Private Alternatives to the Public Markets How to Survive and Grow in a Capital Constrained Environment A Private Conference on May 16, 2001 Sponsored by: Windsor Group Investment Banking Deloitte & Touche Holland & Knight LLP Holland & Knight Consulting

Backdrop to Current Environment Slowing economy and Internet “bubble” are reducing the opportunities for IPO’s and secondary stock sales Number of United States IPO’s are down to 429 in 2000 from 538 in 1999 (down 20%) Only $8.1 billion of proceeds in fourth quarter 2000 versus $27.4 billion in fourth quarter 1999 Performance very poor in 2000: Rule “FD could make things worse, due to increasing uncertainty in minds of analysts and portfolio managers

Backdrop to Current Environment Leveraged loan market has contracted to levels of the early 1990s Proceeds of debt syndications of $1,175 MM in 200 versus $1,298 MM in 1999 (down 9.5%) Bank debt multiples at a 10-year low Bank examiners caused 60% of syndication buyers to exit the market since mid-2000 Predicting a recession - and may be getting what they predicted!

Backdrop to Current Environment High-yield bond market is no longer an option for most issuers Assets more concentrated than in stock market, leading to larger minimum size thresholds (now $250MM+) Returns under 5% annually since 1998 Yields and spreads have increased, but liquidity has not returned 2000 new issuance down to levels of 1994-95

Backdrop to Current Environment cont’d Significant amount of LBO capital has been raised but not invested yet Source: Venture Economics/NVCA

Backdrop to Current Environment LBO funds are investing more equity in deals, despite high acquisition multiples implying a reduction in expected returns