SOURCINGThe

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Middle-market companies gear up for more M&A activity in 2010

2 • Sourcing the Deal • May 2010

ContentsIntroduction .......................................................... 1

Survey Findings ......................................................3

Expert Insights .......................................................7

Willie Woods, ICV Partners ..................................7

Luke Gosselin, Aladdin Credit Partners ................8

Brent Gledhill, William Blair & Co. ........................9

Merrill Corp. and The Deal surveyed 150 middle-market companies to determine how these firms source M&A deals. Most are smaller-tier firms in the banking and finance sector (37% of all respondents) and have less than 50 employees. Roughly half (49%) of the participants said they announced less than five acquisitions or divestitures in 2009, while 52% said the average dollar value of their acquisitions for this period was under $50 million.

Survey Notes

May 2010 • Sourcing the Deal • 1

IntroductionMiddle-market companies are gearing up for more acquisi-tions this year—a sure sign that firms are starting to glimpse a bottom to the recession. Although the recovery remains fragile, more companies are expecting 2010 to be a busier year for deal flow than 2009 (Chart 1) as equity markets stagger back to life and opportunities re-emerge. This is already evident in the deal flow since the start of 2010, with 180 announced or completed middle-market deals ranging from $50 million to $1 billion through March, according to pipeline.thedeal.com. That’s a 23% increase over the 146 deals done or announced for the same period last year.

To better understand how these companies are sourcing new deals—what sectors are on their radar screens, criteria for assessing targets and their view for 2010—Merrill Corporation and The Deal surveyed 150 middle-market companies. Some 52% of those surveyed said deals had generally ranged below $50 million in 2009, while 68% now say they expect the size of transactions to increase for 2010—in the range of $50 million to $1 billion (Chart 2).

“We’re only just starting to see more M&A activity. There’s a lot of cash in the sidelines, so that’s the good news,” says Bruce Eatroff, a partner at New York-based private equity firm Halyard Capital.

“If you’re a strategic buyer, this could be a good opportunity to pick up a competitor and take real costs out. Or deals could be so cheap that people say we’ve reached the bottom. The question is if it’s the bottom.” This is precisely what many companies are trying to determine as they sift through sectors that have been hit hard, such as consumer-related and media companies.

More than half of the companies surveyed say conditions for doing deals remain “difficult.” But there are also signs that the environment is improving, with 29% saying conditions for finding appropriate targets are “somewhat easy.” Glimmers of optimism are also evident as companies begin to focus more on valuations and less on financing issues, with 48% saying their biggest challenge in acquiring deals is valuation and 47% still focusing on financing (Sidebar, page 3). While this is an admit-tedly narrow margin, it does suggest that companies are at least starting to look around again for new deals. “Concern about valuation is the best sign that these companies are no longer spooked and are ready to buy businesses again,” says Brent Gledhill, global head of corporate finance at Chicago-based investment firm William Blair & Co. LLC. “We’ve had a number of calls from strategists and a lot more meetings over coffee.”

The need to maximize resourcesAs companies scout for opportunities, they say they’re most focused on targets that make a good strategic fit with their business. Finding these opportunities can be especially chal-lenging for middle-market companies, which tend to have fewer resources and thinner networks than better-capitalized companies. So making the most of available resources is essen-tial. Some companies prefer to own the deal process, with 39% of respondents saying their internal corporate dealmakers have primary responsibility for locating acquisitions or buyers for divestitures (Chart 3). Dedicated deal teams can apply their industry expertise more directly in the due diligence process—which can be a big advantage over those that farm this responsibility to others.

“If you’re a buyer and there’s a question of resources, will you do better if you have a dedicated business development person talking to the market about what’s going on? Absolutely,” says Eatroff. “This is particularly so in sectors where there’s not as much transparency.”

While many prefer direct control in the deal process, execu-tives also recognize the importance of partnering, with some 33% saying they share this work with investment banks, advi-sory and law firms and other external methods. To a much lesser extent, corporate dealmakers also tap professional networking associations, while others choose to hand the core responsibility for finding deals to designated profes-sional partners outside the firm. This may be more common among smaller firms with fewer resources. But bottom line, most companies look to some extent on outside resources. Even when companies depend on their own internal groups to source possible deals, 45% say they rely foremost on profes-sional relationships (Chart 4).

