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CONNECTING M&A COMPANY LEADERS THROUGH ENGAGING PROGRAMS, NETWORKING EVENTS, AND A GLOBAL BANK OF INVALUABLE INFORMATION

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CHAIRMAN’S WELCOME

s the Chair franchise, brandFEBRUARY management, environ- mentators and actors, and8, his take2012 on vided Capital Connection attendees with of the 10th mental services COBBand marketing GALLERIA services. theCENTRE “State of the· ATLANTA, Economy.” Stein GEORGIA was unique perspectives from our knowledge- AAnnual At- Mr. Aronson, who was also a featured catapulted into the mainstream spotlight able, thought-provoking and entertaining lanta ACG Capital speaker at the first Atlanta ACG Capital in 1986 with his portrayal of the boring panelists. Connection, and Connection in 2003, will be discussing teacher in Ferris Bueller’s Day Off. Many on behalf of the “The Evolution ofThe Private EquitySoutheast’s – Strate- people don’t Premier realize though M&Athat Stein hasEvent We especially thank the sponsors of the Atlanta Chapter gies for Success.” a very diverse background aside from 2012 Atlanta ACG Capital Connection, of the Associa- acting, including being an attorney, a many of whom have supported this event tion for Corpo- After breakfast, the Private Equity Mar- university professor, a speech writer for for many years. Each of these sponsors rate Growth, I ketplace, featuring 91 of the top middle Presidents Nixon and Ford, the author of is dedicated to supporting the successful invite you to join market private equity groups in the Unit- 30 books, and a regular commentator on growth of middle market companies. us at this year’s conference on February ed States with billions of dollars of avail- CBS Sunday Morning and Fox News. 8, 2012. Since its inception in 2003, the able capital, will offer opportunities for I encourage all participants to take ad- Atlanta ACG Capital Connection has be- After lunch, from 2:00 vantage of the networking opportunities come the Southeast’s premier networking “...private equity attendees have to 4:45 p.m., the Re- available at this year’s Atlanta ACG Capi- and educational event for participants in consistently ranked the Reverse verse Capital Connec- tal Connection. On behalf of the Capital all facets of corporate growth, dealmak- Capital Connection as the tion will highlight over Connection Executive Committee, I hope ing, and mergers and acquisitions. With highlight of the entire event.” 50 leading middle mar- you have a very productive and success- many factors pointing to a robust M&A ket investment banking ful day on February 8. I look forward to market in 2012, we are especially excited groups from across the meeting with many of you. about this year’s event. intermediaries, CFOs, accountants, at- United States. In recent years, private torneys and other individuals involved in equity attendees have consistently ranked Regards, The conference will begin with our break- mergers and acquisitions to network with the Reverse Capital Connection as the fast speaker, Neal Aronson, Founder and principals from top middle market pri- highlight of the entire event. Robert Owen Managing Partner of the Atlanta-based vate equity groups and strategic buyers. Partner private equity firm Roark Capital. Roark Throughout the day, there will be four in- Tucker, Midis & Owen, LLC specializes in business and consumer ser- Attendees won’t want to miss our lunch formative breakout panel discussions ad- Chair vice companies with attractive growth speaker, Ben Stein, one of America’s most dressing a variety of timely issues related 2012 Atlanta ACG Capital Connection prospects. Specific areas of focus include entertaining economists, authors, com- to the M&A world which have always pro-

A WORD FROM THE PRESIDENT...

