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Financial Crisis PanelFinancial Crisis PanelEffects and Changes in Mergers & Effects and Changes in Mergers &
AcquisitionsAcquisitions
World Services GroupWorld Services Group
Costa RicaCosta RicaNovember 12, 2009November 12, 2009
2:00-3:15 pm2:00-3:15 pm
Ed DawsonEd DawsonCapital Alliance CorporationCapital Alliance Corporation
Dallas, Texas, USADallas, Texas, USA
“Something is definitely going on. We’re back to eating dog food.
Source: The New Yorker
Financial CrisisFinancial Crisis
EffectsEffects
Risk reductionRisk reduction
FearFear
Conservative, less risky actionsConservative, less risky actions Build reservesBuild reserves
Reduce costs/assets employedReduce costs/assets employed
Merger and acquisition impactMerger and acquisition impact 4Q08 marketplace virtually frozen4Q08 marketplace virtually frozen
Gradual monthly improvements in ‘09Gradual monthly improvements in ‘09
Financial CrisisFinancial Crisis
ChangesChanges
Dramatic reduction in lendingDramatic reduction in lending
Many private equity firms can not get Many private equity firms can not get financingfinancing
Staff reductions throughout the industryStaff reductions throughout the industry
Global M&A Activity in Global M&A Activity in Recent YearsRecent Years
Cyclical and Ever ChangingCyclical and Ever Changing
US and Global M&A ActivityUS and Global M&A Activity
Monthly AverageMonthly Average
Source: Source: Federal ReserveFederal Reserve
Release Date: Release Date: September September 20092009
New Security IssuesNew Security IssuesUS CorporationsUS Corporations
Total U.S. Private Equity Total U.S. Private Equity Deal FlowDeal Flow
Source: PitchBook
U.S. Private EquityU.S. Private EquityFundraising ActivityFundraising 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 What Have Bankers Been Doing?Doing?
“And, while there’s no reason yet to panic,I think it only prudent that we make preparations to panic.”
Source: Source: Federal ReserveFederal Reserve
US Depository InstitutionsUS Depository InstitutionsMonthly Total ReservesMonthly Total Reserves
Source: Source: Federal ReserveFederal Reserve
US – Net LendingUS – Net LendingAverage per QuarterAverage per Quarter
OpportunitiesOpportunities
Many strategic firms have excess cashMany strategic firms have excess cash
Strategic fits driving many transactionsStrategic fits driving many transactions
Private equity cash is availablePrivate equity cash is available
Many global opportunities – Far EastMany global opportunities – Far East
ChangesChanges
Lower pricesLower prices
Fewer transactionsFewer transactions
Difficult financingDifficult financing
More government involvementMore government involvement
More regulationsMore regulations
The “new normal” is conservative behaviorThe “new normal” is conservative behavior
We Have Seen This Movie We Have Seen This Movie BeforeBefore
Credit Suisse Global Risk AppetiteCredit Suisse Global Risk Appetite