February 2011 - Association for Corporate Growth

THE OFFICIAL PUBLICATION OFFEBRUARY 2011Linsalata Capitalco-presidentsStephen Perry andEric Bacon detecta normalizingdeal marketNewBeginningsTHEMIDDLEMARKET.COMPLUSInterGrowth Preview Issue2010 Data AlmanacRussia Back on the Radar?

WatercoolerCatching up for Lost TimeSponsors finally get the green lightThe pent up demand that marketwatchers kept referringto in 2010 finally erupted in December and January,as some sponsors seemingly produced a year’s worth ofactivity in the matter of weeks or evendays. Centre Partners secured threeexits in five days, and added a fourtha week later, when it sold BumbleBee Foods, Gray Wireline, QuickieManufacturing and Kaz Inc. in quicksuccession. ABRY Partners, also inDecember, locked down two deals,York Risk Services and Comforce,while exiting another, Monitronics.The Boston firm then started the year by acquiring Trover Solutions,a portfolio company of Tailwind Capital, which itself,inked two other acquisitions in December and January.Brynwood Partners, meanwhile, acquired P&G’s Zest Soapbrand, picked up Frito Lay’s TrueNorth assets for its DeMetcandy platform, and sold Metro Doors, all between January 4and January 5. Also sealing multiple deals were IrvingPlace Capital, buying National Surgical Hospitalsand retailer Dots; Water Street Healthcare Partners,acquiring J&J’s OraPharma and merging its PrecisionDynamics platform with St. John Cos.; SentinelCapital Partners, which sold ReachOut Healthcareand bought Chase Doors; and Charlesbank CapitalPartners, which acquired Peacock Engineering andwas part of the investor group that sold NationalSurgical Hospitals to Irving Place.SPACs make ComebackMarket serves as a proving ground forold starsThe market for special purpose acquisition companiesseems to be opening up again, or at the very least it’s attractingsome of private equity’s stars from previous eraslooking to prove they can still deal. Tom Hicks, despite all histroubles with his sports teams, scored a huge win with his firstSPAC, which backed the reverse merger of Resolute NaturalResources. The success of that deal paved the way for him toprice a second offering in October. That blazed the trail for JWChilds to launch a SPAC in November and Robert L. Johnsonto also follow suit in December with a $125 million effort.In January, this newest batch of blank-check company andPOLITE CONVERSATIONSPAC offerings startedyielding deals, as 57thStreet Acquisition acquiredCrumbs Holdings,a chain of high-endcupcake houses. 57thStreet was formed by ex-A leak to the New York Post revealed that MorganStanley’s CEO James Gorman, in a December conferencecall, threatened to “personally escort” outanyone caught revealing the details about MorganStanley’s bonuses to the press.Ladenburg ThalmannFinancial Services CEOMark Klein and Paul Lapping. Crumbs will go public throughthe deal, which is valued at $66 million.Even as new groups look to form SPACs, vestiges of theblank-check heyday remain. In the last week of December,Warburg Pincus agreed to acquire ReSearch PharmaceuticalServices. ReSearch had gone public through a reverse mergerwith Edward Yang-led SPAC CrossShore Acquisition Corp. Cartesian Capital,at the time, had to help push thedeal through with an investment thatbought out the dissenting shareholders.The company had traded on the LondonStock Exchange’s Alternative InvestmentMarket, but in September, 2009, choseto delist. MERGERS & ACQUISITIONS February 2011

WatercoolerTOMORROW’S DEALSCapitalSource Explores OptionsJPMorgan brought in to advise the companyon a possible saleCapitalSource hired JPMorgan Chase & Co. as its investmentbanker with a mandate to explore strategicoptions, according to sources.Both companies declined to comment, but the move did notsurprise analysts. They said the $7 billion-asset companymight gain advantage by taking this route.“I am not of the view that there is an issue thatwould force them to do this,” said Jeff Davis, an analystat Guggenheim Partners LLC. “It could be as simple asthem saying, ‘Let’s test the market and see the pricingthat comes up.’”Analysts mentioned deals such as Hancock HoldingCo.’s planned purchase of Whitney Holding Corp., at1.75 times tangible book value, and People’s United FinancialInc.’s 2010 purchase of Financial Federal Corp.,at 1.6 times tangible book value, as possible comparisons.CapitalSource could fetch a premium of 1.2 to 1.7 timestangible book, they said.Davis said prospective buyers would probably be attractedby the company’s acumen in commercial lending, a sweet spotmany lenders are chasing as an alternative to commercial realestate. CapitalSource began as a specialty finance company, butstarted looking for deposits in 2007. A year later, it became anindustrial loan company after buying the deposits and most ofthe assets of Fremont General Corp. in Brea, Calif., from theFederal Deposit Insurance Corp.The company, headed by chairman John Delaney, hadplanned to convert to a commercial bank, and it got approvalfrom state regulators, but itsapplication to become a bankholding company stalled at theFederal Reserve. Late last year,the company said it planned torenew its push to become a bankholding company and convert toa commercial bank.Michael Taiano, an analyst atJohn DelaneySandler O’Neill & Partners LP,said this might be a clue as towhy the company is exploring asale. “Before they go down that road to becoming a bank holdingcompany, which is long and arduous,” he said, “maybe theydecided to put out feelers to see if there was a deal that justmakes more economic sense?” —Robert BarbaRegis Halts ProcessFranchisor of Supercuts and other salons isjust the latest to opt against a saleMinneapolis hair salon operator Regis Corp. optedagainst a sale, signaling that a gap still exists betweenbuyer and seller expectations. The company hadfirst started exploring alternativesin August, with speculation frommarketwatchers pointing to a likelydeal with a financial sponsor.The company, shortly beforelaunching its strategic review, gaveitself a cushion in the form of a$336 million capital raise, whichtrimmed its debt and modified itscovenants.Regis, analysts note, has seen its stock suffer amid the downturn,but many expect shares to trend upward toward its historicalaverage. BofA Merrill Lynch analysts, for instance, currentlyhave a $24 price target based on enterprise multiple of 7xforward-looking Ebitda.The New York Post had reported that Apollo Managementhad been among the suitors looking at the assets.The fruitless process highlights a divide thatstill exists between buyers and sellers in the largermarket. Ameristar Casinos, in the same week,abandoned its sale process. Ameristar was considereda motivated seller, thanks to an estate taxbill facing the son of founder Craig Neilsen, whopassed away four years ago. Seagate Technology,two weeks earlier, ended talks with its private equitysuitors, opting instead for a $2 billion sharerepurchase program. MERGERS & ACQUISITIONS February 2011

Brown-Forman Looks to UnloadFetzer and Other Wine BrandsConfirmation of the sale process comes asmarketwatchers speculate about FortuneBrands selloffLouisville, Ky.-based Brown-Forman Corp. said it is consideringa possible sale for its Hopland, Calif.-based wineassets. The company’s Fetzer brand and related assets areincluded in the review, as are other brands in the region.The company, however, will not look to move its super-premiumSonoma-Cutrer brand as part of the process or alter itslong-term agency relationship with Korbel California Champagnes.Analysts largely cheered the news. JPMorgan, in a researchnote found on Thomson One Analytics, estimated that a sale ofthe brands could yield proceeds of between $150 million and$200 million.The news comes as the wine and spirits space faces upheavaldriven largely by M&A speculation. JPMorgan cited that the expectedbreakup of Fortune Brands could motivate Brown-Formanto explore bolstering some its stronger categories, such asvodka, tequila or rum. The company, the analysts wrote, “couldexplore some of [Fortune’s] smaller brands, which could includeCruzan Rum, Effen Vodka or Sauza tequila.” Diageo, meanwhile,was said to be interested in Fortune’s whiskey brands.Others in the drinks space have also moved to unload wineassets in recentmonths. Also inDecember, ConstellationBrandssaid it found a buyerfor its Australianand UK businessin CHAMPPrivate Equity.Foster’s Group,meanwhile, turnedaway suitors for itswine business, butis moving forward on a plan to spinout the unit. Foster’s appointedDavid Dearie, a veteran of Brown-Forman, as the CEOof its wine business should the spinout go ahead as planned.Art courtesy of flickr.com user Harry HengEMS Attracts Activist InterestClay Lifflander steps up his campaign toforce a sale of the companyClay Lifflander’s MMI Investments is keeping the pressureon EMS Technologies in an attempt to push thecompany into a sale process. The activist investor discloseda letter in December again calling on the board of theNasdaq-listed communications infrastructure company to pursuea deal.The recent letter represents just the latest back and forth betweenLifflander and members of the EMS Technologies managementteam. Lifflander cited the “robust” environment forM&A, adding that past initiatives have failed to stimulate thecompany’s stock price.“If the strategies you have implemented and products youhave developed are indeed so valuable, a competitive sale processto knowledgeable potential acquirors would in our view bevirtually certain to monetize them,” Lifflander wrote.EMS appointed Dr. Neil Mackay as president and chief executiveofficer in November, 2009. Mackay previously oversawthe company’s consolidation efforts, a role that saw him orchestratedeals for Akerstroms Trux, Sky Connect, Formation Inc.and Satamatics Global.The EMS stand-alone plan currently calls for the companyto ramp up its efforts to realize operational synergies by mergingits aviation, space and defense divisions into one Aero Connectivityunit, and tethering the global tracking and LXE businessesinto a Global Resource Management unit.Analysts don’t necessarily expect a sale to result from the effortsof MMI, a 7.7% stockholder. Needham, for instance, issueda research note, found on Thomson One Analytics, characterizinga potential sale of the company as “a low probability.”Lifflander, before jumping into hedge fund investing, hadserved as the president of the New York City Economic DevelopmentCorp. under former Mayor Rudy Giuliani during1994 to 1995. Before that, he spent a decade at Smith Barney,where was a managing director of its M&A group.February 2011MERGERS & ACQUISITIONS

WatercoolerBELTWAY MONITORPE Lobby’s First Report CardObservers suggest that PE was the beneficiaryof the real estate industry’s swayAfter months of strategizing and playing out the differentscenarios, private equity, real estate, and venture capitalprofessionals breathed a sigh of relief in December whenPresident Obama signed a new tax policy into law that extendedthe Bush tax cuts for an additional two years.The result is that the favorable capital gains tax rate remainedunchanged, which gave some sponsors a chance to step off thegas ahead the New Year on deals racingfor the December 31 deadline.The win for dealmakers representedtheir second major tax victory afterlegislation that would have changedthe tax treatment for carried intereststalled in the Senate and was notresuscitated in the tax bill that extendedthe tax cuts.“There’s no doubt that privateequity and these other groups havebeen identified as a ‘pay for,’” saysone observer. “It doesn’t help whenyou have guys like Warren Buffettsaying that they pay less tax thantheir administrators. In the end, theincoming Congress doesn’t have theappetite to raise taxes on companiesthat invest at a time when job creationis on everyone’s minds.”Of course, the lobbying effortsof the private equity, venture capitaland hedge fund communitiescertainly didn’t hurt the cause. TheCenter for Public Integrity reportedin the first week of January that asmall coterie of hedge fund investorswere alone responsible for $10 million, possibly more, thathelped fund GOP campaign efforts. A day after the new taxbill passed, The National Venture Capital Association’s MarkHeesen took to the trade group’s blog to thank membership andstaff “who have worked tirelessly on this issue for the past threeyears.” Meanwhile, the PE industry’s renamed trade association,the Private Equity Growth Capital Council, released studies andalso went to Capitol Hill to lobby against the tax hikes, whichwould’ve seen the tax on carry profits balloon from 15% to 35percent.While PE, VC and the hedge funds are beneficiaries ofWashington’s collective change of heart, sources say it was thelobbying efforts of the Real Estate Roundtable that did theheavy lifting.“This debate wasn’t about private equity. The real estate industryis the most powerful of them all,” says one lobbyist. “Ofthe almost three million partnerships affected, more than halfwere real estate, and the old saw is true: there’s real estate inevery district.”The lobbying source adds thatPE, in contrast, might have “a couplethousand” partnerships.That’s not to say the PEGCC’sefforts should be overshadowed, asthe tax debate served to remind investorsof all sizes that what happensin Washington does have an impacton their day-to-day business. ThePEGCC brought in 18 new “middlemarket” members in December,which expanded the Council’s membershipbeyond just the 12 megafunds that launched the lobbyinggroup in 2006.“Too many policy makers mistakenlyconclude that private equityis just about a small group of verylarge and well-known firms,” saysPeter Brockway, managing partnerat Brockway Moran. “Firms likeours are less visible, but provide criticalfinancing to hundreds of smaller[businesses] seeking capital to grow.”And with the tax issue now inBreaking on Taxesthe rearview for at least the next twoyears, private equity’s still fledglinglobbying group is preparing to take on new targets. Complicationsaround registration, for instance, are one area that couldreceive attention, and the impact of Basel III is stirring fears thatthe cost of borrowing could become prohibitive.And it’s not merely a large-market problem, the lobbyingsource adds, referring to registration and Basel III. Indeed, thework of a lobbyist, private equity pros are discovering, is neverreally done. —Danielle Fugazy10 MERGERS & ACQUISITIONS February 2011

Novell IP Sale Draws CriticsThe Open Source Initiative has called onGerman regulators to investigate theMicrosoft-led carveout of the CPTN patentportfolioThe Open Source Initiative (OSI) is taking issuewith the sale of Novell, soliciting German antitrustregulators to investigate the transaction.At the end of November, Novell agreed to a deal withPE-backed Attachmate Corp. valued at $2.2 billion. Separately,the company said it would unload the intellectualproperty associated with CPTN Holdings to Microsoft for$450 million in cash. As Mergers & Acquisitions previouslyreported, Microsoft and Novell had battled in thepast over IP related to Unix, which resulted in a $350 millionjudgment against the software giant.According to a blog post by OSI president and fundraisingchair Michael Tiemann, Microsoft’s co-investors in thedeal include Oracle, Apple, and EMC. The deal, he wrote,puts into question how the patents will be used on a goingforward basis. In the past, Novell’s IP portfolio “has neverbeen used to attack open source and has in some cases causedpatent aggressors to step down their rhetoric and their actionsagainst open source software,” Tiemann wrote.The OSI, according to its website, is an advocacy organizationcredited with establishing the open source definition.In the draft of the letter submitted the German FederalCartel Office, OSI called the creation of CPTN a majordisruption to the competitive landscape.CPTN’s investors, the authors of the letter claimed,“have no incentive to support open source as a competitivealternative to proprietary software. CPTN creates a coverto launch patent attacks against open source while creatingfor each principal a measure of plausible deniability thatthe patent attack was not their idea.”Tech M&A has had an impact on the open source communitybefore. Oracle’s late summer patent infringementclaims against Google’s Android stem from the company’sacquisition of Sun MicroSystems and the Java patents thatcame with the purchase.Meanwhile, fights over IP have dominated headlinesin December. Microsoft co-founder Paul Allen recentlyfiled an amended complaint against a slew of companies,such as Apple, Google, Facebook, NetfFlix and others,claiming that their webtechnologies violated IPcontrolled by Allen’s IntervalResearch. Allen, likeOracle, is also taking aimat Google’s Android operatingsystem. The originalcomplaint was dismissedby a federal judge earlier Paul Allen among those battling on IPin December.Intellectual Ventures, the IP investment house headed by formerMicrosoft chief technology officer Nathan Myhrvold, also sued thelikes of McAfee, Symantec and Hynix Semiconductor in Decemberover various IP.West Coast Capital ConferenceFebruary 10, 2011The Palace Hotel | San Franciscowww.acg.org/sanfranciscoFebruary 2011 MERGERS & ACQUISITIONS 11

