Agenda
I.
II.
III.
Introduction to M&A related Valuation
Dynamics of M&A Valuation
A.
B.
Drivers of M&A and Role of an Investment Banker
Valuation Methodologies and the “Football Field”
IPO Valuation
A.
B.
What Matters and is Most Important?
In-depth IPO Valuation
Agenda

Introduction to Valuation
Valuation is a Central Discipline in Investment Banking
 Nearly Every Activity in Investment Banking and Private Equity is Driven by Valuation Analyses


Determining the value of the Company is generally the first step
–
–
–
M&A ⇛ Determining the value in a transaction
Equity Capital ⇛ Pricing the Initial Public Offering
Leveraged Finance ⇛ Determining collateral value and/or financing capacity
Securities design and pricing is an extension of the same fundamental concepts
 Valuation Requires the Interpretation of Information and Sound Judgment
(Balance of “Science” & “Art”)
 Information provides a foundation of knowledge about the asset and the marketplace
 Interpretation of the information and correct judgment distinguishes the quality of the analysis
 At the Core, Valuation is About Finding the Equilibrium Between Risk and Reward
 Fair market value is typically defined as the price at which a willing buyer and a willing seller will transact around an asset / company when both have complete information and neither is under any compulsion to act
 Obviously, buyers and sellers may value assets differently based on a variety of factors, thereby creating a market
1

Introduction to Valuation
Definition of Key Terms
 Firm Value (or “Enterprise Value”)
 The total value of an operating business regardless of its capital structure
 Equity Value (or “Market Value of Equity”, “Market Value” or “Market Cap”)
 The value of an operating business to its equity holders
 The value of an operating business after the satisfaction of its creditors and preferred claim holders
 Net Debt


The sum of:
–
–
Total indebtedness for borrowed money
Preferred claims against the value of the business
Less the sum of:
– Cash and cash equivalents
 Preferred Claims against the Value of the Business
 May include preferred stock, “out-of-the-money” convertible securities or minority interests
2

Definition of Key Terms
Introduction to Valuation
 Typically involves a premium over the publicly traded equity value
 Ability to control the Board, management and strategy of the business
 Ability to integrate with other assets and capture synergies
 Ability to access all cash flows and create the optimal capital structure
 Commonly represented by publicly traded equity value
 Assumes adequate liquidity in the market
 Generally subject to existing Board, management and strategy
 Access to cash flow limited to dividends
 Typically involves a discount to the publicly traded equity value


Discount reflects a lack of market history and therefore certain liquidity and valuation risk
Also reflects an attempt to “entice” shareholders of similar companies to buy IPO (bargain price)
3

M&A Valuation
Why Deals Happen and Don’t Happen



Why Deals Happen
Compelling Strategic Rationale for a Transaction
 Diversification vs. Focus (Broaden or Narrow Business
Mix)
 Manage Market Position and Scale (Commit to a
Product / Market or Exit)
 Geographic Expansion vs. Retrenchment (Globalization
/ Cost of Entry)


Vertical Integration vs. Outsourcing
Defensive (What If Our Competitor / Pursuer Wins?)
Compelling Financial Rationale for a Transaction
 Low Relative Cost or High Relative Opportunity



Financing Markets (Ability to Leverage Equity Returns)
Equity Market Perception / Reaction (Valuation Metrics /
Business Model / Growth / Profitability)
Financial Synergies (Different Value Available to
Different Owners)


Financial Stress (Company Selling Subsidiary to Raise
Cash)
Financial Sponsor Exit
Other Reasons
 Management Ego
 Change in Management


Why Deals Don’t Happen
Insufficient Strategic or Financial Rationale
Management / Board of Directors Resistance (Social
Issues)
 Market / Shareholder Concerns (Dilution / Lack of
Understanding / Credibility)
Inadequate Financial Resources Available to the Buyers



 Anti-Trust Considerations
Changes in Relative Valuation
Accounting, Tax, Legal, and Environmental Issues Are
Insurmountable
 Regulatory (Domestic or Abroad)
4

