© 2013 Navidar Group LLC
Member: FINRA/SIPC
Presentation to: Capital Markets and M&A Update October 7, 2010
2 CONFIDENTIAL
Disclaimer
© 2013 Navidar Group LLC
This Presentation (the “Presentation”) has been prepared solely for informational purposes and may not be used or relied upon for any purpose other than as specifically contemplated by a written agreement with us. This Presentation is not intended to provide the sole basis for evaluating, and should not be considered a recommendation with respect to, any transaction or other matter. This Presentation does not constitute an offer, or the solicitation of an offer, to buy or sell any securities or other financial product, to participate in any transaction or to provide any investment banking or other services, and should not be deemed to be a commitment or undertaking of any kind on the part of Navidar Group LLC (“Navidar”) or any of its affiliates to underwrite, place or purchase any securities or to provide any debt or equity financing or to participate in any transaction, or a recommendation to buy or sell any securities, to make any investment or to participate in any transaction or trading strategy. This Presentation remains subject to our review and assessment from a legal, compliance, accounting policy and risk perspective, as appropriate, following our discussion with the Company. Although the information contained in this Presentation has been obtained or compiled from sources deemed reliable, neither Navidar nor any of its affiliates make any representation or warranty, express or implied, as to the accuracy or completeness of the information contained herein and nothing contained herein is, or shall be relied upon as, a promise or representation whether as to the past, present or future performance. The information set forth herein may include estimates and/or involve significant elements of subjective judgment and analysis. No representations are made as to the accuracy of such estimates or that all assumptions relating to such estimates have been considered or stated or that such estimates will be realized. The information contained herein does not purport to contain all of the information that may be required to evaluate a participation in any transaction and any recipient hereof should conduct its own independent analysis of the data referred to herein. We assume no obligation to update or otherwise revise these materials. Navidar and its affiliates do not provide legal, tax or accounting advice. Prior to making any investment or participating in any transaction, you should consult, to the extent necessary, your own independent legal, tax, accounting and other professional advisors to ensure that any transaction or investment is suitable for you in the light of your financial capacity and objectives. This Presentation has not been prepared with a view toward public disclosure under applicable securities laws or otherwise, is intended solely for the benefit and use of the Company, is strictly confidential and may not be reproduced, disseminated, quoted or referred to, in whole or in part, without our prior written consent other than to your advisors and professionals who will be assisting you in evaluating these materials.
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Table of Contents
Section
Global Markets Overview I
Midwest Deal Activity III
II Private Investment Activity
Navidar Observations On the Market IV
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I Global Markets Overview
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Global Stock Markets Continue To Be Volatile
(40)%
(30)%
(20)%
(10)%
0%
10%
20%
1/4/2010 2/11/2010 3/23/2010 4/30/2010 6/9/2010 7/19/2010 8/26/2010 10/5/2010
Source: Thomson Reuters.
LM 400 – Latin America FTSE 100 – Europe S&P 500 – North America
CSI 300 – China
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IPO Market Globally Revived
1H 2010 IPO $ Volume by Geography
Other2%
Asia60%
EMEA22%
North America
16%
Summary Stats $99.6B in IPO Volume in 1H 2010
743% increase over 1H 2009
593 Deals
Leading Sectors • Financials ($24.7B)
• Materials ($15.2B)
• Industrials ($14.1B)
• High Technology ($10.3B)
• Energy ($10.0B)
U.S. Market Institutional investors remain cautious
Many sponsor-backed IPO’s priced poorly
China • Most active market with 32% share
• 43 SOE IPO’s
Source: Thomson Reuters, as of June 30, 2010.
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Global M&A Volume is Down
Europe is Down 23%, US is Down 5%, and Asia is Down 1% Compared to 1H 2009.
Source: Thomson Reuters, as of June 30, 2010. Note: Global value includes Latin America, Japan and Africa.
$3,397
$1,688
$1,204$1,346
$1,877
$2,679
$3,603
$4,162
$2,885
$2,059
$976
$1,7
05
$752
$439 $5
39 $795
$1,1
33
$1,5
72
$924
$720$1
,001
$550
$480
$506 $7
09 $980
$1,3
24 $1,5
94
$1,1
70
$586
$227
$238
$165
$136
$138
$169
$233 $3
60 $458
$431
$407
$1,4
69
$339
$186
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
$4,000
$4,500
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010Global ($ in billions) US Target ($ in billions)Europe Target ($ in billions) Asia Pac. Ex Japan Target ($ in billions)
(In $ in billions)
Global M&A Volumes Annually
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Retail$22
Materials$97
Industrials$84
Real Estate$71
Consumer Staples$67
Healthcare$70
High Technology$59
ConsumerProducts
$25 Media$52
Telecommunications$104
Financials$135
Energy and Power$189
Global M&A Activity by Sector
Source: Thomson Reuters, as of June 30, 2010.