Outlook“”Anytime an economic crisis unfolds, a corollaryof that will be financial reform. Domestically,deal makers shudder at the thought of moreregulation. For those looking overseas, specifically towardRussia, such efforts can go a long way in makinga geography suddenly palatable. While Russia hadseemed to accept its standing as the red-headed stepchildof the BRIC nations, coming out of the downturn,the country has taken measures to improve itsstanding among foreign investors. Dealmakers arenow taking notice.“It’s my view that Russia is much more open to foreigninvestment today,” says Dechert’s Laura Brank,a partner working out of the firm’s London and Moscowoffices. “The country seems to understand thatto draw foreign capital, investors need transparency,support for the rule of law and considerations thatjust make it easier to do business in the country.”Ahead of the downturn, Russia appeared to bemoving in the opposite direction. On the same dayPresident Dmitry Medvedev took office, in May,2008, the country’s Law on Foreign Investment inStrategic Sectors was officially enacted. The law actuallylists 15 sectors, spanning from mining and armsproduction to fishing and publishing, that are consideredkey industries to the country. The law doesn’tnecessarily ban investment in these areas, but theirmere inclusion on the list, along with the promisednational security review, still spooks most potentialbuyers.PepsiCo’s recent acquisition of juicemaker anddairy farm Wimm Bill Dann Foods, for instance, wasforced to go through through the review process. Inthe last week of December, Russia’s Premier VladimirPutin, himself, graced the transaction, and even celebratedthe deal, citing the potential growth and expectedjob creation.Brank, who worked on the PepsiCo deal, identifiesthat its approval underscores that the “strategic” sectorsaren’t off limits, and that the law actually serves“to clarify” the legal framework for buyers.Critics may argue that a juice company may not beas “strategic” to Russia as an aerospace asset or miningcompany. Brank cites Kinross Gold Corp.’s $365million acquisition of the Dvoinoye and Vodorazdelnoyegold and silver deposits in Chukotka as anotherexample, in an area -- mining -- that she says “tends tobe much more restrictive.”Foreign investors have also planted flags in transportation(Fraport AG’s minority stake investment inSt. Petersburb’s Pulkovo airport), oil and gas (TNK-BP investment in Verkhnechonskeftegas), and againin food (Danone-Unimilk). In January, the Russiancommission on foreign investment did reject a bidby Teliasonera AB to move its roughly 36% stake inRussia’s Megafon to an offshore holding company.Meanwhile, Russian leaders have taken other stepsto comfort foreign investors. Medvedev installedthe National Plan of Counteraction of Corruptionlast year, and more recently, the country enacted the2010-2011 Anti-Corruption Strategy, criminalizingbribery.The laws, however, have done little to changethe perception of Russia. Various cables released byWikiLeaks, for instance, depicted the Moscow citygovernment as a “kleptocracy” and introduced theworld to the term “krysha,” which refers to the “roofof protection” extorted by the government against localbusinesses.Then there is the anecdotal evidence. The RussiaMonitor, in December, published a story, with video,of a local businessman and his son being attacked bymasked gunmen, who set cars on fire and killed theRUSSIAN REVERSAL continued on page 5612 MERGERS & ACQUISITIONS February 2011

its the companies that engage users (think Zynga), allowfor monetization at multiple levels (Thrillist); andforward new distribution models (Twitter) that willbe in demand.Google’s bid for Groupon, no doubt, highlightsthe demand for these characteristics. But Gridley addsthat history has shown that buyers have more successwith tuck-ins that supplement a company’s core business.“It’s more about experimenting than really makinghuge bets,” she cites, adding that early-stage assets,as long as they’re scalable, can quickly become profitablefor the right buyers.Alpert, meanwhile, describes that the trends drivingactivity in consumer media are muted a bit in theBtoB space, but similar drivers are still crucial. For instance,it’s the integrated media companies that maygenerate revenue through print, online and customevents that could attract interest. “Those smaller, midmarketcompanies that may have figured out how tomake the choir sing could be intriguing to the largerbuyers still trying to figure it out,” he says.But Alpert notes that even the BtoB space is encounteringa “sense of convergence -- in which thedifferences between media, services and technologyare becoming harder to figure out.”He adds that in the broader market, he’s anticipatinghe’ll see more deals like Hearst’s acquisitionof online marketing company iCrossing last yearor Meredith’s sustained efforts to grow its marketingservices arm, following acquisitions of O’GradyMeyers, Genex, Big Communications, Hyperfactoryand others.“”February 2011 MERGERS & ACQUISITIONS 15

LBO Watch“”For some, 2010 could have been considered the‘Year of the Add-on.’ The natural progression,aside from pursuing new platforms, wouldmake 2011 the ‘Year of Integration’ for private equity.Add-on acquisitions have always been a criticalcomponent to many value-creation strategies. It’sconsidered conventional wisdom in private equitythat building scale is one of the few ways to engineermultiple expansion on the exit.While many rollup efforts are pre-ordained, sponsorswere especially opportunistic in the early part oflast year. The same crippled credit markets that preventedshops from buying new platforms allowedthe same sponsors to capitalize on the lingering uncertaintythrough building marketshare within theirportfolios. The first quarter, according to PitchBookData, represented a three-month peak not seen since2007, as add-on deals represented a full 32% of all PEinvestments.As an easy answer to the credit woes, however, it’sperhaps understated how much work is involved toactually get the integration right. This is especiallytrue when sponsors apply the gas to boost the acquisitionpace. And it doesn’t take long for failed add-onsto quickly destroy value.“The biggest challenge is communication andkeeping the best people,” according to AlixPartnersmanaging director Bruce Myers. “When the communication[fails] that is when you see the good peopleleave.”To be sure, there were seemingly as many failedrollups as successful consolidations in the Nineties.US Office Products, chocolate maker Fannie May,and direct mail marketing company SourceLink areamong the handful that often to come to mind.The difference today, market pros insist, is the attentionthat goes into rollup integration.Robert Bryant, a vice president at Roark CapitalPartners, cites the firm’s investment in FOCUSBrands, a platform that was launched in 2004 whenRoark acquired Cinnabon and Seattle’s Best CoffeeInternational from AFC Enterprises. Carvel, an existingportfolio company, was rolled into the platformand subsequent acquisitions included Schlotzky’s,Moe’s Southwest Grill and most recently, AuntieAnne’s.Bryant cites the original investment required “asignificant amount of capital and time” just to createthe infrastructure that made FOCUS scalable.He describes the original deal, which did mergeCarvel with Cinnabon and Seattle’s Best, was essentially“a full-blown integration process” from thestart.“A lot of the integration planning can go on beforethe close happens,” AlixPartners’ Myers describes.Kevin Potts, a vice president of marketing andproduct management at Marlin Equity-ownedEmptoris, cites that when Marlin acquired thecompany in 2009, the firm had a list of around 50potential targets. Emptoris, a supply and contractmanagement software business, has since cinched adeal for the contract and service management businessof Click Commerce, and in January acquiredRivermine.The process, he says, is methodical. The targets,split it into eight different software categories, areprioritized. The company itself does most of the duediligence, although Marlin is proactive in providingcontacts and accessing relationships. Consultants arealso tapped to ensure targets fit. Potts notes that thestrategy isn’t about building scale just for the sake ofit.“Our strategy is to be a best of breed softwareplayer in our space, so we’re not just going out thereto fill out adjacent categories or picking up distressedcompetitors,” he says. “We are really careful aboutTHE ADD-ONS continued on page 5616 MERGERS & ACQUISITIONS February 2011

ingsLinsalata Capital co-presidents Stephen Perry and Eric Bacon detect anormalizing deal market By Ken MacFadyenPhotographs by YasakiPhotographic.com

New Beginnings“ ”may fail to capture the fancy of a broader public impressedby big numbers.No. 6 on that list was Linsalata Capital, the Clevelandfirm founded by Midland Ross Corp.’s FrankLinsalata more than two decades ago. Legend hasit that Linsalata’s first pool of buyout funding cameStephen Perryvia a second mortgage on his house. Stephen Perryis another Midland Ross vet, while Eric Bacon arrivedfrom Allied Signal. While most sponsors makea show of hiring senior advisors and operating executives,this, according to Perry, is the foundation of thefirm, and likely speaks to Linsalata’s consistency acrossfunds and cycles.In January, Linsalata took another incrementalstep toward succession, when Perry and Bacon werenamed as co-presidents. Frank Linsalata, meanwhile,maintained the chairman role. Bacon says the appointmentsare just part of a slow transition that hasbeen ongoing since 2004, and that Frank’s day-to-dayrole is changing little in the near term. In a sign affirmingthe status quo, Linsalata expects its next fundto match its current vehicle, at $425 million.Mergers & Acquisitions caught up with Linsalata’snew co-presidents just ahead of the New Year to discusstheir thoughts on where the market is headed in 2011,how investors can capitalize and any red flags that stillloom. The pair also touched on Linsalata’s slow evolutionthat has served the firm well over time. The followingis an edited version of the conversation.Mergers & Acquisitions: For the first time in a longtime, the New Year actually feels like a fresh start forprivate equity and the M&A market at large. Howwould you assess the past few years, going back to yourworst fears at the depths of the downturn to the reality ofhow the market has since emerged? And where do you seethings going from here?Bacon: It’s tough to put yourselfback and capture your mindsetback on September 15, 2008.We actually had a deal die onus that day. It took another 15months, but we were able to finallycomplete the transaction[in January, 2010] when we acquiredManhattan Beachwear.We’ve probably been throughfour or five recessions, but thatwas one of the darkest days I’vegone through. You just didn’tknow at the time if certain companieswould be able to come outon the other side.Perry: If you go back to that period,the focus on investing took a back seat to theportfolio. So when financing dried up, we probablyspent the remainder of 2008 and a good part of 2009facilitating conversations with banks as a few of ourcompanies bumped up against covenants. We alsohad an inward focus to work with the portfolio managementteams to understand where reality would liein terms of the top line. We had to take a lot of difficultactions early on, but we were able to perseverethroughout that stretch without losing any companies.We’re not the type to just throw the keys on thetable.But I think 2010 was the year, from a portfoliostandpoint, that we started to see those efforts pay off.As performance improved, the focus again was aboutspotting opportunities to differentiate the businessesand drive top-line growth. And we were able to capitalizeon the lingering uncertainty in the respectivemarkets and grab marketshare.Bacon: On the deal side, 2010 was a year of twohalves. Good companies became available again asthe credit markets drove valuations higher. That was22 MERGERS & ACQUISITIONS February 2011

a huge difference. I think the switch was thrown atsome point in March, when valuations rebounded. I’dsay it’s almost back to normal. The banks are out therelending, and you’ll run into a lot of cases in which thebidding escalates beyond the point of comfort. It’s notat bubble levels, but the market has reached a pointwhere people are willing to model out a full range ofreturns again.Perry: I’d say that early on in 2010, you had a chanceto find some good assets at prices that you wouldn’thave seen over the past three to five years. That windowclosed pretty quickly as credit became available.There’s certainly no shortage of investors, but I thinkthe past 12 months presented a lot of quality opportunities.We were able to close on four or five deals.Mergers & Acquisitions: So how do you see 2011shaping up?Bacon: I’m expecting it to be a pretty good year, perhapsbetter than 2010. One thing that could happen,though, is that buyers in the middle market may facea gap in deal flow. Given the uncertainty of the taxlegislation, there was a clear bubble of activity in theEric BaconJuly / August timeframe. Once that was resolved, yousaw a lot of deals that were heading for an end-of-yearclose pushed into January, but presumably the rushof deals came from somewhere, so that may translateinto some slowness in the first quarter. Once that mitigates,I’m expecting the markets to maintain a reasonablespot in the cycle for the foreseeable future, asopposed to buyers and lenders racing out of the gatesand stretching for deals. It all starts once you see thenon-bank lenders start to reach, forcing someone elseto do the same thing, until it gets ridiculous again.But I’m expecting 2011 to be a year characterized bycomfortable and sane investing.Mergers & Acquisitions: We’re still not that far removedfrom 2008. Do you think the intensity of the crisiswill do anything to strengthen institutional memories?Bacon: That hasn’t been the case in the last seven recessions.There is institutional memory and investorsare cognizant of past mistakes. But there will alwaysbe some innovation or change in dynamics that wedon’t fully understand. And that innovation will turnout to be the source of the next problem.Mergers & Acquisitions: Are there any red flags thatyou’re keeping an eye on at this point?Perry: I think one concern on a macro-economiclevel is just the lack of tractionin the employment figures. Thatdrives consumer spending, sowhen there is little improvementin those numbers, it underscoresthat the recovery is still very tenuous.Bacon: That’s been what’s reallyholding us back. Fundamentally,most of our businesses, somewheredown the line, requirepeople to buy the products andstimulate demand. I’m gettingthe sense, though, that thingsare starting to turn. Up until sixmonths ago -- from the secondhalf of 2008 to the first half of2010 -- I would literally get hundredsof emails from people inthe midst of a career change; that’s usually a euphemismfor having been let go. Now I’m getting moreand more emails from people inquiring to fill openpositions.“”February 2011 MERGERS & ACQUISITIONS 23

iod with a 10-year investment window, and that’s apace that is supported by our team.It’s the same market that the bank groups and lenderswho we already work with and are familiar with aretargeting, and it means we’re working with companies-- with $15 million to $30 million of Ebitda -- thatwe can add value to.Mergers & Acquisitions: As a wrap-up question, anyforecasts for the New Year?Perry: It’s not a bold prediction, but I think as wemove forward this year, we will see a steady recoveryand we’ll continue to build on that. I’m not expectingto necessarily see a snap-back in any particularindustry. As employment improves that should driveall sectors.Bacon: I’d like to think that there is so much slackleft in our economy that we won’t see another recessionbefore 2016. I’d hope that we don’t witnessanother boom, which would just serve to acceleratethe absorption of that slack. In terms of our market,the evolution of private equity will continue. Ourindustry has been around for 30 years; it’s changeddramatically over that time and become increasinglycompetitive.The information has only improved and the wholeprocess has become more efficient. In my mind, that’sjust served to reinforce our role of not just owningbusinesses, but helping to build them and create actualvalue.“”February 2011 MERGERS & ACQUISITIONS 25

ACG InterGrowth Preview“”veryone has seen those California commercials,featuring ex-governor ArnoldSchwarzenegger. The ads almost pokefun at the idea of the state as being abusiness destination, highlighting thatin California, ‘board meetings’ refer to surf and skateboards, while a ‘dirty job’ equates to a mud bath at aspa. Perhaps those factors add to the appeal, but dealmakersare drawn to the state -- home to the No. 8economy globally -- for a host of other reasons.The three legs of the stool for a hearty deal regioninclude a strong commercial banking market, a diversifiedpool of industries, and of course talent. Californiahas all three in spades, and also has a proximity toAsia -- an increasingly key differentiator from otherregions, such as New York or Charlotte.Todd Jadwin, head of West Coast investmentbanking at Houlihan Capital, has worked on theWest Coast for more than 20 years with companieslike AOL, Transworld Entertainment and MGM. Hecites the dealflow that emerges as the key draw foracquirers and investors.“California is a big state with lots of opportunities.By working here, you often don’t even have to get on aplane to find a good deal. It’s a top place to find dealsand financing,” says Jadwin.California’s tech industry is likely the first thingdealmakers think when it comes to the region, withmedia and entertainment a close second. Not to beoverlooked, however, are the military and defensemarkets sprouting out of areas such as San Diego orthe manufacturing centers around Los Angeles andthe Bay Area. Food production is another marketthat flourishes, underscored by Northern California’sdominant domestic wine region, while the state’s retailmarket, thanks to a population of nearly 38 million,boasts such mainstays as the Gap, Williams Sonoma,Ross Stores, Safeway and countless others.Deal pros credit the education system. Companieslike Yahoo! and Google were both founded bygraduate students at Stanford University and thensubsequently set up their headquarters in the state.And earlier this year The Wall Street Journal rankedventure backed companies that are likely to populatethe next era of tech stars; 33 out of 50 hailed fromCalifornia.While Silicon Valley isn’t exactly a well kept secret,it’s easy to forget just how much of a powerhousethe region is when it comes to VC. SiliconValley attracted more than four times as much venturecapital as New York in the first three quarters ofthis year, according to a report prepared by PricewaterhouseCoopersand the National Venture CapitalAssociation.It used to be that those early stage companieswould jump right into the public market. It’s morecommon today to see a venture-backed business eitherfind its exit through a sale or just keep on growing,using M&A along the way to build scale.Private equity is not confined to the angel or earlystage community either. Firms like Leonard Green,TPG Capital, Yucaipa Cos. and Levine Leichtmanhave always been active, while Gores Group andPlatinum Equity have even started spawning spinouts,such as Marlin Equity and OpenGate Capital,respectively.Meanwhile, strategically, observers are increasinglybilling California as the first stop for an Asiastrategy.“Because we are so close to Asia, lots of companiesset up shop here. It is the gateway to Asia. Californiais a unique place,” says Jadwin.26 MERGERS & ACQUISITIONS February 2011

