Financial Crisis Panel
Effects and Changes in Mergers & Acquisitions
World Services Group
Costa Rica
November 12, 2009
2:00-3:15 pm
Ed Dawson
Capital Alliance Corporation
Dallas, Texas, USA
“Something is definitely going on. We’re back to eating dog food.
Source: The New Yorker
Financial Crisis
Effects

Risk reduction

Fear

Conservative, less risky actions


Build reserves

Reduce costs/assets employed
Merger and acquisition impact

4Q08 marketplace virtually frozen

Gradual monthly improvements in ‘09
Financial Crisis
Changes

Dramatic reduction in lending

Many private equity firms can not get financing

Staff reductions throughout the industry
Global M&A Activity in Recent Years
Cyclical and Ever Changing
US and Global M&A Activity
New Security Issues
US Corporations
250.00
Monthly Average
Source: Federal Reserve
Release Date: September 2009
218.28
199.09
200.00
150.00
100.78
89.36
100.00
50.00
0.00
2006
2007
2008
Avg. Monthly Issues - USD ($bn)
2009 (To Date)
Total U.S. Private Equity Deal Flow
Source: PitchBook
U.S. Private Equity
Fundraising Activity
Source: PitchBook
 The number of funds raised year to date declined 57% compared to 143 funds closed through 3Q 2008.
What Have Bankers Been Doing?
“And, while there’s no reason yet to panic,
I think it only prudent that we make preparations to panic.”
US Depository Institutions
Monthly Total Reserves
922.8
1,000
900
800
700
600
500
400
300
200
100
45.5
Fe
b08
M
ar
-0
8
Ap
r-0
8
M
ay
-0
8
Ju
n08
Ju
l-0
8
Au
g08
Se
p08
O
ct
-0
8
N
ov
-0
8
D
ec
-0
8
Ja
n09
Fe
b09
M
ar
-0
9
Ap
r-0
9
M
ay
-0
9
Ju
n09
Ju
l-0
9
Au
g09
Se
p09
0
Total Reserves ($bn)
Source: Federal Reserve
US – Net Lending
Average per Quarter
4,502
5,000
4,023
4,500
3,560
4,000
3,132
3,500
2,651
3,000
2,500
2,000
1,500
1,000
(233)
500
0
(500)
2004
2005
2006
2007
Net Lending ($bn)
Source: Federal Reserve
2008
2009
Opportunities

Many strategic firms have excess cash

Strategic fits driving many transactions

Private equity cash is available

Many global opportunities – Far East
Changes

Lower prices

Fewer transactions

Difficult financing

More government involvement

More regulations

The “new normal” is conservative behavior
We Have Seen This Movie Before
Credit Suisse Global Risk Appetite