M&A Valuation
Types of Deals and Structures


Types of Deals and Processes
Exclusive Sale
 Private Sale to a Single Buyer
 Limited Auction (Formal vs. Informal)
 Full Auction (Public vs. Private)
Buy-Side Mandate


Willing Target Pursuing a Sale Process
Unsolicited Approach – Target Attitude Unknown
(Formal vs. Informal)
–
–
–
Friendly Negotiations
“Bear Hug” – Target is Resistant (Disclosure Issues)
Hostile Offer
 Equity Restructurings
 Spin-off – shares of subsidiary distributed tax-free to all parent shareholders on a pro-rata basis


Split-off – shares of subsidiary distributed tax-free to self-selected parent shareholders
Targeted Stock – distributed tax-free in either manner outlined above or IPO’
 Leveraged Buyouts and Recapitalizations

Subsid./Private Company Transaction Structures
Asset Sale
 Transaction of specific assets and liabilities
 Required if operations are not held in a distinct subsidiary or set of subsidiaries
 Provides the buyer the ability to deduct transaction goodwill for tax purposes
 Stock Sale
5

M&A Valuation
A financial advisor performs a broad range of functions in the M&A process



Drive the Process
– From “cradle to grave”
Valuation Advice
– Provide comprehensive financial analysis to formulate (buyside) or evaluate (sellside) a bid
Diligence
– Assist client in the completion of a thorough and organized diligence process
 Marketing – Assist client in preparing diligence materials and public / investor communications


Structuring – Structure transaction to meet the needs of the parties
Market Intelligence
– Provide industry knowledge, a perspective on any public market activity and the ability to assess the likelihood of other potential bidders of the target


Bidding Strategy
– Advise the client on the best way to ensure success
Financing
– Arrange financing alternatives (if necessary)
 Negotiations – Increase negotiating flexibility and leverage by acting as a go-between with the other side


Opinion – Deliver fairness opinion (if appropriate)
Market Reaction
– Anticipate market reaction and marketability of securities
6

M&A Valuation
A football field summarizes the various metrics and assumptions used to determine the valuation of a company or business segment
 Fairness Opinion
 Presents the range of “fair value” for a Board of Directors’ consideration in a sale context
 Provides guidance to justify a bid value in a buy-side
 Sell-Side
 Summarizes proposed positioning and target valuation range based on preliminary analysis
 Buy-Side
 Demonstrates knowledge of the asset, suggests how other buyers might approach valuation and provides bid range guidance
 Internal Reference
 For example – supports loan to value analysis when examining financing alternatives
7

M&A Valuation
Multiple types of valuation analyses will be included in a valuation summary depending on industry, type of presentation, available information and numerous other factors
Metric
Control
Value
Private Co.
Metric
Trading Multiples
Comparable
Transactions
Premiums Paid
Leveraged Buyout
Considerations
 Forward P/E, P/CF, EV/EBITDA, EV/Revenue most common – may show more than one metric
 LTM P/E, P/CF, EV/EBITDA, EV/Revenue most common
– may show more than one metric. Operational metrics used too, particularly in commodity-oriented businesses
 Make sure to apply premium to unaffected price (i.e. preannouncement or pre-leak)
 Alternatively, may apply premium to trading multiples
 Choose appropriate target range of IRR
 Solve for price based on fixed leverage and range of exit multiples
Trading
Value







 Option to show with and/or without synergies

Discounted Cash Flow
Sum-of-the-Parts
Stock Price Trading
Ranges
Equity Research Price
Targets
 Use for distinct business segments or individual assets with different value parameters
 Used as reference point
 52-week most common; also 3-months, 6-months, period since significant event
 Used as reference point
 High/low research price targets; check length of time forward and ensure consistent (or discount back)



