2012 HL Going Private Study...Confidential. 2012 Going Private Table of Contents Transaction Study...

MERGERS & ACQUISITIONS

2012 Going Private Transaction Study

MERGERS & ACQUISITIONSCAPITAL MARKETSFINANCIAL RESTRUCTURINGFINANCIAL ADVISORY SERVICES

HL.com

November 2013

Confidential

Table of Contents2012 Going Private Transaction Study

Page

Study Overview 2

Study Results 6y

Appendix 41

Transaction Summary 42

About Houlihan Lokey 44

Di l i 46Disclaimer 46

1

Study Overview

SummaryStudy Overview

In the 2012 Going Private Transaction Study (the “Study”), we have summarized and analyzed 23 going private transactionsannounced in the calendar year ended December 31, 2012.

The number of transactions reviewed in 2012 represents a decrease from the 34 going-private transactions reviewed in thecalendar year ended December 31 2011 The number of transactions reviewed in the Study is also down from the number ofcalendar year ended December 31, 2011. The number of transactions reviewed in the Study is also down from the number oftransactions occurring during the difficult market conditions that prevailed during the calendar year ended December 31, 2009(the “2009 Study”), in which we reviewed 28 announced transactions. By contrast, our study for the combined 2006 and 2007periods (the “2006-2007 Study”), which reflected the peak of the prior economic cycle, included 167 transactions.

For purposes of this Study, a target company is generally considered to have “gone private” if its pre-transaction publicly tradedshares were purchased by a privately held financial sponsor investment company or similar entity (generically referred to as ashares were purchased by a privately held financial sponsor, investment company or similar entity (generically referred to as a“financial buyer”).

Specifically, this Study analyzes the following key items for each of the 23 transactions:

Transaction background, focusing on management, stockholder and board involvement

Transaction valuation (including transaction multiples and acquisition premiums) Transaction valuation (including transaction multiples and acquisition premiums)

Deal protection measures and fiduciary provisions

Transaction structure and financing

Termination provisions

3

Note: The 2008 study also includes selected transactions announced during Q4 ‘07.

Transaction Screening MethodologyStudy Overview

We identified the potential universe of going private transactions through several screens from widely used transaction databases,including Thomson Reuters, S&P Capital IQ and MergerMetrics, as well as by reviewing transactions requiring a Schedule 13e-3filing with the Securities and Exchange Commission (SEC).

For this Study we excluded transactions with the following characteristics: For this Study, we excluded transactions with the following characteristics:

Transactions involving target companies that have their primary business operations outside of the United States;

Transactions involving targets with an enterprise value of under $50 million;

Transactions for which there was insufficient information regarding terms (generally, smaller transactions);

“G i d k” i i hi h bli l d d d h b f kh ld f d b l i “Going dark” transactions, in which a publicly traded company reduces the number of stockholders of record below a certainthreshold (often through reverse stock splits and share repurchases) to avoid SEC filing requirements;

Transactions involving a privately held, nonfinancial (i.e., “strategic”) buyer1;

Transactions involving bankrupt or reorganizing target companies; and

T i h ll d i hd i h i f Transactions that were cancelled or withdrawn prior to the execution of a merger agreement.

4

Note:1. Certain transactions in which financial sponsors acquired a target via a portfolio company were considered for the purposes of the Study.

Definition of Key Items in the StudyStudy Overview

We used the following methodology to analyze each of the transactions:

Transaction Value: We calculated transaction value (“TV”) using data from Thomson Reuters. TV represents the cost toacquire all common equity, preferred equity and convertible securities, plus the face value of all outstanding debt, less cash andmarketable securitiesmarketable securities.

Valuation Multiples: The valuation multiples include TV/revenue, TV/EBITDA and TV/EBIT. We derived revenue, EBITDAand EBIT figures from Thomson Reuters.

Acquisition Premiums: We obtained acquisition premiums from Thomson Reuters and S&P Capital IQ. These premiums arecalculated by measuring the percentage change from the offer price per share to the trading prices one day, one week and fourweeks prior to the transaction announcement date.

Note: When analyzing the acquisition premiums, we excluded negative premiums from our high, low, median and meancalculations, as these transactions involved companies in special or unusual situations and were not considered to berepresentative of going private acquisition premiums.

The Study was authored by Richard De Rose and Robert Glucksman of Houlihan Lokey’s New York office. If you haveti t l t t th i di id l id tifi d b t 212 497 7867 212 497 7813questions or comments, please contact the individuals identified above at 212.497.7867 or 212.497.7813.

5

Study Results

Summary StatisticsStudy Results

In the following table, we summarize the low, high, median and mean metrics of the 23 transactions we analyzed in the Study.

Summary Metrics

TV ($mil) TV/Revenue TV/EBITDA TV/EBIT 1-Day 1-Week 4-Weeks Low $58.0 0.33x 6.4x 9.8x 0.1% 7.4% 3.3% High $1,961.5 4.30x 22.5x 26.3x 153.0% 144.2% 127.1%

LTM Multiples Acquisition Premiums1

Median $631.0 1.44x 9.6x 15.1x 23.2% 23.6% 24.1% Mean $692.5 1.65x 10.4x 16.0x 32.2% 30.5% 29.8%

(1) Calculation excludes negative premiums and other outliers.