Indeed, California’s close proximity to Asia makesit a great place for companies to be, particularly asmore and more US companies set up sales offices inAsia and conduct their manufacturing offshore.“While we are seeing a significant amount of manufacturingin Asia, a large amount of R&D continuesto happen in California,” says Eva Davis, a partnerwith Kirkland & Ellis.She adds that one of the challenges of operating isactually the breadth of the market.“The number of middle market businesses here aregreat, [but] you can never be sure where the next opportunityis coming from,” says Davis.And the innovative culture, she adds, extends beyondtechnology. Davis counts Razor USA as a pastclient. The company that became famous for its Razorscooter, has since come out with new products everyyear. “There are a bunch of companies trying to dothe same thing. You just don’t know what will comenext,” says Davis.California also has some other benefits that thestate alludes to in its commercials. And believe it ornot, California’s non-business attributes do serve tosupport the deal community.Andrew Nikou launched OpenGate Capital in2005. He never even thought of leaving the Los Angelesarea when he opened up his first office.“We like California because we have been able toattract a strong team of talented deal making and operationsprofessionals,” he describes. “Everyone likesliving here and the quality of life is great, even thoughwe work very hard.”“”RegisteR nowMarch 17, 2011grand hyatt, washington, d.c.17th AnnuAlstrategic growth conferencenAtionAlly Respected Business leAdeRsdavid M. rUbensteinCo-Founder and ManagingDirector, The Carlyle Groupsteve caseChairman & CEO, Revolution,Co-Founder, America Online &Chairman, The Case FoundationKnight KiplingerEditor in Chief, The KiplingerLetter, Kiplinger’s PersonalFinance magazine and TheKiplinger Tax Letterearly bird registration at www.acgcapital.org greater washington d.c. is the 4th largest econoMy in the U.s.Connect with key decision makers, forge alliances and expand your network.Conference will include corporate executive panels on timely topics/recentdeals and evening networking reception.For registration and sponsorship opportunities, contact703-584-0246 or acgcapital@acg.org.February 2011 MERGERS & ACQUISITIONS 27

Guest Article“”e are now four full years into thehistoric meltdown in the housingmarket and also over twoyears into a very deep correctionin commercial construction, andare just beginning to see some stabilization and earlysigns that we have arrived at the long-awaited bottomof the overall construction cycle. While publicand private investors and industry participants arehesitant to allow themselves to become even slightlyoptimistic given the number of times over the lastyear that industry analysts and pundits have falselycalled the bottom and made forecasts for a reboundthat has yet to happen, data on a number of fronts isencouraging.From housing starts that have bounced around abottom for the last nine months to the dramatic reductionin the inventory of new homes and modestuptick in home improvement spending by consumers,conditions overall have begun to stabilize for residentialconstruction activity.While we are not out of the woods yet given thelarge volume of pending foreclosures and homes thatare still underwater as well as rather anemic economicand job growth to date, these factors will likely dampenor delay any real recovery or growth rather thancause the housing market to take another step back.New commercial construction starts are expected tocontinue to decline in 2011, but the pace of the declineshould be much less than what we experiencedin 2009 and 2010, and forward indicators such asthe Architectural Billings Index have recovered substantiallyfrom record lows and are showing signs ofincreased activity in some sectors. Mere stabilization,however, could stimulate dealflow in the sector.As a result of the historic downturn in the constructionmarkets, M&A activity in the sector declineddramatically over the last few years. With theexception of companies that were forced to sell givenbalance sheet issues, both private investors and publicbuilding products companies have been hesitant tosell and have chosen to remain patient, waiting for thecycle to turn. This has severely limited M&A activityfor good quality businesses. With the markets beginningto stabilize, we are seeing a significant shift inhow both strategic buyers and private equity groupsview the building products sector, and renewed interestin M&A.Strategic buyers in the sector suffered substantialloss of shareholder value over the last few years but forthe most part took the necessary but painful efforts toright-size their businesses and improve their balancesheets, and have emerged having largely weatheredthe storm. This, combined with their own improvedvaluations, is causing them to begin to be more active.Since reaching record lows in early 2009, stock pricesand valuations for publicly-traded building productscompanies have more than doubled on average. Additionally,with their businesses now stabilized, manyindustry participants are reviewing all segments oftheir companies with an eye toward divesting noncorebusinesses and redeploying capital in sectorswhere they see the most potential for growth and tocreate shareholder value.Private equity groups are split into three generalcamps. In the first camp are the sponsors who madeacquisitions in the industry in the 2004-to-2007timeframe and have investments in which their equityis underwater or where they lost control in a restructuringor bankruptcy. Most of these groups are on thesidelines with no appetite for additional exposure tothe sector. With that said, there are a few exceptionsof groups that, despite suffering pain, see renewed opportunityand are actively pursuing deals. The middlecamp is comprised of financial sponsors that investedin high quality building products companies that28 MERGERS & ACQUISITIONS February 2011

have performed well through the cycle.With many of these companies just now showing a pick-up inbusiness and improved financial performance, their sponsors areclosely monitoring market conditions to assess the right time formonetizing assets. While actively looking at add-ons, most of thesesponsors are lukewarm in terms of their appetite for new investmentsin the industry. Lastly, there is the camp of private equity groups thatrecognize the unique opportunity to make acquisitions at the verybottom of the housing cycle (and near bottom of commercial constructionas well), and are aggressively looking for new platforms.This camp is the largest of the three, as evidenced by the number ofsponsors at the International Builders Show and KBIS in 2010.The combination of sponsors in the middle camp who are activelyconsidering whether now is the right time to sell investmentsthat are getting long in the tooth and families and other private investorsunable to get liquidity over the last few years should fuel asignificant uptick in M&A activity in the industry beginning thisyear. We expect valuations to remain on the conservative side relativeto the peak, as strategics remain inwardly focused and sponsors areconstrained by available financing.However, given the amount of available capable from sponsorseager to invest now and strategic buyers looking for ways to accelerategrowth in what is still a tough construction market, deal flow shouldincrease considerably. While there are few expectations for renewedstrong growth in either residential or commercial construction, thestabilization and gradual industry recovery will likely bring us continuedpositive developments and the beginning of a healthier and activebuilding products M&A environment for years to come.Mike Hogan is a managing director at Harris Williams & Co. andleads its building products practice. Harris Williams & Co. (www.harriswilliams.com),a member of The PNC Financial Services Group,Inc. (NYSE:PNC), is the trade name for Harris Williams LLC, a registeredbroker dealer. Member FINRA and SIPC.VNew YorkRegistration and Hotel Accommodations - www.acgnyc.orgFebruary 2011 MERGERS & ACQUISITIONS 29

PeopleA number of firms began 2011 by elevating existing membersof the team. Austin Ventures, TA Associates, BerkshirePartners, ICV Partners and Technology Crossover Partners,among others, all announced promotions in December or earlyJanuary.There were a few other trends, as investor relations professionalsalso seemed to be in demand. Platinum Equity broughton a former LP to bolster its IR team, while Navigation CapitalPartners created a new IR role at its firm.The larger shops, meanwhile, closed the year with an internationalfocus, as Blackstone, KKR and Fortress all madesignificant moves in Asia or the Middle East.Austin Ventures— The VC and growth equityfirm announced the promotions of MikeDodd and Scott Donaldson, elevating thepair to partner and principal, respectively.Dodd joined the firm in 2008, havingearlier served in a corporate development rolewith software company Omniture. Dodd alsoput in earlier stints at MyFamily.com, RobertsonStephens and was a partner at VC firmEuropatweb.He primarily focuses on early- and expansion-stagebusiness and consumer servicessectors, and has led “several deals,”according to a press release, in social mediamarketing, fitness mapping and analytics andonline education.Donaldson, meanwhile, joined the firm ayear earlier, and largely concentrates on growthequity and executing platform acquisitions.He arrived from Evanston, Ill.-basedSilver Oak Services Partners and also put instints with Willis Stein & Partners and ThomasWeisel Partners.Berkshire Partners— The Boston privateequity firm announced the promotions ofSharlyn Heslam and Elizabeth Hoffman,who were each bumped up to managing directors.Heslam is the firm’s first general counsel.She joined the firm in 2006 from Weil, Gotshal& Manges.Hoffman, meanwhile, has been at Berkshiresince 2003, and has largely specializedin the communications and business servicessectors. She arrived from VC firm The SproutGroup and previously put in a stint at MorganStanley & Co. in the firm’s M&A group.The pair join Berkshire’s 12 existing managingdirectors.The Blackstone Group— The private equitygiant named senior managing director MichaelChae as the head of private equity inAsia. Ben Jenkins, who had formerly headedthe firm’s Asia Pacific PE group, is staying onwith the firm, while Antony Leung, the firm’schairman for Greater China, joined Blackstone’sexecutive committee.Chae joined Blackstone in 1997 afterstints at The Carlyle Group and Dillon, Read& Co.Charles Aris Inc.— The executive searchfirm named Charles Mitchell “Chad”Oakley III as its new president and COO. Heis succeeding Mitch Oakley, who will remainin place as the company’s chairman.The move represents a promotion for theyounger Oakley, who had previously served asthe vice president of business development.He will continue to oversee the strategy andbusiness development practice at the firm.Prior to joining the Greensboro, NC, searchfirm, Oakley put in stints at Bain & Co. andDeloitte & Touche Consulting.Conway MacKenzie— The firm addedKent Laber as a managing director in thefirm’s Dallas office.Laber, who specializes in crisis management,previously served as a president andsenior managing director of boutique restructuringand M&A firm Barrier Advisors. Beforethat, he was a principal member of PricewaterhouseCoopersbusiness recovery practice,and also spent time serving in the chairman’soffice, where he helped implement the mergerof Pricewaterhouse with Coopers & Lybrand.Laber left PwC in 2001.Recent mandates for Laber include AcmePackaging and Fedders Corp., among others.DiCicco, Gulman & Co.— The CPA andadvisory named George Shaw as a partneroverseeing the firm’s transaction advisory servicespractice.In his new role, Shaw focus on M&A taxstructures, transaction support, integrationservices and quality of earnings assessments.He arrives from NorthPeak Advisors, a firm hecontrolled, and previously spent time as a taxpartner at Feeley and Driscoll PC and put intwo-plus decades at Grant Thornton.Duff & Phelps— Randal Stephensonhas landed in the firm’s M&A practice as amanaging director based in the New York office.His addition also bolsters the firm’s dis-30 MERGERS & ACQUISITIONS February 2011

tressed situations bench, as Stephenson haspast experience in restructurings.Stephenson is joining the firm from BurnhamSecurities, where he was a managing director.Stephenson had previously headed CITGroup’s mid-market M&A advisory practice,and in between had a short spell at Pali Capital.Stephenson, originally a bankruptcy andM&A lawyer, also put in stints at Jefferies &Co., Merrill Lynch, and Wolfensohn & Co.Edgeview Partners— The Charlotte advisornamed two new managing directors, promotingDerek Beres and Chris Rosbrookto the roles. The firm also promoted Tripp Griffinand Craig Walker as vice presidents.Beres joined Edgeview in 2004 afterstints at Morgan Stanley and Arthur D. Littleand co-heads the firm’s transportation and logisticseffort.Rosbrook joined that same year fromDain Rauscher Wessels and he currently overseesthe firm’s the applied technology practice.He also put in stints at RBC Capital Marketsand Magma Foundry Technologies.Griffin and Walker were both 2007 hires,coming from the Navy and law firm Hunton &Williams, respectively.Golub Capital— Ross Teune was namedBruckmann, Rosser, Sherrill & Co.—The New York private equity firm announced that founding partner Harold “Hal”Rosser would be leaving to launch a new investment firm, bringing BRS managingdirector Jacob Organek and his son senior associate Luke Rosser with him.The move comes roughly two years after BRS held a final close for its third fund,which only collected $213 million amid the credit crisis. The final close fell well shortof the firm’s 1999-vintage predecessor and also missed a revised $600 million targetidentified in a March 2009 Form D filing.BRS was launched in the mid-Nineties by Rosser, Bruce Bruckmann, StephenSherrill and Stephen Edwards, who left in 2002 to join hedge fund Atticus Capital.The four had previously worked together at Citicorp Venture Capital.Sherrill, in a call with Mergers & Acquisitions, noted that the departure of Rosserwill not trigger a key man provision in the fund, which would require the departure ofat least two of the firm’s senior executives, including Thomas Baldwin.Rosser oversaw many of the firm’s restaurant investments, an area where BRShas had success in the past. Rosser had worked on the firm’s earlier investments inMcCormick & Schmick’s, California Pizza Kitchen, and Logan’s Roadhouse, whichwas sold last year to Kelso & Co. A director of the Culinary Institute of America,Rosser also helped oversee BRS’s investments in Il Fornaio, Bravo Brio RestaurantGroup and Ruth’s Hospitality Group, among others.Organek, meanwhile, joined the firm in 2003, arriving from Lehman Brothers,where he worked in the firm’s investment banking group. Luke Rosser joined thefirm in 2009, following stints in the mezzanine arm of Intermediate Capital and in thefinancial sponsors group at Deutsche Bank.Rosser will continue to be a “substantial” investor in BRS going forward, whileSherrill told Mergers & Acquisitions that the firm still has roughly 75% of its capitalremaining from its third fund.chief financial officer of Golub Capital’s affiliatedbusiness development company. He replacesSean K. Coleman, who will continueas a managing director of GC Advisors.Teune, 42, joined an affiliate of GC Advisorsin November 2007 and was senior vicepresident of finance, where he had responsibilityfor the financial reporting for its privatemanaged debt funds.He also briefly served as director of strategicplanning at Merrill Lynch Capital fromApril 2006 to November 2007.Hahn & Co.— The former chief investmentofficer of Morgan Stanley’s Asian private equitygroup, Scott Hahn, is raising a debut fundfor his new firm, Hahn & Co. According to anSEC filing, the firm is seeking $600 million forits inaugural effort.Joining Hahn at his eponymous firm isPratish Patel, another Morgan Stanley vetwho was formerly an executive director at thefirm.According to the SEC filing, Hahn’s headquartersare based in Seoul, while Patel is currentlybased in New Jersey.Hahn most recently oversaw the $1.5 billionMorgan Stanley Private Equity Asia III, LP.At Morgan Stanley, he invested across the AsiaPacific region.Hicks Acquisition Co. II— Tom Hicks’special purpose acquisition company namedChristina Weaver Vest president and chiefexecutive. She replaces Robert Swartz.She has been chief financial officer and asenior vice president since the company’s inceptionin June and previously was senior vicepresident of Hicks Acquisition Co. I. She willcontinue to serve as CFO.Vest served as a principal at HM CapitalPartners, formerly Hicks, Muse, Tate & Furst,which she joined in 1995.Hilco Trading— Edward Siskin is joiningthe Northbrook, Ill. firm as an executivevice president, a role that will see him focuson expanding the Hilco’s investment bankingbusiness.February 2011 MERGERS & ACQUISITIONS 31

