1. 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

2. 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

3. 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!

4. 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

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

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