The March Group | Leading Mergers & Acquisitions Firm Presentation

Doing Business in the USAMid-Market M&A

Mr. Thomas M. Braun Executive Vice PresidentThe March Group

Introduction

• The March Group

– Leading global investment banking firm specializing in mergers, acquisitions, divestitures and capital raising for the U.S. private mid-market

– Offices throughout North America

– 23+ years of mid-market experience

Events of the Day

• Attributes of the market

• Benefits to buyers worldwide

• Current acquisition and investment climate

U.S. Private Mid-Market

Keynote Speaker

Arthur Ward, Jr.VP, M&A AdvisorThe March Group

• Over three decades of successful business experience as an entrepreneur, negotiator and corporate executive

• As an entrepreneur, acquired, grew and sold six midsize companies. Deal-making experience spans 20 years and includes 2,000+ transactions

• As a corporate executive, served as IBM senior manager and Exxon senior vice president. At IBM, developed strategies to ensure effective, profitable introduction of new products and services. At Exxon, led development and implementation of business growth strategy resulting in acquisition of 33 companies in four years

Keynote Speaker

Arthur Ward, Jr.VP, M&A AdvisorThe March Group

• Art Ward has been quoted in dozen of business publications, including The Chicago Tribune, Business Week, Nation’s Business, Florida Trend and Inc. Magazine.

• He is a fellow of the Reed Institute of Chicago and has spoken to hundreds of groups.

Acquisition Opportunities

• Why Invest in the U.S.?

• Why the Mid-Market?

• Current Trends

Attributes

• Scale

• Economy

• Labor Market

• Culture

• Growth Trends

• Exchange Rates

Population(millions)

Per Capita GDPper capita income

Scale

Source: IMF, 2007

GDP($ tt)

U. S. 305 $45,845 13.9

Germany 82 $34,181 2.8

U. K. 61 $35,134 2.1

France 64 $33,281 1.9

Ireland 5 $43,144 1.8

Italy 59 $30,448 1.8

Spain 46 $30,120 1.3

Canada 34 $38,400 1.3

Consumer Base

Scale

• World GDP:

– U.S. represents 26%

– U.S. and Canadarepresent 29%

Source: IMF, 2007

Deal Activity

0

2,000

4,000

6,000

8,000

10,000

12,000

19

87

19

88

19

89

19

90

19

91

19

92

19

93

19

94

19

95

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

Global M&A Transactions

Source: Mergerstat Review, 2006, 2007, 2008

0

5

10

15

20

25

30

35

40

UnitedStates

France Canada UnitedKingdom

Germany

Labor Market

Source: The Economist, Pocket World in Figures, 2008 Edition

Employment Costs for production employees:

$ p

er h

ou

r

Labor Market

Source: OECD Factbook 2008: Economic, Environment and Social Statistics

Percent of labor cost per employee:

0%

10%

20%

30%

40%

50%

60%

UnitedStates

Canada UnitedKingdom

Spain Italy Germany EU 15average

Labor Market

Source: OECD Factbook 2008: Economic, Environment and Social Statistics

Percent of workforce with advanced education:

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

UnitedStates

Canada UnitedKingdom

Spain Italy Germany

Labor Market

Source: 2007 Global Competitiveness Report

Percent of workforce that are union members:

0%

5%

10%

15%

20%

25%

30%

35%

40%

UnitedStates

Canada UnitedKingdom

Spain Italy Germany

Exchange Rates

Source: Oanda.com

• The U.S. Dollar

– Two years endedJanuary 1, 2009, thedollar has declined…

• 5% against the pound sterling

• 14% against the Euro

– The U.S. is on sale!

Private mid-market

• Over 1 million mid-marketcompanies in the US

– Revenues up to $500 million

– Make up 80% of US economy

– Make up 88% of all deals done (by volume) in the U.S.

Source: Dun & Bradstreet

99.6% Private

1,037,880 companies

0.4% Public

4,163 companies

U.S. Mid-Market

Source: Dun & Bradstreet, 2007

Turnover: $2M – $500M> 1m companies

Mid-Market M&A

• Strategic buyers looking for smaller targets– Ease of finance – Ease of board approval– Shareholders apprehensive towards larger

deals– Relatively fewer integration issues– Risk spread across number of smaller deals– Empirical data supports better returns

Mid-Market M&A

• Over a 20 year horizon, small buyouts returned 25% versus 11% for mega buyouts

Source: http://money.cnn.com/2007/04/11/magazines/fortune/demos_privateequity.fortune/index.htm

ROI

0%

5%

10%

15%

20%

25%

Mega Buyouts Small Buyouts

Deals Closed Below $500 Million

Mid-Market Transactions

Source: Mergerstat Review 2008 and Mergerstat Review 2006

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Percentage of Deals with Disclosed Valueby Range

Mid-Market Transactions

Source: Mergerstat Review 2008 and Mergerstat and Mergerstat Review 2006

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Deal Value(US$MM)

$0 - $25

$25 - $50

$50 - $100

$100 - $500

Over $500

Mid-Market Transactions

Type of Payment

Other

Stock

Combination

Cash

47%

31%

21%

1%

Source: Mergerstat Review 2008

Involving Private Target Companies: 1984 – 2007

Offshore Transactions

Source: Mergerstat

0%

10%

20%

30%

40%

50%

60%

70%

80%

'84 '85 '86 '87 '88 89 ‘90 ‘91 ‘92 '93 '94 '95 '96 '97 '98 '99 ‘00 ‘01 ‘02 '03 '04

Per

cen

tag

e o

f G

lob

al T

ran

sact

ion

s 90%

'05 '06 '07

Offshore Transactions

31%

16%

18%

27%

8%

$0 - $25

$25 - $50

$50 - $100

$100 - $500

Over $500

Source: FactSet Mergerstat Custom Report

Deal Value(US$MM)

The Acquisition Process

Identificationof Target

Local Incentives

Confidentiality Agreement

Financing Alternatives

Confidential Discussions/Negotiations

Letter of Intentor Term Sheet?

