You will need the Flash plugin to view this publication

Download the Flash plugin for free here. Just refresh this page after installing Flash.
Also make sure that javascript is enabled in your browser.

Alternatively, you can download this publication in PDF-format - Click here.

Page 1
Page 2
Page 3
Page 4
Page 5
Page 6
Page 7
Page 8
Page 9
Page 10
Page 11
Page 12
Page 13
Page 14
Page 15
Page 16
Page 17
Page 18
Page 19
Page 20
Page 21
Page 22
Page 23
Page 24
Page 25
Page 26
Page 27
Page 28
Page 29
Page 30
Page 31
Page 32
Page 33
Page 34
Page 35
Page 36
Page 37
Page 38
Page 39
Page 40
Page 41
Page 42
Page 43
Page 44
Page 45
Page 46
Page 47
Page 48
Page 49
Page 50
Page 51
Page 52
Page 53
Page 54
Page 55
Page 56
Page 57
Page 58
Page 59
Page 60
Page 61
Page 62
Page 63
Page 64
Page 65
Page 66
Page 67
Page 68
PRIVATEEQUITYANNUALREVIEW2012-2013coNNEcTIoNsGlobalPrivateequitytheMiddleMarketINTHEMIDDLEMARKETFEATURINGEXcLUsIVEINTERVIEWsWITHGLobALLEADERsHIPTEAMoFTHERIVERsIDEcoMPANYsTEVENKAPLANPRoFEssoRTHEUNIVERsITYoFcHIcAGobooTHscHooLoFbUsINEss coNNEcTIoNs Globalprivateequityyearinreview2012introductiontheGlobalprivateequitylandscapetheworldaccordinGtoriversideeuropeasiapacificconclusionu.s.northamerica02061826284050WHATsINsIDEaboutduanemorris56contributors60INNOVATIONSINGLOBALPRIVATEEQUITYLAW aginnnngvgnynngyng-gvngnnnny.unnynn2012gykneznynGiyncygncnnnvngku.s.ny.tgnnngvn-kpegynnnnnnnny.txn-knngnyxnnngngynvnnlpnnq.anyvvnnnnngnvdnmpeannrvnvnggvqy.ognxnknglpn-kvqynn.wnvngnnnngnennnesGn.onanilpangnnnnvnnnn.oxnnngpeGnnnnvvynnnn.annynnngnngvggn.wndnmn2013srncnnnbnvnggnnngnnnnv-knnng.tnnn--gnvgvqyvnnnvngvynlpngnnn360-gn.bnnnvnknkgnvnjvxngvqygntrvcny.wgynvngrvc-ceobszgynsKcoophnknKnlngbsznnKndnsnfgnmn.wnynvnysvnKnunvycg.wznvnngvqynnnannrv.wnnktrvcnyvngngnnngngkvngnnyynggnngn.tnnvkngngkgvqy.ttrvcnyng25nnvynnxnngn.rvngnkynnnnvngnk.ALettertourReaders DUANEMORRISINNOVATIONSINGLOBALPRIVATEEQUITYLAW1wxtttyoifinoannriinfotionsintogt-ooking.wsttooiontinstoontibttottogtsiofti-ktitqitynoyoig.vytyyosGeorgeJ.NemphosciofcootptiGonco-hofpiteqitydnmoisllpPierfrancescoCarboneco-hofpiteqity-uKeodnmoisllpRichardP.Jaffeco-hofpiteqitydnmoisllpINNOVATIONSINGLOBALPRIVATEEQUITYLAW 2THeGLOBALMARkeT2012sawprivateequitydealvalueincreaseto166billionuplessthan2percentinaiffilroonoinvironnnwhrmawgnrllyfloronring.thlrgrkyvlhu.s.whlhygrowhwhileroonrnaijorhn100rn.Despiteatoughyearthatsawholdingperiodsincreasepastfiveyearsthevalueofrlizioninr.Globallyrealizationsfell10percentto148billionasthe50-percentriseinexitvalueinhu.s.wovrhowyhhighroinfllinvlineronai.maihinxihnnl50rnyvlonryyohowhgrincreaselastyearupmorethan20percenttoaccountforalmost40percent.Abetteryearforexitshelpedtoimproveglobalfundraisingwhichincreased20percentbutwihhiinrnofinvorwriingiggrhkofnfwrGp.Inadditiontoanincreaseinrealizationsprivateequityfundraisingisbenefitingfrominrrroniniionlinvorofinhighrrrninvninoylow-yilnvironn.THeU.S.MARkeTTheflatU.S.MAclimatedidnotpreventprivateequitydealmakingfrommovingaheadasdealvalueincreasedbymorethan8percentto90.5billion.Keydriversincludedthemorethan450billionofdrypowderbuyoutfirmsaresittingonwhilebanksmayhavegrownoronrvivliqiiyiinringlyvillfrononnkhpefirwihlningrninvlononibdc.TheU.S.sawrealizationsincreaseto93billionornearly69percentin2012withMArniononingforovr50rnofxivlfollowyonryyowhichsawalargeincreasetomorethan40percent.Add-onsaccountedfornearlyhalfofU.S.buyoutsastheyhaveproventobeattractivelrilrlyinlow-growhonoywihloorniyfororgnigrowh.FundraisingforU.S.-focusedfundsincreasedforthethird-straightyeartoreach138billion.throinhnroffnrinrorinvorrgyofwriingfwrcheckstolargerfundswhichwasreflectedinthejumpinshareofcapitalraisedby2billion-plusfundswhichwentfrom45percentofcapitalraisedin2009tonearly70percentin2012.Abroadconsensusofsurveysindicatethatinvestorsarelikelytoincreasetheirallocationorivqiyinroryhloninorfornofliqiiwllhinnrhforyilinoylow-yilnvironn.GlobalPrivateEquityYearinReview2012 DUANEMORRISINNOVATIONSINGLOBALPRIVATEEQUITYLAW3THeeUROPeANMARkeTReflectingtheregionsmacroeconomicchallengesEuropeanprivateequitydealvaluefellmorethan20percentto55billionaneight-yearlow.TheUKwastheonlytop-fivedlmkngcntrytnncrrthyrwthfrncrngmrthn60rcntcntrctnndlvl.TheanemiceconomicgrowthandconsiderableuncertaintysawthevalueofEuropeanprivateequityexitsfallnearly50percentto51billionin2012.MAtransactionsaccountedforabout57percentoftheexitsbyvaluefollowedbysecondarybuyoutsat40percentwithipotlthn3rcnt.PrivateequityfundraisinginEuropereached54billionwhichreflectedanincreaseofmorethan40percentfrom2011thehighestamountsince2009.Animportantcontributorwcndryndwhchwntrmccntngrbt2rcntndrdto28percentasfundmanagersexpectnewregulationwillrequirebanksandinsurancecmntlldwnthrpetk.BothEuropeandtheUnitedStatesareputtinginplacenewregulationsthatareanticipatedtgncntlyrcmlnccttthGplvlndlngtvlymctmnynvtrncldngglblbnknrnccmnndnnchm.atthmtmthdbtnnwvnttxrvtqtybngtkdbythncnthntrnwdrlrvnnthuntdsttrthrxcrbtngthdcltbnclmt.THeASiAN-PACiFiCMARkeTRepresentedbytheChinaandIndianmarketswhichhaveexperiencedremarkablystrongeconomicgrowthAsianprivateequitydealactivitygrewarecord130percenttoover20billionin2012.Minoritygrowthdealsaccountedfor85percentofthedealvaluefollowedbycrvt10rcnt.AlessintermediatedmarketcomparedtotheUnitedStatesandEuropetheAsian-Pacificrgnlcgrtrrlncnrnlrltnhnrcngndclngdllthghthxctdtchngthmrktmtr.Asian-PacificprivateequityexitactivityChinaandIndiacontractedin2012bynearly60percentto4.5billionafive-yearlow.Thechallengedexitmarketreflectedcoolingcnmcgrwthnthrgnwllncrngcncrnvrcrrtn.ipothxtchnnlchcllbymrthn50rcntn2012.FundraisingforChinaandIndiashowedaslightdecreaseto34billionin2012inlinewiththetwopreviousyears.The1billion-plusfundsizejumpedfromaccountingfor34percentn2011t52rcntthctlrdn2012.INNOVATIONSINGLOBALPRIVATEEQUITYLAW 4StewartKohlandBlaSzigethyCo-CEOsTheRiversideCompany DUANEMORRISINNOVATIONSINGLOBALPRIVATEEQUITYLAW5TheRiversidecompanyVantagePointWwenedougloblvieofmiddle-mkepiveequiyobeoffeedhoughhelensofsignifingloblpiipn.ashemosglobllyivepiveequiyinvesolsyetherivesidecompnyoffeedusnexellenvngepoinogobeyondhenumbesndexploeheehemiddle-mkebuyoubusinessisndheeiisgoing.amonghekeyhemesoveedinhisannulrevieinludeStayingfocusedonwhereyoucanmakethebiggestimpactoverthepast25yearsrivesidehsfousedexlusivelyonheloemiddlemke.Cultureisplayinganincreasingroleinensuringthatprivateequityfirmscanexecuteandinhoheydiffeeniehemselvesbeingveylebouisvluesndlevinggoodefeenesinoukeispofrivesidesedge.Operatingsuccessfullyonaglobalbasisincreasinglyrequiresaseamlessprocessoforiginatorsnsionemsndopeingpnesrivesidehsinsiuionlizedhispoesshoughhedelmkingexpeieneihsginedndppliesiglobllyinnsfomingompnies.Identifyingcountriestooperateinthatprovidenecessaryrulesandsizesothatlocalbusinessesnbeomegloblbusinessesforivesidehismensgoingoouniesihlongkeodoffeeeleionsnddemoyheuleoflespefoindividulighsndfeepess.INNOVATIONSINGLOBALPRIVATEEQUITYLAW 6in2012fryrfrhglblfnnlrhdlnvrnnnnbplgdbypllndnnrnhrngvlypnghnfdnfceobrddrrndnvr.tppnghlfnrnerznrlngngu.s.fllffndqrnngnlwr-grwngrgngrkndhfnwrglnndpnlx.arlnhjrrgnfhwrldxndnhrprhmarkwfllghlyngv.schr1.thrgnnrngnblyn2012wherznwhhwnfrnrbng16prnfglblman201113prnlyr.2012wtheworstyearfortheregionsince2009butwithhGrkbldnhxpnhherzndbrybng.thrvryylrdybnprgrngherpnnrdherznwhhjpdfr16.4percentofglobalMAin2011to17.8percentlastyearthebest-performingyearsince2008.1IntroductionTheGlobalPrivateEquityLandscapeIChart1GlobalMAActivity-AnnualSourcemergermarketChart2GlobalMid-MarketMAActivity-AnnualSourcemergermarket02000400060008000100001200014000160001800005001000150020002500300035004000NumberofDealsValueofDealsUSbnEuropeexcludingEurozoneMAEurozoneMAUSMAAsia-PacificexcludingJapanRoWMANumberofDeals0510152025303540020040060080010001200ofGlobalMAValuesofDealsUSbnEuropeexcludingEurozoneMid-MarketMAEurozoneMid-MarketMAUSMid-MarketMAAsia-PacificexcludingJapanMid-MarketMARoWMid-MarketMAofGlobalMid-MarketMAthrwrvyhglbld-rklvldlvlnrdfrhhrdrghyrandrosetonearly38percentoftotalglobalvalue.schr2.thundsxprndnrly22-prnprnnd-rkvynprn2011whld-lvldlfllnherzntheirlowestvaluesince2009.2INNOVATIONSINGLOBALPRIVATEEQUITYLAW DUANEMORRISINNOVATIONSINGLOBALPRIVATEEQUITYLAW7SLiGHTUPTiCkiNPRiVATeeqUiTYDeALSinhshghlchllngdmanvonnvquhusnssofungnsfongndsllngconssonofhfwghsos.inddrchdm.Jnnacsvcchfonscondvsosvcsensyoungosvshascoosconnuoskvspefshonsowchndonlghson2013shdownconoovdsgoodonvs.3inlnwhhsffconochdwndshnghmakglolvqudlcvroseascant2percentlastyearto166.2billionwhilethenumberofdealsfellto1770.SeeChart3.thsodssu10cnofhovllmaknncsfo2011ushoofhkn2006whnochdnl30cnofmadls.4Atmorethan54percenttheU.S.accountedforhlonsshofhglolkvlundincreasedby8percentin2012.Europeaccountedforou33cnofvlundlsconcdov20cn.aswhhsllsshswdlvluncsohn100cn.buousChart3GlobalPeActvtyn2012NumberofPEDealsBuyoutGrowthDealValueBbyRegion238.5462.9646.3314.9132.8197.7163.3166.216092246259226281731215320381770050010001500200025003000020040060020052006200720082009201020112012AsiaChinaIndiaEuropeU.S.GlobalincludesU.S.EuropeIndiaandChinaSourceDowJonesStewartKohlandBlaSzigethyCo-CEOsTheRiversideCompany 