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					                        Recent Trends in Middle Market M&A
                                                     March 7, 2008


                                                 Barry E. Steiner
                                                Managing Director




                                                                                                   Member: NYSE, AMEX, FINRA, SIPC

     Capital Raising | Mergers & Acquisitions | Fairness & Solvency Opinions | Valuations | Restructuring | Financial Advisory

MIAMI • NEW YORK • HOUSTON • COLUMBUS • MELVILLE • BOCA RATON • CHICAGO • PRINCETON                      • PALO ALTO • LOS ANGELES
Factors Driving M&A Market Activity


                                       Economic
                                      Environment
                          Investor                  Stock Market
                         Confidence                 Performance



                                                                     CEO
        Credit Markets
                                                                   Confidence

                                        M&A
                                      ACTIVITY

         Shareholder                                               Corporate
          Activism                                                 Scandals



                                                    Geopolitical
                         Valuation
                                                     Situation
                                        Political
                                       Landscape



                                                                                2
U.S. M&A Activity Continued to Increase During 2007
  • Since mid-2003, favorable economic and market conditions have created a near perfect M&A deal environment.



  • The rapid pace of M&A activity in the first half of 2007 was followed by a dramatic slowdown during the second half
     of the year.


  • Despite the dramatic slowdown directly resulting from the credit market crisis, the M&A market maintained its fifth
     consecutive year of growth in 2007.

                                     (# of Deals)                                 Total     Deal Value                              (Deal Value - $Bn)

                                     14,000                                                                                            $1,800

                                                                                                                                       $1,500
                                     10,500
                                                                                                                                       $1,200

                                      7,000                                                                                            $900

                                                                                                                                       $600
                                      3,500
                                                                                                                                       $300

                                         -                                                                                             $-
                                                    1998   1999   2000     2001    2002    2003      2004   2005     2006    2007

                                      1998              1999        2000            2001           2002       2003           2004            2005         2006    2007
 # of Deals >$1.0 Billion             186               221         229             131             70         98            150             191          250     304
 # of Deals - Middle Market(1)       5,661             4,624       4,602           3,343          3,168      3,295          3,476           3,842        4,058   4,134
 # of Deals - Undisclosed            7,099             6,333       6,719           4,789          4,242      4,822          5,696           5,932        7,031   7,490

               (1) Middle-Market defined as transactions with a deal value under $1bn. This definition is consistent throughout the presentation.
               Sources of Information: Thomson Financial.                                                                                                                3
2007 M&A Trends
 • The strongest segment of the U.S. M&A market during 2007 was in billion-dollar-plus transactions.


 • U.S. M&A activity represented nearly 35% of all global M&A transactions in 2007 and over 40% of the total dollar
  volume for the year.


 • Divestitures were a major source of M&A deal volume in 2007, accounting for approximately 40% of all middle-
  market transactions.


 • Private equity continued to play a significant role in the M&A markets.


 • The median EBITDA multiple for M&A transactions in 2007 was 11.4x.


 • Key elements which presented favorable environment have changed.




                                                                                                                      4
2007 M&A Trends (continued)
  • Most of the key market drivers have become uncertain or turned negative creating an uncertain M&A environment for
   2008.

                                         M&A Activity in the Last Five Months of 2006 and 2007

                                                        August - December 2006 August - December 2007   % Change
                Number of Middle Market Deals                   1,714                  1,633              -4.7%
                Deals with Undisclosed Values                   2,913                  3,019               3.6%
                Total                                           4,627                  4,652               0.5%
                $1 Billion + Deals                               117                    77               -34.2%




           Sources of Information: Thomson Financial.                                                                   5
M&A Activity by Industry
  • Technology is the most active sector, representing 19% of all announced M&A transactions in 2007. The following
   chart details total U.S. M&A activity in 2007 by number of announced transactions.



                                                           Real Estate     Retail
                                                                                    Telecom
                                        Consumer Staples      5%            4%
                                                                                      3%
                                             7%

                             Energy and Power
                                                                                                  Technology
                                    7%
                                                                                                     19%



                                 Materials
                                   8%




                                 Healthcare
                                                                                                   Industrial
                                    8%
                                                                                                     12%


                                Media/Entertainment
                                       8%                                             Financial
                                                       Business Services                10%
                                                             9%



          Sources of Information: Thomson Financial.                                                                  6
M&A Payment Methods
 • The following chart details U.S. middle-market M&A payment methods during the last ten years. During 2007, over
  65% of all U.S. middle-market transactions were completed with an all cash consideration.




                                                        All Cash    All Stock   Cash/Stock    Other

         100%



          75%



          50%



          25%



           0%
                    1998         1999         2000        2001        2002      2003         2004     2005   2006   2007




         Note: Data is based on number of U.S. middle-market M&A deals.
         Sources of Information: Thomson Financial.                                                                        7
Corporate M&A Activity
  • Corporate M&A activity accounted for over 87% of all U.S. M&A transactions in 2007 and is expected to increase in
   2008.


  • The number of deals involving a corporate acquiror increased for the fifth straight year in 2007.



  • The following chart outlines all corporate M&A activity in the U.S. during the last ten years.




                                                          Public Acquirors   Non-Public Acquirors
                (# of Deals)

                14,000


                               2,599
                10,500
                                       2,556      3,533
                                                                                                            3,821   4,268
                 7,000                                                                    3,009     3,127
                                                          2,632
                                                                     2,536      2,997
                               9,812
                                       8,118      7,454
                 3,500
                                                                                          5,438     5,757   6,147   6,148
                                                          5,205      4,477      4,543

                    -
                               1998    1999       2000    2001       2002       2003      2004      2005    2006    2007


           Sources of Information: Thomson Financial.                                                                       8
Private Equity Fundraising Activity
  • 2007 was a record year for private equity fundraising activity.



