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Breakfast Forum
The Current State of the Capital Markets - 2008
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Crutchfield Capital CorporationPresentation
toBoyar Miller Breakfast ForumAn Overview
of Institutional Private Equity MarketsHouston,
TexasOctober 17, 2007
Private Equity J.B. Dollison Managing
Director Crutchfield Capital Corporation
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• Fundamentals of Private Equity Markets
• Institutions formed with Specific Investment
  Criteria
• Growth Capital
• Buyout
• Most are Limited Partnerships
• Limited Partners Typically are
• Wealthy Individuals/Families
• Endowments
• Pension Funds
• Insurance Companies
• Examples of Private Equity Firms
• Bain Capital Kohlberg Kravis Roberts Co.
• The Blackstone Group The Carlyle Group

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• What Did We Say Last Year?
• Private Equity Firms had Raised Extraordinary
  Sums of Capital with Much on the Sidelines
• Large Amount of Private Equity was being Deployed
  in Leveraged Buyouts
• Private Equity was Representing an Increasing
  Share of MA Transactions

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• Our 2007 Forecast for Private Equity
• Public Equity Markets Should be Watched for Early
  Warning Signs of Deterioration
• Current Liquidity Surplus will take Significant
  Time to Absorb
• Sub-Prime Credit Problems will have Limited Long
  Term Effects on Private Equity Transactions
• Valuations are Likely to Moderate Based on
  General Economic Conditions

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• Our 2007 Forecast vs. Actual Results
• Public Equity Markets Should be Watched for Early
  Warning Signs of Deterioration

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• Our 2007 Forecast vs. Actual Results
• Current Liquidity Surplus will take Significant
  Time to Absorb

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• Our 2007 Forecast vs. Actual Results
• Sub-Prime Credit Problems will have Limited Long
  Term Effects on Private Equity Transactions

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• Our 2007 Forecast vs. Actual Results
• Valuations are Likely to Moderate Based on
  General Economic Conditions

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• Our 2008 Forecast for Private Equity
• Leverage Ratios are Unlikely to Increase
  Significantly prior to Resolution of Credit
  Crisis
• Strategic Buyers will be More Competitive than in
  Previous Years (2003 2007)
• International Buyers will Continue to
  Aggressively Pursue U.S. Assets due to Weak
  Dollar
• Valuation Metrics Likely to Remain Flat
• Possible Increased Supply of Businesses due to
  Baby Boomer Retirements could apply Downward
  Pricing Pressure

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• What Does our 2008 Forecast Mean for You?
• If You are Raising Capital or Selling a Business
• Significant Private Equity Capital is Available
  for Attractive Transactions
• Valuation Metrics have Moderated Considerably
• Adjust Expectations Accordingly
• If You are Purchasing a Company
• Equity Capital will Likely be a Greater
  Percentage of the Transaction Structure
• Expect Strategic Buyer Competition for Assets
• Lower Return Metrics Implied by Larger Equity
  Contribution could be Offset by Lower Purchase
  Multiples and/or Less Risk

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Private Equity Take Away Sheet

• Liquidity Remains High
• Lower Leverage Ratios have Compressed Purchase
  Multiples
• Attractive Transactions are still Generating
  Significant Interest
• Consider Professional Representation to Ensure
  Best Valuation and Deal Terms

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• Private Equity
• J.B. Dollison
• Managing Director
• Crutchfield Capital Corporation
• 2700 Post Oak Blvd., Suite 975, Houston, Texas
  77056
• 713.961.0496 jbd_at_crutchfieldcapital.com
  www.crutchfieldcapital.com