1. Joseph V. Rizzi Amsterdam Institute of Finance December, 2015

2. M&A StrategyDeal Phase Integration/ Execution 2 Translate General Strategy into M&A Strategy Determine Screening Criteria Identify Targets Screen/Prioritize Output: Target with Investment Thesis (Business Case) Outcome: Go forward decision Next Step: Contact Target Valuation (synergies, sensitivity analysis, walk-away price) Due Diligence Deal Structure Negotiation Pro forma business model Integration Planning (degree/scope of integration, etc.) Output: Due Dili Report; Full/Final Business case including Final Financials Outcome: Go/No Go Decision; Close the Deal Leadership PMI Project Office/Team 100 Day Plan Communication Plan Operating Integration Customer Integration Cultural Integration Performance & Synergy Tracking Fix/Adjust Process Post Closing Evaluation Outcome: Accomplish Investment Thesis Amsterdam Institute of Finance December, 2015

3.  Goal of deal structure should be to maximize value – but different parties have different objectives.  Some Buyer Shareholder Objectives: – Minimize after-tax price paid for the acquisition – Minimize the dilution of their pre-merger ownership stake – Protect deal  Some Seller Shareholder Objectives: – Maximize after-tax price received – Minimize risk of the offer (for a given dollar value of the deal) e.g. termination and go shop 3 Amsterdam Institute of Finance December, 2015

4. Seller Maximize Value  Create competitive environment among bidders  Avoid surprises from bidders’ diligence  Control information release  Balance length of process against stakeholder expectations  Limit warranties and indemnifications 4 Common Goals  Preserve value  Reduce uncertainty  Create efficient tax structure  Minimize distractions  Maintain credibility  Enhance reputation  Separate smoothly  Minimize post-closing disputes Buyer Lower Price  Highlight liabilities and risks  Challenge run rates and forecasts  Understand sustainability  Develop advantage over other bidders  Analyze costs and synergies in detail  Maximize warranties and indemnifications  Balance exclusivity and break-frees Amsterdam Institute of Finance December, 2015 Seller Buyer Maximize Value Common Goals Lower Price

5. Acquisition NDA LOI Offering Memorandum SPA Financing Bank Book Term Sheet Commitment Letter Fee Letter Credit Agreement(s) Intercreditor Agreement(s) Security Document 5 Amsterdam Institute of Finance December, 2015

6.  Price  Form of Transaction  Form of Payment  Control and Governance  Social Issues  Timing and Deadlines  Transaction Hedges 6 Amsterdam Institute of Finance December, 2015

7. 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 December, 2015 7

8. Contract Form Consideration Pricing Conditions Repos and Warranties Indemnities Change of Control Covenants Tax Capital Gains to Seller WHT on divs and int Basis NOL’s Interest deductibility Tax treaties Consolidation Exit planning Rating Agencies Regulatory Competing Bids Size Financial Strength Dilution Analysis Strategic Fit Securities Notice S/H Vote Tenders Preemption Rights Triggers Bankruptcy Framework (Inter-creditor Concerns) Subordination Guarantees Corporate Notice Percent by Region/State Lock-Up/Break Up Fee/No Shop Pills/Defenses Merger/Consolidation Antitrust Hart/Scott/Rodino Sherman Act HHI European Commission Monopolies & Mergers Commission Accounting Goodwill Fair Market Value Net Worth Consolidation Amsterdam Institute of Finance December, 2015 8

9. Buyer Issues Share Valuation: avoid using undervalued shares Synergy Risk: use cash if synergy risk low to retain upside Market Risk: who bears risk of shares charging price post offer/pre close Fixed price: seller assumes risk Fixed share: buyer assumes risk Collars/caps: share Dilution Earnings Book value Ownership Taxes Asset write-up Tax domicile Credit Ratings Seller Issues Valuation: DD on buyer Taxes:defer seller capital gains taxes Liquidity:share float, lock-ups and Regulation Rights 9 Amsterdam Institute of Finance December, 2015