8

M&A Valuation
An analysis is only as good as its inputs


The Projections
 Consideration must be given to which projections to use – can present multiple cases or one case only
 Fairness opinion valuations may involve a base case and a downside and should be provided by or blessed by management
Buy-side valuations may involve management case and revised due diligence case
If preliminary valuation, consider adding due diligence contingencies for unknown factors that may impact value






The Key Assumptions
 Trading Comps: must have back-up for all analysis and consistently apply methodology (e.g. exclude finance subsidiaries, include / exclude underfunded pension liabilities, etc.)
 Transaction Comps: be sure to use publicly available data if creating a fairness opinion for a public company; and be thorough in your search – have rationale for exclusion of deals
Exit multiples:
WACC: justify LBO and DCF exit multiples through trading and transaction comps or cycle analysis perform a detailed WACC analysis to justify discount rates for DCF
Leverage:
Premiums: analysis discuss leverage assumptions to make appropriate LBO valuation clearly define the transaction size, time period and reference point of premiums used in
Share count: use exercisable or outstanding options where appropriate
Change in Control Costs: review proxy materials to determine if change in control costs are relevant
9

Science, Art or Sanity?
“Science” vs. “Art”
Step Back and Look at the “Bigger
Picture”
Sanity Check
M&A Valuation


“Science”
 Market information; financial data
 Mechanics of valuation methodologies
“Art”


Valuation inputs and assumptions are based on industry knowledge, experience and common sense
Senior bankers and industry coverage will opine on the appropriate ranges and assumptions


Individual valuation ranges may seem reasonable, but do they make sense with respect to one another?
 i.e.
, Transaction multiples vs. trading multiples
Are assumptions consistent between methodologies?
 i.e.
, DCF or LBO exit multiples vs. trading multiples or transaction multiples


Is the valuation range too wide or too narrow?
Go back and check the assumptions and calculations
 Are there any outliers in the comparable multiples?
 Are the earnings drivers correct? ( i.e.
, FCFE & earnings for equity value multiples,
EBITDA for enterprise value multiples)


Have I used the right share count (exercisable vs. outstanding options)?
Is implied perpetuity growth rate appropriate?
 What metric does the industry trade on?
11

Enterprise Value ($MM): $850
Preliminary Review of Valuation Parameters
$925 $1,000 $1,075
Discounted Cash Flow
WACC: 8.0%-10.0%
Terminal EBITDA Multiple: 10.0x
Ability-to-Pay
Target 0% 2012 Accretion
MLPs: 11.0x to 13.0x 2012 EBITDA
MLPs: 10.0x to 12.0x 2013 EBITDA
Infrastructure LBO
Exit Multiple: 10.0x
IRRs: 10%-15%
$850
Private Equity LBO
Exit Multiple: 10.0x
IRRs: 17.5%-22.5%
Comparable Transactions
Initial EBITDA Multiple: 14x – 16x
EBITDA Multiple Range: 8x – 10x
EBITDA Multiple
2011
2011 PF
2013
2014
Statistic
$66.5
$80.8
$91.9
$102.4
12.8x
10.5x
9.2x
8.3x
$925
13.9x
11.5x
10.1x
9.0x
$975
$1,000
$1,000
15.0x
12.4x
10.9x
9.8x
$1,025
16.2x
13.3x
11.7x
10.5x
$1,100
$1,100
$1,100
$1,150
$1,150
17.3x
14.2x
12.5x
11.2x
M&A Valuation
$1,225
18.4x
15.2x
13.3x
12.0x
13