Companies say another important resource is old-fashioned word-of-mouth information, as well as cold calls, media reports, Securities and Exchange Commission filings and public state-ments. Of those who favor the media for their information source, 80% say they use the Internet (Chart 5), reflecting a hunger for information in a market that has been traditionally opaque. That’s because the middle market has a large number of private companies, which aren’t subject to the same level of financial disclosure that public firms are.

“Media usage is an important tactic for people in corporate development,” says Gledhill. “Whether it’s looking at the Internet, reading The Deal, The Wall Street Journal or people’s tweets—they are pulling in as much data as they can.”

2 • Sourcing the Deal • May 2010

Looking for sector opportunities As capital markets recover, middle-market companies are focusing on sectors that have more potential to recover with the economy or benefit from resolutions to political and regula-tory uncertainties. Respondents say they’re particularly focused on healthcare/pharmaceuticals, financials, information tech-nology, energy, consumer products and media this year (Chart 6). Healthcare, which has started to stabilize since the recent passage of healthcare legislation, tops the radar screens of those surveyed. Others believe consumer products will get a boost as consumer spending improves.

Information technology is another sector that is gaining favor after suffering from big research and development spending cuts. Some think the sector has tremendous promise for growth as companies reignite their R&D spending machines. In another sign of the times, nearly half of the respondents say they’re considering distressed acquisitions in 2010—an indication that they’re seeing a bottom to the downturn and are more confi-dent about the availability of bargains.

Still, others are cautiously eyeing cross-border opportunities, although the majority of respondents are U.S.-based and continue to clearly emphasize domestic deals. However, 23% of respondents say cross-border deals will be “somewhat impor-tant” this year (Chart 7), with 26% of those polled indicating that Asia has the greatest potential for growth in midmarket acquisitions this year. That’s much higher than other regions. After Asia, the next highest-ranking region is South America, with 6% expressing interest there. “Valuation, even after all of the market undulations, remains high in China and Korea,” Gledhill says. “The underlying economies are growing very fast, which suggests the best businesses have growth rates far higher on average than those in the U.S. and Europe. Growth is the greatest determinant of value.”

Companies say their greatest priority in assessing the merit of a deal—whether it’s overseas or at home—is determining whether a target is a good strategic fit (Chart 8). Some 58%

say this is even more important than financial performance. Strategic strength can improve the odds of preserving and generating greater value down the road. For example, when business models and management teams fit well together, it can enhance synergies. When it comes to assessing risk, corpo-rate dealmakers put a heavy emphasis on accurate financial bookkeeping and revenue projections—with 35% saying this is the biggest concern when they conduct due diligence. Gledhill says these concerns relate directly to the Sarbanes-Oxley Act of 2002, which introduced major changes to the regulation of corporate governance and financial practice. “The worry and need to know what exactly is on your balance sheet has been heightened because of this act,” he says.

Credit remains tight and cash more plentiful Companies that are already sitting on cash and are watching the equity markets thaw are less prone to go to banks with hat in hand to fund their acquisitions—which is just as well, because banks remain reluctant to lend. About 19% of respondents said they would use cash in hand to fund their next acquisition, while just 2% said they would tap existing credit facilities and 36%—the biggest margin—said they would use a combination of cash, stock, outside funding sources and existing credit facil-ities (Sidebar, page 6).

“We’re still looking at an economy that has a fragile recovery, and so credit is still very scarce,” says Scott MacDonald, head of credit and economic research at Stamford, Conn.-based broker-dealer and investment firm Aladdin Capital Management LLC.

“That credit issue is going to remain through the course of this year. A lot of smaller banks are afraid of extending capital.” Companies are well aware of these constraints, with 42% saying they find financing conditions still “stringent.” Still, a greater number—57%—say financing has become available on a case-by-case basis. This suggests that funds are available for those that have solid balance sheets and compelling deals. That could bode well for those who will need to borrow as M&A activity picks up in the months ahead.

Introduction

May 2010 • Sourcing the Deal • 3

Survey Findings

Yes77%

No23%

Do you expect your company to consider making acquisitions and/or divestitures for the rest of 2010?

Chart 1. Do you expect your company to consider making acquisitions and/or divestitures for the rest of 2010?

Deals between$1 bill. – $5 bill.

Deals between$50 mill. – $1 bill.

Increase Decrease Remain the same

Increase Decrease Remain the same

68%

9%11% 9%

2% 1%

What are your expectations for the number of transactions based on deal size in 2010?

Chart 2. What are your expectations for the size of transactions based on deal size in 2010?