8hmppldlypyvlflldyghhihhgy-v-yincrease.SeeChart4.WHATSDRiViNGTHeBUSiNeSSGROWiNGiNDUSTRYHUMANCAPiTALROUTiNizeDPROCeSSwhvgfmlivlylimidmfpplihldhllyddhydllmpyiizdpivlvigfhdfflk.ayghghhylhifllffhflkdgdmfm.thyhghigldhyhpddl.nfimgddyghghhmgyl.adigllphm.sKhlc-ceothrividcmpy20ygifyllfmpyyidiigfl.tdyillymlfmpyfl.thigmhdlligympy.thu.s.imdlyimdiddyfhu.s.myghhmpilinhamiihdpddihldiillfhplihlddi.blszighyc-ceothrividcmpynly60pfhydi2012weresmallcapdealsvaluedatlessthan100millionandnearly80percentwerevaluedatlessthan250million.Themiddlemarketaccountedfor14percentofalldealsand28percentofthevalueofdealsin2012.Largecapdealsvaluedatmorethan1billiondfvhlffhgggvlfdlgllly.5thmiddlmkigigiyivihdihfhfiilii.adighlgllTabl1invstorsFocusofAttntonAmongPrvatequtySctorsTop-fvRponssSourceProbitasPartnersSectorTargetingU.S.Middle-MarketBuyouts49EuropeanMiddle-MarketBuyouts42U.S.VentureCapital34DistressedDebt30AsianFunds252007SectorTargetingU.S.Middle-MarketBuyouts58GrowthCapital40EuropeanMiddle-MarketBuyouts39CreditStrategies26AsianFunds242013Chart4GlobalGrowthDalsincrasn2012DealValueAllocationbyRoundType24714123354842373035434338161571015131319443825314123132427134441623171325010203040506070809010020052006200720082009201020112012Add-onLeveragedBuyoutCarveoutManagementBuy-InManagementBuyoutPublictoPrivateGrowthGlobalincludesU.S.EuropeIndiaandChinaSourceDowJones DUANEMORRISINNOVATIONSINGLOBALPRIVATEEQUITYLAW9yffmppfocusforinvestorsbackin2007wasU.S.middle-mkyjy.st1.tgmkgf-y-fyin2012asignificantincreasefroman18-percentff.6ReALizATiONReVieWANDRiGHTTiMeFORexiTwgmymmiggmyggfyywgmfgmykgmfmkgxifmyfykg-m--ggmfxk.szKtrcmyWHATMATTeRSReALizATiONSANDDiSTRiBUTiONSLastyearrealizationsdippedgloballyto148billionor10gxmxf.sc5.tu.s.xjmm50eggyezyj50a50.2012LOTSOFMONeYCHASiNGDeALSGReATMARkeTFORReALizATiONStqfmygmf2012.afgggdmgm.wkgffqyfmmfgfmgy.asold14companies.bszgyc-ceotrcmyMAmadeup45percentofexitsbynumberand50gy20fm2011.sc6.sgym20ymalmost40percentofexitsbyvalueand45percentym.ipoy30m10fxy.tnavnavggfyggfykfmfg.hmlChart5U.S.LadsGlobalPeetsn2012NumberofPEExitsMAIPOSecondaryBuyoutDealAmountBSourceDowJones66.6126.9166.5119.388.3153.2165.5148.2377487652558406816824794010020030040050060070080090005010015020020052006200720082009201020112012U.S.EuropeAsiaChinaIndiaChart6GlobalScondaryBuyoutsincrasn2012PercentageofPEExitsMAIPOSecondaryBuyoutSourceDowJones40343146504647454451565139414245161513311131111010203040506070809010020052006200720082009201020112012MASecondaryBuyoutIPOGlobalincludesU.S.EuropeIndiaandChinaGlobalincludesU.S.EuropeIndiaandChina 10Chart8PeCaptalOvrhangSourcePitchBook1H2013PEFundraisingandCapitalOverhangReportJanuary242013estimatesthatNAVisover1.6trillion.7wniymovoyomGpkolpiiiyoGponnnniiyolpoinizomnoGp.tnkomou.s.onomiovynvoimkinyoturnedpositiveatmid-yearforthefirsttimesince2007.diiionoinvogoy6noommiiinioyioioinnyoi5.5n.8wiiioniqiiynnoninGpioniviniizionogniiionkoinvo.hingoivininiioninvongoivyioyiomoinning.aoingospciIQsponsor-backedcompaniespaidmorethan63iioninivinogdm132012nydoublethe34.4billionduringthesameperiodayeari.9SeeChart7.Althoughrecapshavegainedngivminiongivnonnyvomnimovgnmyiingongrow.bico.imvgvoivinvnogyonyooonyo.10anokyoinningizionipeiovng.fou.s.mkmihasfallenfromits2008peakofover500billiontojustunder350billion.SeeChart8.AccordingtoPitchBookmorethan100billionofthisdrypowderisheldin2007and2008vintagefunds.11wiiv-yinvmnioGpmnookoommimnxiolpommimnoni.LONGeRHOLDiNGPeRiODSACCeNTUATeTHeJ-CURVe42.7864.4550.5925.7871.3193.30-100200300400500600200720082009201020112012Under100M100M-250M250M-500M500M-1B1B-5B5BCumulativeOverhangOverhangbyVintageandFundSizeChart7SponsordDvdndStockRpurchasVolumbyMonthBllonsSourceShashaDaiRiskyBusinessPEsDividendRecapGoldRushDowJonesPrivateEquityBeatJanuary1020131874216291645Jan.Feb.Mar.Apr.MayJuneJulyAug.Sept.Oct.Nov.Dec.1680 DUANEMORRISINNOVATIONSINGLOBALPRIVATEEQUITYLAW11Chart9FwrFundsRasMorCaptaln2012CommitmentstoPrivateEquityFundsbyRegionBasedonfinalclosingSourceDowJonesthghvhivycompaniespurchasedin06and07thatthenhittheiygighixyhhyiuy.lkighiiihhyyuhvghimiughuig101112.diiumiimihihuhJ-uv.agyuivmyixguhyuyugigoK.bszighyc-ceothrivicmyFUNDRAiSiNGUPNUMBeROFFUNDSDOWNGlobalprivateequityfundraisingreached226.9billionin2012up27percentfromthepreviousyear.SeeChart9.Thisisnearlyinlinewithaverageannualfundraisingsince2005ifoutlieryears2007and2008arenottakenintoaccount.Thenumberuhigyu25343.Thetrendoffewerbiggerfundsbywell-knownGpuihighquiyiviiiizighiumgiu.thjumiuiziyithemegafundlevel5billion-pluswhoseportionuiigyvuiigiiygivhiyhuvhy.sch10.thimhx-mi-mkuhhhy30.Kydpivipipihmknyjuhmi-mkguuyuhviivggkyuikigu.12WHATiNVeSTORSAReLOOkiNGFORFOURSTeePHURDLeSwhivkigiighthyguuhyguhyhmihmiyiiiyiiiy.thyyuhmhyugyhyikhyiikgi.thhihighyiy.fiyhyihiugmmuii.thyuhhiig-miiquiivmhuihiguigihi.sKhc-ceothrivicmyogihvgghimifundincreasedslightlyto17monthsfrom16.2monthsi2011.13Thiscomparestoover19monthsin2010the-giiiiky.thuiigvimmiu-miivihof1940fundscurrentlyinthemarketseeking795iiimmim.Chart105BFundSzAllocatonRssn2012AllocationofCommitmentsbyFundSizeBasedonfinalclosing43223532108777129516131089141481818141514262319323331303943434321253637278240102030405060708090100200520062007200820092010201120125B1B-5B500M-1B250M-500M100M-250MUnder100MofCapitalRaisedGlobalincludesU.S.EuropeandAsiaPacificexcludesMiddleEastbutincludesrestofAsiaandOceaniaSourceDowJones7038048757344574764293480200400600800010020030040050060020052006200720082009201020112012AsiaPacificEuropeU.S.FundsRaisedB281.7380.9545.2448.6219.9150.5178.6226.9 