PeopleSiskin was a founding principal at CrystalFinancial and Crystal Capital, and before thathe founded Back Bay Capital, where he alsoserved as President. Earlier stints includedstops at Bankers Trust, Red Apple Group, ina corporate development role, and specialtyfinance company GBFC, which was subsequentlyacquired by BankBoston, and ultimatelyBank of America. At BofA, he had assumedthe role of chief operating officer in theretail finance group.Houlihan Lokey— The mid-market advisorhired Marc Ellegaard to strengthen anddevelop the firm’s financial advisory servicesbusiness in Europe, the Middle East and Africa.Ellegaard, who will be based in London,joins as a director and head of financial advisoryservices business development forthe EMEA region. He will be responsible fororigination efforts across a wide range of services,including hedge fund and private equityportfolio valuations, fairness and solvencyopinions, purchase price allocations as well asgoodwill and asset impairment analyses.Ellegard was previously with EmiratesNational Bank of Dubai, where he was head ofcorporate finance and advisory. Before that, Ellegardwas a director in corporate finance andratings advisory at Merrill Lynch Europe.ICV Partners— The New York private equityshop promoted Sheldon Howell and JermaineWarren to serve as vice presidents.The pair were formerly senior associates.Howell previously worked for ChurchillFinancial and also put in stints at MerrillLynch, Ladenburg Thalmann and AIG. Warren,meanwhile, worked at ICV from 2003 to 2005and rejoined the firm last year. He spent timeat Goldman Sachs, where he worked on M&A,and equity and debt financings.JPMorgan Chase— Robert CummingsJr. will join the bulge bracket as vice chairmanof investment banking, based in New York.He will report to Jeffrey Urwin and KevinWillsey, co-heads of investment banking inthe Americas.Cummings spent 27 years at Goldman,Sachs & Co. in corporate finance advising clientson mergers and acquisitions and strategicfinancing. After retiring from Goldman in 2001,he studied art history at Columbia University.He now sits on the boards of directors of twopublicly owned companies, Corning Inc. andViasystems Group.Jefferies— The investment bank brought onMichael Tedesco to its investment bankingdivision as global head of technology mergersand acquisitions and U.S. head of M&A.Tedesco, a Citigroup vet, joins as a managingdirector and will work in Silicon Valley.He has more than 16 years of investment bankingexperience with Salomon Brothers and itssuccessor, Citigroup, where he most recentlyserved as a managing director and head oftechnology M&A.Kohlberg Kravis Roberts— The privateequity firm named Kaveh Samie as its newhead of the Middle East and North Africa.Samie, who’s replacing Makram Azar,was formerly with HSBC, and put in earlierstints at Citigroup, Oppenheimer, PrudentialSecurities and Julius Baer. Azar had left forBarclays Capital in June.Lazard Middle Market— The M&A advisorbrought on John Lonnquist to serve asa managing director in its business servicesgroup. Lonnquist arrives from Piper Jaffrey,where he previously headed up the firm’s coveragein the business services and educationsegments.Lonnquist will be based in the firm’s Minneapolisoffice.Prior to Piper, Lonnquist spent nine yearsat Alex. Brown and ultimately Deutsche Bankfollowing the former’s sale to the Germanbulge bracket.Loughlin Meghji + Company— The turnaroundfirm named Karen Garza, Brian J.Griffith and Tom Wang as managing directors,bolstering its MD ranks from eight toeleven.Garza originally joined Loughlin Meghjiin 2003 following stints at Lehman Brothersand ABN Amro. She has worked on recentmandates including Adelphia Communicationsand National Envelope Corp., which wasrecently sold to The Gores Group. Griffith,meanwhile, spent time at FTI Consulting andCCV Restructuring, specializing on debtor andcreditor engagements. Wang is going on histenth year with Loughlin Meghji, and duringthe past decade spent time as the assistantchief restructuring officer of Werner Ladderand Greatwide Logistics.Macquarie— Thomas Hassen joinedthe Australian investment bank as chairmanof global oil and gas banking for MacquarieCapital. Hassen, who will work in New York,has more than 30 years’ experience in investmentbanking, concentrating in energy.Previously, Hassen was vice chairmanof the global industries group and also a seniormanaging director in the global energygroup at Bear Stearns. Most recently he wasvice chairman of New York private equity firmIrving Place Capital.MidCap Advisors— The boutique bankopened a Boston office, naming John Parnellas a managing director overseeing thenew location.Parnell will also head up MidCap’s educationgroup. He jumps into banking afterserving as advisor in the for-profit educationspace. Past clients include Rets Tech Center,Javelin Learning Systems and others.Mistral Equity Partners— The New YorkPE shop announced three promotions in December.Griffin Whitney and ChristopherBradley were each bumped up to principal atthe firm, while Elizabeth Nations was named asenior associate.Whitney joined the firm in 2007, whileBradley and Nations came aboard a year later.Whitney, earlier in his career, worked atTrimaran Capital Partners, which was also for-32 MERGERS & ACQUISITIONS February 2011

merly home to Mistral founder Andrew Heyer.He also put in stints with AEA Investors andJPMorgan. Bradley, meanwhile, joined Mistralfrom the Sage Group and also put in time atBanc of America Securities, where he focusedon M&A. Bradley spent time on the corporateside as well, as a manager in the strategygroup of Burger King and also spent time as aconsultant with PricewaterhouseCoopers.Navigation Capital Partners— The Atlantaprivate equity firm named Beth Burrusas a director of investor relations, a new roleat the firm.In the IR role, Burrus is expected to spearheadNavigation’s fundraising activity, overseeall contact with limited partners and help facilitatenew business opportunities.She previously held senior roles withSciens Capital, Apax Partners and Weiss, Peck& Greer and Bankers Trust.NXT Capital— The Chicago lender recruitedDave Allen to serve as a managing directorin the firm’s corporate finance group. Allen willoversee the firm’s cash-flow lending activitiesin the healthcare sector.Allen is arriving from Freeport Financial,a firm he co-founded in 2004. At Freeport, Allenalso oversaw the healthcare practice. Aspart of the move to NXT, he is bringing withhim Freeport vet Joe Gambino, who willserve as a vice president.Allen has put in nearly two decades ofwork in commercial finance. He spent timeat Genentech and also served as an aid to amember of Congress before entering the debtspace. He subsequently worked at City National,Heller Financial and GE Capital.Gambino, meanwhile, worked at GE Capitalbefore joining Freeport. Allen is based inthe firm’s Chicago office.Paine & Partners— The firm named AngeloDassios and Andrew Freeman aspartners in January.Both spent time at Paine & Partners’ predecessorfirm, Fox Paine. Dassios had joinedin 2002 after a stint at Goldman Sachs in thefirm’s investment bank and principal investmentarm. He had left, but rejoined Paine uponthe launch of Fund III.Freeman joined in 2005 from FremontPartners. He also put in stints at Michael Dell’sPE fund, MSD Capital, and at real estate-focusedWestbrook Partners.Palladium Partners-- The firm promotedthree senior members of its investment team,two of which were named as managing directors.Luis Zaldivar and Erik Scott wereelevated to managing directors from principals.Zaldivar joined the company in 2004and focuses on consumer, food and restaurantinvestments. Scott joined Palladium in 2005and focuses on business and industrial servicesinvestments.Rafael Ortiz was also promoted toprincipal from vice president. Ortiz joined thecompany in 2006 and focuses on health careand industrial services investments.Platinum Equity— The California PE shopbolstered its presence overseas, tapping RobertKlap to serve as a principal, joining MadsHansen in the firm’s London office.Klap arrives from UBS, where he oversawthe firm’s PE fund investments from the firm’swealth management group. Before that, he wasa PE portfolio manager at Shell Asset ManagementCo. and a fund manager at Mn Services.Both are investors in Platinum Equity funds.Klap will focus on Platinum’s investor relationsand capital raising program, an effortheaded by Mark Barnhill.Praesidian Capital— The mezzanine lenderappointed Glenn Harrison to managingdirector and James Heyer to vice president.Harrison has been with Praesidian forthree years. Previously, he was vice presidentat Merrill Lynch middle-market finance, structuringand underwriting senior debt investmentsin mid-market companies. He holds aBA in economics from Rutgers University.Heyer has been with Praesidian Capitalfor two years. Previously, he worked as an analystin the structured finance group at Goldman,Sachs & Co., focused on the automobileand equipment finance sectors. He has a BSfrom the Wharton School of the University ofPennsylvania.TA Associates— The Boston firm announceda series of promotions, appointing adirector, two principals and a handful of seniorvice presidents.Christopher Parkin was bumped upfrom a principal to a managing director. Parkin,who works out of the firm’s London office,specializes on financial services and consumerinvestments.He oversaw last year’s deal for CathKidston, among others. James Hart andNaveen Wadhera were each promoted toprincipal. Hart works out of the firm’s MenloPark location, targeting the healthcare, businessservices, financial and consumer sectors,while Wadhera heads the firm’s Indian operationsas a director of the the firm’s affiliatedMumbai office.Birker Bahnsen, James Werlin andTad Yanagi were all also promoted to seniorvice president.Technology Crossover Ventures— TheVC and growth investor announced the promotionsof Nari Ansari and Kapil Venkatachalamto vice presidents from seniorassociates. Both joined TCV in 2006 and workin the firm’s Palo Alto, Calif., headquarters.Ansari previously spent several years as abusiness analyst in the San Francisco officeof McKinsey & Co. Venkatachalam was aninvestment banker at Goldman, Sachs & Co.in New York.Tennenbaum Capital Partners— Theturnaround firm hired Lee Landrum as amanaging director.Landrum spent more than three yearsas a principal with the global credit alternativesteam at Carlyle Group. Previously, hewas managing director with Babson CapitalManagement LLC as part of its mezzanine andprivate-equity team.February 2011 MERGERS & ACQUISITIONS 33

The Data PagesA look back at 2010,as told by the numbers

Data Almanac Completed M&A2010 vs. 20092010 2009% of % of % of % ofAll M&A No. of Total Value Total No. of Total Value TotalActivity Deals No. ($bil) Value Deals No. ($bil) ValueDomestic Deals 4,637 68.2 535.1 68.0 4,099 69.9 544.6 75.5Cross-Border Acq. Into US 931 13.7 119.7 15.2 815 13.9 117.9 16.3US Acquisitions Overseas 1,235 18.2 132.3 16.8 948 16.2 58.9 8.2Total 6,803 100.0 787.0 100.0 5,862 100.0 721.4 100.0Divestitures only 2,137 31.4 293.3 37.3 1,978 33.7 214.0 29.7LBOs only 438 6.4 68.1 8.6 287 4.9 20.8 2.910-Year M&A Record2001 to 2010No. of % Value %Year Deals Change ($bil) Change2001 6,828 - 1,158.9 -2002 5,982 -12.4 629.5 -45.72003 6,640 11.0 532.7 -15.42004 7,763 16.9 870.0 63.32005 8,518 9.7 1,014.8 16.62006 9,686 13.7 1,439.6 41.92007 10,412 7.5 1,836.2 27.62008 8,442 -18.9 1,021.1 -44.42009 5,862 -30.6 721.4 -29.42010 6,803 16.1 787.0 9.1No. ofDeals12000100008000600040002000010-Year M&A Record2001 to 2010Number of DealsValue ($bil)2001 2002 2003 2004 2005 2006 2007 2008 2009 2010Value($bil)2000180016001400120010008006004002000February 2011 MERGERS & ACQUISITIONS 35

Data Almanac2010 League TablesMost Active By Number(Announced and Completed Deals)Most Active by Value(Announced and Completed Deals)AdvisorNo. of DealsAdvisorValue ($bil)Goldman Sachs & Co 230JP Morgan 188Morgan Stanley 182Bank of America Merrill Lynch 167Houlihan Lokey 156Credit Suisse 153Lazard 133UBS 128Barclays Capital 126Citi 115Jefferies & Co Inc 103Deutsche Bank AG 97RBC Capital Markets 75Rothschild 70Moelis & Co 64Goldman Sachs & Co 426.1JP Morgan 363.8Morgan Stanley 348.2Barclays Capital 301.8Credit Suisse 229.0Bank of America Merrill Lynch 215.2Citi 198.9Deutsche Bank AG 194.8UBS 164.9Lazard 148.1Evercore Partners 129.4Jefferies & Co Inc 82.5HSBC Holdings PLC 77.0Perella Weinberg Partners LP 72.9Blackstone Group LP 72.6Mid-Market - Most Active by Number(Announced and Completed Deals < $500m)Mid-Market - Most Active by Value(Announced and Completed Deals < $500m)AdvisorDealsAdvisorValue ($bil)Goldman Sachs & Co 66Houlihan Lokey 60Morgan Stanley 57Credit Suisse 55JP Morgan 53UBS 53Bank of America Merrill Lynch 51Jefferies & Co Inc 47Lazard 45Citi 44RBC Capital Markets 35Deutsche Bank AG 32Macquarie Group 29Stifel Financial Corp 26Sandler O’Neill Partners 26Goldman Sachs & Co 17.4JP Morgan 15.3Credit Suisse 14.3Morgan Stanley 12.4Bank of America Merrill Lynch 12.3UBS 11.6Citi 10.4Lazard 9.5Jefferies & Co Inc 9.4Deutsche Bank AG 9.4Houlihan Lokey 8.5Barclays Capital 5.9Macquarie Group 5.7RBC Capital Markets 5.5Stifel Financial Corp 4.436 MERGERS & ACQUISITIONS February 2011

Adviser League TablesSmall Market - Most Active By Number(Announced and Completed Deals < $250m)Small Market - Most Active by Value(Announced and Completed Deals < $250m)Advisor No. of DealsAdvisorValue ($bil)Houlihan Lokey 51Morgan Stanley 35Jefferies & Co Inc 33UBS 31Goldman Sachs & Co 30Lazard 29Credit Suisse 29RBC Capital Markets 28Bank of America Merrill Lynch 25Sandler O’Neill Partners 25Citi 24JP Morgan 20Stifel Financial Corp 19Keefe Bruyette & Woods Inc 19William Blair & Co 19Houlihan Lokey 5.3Credit Suisse 5.1Morgan Stanley 5.0Jefferies & Co Inc 4.7Goldman Sachs & Co 4.3Lazard 4.2UBS 3.7Citi 3.5Bank of America Merrill Lynch 3.2RBC Capital Markets 3.1JP Morgan 3.0Sandler O’Neill Partners 2.5Deutsche Bank AG 2.5William Blair & Co 2.1Rothschild 1.9Most Active By Fee Income(Value of Disclosed Fees)Advisor Fees ($Mil) DealsGoldman Sachs & Co 819.5 37JP Morgan 530.8 22Morgan Stanley 451.7 17Bank of America Merrill Lynch 438.3 25Citi 358.0 11Barclays Capital 265.4 14Evercore Partners 233.6 6Lazard 233.0 7Centerview Partners LLC 171.9 4UBS 171.2 11Credit Suisse 169.0 11Perella Weinberg Partners LP 158.9 8Deutsche Bank AG 149.0 12Jefferies & Co Inc 129.6 9Greenhill & Co, LLC 122.0 5Fee Income 2001-2010(Value of Disclosed Fees)Advisor Fees ($mil) DealsGoldman Sachs & Co 7,486.7 361JP Morgan 5,471.7 332Bank of America Merrill Lynch 5,389.7 335Morgan Stanley 4,926.0 249Citi 3,726.3 198Barclays Capital 3,065.1 198Credit Suisse 2,749.4 191UBS 2,049.7 147Lazard 1,650.9 110Deutsche Bank AG 1,633.3 116Evercore Partners 980.8 42Wells Fargo & Co 741.4 85Greenhill & Co, LLC 681.8 32Sandler O’Neill Partners 586.1 148Houlihan Lokey 536.3 100February 2011 MERGERS & ACQUISITIONS 37

