presentation to: capital markets and m&a update october 7 ... · presentation to: capital...

© 2013 Navidar Group LLC

Member: FINRA/SIPC

Presentation to: Capital Markets and M&A Update October 7, 2010

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2 CONFIDENTIAL

Disclaimer


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.

3 CONFIDENTIAL

Table of Contents

Section

Global Markets Overview I

Midwest Deal Activity III

II Private Investment Activity

Navidar Observations On the Market IV


4 CONFIDENTIAL

I Global Markets Overview


5 CONFIDENTIAL

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


6 CONFIDENTIAL

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.


7 CONFIDENTIAL

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


8 CONFIDENTIAL

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


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%


9 CONFIDENTIAL

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.



10 CONFIDENTIAL

U.S. and the U.K. Lead the Cross Border Activity


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)


11 CONFIDENTIAL

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 (%)



12 CONFIDENTIAL

II Private Investment Activity


13 CONFIDENTIAL

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



14 CONFIDENTIAL

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.


15 CONFIDENTIAL

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.


16 CONFIDENTIAL

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)


17 CONFIDENTIAL

III Midwest Deal Activity


18 CONFIDENTIAL

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.


19 CONFIDENTIAL

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



20 CONFIDENTIAL

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%


$32.8B in 1H 2010


21 CONFIDENTIAL

IV Navidar Observations On the Market


22 CONFIDENTIAL

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


23 CONFIDENTIAL

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.


24 CONFIDENTIAL

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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