10. Issues: tax, accounting Forward:Target merges into buyer’s wholly owned subsidiary with subsidiary as Continuing entity Pre transactionPost closeBuyer Subsidiary TargetSubsidiary (including old target) Reverse:Target merges into buyer’s wholly owned subsidiary with target as continuing entity. Subsidiary shares converted into target shares; shares converted into buyer shares Pre transactionPost closeBuyer Subsidiary TargetTarget (including subsidiary) 10 Amsterdam Institute of Finance December, 2015

11. HSR Review Period (30 Calendar Days) Engage Investment Bankers Prepare Merger Agreement, Stockholders Agreement & HSR Premerger Notification Due Diligence Fairness Opinion Issued and Boards Approve Merger Agreement Arrange Financing Determine Structure (Tax, Accounting, Form, Consideration) Sign Merger Agreement & Stockholders Agreement File HSR Premerger Notification Commence Preparation of Preliminary Proxy Materials (Schedule 14A) Issue Press Release File 8Ks and Schedules 13D File Preliminary Proxy Materials (Schedule 14D) with SEC Print and Mail Proxy Materials To Target Stockholders (Assumes Definitive Proxy Materials Are Available) HSR Waiting Period Expires, Assuming No Second Request Target Stockholder Meeting Close Merger Pre-Commencement Day 1Calendar Week 7 Period (1 Week) Week 2 Day 10 Day 20 Day 30 Day 40 11 Amsterdam Institute of Finance December, 2015

12. 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 / OriginationUnderwriting Product Execution Amsterdam Institute of Finance December, 2015 12

13. Purchase/Sale Nondisclosure Agreement Offering Memorandum Data Room Letter of Intent Sale and Purchase Agreement Financing Commitment Letter(s) Term Sheet Credit Agreements Intercreditor Agreements Amsterdam Institute of Finance December, 2015 13

14. Business Legal Entity Basis Bankruptcy Payment Priorities Provisions Reps/Warranties: What are the facts? Operating Covenants: Pre Close Financial Covenants: Preserve deal Remedies Structures to reduce credit risk Guarantees Indemnities Pledges of Stock Subordination Deposits / Escrows Amsterdam Institute of Finance December, 2015 14

15. Parties Definitions Form: Merger, Tender, Asset Sale,… Consideration: Type, Payment, Mechanics, Calculation,… Reps/Warranties: Duration, Survival Target: MAC Buyer: Issue when stock used Ordinary Course Covenants: Target will operate as usual during signing/closing gap period Other Agreements: Filings, Meetings,… Closing Conditions: Regulatory, Shareholder Termination & Expenses: Drop Dead Fee, Drop Dead Date, Termination Fees Other Stuff: Choice of Law, Specific Performance Useful Sites apps.americanbar.org/…/mspd-letter-of-I contracts.onecle.com PLI.edu 15 Amsterdam Institute of Finance December, 2015

16. Commitment Letters MAC Due Diligence Syndication Flex Marketing Periods Fraudulent Conveyance Loan Documentation Intercreditor Covenants Conditions See: lma.eu.com/documents for drafts Amsterdam Institute of Finance December, 2015 16

17.  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 December, 2015 17

18. Deal Financial Arithmetic Amsterdam Institute of Finance December, 2015 18

19.  Purchase Price + Expenses ◦ Minimum/Maximum ◦ Recapitalization Dividend  Debt Refinancing ◦ Callability ◦ Premiums ◦ Tax Issues  Expenses  Other Uses Amsterdam Institute of Finance December, 2015 19

20.  Revolver oTied to advance against current assets oCrossing liens  Term Loan A oMacro: Ratio of 3-4x EBITDA oMicro: Amortization analysis tied to cash flow in years 1-7  Term Loan B oSenior debt ratio less Term Loan A amortization o1% P.A./Balloon Second Lien oMacro: 0.5-1x EBITDA oLimited amortization oLonger term Senior/Subordinated Unsecured  Other Debt oTotal Debt/EBITDA less Senior Debt/EBITDA  Equity oFunding need less Total Debt/EBITDA Senior Secured First Lien Amsterdam Institute of Finance December, 2015 20