12iNCReASiNGFOCUSONCULTUReANDTRANSPAReNCYtfndvnndfnffndnngfgnggkndngngfnv.bngdgndnngnggngvfngngnvndndf.phndkncootrvdcnPRiVATeeqUiTYUPSiDeiNVeSTORSDeMANDHiGHeRReTURNiNVeSTMeNTSinddndd-dngnvnnfvvqnnnvddfng-nvngngn.tfddkvq.asmndfnvnffGggnpnnkdtnngd.evnnfnddkn.14tnnfndndnnnnndfn300nffnvqndndvnnvnd.sKc-ceotrvdcninvvdnn.mnnlpnngnvqvnx12nnnddngccnd.sc11.tnnwithPreqinslatestsurveyfindingthat70percentofnnfndnkngnnvng.adngwvgnvqfpensionplansover5billionwas12.7percentfortheqndds.15sc12.endnngvqnvn.yunvdndngnChart11LPsPlansforThrPrcntagofAsstsTargtdatPen12MonthsTm-20-10010203040Winter201213Winter201112RespondentsDecreaseIncreaseChart12PnsonsShowStadyGrowthnAllocatonstoPeSourceMichaelCorkeryPensionsBetBigwithPrivateEquityTheWallStreetJournalJanuary2420132002040608101202040608010049.823.412.7OtherStocksBondsPrivateAverageallocationsforplanswithassetsof5billionormoreforquarterendedSeptember.Morepublicpensionfundsaretryingtoboostreturnswithprivateequityandothertypesofalternativeinvestments.14.1sourceWishireTrustUniverseComparisonServiceTheWallStreetJournalSourceCollerCapitalGlobalPrivateEquityBarometerWinter201213p.4 DUANEMORRISINNOVATIONSINGLOBALPRIVATEEQUITYLAW13privateequityto35percentfrom34percentandx10.5.rdsym10-z10.6qg13.2.16ag-mgqgswfktohavethebiggestimpactgoingforward.In2008m5mm2011was7percent.17t-swfqggg56billion.18ummmmk.amgxmgq.ommgucgbsbsn.Krs.huvgtmJkuox.19exmgventurecapitalfundperformancefrom1984to2008publicmarketsinmostvintageyearssince1984.Thegu.s.msp500203.acmgaxu.s.qmdJiagr2000sp500x.st2.wmcCapitalssurveyfoundthatabout80percentofxpe11thenextthreetofiveyearswith28percentexpectingm16m.tkregionsoftheworldasthesafestbetwith84percentlpg11mNorthAmericanbuyouts82percentbettingsimilarreturnsforAsian-Pacificregionand77percentofLPsgmme.sc13.Tabl2U.S.PrvatequtyindxRturnsforProdsendngSptmbr302012SourceCambridgeAssociatesU.S.PrivateEquityandVentureCapitalBenchmarkCommentaryQuarterEndingSeptember3020120102030405060708090100AcrosswholeportfolioNorthAmericanbuyoutsNorthAmericanventureEuropeanbuyoutsEuropeanventureAsia-PacificbuyoutsAsia-PacificventureFunds-of-fundsgeneralistfundsRespondentsChart13LPsexpctngNtAnnualRturnsof11fromthrPePortfolosovrthNxt3-5YarsSourceCollerCapitalGlobalPrivateEquityBarometerWinter201213p.4FortheperiodsendingSeptember302012Qtr.YeartoDate1Year3Years5Years10Years15Years20Years25YearsUSPE3.69.215.215.76.513.711.813.613.1DJIA5.012.226.514.52.28.65.99.89.6Russell2000Composite5.314.231.913.02.210.25.59.18.2SP5006.416.430.213.21.18.04.78.58.6OtherIndices 14abulerofbuneerveequygrouornforheoeronfnnlngovernneleveroflower-nle-rkefr.inonrveequyfrwhnernonloeronreooneornforle-rkefrnogloblone.mle-rkeoneeehegloblexpansionopportunity82percentexpectsalestogrowuwrof20erenfroforegnrkebutmanyseeexpansionabroadastoorisky43erenheylkrkeknowlege32erenordonotglimpsetheopportunity28percent.aheeeneheburngofhebuyoumarketbubblein2008investorshavebecomenrenglyreole-rkebuyoufun.deereenreurgenenegbuyouheurrennnlrkehnolerehren.theleurveyofgloblnveorfrobohpreqnnprobprnerfounhorehnhlfnehheyrelookngonvenll-ole-rkebuyoufunnheongyer.seechr15.thgnnlyorehnhenexo-ereofherkevenurelfuninwhich28percentofinterviewedinvestorsexpressednvengneren2013.Chart15FundTypsinsttutonalinvstorsnPrvatequtyArSngtoinvstnovr2013THeLOGiCBeHiNDTARGeTiNGTHeLOWeRMiDDLeMARkeTThemiddlemarketisbig.AccordingtotheNationalCenterfortheMiddleMarketintheUnitedStatesthereareapproximately195000businessesthathaverevenuesbetween10millionand1billion.Inaggregatetheyaccountfor33percentor3.84trillionofU.S.GDPandcreatedover41millionjobsthroughthecrisis.20IntheUnitedStatesPRIVATEFAMILYUNINCORPORATEDPUBLICLYHELD1000EMPLOYEESDomesticInternational505070553715192332themajorityofthesebusinessesareprivatefamilyheldwithjust15percentpubliclyheld.SeeChart14.Chart14OwnrshpStructurEIU2012ResearchGongGlobalEIU2012ResearchSourceNationalCenterfortheMiddleMarketLeadingfromtheMiddle2012NationalMiddleMarketSummitOctober242012TOP3EXPANSIONBARRIERSDOMESTICFIRMSExpansionistooRiskyLackofForeignMarketKnowledgeDontKnowtheOpportunity433228PreviousEntryModeFutureEntryMode46PARTNERSHIP33PARTNERSHIP32DIRECT26ALLIANCE14JV32DIRECT22ALLIANCE18JV