n behalf of the Board of Direc- middle market companies in 56 chapters equity groups, lenders and capital sources Connection Committee for their great ef- tors, and as President of ACG At- across the globe. Members include lead- from around the country. Our wealth of forts, thoughtfulness and consideration Olanta, welcome and thank you for ers in corporations and capital markets networking opportunities at ACG Atlanta this year. If you have not yet joined ACG attending the 10th Annual Atlanta ACG who recognize the benefits of exchanging does not end there. Atlanta, I invite you to do so. And if you Capital Connection! ideas about corporate growth and value- are already a member, I look forward to building strategies within an influential Our Community Service Committee orga- seeing you at an upcoming networking What began modestly 10 years ago at the community of executives growing public nizes annual community service awards event. Let me know how you would like suggestion of then ACG Atlanta President and private com- for non-profit orga- to be involved in ACG Atlanta and to- Richard Lawry has now become a must panies worldwide. “Capital Connection... nizations, maintains gether we will work to make your mem- attend event for the national M&A com- Our Atlanta Chapter our strong relation- ber experience the best it can be. In the munity. Robert Owen (Tucker, Midis & boasts approximate- is just one of the ship with Junior meantime, please do not hesitate to reach Owen), Chair of this year’s Atlanta ACG ly 500 members and many opportunities Achievement, and me at gcinnamon@kilpatricktownsend. Capital Connection, and his committee continues to receive our members have conducts the ACG com or 404.815.6162 with any questions have put together another terrific event recognition as a top to network with the Cup competition you might have about ACG or any other for you. ACG chapter. In ad- ‘Who’s Who’ of the among Georgia-based matter. dition to our Capital Atlanta business and business schools. The outstanding Capital Connection we Connection, we hold Each of these efforts have planned is just one of the many monthly dinner and deal community and provides our mem- Very truly yours, opportunities our members have to net- breakfast network- beyond.” bers with additional work with the “Who’s Who” of the At- ing events where lo- networking opportu- lanta business and deal community and cal CEOs and deal-making experts share nities and ways to give back to the Atlanta Greg Cinnamon beyond. ACG (www.acg.org) is the pre- their experiences on growing businesses community. I trust that you will enjoy Partner, Kilpatrick Townsend & mier global association for profession- both organically and by acquisition. Each this year’s Capital Connection and that Stockton LLP als committed to business development June, we honor Georgia’s 40 Fastest you will find meaningful business oppor- President, ACG Atlanta and entrepreneurship, with over 14,000 Growing companies, and each September tunities during your time here. Again, members representing Fortune 1000 and we host an annual wine tasting for private many thanks to Robert and the Capital ACG ATLANTA ADVERTISING SUPPLEMENT FEBRUARY 2012 3

ATLANTA CAPITAL CONNECTION® 2012 TUESDAY, FEBRUARY 7 FEBRUARY9:45–10:45 AM 8, 2012 COBB GALLERIA11:00 CENTRE AM–Noon · ATLANTA, GEORGIA 5:00–7:00 PM BREAKOUT SESSIONS 1 & 2 Exhibitor Reception @ Whiskey Blue (By Invitation) Noon–2:00 PM The Southeast’sLuncheon &Premier Keynote Speaker, M&A Ben Event Stein: WEDNESDAY, FEBRUARY 8 “The State of the Economy”

7:00–7:30 AM 2:00–4:45 PM Registration for Conference Attendees REVERSE CAPITAL CONNECTION Investment Bankers become the exhibitors. 7:30–8:45 AM Private Equity Groups, CFOs, accountants, Continental Breakfast & Keynote Speaker, lawyers, and other dealmakers can visit with Neal Aronson: “The Evolution of Private Equity- investment bankers representing firms from across Strategies for Success” the United States.

9:00 AM–Noon 2:30–3:30 PM PRIVATE EQUITY MARKETPLACE 3:45–4:45 PM Opportunitites for intermediaries, CFOs, BREAKOUT SESSIONS 3 & 4 accountants, lawyers and other dealmakers to network with top equity principals who are staffing 5:00–7:00 PM the exhibit tables. Cocktail Reception SCHEDULE OF EVENTS BREAKOUT SESSIONS