Source: Thomson Reuters.Note: The high and low metrics shown in this chart represent the high and low TVs, TV multiples and acquisition

h h d h l l l d l l d

7

premiums shown in the study. The low TV multiples and acquisition premiums, respectively, are not necessarily associated with the transactions with the lowest transaction value, and the high TV multiples and acquisition premiums, respectively, are not necessarily associated with the transaction with the highest transaction value. Similarly, the low and high acquisition premiums, respectively, are not necessarily associated with the transactions with the lowest and highest transaction value or TV multiples.

Transaction Analysis by Target Company SizeStudy Results

Approximately half of the transactions in the Study had a TV in excess of $500 million, with seven transactions in excess of $1.0billion.

There were two transactions with TVs under $100 million, which generally exhibited lower transaction revenue multiplescompared to the other size categories but higher TV/EBITDA multiplescompared to the other size categories, but higher TV/EBITDA multiples.

Transactions in the Study generally exhibited slightly higher transaction multiples than in the studies for the calendar years endedDecember 31, 2011 (the “2011 Study”) and 2010 (the “2010 Study”); however, multiples were still slightly below the levelsobserved in the study for the calendar year ended December 31, 2008 (the “2008 Study”).

In general, median acquisition premiums remain lower than levels observed in the 2008 Study.

Analysis by Target Company Size

Number of LTM Multiples Acquisition PremiumsTransaction Value Transactions TV ($mil) TV/Revenue TV/EBITDA TV/EBIT 1-Day 1-Week 4-WeeksOver $1 billion 7 Median $1 073 9 1 90x 9 7x 14 8x 19 7% 20 7% 16 5%Over $1 billion 7 Median $1,073.9 1.90x 9.7x 14.8x 19.7% 20.7% 16.5%

Mean $1,339.6 1.81x 10.4x 16.2x 21.8% 23.4% 21.0%

$100 million to 14 Median $336.9 1.48x 8.9x 13.9x 23.2% 23.0% 24.1%$1 billion Mean $459.3 1.65x 10.2x 15.8x 29.4% 25.1% 26.0%

Less than 2 Median $59.7 1.06x 11.0x 16.5x 82.4% 84.0% 78.9%$100 million Mean $59 7 1 06x 11 0x 16 5x 82 4% 84 0% 78 9%$100 million Mean $59.7 1.06x 11.0x 16.5x 82.4% 84.0% 78.9%

All Transactions 23 Median $631.0 1.44x 9.6x 15.1x 23.2% 23.6% 24.1%Mean $692.5 1.65x 10.4x 16.0x 32.2% 30.5% 29.8%

8

Sources: Thomson Reuters and S&P Capital IQ.Note: Mean and median calculations exclude negative premiums and other outliers.

Transaction Analysis by Date AnnouncedStudy Results

Transaction volume during 2012 peaked in the second quarter. Activity in the second half of the year was roughly equal to levelsobserved in the comparable periods in 2011, when 15 going-private transactions were announced.

Median EBITDA and EBIT multiples were somewhat volatile during the year, with the multiples ranging from 8.5x – 12.1x inthe case of EBITDA and from 12 6x 18 0x in the case of EBITthe case of EBITDA and from 12.6x – 18.0x in the case of EBIT.

Analysis by Transaction Announcement Date

Number of LTM Multiples Acquisition PremiumsTransaction Date Transactions TV ($mil) TV/Revenue TV/EBITDA TV/EBIT 1 Day 1 Week 4 WeeksTransaction Date Transactions TV ($mil) TV/Revenue TV/EBITDA TV/EBIT 1-Day 1-Week 4-Weeks1/1/2012 - 3/31/2012 1 Median $61.3 1.31x 12.1x 16.5x 11.7% 23.8% 30.7%

Mean $61.3 1.31x 12.1x 16.5x 11.7% 23.8% 30.7%

4/1/20112- 6/30/2012 8 Median $369.2 0.80x 8.5x 18.0x 26.8% 22.7% 19.0%Mean $650.9 0.88x 8.5x 18.3x 35.2% 23.2% 19.2%

7/1/2012 9/30/2012 7 M di $978 5 2 18 9 5 12 7 30 5% 30 6% 30 6%7/1/2012 - 9/30/2012 7 Median $978.5 2.18x 9.5x 12.7x 30.5% 30.6% 30.6%Mean $1,000.8 1.84x 11.9x 13.4x 26.5% 28.5% 32.2%

10/1/2012 - 12/31/2012 7 Median $305.4 2.63x 9.8x 12.6x 19.2% 22.0% 24.3%Mean $521.9 2.38x 10.4x 15.4x 36.5% 42.1% 39.6%

All Transactions 23 Median $631.0 1.44x 9.6x 15.1x 23.2% 23.6% 24.1%M $692 5 1 65 10 4 16 0 32 2% 30 5% 29 8%Mean $692.5 1.65x 10.4x 16.0x 32.2% 30.5% 29.8%

9

Sources: Thomson Reuters and S&P Capital IQ.Note: Mean and median calculations exclude negative premiums and other outliers.