Legal and regulatory hurdles5%

Financing47%

Valuation48%

In identifying the biggest challenges they face when lining up deals, middle-market respondents say valuation is marginally more of a concern than financing the deal (48% versus 47%). This is another sign that company sentiment is slowly improving, as companies start to wrestle more with how much a target is worth than the difficulties in lining up financing—a common preoccupation for this sector and one that was even made more acute during the past two years. This may also reflect that some companies have greater cash cushions than usual.

Companies continue to gear up for more acquisitions and dives-titures in 2010, with 77% of respondents saying they expect to increase such activity through the end of 2010.

The majority of respondents (68%) see the greatest deal activity in transactions that are priced between $50 million and $1 billion, a bracket where many smaller-growth opportunities can be found right now. They generally expect deal values to rise in 2010 from 2009. Far fewer (9%) see an uptick in bigger deals worth between $1 billion and $5 billion.

n Sidebar: 2010’s biggest challenge for middle market acquirers

4 • Sourcing the Deal • May 2010

Survey Findings

The responsibility is shared among the aforementioned groups

Professional networking association or function

Investment Bank/Advisory Firm/Law Firm

Internal M&A/corporate dealmaking team

Internal M&A/corporate dealmaking team

Investment bank/advisory firm/law firm

Professional networking association or function

The responsibility is shared among the aforementioned groups

21%

7%

39%33%

Who is primarily responsible for locating possible middle-market acquisitions or buyers for divestitures for your company?

Chart 3. Who is primarily responsible for locating possible middle-market acquisitions or buyers for divestitures for your company?

Industry conferences ornetworking conferences

Follow up on published reports(newspaper/magazines/Internet)

Follow up on SEC filingsor public statements

Cold call

Word of mouth

Professionalrelationships

What is the most important processyour company’s internal group uses to locate possible deals?

45%

14%

12%

11%

8%

6%

Chart 4. What is the most important process your company’s internal group uses to locate possible deals?

Many middle-market companies (39% of respondents) continue to rely on their in-house dealmakers to determine acquisition targets and buyers for divestitures. But they also recognize the value of networking and are often on the lookout for good information and contacts to help them make important connec-tions. And some companies are just too small to command the necessary resources. These considerations are reflected to some extent in the fact that 21% of respondents hand primary respon-sibility for locating deals to their investment banks, advisory and law firms. Others prefer to keep some control but combine resources, with nearly 33% saying they work alongside profes-sional contacts.

Bottom line, it still matters who you know and how you mine your resources. Even those committed to driving the deal process in their corporate development groups or the CEO’s office say professional relationships remain essential for landing deals. In other words, they still rely extensively on outside contacts to track down deals, whether it’s established professional relation-ships or word of mouth. Many companies also glean information by tracking SEC filings and public statements.

77% of respondents say they expect to increase deal activity through the end of 2010

May 2010 • Sourcing the Deal • 5

Podcasts

Television

Radio

Industry-specificpublications

Internet 80%

8%

4%

7%

34%

What type of media do you use to find out about companies for sale?

Chart 5. What type of media do you use to find out about companies for sale?

Survey Findings

The more information companies can glean about a prospec-tive deal, the better. It’s no surprise, therefore, that some 80% of those surveyed who say they use the media as a research tool also say they prefer the Internet over other media, such as podcasts and television. After the Internet, 34% say industry-specific publications help. The Internet should continue to play a more important role in keeping companies informed about market developments and industry opportunities—especially as deal activity gathers steam. Unlike bigger companies, which have more extensive resources, corporate middle-market deal-makers tend to be more stretched in this regard.

Companies are hunting for value and opportunity in sectors that have faced significant challenges in the economic downturn or sectors that have been under political or regulatory scrutiny and are now moving closer to some form of resolution. For example, some 36% of companies say they expect more activity in health-care deals for 2010—a sector that has recently begun to stabilize following government passage of healthcare reform.

The Internet should continue to play a more important role in keeping companies informed about market developments and industry opportunities—especially as deal activity gathers steam

Professional services (legal)

Other

Retail

Transportation

Education

Chemicals

Auto

Electronics

Telecom

Real estate

Software

Media

Industrial products

Consumer products

Energy

Information technology

Banking/finance

Healthcare/pharmaceuticals

36%

34%

31%

29%

16%

16%

15%

15%

12%

10%

9%

8%

8%

8%

7%

5%

5%

2%

For which of the following industries do you expect the most activity in 2010?