Purchase Price Ratio Analysis
($ in millions)
Enterprise Value
Less: Projected OpCo Debt (6/30/11)
Implied Equity Value to the Buyer
Less: Projected HoldCo Debt (6/30/11)
Net Proceeds to Sponsor A
Enterprise Value as a Multiple of:
2011E PF EBITDA
2012E Cash EBITDA
2013E Cash EBITDA
2014E Cash EBITDA
Statistic:
$80.8
71.9
91.9
102.4
PPR Analysis
$900
(294)
$606
(305)
$301
$950
(294)
$656
(305)
$351
$1,000
(294)
$706
(305)
$401
$1,050
(294)
$756
(305)
$451
$1,100
(294)
$806
(305)
$501
$1,150
(294)
$856
(305)
$551
$1,200
(294)
$906
(305)
$601
$1,250
(294)
$956
(305)
$651
11.1x
12.5x
9.8x
8.8x
11.8x
13.2x
10.3x
9.3x
12.4x
13.9x
10.9x
9.8x
13.0x
14.6x
11.4x
10.3x
13.6x
15.3x
12.0x
10.7x
14.2x
16.0x
12.5x
11.2x
14.9x
16.7x
13.1x
11.7x
M&A Valuation
15.5x
17.4x
13.6x
12.2x
14

($ millions)
EBITDA
Contract Amortization
Maintenance Capital Expenditures
Growth Capital Expenditures
Unlevered Free Cash Flow
Terminal Value Calculation
2016E EBITDA
FWD EBITDA Multiple
Terminal Enterprise Value of FCF
Discount Rate
Discount Factor
PV of Cash Flows
Enterprise Value
Less: OpCo Debt (6/30/11)
Less: HoldCo Debt (6/30/11)
Net Proceeds to Sponsor A
$1,062.1
($294.4)
($305.0)
$462.7
M&A Valuation
DCF Analysis
0
2H 2011E
$37.4
(4.1)
(0.9)
(22.6)
9.7
2012E
$80.3
(8.3)
(2.7)
(19.9)
49.4
2013E
$97.1
(5.2)
(2.0)
(2.0)
87.9
2014E
$104.6
(2.2)
(2.0)
-
100.4
2015E
Year-End
2016E
$111.3
(1.8)
$115.0
(2.1)
-
107.4
1,149.7
9.0%
0.979
$9.5
9.0%
0.917
$45.3
9.0%
0.842
$74.0
9.0%
0.772
$77.5
9.0%
0.708
$76.1
115.0
10.0x
$1,149.7
9.0%
0.679
$780.1
Discount
Rate
10.0%
9.0%
8.0%
PV of
Cash Flows
$275.9
$282.5
$289.3
Present Value of Terminal Value
Based on EBITDA Multiples of:
9.5x
10.0x
10.5x
9.0x
11.0x
$673.8
$711.3
$748.7
$786.2
$823.6
$702.1
$741.1
$780.1
$819.1
$858.1
$731.8
$772.5
$813.2
$853.8
$894.5
9.0x
Preliminary Enterprise Value
9.5x
10.0x
10.5x
11.0x
$949.7
$987.1
$1,024.6 $1,062.0 $1,099.5
$984.6
$1,023.6 $1,062.6 $1,101.6 $1,140.6
$1,021.2 $1,061.8 $1,102.5 $1,143.1 $1,183.8
9.0x
Preliminary Equity Value to the Buyer
9.5x
10.0x
10.5x
11.0x
$655
$690
$727
$693
$729
$767
$730
$768
$808
$768
$807
$849
$805
$846
$889
15


