ACG Growth Conference –Specialty Investing PanelSpecialty Investing Panel

June 3, 2009

Moderator Biography – Mr Bill RomanName Background

Moderator Biography Mr. Bill Roman

• Mr. Roman manages Harris Williams & Co.'s Boston Office. Mr. Roman has been engaged in ai f d i d fi i l i i hi i b kivariety of advisory and financial engagements since commencing his investment banking career

in 1979.

• Previous experience includes Managing Director and head of the Boston Investment Bankingoffice of Dean Witter Reynolds, Inc. (now Morgan Stanley). Prior to joining Harris Williams &C M R H d f I t t B ki t T k A th S t ( RBCCo., Mr. Roman was co-Head of Investment Banking at Tucker Anthony Sutro (now RBCCapital Markets).

• Mr. Roman earned an M.B.A. at the Darden Graduate School of Business Administration at theUniversity of Virginia and a B.A. with Honors at Brown University.

Harris Williams & Co. is one of the country’s leading M&A advisors focused exclusively on themiddle market. Services include private company sales, corporate divestitures, acquisitions,management buyouts, fairness opinions, restructuring advisory, and complex valuations. HarrisWilliams & Co. represents private equity groups as well as publicly and privately held companiesworldwide. The firm was named “Middle Market Investment Bank of the Year” in 2008 byInvestment Dealers’ Digest. For more information visit, www.harriswilliams.com. MemberFINRA/SIPC.

Panelist Biography – Mr John BlackName Background

Mr. John BlackManaging Director

Panelist Biography Mr. John Black

• Mr. Black is a Managing Director of H.I.G. Capital and heads the Firm’s Boston Office.

• Since joining H.I.G. in 1996, Mr. Black has led more than 35 middle market transactionsincluding acquisitions, leveraged recapitalizations and industry consolidations of both publicand private companies.

• Prior to H.I.G., Mr. Black was a senior professional with several leading consulting firms,working with middle market companies to develop and implement strategic and operationalbusiness plans.

• Mr. Black is a graduate of Harvard University with a dual degree in applied mathematics andeconomics.

H.I.G. Capital is a leading global private equity firm focused on management buyouts andrecapitalizations of leading middle market companies as well as growth equity investments. Withmore than $7.5 billion of equity capital under management and more than 150 investmentprofessionals H I G is dedicated to using its in house operating expertise to help talentedprofessionals, H.I.G. is dedicated to using its in-house operating expertise to help talentedmanagement teams and entrepreneurs build companies of significant value. H.I.G. works closelywith its portfolio companies and provides capital, operating and strategic expertise, and a networkof strategic industry contacts to help them become industry leaders. H.I.G. is a significant investorin over fifty companies in the U.S. and Europe in a diverse range of industries, with combinedannual revenues in excess of $7 billion.

T ti f $25 t $500 illi f t i l

Exclusively Devoted to the Middle Market• Transactions from $25 to $500 million of enterprise value

• $10 to $100 million in EBITDA at closing or a “highly visible” path to $10 million in EBITDA through short-term operating improvements or immediate acquisitions

• H I G specializes in complex transactions where we identify opportunities for value creationH.I.G. specializes in complex transactions where we identify opportunities for value creation

• Over 150 investment professionals, half of which have consulting / operating backgrounds

• Transactions typically have one or more of the following characteristics:

- Corporate divestitures

- Owner operated recapitalizations

- “Buy and build” consolidation plays

O ti l t iti / t d

- Contingent / simultaneous mergers

- Bankruptcy (363 or reorganization)

- Restructuring

St t l / t ti l l it- Operational opportunities / turnarounds

- Industry in transition

- Managerial transition / deficiency

- Structural / transactional complexity

- Public-to-private transactions

- Growth capital infusions

H.I.G. provides flexible transaction structures to the middle market in a wide range of business situations where we can create value for all stakeholders by utilizing

our extensive operational and restructuring process experience

H.I.G. Family of FundsLeading Middle Market Focused Private Investment FirmLeading Middle Market Focused Private Investment FirmLeading Middle Market Focused Private Investment FirmLeading Middle Market Focused Private Investment Firm

US / EUR PE Distressed Debt Venture Capital Hedge Fund Real EstateUS / EUR PE$2.3 Billion