SESSION 1 SESSION 2 SESSION 3 SESSION 4 M&A MARKET UPDATE PRIVATE EQUITY NAVIGATING 2012 - CREDIT ALIGNING TO CREATE 9:45–10:45 AM FUND-RAISING - THE ROAD MARKET UPDATE VALUE - MANAGEMENT AHEAD 2:30–3:30 PM & PRIVATE EQUITY AS Bob Pearlman, Partner 11:00 AM–Noon PARTNERS BDO Seidman Rick Blumen, Partner 3:45–4:45 PM Moderator Bishop Leatherbury Alston + Bird LLP Managing Partner Moderator Tom Beaty, President & Chief Tatum LLC Executive Officer PANELISTS Moderator Insight Sourcing Group Andy Mason, Partner PANELISTS Moderator VRA Partners Michael Bloomenfeld PANELISTS Senior Vice President & Regional Jeff Maxwell, Managing Director - Beth Burruss Marketing Manager PANELISTS Mergers & Acquisitions Director of Investor Relations PNC Business Credit Ulrich Brechbühl Raymond James & Associates Navigation Capital Partners Chief Financial Officer Don Smith, Managing Director & Chamberlin Edmonds Todd Wade, Partner Mark Christopher Southern Group President Bryan Cave, LLP Managing Director - Investor Regions Business Capital Taylor Cole, Managing Director Relations Charterhouse Group Michael Levy, Director - The Carlyle Group Brad Marcus, Regional Vice President Merger & Acquisition Services Wells Fargo Martin Gilmore, Partner Habif, Arogeti & Wynne, LLP BB&T Capital Partners Joe Rodgers, Managing Director Jason Mullins, Vice President - KPMG Corporate Finance Corporate Development Newell Rubbermaid, Inc. John Tinnell, Senior Vice President Hilco Appraisal Services

, ------Ferris News about and Barron’s 2012 The Wall Street Journal The Wall Win Ben Stein’s Money. Ben Stein’s Win , a regular commenta , where he talked about voo

, expert witness in complex securities The American Spectator The SUSAN O’DWYER LLP & Wynne Arogeti Habif, PUTKONEN KURT PNC Business Credit CHRIS ROSSELLI Alston + Bird LLP WADE TODD Bryan Cave LLP and has appeared in dozens of movies. Ben Stein Columnist, Commentator, Author, Actor, and Renowned Economist Ben Stein is probably most famous for his portrayal of the economics teacher in Bueller’sDay Off doo economics and kept asking, “Anyone, fa Anyone?” but he instantly became world mous as a lecturer in economics and finance. ® CBS Sunday Morning The Wiley Little Book of Alternative Investments. Little Book of The Wiley The New York Times York The New The Wonder Years

, and the co-author of more than a half dozen best selling , books ATLANTA, GEORGIA ATLANTA,

on economics and finance, including hisPhil DeMuth, latest, thor, along with his co-au dogs, and four 43 years, eight cats Angeles with his wife of He lives in Los all rescues. Currently, he continues to give speeches all over the world, is a regu give speeches to he continues Currently, lar commentator on a columnist for on Fox News, tor max Today, Ben Stein is an economist. After studying economics at Columbia Ben Stein is an economist. Today, he has had an as University, Yale Univeristy and law and economics at tonishing jobs: poverty lawyer variety of in New Haven, trial lawyer in DC, economics at Pepperdine, teacher columnist for columnist for cases, and writer of hundreds of thousands of words in finance. Ben was the host of a long-running quiz show, The show won seven Emmy awards, including one for Ben and his co-host regular He was also a Show.’ a Game Hosts of ‘Best Jimmy Kimmel as character on

LUNCH | | LUNCH

Noon–2:00 Noon–2:00 PM TM Capital MASON ANDY Partners VRA DOM MAZZONE Mazzone & Associates MORELAND IRA ICV Partners CAROL LANGENDORFER CAROL Regions Business Capital LEATHERBURY BISHOP LLC Tatum ALEX MAMMEN - - ACG ATLANTA ACG SUPPLEMENT ADVERTISING CAPITAL CONNECTION CAPITAL · CENTRE COBB GALLERIA The Southeast’s Premier M&A Event Premier M&A The Southeast’s ATLANTA 8, 2012 FEBRUARY JOSH KUDER Enhanced Capital Partners Aon Risk Solutions GREG CINNAMON LLP & Stockton Townsend Kilptarick ED FISHER Southpointe Ventures HALWIG NANCY UPS Capital JOHNSON STUART Thornburg LLP Barnes & COMMITTEE MEMBERS: JOE CHAPMAN growth prospects. Specific areas of focus include franchise, brand management,environmental services and marketing services. The $1.5 billion of equity capital under management. firm has Neal Aronson Founder and Managing Partner Roark Capital Group Atlanta-based private Roark Capital an is equity firm thatattractive consumer service companies with specializes in business and