Management InitiationStudy Results

In the 2011 Study, none of the transactions in the Study were initiated by the management of the target. In 2012, there were twotransactions initiated by management of the target. For purposes of the Study, “management” does not include directors.

Was the transaction initiated by management?

Yes9%

No91%

Source: Thomson Reuters.

10

Major StockholdersStudy Results

100% of target companies in the 2012 Study had at least one significant and/or substantial stockholder prior to the transactionversus 97% in the 2011 Study.

Was there a substantial (≥ 35%) or significant (> 5%, < 35%) stockholder prior to transaction?

2011 2012

Neither3%

Both Signficant d S b i l

Neither0%

Both Signficant and Substantial

Stockholder23%

3% and Substantial Stockholder

9%

Substantial Stockholder

Only0%

0%

Substantial Stockholder

Only3%

Significant St kh ld

0%

Stockholder Only71%

Significant Stockholder

Only91%

Source: Public filings. Source: Public filings.

11

Stockholder InitiationStudy Results

Approximately 13% of the observed going-private transactions in 2012 were initiated by an existing significant or substantialstockholder, compared with 26% in 2011 and 25% in 2010.

Of the two transactions in which the target company had a substantial stockholder prior to the transaction, 50% were initiatedby that stockholder (as compared to 33% in 2011)by that stockholder (as compared to 33% in 2011).

Significant stockholders were less likely (9%) to initiate a transaction.

Did a significant or substantial stockholder initiate the transaction process?

50%

40%

50%

s

20%

30%

% o

f T

rans

acti

ons

13%

9%

0%

10%

% of total transactions % of transactions with % of transactions with

12

% of total transactions initiated by significant or substantial stockholder

% of transactions with significant stockholder initiated by significant

stockholder

% of transactions with substantial stockholder initiated by substantial

stockholder

Source: Public filings.

Major Stockholder RolloverStudy Results

In the 2012 Study, significant and substantial stockholders rolled over their target stock into stock of the acquisition vehicle orthe surviving corporation in 26% of the transactions, as compared to 18% in the 2011 Study.

Where a substantial stockholder existed prior to the transaction, that stockholder rolled over at least a portion of their holding in50% of the transactions as compared to 33% in the 2011 Study50% of the transactions, as compared to 33% in the 2011 Study.

In the 2012 Study, significant stockholders were more likely (26%) to roll over a portion of their holdings versus 13% in the2011 Study.

Major Stockholder Rolloverj

50%

35%

40%

45%

50%

26%26%

15%

20%

25%

30%

35%

% o

f Tra

nsac

tion

s

0%

5%

10%

15%

Transactions with a substantial or significant stockholder rollover

Transactions with a substantial stockholder and a substantial

Transactions with a significant stockholder and a significant

13

significant stockholder rollover stockholder and a substantial stockholder rollover

stockholder and a significant stockholder rollover


“Shopped” CompaniesStudy Results

Consistent with the 2011 Study, the majority of targets in this Study undertook a process to “shop” the company prior to theexecution of a transaction agreement.

Approximately 71% of the targets involved in transactions with TVs above $1 billion were shopped, as compared to 63% of thetargets with TVs of less than $1 billiontargets with TVs of less than $1 billion.

90.0%

100.0%

Was the company “shopped?” % of Total Transactions “Shopped”

2012

No35%

60.0%

70.0%

80.0%

sact

ions

Yes65%

20.0%

30.0%

40.0%

50.0%

% o

f T

ran

2011

No35% 0.0%

10.0%

Over $1,000 $500 to $1,000 $100 to $500 Less than $100 All Transactions

Transaction Value ($ millions)

2012 2011

14

Yes65%



Auction ProcessStudy Results

In 60% of the transactions where the target was shopped prior to the execution of a transaction agreement, the auction processwas widespread (in excess of 15 prospective buyers solicited).

27% of the shopped transactions involved limited auctions (five to 15 parties solicited).

Targeted auctions (<5 parties solicited) represented 13% of the shopped transactions.

If the company was shopped prior to an acquisition agreement being signed, was the process a widespread, limited or targeted auction?

Limited Auction

36%

2011 2012

Limited Auction

27%

Targeted Auction

13%

Widespread A iAuction

64%

Widespread Auction

60%

15


Auction Process (cont.)Study Results

Widespread auctions not only appeared to generate the highest mean and median transaction multiples, but also indicate highertransaction multiples as compared to the 2011 Study in which the mean and median was 10.7x and 8.9x, respectively.

