Private Equity Industry Update and Trends

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• Private Equity Industry Update and Trends
• Avy Stein, Managing Partner
• Willis Stein Partners

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Global Buyout Fundraising
As of December 31, 2006
Sources Private Equity Analyst, Venture
Economics, Asia Venture Capital Journal, Company
Estimates
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Buyout Fundraising Dominated by Mega Funds
Amount Raised by Fund Size
In 2006, mega funds represented 11 of buyout
funds, but accounted for 49 of the capital
raised.
Source Venture Economics
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Buyout Activity at an All-Time High
Sources Standard Poors Q4 2006 Leveraged
Buyout Review, Standard Poors MA Stats
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Take Private Buyout Activity at an All-Time High
Source Capital IQ
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Buyout Activity Drivers

• Motivated Targets
• Misalignment of management incentives versus
  public owners
• Long-term vision versus quarterly earnings
• Sarbanes-Oxley cost and increased litigation
  risks
• Managers L A W
• Capital Availability
• Fundraising success
• Unprecedented amount of debt available at low
  rates
• CLOs, CDOs and Structured Vehicles
• Hedge Funds

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Acquisition Multiples At or Near Historic Highs
Average LBO Purchase Price Multiples Across Deal
Sizes
Purchase multiples are highand increasing
Sources Standard Poors Q4 2006 Leveraged
Buyout Review, Standard Poors MA Stats
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Today and The Future
The Credit Crunch Volume down, Spreads up
Sources Babson Capital Leveraged Finance Overview
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Today and The Future

• Over 200 billion outstanding in unsold
  leveraged loans in the U.S.
• 400 billion outstanding in U.S. private equity
  funds
• Additionally, hedge funds control more than 1
  trillion, of which 10-30 is set aside for
  private equity type investing
• Whats Next?