Global M&A By Sector – $976B YoY Change (%)
Energy and Power +22%
Financials -40%
Telecommunications +202%
Materials -20%
Industrials -11%
Real Estate +67%
Healthcare -50%
Consumer Staples +37%
Technology +30%
Media +42%
Consumer Products +43%
Retail +39%
10% 9%
7%
7%
7%
2%
6%
3% 5%
11%
14%
19%
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Global Cross Border Volumes
Global Cross Border M&A Activity Has Increased
$417
$643
$351$422
$251$339 $329
$157$111 $112
$156 $174 $179 $198
39% 38% 38%
30%
23% 22%
29%
34%
43%
33%
43% 45%48%
41%
$0
$100
$200
$300
$400
$500
$600
$700
1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q100%
10%
20%
30%
40%
50%
60%
Value $ in billions % of Total M&A
Cross Border Activity Has Increased for the 5th Consecutive Quarter, Up 60% from the 1H 2009.
Source: Thomson Reuters, as of June 30, 2010.
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U.S. and the U.K. Lead the Cross Border Activity
Source: Thomson Reuters, as of June 30, 2010.
Country Volume $B Share (%)
United States of America $17.3 23%
United Kingdom $10.0 13%
China $8.2 11%
Canada $7.8 10%
India $6.1 8%
Germany $5.5 7%
Netherlands $5.0 7%
Spain $4.9 7%
Japan $4.7 6%
France $3.2 4%
Australia $3.1 4%
Country Volume $B Share (%)
United States of America $23.4 34%
United Kingdom $11.4 17%
Australia $7.1 10%
Brazil $4.1 6%
Netherlands $3.9 6%
Canada $3.8 6%
Hong Kong $3.4 5%
Mexico $3.0 4%
Nigeria $2.9 4%
Germany $2.6 4%
China $2.5 4%
Top 10 Most Acquisitive Nations 2010 YTD (US$ B) Top 10 Most Targeted Nations 2010 YTD (US$ B)
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Leverage Finance Market Is Very Active
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2007 2008 2009 1H10
Refinancings M&A Recap Other
$0.0
$10.0
$20.0
$30.0
$40.0
$50.0
$60.0
$70.0
2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10
Leverage Finance Volumes ($ in billions) Use of High Yield Bond Proceeds (%)
Source: Thomson Reuters, as of June 30, 2010.
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II Private Investment Activity
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Global Buyside Financial Sponsor Activity
Buyside Financial Sponsor Activity Overall is Up 106%, the U.S. is Up 200% and Europe is Up 110% Compared To 1H 2009.
$254
$343
$790 $796
$235
$123$116 $147$117$92 $72
$30 $4
8
$49 $1
05 $148
$432
$433
$72
$48
$36$6
0 $82 $1
20 $167
$282
$254
$103
$43
$21
$5 $3 $4 $7 $6 $10 $3
6
$37
$20
$16
$10$5
5
$45
$48
$0
$100
$200
$300
$400
$500
$600
$700
$800
$900
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 1H 2010
Global ($ in billions) US Target ($ in billions)Europe Target ($ in billions) Asia Pac. Ex Japan Target ($ in billions)
$ in billions
Global Buyside Financial Sponsor Volumes Annually
Source: Thomson Reuters, as of June 30, 2010.
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Largest Quarter for VC Investments Since Q3’08
$7.3 $7.7 $8.0 $7.7 $7.4 $7.0
$5.8
$3.4$4.3
$5.1 $5.3 $4.9
$6.5
$0.0
$2.0
$4.0
$6.0
$8.0
$10.0
2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q100
200
400
600
800
1,000
1,200
Total Amount Invested ($ in billions) # Deals
Source: Dealogic.
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Investment Activity By Industry – Q2 2009 vs. Q2 2010
$904
$564
$702$648
$318
$1,296 $1,282
$1,035
$755
$414
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
Biotechnology Industrial Energy Software Medical Devices andEquipment
IT Services
Q2 2009 Q2 2010
Total Amount Invested ($ in millions)
Source: Dealogic.