  • Increased availability of capital, as well as declining valuations and a need to make add-on acquisitions to existing
   portfolio companies should drive private equity buy-side activity in 2008.


  • The following chart shows funds raised by private equity firms during the last ten years.


                ($Bn)

              $320                                                                                        $302

                                                                                                   $257

              $240

                                                  $184
                                                                                            $168
              $160
                                      $117                     $117
                         $101                                                        $99

               $80                                                     $67
                                                                              $54



                $0
                         1998         1999        2000         2001    2002   2003   2004   2005   2006   2007


           Sources of Information: Dow Jones Private Equity Analyst.                                                        9
U.S. Private Equity Activity
  • 2007 experienced 12% growth from 2006 in deal flow for private equity backed U.S. acquisitions.



  • Private equity firms continue to focus on private company acquisition targets – 59% of all private equity backed
   acquisitions in 2007.


  • The following chart outlines historical U.S. private equity buy-side activity from 1998 through 2007.



                                  (# of Deals)                                  Total       Deal Value                          (Deal Value - $Bn)

                                     1,500                                                                                        $500


                                     1,200
                                                                                                                                  $375

                                       900
                                                                                                                                  $250
                                       600

                                                                                                                                  $125
                                       300


                                       -                                                                                          $-
                                                 1998    1999   2000     2001    2002      2003   2004   2005     2006   2007


                                     1998               1999           2000         2001          2002          2003      2004             2005      2006    2007
  # of Deals >$1.0 Billion            4                  11             12           4             10            15        42               42        76      83
  # of Deals - Middle Market         172                184            183          144           174           250       410              266       308     298
  # of Deals - Undisclosed           222                191            262          175           198           333       367              726       927    1,086



              Sources of Information: Thomson Financial.                                                                                                            10
Middle-Market Valuation
  • The combination of strong demand and favorable financing conditions have kept valuations at the upper end of their
   historical ranges.


  • The following chart details median U.S. middle-market enterprise value to EBITDA multiples during the last ten years.



      (EV/EBITDA Multiple)

          12.0x                                                                                           11.4x

                       9.9x                                                           10.1x
                                                                                                 9.7x
                                  9.2x                                        9.2x

                                               7.9x      7.7x   7.9x   7.6x
           8.0x




           4.0x




           0.0x
                      1998        1999         2000      2001   2002   2003   2004     2005     2006      2007




            Sources of Information: Thomson Financial.                                                                      11
Aggregate M&A Market Valuation
 • The following chart details average enterprise value to EBITDA multiples across different sectors for all U.S. M&A
  activity during the last ten years.



              (EV/EBITDA Multiple)

              25.0x
                       20.6x
              20.0x                   16.8x
                                              15.0x   14.5x
              15.0x                                           12.8x   12.0x   11.8x      11.5x   10.5x   10.6x
                                                                                                                 9.3x   8.8x   8.8x
              10.0x

               5.0x

               0.0x




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          Sources of Information: Thomson Financial.                                                                                  12
Overview of Financing Environment
  • One of the primary factors driving the M&A boom of the last five years has been the substantial amount of liquidity
   available to finance acquisitions.


  • High equity prices and low interest rates, coupled with a friendly financing environment, led to creating very high
   demand for financing and to continuously increasing acceptable levels of debt to EBITDA.


  • The availability of friendly financing helped to drive up valuations by allowing private equity firms to compete and bid
   against strategic buyers.


  • The chart below lays out average debt multiples in middle-market M&A transactions during the last ten years for deals
   below and above $50mm in EBITDA.
                                                                             < $50mm EBITDA             > $50mm EBITDA
                     (Debt/EBITDA Multiple)
                              7.0x
                                                                                                                                                                    6.2x
                              6.0x          5.4x                                                                                                      5.4x   5.6x
                                                                                                                                        5.3x
                                     4.7x                 4.7x                                              4.6x          4.8x   4.7x          4.7x
                              5.0x
                                                   4.1x          4.0x 4.2x          4.1x   3.9x 4.0x 3.8x
                                                                                                                   4.2x
                              4.0x                                           3.4x

                              3.0x

                              2.0x

                              1.0x

                              0.0x
                                       1998          1999          2000        2001          2002      2003          2004          2005          2006          2007
           Sources of Information: Standard & Poor’s Leveraged Commentary & Data.
                                                                                                                                                                           13
2008 and Beyond

  • Capital that moved to the sidelines as valuations got pricier, is now poised to return.



  • More realistic debt pricing, leverage ratios and return expectations.



  • Good companies will continue to be high in demand.



  • New M&A announcements in the first month of 2008 rose just 3% from the previous month, but aggregate M&A
   spending dropped 17%.


  • It is likely that M&A will slow in the short-term as buyers, sellers and sources of capital adjust to some of the changing
   elements in the financial landscape.




                                                                                                                                 14
Ladenburg Thalmann & Co. Inc.




                        Miami, FL                                       New York, NY
                    4400 Biscayne Blvd                                153 East 53rd Street
                         14th Floor                                        49th Floor
                     Miami, FL 33137                                  New York, NY 10022
                     Tel: 305.572.4200                                 Tel: 212.409.2000

           Additional offices in Melville, NY, Columbus, OH, Houston, TX, Princeton, NJ, Los Angeles,
                                     CA, Boca Raton, FL, and Lincolnshire, IL
                                      Member New York Stock Exchange




                                                                                                        15

				
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