Targeted Auction ProcessesTargeted Auction Processes

TV ($mil) TV/Revenue TV/EBITDA TV/EBIT 1-Day 1-Week 4-WeeksLow $1,073.9 1.90x 8.7x 11.0x 7.9% 9.3% 14.0%High $1,961.5 2.35x 9.8x 16.6x 36.7% 39.5% 49.0%

Median $1 517 7 2 12x 9 2x 13 8x 22 3% 24 4% 31 5%

LTM Multiples Acquisition Premiums

Limited Auction Processes

Median $1,517.7 2.12x 9.2x 13.8x 22.3% 24.4% 31.5%Mean $1,517.7 2.12x 9.2x 13.8x 22.3% 24.4% 31.5%

TV ($mil) TV/Revenue TV/EBITDA TV/EBIT 1 Day 1 Week 4 Weeks


TV ($mil) TV/Revenue TV/EBITDA TV/EBIT 1-Day 1-Week 4-WeeksLow $58.0 0.37x 8.0x 13.1x 2.0% -1.4% 3.3%High $1,473.7 3.22x 9.8x 63.7x 153.0% 144.2% 127.1%

Median $628.5 1.36x 9.6x 16.9x 11.7% 11.9% 15.3%Mean $697.2 1.58x 9.3x 31.2x 44.6% 41.6% 40.3%

Widespread Auction Processes

TV ($mil) TV/Revenue TV/EBITDA TV/EBIT 1-Day 1-Week 4-WeeksLow $61.3 0.33x 6.4x 11.6x -7.2% -8.8% -4.2%High $1,737.4 4.30x 18.5x 32.4x 113.2% 49.2% 56.4%


16

g ,


Sources: Thomson Reuters and public filings.

Public DisclosureStudy Results

In 77% of the shopped transactions, there was no contemporaneous publicannouncement of the process.

The transaction size was generally smaller for auction processes that were publiclyannounced

Transaction Value Analysis (in millions)

Public

Disclosure

No Public

Disclosure

Low $58 0 $61 3announced.

Widespread auctions constituted (i) 80% of shopped transactions in which theauction process was publicly disclosed (versus 86% in the 2011 Study), and (ii)40% of those in which the process was not publicly disclosed (versus 53% in the2011 Study).

S Th

Low $58.0 $61.3

High $1,028.5 $1,961.5

Median $269.9 $888.6

Mean $377.4 $788.7

Was there contemporaneous public disclosure of the auction process?

If there was public disclosure, was the process a widespread, limited or

targeted auction?

If there was no public disclosure, was the process a widespread, limited or

targeted auction?


Yes23%

Limited20%

Widespread40%

Targeted27%

No77%

Wid d

17

Widespread80%

Limited33%

Sources: Thomson Reuters and public filings.

ExclusivityStudy Results

Exclusivity was granted to a prospective acquiror in 43% of the shopped transactions versus 41% in the 2011 Study.

Transactions with exclusivity periods generally garnered roughly equivalent TV/EBITDA multiples as those without exclusivityperiods. However, transactions without exclusivity had higher premiums.

Was there exclusivity granted to any bidder during the auction process?

Transactions with Exclusivity Periods

TV ($mil) TV/Revenue TV/EBITDA TV/EBIT 1-Day 1-Week 4-WeeksLow $61.3 0.33x 6.4x 11.9x 2.0% -1.4% -4.2%


Yes43%

NoT i i h N E l i i

High $1,737.4 2.80x 17.4x 24.7x 113.2% 49.2% 56.4%


No57% Transactions with No Exclusivity

TV ($mil) TV/Revenue TV/EBITDA TV/EBIT 1-Day 1-Week 4-WeeksLow $58.0 0.50x 6.5x 9.8x -7.2% -8.8% -4.2%High $1,961.5 4.30x 22.5x 63.7x 153.0% 144.2% 127.1%



Sources: Thomson Reuters and public filings. Sources: Thomson Reuters and public filings.

18

Special CommitteesStudy Results

In 52% of the transactions (versus 47% in the 2011 Study), a committee of independent directors was appointed to reviewand/or negotiate the transaction.

Special committees were appointed in 67% of the transactions that were initiated by a substantial stockholder.

Was a special committee of independent directors formed to review the transaction?

% of Transactions with Special Committees

100.0%

67%70.0%

80.0%

90.0%

f T

rans

acti

ons

Yes52%

No48%

52%

30.0%

40.0%

50.0%

60.0%

% o

f

0.0%

10.0%

20.0%

Stockholder Initiated Transactions All Transactions

19


Post-Transaction EmploymentStudy Results

Boards of directors of going-private targets appear to have become less lenient in allowing management to discuss post-transaction employment prior to the board’s selection of a winning bidder.

Did management discuss post-transaction employment prior to the board’s selection of a winning bid?

2011 2012

No41%

Yes39%

Yes59%

39%

No61%

Source: Public filings. Source: Public filings

20


13e-3 TransactionsStudy Results

Approximately 22% of the transactions in the Study were “13e-3 transactions,” versus 29% in the 2011 Study.

Was the transaction a 13e-3 transaction?Was the transaction a 13e 3 transaction?

20122011

Yes22%

Yes29%

No78%No

71%

Source: MergerMetrics.

21

Stockholder Lock-UpsStudy Results

Stockholder agreements to vote in favor of the transaction were observed in 57% of the transactions versus 37% in the 2011Study.