Due Diligence

Additional Negotiations

Purchase Agreement

Pre-Closing

Closing

Post-Closing

Integration with Purchaser

Similar to Acquisitions around the globe

North American Private Middle Market

Summary

• Tremendous opportunity

• No better time than now– Currency Exchange Rates– Tax Rates– Interest Rates– Baby Boomer Bonanza for Buyers

Baby Boomer Bonanza

“The baby boomer generation is aging. Over the next 10-15 years small businesses will be sold at a pace that dwarfs any previous activity…

In the next 10 years, however, we will be moving into a buyer’s market.”

San Antonio Business Journal, 2007

The March Group —An Overview

Mr. Art Ward, Jr.Vice PresidentThe March Group

January 14, 2009

The March Group – Overview

• A leading global investment banking firm for the private middle market

• Offering unique coverage across the U.S. and around the world

• Primary focus: North American private companies with– Revenues up to $200m– Profitable operations

• 23+ years in the mid-market

The March Group – Overview

• We specialize in North American and trans-Atlantic mid-market M&A and Corporate Finance

• The best access to the North American mid-market– Insight into thousands of private companies– Relationships with thousands of US buyers,

investors and access to their multi-company portfolios

The March Group: A Deeply Resourced Organization

• Offices– North American HQ: South Florida– Additional offices throughout the world

• Professionals– Over 175 professionals & support staff– Research team dedicated to the mid-market

and niche industries– Experienced dealmakers

• Hundreds of years of cumulative experience

The March Group

• Currently in the market with over 250 mandates in over 50 different industry niches

• We assist buyers and investors in making sense of the North American mid-market and identify appropriate targets and opportunities

• We assist in arranging financing either in the US or Europe either at the parent level or at the acquisition target level

• We assist when other major investment banks have no interest in the transaction

The March Group

North American Coverage

General Industry Coverage

Agriculture, Forestry &

Fishing0.5%

Building Materials

& Construction17%

Manufacturing24%

Transportation, Utilities &

Communications6%

Wholesale & Retail26%

Finance, Insurance & Real Estate

0.5%

Services26%

Aerospace Trucking & automotive Logistics Financial services Consulting Food Metals & mining Energy & utilities Biotechnology Telecom, cable, &

wireless Printing & publishing Textiles, fabrics,

materials Retail services Business Services Chemicals Hospitality Technology

Building products Construction services Engineering Machining & tools Textiles Paper & packaging Paints & coatings Agricultural equipment Measuring devices Environmental services Software Staffing Security systems Healthcare services Architecture Wholesale distribution Consumer products

Industry Sub-Sectors

Capabilities

MAXIMIZEVALUE

Mergers & Acquisitions

Capital Raises

Leveraged Buyouts

Divestitures

Cross-Border

Valuations

Expertise – Sell-side

• North American privately owned middle-market companies where owners want to retire or to diversify

• North American private equity backed businesses which are part of a maturing portfolio

• US ‘orphan’ / non-core businesses owned by large multi-nationals

Expertise – Buy-side

• Identifying and managing the acquisition process for North American targets on behalf of U.K. And EU groups

• Introducing U.K. And EU targets to US strategic and financial groups interested in offshore deals and managing the acquisition process

• Capital raising in North America for US and EU companies to support acquisitions and introducing the acquirer to new sources of financing

Why The March Group?

• Mandate matching seller inventory ready for acquisition

• On the ground value assessment

• Multiple funding options and choices

• Accelerated closing resources

• Coverage in all major North American markets

Typical Acquisition Timeline

Research Solicitation

2-3 Months

InformationGathering LOI

Due Diligence& Closing

Typically 3-5 Months

Process & Timetable

Engage The March Group

Confirm acquisition criteria

Research target population meeting acquisition criteria

Present target profiles

Prioritize targets Confirm tactics

for approaches Create buyer

overview Make approaches

to agreed prioritized targets

Provide result feedback

Determine if genuine sellers

Introduce buyer Obtain financial

and commercial information

Assess and visit Evaluate and

determine whether to submit LOI

Submit LOI Negotiate LOI Countersign LOI Coordinate due

diligence process and timescale

Start exclusivity period

Explore financing if necessary

Continue negotiation of legal documentation

Complete due diligence

Raise capital if necessary

Plan integration Close

Prepared Sellers

• Financially Committed– Clients pay a sizable retainer prior to buyers being

contacted

• Reasonable Expectations– Clients receive a detailed valuation prior to buyers

being contacted

• Efficient Process– Financial information and other due diligence items

are professionally prepared in advance

• Constantly adding new deal flow– New sellers acquired monthly

Access to Sellers

www.corporations4sale.com

www.corporations4sale.com/comingattractions

Thank you