M&A Valuation
The valuation below includes all of the potential expansion projects and is discounted at a 10% rate to account for the additional risk associated with un-contracted projects
($ millions)
EBITDA
Contract Amortization
Maintenance Capital Expenditures
Growth Capital Expenditures
Unlevered Free Cash Flow
Terminal Value Calculation
2016E EBITDA
FWD EBITDA Multiple
Terminal Enterprise Value of FCF
Discount Rate
Discount Factor
PV of Cash Flows
0
DCF Analysis
2H 2011E
$37.4
(4.1)
(0.9)
(22.6)
9.7
2012E
$80.3
(8.3)
(2.7)
(38.0)
31.2
2013E
$97.1
(5.2)
(2.0)
(18.2)
71.8
2014E
$117.0
(2.2)
(2.0)
(2.0)
110.8
2015E
Year-End
2016E
$123.9
(1.8)
$127.8
(2.1)
-
120.1
1,278.4
10.0%
0.976
$9.5
10.0%
0.909
$28.4
10.0%
0.826
$59.3
Discount
Rate
11.0%
10.0%
9.0%
Enterprise Value
Less: OpCo Debt (6/30/11)
Less: HoldCo Debt (6/30/11)
Net Proceeds to Sponsor A
PV of
Cash Flows
$255.9
$262.4
$269.2
$1,094.3
($294.4)
($305.0)
$494.9
Present Value of Terminal Value
Based on EBITDA Multiples of:
9.5x
10.0x
10.5x
9.0x
11.0x
$719.4
$759.3
$799.3
$839.3
$879.2
$749.3
$790.9
$832.5
$874.1
$915.8
$780.7
$824.1
$867.4
$910.8
$954.2
9.0x
Preliminary Enterprise Value
9.5x
10.0x
10.5x
11.0x
$975.3
$1,015.3 $1,055.2 $1,095.2 $1,135.1
$1,011.7 $1,053.3 $1,094.9 $1,136.6 $1,178.2
$1,049.8 $1,093.2 $1,136.6 $1,180.0 $1,223.3
10.0%
0.751
$83.2
10.0%
0.683
$82.0
127.8
10.0x
$1,278.4
10.0%
0.651
$832.5
9.0x
Preliminary Equity Value to the Buyer
9.5x
10.0x
10.5x
11.0x
$681
$717
$755
$721
$759
$799
$761
$801
$842
$801
$842
$886
$841
$884
$929
16

IPO Valuation
Comparable Company Analysis Explained
 The equity of fundamentally similar, or “comparable” companies tends to be valued on a relatively consistent basis by the public markets
 Broadly speaking, if Company A competes in the same industry as Company B, using a similar business model, the equity markets are likely to value the two businesses in a relatively consistent manner
 The Comparable Company Analysis seeks to identify a group or “universe” of public companies which are deemed fundamentally comparable to the target and compares the “market trading multiples” of these companies to determine a range of value for the target, expressed in valuation multiples
 By analyzing certain key ratios and operating data for each of the comparable companies it is possible to determine how the comparable companies valued relative to their profitability, growth prospects, etc.
 Public markets typically place premiums to companies which portrays growth and margin profiles better than those of industry average



As Comparable Company Analysis is based on an analysis of currently publicly trading companies, valuations received by the comparable universe DO NOT typically reflect:
Premium a buyer must pay for control of a company in an M&A transaction; or
Discount the market may place on shares which are newly introduced in an IPO
23

IPO Valuation
Most Widely Used Valuation Tool

What is it?
Fundamental valuation tool used for deriving company value
Use of Trading Multiples
 Initial Public Offering
 Helps in benchmarking performance and valuations across companies within a sector
 Buy-side M&A
 Valuation tool based on how comparable companies are valued by the stock market as a multiple of profit, sales or other parameters
 Sell-Side M&A
 Add-on financings
 Share repurchases
 Assumes that the stock market is relatively efficient in valuing comparable companies  Leveraged Buy-out
Importance
24

IPO Valuation

Equity Value Multiples
Takes into account capital structure in decision making
 Denominator after interest expense



Main multiples are
 P/E ratio

Equity Market Value / Net Income
Price / Book ratio
Price / CFPS

Enterprise Value Multiples
Focus towards quality of operation
 Unlevered Capital Structure
 Denominator before interest expense






Main multiples are
EV / Sales
EV / EBITDA
EV / EBIT or EV / EBITA
EV / Capital Employed
EV / Subscribers (telecom, similar ratios based on operating figures in other industries)

Summarize the Results
Summary Statistics
 Mean, Median, High Low (The Median is the most meaningful statistic because it will naturally screen outliers)
 Outliers should be evaluated and possibly eliminated
25

IPO Valuation
Choice of the Multiple Depends on Industry, Profitability, Accounting Regimes
Multiple
EV / Sales
EV / EBITDA
Advantage