Data Almanac2010 League TablesFairness Opinions - Most Active by Number(Announced and Completed Deals)Advisor Deals Value ($bil)JP Morgan 58 194.1Goldman Sachs & Co 55 210.7Morgan Stanley 52 171.1Houlihan Lokey 47 30.8Bank of America Merrill Lynch 37 80.0Credit Suisse 32 76.8UBS 31 91.4Barclays Capital 31 144.5Citi 27 90.7Deutsche Bank AG 22 86.7Tudor Pickering & Co LLC 17 9.0Sandler O’Neill Partners 17 3.6RBC Capital Markets 16 11.0Jefferies & Co Inc 16 54.8Evercore Partners 14 66.2Mid-Market Fairness Opinions(Announced and Completed Deals Deals > $500m)Advisor Deals Value ($bil)Houlihan Lokey 28 3.6Sandler O’Neill Partners 15 1.6UBS 14 3.2Goldman Sachs & Co 14 3.6JP Morgan 14 4.0Bank of America Merrill Lynch 11 3.0Morgan Stanley 10 2.0Stifel Financial Corp 10 2.1Jefferies & Co Inc 9 1.8Macquarie Group 8 1.9Keefe Bruyette & Woods Inc 8 1.2Raymond James Financial Inc 7 .9RBC Capital Markets 7 .9Tudor Pickering & Co LLC 7 1.9Citi 7 1.3Legal - Most Active by Number(Announced and Completed Deals)Firm Deals Value ($bil)Jones Day 237 68.5Kirkland & Ellis 193 61.8Latham & Watkins 186 211.3Skadden 179 269.2DLA Piper 162 12.9Simpson Thacher & Bartlett 138 212.0Sullivan & Cromwell 137 201.8Wilson Sonsini Goodrich & Rosati 120 47.2Weil Gotshal & Manges 119 144.6Cleary Gottlieb Steen & Hamilton 107 186.7Gibson Dunn & Crutcher 106 135.2Dorsey & Whitney LLP 103 7.0Fenwick & West LLP 101 12.9Hogan Lovells 93 30.8K&L Gates 92 10.6Mid Market Legal - Most Active by Number(Announced and Completed Deals < $500m)Firm Deals Value ($bil)Kirkland & Ellis 73 13.2Latham & Watkins 72 14.0Skadden 70 13.7Jones Day 66 11.1Wilson Sonsini Goodrich & Rosati 51 6.0Simpson Thacher & Bartlett 50 12.4Sullivan & Cromwell 49 10.9DLA Piper 48 5.1Weil Gotshal & Manges 44 7.6Hogan Lovells 39 5.3Baker & McKenzie 39 6.2Shearman & Sterling LLP 37 7.6Dewey & LeBoeuf LLP 37 8.1Morrison & Foerster 34 5.3O’Melveny & Myers 33 5.538 MERGERS & ACQUISITIONS February 2011

Industry Breakdown - Completed DealsDomestic Deals Cross-Border Into US US Acq. Overseas TotalValue Value Value ValueIndustry Deals ($mil) Deals ($mil) Deals ($mil) Deals ($mil)Advertising Services 27 970 3 23 21 42 51 1,035Aerospace and Aircraft 15 2,988 2 0 2 0 19 2,988Agriculture, Forestry, and Fishing 14 344 7 16 7 307 28 667Air Transportation and Shipping 18 7,384 3 0 5 0 26 7,384Amusement and Recreation Services 50 569 6 300 11 579 67 1,448Business Services 942 51,422 162 7,292 225 5,955 1,329 64,670Chemicals and Allied Products 59 7,299 34 869 32 863 125 9,031Commercial Banks, Bank Holding Companies 196 4,945 19 600 12 1,745 227 7,290Communications Equipment 24 1,160 7 1,366 9 4,478 40 7,004Computer and Office Equipment 33 17,765 5 593 9 323 47 18,681Construction Firms 69 1,453 15 569 14 656 98 2,677Credit Institutions 44 5,739 10 464 9 606 63 6,809Drugs 83 15,476 37 13,047 50 14,831 170 43,354Educational Services 28 683 1 92 8 796 37 1,571Electric, Gas, and Water Distribution 119 47,087 28 3,565 24 3,659 171 54,311Electronic and Electrical Equipment 105 13,961 25 796 50 5,388 180 20,145Food and Kindred Products 101 36,866 29 9,641 25 26,004 155 72,511Health Services 246 13,347 10 1,393 20 2,717 276 17,457Holding Companies, Except Banks 13 228 5 322 16 633 34 1,183Hotels and Casinos 100 8,779 12 106 16 1,141 128 10,025Insurance 138 22,326 12 3,543 21 1,236 171 27,105Investment & Commodity Firms/Dealers/Exch. 138 12,096 50 10,752 54 8,102 242 30,950Leather and Leather Products 11 291 1 0 - - 12 291Legal Services 10 0 1 0 3 0 14 0Machinery 91 21,532 21 441 48 1,356 160 23,330Measuring, Medical, Photo Equipment; Clocks 125 14,065 35 8,452 46 3,292 206 25,809Metal and Metal Products 93 4,060 17 302 34 1,449 144 5,811Mining 43 2,812 50 4,598 34 2,319 127 9,728Miscellaneous Manufacturing 18 809 6 212 7 31 31 1,052Miscellaneous Retail Trade 89 6,905 8 250 20 1,196 117 8,351Miscellaneous Services 5 0 3 83 1 0 9 83Motion Picture Production and Distribution 27 1,242 4 70 8 137 39 1,449Oil and Gas; Petroleum Refining 173 87,128 58 17,194 30 7,186 261 111,508Other Financial 2 0 - - 2 3,019 4 3,019Paper and Allied Products 21 2,045 3 66 13 398 37 2,510Personal Services 13 85 1 0 2 361 16 446Prepackaged Software 416 14,081 70 10,917 91 2,638 577 27,636Printing, Publishing, and Allied Services 52 1,428 9 287 9 1,539 70 3,254Public Administration 9 535 - - 1 142 10 677Radio and Television Broadcasting Stations 37 5,874 4 5,200 9 6,421 50 17,495Real Estate; Mortgage Bankers and Brokers 206 18,663 33 3,276 28 3,821 267 25,760Repair Services 30 397 6 30 7 260 43 687Retail Trade-Eating and Drinking Places 37 6,110 2 0 9 236 48 6,346Retail Trade-Food Stores 22 364 5 460 6 1,347 33 2,171Retail Trade-General Merchandise & Apparel 18 1,846 4 65 12 1,516 34 3,427Retail Trade-Home Furnishings 9 11 1 0 5 292 15 303Rubber and Miscellaneous Plastic Products 30 1,407 6 6,289 15 719 51 8,415Sanitary Services 20 697 3 159 6 92 29 948Savings and Loans, Mutual Savings Banks 4 47 1 301 - - 5 348Soaps, Cosmetics and Personal-Care Products 20 1,180 4 1,906 6 503 30 3,589Social Services 23 810 3 611 4 0 30 1,421Stone, Clay, Glass, and Concrete Products 22 510 6 93 9 938 37 1,541Telecommunications 76 18,704 11 939 23 859 110 20,502Textile and Apparel Products 24 706 3 524 11 5,337 38 6,567Transportation and Shipping (except air) 70 39,447 22 114 21 2,021 113 41,582Transportation Equipment 43 1,324 11 950 15 29 69 2,303Wholesale Trade-Durable Goods 102 3,249 21 42 34 206 157 3,497Wholesale Trade-Nondurable Goods 49 2,685 12 309 16 2,538 77 5,532Wood Products, Furniture, and Fixtures 35 1,160 4 165 10 0 49 1,325February 2011 MERGERS & ACQUISITIONS 39

Data AlmanacCross-Border Deals involving US Targets2001 to 2010Percentage Value PercentageYear Deals of Total M&A ($bil) of Total M&A2001 983 14.4 205.6 17.72002 761 12.7 79.8 12.72003 791 11.9 71.5 13.42004 880 11.3 85.8 9.92005 1,130 13.3 112.6 11.12006 1,270 13.1 193.3 13.42007 1,522 14.6 332.5 18.12008 1,266 15.0 324.7 31.82009 815 13.9 117.9 16.32010 931 13.7 119.7 15.2No. ofDeals180016001400120010008006004002000Cross-Border Deals involving US Targets2001 to 2010No. of DealsValue ($bil)2001 2002 2003 2004 2005 2006 2007 2008 2009 2010Value($bil)350300250200150100500US Acquisitions Overseas2001 to 2010US Acquisitions Overseas2001 to 2010Percentage Value PercentageYear Deals of Total M&A ($bil) of Total M&ANo. ofDeals1600Value($bil)3502001 1,230 18.0 118.7 10.22002 899 15.0 88.3 14.02003 970 14.6 94.4 17.72004 1,259 16.2 131.1 15.12005 1,317 15.5 153.1 15.12006 1,552 16.0 216.0 15.02007 1,715 16.5 306.6 16.72008 1,461 17.3 153.7 15.12009 948 16.2 58.9 8.22010 1,235 18.2 132.3 16.81400120010008006004002000No. of DealsValue ($bil)2001 2002 2003 2004 2005 2006 2007 2008 2009 201030025020015010050040 MERGERS & ACQUISITIONS February 2011

Completed Divestitures2001 to 2010Completed Divestitures2001 to 2010Percentage Value PercentageYear Deals of Total M&A ($bil) of Total M&ANo. ofDeals3500Value($bil)6002001 2,541 37.2 255.7 22.12002 2,331 39.0 311.3 49.52003 2,607 39.3 217.5 40.82004 2,646 34.1 273.4 31.42005 2,844 33.4 327.0 32.22006 3,094 31.9 427.2 29.72007 3,036 29.2 573.1 31.22008 2,573 30.5 289.9 28.42009 1,978 33.7 214.0 29.72010 2,137 31.4 293.3 37.3300025002000150010005000No. of DealsValue ($bil)2001 2002 2003 2004 2005 2006 2007 2008 2009 20105004003002001000February 2011 MERGERS & ACQUISITIONS 41

Data AlmanacThe Leveraged Buyout Market2001 to 2010PercentagePercentageYear Deals of Total M&A Value ($bil) of Total M&A2001 172 2.5 23.0 2.02002 187 3.1 23.4 3.72003 197 3.0 52.4 9.82004 366 4.7 87.0 10.02005 520 6.1 144.9 14.32006 754 7.8 257.7 17.92007 815 7.8 530.0 28.92008 576 6.8 120.0 11.72009 287 4.9 20.8 2.92010 438 6.4 68.1 8.6Data provide by Thomson ReutersPrivate Equity FundraisingCapitalRaised4000003500003000002500002000001500001000005000002004 2005 2006 2007 2008 2009 2010Numberof Funds400350300250200150100500Capital Raised ($M)# of Funds ClosedData provide by Pitchbook Data Inc.42 MERGERS & ACQUISITIONS February 2011

Private Equity Fundraising - Top 50 Funds Raised in 2010Private Equity Firm Fund Fund Type Close Date Fund Size ($mil)Oaktree Capital Management OCM Opportunities Fund VIII Distressed 19-Aug 4,400.00Energy Capital Partners Energy Capital Partners II Infrastructure 17-Aug 4,335.00Madison Dearborn Partners Madison Dearborn Capital Partners VI Buyout 4-May 4,100.00Alinda Capital Partners Alinda Infrastructure Fund II Infrastructure 31-Jan 4,000.00Oaktree Capital Management OCM Principal Opportunities Fund V Buyout 1-Feb 3,300.00GSO Capital Partners Blackstone/GSO Capital Solutions Fund Distressed 9-Jul 3,250.00The Blackstone Group Blackstone/GSO Capital Solutions Fund Distressed 9-Jul 3,250.00Pantheon Ventures Pantheon Global Secondary Fund IV LP Secondary 7-Oct 3,000.00The Carlyle Group Carlyle Asia Partners III Buyout 13-Apr 2,550.00New Enterprise Associates New Enterprise Associates 13 Venture Capital 5-Jan 2,500.00Centerbridge Partners Centerbridge Special Credit Partners Distressed 20-Apr 2,000.00Landmark Partners Landmark Equity Partners XIV LP Secondary 7-Apr 1,930.00Apollo Global Management Apollo European Principal Finance Fund Distressed 1-Feb 1,916.86Avista Capital Partners Avista Capital Partners II Buyout 18-Mar 1,800.00Sheridan Production Partners Sheridan Production Partners II Corporate Development 29-Nov 1,800.00Southern Cross Southern Cross Latin America Private Equity Fund IV Buyout 27-Sep 1,680.00Advent International Latin America Private Equity Fund V Buyout 12-Apr 1,650.00Littlejohn & Company Littlejohn Fund IV Buyout 1-Nov 1,340.00Adams Street Partners Adams Street Partners 2010 Global Offering Program Fund of Funds 26-May 1,300.00Veritas Capital Veritas Capital Fund IV Buyout 8-Jul 1,225.00Angelo Gordon & Company AG Capital Recovery Partners VII Distressed 1-Apr 1,200.00Wellspring Capital Management Wellspring Capital Partners V Buyout 3-Nov 1,200.00Bayside Capital H.I.G. Bayside Loan Opportunity Fund II Distressed 30-Jul 1,100.00H.I.G. Capital H.I.G. Bayside Loan Opportunity Fund II Distressed 30-Jul 1,100.00The Carlyle Group Carlyle Global Financial Services Partners Buyout 6-Apr 1,100.00Newbury Partners Newbury Equity Partners II LP Secondary 21-Oct 1,024.00Avenue Capital Group Avenue Special Situations Fund VI Distressed 28-Oct 1,000.00Resource Capital Funds Resource Capital Fund V Buyout 3-May 1,000.00Prudential Capital Group Prudential Capital Partners III Mezzanine 20-Jan 965.00Starwood Capital Group Starwood Hospitality Fund II Buyout 31-Mar 965.00Sankaty Advisors Sankaty Middle Market Opportunities Fund Mezzanine 1-Apr 904.00JMI Equity JMI Equity Fund VII Buyout 30-Nov 875.00JP Morgan Asset Management Asian Infrast. & Related Resources Opportunity Fund Infrastructure 2-Feb 858.60The Sterling Group Sterling Group Partners III Buyout 16-Mar 820.00Castle Harlan Castle Harlan Partners V Buyout 27-Jul 800.00EnCap Flatrock Midstream EnCap Energy Infrastructure Fund Infrastructure 19-Apr 791.60EnCap Investments EnCap Energy Infrastructure Fund Infrastructure 19-Apr 791.60ABRY Partners ABRY Senior Equity III Mezzanine 19-Apr 750.00Battery Ventures Battery Ventures IX Venture Capital 8-Mar 750.00Institutional Venture Partners Institutional Venture Partners XIII Venture Capital 31-Aug 750.00JLL Partners JLL Partners Fund VI Buyout 1-Feb 750.00Oak Investment Partners Oak Investment Partners XIII Venture Capital 1-Jan 725.00Audax Group Audax Mezzanine Fund III Mezzanine 21-Jun 700.00Andreessen Horowitz Andreessen Horowitz Fund II Venture Capital 3-Nov 650.00LBC Credit Partners LBC Credit Partners II Mezzanine 1-Feb 645.00Emerging Capital Partners ECP Africa Fund III PE Growth-Expansion 26-Jul 613.00Merit Capital Partners Merit Mezzanine Fund V Mezzanine 26-Jul 612.50Kayne Anderson Capital Advisors Kayne Anderson Mezzanine Partners Mezzanine 2-Nov 600.00Leeds Equity Partners Leeds Equity Partners V Buyout 1-Jun 600.00RoundTable Healthcare Partners RoundTable Healthcare Partners Fund III Buyout 16-Jul 600.00Data provide by Pitchbook Data Inc.February 2011 MERGERS & ACQUISITIONS 43