Aronson began his career in the corporate finance department at Drexel, at department finance corporate the in career his began Aronson Burnham, Lambert Incorporated. with more than 500 hotels in 50 states and five countries, making USFS Principal of Aronson was a U.S. tenth largest hotel company in the the partnership founded by Jack a private investment L.P., Odyssey Partners, Aronson was a Principal and Prior to Odyssey, Nash and Leon Levy. (which has since become Oak Acadia Partners, L.P. General Partner at Hill Partners), and subsequently a Managing Director of its successor Inc. company Rosecliff national), Money Mailer, FASTSIGNS, Wingstop, McAlister’s, Primrose FASTSIGNS, national), Money Mailer, Fornaio and Il Arby’s, Batteries Plus, Corner Bakery, Valu, Schools, Pet Atkins. Chief Aronson was the co-founder and Prior to founding Roark Capital, Financial Officer of U.S. Franchise Systems. In five years, USFS was transformed from one brand with 22 hotels in nine states to three brands Roark Capital has made investments in 21 franchise companies that to gether have generated approximately $8 billion in system sales through states and operate in 50 U.S. 3,500 franchisees and 10,000 stores that current brands include Brands FOCUS 47 countries. Roark Capital’s Southwest Grill, (the owner of Carvel Ice Cream, Cinnabon, Moe’s Inter Best Coffee Pretzels and Seattle’s Anne’s Auntie Schlotzsky’s,

BREAKFAST | | BREAKFAST

7:30–8:45 7:30–8:45 AM

FEBRUARY 2012 FEBRUARY

4 KEYNOTE SPEAKERS KEYNOTE KENNA THOMAS KENNA Global Events EVENT COORDINATOR: ROBERT OWEN ROBERT LLC Midis & Owen, Tucker, COMMITTEE CHAIR: ATLANTA ACG CAPITAL CONNECTION EXECUTIVE COMMITTEE ACG CAPITAL ATLANTA

ACG ATLANTA ADVERTISING SUPPLEMENT FEBRUARY 2012 5

ATLANTA CAPITAL CONNECTION®

FEBRUARYEXHIBITOR 8, LISTING2012 AS OF JANUARY 13, 2012 3i Private Equity COBBGreat GALLERIA Point Partners CENTRE · ATLANTA, GEORGIARiver Associates Investments, LLC AEA Investors LP H.I.G. Capital Riverside Partners Altamont Capital Partners Hancock Capital Management, LLC Roark Capital Group Arcapita Inc The HarrenSoutheast’s Equity Partners Premier M&ASalem Event Halifax Capital Partners, LP Audax Group High Road Capital Partners Saw Mill Capital Azalea Capital Huron Capital Partners, LLC Sentinel Capital Partners BB&T Capital Partners ICV Partners Serent Capital BBH Capital Partners Insight Equity SFW Capital Partners Blue Point Capital Partners Inverness Graham Investments Source Capital LLC BNY Mellon-Alcentra Mezzanine Partners Investors Management Corporation Southfield Capital Advisors Brazos Private Equity Partners LLC JMH Capital SouthPointe Ventures, LLC Brighton Partners KLH Capital, L.P. Stonehenge Partners Brockway Moran & Partners, Inc. KRG Capital Partners Summit Park, LLC Brookstone Partners Lazarus Capital Partners Superior Capital Partners LLC Calera Capital Lincolnshire Management, Inc. Svoboda Capital Partners Capital For Business Linsalata Capital Partners Tamarix Capital Corp. CapitalWorks, LLC Linx Partners The Brookside Group Carousel Capital LLR Partners The Compass Group Castanea Partners Longroad Asset Management The Comvest Group Clarion Capital Partners Main Street Capital Corporation The Halifax Group CleanSource Growth Equity Milestone Partners Trinity Hunt Partners Corinthian Capital Group MSouth Equity Partners LP Trivest Partners Cortec Group Navigation Capital Partners TSG Consumer Partners Cyprium Investment Partners LLC Northcreek Mezzanine Valor Equity Partners Deerpath Capital Northstar Capital Wafra Partners LLC Diamond Equity Partners Parallel Investment Partners Watermill Group EBSCO Parthenon Capital Partners Waud Capital Partners Emigrant Capital Corp. Peachtree Equity Partners Wingate Partners Eos Partners Petra Capital Partners Wynnchurch Capital Fulcrum Equity Partners Prospect Partners LLC Gen Cap America Renovo Capital, LLC PRIVATE EQUITY MARKETPLACE EQUITY PRIVATE REVERSE CAPITAL CONNECTION

