Financial Crisis PanelFinancial Crisis PanelEffects and Changes in Mergers & Effects and Changes in Mergers &

AcquisitionsAcquisitions

World Services GroupWorld Services Group

Costa RicaCosta RicaNovember 12, 2009November 12, 2009

2:00-3:15 pm2:00-3:15 pm

Ed DawsonEd DawsonCapital Alliance CorporationCapital Alliance Corporation

Dallas, Texas, USADallas, Texas, USA

“Something is definitely going on. We’re back to eating dog food.

Source: The New Yorker

Financial CrisisFinancial Crisis

EffectsEffects

Risk reductionRisk reduction

FearFear

Conservative, less risky actionsConservative, less risky actions Build reservesBuild reserves

Reduce costs/assets employedReduce costs/assets employed

Merger and acquisition impactMerger and acquisition impact 4Q08 marketplace virtually frozen4Q08 marketplace virtually frozen

Gradual monthly improvements in ‘09Gradual monthly improvements in ‘09

Financial CrisisFinancial Crisis

ChangesChanges

Dramatic reduction in lendingDramatic reduction in lending

Many private equity firms can not get Many private equity firms can not get financingfinancing

Staff reductions throughout the industryStaff reductions throughout the industry

Global M&A Activity in Global M&A Activity in Recent YearsRecent Years

Cyclical and Ever ChangingCyclical and Ever Changing

US and Global M&A ActivityUS and Global M&A Activity

Monthly AverageMonthly Average

Source: Source: Federal ReserveFederal Reserve

Release Date: Release Date: September September 20092009

New Security IssuesNew Security IssuesUS CorporationsUS Corporations

Total U.S. Private Equity Total U.S. Private Equity Deal FlowDeal Flow

Source: PitchBook

U.S. Private EquityU.S. Private EquityFundraising ActivityFundraising Activity

Source: PitchBook

The number of funds raised year to date declined 57% compared to 143 funds closed through 3Q 2008.

What Have Bankers Been What Have Bankers Been Doing?Doing?

“And, while there’s no reason yet to panic,I think it only prudent that we make preparations to panic.”

Source: Source: Federal ReserveFederal Reserve

US Depository InstitutionsUS Depository InstitutionsMonthly Total ReservesMonthly Total Reserves

Source: Source: Federal ReserveFederal Reserve

US – Net LendingUS – Net LendingAverage per QuarterAverage per Quarter

OpportunitiesOpportunities

Many strategic firms have excess cashMany strategic firms have excess cash

Strategic fits driving many transactionsStrategic fits driving many transactions

Private equity cash is availablePrivate equity cash is available

Many global opportunities – Far EastMany global opportunities – Far East

ChangesChanges

Lower pricesLower prices

Fewer transactionsFewer transactions

Difficult financingDifficult financing

More government involvementMore government involvement

More regulationsMore regulations

The “new normal” is conservative behaviorThe “new normal” is conservative behavior

We Have Seen This Movie We Have Seen This Movie BeforeBefore

Credit Suisse Global Risk AppetiteCredit Suisse Global Risk Appetite