21.  Current Asset approach ◦ Use standard advance rates  Accounts Receivable 80%  Inventory 60%  PP&E/Net40% ◦ Consider the following factors  Seasonal Needs  Future Working Capital Growth  Unexpected Liquidity Needs Amsterdam Institute of Finance December, 2015 21

22.  Term Loans = Maximum Senior Debt - Revolver  Focus is on Free Operating Cash Flow  Market conditions also dictate the maximum tenor of the loan and the amount required to be amortized  Acceptable asset coverage is also a consideration in determining the size of the term loans Amsterdam Institute of Finance December, 2015 22

23.  Typical bank financings as structured as follows: Revolving Credit Term Loan A (amortising) Term Loans B & C (bullet/balloon) T/LC Rare Large unfunded revolvers are seldom used today due to the fact that it is capital unfriendly to banks and companies don’t like to pay for unused commitments. In the interest of keeping flexibility for the long term, additional indebtedness baskets should be negotiated upfront. This allows companies to access either the bank or bond markets under their existing credit agreements and saves the costs of having to refinance. Amsterdam Institute of Finance December, 2015 23

24.  Long Term Debt = Max Total Debt - Max Senior Secured Debt ◦ Senior unsecured ◦ Sub Debt ◦ Other – unitranche, PIK, …  Equity: ◦ Equity = Total Uses - Max Total Debt ◦ Common ◦ Hybrids  Convertibles  Preferred Amsterdam Institute of Finance December, 2015 24

25. Senior lenders are concerned with the implications of having high yield investors at the table during a restructuring. EURO High Yield investors to date have not been as vocal as senior bank lenders, viewing the issue as one of pricing rather than principle. All other things being equal, sophisticated investors will probably price structural subordination at premium. Amsterdam Institute of Finance December, 2015 25

26. Holding Company Intermediate Holding Company Operating Company Operating Company 100% Equity Interest Issues High Yield Bonds Subordination Agreement Senior Secured Loan Amsterdam Institute of Finance December, 2015 26 Guarantees To what restructuring Cash Assets

27. Holding Company Intermediate Holding Company Operating Company Operating Company 100% Equity Interest Issues High Yield Bonds Support Package Senior Secured Loan Amsterdam Institute of Finance December, 2015 27

28.  There are no standard covenants.  They must be tailored to fit each deal and loan structure.  The steps in structuring the covenants are: o Identify the risks (business, financial and structural) o Select Covenants to monitor the risks Need to prioritize the risks to monitor because it will be impossible to monitor every risk The time and cost to monitor the covenants must be considered (i.e., sometimes one covenant can cover multiple risks) o Set Appropriate Levels Want the covenants to trigger a warning before any principal or interest payments become delinquent. Need to factor in any seasonal needs to the covenant levels. Amsterdam Institute of Finance December, 2015 28

29. Major Covenants (financial maintenance) – Industry Variation CAPEX Debt Service Fixed Charge Funded Debt Net Worth Earnings Reason for Decline Institutional Loan Investors High Yield Market Competition Amsterdam Institute of Finance December, 2015 29

30. Most acquirers fail to consider how deal type impacts what you integrate and how you handle people issues 30 Amsterdam Institute of Finance December, 2015 “Scale” deals “Scope” deals Degree of Integration: Integrate comprehensively Ensure Integration approach is coordinated across regions Integrate selectively, only where there is overlap Ensure business models align and cross- fertilize strengths Organization Structure: Blend structures; assimilate where the target is small or under-performing Make decisions early, but don’t sacrifice more informed decisions for speed Keep organizations separate; blend structures where there is overlap Define the role of the center and regional/ functional superstructure Make decisions as early as possible Executive Selection: Select a small proportion of the target’s executives; select more where the target is larger or better performing Make decisions early; ideally before announcement Retain a high proportion of the target’s executives Make decisions before announcement Make retention a priority and offer retention incentives Employee Retention: Target early talent critical to the transition/integration Target early talent critical to success of company Cultural Integration: Integrate the two cultures, typically by selecting the “best of both” Win the hearts and minds of both companies’ employees Preserve the two cultures Harmonize at the leadership level (clarify “way of working” and how decisions are made)