Of the transactions involving a target with a significant shareholder, 57% had a lock-up and 100% of the transactions involvinga target with a substantial shareholder had a lock up (versus 56% and 45% respectively in the 2011 Study)a target with a substantial shareholder had a lock-up (versus 56% and 45%, respectively, in the 2011 Study).

Transactions with stockholder lock-ups as a % of total transactions

Transactions with significant shareholder lock-ups as a % of total transactions with

significant shareholders

Transactions with substantial shareholder lock-ups as a % of total transactions with

substantial shareholders

Yes57%

No43%

Yes57%

No43%

Yes100%

Source: Public filings. Source: Public filings.Source: Public filings.

22

Approval by a Majority of the MinorityStudy Results

While only 9% of the transactions were subject to approval by a majority of the minority shareholders, 25% of transactionsrequired such shareholder approval when the transaction was initiated by a substantial shareholder, significant shareholder, ormanagement, versus 11% from the 2011 Study.

Was the transaction subject to approval by a majority of the minority if initiated by a substantial shareholder, significant shareholder, or management?

20122011

Yes11%

Yes25%

No89%

No75%


23

Transaction StructureStudy Results

Despite the advantage of being able to quickly gain control of a target through the use of a tender offer, 83% of the transactionsin the Study (74% in the 2011 Study) were structured as one-step merger transactions.

Transaction Structure

Two-StepTransaction

17%

One-StepMMerger83%


24

Club DealsStudy Results

Only 26% of the transactions in the Study were “club deals” involving two or more sponsors, up slightly from 21% in the 2011Study.

All of the transactions that were “club deals” were over $500 million.

% of Club Deals by Transaction Value

60%

70%

43%

60%

40%

50%

60%

ons

26%

20%

30%

40%

% o

f T

rans

acti

o

0% 0%0%

10%

Over $1,000 $500 to $1,000 $100 to $500 Less than $100 All Transactions

25

Over $1,000 $500 to $1,000 $100 to $500 Less than $100 All TransactionsTransaction Value ($ millions)


Go-Shop ProvisionsStudy Results

Only 35% of the transactions in the Study (versus 32% in the 2011 Study) provided for a post-agreement go-shop period.

The average go-shop period length for all of the observed transactions was 36.4 days (slightly lower in comparison with the 37days observed in the 2011 Study), with smaller transactions having longer average “shopping days.”

Average Length of Go-Shop (days)Was there a go-shop provision?

35 0

40.0

36.4 40

45

Yes35%

33.7 35.0

20

25

30

35

th o

f go

sho

p pe

riod

No65%

0.0

5

10

15

Ave

rage

leng

t

0 Over $1,000 $500 to $1,000 $100 to $500 Less than $100 All

TransactionsTransaction Value ($ millions)

Sources: Thomson Reuters and MergerMetrics. Sources: Thomson Reuters and MergerMetrics.

26

Go-Shop Provisions (cont.)Study Results

Go-shop provisions were present in 75% of transactions that were not preceded by an auction process, a considerable increaseover the 50% observed in the 2011 Study.

If there was an auction process, was there a go-shop provision? If there was not an auction process, was there a go-shop provision?

No25%

Yes13%

Yes75%75%

No87%

Sources: Thomson Reuters and public filings. Sources: Thomson Reuters and public filings.

27

Go-Shop Provisions (cont.)Study Results

In instances where a go-shop provision was present, the bidder had matching rights in 80% of the transactions (versus 73% inthe 2011 Study).

Matching rights were generally available for a period of under five days.

No20%

4 Days14%

If there was a go-shop provision, did the original bidder have matching rights?

If the original bidder did have matching rights, over what period were the matching rights effective?

20%

2 Days29%

Yes80%

3 Days57%


28

No-Shop ProvisionsStudy Results

All of the transactions had a “no-shop” provision.

In certain cases, transactions had both “go-shop” and “no-shop” provisions, with the “no-shop” provision effective following a“go-shop” period.

Was there a no-shop provision?

No0%

Yes100%


29

Fiduciary Out to a Superior ProposalStudy Results

All transactions with no-shop provisions contained a fiduciary out in the event the target received a superior outside proposal;however, in most cases the original bidder was granted matching rights effective for a period of up to five days.

5 Days19%

No4%

If the bidder did have matching rights, over what period were the matching rights effective?

If there was a fiduciary out for a superior proposal, did the original bidder have matching rights?

4 Days10%

3 Days71%Yes

96%96%


30

FinancingStudy Results

Mean and median total debt-to-EBITDA multiples across all size categories were relatively similar to those observed in the 2011Study.

The two transactions that were less than $100 million did not have debt commitment letters associated therewith.

Most transactions exhibited a capital structure that included at least 50% equity.

Transactions with TVs of less than $500 million had relatively lower leverage multiples and required more equity as a percentageof overall financing than larger transactions.