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Significant Cash is Still On Sidelines
Cash Held by Strategic Buyers U.S. Private Equity Overhang
$0.0
$0.2
$0.4
$0.6
$0.8
$1.0
$1.2
$1.4
$1.6
$1.8
$2.0
2003 2004 2005 2006 2007 2008 2009 Q22010
($ in trillions)
Source: Grant Thornton Corporate Finance; Federal Reserve Statistical Release, June 10, 2010.
$0.0
$50.0
$100.0
$150.0
$200.0
$250.0
$300.0
$350.0
$400.0
$450.0
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 IH2010
($ in billions)
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III Midwest Deal Activity
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North America Heat Chart
South West Mid West Mid-Atlantic New England Total
TMT 216 368 85 148 91 963
Life Sciences & Healthcare 169 139 115 113 60 623
Energy, Mining, Oil & Gas 202 104 45 39 17 596
Industrials, Chemicals & Engineering 107 73 126 54 43 450
Consumer 86 116 82 65 28 425
Financial Services 125 84 96 75 22 417
Business Services 81 52 28 40 20 250
Defense 81 31 15 17 16 163
Leisure 57 47 26 13 7 161
Transportation 31 21 23 13 3 103
Construction 23 15 24 9 2 81
Real Estate 17 26 13 9 3 71
Agriculture 2 3 13
Government 5 2 1 3 11
Total 1,202 1,081 679 598 312 4,327
120 75 105 60 90 45
30 15 0
Hot Warm Cold
The Heat Chart is based on ‘companies for sale’ stories tracked by mergermarket.com in H1 2010. Opportunities are captured according to the dominant sector and geography/region of the potential target company.
Source: Mergermarket.
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M&A Deal Activity in Midwest
M&A Split by Deal Size
Value $ in billions Volume
269314 356
407 373310
164
9589
112109
61
46
21
195199
234236
152
85
40
7064
8263
45
29
21
3540
5038
3140
48
6885
25
10
9
16
23
0
100
200
300
400
500
600
700
800
900
1,000
2004 2005 2006 2007 2008 2009 1H 2010
Value not disclosed $5M - $14M $15M - $100M$101M - $250M $251M - $500M >$501M
8.6 9.1 10.8 7.211.8 10.5 13.1 9.7 7.6
12.3 14.4 17.1 13.810.9
133.9103.6
186.9
261.5
137.6
$167.4
$138.4
$227.8
$163.8
$117.8
$41.5
0.8 0.8 1.0 1.0 0.5 0.4 0.23.9 1.69.7 4.8 3.53.43.3
32.8
105.4
$296.8
0
50
100
150
200
250
300
2004 2005 2006 2007 2008 2009 1H 2010
$5M - $14M $15M - $100M $101M - $250M$251M - $500M >$501M
Source: Mergermarket.
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M&A Midwest Deal Activity By Sector – 1H 2010
Mix of Deals by Industry Sector – $ Value
Consumer21.1%
Energy, Mining, Oil & Gas
19.5%
TMT6.2%
Leisure1.2%
Transportation0.1%
Life Sciences & Healthcare
12.1%
Construction0.1%
Real Estate16.5%
Agriculture0.5%
Industrials, Chemicals & Engineering
13.5%
Financial Services2.9%
Business Services6.3%
Source: Mergermarket.
$32.8B in 1H 2010
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IV Navidar Observations On the Market
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Creating Value Is More Art Than Science
Source: Grant Thornton and Navidar
Price V (S C) e
“Scientific” Value (Baseline)
Story (Developing a Compelling
Story )
Competition (Using a Competitive Process)
emotion (Evoking Buyer Emotion)
+ + =
Other Important Factors In Driving the Best Price
• Effective and Customized Process
• Avoid Process Mistakes
• Negotiate From Position of Strength
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Different Buyers Have Differing Valuation Frameworks
Price
Market Position
Proprietary Technology
Company Specific EBITDA Revenue Growth
Market Position
Proprietary Technology
Recognized Brand
Global Footprint
Strategic Value: The opportunity to leverage some or all of a company’s assets
Value To You Value To Buyer A Value To Buyer B
Synergies
Synergies
Use the Imperfections of the Private Markets To Your Advantage.
Source: Grant Thornton and Navidar.
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Navidar Observations on M&A and Capital Raising
The M&A and Capital Markets Are Open
Prepare Early For the Process
Positioning Your Story Properly Is Critical To Success
Financial Models Undergo Heavy Scrutiny
Understand the Mindset of the Investor / Acquirer
Competitive Processes Result In Best Outcomes
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