Chart 6. For which of the following industries do you expect the most activity in 2010?

6 • Sourcing the Deal • May 2010

Survey Findings

Somewhatimportant

23%Not

essential65%

Toppriority12%

How important is making a cross-border/overseas acquisition for your company in 2010?

Chart 7. How important is making a cross-border/overseas acquisition for your company in 2010?

Most of those surveyed are based in the U.S. and say they don’t consider cross-border/overseas deals as essential to their 2010 acquisition strategies. Still, a number of companies are thinking about it, with 23% calling cross-border deals “somewhat impor-tant” for this year. In a related question, 26% of respondents said Asia holds the greatest potential. And in another survey question relating to cross-border deals, more than half of respondents say they’re most interested in strategic benefits, followed by financial performance. Middle-market respondents say strategic fit is the single greatest

factor they look at when deciding if they want to do a deal, with 58% ranking this as their No. 1 criteria. For example, some look to see whether management can work together and how well the business models complement each other. This is one way to help prevent deals from unraveling down the road. While profit-ability is also important, just 23% of companies said they focused primarily on this factor. In a related survey question, dealmakers say the greatest risk they worry about during due diligence is accurate financial bookkeeping and revenue projections.

Strategic fit of target to current business

Profitability

Other (please specify)

Your company’s current financial ability to make an acquisition

Geographic restrictions

23%

3%

58%

7%

9%

What is your company’s top criteria when considering a company to possibly bid on?

Chart 8. What is your company’s top criteria when considering a company to possibly bid on?

Combination of all or some of the above

Raise financing from outside

sourcesTap existing credit facilities

Combination of cash and stock

Stock

Cash on hand

36%

17% 2%

21%

5%

19%As companies gear up for more M&A deals, they are planning to tap a mix of financial resources—cash, stock, external funding and existing credit facilities. Although credit conditions have eased, banks have been slow to start lending again to the middle market.

n Sidebar: Financing the next acquisition

May 2010 • Sourcing the Deal • 7

Expert Insights

Willie Woods, President and Managing Director of ICV Partners LLC

What is your firm’s focus in the middle markets?We’re a private investment firm focused on the lower end of the middle market, with companies that have EBITDA between $5 million and $30 million. These companies represent the larger part of the economy and so span most sectors, such as manufac-turing, consumer products, industrial packaging and healthcare. Because they’re small, they tend to have common issues—whether it’s holes in management or they’ve been myopic in their approach, or they’re offering only a single product. Many are entrepreneurs that have not had the financial resources to pursue different products or distribution channels.

Is M&A activity picking up? Last year was terrible for deal flow—ours was down by 12% to 15%. Because this is the riskier end of the middle market, financing goes away quicker and comes back more slowly. Valu-ations came down in 2009 and companies that didn’t have to do a transaction decided to wait. That’s changing. Although the 2010 first quarter got off to a slow start, in the last 35 to 40 days our niche sector of the market has picked up substantially. Credit markets have come roaring back, so lenders are back and pricing has gotten lower. Normally, this sector takes a while to get re-energized, but that isn’t the case this time. Lending terms in this sector are never as good as in the larger markets, but nevertheless, credit availability is much stronger. And that’s what creates the environment for doing transactions.

Do you expect momentum to continue? This is going to be a busy year, driven by the incredible return of the financial market. There’s also a lot of pent-up activity from 2009. I’ve heard some investment banks are making eight to nine pitches a month, compared to three to four last year. Normally, when you see that level of pitches, it means someone is going to get hired. I simply think there are many more small companies than larger companies, which is what

makes this time more unique. Individually owned firms may also be motivated to do more deals because the capital gains tax is going up at the end of this year, so they recognize that even if they can’t get the full value they may have wanted this year, they still don’t want to give the tax person their money next year. This will make people want to do transac-tions as well.

How do you source deals?All of our deals are sourced through some sort of investment bank process. In today’s world, it’s difficult to find a proprietary deal where there’s no investment bank involved. Most entre-preneurs are not sophisticated finance people, so this outside involvement leads to a more efficient use of their time. Our job at ICV is to find what we call limited auction situations. Typi-cally, this involves an entrepreneur- or family-owned business where family members have decided they want to bring in a financial partner to increase liquidity for their estates or do a product investment to diversify their wealth. Sometimes it’s a vision for how their company can grow. They aren’t interested in talking with a lot of people. We have a very robust calling program organized regionally by deal partner. You have to be top-of-mind with investment bankers so you’re included when they get a call from an entrepreneur.