Data AlmanacThe Top 200 by Purchase PriceAcquirer Target Target Advisors Date Value ($mil)Exxon Mobil Corp XTO Energy Inc Barclays Capital, Jefferies & Co Inc Jun-10 40,298Berkshire Hathaway Inc Burlington Northern Santa Fe Goldman Sachs & Co, Evercore Partners Feb-10 36,724Kraft Foods Inc Cadbury PLC Morgan Stanley, Goldman Sachs & Co, Apr-10 18,769UBS Investment BankMetLife Inc American Life Insurance Co Inc Morgan Stanley, Goldman Sachs & Co, Nov-10 16,054Citi, Blackstone Group LPCoca-Cola Co Coca-Cola Entr Inc-NA Bus Greenhill & Co, LLC, Oct-10 13,441Credit Suisse Group, LazardWilliams Partners LP The Williams Cos Inc-Gas Barclays Capital, Citi Feb-10 11,750Schlumberger Ltd Smith International Inc UBS Investment Bank Aug-10 11,042Enterprise Products Partners Enterprise GP Holdings LP Morgan Stanley Nov-10 9,001Frontier Communications Corp Verizon Commun Inc-Local Barclays Capital, JP Morgan Jul-10 8,583Xerox Corp Affiliated Computer Svcs Inc Citi, Evercore Partners Feb-10 8,374PPL Corp E.ON US LLC Goldman Sachs & Co, Blackstone Group LP Nov-10 7,625Abbott Laboratories Solvay Pharmaceuticals SA Citi, Morgan Stanley, Rothschild, Feb-10 7,603Deutsche Bank AGOracle Corp Sun Microsystems Inc Credit Suisse Jan-10 7,305Merck KGaA Millipore Corp Goldman Sachs & Co Jul-10 6,127Sheffield Acquisition Corp Sybase Inc Bank of America Merrill Lynch Jul-10 5,959PepsiCo Inc Pepsi Bottling Group Inc Morgan Stanley, Perella Weinberg Partners Feb-10 5,422Baker Hughes Inc BJ Services Co Greenhill & Co, LLC, Apr-10 5,240Bank of America Merrill LynchLiberty Media Corp Unitymedia GmbH UBS Investment Bank, Morgan Stanley, Jan-10 5,195Nomura, HypoVereinsbank, Credit SuisseAlps Merger Corp Hewitt Associates LLC Citi Oct-10 4,804Investor Group General Growth Properties Inc UBS Investment Bank, Nov-10 4,555Houlihan Lokey, Miller BuckfireReynolds Group Holding Ltd Pactiv Corp Credit Suisse Group, Nov-10 4,517Perella Weinberg Partners LPCF Industries Holdings Inc Terra Industries Inc Credit Suisse Group Apr-10 4,067Investor Group IMS Health Inc Foros, Lazar, Deutsche Bank AG Feb-10 4,038Ruby Acquisition Inc OSI Pharmaceuticals Inc Lazard, Centerview Partners LLC, Jun-10 4,031Bank of America Merrill LynchKDDI Corp Liberty Global-Subsidiaries(3) JP Morgan Feb-10 4,000Extended Stay America Inc SPV Extended Stay America Inc Lazard, JP Morgan, Houlihan Lokey Oct-10 3,925Apache Corp Mariner Energy Inc Credit Suisse Group Nov-10 3,916Biovail Corp Valeant Pharm Intl Inc Goldman Sachs & Co, Jefferies & Co Inc Sep-10 3,717Abbott Laboratories Piramal Healthcare Ltd- Sep-10 3,713Nestle SA Kraft Foods Inc-North American Lazard, Houlihan Lokey, Mar-10 3,700Centerview Partners, Citi, Deutsche BankUAL Corp Continental Airlines Inc Lazard, Morgan Stanley, Oct-10 3,689UBS Investment BankCarlyle Group LLC NBTY Inc Centerview Partners LLC, Oct-10 3,640Bank of America Merrill LynchCelgene Corp Abraxis BioScience Inc Lazard, Goldman Sachs & Co, Oct-10 3,578Bank of America Merrill Lynch44 MERGERS & ACQUISITIONS February 2011

The Top 200 by Purchase PriceAcquirer Target Target Advisors Date Value ($mil)CONSOL Energy Inc Dominion Expl & Prodn Inc Barclays Capital Apr-10 3,475The Stanley Works The Black & Decker Corp JP Morgan Mar-10 3,470Cisco Systems Inc Tandberg ASA JP Morgan Apr-10 3,426Goldcorp Inc Andean Resources Ltd BMO Capital Markets Dec-10 3,374Interactive Data Corp SPV Interactive Data Corp Goldman Sachs & Co, Foros Jul-10 3,330General Motors Co AmeriCredit Corp JP Morgan, Credit Suisse Group, Oct-10 3,314Jefferies & Co IncBlue Acquisition Sub Inc Burger King Holdings Inc Morgan Stanley, Goldman Sachs & Co Oct-10 3,302Creditors Spansion Inc Barclays Capital May-10 3,270Creditors Spansion Inc Barclays Capital, Houlihan Lokey May-10 3,270Brookfield Asset Mgmt Inc General Growth Properties Inc UBS Investment Bank, Miller Buckfire, Nov-10 3,270Houlihan LokeyApache Corp BP PLC-Wstn Canadian Upstream Standard Chartered PLC Oct-10 3,250Hewlett-Packard Co 3Com Corp Goldman Sachs & Co Apr-10 3,183Phillips-Van Heusen Corp Tommy Hilfiger Corp Morgan Stanley, Citi, Credit Suisse Group May-10 3,160Apache Corp BP PLC-Permian Basin Assets Standard Chartered PLC Aug-10 3,100Investor Group RBS WorldPay UBS Investment Bank, RBS Hoare Govett Dec-10 3,019Denbury Resources Inc Encore Acquisition Co Barclays Capital Mar-10 2,829COV Delaware Corp ev3 Inc JP Morgan, Piper Jaffray Cos Jul-10 2,692State Street Corp Intesa Sanpaolo SpA-Security Rothschild, Banca IMI May-10 2,495AT&T Inc Verizon Wireless Inc-Cellular Morgan Stanley Jun-10 2,350Simon Property Grp Inc Prime Outlets Acquisition Co Citi Aug-10 2,325Bank of New York Mellon Corp PNC Global Invest Servicing Citi, Morgan Stanley Jul-10 2,310Total E&P USA Inc Chesapeake Energy-Upstream Jefferies & Co Inc Jan-10 2,250EMC Corp Isilon Systems Inc Morgan Stanley, Qatalyst Partners Dec-10 2,248PRISA Liberty Acq Hldgs Corp Tegris Advisors, Citi, Barclays Capital Nov-10 2,220Noble Corp FDR Holdings Ltd Goldman Sachs & Co, Jul-10 2,160FBR Capital Markets CorpMcKesson Corp US Oncology Inc Morgan Stanley, Deutsche Bank AG Dec-10 2,160Hexagon AB Intergraph Corp Goldman Sachs & Co Oct-10 2,125Inergy LP Inergy Holdings LP Tudor Pickering & Co LLC Nov-10 2,068Hewlett-Packard Co 3PAR Inc Qatalyst Partners Sep-10 2,065PepsiCo Inc PepsiAmericas Inc Goldman Sachs & Co Feb-10 2,060GE Universal Studios Holding III Barclays Capital, Societe Generale Sep-10 2,000Tyco International Ltd Brink’s Home Security Holdings Morgan Stanley May-10 1,973Universal Health Services Inc Psychiatric Solutions Inc Goldman Sachs & Co Nov-10 1,965Visa Inc CyberSource Corp Goldman Sachs & Co Jul-10 1,964Onyx Acquisition Corp Netezza Corp Qatalyst Partners Nov-10 1,931Investor Group First Republic Bank,California Bank of America Merrill Lynch Jul-10 1,860United Technologies Corp GE Security Inc JP Morgan, Citi Mar-10 1,820Bain Capital LLC Gymboree Corp Goldman Sachs & Co, Nov-10 1,806Peter J. Solomon Co LtdPilot Travel Centers LLC Flying J Inc Houlihan Lokey, Blackstone Group LP Jul-10 1,800Sanofi-Aventis SA Chattem Inc Morgan Stanley Feb-10 1,781Watson Wyatt Worldwide Inc Towers Perrin Forster & Crosby Goldman Sachs & Co Jan-10 1,756Healthscope Ltd SPV Healthscope Ltd Goldman Sachs JBWere Pty Ltd, Lazard Sep-10 1,724February 2011 MERGERS & ACQUISITIONS 45

Data AlmanacThe Top 200 by Purchase PriceAcquirer Target Target Advisors Date Value ($mil)GS Capital Partners LP Michael Foods Inc Bank of America Merrill Lynch Jun-10 1,700JPMorgan Chase & Co JPMorgan Cazenove Ltd Lazard Jan-10 1,666SandRidge Energy Inc Arena Resources Inc SunTrust Robinson Humphrey, Jul-10 1,661Tudor Pickering & Co LLCConcho Resources Inc Marbob Energy Corp-Oil & Gas Oct-10 1,659Bain Capital Partners LLC Styron Corp Deutsche Bank AG, HSBC Holdings PLC Jun-10 1,630New Development Holdings LLC Conectiv Energy Inc Morgan Stanley, Credit Suisse Jul-10 1,630RRI Energy Inc Mirant Corp JP Morgan Dec-10 1,623JPMorgan Chase & Co RBS Sempra Commodities LLP-Ops Lazard, RBS, RBS Hoare Govett Ltd Jul-10 1,600China Investment Corp{CIC} AES Corp Deutsche Bank AG, Citi, Credit Suisse Group Mar-10 1,581Triumph Group Inc Vought Aircraft Industries Inc Evercore Partners, Barclays Capital Jun-10 1,574Hewlett-Packard Co ArcSight Inc Morgan Stanley Oct-10 1,570Investor Group Clearwire Corp Morgan Stanley Mar-10 1,563Ontex NV SPV Ontex NV Bank of America Merrill Lynch, Oct-10 1,552UBS Investment BankMan Group PLC GLG Partners Inc Goldman Sachs & Co, Moelis & Co Oct-10 1,544MSCI Inc RiskMetrics Group Inc Evercore Group Jun-10 1,543Agilent Technologies Inc Varian Inc JP Morgan May-10 1,512Mitsui E&P USA LLC Anadarko Petro Corp-Shale Asts May-10 1,500Rutherfurd Acquisitions Ltd Chloride Group PLC Citi, Investec Sep-10 1,490Shiseido Co Ltd Bare Escentuals Inc Goldman Sachs & Co Mar-10 1,456Bunge Ltd Moema Group Mills,Brazil Feb-10 1,427Dividend Capital Total Realty iStar Financial Inc-Office HFF Securities LP Jun-10 1,400Intl Bus Machines Corp{IBM} Sterling Commerce Inc Greenhill & Co, LLC Aug-10 1,400TPG Capital LP Vertafore Inc Barclays Capital Jul-10 1,400Invesco Ltd Morgan Stanley-Ret Ast Mgmt Bu Morgan Stanley Jun-10 1,374Cablevision Systems Corp Bresnan Communications LLC UBS Investment Bank, Credit Suisse Group Dec-10 1,365Wal-Mart de Mexico SAB de CV Wal-Mart Centroamerica JP Morgan Feb-10 1,347Fairfax Financial Holdings Ltd Zenith National Insurance Corp Bank of America Merrill Lynch May-10 1,319Adecco SA MPS Group Inc Bank of America Merrill Lynch Jan-10 1,310Allscripts-Misys Healthcare Eclipsys Corp Perella Weinberg Partners LP Sep-10 1,305Hewlett-Packard Co Palm Inc Goldman Sachs & Co, Qatalyst Partners Jul-10 1,303Asteroid Subsidiary Corp AGA Medical Holdings Inc Piper Jaffray Cos Nov-10 1,300Sociedad Pesquisa E Producao Block 32 Offshore,Angola Standard Chartered PLC Feb-10 1,300Bucyrus International Inc Terex Corp-Mining Business Goldman Sachs & Co Feb-10 1,300AP Moller Maersk AS Devon Energy Corp-Oil Ppty JP Morgan, Scotia Capital Inc Mar-10 1,300TPG Capital LP American Tire Distributors Inc Bank of America Merrill Lynch, Jun-10 1,300Deutsche Bank AGCorn Products Intl Inc National Starch LLC Morgan Stanley Oct-10 1,300Hellman & Friedman LLC Associated Materials Inc Deutsche Bank AG, Barclays Capital Oct-10 1,300UIL Holdings Corp Southern Connecticut Gas Credit Suisse Group Nov-10 1,296Micron Technology Inc Numonyx BV Morgan Stanley, Deutsche Bank AG, May-10 1,284UBS Investment BankSymantec Corp VeriSign Inc-Identity Business JP Morgan Aug-10 1,280ABRY Partners LLC RCN Corp Deutsche Bank AG, Waller Capital Aug-10 1,273TransDigm Group Inc McKechnie Aerospace Morgan Stanley, Jefferies & Co Inc Dec-10 1,27046 MERGERS & ACQUISITIONS February 2011

The Top 200 by Purchase PriceAcquirer Target Target Advisors Date Value ($mil)Berkshire Hathaway Inc Swiss Reinsurance Co Ltd-US Jan-10 1,260Marfrig Alimentos SA Keystone Foods LLC Deutsche Bank AG, Goldman Sachs & Co Oct-10 1,260Tyco Electronics Minnesota Inc ADC Telecommunications Inc Morgan Stanley, Houlihan Lokey Dec-10 1,237Bemis Co Inc Alcan Packaging Food Americas Morgan Stanley Mar-10 1,200Enterprise Products Partners M2 Midstream LLC-Natural Gas Barclays Capital May-10 1,200Undisclosed Joint Venture Co Sunwest Mgmt Inc-Senior Living Aug-10 1,200Endo Pharmaceuticals Holdings Qualitest Pharmaceuticals Inc JP Morgan Dec-10 1,200Grupo Televisa SAB Univision Communications Inc Guggenheim Securities LLC Dec-10 1,200Ascent Media Group Inc Monitronics Inc Citi, Moelis & Co Dec-10 1,200Ocwen Loan Servicing LLC Barclays-HomEq Servicing Bus Barclays Capital Sep-10 1,197Ralcorp Holdings Inc American Italian Pasta Co Evercore Partners Jul-10 1,163Windstream Corp Iowa Telecom Services Inc JP Morgan Jun-10 1,154Barclays Bank PLC Chesapeake Energy Corp-Barnett Jefferies & Co Inc Sep-10 1,150Investor Group Gas Natural SDG SA-Distn Asts JP Morgan, UBS Investment Bank, Citi Apr-10 1,147Reliance Eagleford Upstream LP Pioneer,Newpek-Eagle Ford Bank of America Merrill Lynch, Jun-10 1,145Tudor Pickering & Co LLCHoneywell Holding France SAS Sperian Protection SA Credit Agricole CIB, Rothschild Sep-10 1,137Altegrity Inc Kroll Inc Perella Weinberg Partners LP Aug-10 1,130Live Nation Inc Ticketmaster Entertainment Inc JP Morgan, Allen & Co Inc Jan-10 1,127Walgreen Co Duane Reade Inc Goldman Sachs & Co, Apr-10 1,100Bank of America Merrill LynchSedgwick CMS Holdings Inc SPV Sedgwick CMS Holdings Inc Goldman Sachs & Co May-10 1,100ACE Ltd Rain & Hail Ins Svcs Inc Morgan Stanley Dec-10 1,100SSI Investments III Ltd SkillSoft PLC Credit Suisse Group May-10 1,080CNOOC International Ltd Chesapeake-Oil,Gas Asts,TX Jefferies & Co Inc Nov-10 1,080Goldman Sachs Group Inc Endesa Gas SA JP Morgan, Citi, Mediobanca Dec-10 1,076Schlumberger Ltd Geoservices SA Goldman Sachs & Co, Bucephale Finance Apr-10 1,070Apache Corp Devon Energy Corp-Gulf of Bank of America Merrill Lynch Jun-10 1,050Hess Corp TRZ Energy LLC-Bakken Acreage Tudor Pickering & Co LLC Dec-10 1,050Clayton Dubilier & Rice LLC Univar NV JP Morgan, Deutsche Bank AG, Nov-10 1,028Goldman Sachs, Moelis & Co, BarclayslMarathon Oil Corp SPV Marathon Petroleum Co LP-Asts Morgan Stanley Dec-10 1,025Blackstone RE Advisors LP ProLogis-Property Portfolio Nov-10 1,020Energy XXI(Bermuda)Ltd Exxon Mobil Corp-Certain Dec-10 1,010Crestwood Midstream Partners Quicksilver Gas Services LP UBS Investment Bank Oct-10 1,001Ameriprise Financial Inc Columbia Management Group Bank of America Merrill Lynch May-10 1,000ABB Ltd Ventyx Inc Credit Suisse Group, Atlas Capital IB LLC Jun-10 1,000CONSOL Energy Inc CNX Gas Corp Lazard Jun-10 989Cerberus Capital Management LP DynCorp International LLC Goldman Sachs & Co Jul-10 988Madison Dearborn Partners LLC Bway Holding Co Goldman Sachs & Co Jun-10 987Lion Capital LLP Bumble Bee Foods LLC JP Morgan, Wells Fargo & Co, Dec-10 980Jefferies & Co IncMassey Energy Co Cumberland Resources Corp UBS Investment Bank Apr-10 961CGI Group Inc Stanley Inc Sagent Advisors Inc Aug-10 9403M Co Cogent Inc Credit Suisse Securities (USA), Dec-10 933Goldman Sachs & CoFebruary 2011 MERGERS & ACQUISITIONS 47

