1. Norwest Equity Partners | 1 CFA Society of Iowa February 2008

2. Norwest Equity Partners | 2 The Private Equity Market -Introduction to Norwest Equity Partners (NEP) -The Evolution of Private Equity -Current Middle Market Overview -Trends in Private Equity

3. Norwest Equity Partners | 3 Who We Are Norwest Equity Partners (NEP) invests in profitable and growing middle market companies – Four decades of investment experience; heritage dates back to 1961 – $3 billion in capital under management – Currently investing NEP VIII — $800 million private equity fund – Affiliated mezzanine fund: Norwest Mezzanine Partners (NMP), $650 million under management – Limited partner is Wells Fargo & Co. – NEP General Partners have autonomous decision-making – 25 investment professionals located in Minneapolis (20 NEP, 5 NMP)

4. Norwest Equity Partners | 4 What We Do Types of Transactions – Buyouts – Recapitalizations – Growth Equity – Mezzanine – Other Investment Criteria – EBITDA greater than $10 MM for standalone investments; any size for portfolio company add- on acquisitions – Transaction size between $50 MM - $500 MM – Equity investments of $20 MM - $100 MM

5. Norwest Equity Partners | 5 Agricultural Services and Products Business Services Consumer Services and Products Distribution Energy Financial Services Healthcare Manufacturing Plastics and Packaging Proven Technology Transportation and Logistics Representative Investments

6. Norwest Equity Partners | 6 National Presence Not shown on map: Hawaii Brazil, Mexico, Canada ● ● – current portfolio company – exited investments – add-on investments NEP Office, Minneapolis ● ●● ● ● ● ● ●● ● ● ● ● ● ● ●● ● ● ● ● ● ● ● ● ● ● ●

7. Norwest Equity Partners | 7 POET Biorefining Jewell, IA POET Biorefining Gowrie, IA Paladin Brands Cedar Rapids, IA Jacobson Companies Des Moines, IA Becker Underwood Ames, IA NEP and NMP have invested over $265 million in Iowa Combined sales of over a billion $’s NEP Iowa Investments

8. Norwest Equity Partners | 8 The Evolution of Private Equity

9. Norwest Equity Partners | 9 What is Private Equity?

10. Norwest Equity Partners | 10 Venture Capital BDCs SPACs Leveraged Recaps Leveraged Buyouts Mezzanine PIPEs Management Buyouts

11. Norwest Equity Partners | 11 What is Private Equity? Source: Credit Agricole

12. Norwest Equity Partners | 12 Top Quartile Performance Source: Bain

13. Norwest Equity Partners | 13 “Cowboy Days”  <20% of capitalization in equity for LBOs  Some deals funded with 0% equity  Mega deals like RJR Nabisco  6x leverage, emergence of cash flow loans and junk bonds The Early Stage Early 1980’s - Mid 1990’s

14. Norwest Equity Partners | 14 Return Model The Early Stage Debt Paydown -Debt arbitrage -Cost cuts -Junk bonds Multiple Arbitrage -Fewer exit options Earnings Growth -Don’t rock the boat

15. Norwest Equity Partners | 15 The Early Stage Source: Venture Economics

16. Norwest Equity Partners | 16 “The Proliferation Story”  More funds, more specialization, spin-out funds  Over-levered deals in trouble  Growth slows with recession  It’s all about the internet and technology The Middle Stage Late 1990’s - Early 2000’s

17. Norwest Equity Partners | 17 Return Model The Middle Stage Debt Paydown -Asset Sales -Cost cuts Multiple Arbitrage -Roll-ups Earnings Growth -Cost take-outs in roll-ups

18. Norwest Equity Partners | 18 Institutional “Grown-up” Stage  Record fundraising and investments  Record leverage and purchase multiples The Recent Stage Mid-2000’s – 6 Months Ago

19. Norwest Equity Partners | 19 Return Model Recent Stage Debt Paydown -Not at these prices and required equity % Multiple Arbitrage -Not at these prices Earnings Growth -Operational improvements

20. Norwest Equity Partners | 20 2007: Record Breaking U.S. Buyout and Mezzanine Fundraising, 1996–2007($Mil) Source: Buyouts Magazine

21. Norwest Equity Partners | 21 2007: Record Breaking U.S.-Based Disclosed Deal Volume By Quarter In Billions Source: Buyouts Magazine