Abraxas Business Services FOCUS LLC Morgan Keegan & Company, Inc. Arlington Capital Advisors Founders Investment Banking Navigant Capital Advisors BlackArch Partners FourBridges Capital Advisors Newland Associates Brookwood Associates, LLC Frisch Capital Partners Raymond James & Associates Cary Street Partners Frost & Co. SunTrust Robinson Humphrey Cassel Salpeter & Co. Generational Equity The Breckenridge Group, Inc. Caymus Partners LLC Genesis Capital, LLC The Capital Solutions Group CBIZ Mergers & Acquistions Group Harris Williams & Co. The Lenox Group CHILDS Advisory Partners Houlihan Lokey The Orr Group Coker Capital Advisors Hyde Park Capital Partners, LLC TM Capital Corp. Croft & Bender LLC Kinetic Advisors Tucker, Midis & Owen, LLC Decosimo Konsortium Capital Partners Tunstall Consulting Dinan & Company, LLC Kurt Salmon Capital Advisors Vaupen Financial Advisors, LLC Edgeview Partners Linch Capital VRA Partners, LLC Ernst & Young Capital Advisors, LLC Mazzone & Associates EVE Partners Mensura Securities, LLC 6 FEBRUARY 2012 ADVERTISING SUPPLEMENT ACG ATLANTA

ATLANTA CAPITAL CONNECTION® PLATINUM SPONSOR FEBRUARY 8, 2012 COBB GALLERIA CENTRE · ATLANTA, GEORGIA

The Southeast’s Premier M&A Event

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BNY Mellon Wealth Management • Capital One Leverage Finance Corp • CBIZ Mergers & Acquisitions Group Chatham Capital • Cherry, Bekaert & Holland LLP • CHILDS Advisory Partners • Cole Taylor Business Capital Croft & Bender LLC • Decosimo • Dixon Hughes Goodman • ERM • Everest Group International • FOCUS LLC Generational Equity • Golub Capital • Grant Thornton LLP • Habif, Arogeti & Wynne • IntraLinks • Mazzone & Associates Phoenix Management Services • Presidential Financial • TM Capital Corp. • U.S. Bank ACG ATLANTA ADVERTISING SUPPLEMENT FEBRUARY 2012 7

M&A NEWS

M&A Market Update by Bob Pearlman

confluence muted – the 2012 BDO IPO Out- ket. However, this momentum may American bottlers. From a financial of factors look Study, released in January be tempered by external factors in- standpoint, strategic buyers are more Aindicates 2012, is by far the least positive cluding continued volatility in Europe focused than their industry coun- that merger and forecast from capital markets ex- and uncertainty in the U.S. Congress. terparts on companies with strong acquisition (M&A) ecutives since the study’s incep- In particular, notes Mason, strategic EBITDA. When it comes to opera- activity in Geor- tion three years ago. Further- buyers are in limbo, finding it difficult tions, a major red flag is undeveloped gia – and across more, Atlanta ACG Capital Con- to operate and make decisions in an infrastructure, which will require the country – will nection pan- eventual capital expenditure and the likely increase in elist, Andy “...the projected uptick will be ability to pass on rising input costs to 2012. Potential Mason, Man- supported by continued low customers. buyers are look- aging Director interest rates and a stabilizing ing to deploy capital that has been at VRA Partners, In conclusion, signs point to strong kept on the sidelines due to uncertain notes that there is financing market.” M&A activity in 2012, although both market conditions. Atlanta’s largest an increased sense of urgency among environment when federal regula- buyers and sellers will be closely public companies, for example, have sellers to complete deals this year, tions including tax, healthcare and watching Congress and the econom- stockpiled up to $25 billion in cash, as capital gains tax rates are slated energy policies remain in flux. ic conditions both here and abroad. and are actively looking for acquisi- to rise at the end of 2012. Sellers’ Sellers should evaluate their at- tion targets to stimulate growth, ac- expectations regarding the value of In response to this uncertainty, stra- tractiveness to potential acquirers cording to a recent Atlanta Business their businesses have also adjusted tegic buyers will be focused on pur- through the lens of how they can con- Chronicle story. And with numerous downward, which will contribute to chases where they will see an imme- tribute to buyers’ growth objectives – private equity funds set to mature significant transaction activity, as an diate increase in revenue or other key both in the short- and long-term. this year, general partners will be on Atlanta ACG Capital Connection pan- performance indicators. Therefore, the lookout for high quality invest- elist, Todd Wade, a partner in Bryan the “potential fit” of an acquisition ment targets. Cave LLP’s M&A group, noted. target is no longer sustainable crite- ria. For example, as noted in Atlanta Bob Pearlman is Office Business Line For potential sellers, there is a re- When it comes to the macroeconom- Business Chronicle, analysts state Leader at BDO USA, LLP in Atlanta newed focus on M&A as a way to gen- ic factors impacting M&A activity that The Coca-Cola Co. will continue and will be the Moderator for Breakout erate sufficient returns for investors, in 2012, the projected uptick will be to acquire companies in order to ex- Session 1 at the 2012 Atlanta ACG given that accessing capital remains a supported by continued low interest pand globally, and will be shoring-up Capital Connection. challenge. IPO prospects also remain rates and a stabilizing financing mar- its supply chain by acquiring North