DUANEMORRISINNOVATIONSINGLOBALPRIVATEEQUITYLAW15SourcePreqinInvestorSurveyDecember2012THeRiVeRSiDeLOGiCOFTARGeTiNGTHeLOWeRMiDDLeMARkeTeASieRTOGROWANDMAkeANiMPACTALOTOFBUYeRSwvhaanmpahmpannfhanhvhnaahmandfhmddmakv25a.imucheasiertotakea5millionbusinessandgetitto10millionor15millionthanitistostartwitha50millionbusinessofEBITDAandtrytogetitto100millionor150million.Andwhenyouturn10into20or30millionandyoupolishitupandmaketheunuquaavamaznghhanxhnfunupuhun.saKhc-ceothrvdcmpanbungandngmapmpangnandmandhakhaamppunfndvunquuan.wnfdnhafafhdahu312daxpnand25axpnnpangnngngdapgdjfdnfnghhhhavhmaavkadppnfhaddffnfmhahfunddunup.saKhc-ceothrvdcmpanWHYTHeMiDDLeMARkeTALWAYSFiNDOUTPeRFORMiNGCOMPANieSivhaahndfhmddmakuanaafndupfmngmpannamvndu.yujuhavkfhm.thahhphavgnanhahu1500daaaavnjuneup.iauhavvdpvnhmak.KanlangthrvdcmpanStewartKohlandBlaSzigethyCo-CEOsTheRiversideCompany 16COMPeTiTiVeLANDSCAPeiNASiALOCALCOUNTRYMANAGeRSFAMiLYNeTWORkSLARGeBUYOUTGROUPSNOTALOTOFDiReCTCOMPeTiTiONihowdohmddmkapomoogyooymgohghwohm.thogdoomoyooou.s.md-mkmhohwod.thobyomhhgodobdoghmgd.thvmhqdohvhogohogoodhodhdomghijdohkgogohg.smofgthrvdcomyiomdd-mkmobgobbovobdddgy.thdvgobggoboomobhoggowhhxdoobddoyohv.thohoomyoomhdgdwhhgodowohvoomyohdmhowbgghkowbGp.thdoghoyogogobooyooodgmbomdogob.thqowhhmdd-mkGpoodhbwyhhdgoghodogoodd.svKuvyochgolgmohvbdomdd-mkdhwodov.ahoghnohamogywhbgoeodoomxahowggowh.sch16.shhmddmkhdmorethan20billionperyearandhasnotbeenmdbygdmgdgthepasttwoyears.SeeChart17.1.24.56.33.50.83.82.92.21.83.23.55.82.73.24.60.07.316.915.913.14.86.15.56.618.923.019.422.38.59.611.413.20.05.010.015.020.025.030.035.040.045.050.02005200620072008200920102011Jan-Dec2012YTDAggregateCapitalRaisedbnYearofFinalCloseNorthAmEuropeAsiaRestofW25.329.629.523.713.513.812.710.240.429.147.645.244.816.722.824.422.033.546.549.249.450.830.125.230.619.470.042.399.3119.0113.748.816.211.030.383.80501001502002503002005200620072008200920102011Jan-Dec2012YTDFundsinMarketAggregateCapitalRaisedTargetSizebnYearofFinalCloseMegaLargeMid-MarketSmallChart16Md-MartBuyoutFundrasngbyGographcalFundFocusChart17AllBuyoutFundrasngandFundsnMartbyAggrgatCaptalRasdandTargtd DUANEMORRISINNOVATIONSINGLOBALPRIVATEEQUITYLAW17SourcePreqinPrivateEquitySpotlightDecember2012OUTLOOkADiFFeReNTANDMORePOSiTiVeVieWFROMTHeLOWeRMiDDLeMARkeTwnyulayasmallndfmiddlmakasdyuamumabumiissusanmaissus.evninunisnmyaasbllasingaundyuyuansillfindagadalbausagalilmanisaansllusidimunysllsmingvynndsnmaanmyisding.pamhndiksncootrivsidcmany 18TheU.s.MarketTheMotIntermediatedMarketlkhrofhordhu.s.markddnochpprcbgrohn2012.thconrfccfforrndoongxchnghpdoccnrkndpocncrn.in2012U.S.dealactivitybyvaluewasupslightlyby1percentto825.4billion3711dealsfrom817.1billion3674dealsin2011.Thismade2012thebest-performingyearsince2007.SeeChart18.ThenumberofU.S.companiesplanningtomakeanacquisitiondroppedto23percentfrom34percentlastyearandofthosecompaniesplanningtodoadealamajoritysaidtransactionsizeswouldbe500millionorlessaccordingtoernyong.21whhghcroconocncrncorporonrfocdonorgncgrohrrgcdndonpprcbxnvngch.LINNOVATIONSINGLOBALPRIVATEEQUITYLAW DUANEMORRISINNOVATIONSINGLOBALPRIVATEEQUITYLAW19thunisixooninooinhlklin2013glolinvofoonfnhu.s.iningonofhwolongnolonoi.aoingoenyongGlolcilconfinbohunisnkhinonlchinhn-woinvninionfohnx12onhfofohlli.thflu.s.maliinovnivilkingfoovinghlvlincreasedbyover8percentto90.5billion.SeeChart19.Keydriversincludedthemorethan450illionofowhogoiingonnwhilnkhvgownoonvivliiiiininglvillfononnkhpefiwihlningninvlononibdc.qlilooniihighiihofn-honinooivlk.ReBOUNDiNReALizATiONSaohonliinhannlrviwhoninu.s.lizionovihnigoighspotlastyearinprivateequity.Thevalueofexitsin2012increasedbynearly60percentto93billionwith474exits.SeeChart20.Besidespent-updemandtheriskofhighertaxesin2013offeredanotherdriverinthehfolizion.Chart19U.S.PeActvtyStadyn2012NumberofPEDealsBuyoutGrowthDealValueBbyRoundTypeSourceDowJones123.7294.7478.8153.464.7110.483.290.58131197137712318019829259330200400600800100012001400160001002003004005002005200620072008200920102011201223.441.3274.643.048.083.658.792.816522931727018941136402004000408012020052006200720082009201020112012MASecondaryBuyoutIPOChart20U.S.PeextsBouncBackn2012NumberofPEExitsMAIPOSecondaryBuyoutDealAmountBSourceDowJonesmaniononfoohn50nofxivlin2012.sonowhihonforover40percentofthevaluein2012jumped250percentfrom2011.ExitsthroughIPOsdecreasedmorethan20percentbutatover7billionwereaboveaverageforthepasteightyears.Chart18U.S.MAActvty-Annual0100020003000400050000200400600800100012001400NumberofDealsVaueoDetaisUSnValueUSbnNumberofDealsSourcemergermarketMARound-Up2012Jan.142013DealValueBNumberofPEDeals 