Traditional Buyouts

Buy‐and‐Build / Consolidation St t i

$3.5 Billion

Chapter 11, Plan of Reorganization

Chapter 11, §363 Sales

Venture Capital$0.5 Billion

Minority Ownership Positions in Rapidly Growing Businesses

E i C it l

Hedge Fund

Small and Mid‐Capitalization Publicly Traded Companies

Li it d Li idit N

$1.0 Billion

Real Estate

Distressed Situations

Lender / Developer Divestitures 

$0.2 Billion

Strategies

Corporate Divestitures w/ or w/o Infrastructure

Owner Operator Recapitalizations

Out‐of‐Court Restructurings / Turnarounds

Public‐to‐Private Transactions

Equity Investments

Expansion Capital

Founder Liquidity

Add‐On Acquisitions

Early Stage Institutional Funding

Limited Liquidity, Non‐Control Situations

PIPEs (Acquisition or Liquidity Financing)

Long / Short Positions

Preferred Stock

Sectors and Markets with Improving Fundamentals 

Performing and Non‐Performing Loans 

Urban Housing 

Public‐to‐Private Transactions

Operational Turnarounds

Add‐On Acquisitions

Equity Investments

Purchase of Distressed Securities

Special Situation Lending

Bridge Loans

Preferred Stock Investments

g

Asset Repositioning / Turnaround 

Real Estate Dependent Business (Long‐Term Care, Hotels, Etc.)

Bridge Loans

Debtor‐in‐Possession Financings

$7.5 Billion Under Management

Panelist Biography – Mr Charles Cherington

• Mr. Cherington co-founded Intervale Capital to build on the success of Cherington Capital, ai i fi f d i i iddl k i

Name Background

Mr. Charles CheringtonManaging Partner

Panelist Biography Mr. Charles Cherington

private equity firm focused on investments in middle market energy companies.

• Prior to founding Cherington Capital, Mr. Cherington co-founded a smaller fund which alsofocused on middle market buyouts.

• Before launching his first fund, Mr. Cherington spent several years as a vice president at theVietnam Fund, a British private equity fund.

• Mr. Cherington also worked for CS First Boston in New York and Vietnam.

• Mr. Cherington earned an M.B.A., with honors, from the University of Chicago and a B.A. inHistory from Wesleyan University.History from Wesleyan University.

Intervale Capital is a private equity firm, based in Houston and Boston, focusing exclusively oninvestments in middle-market oilfield services companies and related technologies. Intervale,together with its predecessor entities, manages eight platform investments, and is currentlyinvesting out of its $280 million fundinvesting out of its $280 million fund.

Intervale Overview

• Intervale was founded in 2007 by Curtis Huff and Charles Cherington, two seasoned energy services investors

• Four senior investment professionals operating out of Boston and HoustonM i P t h d h d hi t

Background• Managing Partners have deep shared history

– Eight transactions executed together since Intervale formed

• Lower middle market buyouts and growth capital focused on oilfield services• Lower middle market buyouts and growth capital, focused on oilfield services

• Only fund building oilfield services platforms with proprietary add-on technologies

• $281MM fund, closed May 2008

• $24MM GP commitment

IntervaleOverview

• $24MM GP commitment

• 28% of capital invested as of Q1 2009

• 6.8x ROI and 33% IRR track record by Cherington and Huff

TrackRecord

6.8x ROI and 33% IRR track record by Cherington and Huff– $328MM invested generating total value of $2.2B+

• Since 2003, Cherington and Huff have invested $125MM, including over $30MM of personal money, acquiring 10 platform companies and 6 add-ons

CONFIDENTIAL 1

Intervale Overview

• Represents the backbone of the energy industry

• Virtually all activities at the wellhead are outsourcedOilfield Services • Typical energy funds adopt a multi-sector approach (necessary to invest multi-

billion dollar funds)

• Intervale focuses on an inefficient niche, to seek to maximize returns, not fund size

Services, Not E&P

Technology Focused

• Depleted reservoirs require enhanced technology

• New technologies lower the cost of drilling and enable market share capture

• Operators are reluctant to buy from start-ups, creating opportunity for larger Focused platforms to acquire and deploy new technology

• Innovation and activity, not cycle, drive investment performance

• Intervale buys platforms, builds management and adds technology to achieve exceptional results

• Target companies in specific verticals with favorable characteristics• Proven history of sourcing deals outside of auctions

ProvenModel

• Portfolio companies continue to outperform the oilfield services industry

CONFIDENTIAL 2

Panelist Biography – Mr Richard D TadlerName Background

Mr. Richard D. TadlerManaging Partner

Panelist Biography Mr. Richard D. Tadler

• Mr. Tadler is a Managing Director of TA Associates. Mr. Tadler heads the Boston officeH l h G i li i i h l h d i l d b i d h i lHealthcare Group, specializing in healthcare and service-related businesses, and he is also amember of TA Associates’ executive committee.