22. Norwest Equity Partners | 22 2007: The Year of the Mega Deal Biggest Closed Deals Ever SponsorTarget NameValueSectorClosing Date 1Kohlberg Kravis Roberts & Co., TPG, Goldman SachsTXU Corp$44.3 billion UtilitiesOctober 2007 2The Blackstone GroupEquity Office Properties Trust$37.7 billion Real EstateFebruary 2007 3KKR, Bain Capital, Merrill Lynch CapitalHCA Inc$32.1 billion HospitalsNovember 2006 4KKRRJR Nabisco Inc$30.2 billion CigarettesApril 1989 5Goldman Sachs, Carlyle Group, Riverstone, AIG, managementKinder Morgan Inc$27.5 billion EnergyMay 2007 6KKRFirst Data Corp$27.0 billion Data processingSeptember 2007 7TPG, Goldman SachsAlltel Corp$26.9 billion TelecomNovember 2007 8The Blackstone GroupHilton Hotels Corp$26.7 billion HotelsOctober 2007 9KKR, managementAlliance Boots PLC$19.4 billion Drug storesJune 2007 10The Blackstone Group, Permira, Carlyle Group, TPGFreescale Semiconductor Inc$17.5 billion SemiconductorsDecember 2006 Source: Thomson Financial, Buyouts Source: Buyouts Magazine 7 out of the 10 largest closed deals ever took place in 2007

23. Norwest Equity Partners | 23 Current Middle Market Overview

24. Norwest Equity Partners | 24 2007: The Year of the Credit Crunch The market has been erratic this week.

25. Norwest Equity Partners | 25 Buyout firms walking away from take-private deals  KKR and GS Capital: Harman International ($8 billion)  J.C. Flowers and Cerberus: Sallie Mae ($25 billion)  Cerberus: United Rentals ($100 million reverse break-up fee) The Break Up

26. Norwest Equity Partners | 26 Top Pending US “Going Private” Transactions TargetSpread ($)Spread (%) Myers Industries Inc-12.32-54.76 Cumulus Media Inc-6.32-53.79 Restoration Hardware Inc-2.84-42.39 Mace Security Intl Inc-1.20-40.00 Reddy Ice Holdings Inc-9.62-30.78 Alliance Data Systems Corp-21.46-26.25 Covad Commun Grp Inc-0.25-24.51 3Com Corp-1.28-24.15 Critical Path Inc-0.02-20.00 Penn National Gaming Inc-12.98-19.37

27. Norwest Equity Partners | 27 PE Slowdown? “Hoskins, try saying 'profits are up' without the finger quotes, okay?”

28. Norwest Equity Partners | 28 PE Market Slowing? LPs Seeing Early Signs Of An End To The Buyout Boom (Dec 07) Source: Coller Capital

29. Norwest Equity Partners | 29 Liquidity shortage finally catching up with middle market  Collapse of CLO and syndication markets  Sub-prime mess, recession fears, rogue traders  Consolidation and retreat  Funding challenges for BDC’s Middle Market Immunity?

30. Norwest Equity Partners | 30 Middle Market Immunity? Source: Buyouts Magazine

31. Norwest Equity Partners | 31 Middle Market Immunity? Source: Buyouts Magazine

32. Norwest Equity Partners | 32 Middle Market Immunity? Source: Buyouts Magazine

33. Norwest Equity Partners | 33 Middle Market Immunity?

34. Norwest Equity Partners | 34 Middle Market Woes  Harder time getting lenders to underwrite deals  Buyout Funds are seeking non-traditional lenders (Hedge Funds, etc)  Less Capacity  Lenders pushing for tougher covenants

35. Norwest Equity Partners | 35 Trends in Private Equity

36. Norwest Equity Partners | 36 “The private-equity industry is larger, more profitable and more global in scope than at any time in its roughly 40-year history.” David Rubenstein, co-founder of the Carlyle Group Globilization of PE Source: The Economist

37. Norwest Equity Partners | 37 Europe moving into U.S. PE Market? European Sponsors Grow More Active In U.S. Source: Buyouts Magazine

38. Norwest Equity Partners | 38 Industry/Theme Focus  Sector specialization –Energy, retail, clean technology, etc  Demographics –Baby boomers, Hispanic market, affluent market  Outsourcing –China and India strategies  PE organizational changes –Operating partners, role specialization

39. Norwest Equity Partners | 39 Convergence with Hedge Funds  Synergies between two areas  Leveraging sector talent, market knowledge, deep research, deal flow, fund raising  Debt markets are largest areas of convergence  Public to Private Deals  Significant cultural differences

40. Norwest Equity Partners | 40

41. Norwest Equity Partners | 41 Going Public BDCs, SPACs, Management Companies, etc

42. Norwest Equity Partners | 42 Tips for working with a private equity firm…  Start to prepare early -Get financials in order  Understand decision making process of PE groups  Do your homework -What is the firm’s track record? Reputation? -Call CEO’s of current and former portfolio companies  Think about taxes -Can single level taxation be preserved? -Changes in capital gains rates  Spend time with firm to understand personalities/good cultural fit