20ovlflzgfqlglfq.tgggl.tfglzltvfu.s.pe-650060flk.22sc21.SeLLiNGCOMPANieSAUCTiONSVS.PROPRieTARYalvvnakgllfll.evgllvlgfggloftheoriginationteamwesaw4500opportunitiesll.sKlc-ceotrvcaglkgk.tlvfvllfl.wllflv.ilvgfgv.iflklfllggkgg.blszgc-ceotrvcafxllvl2012gvqflfqxg.sc22.tmakvlflkllfpeflkflz.sllgklvfvfk.SeCONDARYBUYOUTSVieWFROMASeASONeDSeLLeRtllllggglgfglvlvglkkg.evfgvqdfifgjlvgggxf.yf.phkcootrvcACLiMATeFORADD-ONSilgkgvlllgg.wlfggggl2vgfggfffl-vvgChart21Mddl-MarktCompanyinvntory3921010002000300040005000200120022003200420052006200720082009201020112012NumberofPortfolioCompaniesAsofYearAsofNovember2012SourceBrownGibbonsLangCo.TheStateoftheMiddleMarketFinancingsintheU.S.November2012Chart22U.S.ScondaryBuyoutsincrasn2012PercentageofPEExitsMAIPOSecondaryBuyout3634314747505248445063504142404520167312878010203040506070809010020052006200720082009201020112012MASecondaryBuyoutIPOSourceDowJones DUANEMORRISINNOVATIONSINGLOBALPRIVATEEQUITYLAW21Chart23Buy-and-BuldStratgsContnutoPlayaSgnfcantRolnU.S.PeAdd-onActivityasaPercentageofBuyoutsSourcePitchBook2013AnnualPrivateEquityBreakdownPresentationSlideDeckg.add-dv.sc23.twddkgd-g.ikgdd-gforatleast15years.Therewasatimeinthe90swwdg-wgzdddwk.Gpdvddzdvdzddgwvg.agdggwvgddwkzg.svKuvcgMULTiPLeexPANSiONHiSTORiCALLYWeGeTTWOTURNSOFMULTiPLeexPANSiONONOURexiTSovwkdxwgwxxddvwvgdd-qwgggwwvg.szKtrvdcbdpe-qvd-hecpovGgxdv500e-d-dvpastthreedecadesandfoundthat34.5percentofddw2-3.5xg32.2percentforregulardealsand16.9percentreturnedw3.5-5xd13.3-v.23avvqdpvqgdvdwgg-d-ddvvvwdvggwgg.PORTFOLiOCOMPANYBUYeRSABOUTHALFSTRATeGiCANDHALFFiNANCiALOverRiversides25-yearhistorywevesold82dj5050wgd.ov12wvgwggv.swKc-ceotrvdcykwwggzvgwwgkdk.twgvwdvq.bszgc-ceotrvdcFUNDRAiSiNGNOTGeTTiNGeASieReSPeCiALLYATTHeSMALLeReNDfdggglpvgdggwvdkggwwGp.nnalpvdccdddGpvxww102006.24mvlpdkgvddg49867885711027754866797946778661015124013929765297947987273740414444484650480102030405060050010001500200025003000200420052006200720082009201020112012Add-onNonAdd-onAdd-OnofBuout 22Chart265BFundSzAllocatonRssn2012AllocationofCommitmentsbyFundSizeBasedonfinalclosingChart25U.S.PrvatequtyFundrasngRssn2012CommitmentstoPrivateEquityFundsBasedonfinalclosingSourceDowJonesedemmmenha-pflpengparticularlyactiveinthisapproach.SeeChart24.theefheedmhenmeffndclosedto199in2012asmallincreasefromthe193edn2011mkngheyeheendeveheeghye.seech25.bhnnnedyheefgeofaggregatecapitalupnearly5percenttoover138n.thndegngvegefndzewhichin2012climbedtojustabove1billion.Theneenfndngvehehee-yeednmngnhhendyevenghgnfnvehngfmhemye.UPSiDeOPPORTUNiTYASiNVeSTORSCOMMiTLARGeRDOLLARAMOUNTSTOFeWeRMANAGeRStheefvenheefndngnhenvedehmedneeyngmngednhenmefheenh.onefhedvngehrvedeffenvehheydmmgedndnhemefhemddemkendjhveneGpenhtomanageratherthanseveral250millionor400mnfndhhenheyhvekndendnnmeengndhfhng.sznneKnthervedecmnywheeekngheghnheraisedby5billion-plusvehiclesoverthepastfewyehhhmeheexenefedymdde-nde-mdde-mkefnd.seech26.ch26mheghgvenheu.s.mkegnfnhenvefndng.Removing2007and2008thetwooutlieryearstheneenmegyn2012veheegh-yearaverageof17percent.Fundsinthe1billion-plussizehavegonefromaccountingforabout45percentofcapitalraisedin2009tonearly70percentin2012.weeevehhegngvegefndzehmnydvendngnveefeenemkegenfeefndhedffenvnmenndhendymy.inddnhngeneefnemnge20124024254753972282221931990100200300400010020030040020052006200720082009201020112012BuyoutsCorporateFinanceVentureCapitalMezzanineSecondaryOtherFundOfFundsFundsRaisedB165.0239.9377.4304.0152.580.0104.9138.43211242110765610851610876171192118131413232317283628294946504321274443257240102030405060708090100200520062007200820092010201120125B1B-5B500M-1B250M-500M100M-250MUnder100MofCapitalRaisedChart24LPsRducngThrNumbrofFundCommtmntsasaRsultofMorintnsvDuDlgncSourceCollerCapitalGlobalPrivateEquityBarometerWinter201213p.701020304050NorthAmericaLPsEuropeLPsAsia-PacificLPsRespondentsSourceDowJones DUANEMORRISINNOVATIONSINGLOBALPRIVATEEQUITYLAW23j10-ndhhdhdd.25ahGphvgndvhnkdnbhgnd.mnhGpngggngbnqnggnd.fnh2nd20nhbnbnhdngnd.TeRMANDCONDiTiONS2AND20ANDNeeDTOFOCUSONNeTReTURNSwnhndhnhhddh.ihnkhhnhbnndndnvokhdhnnddhhxnbngh.fdnhvddnddnvhngngdn.andndh2nd20bng13nd1030.tkklpgnghvbvdnhnn.sKhc-ceothrvdcnthhdnbnnngngnd.lpkngdnngnhngn.yvnvnnnggng100ntheGPtoa5050GPLPsplittoa2080split.OvertimeIthinkyoullseestandardsofeither2080or0100.yndnhngnhlpndGpngnd.thnhhhnglpGpgnn.yhGpnknhnihlpkn.anbhglpknghb-nv.thnhd-n-nvnndbdh.thnbvhGpbhGpdnhvbngnhGpndhdhd.svnKnunvchgwhvbvdhnhhhngngndngnvnnhxnhhGpgnvgnv.thccnvvndhnearly40percentofLPshavetakenadvantageofPamHendricksonCOOTheRiversideCompany 24yddunnfvhyndmmdyfund.26inngyfundmndndnnhlpfungnhm.indnnuyndunuhnvquyfmndgydfyGphgnnflpdnghccuvy.SeeChart27.AlthoughitwasagreaterconcernsixyearsagogrowthinthesizeofGPsfundsstillremainsaffnv.ALiGNMeNTANDGPCAPiTALCONTRiBUTiONSALLiNTHeFAMiLYwvngyngnngn.thnnghyhdhbndmndnnuhufkfnngunnvmnnhfundyynghfffundmggnvnhnxfundndunghmgfdnh.ov10-ydyuudmvygnfnnvnufund.whnkhnxmyhhydynm.andyduufuyhndhvggnmn.iudynnkdhhyvynnv.sKhc-ceothrvdcmny0102030405060708090100QualityofGPreportingtransparencyFundtermsconditionsGrowthinfundsizecomparedwithaGPspriorfundOverheatingheightenedcompetitiondecliningreturnsinspecificPEmarketsStrategydriftbyGPsContinuitysuccessionissuesRespondentsWinter2012-13Winter2005-06Chart27LPsConcrnsnthCurrntFundrasngenvronmntSourceCollerCapitalGlobalPrivateEquityBarometerWinter201213p.6 