Total Debt/EBITDA by Transaction Value

Over $1.0

billion

$500 million to

$1.0 billion

$100 million to

$500 million

Less than

$100 million

All

Transactions

Low 1.2x 3.7x 1.5x NA 1.2x

High 12.0x 10.1x 7.7x NA 12.0x

y

Median 6.2x 5.3x 6.0x NA 5.8x

Mean 6.2x 6.1x 5.5x NA 6.0x

Over $1 0 $500 million to $100 million to Less than All

% of Equity Financing by Transaction Value

Over $1.0

billion

$500 million to

$1.0 billion

$100 million to

$500 million

Less than

$100 million

All

Transactions

Low 47.3% 43.0% 49.9% 100.0% 43.0%

High 84.3% 100.0% 100.0% 100.0% 100.0%

Median 59.8% 52.2% 63.7% 100.0% 61.5%

Mean 61.2% 60.5% 70.5% 100.0% 68.1%

31Sources: Thomson Reuters and S&P Capital IQ.Note: Calculations excludes transactions lacking sufficient EBITDA data.

Financing (cont.)Study Results

Median total debt/EBITDA multiples were at their lowest in Q4 ’12 and at their highest in Q3 ’12.

Throughout the entire year, leverage multiples remained slightly lower relative to 2011.

Financing Analysis by Transaction Announcement Date (2012)

Number of Total Debt/ % EquityTransaction Value Transactions EBITDA Financing1/1/2012 3/31/2012 1 Median NA 100 0%1/1/2012 - 3/31/2012 1 Median NA 100.0%

Mean NA 100.0%

4/1/2012 - 6/30/2012 8 Median 5.8x 62.7%Mean 5.6x 61.2%

7/1/2012 - 9/30/2012 7 Median 6.2x 56.7%Mean 7.3x 67.5%

10/1/2012 - 12/31/2012 7 Median 5.4x 61.1%Mean 5.1x 71.9%

All Transactions 23 Median 5.8x 61.5%Mean 6.0x 68.1%

32

Sources: Thomson Reuters and S&P Capital IQ.Note: Mean and median calculation excludes companies with negative EBITDA and other outliers.


In 2012, it became slightly more common for the financial sponsor (through the fund making the investment) to guarantee thepayment of any reverse termination fee.

Did the financial sponsor guarantee the reverse termination fee/expense reimbursement?

20122011

No24%

No17%

Yes76%

Yes83%

S P bli fili

33



None of the transactions in the Study (versus 9% in the 2011 Study) were conditioned on the availability of financing.

Was there a financing out in the agreement?Was there a financing out in the agreement?

20122011

Yes9%

Yes0%9% 0%

NNo91%

No100%


34


Commitment letters for the provision of debt and/or equity financing were delivered prior to signing the acquisition agreement in96% of the transactions in the Study.

Was a commitment letter delivered upon signing of the transaction agreement?Was a commitment letter delivered upon signing of the transaction agreement?

2011 2012

Neither3% Equity Only

Neither4%

Equity Only20%

Equity Only18%

Debt Only4%

Debt Only9%

Equity and Debt68%

Equity and Debt74%

35


Minimum EBITDA ProvisionStudy Results

Consistent with the 2011 Study, no transactions included a minimum EBITDA as a predicate for a material adverseeffect/change.

Was there a minimum EBITDA condition?

Yes0%

No100%


36

Termination FeesStudy Results

100% of the transactions in the Study featured a termination fee payable to the acquiror under certain circumstances in whichthe transaction did not close.

Mean and median termination fees as a percentage of transaction value were approximately 3%.

Outliers included American Greetings Corp. (approximately 0.8% of the TV), IntegraMed America Inc. (approximately 4.2%of the TV), Benihana Inc. (approximately 4.1% of the TV), and SeraCare Life Sciences, Inc. (approximately 4.1% of the TV).

Did the transaction have a termination fee? Termination Fee as a % of Transaction Value

No0%

Over $1.0

billion

$500 million

to $1.0 billion

$100 million to

$500 million

Less than

$100 million

All

Transactions

Low 2.4% 0.8% 1.1% 3.1% 0.8%

High 3.5% 3.2% 4.2% 4.1% 4.2%

Median 2 7% 2 7% 3 4% 3 6% 3 0%Median 2.7% 2.7% 3.4% 3.6% 3.0%

Mean 2.8% 2.4% 3.0% 3.6% 2.9%


Yes100%

Source: Thomson Reuters

37


Bifurcated Termination FeesStudy Results

The majority of the transactions in the Study that had “go-shop” provisions had a bifurcated structure pursuant to which thetermination fee during the go-shop period was lower than the termination fee payable after the go-shop period had ended.

For transactions with go-shop provisions, was the fee bifurcated during the go-shop period?

2011 2012

No No13%0% 13%

Yes100%

Yes87%

Sources: Thomson Reuters and MergerMetrics.

38

Reverse Termination FeesStudy Results

Approximately 91% of the transactions in the Study had a reverse termination fee payable by the acquiror if the financing forthe transaction fell through or the acquirer otherwise terminated the acquisition agreement.

76% of the transactions reviewed in the 2011 Study had the same feature.

The median reverse termination fee as a percentage of transaction value of approximately 5.6% was roughly in line with themedians observed in the 2010 (5.1%) and 2011 (6.1%) Studies.

Did the transaction have a reversetermination fee?