Private Equity Fund-raising: The Road Ahead by Bishop Leatherbury

hile many began the year tributed to the slowdown. increased rigor in due diligence which investors are over their target alloca- with the hope that 2009 favors the funds that have performed tions to private equity with 35 percent Wand 2010 marked cyclical Many firms that raised funds between well and have great track records. below their targets. lows in private equity fund-raising, 2004 and 2007 now need to raise 2011 proved to be another new funds. During “The good news is that 73 One of the keys to success in rais- dismal year. According the last several years, percent of investors plan ing funds in 2012 will be differentia- to data firm Prequin, pri- many private equity to make commitments tion. The trend has been for private vate equity firms raised firms delayed fund- equity firms to become more special- $263 billion during 2011 raising until market during 2012.” ized - industry focus and operational which is slightly less than conditions improved. Pre- It naturally puts added pressure on expertise are attractive to LPs. In a in 2010 and significantly quin reports there are now those with less compelling track re- Probitas Partners survey, 49 percent less than the boom years 1,823 funds in the market cords and creates a growing divide of the respondents found the most at- of 2007 and 2008 when attempting to raise almost between the haves and have-nots. tractive investment opportunities to over $650 billion was $740 billion. With a re- This trend will leave some firms with be middle market funds that were fo- raised each year. Buyout cord number of funds on smaller-than-targeted fundraises or cused on generating returns through funds represented a little the road, 2012 will prove unable to raise new funds. First time operational improvements and had under a quarter of the total funds to be very competitive and has the managers will have a very tough time professionals with operating back- raised during 2011. potential to be yet another difficult raising funds in this environment. grounds. That finding bodes well for fund-raising year. Southeast private equity funds. The third and fourth quarters of 2011 The good news is that 73 percent of were two of the worst quarters for pri- Many LPs are looking to reduce the investors plan to make new commit- Bishop Leatherbury is Managing vate equity fund-raising since before number of funds in which they in- ments during 2012. Private equity Partner at Tatum LLC and will be the the market downturn. No doubt the vest, a trend that started during the continues to be an important asset Moderator for Breakout Session 2 at the S&P downgrade of the U.S credit rat- downturn. This drives an increased class and investors still like and need 2012 Atlanta ACG Capital Connection.. ing and the Euro-zone debt crisis con- focus on historical performance and this asset class. Only 16 percent of 8 FEBRUARY 2012 ADVERTISING SUPPLEMENT ACG ATLANTA