Are you focused on opportunities among distressed companies?

We’re in the middle of a deal right now that is typical of what we like—a family-owned business that’s been around 50 years. We don’t see many distressed deals as they are not our focus—that’s more for restructuring specialists. We’re not interested in companies where earnings fell off the cliff, but would be inter-ested where someone put too much leverage on the company and the company had a stumble because of the economy but the core business is still fine and can be fixed with the right capital structure. But this is why we don’t do subordinated leverage—the smaller companies are always the first to get hit. Banks aren’t as sympathetic and just want to get these companies off their watch list and move on. So we think it’s prudent not to be overleveraged. If we’re competing with a private equity firm that advocates a lot of leverage, we’re going to win that contest every time.

8 • Sourcing the Deal • May 2010

Luke Gosselin, Co-Founder and Co-Portfolio Manager of Aladdin Credit Partners LLC

What is the core focus of your business? Last year we launched a credit opportunities fund that’s focused on providing financing to distressed middle- and upper-middle-market companies. But our mandate is relatively flexible. We focus on prepetition financing, usually in the form of rescue financing for companies that are bumping up against—maturi-ties and covenants and have liquidity issues. If they have a lender that’s in a difficult position, there may be good reasons for us to take a look and see if we can get our arms around the value, either enterprise value or in a very distressed situation where we perceive there to be significant asset value. If the value is there, we will contemplate putting a financing facility in place.

Where are you seeing opportunities and how do you source deals?

In the middle market, we continue to see a big universe of compa-nies that are experiencing financial duress that need our type of financing—creative, flexible alternative financing that’s not available to them from the large investment banks, commercial and regional banks. For us, it’s all about being able to tap into the network of relationships that have historically advised or financed the middle market. We spend a lot of our time dealing with midmarket investment banks and financial advisors that advise distressed companies. We’re very well tapped into the bankruptcy community from an attorney perspective. So it’s that network of relationships that can bring us into many situa-tions. And given the fact that we were relatively successful in a tough market raising capital last year for our credit opportuni-ties fund, we’ve got something in capital that’s very precious, and which until recently other lenders haven’t been willing to part with.

Has the decline in defaults affected your business?Our mandate is relatively flexible in terms of being able to finance companies across the spectrum—from prepetition to bankruptcy to post-bankrutpcy situations. Despite the recent moderation of the corporate default rate in the U.S., we continue

to see significant financing opportunities in the middle market. A lot of companies were able to get their lenders during the later part of 2008 and into 2009 to kick the can down the road on debt maturities and covenants, where financial institutions were not necessarily taking a realistic view of value but acted to avoid default and the necessity of marking down their positions. That happened in the institutional market and to some extent in the middle-market sector. Some of these larger companies have now been able to access the high-yield market and appear to have weathered the storm.

But there is also a preponderance of off-the-run middle-market companies that can’t access the high-yield market, so that’s where we’ll spend a fair amount of our time. Whether in the context of bankruptcy or outside bankruptcy, a lot of these companies need our type of financing and we’re taking advan-tage of that. There’s a gap between people who are willing to provide credit and those who aren’t. A lot of banks are reluc-tant to extend capital given uncertainty surrounding regulatory capital requirements and the necessity to raise reserves. This is a particular concern among smaller banks that cater to middle-market companies.

How difficult is it to determine value in the current market?

My personal perspective is that we’re a lot closer to the bottom of the economic cycle than the top, so the judgment call regarding valuations is easier today than it was 24 to 36 months ago. As we’ve migrated down this path the last 12 months, initially it was very challenging to figure out what values were. Some companies weren’t even being valued at their hard asset values. For us, you have to take a longer-term approach and accurately evaluate where we think midstream valuations will be. Then I think at the end of the day you can get comfortable. If you conclude the situation runs the risk of liquidation and the company doesn’t have a lot of restructuring value, you need to look at the assets and discern who the logical buyers of the assets are. You also need to determine where the company fits in with the competition and if there’s a reason for the company to continue to exist. This analysis is completely driven by your view as to whether the company will successfully restructure or go away.