DUANEMORRISINNOVATIONSINGLOBALPRIVATEEQUITYLAW25LeftandAboveSuzanneKriscunasManagingPartnerU.S.TheRiversideCompanywithNanetteHeidePartnerDuaneMorrisLLP 26Todayironicallyforgoodcompaniesyourepayingprettyfullprices.Ibelievethatatthelowerendofthemiddlemarketyoucanalwaysfindoutperformingcompaniesinalmosteveryindustry.Badcompaniesarenottradingbutgoodcompaniesareattractingveryfullmultiplessoyoucantexpectveryhighmultipleexpansion.YoureallyhavetobaseitonourownabilitytocreategrowthandEBITDA.KartenLangerPartnerEurpeOneoftheadvantagesthatRiversideoffersinvestorsisthattheycouldcommitlargerdollarstousandtapintothesmallerpartofthemiddlemarket...andhavejustoneGPrelationshiptomanageratherthanseveralsmallerfundsthattheythenhavetotrackandattendannualmeetingsandthatsortofthing.suzanneKriunaManagingPartnerU.s.THERIVERsIDEcoMPANYTHEWoRLDAccoRDINGToDealvalue8Realizations69secondariesgrowdisproportionatelyAdd-onsnowcloseto50ofU.S.buyoutsFundraisingupforthird-straightyearto138billionFewerlargerfundsabsorbingincreaseLPsprojectingincreasedallocationtoPENoRTHAMERIcA2012 DUANEMORRISINNOVATIONSINGLOBALPRIVATEEQUITYLAW27ThegreatestopportunityinAsiaPacificistheglobalizationoflocalbusiness.WecantakecompaniesthathavegottentoobigandcomplexforonepersonandsayLookwecanhelpyouexpandthatsandboxgofromAustraliaintoKoreaorgofromJapanintoChinaorgofromSingaporeintoIndia.Theyarethekindsofopportunitieswethinkarehugeatthelowerendofthemiddlemarket.simnFeiglinPartnerAiaPaifiDealactivityup130to20billionHighlyrelationship-drivenamuchlessintermediatedmarketExitscontracted60-to4.5billionFundraisingflatyearoveryearat34billionLargerfundstooksharenow52ofcapitalraiseDealvaluedowntoeight-yearlow-55billionExitsfallbyalmost50-to51billionBigfundraisingincreaseup40to54billionESGnowmajorfundraisingdecisionpointRegulatoryregimesstiffenfavoringcurrentplayersEURoPE2012AsIAPAcIFIc2012 28 DUANEMORRISINNOVATIONSINGLOBALPRIVATEEQUITYLAW29EuropeTheslowGrowthMarketWwvsngongnuofndonseuozondssssngndeuopndksszngfxpnngougpod.askdyJonhugodofmaJffsco.euopsovdfognyoonoonondonsgongokongo.27tdovouofdealsstruckin2012hit687billiondown5.4percentfrom2011butinthefourthquarteritincreasednearly100percentto218.9billionwhichwasthehighestlevelinthepastthreeys.28SeeChart28.Chart28europanMAActvty-Annual01000200030004000500060007000800002004006008001000120014001600NumberofDealsValueofDealsUSbnEuropeanMAactivitybyIndustrySector2012-ValueValueUSbnNumberofDealsSourcemergermarketMARound-UpJanuary142013eUROPeANeCONOMYFiNANCiALCRiSiSiSAPOLiTiCALCRiSiSTHATWiLLReqUiReALONGTiMeTORiGHTiTSeLFtsovgndsseuopnsuof2011ndyokdsysussodssnojusnonondfnnssuposs.tposskongogsovdspsuundpdoogy.buinksnonoupsngfopongssovduspopsngsovngngdonndopskov.KsnlngtrvsdcopnyINNOVATIONSINGLOBALPRIVATEEQUITYLAW 30tuKndindondfogooonofmadwny22-nkbydvfoowdbyGny20percentandCentralandEasternEurope18.5n.in2012eononodeozononbd56nofoeondealmarketcomparedtothe44-percentcontributionbyeozonon.29ind-kfneozondbyvndnbond-own2001offdonooupbeatU.S.market.SeeChart29.pvqydvoondonbodmakwvofdfngover20percenttoabout55billionaneight-yearow.sc30.tnbofvqydealsalsofelltoaneight-yearrecordlowto709.Buyout55percentandgrowth18percentdealswdngyofdbyvwfofngbyo30nndnngby65n.txnofo-fvonwondfoov65nofdvndvofogy.tuKwovonyonngfoon35nofgggdvn2012wonyonofo-fvvkoownny.sc31.tgoodnwnnygvngwyogytoookdffbbodngolnhzzngngdofnndvrodGo.30KarstenLangerPartnerEuropeTheRiversideCompanywithPieroCarbonePartnerLondonDuaneMorrisLLP0100200300400500600050100150200250300350400NumberofDealsValueofDealsUSbn111.7161.8161.4155.964.078.671.154.9731926101912027669559277090500100005010015020025020052006200720082009201020112012Add-onLeveragedBuyoutCarveoutManagementBuy-InManagementBuyoutPublictoPrivateGrowthChart29eurozonU.S.Mid-MarktMAActivityChart30europPeActivityDclinsin2012NumberofPEDealsBuyoutGrowthDealValueBbyRoundTypeSourceDowJonesSourcemergermarketMARound-UpJanuary142013EurozoneValueUSbnUSValueUSbnEurozoneNo.ofDealsUSNo.ofDeals DUANEMORRISINNOVATIONSINGLOBALPRIVATEEQUITYLAW31lkunsmvynznnnnnggnvng-qmk.wgnzkunsgngkgmnngnvqyn.innenpemvgnnywithdrypowderatanestimated75billion98.11nngpqn.31in2012mnngnxnnmznebitdaym2011vmknm-mkmn.sc32.tmvmk10.6-mebitdan2012nng10-mebitdain2004.THeGOODCOMPANYBADCOMPANYDiCHOTOMYfngnnm-mkynyvnmnynnnvmngnngmxnnnebitdag.tygmnyyngy.bmnnnggmnngvymynxvygmxnn.KnlngtrvcmnySTABLeeCONOMieSANDSTABLeSeCTORSBUTSOMeTiMeSiTPAYSTOBeCOUNTeR-CYCLiCALsnn-ngnmnnmnmnm.hnGmnyxmmymngmnngniy.tnn-ynnvnsne.agxmnmntnGygqpgmnymvnnynyg.anmmkynynmngmnnmvyny.tvgnny1500yvnjne.Knlngtrvcmnypynngnvnmnnvngxnvngngn.asmntymngngdcavypnmkoxnu.s.