M&A NEWS

The State of the Private Equity Marketplace by Maria Saporta

eality has set in for private eq- than it was in 2009,” and he believes firm has bought about 50 companies nies by refinancing of debt. We found uity companies. The “frothy” that “senior credit debt and mezza- in the past 10 years and has invested we were able to do better in the lend- Rdays of 2007 are gone for good, nine debt is opening up.” But MSouth about $1.5 billion in equity capital in ing market than in the sale market,” and that may not be such a bad thing. has traditionally been rather conser- those companies. she said. “We were able to refinance vative, seeking deals that have at least our high cost of capital without losing 50 percent equity. equity.” After surviving the tough years of “A couple of things have helped us 2008 and especially 2009, private weather the storm,” Aronson said. equity firms today are more cau- “Accessibility to senior debt leads to “First, we don’t use a lot of leverage. Henagan said one issue that will be a tious and conservative in how they an increase in activity and what peo- For a decade we’ve averaged 60 per- factor in 2012 is that “there’s a lot of approach deals — relying less on le- ple are willing to pay for companies,” cent equity. Second, we have stayed money looking for a home” as funds verage and more on sound business Feidler said. “Purchase price and sell- focused.” Roark investments are con- come due in 20102 and 2013. “Now practices. Looking forward, leaders er expectations have come into align- centrated in the franchise industry as everybody has to place their bets in of several private equity firms believe ment again.” well as in the area of waste manage- a slow growth economy,” she said. that business activity in 2012 will ment and environmental services. But it won’t return to 2007 levels be- continue to build upon the increased “We just kept investing in the down- cause companies have been “deeply Ed Fisher, managing partner of activity that they experienced in 2011 turn,” Aronson said. “We invested scarred” by what happened in 2008 SouthPointe Ventures LLC, said that and the fourth quarter of 2010. more money in 2009 and 2010 than and 2009. “They don’t want to get “activity has been reasonably steady.” ever in our history, and we kept that back in debt,” Henagan said. “In the He added that “it is not back to 2007 pace in 2011. We believe very strongly small-sized companies, CEOs are still More significantly, two factors could levels yet, but we have seen it recover, in long-term investments. There are very gun-shy on the hiring front. No- end up building pressure to complete and we are seeing more consistent no quick fixes and shortcuts here. body wants to go through a repeat of deals in 2012 — funds raised in the deal flow.” The equity picture has be- Good things will come out in the end.” having to lay off a lot of people. So I’m past four to five years will need to be not expecting a big surge.” invested in companies to satisfy the expectations of investors, and the “...the financing environment is uncertainty of who will be elected much more robust right now than SouthPointe currently has one port- president in November could prompt folio company — an industrial pack- some to take advantage of the current it was in 2009.” aging supply enterprise, which had tax structure and complete transac- modes of growth in 2011, but “margin tions before possible tax increases. In come more conservative with most Babette Henagan, founder and man- pressure was extreme,” Fisher said. talking to the leaders of several Atlan- deals requiring equity of between 40 aging director of Atlanta-based Linx “We had to work hard to earn every ta-based private equity firms, there to 60 percent compared to the more Partners, said her firm focuses on dollar of revenue.” was an overall sense of optimism that free-flowing days when deals could be companies in manufacturing, logis- business would improve in 2012, but done with just 25 percent equity. “The tics and the family industrial buyout Golub Capital, an active middle mar- that the days of “easy money” were company that you are trying to ac- market. Currently, Linx has five com- ket lender for private equity firms long gone. quire needs to be very high quality.” panies in its portfolio plus “a small with offices in Atlanta, New York and Fisher said. “If you have got a quality piece” of another company. Chicago, is optimistic about business property, you can get a deal done.” “We actually had a busy year last prospects in 2012. “We had a very year,” said Mark Feidler, partner of “Our side of the market — the indus- good year,” said Andrew Steuerman, MSouth Equity Partners. “We ac- For SouthPointe, 2011 had some dis- trial side — was hit very hard in 2009, senior managing director of Golub quired four companies, sold one com- appointments. “We probably saw and we had to get very portfolio- Capital. “We had over $1.5 billion pany and had one of our portfolio over 300 deals this past year and centric and focus on the businesses,” of new commitments for our invest- companies enter into a merger and probably visited 15 companies out Henagan said. “Our focus now is how ment vehicles in 2011, so that was a be recapitalized.” MSouth, which is of that 300,” Fisher said. “We made do we build and grow rather than how very good year for us. And we are pre- in the lower middle market area, only offers on two and didn’t close any. It do you survive. We have shifted on paring for a very good year this year. did one deal in 2008 because it was was a frustrating year.” Fisher said he how we are spending our time.” The economy seems to be somewhat raising a fund. It did four transactions hopes the overall market in 2012 “will stable. We just see quite a bit of activ- in 2009, and three in 2010. be stronger,” because “there’s a lot of ity for 2012.” In 2011, Linx was able to lower the capital waiting to find the right deal cost of capital for its portfolio compa- and waiting to be put to work.” “It’s been reasonably steady,” Feidler said. “You had to work harder in 2009 Maria Saporta is one of Atlanta's outstanding to figure out how to get deals done. It Two local private equity firms — business and civic journalists. She was with the was a very slow year. We tried to be Roark Capital and Linx Partners — flexible and adapt to the rough econo- tend to be longer-term investors in Atlanta Journal-Constitution for 27 years as a my. We found 2011 to be a much busi- family-owned and entrepreneurial reporter and business columnist until accepting er year than 2010. And all indications companies. As a result, they tend to a buyout in August 2008. Right after leaving the are that this brisk level of activity is be less vulnerable to pressures to buy AJC, she began writing a monthly column for ACG going to continue in the first half of or sell companies within a specific Atlanta and became a columnist and reporter for 2012.” five-year window. Atlanta Business Chronicle. In February 2009, she also founded the SaportaReport.com website, Feidler said the “financing environ- Neal Aronson, founder and manag- which focuses on issues facing metro Atlanta. ment is much more robust right now ing partner of Roark Capital, said the ACG ATLANTA ADVERTISING SUPPLEMENT FEBRUARY 2012 9