Reverse Termination Fee as a % of Transaction Valuetermination fee?

No9%

Over $1.0

billion

$500 million

to $1.0 billion

$100 million to

$500 million

Less than

$100 million

All

Transactions

Low 1.7% 3.8% 2.5% 6.1% 1.7%

High 6.5% 6.3% 7.0% 8.2% 8.2%

Median 5.4% 5.1% 5.8% 7.1% 5.6%

Mean 5.1% 5.1% 5.0% 7.1% 5.2%


Yes91%


39

Expense Reimbursement in the Event of Termination

Study Results

Approximately 40% of the termination fee provisions observed in the Study also provided for the reimbursement of transactionexpenses (i.e., expense reimbursement was incremental to the termination fee payable upon termination). Additionally, expensereimbursement was not treated as an incremental expense in a majority of the reverse termination fee provisions.

In the 2011 Study expenses were incremental in 47% of the termination fees observed and were incremental in 15% of the In the 2011 Study, expenses were incremental in 47% of the termination fees observed and were incremental in 15% of thereverse termination fees observed.

Were expenses included in the reverse termination feeor incremental?

Were expenses included in the termination feeor incremental?

IncludedIncremental

33%Included39%

Incremental61%

Included67%

33%

61% 67%

Source: Public filings Source: Public filings

40


Appendix

AppendixTransaction Summary

TransactionsTransaction Summary


DateAnnounced Status Target Acquiror Name TV ($mil) TV/Revenue TV/EBITDA TV/EBIT 1-Day 1-Week 4-Weeks12/30/2012 Closed Duff & Phelps Corporation Stone Point Capital LLC; The Carlyle Group LP; Pictet

& Cie; Groupe LCF Rothschild; Carlyle Global Financial Services Partners, L.P.; Trident Fund V

$631.0 1.36x 7.8x 9.8x # 19.2% 20.7% 28.1%

12/21/2012 Closed FirstCity Financial Corp. Värde Partners, Inc. $181.9 2.63x 17.4x 24.7x # 20.5% 23.3% 20.5%12/11/2012 Closed TNS Inc. Trident Private Holdings I, LLC $845.6 1.53x 6.5x 21.3x # 44.2% 42.1% 45.4%12/04/2012 Closed Young Innovations Inc. Linden LLC $305.4 2.80x 10.4x 12.0x # 8.7% 10.5% 13.1%11/20/2012 Closed MEMSIC, Inc. IDG Capital Partners $58.0 0.82x 9.8x 63.7x * 153.0% 144.2% 127.1%11/15/2012 Closed White River Capital Inc Parthenon Capital Partners; OPTrust Private Markets $157.3 4.30x 11.3x 11.6x # 0.1% -2.5% * -4.2% *10/22/2012 Closed Ancestry.com Inc. Permira Advisers Ltd.; Spectrum Equity Investors;

Permira Investments Limited$1,473.7 3.22x 9.7x 13.1x # 9.7% 11.8% 3.3%

09/26/2012 Closed American Greetings Corp. The Irving I. Stone Limited Liability Company $913.9 0.50x 6.5x 9.9x # 32.5% 23.9% 33.3%09/12/2012 Closed Mediware Information Systems, Inc. Thoma Bravo, LLC $160.6 2.18x 8.0x 12.7x # 39.7% 49.2% 56.4%08/27/2012 Closed Deltek, Inc Thoma Bravo, LLC $1,028.5 3.01x 18.5x 32.4x * -7.2% * -8.8% * -1.6% *08/27/2012 Closed TPC Group Inc First Reserve Corporation; SK Capital Partners $888 6 0 37x 9 5x 16 9x # 13 7% 11 9% 12 5%08/27/2012 Closed TPC Group Inc First Reserve Corporation; SK Capital Partners $888.6 0.37x 9.5x 16.9x # 13.7% 11.9% 12.5%07/21/2012 Closed Peet's Coffee & Tea, Inc. JAB Holdings B.V.; BDT Capital Partners, LLC $978.5 2.55x 22.5x 38.1x * 28.6% 37.3% 27.9%07/16/2012 Closed Par Pharmaceutical Companies Inc. TPG Capital, L.P. $1,961.5 1.90x 8.7x 11.0x # 36.7% 39.5% 49.0%07/02/2012 Closed MModal Inc. One Equity Partners LLC $1,073.9 2.35x 9.8x 16.6x # 7.9% 9.3% 14.0%06/11/2012 Closed IntegraMed America Inc. Sagard Capital $120.9 0.43x 6.4x 11.9x # 23.9% 22.7% 9.1%05/31/2012 Closed The Talbots Inc. Sycamore Partners $370.0 0.33x NMF N NMF N 113.2% 7.4% -4.2% *05/29/2012 Closed Interline Brands Inc. Goldman Sachs Group, Merchant Banking Division; P2