• Prior to joining the firm in 1987, he was a General Partner with Investments Orange NassauInc. He has also served as an Assistant to the President of several divisions at Armco Inc.

Founded in 1968, TA Associates is one of the largest and most experienced private equity firms.

• Mr. Tadler received a M.B.A. in from The Wharton School at the University of Pennsylvania,and a B.S., with distinction, in Finance from the University of Virginia.

, g p p q yWith offices in Boston, Menlo Park and London, the firm manages $10 billion in capital and hasinvested in more than 360 companies. TA Associates provides growth equity capital, leveragedrecapitalization and management buyout financing primarily for technology, financial services,business services, consumer and healthcare businesses.

Overview of TA Associates

Founded in 1968Founded in 1968

Offices in Boston, Menlo Park, London and Mumbai

110 employees

$12 billion under management; $6 billion in active funds

Investment size generally $60 - $350 million

Invest in profitable growth companies, entrepreneurial managers, proprietary products or services

Industry focus on technology, financial services, healthcare, business services and consumer industries

Confidential

1 - 1

Market Overview – Economic ConditionsMarket Overview – Economic Conditions Although general market conditions remain challenging, key indicators suggest themarket may have bottomed.

• The quarterly decline in GDP appears to have stabilized in the first quarter.

• The Consumer Confidence Index has rebounded after hitting an all-time low in February 2009.

Real GDP

Economic Conditions – GDPFor the Last Five Years Ended Q1 2009 and Projected Q2 – Q4 2009($ in trillions)

Consumer Confidence and Unemployment1

For the Months Ended January 2000 – April 2009

Projected GDP

100

120

140

160

7.0%

8.0%

9.0%

10.0%

ConsR

ate

Unemployment Rate

4%

6%

8%

10%

$11.5

$12.0 Real GDPActual Year-Over-Year Change

Projected

Projected GDP

Projected Year-Over-Year Change

40

60

80

100

2.0%

3.0%

4.0%

5.0%

6.0%

sumer confidenceU

nem

ploy

men

t

4%

-2%

0%

2%

$11.0

Stabilization?

0

20

0.0%

1.0% Consumer Confidence-6%

-4%

$10.5Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

Source: The Conference Board and U.S. Bureau of Labor Statistics.

2004 2005 2006 2007 2009E2008

Source: Capital IQ.

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Market Overview Equity Market ConditionsMarket Overview – Equity Market ConditionsAlthough still well below record highs, equity markets are up significantly from firstquarter lows.

D it t k t k th S&P 500 h i 34 0% i M h 9th 2009

Equity Market Performance – S&P 500For the Period of January 1, 2004 – May 28, 2009

Equity Market Performance – S&P 500For the Period of January 1, 2009 – May 28, 2009

• Despite recent market weakness, the S&P 500 has risen 34.0% since March 9th, 2009.

1 400

1,500

1,600

1,700

900

1,000

Stimulus bill signed into law.

S&P (18.2%) since 2004

1,000

1,100

1,200

1,300

1,400

34.0% Increase

800

900

600

700

800

900

Jan 04 Jul 04 Jan 05 Jul 05 Jan 06 Jul 06 Jan 07 Jul 07 Jan 08 Jul 08 Jan 09

600

700

Jan-09 Feb-09 Mar-09 Apr-09 May-09

Obama budget introduced into Congress.

Administration announces plan to bail out automakers.

Jan 04 Jul 04 Jan 05 Jul 05 Jan 06 Jul 06 Jan 07 Jul 07 Jan 08 Jul 08 Jan 09 p y

Source: Capital IQ.Source: Capital IQ.

1 - 3

1 - 4

Market Overview Debt Market ConditionsThe credit market remains tight…

• Over the past 18 months, leverage multiples have contracted materially from peak levels,availability has evaporated and loan defaults have accelerated

Market Overview – Debt Market Conditions

Lagging 12-month Default Rate by Number of IssuersFor the Period of December 1998 – April 2009

Middle Market Debt/EBITDA Multiples1

For the Years Ended December 31, 2001 – 2008; H1 and H2 2008; and Q1 2009

availability has evaporated, and loan defaults have accelerated.

8 0%

9.0% 3.8x 4.1x

4.7x 4.8x

5.6x

4.9x4.5x

5.0x

6.0x

Q

Average: 4.3x Recessions

4.0%

5.0%

6.0%

7.0%

8.0%

3.5x3.7x

3.5x

2.0x

3.0x

4.0x Current: 5.4%

0.0%

1.0%

2.0%

3.0%

0.0x

1.0x

2001 2002 2003 2004 2005 2006 2007 H1 2008

H2 2008

Q1 20092008 2008 2009

Source: Standard & Poor’s and industry research. For Q1 2009 data represents HW&Co. internal estimate.(1) For issuers with less than $50 million EBITDA.