M&A NEWS

Navigating 2012: The Trek to Credit Prosperity by Rick Blumen

f 2010 was a trek to- percent during the first six obligations). According to the LSTA, Tom Greco, CEO of Hilco Appraisal wards the return months of 2011 and lost the banks, particularly the regional Services, says “we expect 2012 to be a Ito normalcy for the nearly 1.70 percent since banks, have to put assets on their bal- very active year for Hilco’s customers leveraged loan market, June. ance sheet. in the financial services world. The 2011 could be considered primary drivers of this activity re- a bumpy arrival. The “Although the market Donald Smith, Managing Director main somewhat unclear given the amount of leveraged loans pulled back in the second and Southern Group President of competing forces of solid corporate made in the U.S. in 2011 half of the year, the good Regions Bank, is seeing an uptick in results, strong liquidity in the market reached its highest level news was that capital was acquisition financing opportunities and mixed macroeconomic indica- since 2007. According to still available - unlike from middle market sponsors. These tors, but all of this leads to volatility Standard & Poor’s Lever- 2008,” said Joe Rodgers, private equity sponsors have, accord- which ultimately creates activity in aged Commentary and Data, more Managing Director at KPMG Corpo- ing to Smith, “guarded confidence in the capital markets.” than $373 billion of high-yield loans rate Finance. “The challenge for lend- the domestic economy while remain- were made through late December, ers was how to price risk given the ing disciplined around purchase mul- 2011. This represents a 58 percent market volatility.” tiples and leverage levels.” increase from 2010, and a nearly fivefold increase from the dismal levels of According to the LSTA, U.S. leveraged “Many bankers and money managers 2009. loan sales to investors are expected to believe that the European debt crisis increase in 2012. A similar expecta- presents the biggest risk to leveraged A majority of the loan sales were made tion exists for refinancing activity in during the first half of 2011 (includ- 2012. Domestic companies generally loans in 2012.” ing a number of re-pricings) before appear to be performing well and, Any predictions on the leverage loan tapering off in the second half due given the lower yields in money mar- market must be qualified by the pos- to Europe’s debt crisis, S&P’s down- kets and in equities--the S&P 500 was sibility of one or more market dis- grade of the U.S. and a corresponding essentially flat in 2011--loan funds are ruptions. Many bankers and money spike in borrowing costs. The volatil- an attractive option. Additionally, managers believe that the European ity could also be seen in loan pricing based on a survey conducted by the debt crisis presents the biggest risk to Rick Blumen is a Partner at Alston + during this period. According to the LSTA, respondents believe the banks leveraged loans in 2012. If, however, Bird LLP and will be the Moderator for S&P/LSTA (Loan Syndications and will continue to be the big buyers of economic catastrophes and a global Breakout Session 3 at the 2012 Atlanta Trading Association) U.S. Leveraged debt in 2012, out-ranking purchases credit crisis can be avoided, 2012 may ACG Capital Connection. Loan 100 Index, loans returned 1.95 made by CLOs (collateralized loan well be a trek to credit prosperity.

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