Capital Partners, LLC$1,052.9 0.83x 9.7x 12.4x # 42.1% 41.6% 19.0%

05/22/2012 Closed Benihana Inc. Angelo, Gordon & Co., Private Equity Group $269.9 0.77x 8.9x 26.3x # 22.6% 17.8% 19.9%05/01/2012 Closed P.F. Chang's China Bistro, Inc. Centerbridge Partners, L.P. $1,049.5 0.85x 8.5x 25.1x # 29.8% 29.7% 30.3%05/01/2012 Closed Collective Brands, Inc. Blum Capital Partners; Wolverine World Wide Inc.;

Golden Gate Capital; BLUM Strategic Partners IV, L.P.; Golden Gate Capital Opportunity Fund

$1,737.4 0.50x 8.0x 19.2x # 4.7% 8.8% 10.6%

04/16/2012 Closed The Edelman Financial Group, Inc. Lee Equity Partners LLC $237.8 1.44x 9.9x 15.1x # 43.2% 34.3% 27.7%04/10/2012 Closed eResearchTechnology, Inc. Genstar Capital, LLC $368.5 1.91x 8.0x 18.0x # 2.0% -1.4% * 18.2%02/13/2012 Closed SeraCare Life Sciences, Inc. Linden LLC $61.3 1.31x 12.1x 16.5x # 11.7% 23.8% 30.7%

Low1 $58.0 0.33x 6.4x 9.8x 0.1% 7.4% 3.3%

High1 $1,961.5 4.30x 22.5x 26.3x 153.0% 144.2% 127.1%

Median1 $631.0 1.44x 9.6x 15.1x 23.2% 23.6% 24.1%

Mean1 $692.5 1.65x 10.4x 16.0x 32.2% 30.5% 29.8%

Source: Thomson Reuters.TV - Transaction Value.LTM - Latest 12 Months.EBITDA - Earnings Before Interest, Taxes, Depreciation and Amortization.EBIT - Earnings Before Interest and Taxes.NA Not Available

43

NA - Not Available.NMF - Not Meaningful Figure.*Excluded from the range.(1) Calculation excludes negative premiums and other outliers.

AppendixAbout Houlihan Lokey

About Houlihan LokeyAbout Houlihan Lokey

Houlihan Lokey is an international investment bank with expertise in mergers and acquisitions, capital markets, financialrestructuring, and valuation. The firm serves corporations, institutions, and governments worldwide with offices in the UnitedStates, Europe, and Asia. Independent advice and intellectual rigor are hallmarks of our commitment to client success across ouradvisory services. Houlihan Lokey is ranked globally as the No. 1 restructuring advisor, the No. 1 M&A fairness opinion advisory y g y g , pover the past 10 years, and the No. 1 M&A advisor for U.S. transactions under $3 billion, according to Thomson Reuters. Formore information, please visit www.HL.com.

45

AppendixDisclaimer

DisclaimerDisclaimer

© 2013 Houlihan Lokey. All rights reserved. This material may not be reproduced in any format by any means or redistributedwithout the prior written consent of Houlihan Lokey.

Houlihan Lokey is a trade name for Houlihan Lokey, Inc. and its subsidiaries and affiliates which include: Houlihan Lokey Capital,Inc., a California corporation, a registered broker-dealer and SIPC member firm, which provides investment banking, privateplacement, merger, acquisition and divestiture services; Houlihan Lokey Financial Advisors, Inc., a California corporation, aregistered investment advisor, which provides investment advisory, fairness opinion, solvency opinion, valuation opinion,restructuring advisory and portfolio management services; and Houlihan Lokey (Europe) Limited, a company incorporated inEngland which is authorized and regulated by the U.K. Financial Conduct Authority and Houlihan Lokey (China) Limited, acompany incorporated in Hong Kong SAR which is licensed in Hong Kong by the Securities and Futures Commission to conductcompany incorporated in Hong Kong SAR which is licensed in Hong Kong by the Securities and Futures Commission to conductType 1, 4 and 6 regulated activities to professional investors only, which provide investment banking, restructuring advisory, merger,acquisition and divestiture services, valuation opinion and private placement services and which may direct this communicationwithin the European Economic Area and Hong Kong, respectively, to intended recipients including professional investors, high-net-worth companies or other institutional investors.

Houlihan Lokey gathers its data from sources it considers reliable; however, it does not guarantee the accuracy or completeness ofthe information provided within this presentation. The material presented reflects information known to the authors at the time thispresentation was written, and this information is subject to change. Houlihan Lokey makes no representations or warranties,expressed or implied, regarding the accuracy of this material. The views expressed in this material accurately reflect the personalviews of the authors regarding the subject securities and issuers and do not necessarily coincide with those of Houlihan Lokey.Offi di t d t i th H lih L k f i h iti i th iti f th iOfficers, directors and partners in the Houlihan Lokey group of companies may have positions in the securities of the companiesdiscussed. This presentation does not constitute advice or a recommendation, offer or solicitation with respect to the securities ofany company discussed herein, is not intended to provide information upon which to base an investment decision, and should notbe construed as such. Houlihan Lokey or its affiliates may from time to time provide investment banking or related services to thesecompanies. Like all Houlihan Lokey employees, the authors of this presentation receive compensation that is affected by overallfirm profitability.firm profitability.

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