Meaningful for loss-making companies
Very limited impact of accounting differences
Disadvantage
 Does not take differences in profitability into account
 No distortions based on different depreciation policies
 Does not take differences in capital expenditures into account
EV / EBIT
EV / Capital
Employed
P/E Ratio
 Valuation based on quality of operation
 Possible distortions based on different accounting policies
 Based on invested capital, which determines potential earnings power


Does not take differences in profitability into account
Distortions through accounting differences
 Focuses on earnings to shareholders  Accounting differences may distort true measures of earnings
Price / CFPS  “Cash is king”
 Does not take differences in capital expenditures into account
Price / Book
 Based on equity, which determines earnings power
 Does not take differences in profitability into account
26

Why Do Comparable Companies Differ in Valuation?
 Industry and Sector Outlook
 Competitive Position
 Research Views
 Historical Performance  One of Key Indicators of Future Performance
 Revenue Growth  Cash Flow
 Operating Margins  Net Income
 Qualitative Factors  Impact Market’s Belief of the Company’s Future Performance
 Management Quality and Track Record
 Regulatory Issues
 Corporate and Operating Strategy
 Environmental Issues
 Ownership Profile  Legal Issues
IPO Valuation
Valuation ultimately assesses the present value of the potential future financial rewards
Current trading valuations or “multiples” of a Company are a reflection of public market’s belief in the future financial rewards by owning the securities of the Company
27

IPO Valuation
Many Factors are Evaluated at Time of IPO
 Peer Group : Clear peer group with sizeable number of companies
 Only need one; none allows Company / Banks to define the “valuation / story”
 Liquidity : % of float vs. other comparable companies
 Need adequate IPO size to attract institutional investors
 Growth : What are organic and acquisitive growth prospects of the Company?
 How do those projects / returns compare vs. peers and how achievable / financeable are they?
 Stability vs. Volatility : Is Company’s business volatile, risky, stable, cyclical?
 Ability to dampen volatility or smooth out earnings? Capital structure and risk policies
 Stage of Company : What stage is the Company experiencing in its life cycle?
 Developing, nascent, growth, mature?
 Capital structure and cash flow generation / reinvestment
 Capital Structure : Credit ratings and leverage vs. peers and appropriate levels for Company / industry
 Market Conditions at time of IPO
 Management, Board composition and PE backing
 Banking relationships and research coverage
 Credit support and capital markets access in the future
28

IPO Valuation
Enterprise Value ($ in millions)
$ in millions
$16,000
$15,717 tons in millions
5,030
5,000
4,000
$12,000
3,000
$7,412 $7,292
$8,000
2,000
$4,000
$2,000
$1,716 1,000
$0
Peer 3 Peer 2 Peer 1 Company B Peer 4
0
Peer 3
Reserves /
2011E Prod.
38.6 yrs
EBITDA CAGR: 2011E – 2013E
%
40%
41.6%
$/ton
30%
20%
10%
16.1%
10.1%
9.5%
7.0%
$12.00
$10.00
$8.00
$6.00
$4.00
$2.00
$0.00
0%
Company B Peer 1 Peer 4 Peer 3 Peer 2
___________________________
Note: Peer group data as per company filing and Wall Street equity research. Market data as of 3/23/2011.
Note: Company B data per Company’s projections.
$12.50
Peer 3
2010A Reserves (million tons)
4,445
Peer 1
27.8 yrs
$9.69
Peer 2
2,254
Peer 2
25.8 yrs
2010A EBITDA / ton
$8.87
Company B
970
Peer 4
10.0 yrs
$4.65
Peer 1
857
Company B
29.8 yrs
$3.39
Peer 4
31

