M&A T ODAY: T ECHNOLOGY, I NFORMATION & B USINESS S ERVICES I NVESTING I N B USINESS S ERVICES Amy LaBan Lake Capital February 12, 2004

2 Lake Capital uses its extensive operational, transactional, and investment expertise in business services to build great companies and create shareholder value Lake Capital Management LLC: –Private equity firm founded in 1998 with a focus on building quality middle-market, business services companies with reliable cash flows, high potential for organic and acquisition-driven growth, and significant equity appreciation. $700 million under management focused on investing significant amounts of equity in services companies: –Service sector-focused fund looking to commit $25-75 million in equity to each portfolio company initiative (with additional equity available through LP’s co-investing). Experience investing and operating across the business services universe: –Lake Capital has worked with companies that range from transaction services to professional services in multiple industries. Hands-on, strategic approach: –The firm takes a “strategically involved” approach to partnering with its portfolio company management teams. Historical track record and focus on attractive, long-term returns: –Lake Capital focuses on investment opportunities that offer a minimum of 3x return on invested capital. I NTRODUCTION

3 T HE B USINESS S ERVICES U NIVERSE The business services universe offers a large number of investment opportunities that range from tactical offerings and project- based contract hiring to strategic services often delivered in a wholly outsourced, systems-driven environment There are more than 50 different SIC codes relating to business and management services within the services sector: Human Capital Finance, Accounting, Admin Supply Chain Sales & MarketingITFacilities Strategic HR outsourcing Finance & accounting outsourcing Supply resource management Sales & customer care outsourcing IT outsourcing Outsourced facilities management Business Process Outsourcing Document & information management Logistics Facilities management Professional employer organizations Transaction processing Customer relationship management Catering Management consulting Distribution Advertising, PR, sales promotion, direct marketing Web hostingUniforms Training Accounting & tax services Security TacticalStaffingLegalTransportation Outbound telemarketing IT services Engineering & construction Contracting Source: KPMG, Lake Capital

4 B USINESS S ERVICES I NVESTORS L OOK F OR Source: Lehman Brothers Private equity investors and public company investors look for similar characteristics in target companies

5 “F OLLOW T HE M ONEY” Top-Line Focused Initiatives Bottom-Line Focused Initiatives Specialty Services Corporate Client Lake Capital starts by identifying services used by corporate clients and then prioritizes:  Industry trends that create demand.  Consultative versus commoditized services.  Contact points at senior levels within large organizations.  Value placed on single source providers.  Need for geographic reach resulting in international growth opportunities.  Deploy technology to benefit product development and the delivery of services.  Require capital for growth.  Opportunity to enhance management. Lake Capital proprietary research on services spending: “Trends in Business Services” ( WhitePaper.pdf)

6 “F OLLOW T HE M ONEY” Top-Line Focused Initiatives Bottom-Line Focused Initiatives Specialty Services Corporate Client Sales and Marketing– related Services:  Marketing communications  Market research  Web-enabled services Finance-related services:  Accounting- related services Operational and infrastructure services:  Human capital management  Corporate training  Legal services  Specialty/professional publishing Specialists in Various Industries Example service sub-sectors Lake focuses on (more on p. 10)

Additional Information On Lake Capital Partners LLC

8 D EAL S OURCING Lake Capital has extensive relationships in the business services sector and an active, in-house market research and deal sourcing process produce a significant number of unique investment opportunities: Relationships with key intermediaries and ongoing market research result in unique investment opportunities Lake Capital Research and Business Development Investors/ Intermediaries Business Owners New Platform Investments Per Year Add-on Acquisitions Per Platform Per Year Lake Capital Pipeline

9 Lake Capital looks to invest a minimum of $25 million and, ideally, $40-75 million in equity over a 3-6 year time horizon New portfolio companies: –Traditional “platform company:” $5 million in EBITDA for a platform; a minimum of $1 million in EBITDA for an add-on acquisition. –“Mass start-up:” A group of professionals that Lake can back in a “new home” and take advantage of a market opportunity. Strong management team focused on growth in fragmented industries. Based in North America but may offer international expansion opportunities. Multiple sector and industry opportunities: –Marketing services such as sales promotion, direct response, public relations, market research, and event services. –Finance-related services such as accounting-related services, cost recovery services, and financial and economic consulting. –Operational and infrastructure services such as human capital management, distribution services, technology consulting, and other outsourced services. –Specialty services such as corporate training, insurance services, legal services, and specialty and professional publishing. –Industry-focused companies with businesses offering services combined with deep expertise in consumer products, energy, financial services, healthcare, legal, and manufacturing, among other industries. L AKE C APITAL I NVESTMENT P ARAMETERS

10 Lake Capital adds value at every stage of the investment and management process: Active support for portfolio company operations differentiates the Lake Capital approach T HE L AKE T EAM OFFERS MORE THAN CAPITAL Enhance executive teams through incentives and recruitment of key employees Manage exits: IPO Recapitalization Strategic sale Identify and execute add-on investments to extend: Service offerings Geographic and market reach Aggressively expand through: Organic growth Acquisitions Strategic partner supporting management’s day-to-day operations Identify, source, and structure transactions

11 Lake Capital has partnered with management teams to build leading companies in various areas of business services: Highly- fragmented business services sector offers numerous attractive investment opportunities S UCCESS IN B USINESS S ERVICES I NVESTING Advance Ross Corporation EAGLE RIVER INTERACTIVE Specialized Transaction Services Sales Promotion e-Consulting Specialized Financial Consulting Branding/Financial PR/ Marketing Services IT Training Strategic and Operational Consulting Public Affairs and Lobbying