Expert Insights

May 2010 • Sourcing the Deal • 9

Brent Gledhill, Global Head of Corporate Finance at William Blair & Co. LLC

Has your deal flow been picking up this year?Definitely. Just the fact that the market is stable again allows the M&A business to get off the mat. The valuation gap hangover that was still drifting around in 2009 impeded many of the M&A deals, but that’s changing. Even with deal volumes down, we’ve come out with a strong closing pattern in healthcare, consumer, IT and business services. Basic consumer industries are also attracting strategic interest. When the valuation hang-over dissipated, you saw strategic buyers with a lot of money and low interest rate facilities. Recently, they’ve been adding debt just to make sure they’re bulked up and ready for the next acquisition.

What sectors are offering the best value? We’re seeing a lot of activity in the healthcare, consumer and technology sectors. The consumer sector, which was unnatu-rally affected, is one of several opportunities we’re seeing. Usually food companies are very stable, but with the massive recoil in consumer spending, everything got hit. Now we’re seeing consumer, healthcare and technology sectors all coming back. In healthcare, whether you like the healthcare reform act or not, this greater clarity has allowed people to take a view on how the future will play out. In the healthcare world, we’re now typically trading deals in the mid- to high teens on an EBITDA basis. You’re not going to get that unless you have a pretty clear legislative and regulatory landscape.

Technology is also very attractive. If there’s a sector that’s been gagging for new, emerging small-cap companies, it’s technology. The R&D curve for technology has been cut short because the larger companies have made so many acquisi-tions, meaning there’s been less R&D independence. Now the IPO window is opening for technology companies and more of these deals are getting done. Many of these tech companies have market caps from $200 million to $500 million. We’re currently named on more than 25 IPOs, and a big bulk of that is for technology companies. That’s something the market hasn’t had for a long time. With the lack of capital, people have once again started looking at public offerings as a way to set up an exit.

How do valuations look?I can’t stress enough the difference between this year and 2009 and how this valuation gap has dissipated. This means a private equity firm with businesses that grew, can exit at two-and-a-half times their initial investment value—and that feels great. It used to be three and four times, but now two is the new three. That’s what I mean by saying the valuation gap is dissipating. This has allowed more deals to get done. What does this mean for private companies? Fundamentally, they’re starting to see firms merging and a lot of companies doing deals and M&A returning to the headlines. They see their financial portfolios growing once again and realize selling now is no longer selling at a bottom.

Will deal activity carry into 2011? Here’s the potential future that we see: 2010 is the year of the sell-the-good-stuff. What does 2011 bring? We think next year will bring more IPOs because the valuation spread between a public financing and a sale to a strategic will likely remain tight. So the equity market will still look pretty good and there will be a need for strategic buyers.

Are you seeing more interest in cross-border deals? Typically, we have seen 35% to 40% of our M&A advisory proj-ects result in counterparties from two different countries, and 2010 feels like that will again be the case. We have seen active participation of European, Asian and North American buyers in our recent sell-side projects. On a more limited basis, we see South American parties. Compared to 10 years ago, Asian buyers have evolved to being competitive and capable to win North American and European auctions. Previously, they moved at too slow of a pace and did not use valuation multiples as often to underlie their bids. Now Korean and Japanese buyers compete actively to the final moments in our processes and win an increasing number of those processes.

On the other hand, while people talk about a big appetite for Asia, we think few actually have the stomach for it for three reasons: diligence limitations, cultural divergence and elevated valuation. For instance, the diligence process takes much longer and involves financial information, often with differing accounting principles from the U.S., lower internal control thresholds and less transparency.

Expert Insights

10 • Sourcing the Deal • May 2010

About Merrill DataSiteMerrill DataSite™ is a comprehensive virtual data room (VDR) solution that accelerates the due diligence process by providing a secure online document repository for confidential time-sensitive documents. Merrill DataSite overcomes the many limitations of a traditional paper data room by enabling companies to present critical business information to multiple prospective buyers in a secure Web-based environment. As a result, transaction time and expense are dramatically reduced. Merrill DataSite can be rapidly deployed and is accessible by viewers throughout the world via the Internet. As a leading provider of VDR solutions worldwide, Merrill DataSite has empowered nearly 2 million unique visitors to perform electronic due diligence on thousands of transactions totaling trillions of dollars in asset value. Merrill DataSite is the first VDR provider to understand the customers’ and industry’s need to provide the highest level of security by obtaining an ISO/IEC 27001:2005 certifi-cate of registration and sets the standard as the world’s only VDR certified for their operations in the United States and Europe.

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