Data AlmanacThe Top 200 by Purchase PriceAcquirer Target Target Advisors Date Value ($mil)Bunge Ltd Usina Moema Acucar e Alcool Banco Itau SA Feb-10 932Boston Properties Inc John Hancock Tower,Boston Dec-10 930Laboratory Corp of America Genzyme Genetics Credit Suisse Group, Goldman Sachs & Co Dec-10 925The Williams Cos Inc Bakken Oil Property,ND Barclays Capital Dec-10 925Gentiva Health Services Inc Odyssey HealthCare Inc Goldman Sachs & Co Aug-10 924Quad/Graphics Inc World Color Press Inc Morgan Stanley, UBS Investment Bank, Jul-10 917BMO Capital MarketsQuantum Resources Mgmt LLC Denbury Resources Inc-Certain RBC Capital Markets May-10 900Investor Group Chesapeake Energy Corp Jun-10 900Aryzta AG Fresh Start Bakeries Inc Jul-10 900Exelon Generation Co LLC John Deere Renewables LLC Goldman Sachs & Co Dec-10 900Steward Healthcare System LLC Caritas Christi Health Care Cain Brothers Co., Nov-10 895Navigant Capital Advisors LLCGreen Mountain Coffee LJVH Holdings Inc UBS Investment Bank, Moelis & Co Dec-10 890Thomas H Lee Partners LP inVentiv Health Inc Goldman Sachs & Co Aug-10 889Kinder Morgan Energy Partners Petrohawk-Haynesville Shale Barclays Capital May-10 875JP Morgan Ast Mgmt(UK)Ltd Bishops Square Holdings Ltd Jones Lang LaSalle Inc Dec-10 866MedAssets Inc The Broadlane Group Inc Deutsche Bank AG, Jefferies & Co Inc Nov-10 850Creditors Citadel Broadcasting Corp Lazard Jun-10 849DG Acquisition Corp Griffin Industries Inc Harris Williams & Co Dec-10 843Bristol-Myers Squibb Co ZymoGenetics Inc Goldman Sachs & Co Oct-10 838BG Group PLC EXCO Resources Inc-Producing & Goldman Sachs & Co Jun-10 835Coca-Cola Enterprises Inc Coca-Cola Co-Norwegian,Swedish Allen & Co Inc, Goldman Sachs & Co Oct-10 822Progress Rail Services Corp Electro-Motive Diesel Inc JP Morgan, Morgan Stanley Aug-10 820McMoRan Exploration Co Plains Expl,Prodn Co-Asts Jefferies & Co Inc, Barclays Capital Dec-10 818Oak Hill Capital Partners LP Hillman Cos Inc Barclays Capital May-10 815Veritas Capital Partners LP Enterprise Integration Group JP Morgan, Stone Key Partners Nov-10 8153M Co Arizant Inc Piper Jaffray Co, Jefferies & Co Inc, Oct-10 810UBS Investment BankPerrigo Co PBM Products LLC Citi, Rothschild May-10 808Eli Lilly & Co Avid Radiopharmaceuticals Inc Morgan Stanley Dec-10 800Humana Inc Concentra Inc Barclays Capital Dec-10 790Ethicon Inc Acclarent Inc JP Morgan Jan-10 785Peoples Hope Gas Cos LLC Peoples Natural Gas Co Feb-10 780Windstream Corp Q-Comm Corp RBC Daniels Dec-10 780Affiliated Managers Group Inc Pantheon Ventures Ltd Credit Suisse Group Jun-10 775CIENA Corp Nortel Networks Corp-Ethernet Lazard, Jefferies & Co Inc, Rothschild Mar-10 769JPMorgan Chase & Co Canary Wharf-25 Bank Street Morgan Stanley Dec-10 768Walt Disney Co Playdom Inc Aug-10 763Investor Group Simmons Bedding Co Miller Buckfire, Moelis & Co Jan-10 760Cliffs Natural Resources Inc INR Energy LLC-Coal Mining Op UBS Investment Bank, Aug-10 757Goldman Sachs JBWere Pty LtdAvista Capital Holdings LP Clorox Co-Global Auto Care Bus JP Morgan Nov-10 756Boeing Co Argon ST Inc Stone Key Partners Aug-10 750Google Inc AdMob Inc Morgan Stanley May-10 750Alcon Inc LenSx Lasers Inc Aug-10 74448 MERGERS & ACQUISITIONS February 2011

Top 25 Deal Failures of 2010Bidder Target Price ($bil)General Growth Properties Inc Simon Property Grp Inc 27.498CF Industries Holdings Inc Agrium Inc 4.899Macarthur Coal Ltd Peabody Energy Corp 4.658Terra Industries Inc Yara International ASA 4.197Andean Resources Ltd Eldorado Gold Corp 3.163Casey’s General Stores Inc 7-Eleven Inc 2.706Healthscope Ltd Tenet Healthcare Corp 2.114Casey’s General Stores Inc Alimentation Couche-Tard Inc 1.9443PAR Inc Dell Inc 1.768Dollar Thrifty Automotive Grp Hertz Global Holdings Inc 1.536WuXi PharmaTech(Cayman)Inc Charles River Labs Intl Inc 1.426Maple Carpenter Creek LLC Atlantic Coal PLC 1.423Albaugh Inc Makhteshim Agan Industries Ltd 1.283Lions Gate Entertainment Corp Icahn Partners LP 1.225Allied Capital Corp Prospect Capital Corp 0.903International Royalty Corp Franco-Nevada Corp 0.611Emmis Commun Corp JS Acquisition Inc 0.553“City of Pittsburgh,PA-Parking” Pittsburgh Parking Partners 0.452CPI International Inc Comtech Telecommun Corp 0.430Bi-Lo LLC Groupe Delhaize 0.425EOG Resources-Marcellus Shale Newfield Exploration Co 0.405Anchor BanCorp Wisconsin Inc Badger Anchor Holdings LLC 0.400Satelites Mexicanos SA de CV Investor Group 0.374Crystal River Capital Inc Laurel Canyon Partners LLC 0.332Diedrich Coffee Inc Peet’s Coffee & Tea Inc 0.269February 2011 MERGERS & ACQUISITIONS 49

THE PULSEAsiaGrowth PrimerACG turned the tables for this month’s Pulse, allowing readers to pose questions to authorAnil Gupta and China India Institute managing partner Haiyan Wang, who will be co-facilitatingthe AsiaGrowth workshop on March 24.Anil K. Gupta and Haiyan WangThe Pulse: We all talk about the extremecompetition for natural resources, be it, oil,copper, aluminum, bauxite, nickel, water, andso on, and how that competition is likely to intensifyas emerging and high-growth marketsin Asia, such as China and India require theseresources to fuel their growth, and competeintensely and jockey forsuch resources. Whatabout the competitionfor human resourcesand talent? Surely wewill also experienceintense competition forhuman resources.What strategieswould you recommend,and how do you see organizationalstructuresand dynamics evolvingor morphing in orderto effectively meet impendingcompetitionfor human resources?Anil K. GuptaDo you see governmentpolicies towards the mobility and flow of humanresources shifting as a result of all this?A: With high unemployment continuing toplague the developed economies, competitionfor human resources will be particularlyintense in the emerging economies but muchless so in the developed ones. This is a directresult of the fact that the developing economiesare growing at three to four times thepace of the developed ones. We see competitionfor talent as being particularly stiff in thefollowing three areas.First, fast-growing emerging market companiesthat need experienced middle andsenior managers. These companies need toscale up rapidly, to go public, and to go global.Managing thesedevelopments requiresseasoned talent. It isrelatively easy to rampup the supply of factoryworkers and evenfresh college graduateswithin a short periodof time. However,this is simply impossiblein the case ofseasoned managers.Second, rich countrycompanies thatare aggressively buildingup their emergingmarket operations.These companies canrely on expats for only the most senior positions.Bulk of their local leadership will haveto come from local hiring. Increasingly, thesecompanies are beginning to face tough competitionfrom local champions who can matchthe compensation and offer faster career advancementopportunities.Third, companies that need highly specializedtalent such as top scientists, top designers,top hedge fund managers, and so forth.This talent tends to be very mobile and almostalways very scarce.We anticipate that an increasing numberof governments will reduce the restrictionson the movement (especially, legal inboundmigration) of people with higher educationand/or other types of specialized talent.The Pulse: It seemsthat more and moregoods are being producedin China and importedto the US whichhas to a large extentkept prices in checkor lowered prices. Recentlythere has beenmore discussion in themedia about potentialhigher China inflationand rising interestrates. My question(s)for the panel: What isHaiyan Wangthe likelihood of significantinflation, wageincreases and/or higher taxes in China, andwouldn’t this have a potentially serious directimpact on the US economy?A: It is very true that we will continue to seesignificant wage increases in China over thenext five years. We can also be certain thatthe yuan will keep rising vis-à-vis the US dollar.However, these developments will havevery limited impact on inflation in the US. We50 MERGERS & ACQUISITIONS February 2011

THE PULSEsay this for two reasons. First, imports fromChina account for only about 20% of all USimports. Thus, in terms of an overall basket ofgoods and services, prices in the US are notas dependent on inflation in China as manypeople believe. Second, as costs in Chinarise, we’ll see a growing shift in the productionof labor intensive goods from China toother lower cost countries such as Vietnam,Indonesia, and India.However, we should point out that, completelyaside from the impact of inflation inChina, the sheer growth of the Chinese economywill continue to have an indirect effect oninflation within the U.S. This is because rapidgrowth in China is pushing up the global pricesof all types of commodities and as the world’slargest consumer of commodities, US inflationis highly affected by global commodity prices.The Pulse: For investors who want to investin fast growth companies in India and China,how best to ensure transparency and integrityin financial reporting and forecasting?A: While financial transparency and integrityremain issues in both China and India, theseproblems are much less severe in the caseof Chinese and Indian companies listed onNYSE, NASDAQ, LSE, and HKEx. Even in thecase of companies listed domestically withinChina and India, transparency and integrityissues are less of a concern in those caseswhere the shareholding is widely distributed.Of course, this still leaves a large number offast growing companies in both China andIndia that remain heavily controlled by eitherthe government or a family. In these cases, investorsneed to focus on the growth potentialwhile discounting appropriately for the highergovernance risk. In these higher risk contexts,investors will also be wise to spend moretime on the ground talking to key managers,customers, and suppliers. It is obvious thatinvestors with local staff within China and Indiaare likely to have an advantage in makingsmarter assessments about the nature andseverity of governance risks.It’s also important to keep in mind thatgovernments in both countries are keen todevelop Shanghai and Mumbai into majorglobal financial centers. As part of this process,both governments are steadily improvingthe governance and disclosure standards.The picture in 2015 is likely to be vastly differentfrom that today.The Pulse: What is your No. 1 recommendationto North American business ownersand/or the professionals who serve them, inthe form of a book to read or an Internet connectionto follow, to best provide an introductionto the business practices and/or businesscultures of Asia?A: Some of the resources that we recommendare:>> Anil K. Gupta and Haiyan Wang, GettingChina and India Right>> James McGregor, One Billion Customers>> Gurcharan Das, India Unbound>> Nandan Nilekani, Imagining India>> China Daily (the No. 1 English languagenewspaper from China)>> The Economic Times (the No. 1 Englishlanguage business newspaper from India)The Pulse: The political backlash in the USagainst the job losses that have accompaniedoutsourcing at many US businesses that haveplunged into cross border alliances to take advantageof lower labor rates seems to suggestthat this kind of co-operation may be a zerosum game and a long term recipe for disasteron both sides. How can global assets andresources be used and shared in a way thatmaximizes both financial and human capital?A: Globalization (i.e. integration across borders)has both positive and negative outcomes.For developed country companies as well asinvestors, globalization offers unprecedentedopportunities. For companies, the next twodecades will offer four billion new customerswhose incomes will rise dramatically. Forinvestors, capital can now chase growth andprofits without being constrained by nationalboundaries. Think about the hundreds of companiesin China, India and Brazil that are growingat a better than 10% annual rate.The real challenge will be for those blueand white collar workers whose skills are notparticularly specialized and can be substitutedat a lower cost by emerging economyworkers. The only long term solution for thischallenge is for rich country governments tomake sure that they remain world leaders ineducation and research and development.Thanks to the following individuals for contributingquestions to this month’s Pulse:Mahesh Krishnamurti, Managing Director,Resources Global Professionals, India (1);Ronald L. Latta, Jr., RL Financial AdvisoryServices, LLC, Houston, Texas (2); Carol A.Nichols, VP, Market Development, vcfo, Dallas,Texas (3); Glen J. Cooper, CBI, CBA, BVAL,President, GlenCooperColorado.com (4); JohnP. Adams, President, Adams & Royer, Inc.On The AgendaFebruary 1ACG Denver: Sam Martin, CEO, GreatAtlantic & Pacific Tea CompanyFebruary 3ACG Boston: DealMakers 2011 M&AOutlook ConferenceFebruary 9ACG Atlanta: The 2011 Atlanta ACGCapital ConnectionACG Central Texas: Morris Miller, President& CEO, Cutstone Ventures LLCFebruary 10ACG San Francisco: 2011 West CoastCapital ConferenceACG Silicon Valley: Pehong Chen, CEO,BroadVisionFebruary 2011 MERGERS & ACQUISITIONS 51