IPO Valuation
2011E EBITDA
($ in millions)
$2,400
$2,115
$2,100
$1,800
$1,500
$1,181
$1,200
$900
$1,031
$600
$348
$236
$300
$0
Peer 3
($ in millions)
BB+ (Stable)
Ba1 (Stable)
BB (Watch)
Ba2 (Watch)
Peer 2 Peer 1
Total Liquidity (1)
BB (Watch)
Ba2 (Watch)
BB- (Stable)
Ba3 (Stable)
BB- (Stable)
Ba3 (Stable)
BB- (Watch)
B1 (Stable)
Peer 4
BB- (Pos)
B1 (Pos)
B+ (Watch)
B2 (Stable)
Company B
B+ (Stable)
Caa1 (Stable)
B- (Stable)
Caa2 (Stable)
$3,000
$ 2,507
$2,500
$2,000
$ 1,488 $ 1,480
$1,500
$ 1,063
$1,000
$ 730
$500
$ 450
$ 395 $ 390
$ 235
$ 87
$0
P eer 5 P eer 2 P eer 3 P eer 1 P eer 4 P eer 6 P eer 6 P eer 8 P eer 9 P eer 10
2011E Cash Flow from Operations
($ in millions)
$1,800
$1,713
$1,500
$1,200
$952
$900
$600
$775
$330
$300 $162
$0
P eer 3 P eer 2 P eer 1 P eer 4
Total Debt/Net Debt/LTM EBITDA
(M ult iple)
BB- (Watch)
B1 (Stable)
B+ (Watch)
B2 (Stable)
BB- (Pos)
B1 (Pos)
B- (Stable)
Caa2 (Stable)
BB- (Stable)
Ba3 (Stable)
BB- (Stable)
Ba3 (Stable)
BB (Watch)
Ba2 (Watch)
B+ (Stable)
Caa1 (Stable)
Co mpany B
BB+ (Stable)
Ba1 (Stable)
BB (Watch)
Ba2 (Watch)
4.5x
4.0x
3.5x
3.0x
2.5x
2.0x
1.5x
1.0x
0.5x
0.0x
4.0x
3.1x
3.4x
2.0x
2.8x
2.7x
2.2x
1.9x
2.2x
2.1x
2.2x
1.2x
1.9x
1.6x
1.8x
1.6x
0.7x
1.0x
Total Debt Median 2.2x
Net Debt Median 1.9x
1.0x
0.3x
Peer 6 Peer 8 Peer 7 Peer 10 Peer 1 Peer 4 Peer 3 Peer 9 Peer 5 Peer 2
Net Debt/LTM EBITDA Total Debt/LTM EBITDA
___________________________
Source: Company information and IBES Estimates.
Note: All companies per 12/31/2010 filings.
1.
Total liquidity is calculated cash & cash equivalents as of latest balance sheet data plus remaining balance on companies’ revolving credit facility, including LOCs.
32

EV / 2011E EBITDA
Multiple
10.0x
8.0x
6.0x
4.0x
2.0x
0.0x
7.1x
7.4x
6.3x
4.9x
5.6x
7.2x
Peer 1 Peer 3 Peer 2 Peer 4 Peer 7
EV / 2012E EBITDA
Peer 8
Multiple
10.0x
8.0x
6.0x
4.0x
2.0x
0.0x
5.5x
6.1x
5.3x
4.4x
5.2x
4.5x
Peer 1 Peer 3 Peer 2 Peer 4 Peer 7
EV / 2013E EBITDA
Peer 8
Multiple
10.0x
8.0x
6.0x
4.0x
2.0x
0.0x
5.2x
Peer 1
Primary Comp
___________________________
Note: IBES consensus estimates as of 3/23/2011.
6.2x
5.5x
Peer 3 Peer 2
Secondary Comps
4.1x
Peer 4
6.1x
Peer 7
4.5x
Peer 8
33
5.1x
Peer 10 Peer 9
4.6x
5.0x
8.1x
5.6x
Peer 10 Peer 9
5.4x
Peer 10
Others
Peer 9
IPO Valuation
8.8x
Peer 5
7.3x
Peer 5
7.1x
Peer 5