Worldwide M&A Activity down 28% over 2007

0

200

400

600

800

1 000

1 200

1 400

1 600

1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08

Vo

lum

e ($

bil

)

Americas Europe Asia-Pacific Africa/Middle East

Source: Thomson Reuters

Decline also in mid-market M&A activity; Under $500m down 24%

$0

$200 000

$400 000

$600 000

$800 000

$1 000 000

$1 200 000

$1 400 000

$1 600 000

1Q05 2Q05 4Q05 4Q05 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08

Val

ue

of

Dea

ls (

$mil

)

$1-500m $500-1000m $1000-5000m $5000-HI Source: Thomson Reuters

M&A Outlook Survey Details

• 94 respondents• Conducted in September 2008

Overall M&A Activity

Excellent2%

Good31%

Fair50%

Poor17%

0%

10%

20%

30%

40%

50%

60%

DecreaseSignificantly

DecreaseModerately

Remain theSame

ModeratelyIncrease

SignificantlyIncrease

How would you characterize the environment for M&A activity today?

During the next 6 months the number of M&A transactions will…

Outlook by Industry Sector

0 0,5 1 1,5 2 2,5

Financials

Retail

Real Estate

Consumer Staples

Industrials

Media & Entertainment

Materials

Consumer Prod. & Services

Telecommunication

Government & Agencies

High Technology

Healthcare

Energy & Power

For the next 6 months, which sectors will experience the most organic

growth?

0 0,5 1 1,5 2 2,5

Media & Entertainment

Consumer Staples

Government & Agencies

Retail

Telecommunication

Materials

Real Estate

Consumer Prod. & Services

High Technology

Industrials

Healthcare

Financials

Energy & Power

For the next 6 months, which sectors will experience the most M&A

activity?

Balance of Power

Buyers'73%

No Difference

15%

Sellers'12%

• Key Comments:– Multiples have come down

due to credit crunch and decreased economic activity

– Good companies can still be sold at a premium, but are scarce

– Strategic buyers who do not have to finance deals are in the strongest position

Do you think it is now a buyers’ or a sellers’ market?

Cross-Border Deals

0

5

10

15

20

25

0 2 4 6 8 10 12 14 16 18 20 22 24 26 28

This calendar year, how many cross-border deals has your firm advised on?

0

10

20

30

40

50

60

0 1 2 to 3 4 to 5 '6+

How many cross-border deals do you expect in the next 6 months?

Number of Deals

Number of Respondents

Number of Deals

Opportunities by Region

Europe70%

US & Canada

20%

Asia-Pacific

5%

Latin America

5%

• Key areas of focus include:– US targets for European and

LatAm buyers– Central & Eastern Europe

Which regions/countries are you most focused on?

What is the single biggest impediment to deal-making right now?

0 2 4 6

Terrorism/Security

Political Instability

Lack of Sellers

Lack of Buyers

Bad Economy

Lack of FundingSupport

• Other impediments mentioned:– Sellers’ price expectations– Frightened investors– Currency fluctuations– Immature market

What percentage of deal activity do you expect to be driven by private equity firms in 2009?

Under 15%9%

16 to 30%52%

31 to 40%21%

Over 40%18%

Private Equity M&A down 80% from 3Q 2007

0

200

400

600

800

1 000

1 200

1 400

1 600

1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08

Vo

lum

e ($

bil

)

0%

5%

10%

15%

20%

25%

30%

% P

riva

te E

qu

ity

Act

ivit

y

Strategic M&A

Private Equity M&A

Private Equity M&A as % of Total M&A

Source: Thomson Reuters

Overall Activity

0

2

4

6

8

10

12

14

16

18

20

Decreasemore than

30%

Decrease16% to 30%

Decrease upto 15%

Flat Increase up to15%

Increase 16 to30%

Increasemore than

30%

What percentage increase / decrease do you anticipate in number of deals announced in 2009 vs. 2008?

Lenders

Yes14%

No Change24%

No62%

• Key comments:– Bankers are extremely

cautious at present– Equity participation must

be higher– Money still available for the

“right deals”, but the terms are getting worse

– Not many leveraged deals in emerging markets so effect is minimal

Are lenders working actively to help complete M&A transactions?

What are some deal design techniques required to get M&A transactions completed compared to recent past?

-0,4 -0,2 0 0,2 0,4 0,6 0,8

Fixed Payments

Severance Payments

Use of Options / Warrants

Cash Purchase

Hybrid Financing

Management Retention Payments

Seller Risk Retention

Seller Financing

Reduced Leverage

Earn Out / Contingent Payments

Lower Seller Price

used moreused about the sameused less

Deal Rationale

0 1 2 3 4 5

Take PrivateTransactions

MBO / MBI

SellerRecapitalizations

Consolidation / ScaleUp

Distressed Sales

Buyer Searches

Owner RetirementSales

Growth byAcquisition

Where are M&A opportunities happening most often at the present

time?

Where do you see M&A opportunities being generated in the next 6

months?

0 1 2 3 4

Take PrivateTransactions

MBO / MBI

SellerRecapitalizations

Consolidation / ScaleUp

Distressed Sales

Buyer Searches

Growth by Acquisition

OwnershipRetirement Sales

• Other opportunities include:– Buying competitors– Corporate carve-outs– Private equity

• Other opportunities include:– Private equity (buying less than typical 70-80%)– Corporate carve-outs– Listed companies– Restructuring due to debt burden