COMMUNITY COMMENTARYScanning for OpportunitiesAmidst the RubbleFind the right financing partner and seek to build value againRon Kerdasha, Cole Taylor Business CapitalThe financial crisis and the anemic recoveryof the economy have done itsshare of damage on many fronts. Withrevenues declining and resources limited,many smaller companies have been scramblingto work through the tough times. Buildingvalue in these smaller companies hasrequired the implementation of key strategicinitiatives in aiming towards a better future.Private equity groups have faced many challengesin reacting to overall market conditionsand preserving value in portfolio companies.Aggressively addressing operating costs, providingcompanies with the capital and liquidityneeded to withstand the down draft, andtactfully dealing with financing sources thatmay or may not be viable long term partnersare amongst the key areas of focus. Havinga good handle on industry factors and howcompetitors have fared has been of particularimportance in developing a survival andgrowth strategy. It is also important to understandthe mindset and financial conditionof lending partners and their commitment orability to be a long term partner.Lender fatigue has become all too commona term over the past few years. Such fatigueoften goes both ways. Unlike anytime inrecent years, this can also mean that a lenderitself is struggling and in need of a liquidityevent. Transactions that were closed prior tothe recession based on higher earnings andaggressive debt multiples have now resultedin “broken” balance sheets. Earning your wayout of an over leveraged balance sheet hasbeen nearly impossible for smaller companieswith the economic recovery sputteringalong. Many companies have remained in thetrenches working their way out of the downRon Kerdashamarket and also dealing very carefully withtheir lending partners, who are keenly awareof their own risk profile and exposure.Another unique aspect to this latest windowof economic problems has been thedevaluation of assets, particularly equipmentand real estate. Asset-based loans thatwere tied to appraised values now may findthemselves underwater with lower values,often 30% to 50% down from five years ago.Equipment appraisers are continuing to providevaluations lower than even a year ago asthe manufacturing economy shows few signsof improvement and liquidations are fresh onpeople’s minds. Real estate values have deterioratedless in most cases because fewerproperties have actually been sold, providingappraisers with limited current comparablesales figures. The down side here is thatlenders are still less likely to proactively lendagainst real estate in this market regardlessof the appraised values.There are several dangerous traps in havinga lender either not comfortable with thecurrent risk profile of its financing or itselfhaving financial issues. The obvious pitfallto this scenario is a lender being consistentlyuncooperative unless a refinance is on the“Asset-based loans that tied to appraised values mayfind themselves underwater.”horizon. Some lenders have been poolingcommercial assets for sale to improve theirown liquidity. These asset pools can includea mixed bag of commercial loans, ranging52 MERGERS & ACQUISITIONS February 2011

COMMUNITY COMMENTARYfrom distressed real estate loans to performingcommercial loans. There is an inherentrisk in having a company’s loan included in apool for sale as the motivation of the ultimatebuyer is unknown and a constructive workingrelationship is temporarily put on hold. Thesepools of assets are typically being bought at amaterial discount to face depending on whatis in the pool. Avoiding having your loan includedin a loan sale is essentialin continuing to work throughcurrent economic conditions andlooking to a company’s long termviability.The other scenario worthwatching out for is when a bank issold, which can result in a gamechanging event and forestall anyprogress that may have been being made withthe old lender. Many smaller banks are beingbought up by mid-size regional banks. Dealingwith a larger bank is not a free pass on this issueas many larger banks are looking to repairloan portfolios and/or exit the lower end ofthe market. Borrowers should carefully lookfor warning signs of a bank having difficultiesor drifting away from the lower end of themarket. These warning signs may include irrationalor impatient behavior, key people departing,shifting relationships to new people,and weak financial performance at the lender.Open communications and understanding thelending culture is a key. People and credit culturechanges can rapidly become a problem,even if the company is showing improvementin performance.For companies with some resources thereare opportunities to work with lenders andperhaps even realize a discounted pay off,thereby de-leveraging the balance sheet andsetting up the company with a more reasonabledebt structure going forward. Manybanks are continuing to clean up their ownbalance sheets and have been proactive insetting up reserves to accurately reflect therisk of these loans. Few banks are seeking toliquidate companies and might rather moveon with a reduced pay out in some form.“Lenders are still less likely to proactivelylend against real estate in this marketregardless of the appraised values.”Lenders willing to step into a new situationthat includes a cleaned-up balance sheet accompaniedby a discounted payout may seeka higher underwriting standard. Certain assetbasedlending groups have been consistentlyactive in providing financing for turnaroundsor storied deals but with a more conservativeunderwriting approach. Examples of thesestandards may include additional commitmentfrom ownership in the form of capitalor subordinated loans and a material liquiditycushion on day one. With a new lender and aliquidity cushion management can move on tofocus on the future with a partner that wantsto be in the deal. Equity dilution and transactioncosts may be an unwelcome consequencebut a better alternative to a fatiguedlender and an over leveraged balance sheet.Even without a discount, starting fresh with anew lender may well be worth the incrementalcosts.In addition to asset based lenders as asolution, there are also a variety of non-traditionalsources of funding seeking to takeadvantage of market demand by providingbridge financing. These bridge lenders areoften non-bank investment funds seeking ahealthy return to assist a company removeitself from an uncomfortable lending relationship.Bridge loans are typically one year dealswith rates between 10% and 15% with escalationclauses in the principal amount if theloans are not repaid at maturity. The bridgeloan may also provide additional liquidity toimplement forward looking business strategiesthat an existing lender may not permit.Once again, there is a trade-off to staying inan uncomfortable situation and moving on ata higher cost of financing. With confidence inthe improving performance of the businessand a more open credit market into 2011, thecost of the one year bridge loan may quicklybe forgotten with a refinance down the road.With a cooperative lender and partner in adeal there are numerous places to turn to enhancethe value of a business in these difficulttimes. Among value building opportunitiesare seeking market share growth and takingadvantage of bargain purchases.The competitive landscape islittered with cyclical companiesthat have stumbled badly and donot have the resources to operatefor the long run but still mayhave a solid business model andstrong customer base. Whethercompanies aggressively pursuemarket share or take advantage of an acquisitionopportunity of a weakened competitor,resources provided by a cooperative lendershould provide for a quick return on investment.In the current environment there havealso been large businesses looking to shed“orphans” that are no longer a good fit fora variety of reasons. These businesses canoften be purchased based upon some parametersthat are not common place in businessvaluations, providing the opportunity for asubstantial upside.Companies left standing with strong managementand the support of financing partnershave unique opportunities amidst therubble of today’s economic conditions, settingthemselves up for real earnings growth. Acombination of borrowed funds and capitalprudently deployed can bring a very positiveoutcome down the road. Having a friendlylender that understands what it takes toimplement this strategy, which may includeshort term costs and an increased need forborrowing capacity, is essential.Ron Kerdasha is a Group Senior Vice Presidentwith Cole Taylor Business Capital, a divisionof Chicago-based Cole Taylor Bank. Ronis based in Baltimore, Maryland and can bereached at rkerdasha@coletaylor.com.February 2011 MERGERS & ACQUISITIONS 53

COMMUNITY COMMENTARYA Growing TrendPreparing a business for sale through sell-side due diligenceSteven E. Brady, Grant Thornton LLPAseller of a business should utilizeall the tools available that help optimizevalue to ownership, managementand other stakeholders and minimizedisruption to the successful operations ofthe business. And while quality companiesin the current deal environment attractabundant interest from private equity firmsand strategic buyers seeking to deploy recordsamounts of capital, the scrutiny a targetis placed under during the due diligencephase has increased fundamentally for theforeseeable future as a reaction to the shockcreated by the global financial crisis.A growing trend in the U.S. to preparea company for sale is the performance ofa due diligence process before taking thecompany to market. Referred to as “sell-sidedue diligence,” this process supplementsthe work of the seller and their investmentbankers. With an additional team memberon the sell-side with financial, tax and operationalexpertise executing the analysis,the seller increases the speed to close, thecertainty of close and the final valuation atthe closing table.By conducting this due diligence analysisprior to going to market, issues that wouldotherwise slow the sale are identified upfrontand presented in an open and clear manner sothat corrective measures can be implemented.Also, in many sale processes, investmentbankers are effectively using a sell-side duediligence engagement to greatly reduce thescope of the buyer’s due diligence. These factorscombine to improve the speed to closing.Due diligence performed by a buyer andtheir advisors will invariably find issues thatare critically important to sophisticated acquirersand investors. This is generally aresult of a seller not anticipating issues becauseof either their focus on operating thebusiness or their relative inexperience withSteven E. Bradythe process of selling a business. Even sophisticatedsellers and their teams will notidentify all the important issues to potentialbuyers. Uncovered in buy-side due diligence,and not effectively anticipated by the seller,these issues can lead to renegotiations that“The advisors’ responsibility remains with the seller.”have the potential to derail the deal. Sellsidedue diligence puts these issues on thetable upfront and minimizes unwelcomedsurprises arising in due diligence, and thuscan dramatically increase the certainty ofclosing the deal.These same types of issues often leadto changes in value when discovered by thebuyer. Many sellers have not had the benefitof prior experience selling a business andmay not know all the factors that drive athorough analysis of the quality of earnings,and how that analysis effects the final valuation.Sell-side due diligence provides theframework for definable and defendable positionswhich provide the foundation for thesell-side team to explain positions to potentialbuyers and their advisors, and optimizevaluation at closing.The use of this tool is increasing in theU.S., although not widely used at this time.In Europe, a similar process called vendordue diligence is commonplace. An importantdistinction is that in vendor due diligence theservice provider has a duty of care obligationto the ultimate acquirer of the business, eventhough that party is unknown when the processbegins. This heightened standard of carebuilt into the process is one of the factors thathas driven more and more buyers and sellersto demand it as the accepted method for duediligence in the acquisition processIn sell-side due diligence in the U.S. the54 MERGERS & ACQUISITIONS February 2011

COMMUNITY COMMENTARYinvestment banker works with their client toengage a third-party due diligence provider towork closely with all parties throughout theprocess. All parties need to work together todesign a work approach that focuses on thekey areas that would be of interest to potentialinvestors; however, the advisors’ responsibilityremains with the seller.Perhaps the most difficult part of this processis convincing a seller of a business toengage an additional advisor to provide thisservice, and incur the expense before the saleprocess begins. It is often easier for a sellerto allocate a portion of the sale proceeds totheir investment bank than to write a checkfor sell-side due diligence upfront, yet thebenefits derived from this process consistentlydemonstrate a high return on this investment.As a result, the service provider, investmentbank and client need to have an activedialogue before the process begins, so thatthe client may understand, appreciate andvalue the benefits this process can bring tothem – especially relative to the cost.Time and time again, sellers that do notadequately prepare for a sale process areunpleasantly surprised when financial analysisand inquiries during due diligence reducethe value the prospective buyer places intheir business or exposes issues that requirestructural changes to the deal.Sell-side due diligence is part of an overallstrategy of transaction readiness that manyeffectively run businesses employ. Very simply,the sooner issues of importance to aninvestor are indentified, the more effectivelythey can be mitigated through meaningful improvementsto the business. This will improvespeed to, certainty of, and valuation at closingof a successful deal.Steven E. Brady is the National ManagingPartner – Transaction Advisory Services atGrant Thornton LLPAPRIL 13 & 14, 2011WESTIN KIERLAND RESORT & SPA IN SCOTTSDALEThis is the premier Mergers & Acquisitions and PrivateEquity event in the Southwest offering perspectives to topleaders in the critical issues impacting M&A, financing, andthe economic outlook for domestic and international companies.APRIL 13: Golf Event, Tequila Sunset Reception (Invite Only).APRIL 14: Breakfast, 2 Breakout Sessions, Keynote Luncheonand Deal of the Year Award, 2 Breakout Sessions, Capital Connection,Closing Reception.For event information or sponsorship opportunities, contact:Jennifer Mannino, 602.349.8900, jmannino@risc-llc.com, orJoe McGovern, 480.421.0853, joe.mcgovern@liesch.comFebruary 2011 MERGERS & ACQUISITIONS 55

RUSSIAN REVERSAL continued from page 12man’s dog. Transparency International, even after Medvedev’s initiatives,dropped Russia in its 2010 “Corruption Perceptions” indexto 154 out of the 180 countries covered. The WikiLeaks cablescited Transparency International’s 2009 survey, which estimated thatbribery costs Russia about $300 billion a year, representing 18% ofthe country’s gross domestic product. That’s also a figure that is morethan seven times the foreign direct investment reported by Putin lastyear.Even Brank concedes that corruption is part of the culture.“There’s this feeling that the good times will end, so people try tomake as much money as they can in the short term.”Brank adds that in her experience, the transparency efforts havemade a difference, and notes that she’s “never lost a tax case againstRussian authorities.”Ironically, for acquirers keen to gain emerging market exposure,the perception of Russia has made the country a value play amongthe other BRICs. Goldman Sachs’ Jim O’Neill, who coined the“BRIC” designation, has highlighted recently that Russia is the mostundervalued.Meanwhile, Doug Nakajima, a managing director at LECGSmart notes that while Russia still has a “heavy hand” in the country’soversight of transactions, “It’s similar to what you would see inChina.” And as far as the perceived corruption, Nakajima reasons,“Those types of questions arise in most of the developing countries.”He adds that while the country has been slow to introduce incentivesfor foreign investors and complications exist, companies can’tignore the opportunity. “If you’re not looking at it, you’re asleep atthe switch,” he says.THE ADD-ONS continued from page 16protecting the brand.”Part of that is ensuring that the acquired assets live up to theirpotential, post close. Potts adds that while Marlin, in the Riverminedeal, stepped on the accelerator once the target was identified, assoon as the deal closed, the attention shifted to the synergies. “Theyaren’t saying, ‘On to the next one,’” Potts describes. “The deal wasjustified on the expected synergies. It’s something that you can’t losesight of.”Additional reporting by Ken MacFadyenMorgan Joseph continued from page 18The merger will not result in “a classic synergies-through-cost elimination,”Cromack said. “We are very complementary organizations.”Cromack and Manocha co-founded Tri-Artisan in 2002. Prior tothat, Manocha had a stint at Thomas Weisel Partners, where he was afounding partner. They also had worked together at Lehman Brothersand later at Furman Selz, which sold itself to ING Barings. Theexecutives first encountered Joseph there, where he worked brieflyafter his years at Drexel.Some of the 65 chief executives who serve as operational professionalsat Tri-Artisan are also investors. Each of these executives has20 to 40 years of experience in their respective industries.“These are people we worked with for many years,” Cromacksaid. “They work with us to introduce us to people in their Rolodexes.They were not employees; they were investors.”The operational pros include F. Peter Cuneo, the Iconix BrandGroup director who helped bring Marvel Enterprises back to life afterits bankruptcy; Scott Flanders, the CEO of Playboy Enterprises;and Maynard Jenkins, who served as CEO of the auto-parts retailerCSK Auto.Ideally, having executives like these on call would help the holdingcompany strengthen its work in restructuring; the thinking is thatthese executives would be called in to advise troubled companies.“There are many benefits” to the merger, “and one of them isMorgan Joseph’s restructuring business taking advantage of the operatingexpertise in working with either debtors or creditors,” saidCromack. “These executives are providing real industry expertise.”For now, the holding company will keep the two broker-dealersas separate entities. Shareholders of both firms received stakes in thenew holding company, which has just over 100 shareholders.“It is a relative merger of equals, as is shown by the fact that the executivecommittee has two [professionals] from each firm,” said Sorte.(The merger has a familiar echo: In 2009, the alternative assetmanager Ramius made a similar deal with Cowen, an investmentbank that focuses on the health care, tech and consumer sectors.)Cromack and Manocha predicted that deal assignments relatedto private-equity firms buying and selling portfolio companies willpick up in the coming years.Manocha estimated that 400 PE funds have, on average, 10 companiesin their portfolios and many of these likely will be put on themarket through M&A or via an initial public offering.“That pent-up demand for sales and exits is a huge opportunityfor Wall Street,” said Manocha.Meanwhile, Morgan Joseph Tri-Artisan Group senior executivessaid the firm does plan to hire professionals, but not from industryareas outside of its immediate areas of expertise.Morgan Joseph focuses on the health care, industrial, telecommunications,media, technology and consumer sectors.Tri-Artisan gets roughly half of its transaction work from the retail,gambling and leisure businesses.It also works with industrial and health companies.56 MERGERS & ACQUISITIONS February 2011