1. Joseph V. Rizzi Amsterdam Institute of Finance November, 2012

2. Strategic Issues Do I make the acquisition? Valuation How much do I pay? Financing How do I pay? Integration Implementation of acquisition Tactics How do I make the offer? Amsterdam Institute of Finance November, 2012 2

3. Accounting Tax Corporate Law Securities Regulatory and Antitrust Contract Business Plan Transaction Characteristics Financial Preferences Market Conditions Deal Competing Bidders Creditors Rights Amsterdam Institute of Finance November, 2012 3

4. Financial Preferences: Dilution Control Risk Tolerance Flexibility Exit Needs Market Conditions: Depth Pricing Requirements Structural Needs Cycle Liquidity Business Considerations: Strategic Plans Growth Plans Management Business Risk (Cash Flow Volatility) Financial Characteristics: Sources and Uses Operating Cash Flows Leverage Liquidity Seasonality Timing Deal Maturity Amortization Seniority Security Covenants Prepayment Cost Liquidity Size What do you want? How to get what you need! What can you get? Amsterdam Institute of Finance November, 2012 4

5. Bull Market Menu Bear Market Menu As the credit curve shifts, the menu that is available to Issuers / Arrangers changes Holding Company PIK Tranche Term Loans Covenant Light High Yield Debt Bridge Loans Second Lien Hybrid Preferred Cross Lien Facilities Asset Carve-outs OPCO/PROPCO Recapitalizations Stretch Senior Seller Notes Senior Notes Private Placements Equity R/C Lite Mezzanine Smaller Covenants Grids Prepayment Penalty Issuer Friendly Investor Friendly Amsterdam Institute of Finance November, 2012 5

6. 6 To access the data points underlying the chart, double-click on the chart. Copyright© 2012 by Standard & Poor’s Financial Services LLC (S&P) a subsidiary of The McGraw-Hill Companies, Inc. Amsterdam Institute of Finance November, 2012

7. Left Hand Side Financing Right Hand Side Financing Based on the cash flow of a specific asset pool. Some examples include: Asset Based Lending Factoring Leasing Project Finance Securitization Based on the cash flow of the entire company. Some examples include: Bank Debt Public Bonds Mezzanine Preferred Stock Common Stock Amsterdam Institute of Finance November, 2012 7

8. Financial Flexibility Target Credit Rating Determine Capital Structure HedgeNo Action Bank Funding Acquisition Bridge Takedown Credit Rating Fixed Income Asset Carveout Securitization \ Prop Co Bank Financing Equity / Near Equity Refinance Bridge Fixed- Rate Floating- Rate Advisory / Origination Underwriting Product Execution Amsterdam Institute of Finance November, 2012 8

9. 9 Purchase/Sale Nondisclosure Agreement Offering Memorandum Data Room Letter of Intent Sale and Purchase Agreement Financing Commitment Letter Term Sheet Credit Agreements Intercreditor Agreements Amsterdam Institute of Finance November, 2012

10. 10 Commitment Letters Mac Due Diligence Syndication Flex Marketing Periods Fraudulent transfers Loan Documentation Intercreditor Covenants Amsterdam Institute of Finance November, 2012

11.  Rule of Thumb Measures ◦ Balance Sheet Model ◦ Cash Flow Model  Detailed Model ◦ Matching markets to the need ◦ Reverse inquiry ◦ Projections (amortization capability) Amsterdam Institute of Finance November, 2012 11

12. Deal Financial Arithmetic Amsterdam Institute of Finance November, 2012 12

13.  Purchase Price ◦ Minimum/Maximum ◦ Recapitalization Dividend  Debt Refinancing ◦ Callability ◦ Premiums ◦ Tax Issues  Expenses  Other Uses Amsterdam Institute of Finance November, 2012 13