37 Offices in 18 Countries

MERGERS ANDACQUISITIONS

Closing the Deal

Presented to:

Phoenix CEO CFO Group

September 24, 2012

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Key Drivers in 2012

• Pent up demand for M&A following slow years in 2008-2010

• Improved financials

• Attractive valuations

• The return of private equity

• Healthier balance sheets and access to stronger credit markets

• Uncertainty on future tax rates

• Volatility in Europe and China continue to dampen M&A activity

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Everyone is playing…

• Strategic Buyers

• Financial Buyers

• Derivative Acquisitions

• Scale is CriticalSynergy

• Buyout FirmsConsolidators

• Hedge FundsAggressive Individuals

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Financial Buyers

• Acquire a Platform

• Grow or Consolidate

• Recapitalize, Sell orTake Public

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Strategic Buyers

• The hunt for growth

• Technology

• Hard Assets

• Channels

• Market Share

• Need for broader geographiccoverage and globalcompetitiveness

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First Steps

• Resisting the trap of responding to a single offer

• Advantages of running a competitive bid process

• Assemble deal team

Investment bank

Law firm

Generalists are not a neutral factor, they are actually in impediment

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Deal Process

• Confidentiality/ NDA

• Letter Of Intent

• Due Diligence

• Negotiation of Purchase Agreement

• Signing of Purchase Agreement

• Satisfaction of Closing Conditions

• Closing

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Transaction Timeline

Week

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

Phase One - Preparation

Initial Meeting

Due Diligence and Preparation of Marketing Materials

Review of Potential Investors

Finalize Potential Investors List

Review Key Issues and Pricing Guidelines

Finalize Marketing Materials

Phase Two - Out to Market

Initiate Contact with Potential Investors

Negotiate Confidentiality Agreements

Deliver Marketing Information to Potential Investors

Prepare Mgmt. Presentation, Data Room and Contract

Review Bidding Procedures with Potential Investors

Phase Three - Solicit Bids

Receive Indications of Interest

Present Evaluation of Initial Proposals to Company

Finalize Presentation and Data Room

Management Presentations and Due Diligence

Phase Four - Negotiate Offers/Execute LOI

Receive Final Proposals

Select and Execute Exclusive LOI

Complete Final Diligence with Exclusive Party

Phase Five - Close Deal

Negotiate and Finalize Definitive Agreement

Circulate Funds Flow, Certificates & Opinions

Close

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Buyer’s Objectives

• What are the Buyer’s Objectives

Buyer’s Main Objectives

– Getting what they’re paying for

– Risk allocation

– Deal protection

– Post-closing continuity of operations

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Seller’s Objectives

• What are the Seller’s Objectives

Seller’s Main Objectives

– Risk allocation

– Certainty of closing

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Valuation Gaps

• Post-recession valuation gaps

Earn-outs

– Purchase price based on future performance

– Operating covenants

Seller’s notes

– Improved financing terms to mitigate risk

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Preparing for the sale

• Prepare ahead of time

With your Management team & Owners at least 12 months

With your Advisors 3-6 months

• Resolve any disputes before going to market

• All documentation

Business / Technical / IP, Legal, Accounting, Regulatory, Other

Special Events

• Historical Financial scrubbed, ideally audited

Key financial and customer metrics readily available

Documentation for all “addbacks” and other key numbers

• Defensible projections

Next 5 years

Next 5 months

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Preparing for the sale

• Prepare your “Story”

Explain the last two years

Challenges, how they were solved, why the Company is stronger

Growth opportunities / future value drivers

• Prepare responses to likely investor questions regarding:

Your Company

– Business model, strategy, operating details

– Customers / target market

– Industry / regulatory environment

– Competitors / your competitive advantage

Your goals – be prepared to

– Maximize Total Value, versus up front value

– Sell a piece, not 100%

– Keep your job

– Sustain culture & employees

– Find a buyer who can “take it to the next level”

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Preparing for the sale

• Prepare in advance

80% of the work is complete before you even go to market

• “Dress up” your asset; prepare for a sale “everyday”

• Have your team in place, informed, sharing similar goals

• Create competition to maximize valuation/terms and ensureclosure

• Have good advisors with strong experience and great references

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Serving Global Markets

Squire Sanders is one of the most geographically diverse legal practicesin the world; our global breadth and local depth serve our clients acrossthe globe.

• Asia Pacific: 6 offices, ~115 lawyers

• Europe / Middle East: 15 offices, ~650 lawyers

• Latin America: 2 offices, ~15 lawyersSquire Sanders Legal Counsel Worldwide Network

• United States: 14 offices, ~525 lawyers

• Nine independent network firms

“One-Firm Firm” Philosophy”

We operate collaborativelythroughout the worldproviding seamless legalservices across all officesand practices. We act onthis philosophy every dayworldwide, and the resultsbenefit our clients.

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Jae ParkSenior Associate

Phoenix Los AngelesT +1 602 528 4181 T+1 213 624 2500jae.park@squiresanders.com

Jae W. Park has experience in a wide variety of business transactionalmatters, with a focus on mergers and acquisitions, private equity,venture capital, corporate governance, corporate law and generalbusiness matters.

Jae’s M&A experience includes advising public and private companiesregarding the structure and implementation of joint ventures andstrategic alliances. Jae also represents private equity firms in public andprivate leveraged buyout transactions. He also counsels clients on post-transaction matters and has experience advising clients on securitiesmatters.

Practice Focus• Corporate

Transactions,Finance &Governance

• Mergers &Acquisition

Education• Duke

University, J.D.• Princeton

University, B.A.Admissions• Arizona• California• New York