Source: Standard & Poor’s.

1 - 5

Market Overview Debt Market Conditions (continued)

• Investors have bid up the secondary market in recent months, and leverage loan issuancest h b d d if l i ll

… but is showing signs of life.Market Overview – Debt Market Conditions (continued)

appear to have rebounded, if only marginally.

New Leveraged Loan Issuances and Average Institutional Flow-Name Loan BidF th P i d f A il 2 2008 M 28 2009

90

95

$25

$30

lions

)

For the Period of April 2, 2008 – May 28, 2009($ in billions; bid price in cents relative to $1.00 par value)

Current: 83.8

75

80

85

$15

$20

Average SeconV

olum

e (in

bill

Low: 63.5

65

70

75

$5

$10

ndary Bid

ever

aged

Loa

n

60$0

L

Leveraged Loan - New Issuances Avg Institutional Flow Name BidLeveraged Loan New Issuances Avg. Institutional Flow Name BidSource: S&P LCD.

1 - 6

Market Overview Middle Market M&A Activity

• M&A volume declined throughout 2008 and into the first quarter of 2009 but the market appears

Market Overview – Middle Market M&A ActivityIn concert with the general economy, debt markets, and equity markets, M&Aactivity has declined significantly from its 2006/2007 peak.

• M&A volume declined throughout 2008 and into the first quarter of 2009, but the market appearsto have found a floor.

Middle Market M&A Transaction Activity1

For the Years Ended 1989 – 2008 & for the First Quarters 2008 & 2009Middle Market M&A Transaction Activity1

For the Months Ended January 2008 through April 2009

2,000

2,500

$250

$300

y g p

400

500

$40

$50

1,000

1,500

$100

$150

$200 # of Transactions `

Val

ue ($

in b

illio

ns)

`

200

300

$20

$30

# of Transactionsal V

alue

($ in

bill

ions

)

0

500

$0

$50

$100

Dea

l V

0

100

$0

$10

s De

Deal Value Number of TransactionsSource: Thomson Financial – SDC database.(1) Includes transactions valued between $25 - $500 million with the target based in the United States

or Canada. Excludes financial institutions.

Source: Thomson Financial – SDC database.(1) Includes transactions valued between $25 - $500 million with the target based in the United States

or Canada. Excludes financial institutions.

Deal Value Number of Transactions

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Market Overview Middle Market M&A ValuationsMarket forces have pushed M&A multiples down over the past 12 – 18 months.Market Overview – Middle Market M&A Valuations

9 0x

Average Purchase Price Multiple for Transactions below $500 Million1

For the Years Ended December 31, 2001 – 2008 and YTD 2009

7.8x7.6x

8.4x

7.5x7.5x

8.0x

8.5x

9.0x

8-Year Average: 7.1x

6.0x6.3x

6.5x6.8x

6.3x

6.0x

6.5x

7.0x

4.5x

5.0x

5.5x

4.0x2001 2002 2003 2004 2005 2006 2007 2008 2009YTD

Source: Standard & Poor’s and industry research.(1) Purchase price multiple calculated as average purchase price / pro forma trailing EBITDA.

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Market Overview Buyer Health

• Deal activity remains limited despite a significant amount of uninvested private equity

Financial and strategic buyers appear to be well positioned to increase acquisitionactivity.

Market Overview – Buyer Health

capital and corporate cash on the sidelines.

Cumulative Uninvested Private Equity CapitalFor the Years Ended December 31, 1998 – 2008

S&P 500 – Aggregate Cash Balance For the Years Ended December 31, 1998 – 2008

Private Equity Buyers Strategic Buyers

$1,000

$1,200

$400

$450

$500

$550

pita

l___

($ in billions) ($ in billions)

$1.1 Trillionin Aggregate Cash

$507 BillionUninvested

$400

$600

$800

$150

$200

$250

$300

$350

sted

Pri

vate

Equ

ity C

aSignificant Available Capital…

$0

$200

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

$0

$50

$100

$

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Uni

nves

Source: Buyouts and Thomson Financial Source: CapitalIQSource: Buyouts and Thomson Financial.

Public vs. Private Valuation Disconnect

Focus on Value/Distressed Opportunities…but with Bottlenecks

Source: CapitalIQ.

Lack of Debt Financing Maintaining Liquidity

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