-nvmnmmgnyemm-vnmnmnn--gnnnennymkkngnynnn.32tvny0510152025200420052006200720082009201020112012Multiplex-AverageOverallMid-market30.465.357.453.732.734.919.620.819.021.522.215.46.19.113.65.114.615.017.611.44.92.78.65.011.721.55.86.50.44.91.21.915.34.46.23.51.63.47.63.10.010.020.030.040.050.060.070.020052006200720082009201020112012UnitedKingdomFranceGermanyNetherlandsSpainChart31OfLargsteuropanPeMartsOnlyU.k.SsDalValuincrasn2012LargestCountriesbyDealValueMBuyoutGrowth2005-2012SourceDowJonesChart32europexteBiTDAMultplsSourcemergermarket 32ghhaxpeggy2012.ayylyccbshuKGhbydhh-khghuKpek.uK-hqvqyh10100vgaccountedfor45percentofallUKbuyoutscompletedy.33thgvhgh-qy--z.aaylycv2013gh-khkuK.iNVeSTiNGiNTOADiFFiCULTeNViRONMeNTPUTFOOTONTHeGASReCOVeRYiSONiTSWAYcyhefvhvygh12hhhh.thghvyhghhgg.sivyyh2011hhghvyyhyg.bszghyc-ceothrvcyCONViCTiONiNMANAGeMeNTANDOPeRATiNGTeAMSASWeLLASiNANACTiVeAPPROACHwgebitdayhghvhvhyhhghygghkh--hhhgkhhvyhgh.ihghhyghx.ihhvyy.sKhc-ceothrvcyReALizATiONSFALLSTeePLYthvevqyxy50percentto51billionin2012fromtheeight-yearrecordpeakof96billionin2011.SeeChart33.thxhy.ighhekyvghyghzhgd15hhghhyvhy.34maaccountedforabout57percentoftheexitsbyvaluefollowedbysecondarybuyoutsat40percentwithipoh3.BeSTDeALSiNGeRMAN-SPeAkiNGeUROPeANDCeNTRALeUROPenhehvqhh.oehvG-kgece.thng.thuKygvyh.thapvhga.bszghyc-ceothrvcyovhhyyyhvma2012hyv50hexits.SeeChart34.Havinghoardedcashsincetheg-Chart33europanPeextsStruggln2012NumberofPEExitsMAIPOSecondaryBuyoutDealAmountBSourceDowJones34.373.785.175.027.357.696.150.920024129627519034439426801002003004000408012020052006200720082009201020112012MASecondaryBuyoutIPO DUANEMORRISINNOVATIONSINGLOBALPRIVATEEQUITYLAW33vuy.b-nnnfvquyffdvyfmagy.rfngunnynhhknddgkhipokfhjufux.shfngGphvundtostrategicssuchasKKRssaleofa45-percentstakeinAllianceBootstoWalgreensfor6.7billion.TOUGHMARkeTqUieTexTeNSiONSBUSTeDAUCTiONSANDTHeNeeDTOMOVeiNVeNTORYihnkyuynufquxnnhfhnnydy50n60ngnxnnvdkngynvnjuh.thnufunhhghhnvnfuhfdhjudnhnuhnnvnughhghxdhdfundng.myfnghhfudunhghhnnfquh.thgdngdndhdnjudnd.igngddnhduungfffund.KnlngthrvdcnyRiSeOFASiANBUYeRSBULGiNGCORPORATeBALANCeSHeeTSwneugnfanuy.thnufnhhvndchnndhannhghinthelast12to18monthsthanitsbeeninanyquvnd.thyuyngvyhngfhngyndk.anhfunhnhyvvnnnndhyngndnndngh.KnlngthrvdcnyFUNDRAiSiNGCOMeSTOLiFewnhhkuzngnyheunfundngkhdunxdnghyundngn2012.thdhvyhdndnudnghgnvgndndnggununhdfnunnnvnn.KarstenLangerPartnerEuropeTheRiversideCompanywithPieroCarbonePartnerLondonDuaneMorrisLLPChart34ScondaryBuyoutsMaUpOvrHalfofeuropanPeetsn2012PercentageofPEExitsMAIPOSecondaryBuyout4434334556474746465455544346505210121111831010203040506070809010020052006200720082009201020112012MASecondaryBuyoutIPOSourceDowJones 34Chart36europanScondarsJumpn2012AllocationofCommitmentsbyFundTypeBasedonfinalclosingSourceDowJonesChart35europanFundrasngGrowsn2012CommitmentstoPrivateEquityFundsBasedonfinalclosingSourceDowJonesPrivateequityfundraisinginEuropereached54billionacross72fundsin2012.SeeChart35.Thevalueoffundsraisedjumpedover40percentandwasthehighestamountsince2008.Ameaningfulnhnhfndyfndnngf2nyvn201128percentin2012.SeeChart36.Inpartthesefndgnghnydyngnnehxdngennkndnnndnzhnnh.whhnvndhfnhnffndyhn25nefdhundsnngvgfndznnvnzdhnfGp.bnmhyngngdpfadvxndhvnkngthhndfffhghfnddhgghndffhfnyny.thnyhvnvnggghnhnndkhygd.35RiSeOFDiReCTiNVeSTMeNTSANDFAMiLYOFFiCeSwdnvnnhndfhd-k.iknfxonthhvddnvnne.ifhhgyhyfndhyhvhhhynnlpGpnddffyhhngvhngn.ihnknhnfhngdffnyxn.wnyfyff.cynkndhnnfddhnnynhnvkfyffndhfhhfndkfhk.Knlngthrvdcnycdhundsegincreaseintheshareof5billion-plusfundsraisedlastyear.Boththissizeandthe1billionto5billionvhhhyghn2012ndghaccountedforover70percentofcapitalraised.See218269276215116919772010020002040608010012014020052006200720082009201020112012FundsRaisedB95.9107.6116.9101.648.935.538.254.07678627867639062868910774434352124102111322810816971515010203040506070809010020052006200720082009201020112012FundOfFundsSecondaryOtherMezzanineVentureCapitalBuyoutsCorporateFinanceofCapitalRaised4543433177101010101151316148131216510191814162218173825343113523545272822354518270102030405060708090100200520062007200820092010201120125B1B-5B500M-1B250M-500M100M-250MUnder100MChart371BFundSzAllocatonRssneuropn2012AllocationofCommitmentsbyFundSizeBasedonfinalclosingSourceDowJonesBuyoutsCorporateFinanceVentureCapitalMezzanineSecondaryOtherFundOfFunds DUANEMORRISINNOVATIONSINGLOBALPRIVATEEQUITYLAW35Chart37.InadditiontocullingofGPsanothernewyfhefgmkhvvfyhkkmyggmk.thhygGpfvfgbGpf.ReLATiONSHiPSANDVALUeSAReBeCOMiNGMOReiMPORTANTrhvbmgmmhybmgmh-b.whhhhgkvmhff.obvykmbhyhvhkvym.ivbmggyhgkbvmhesG.eyhgelphvfyvgmmkhhykhkhhyywmggymyyhmhhvhhvyfy.Klgthrvcmywbvhkykmmghfmhghmybfvhghfhe.thccvyfkyhemhmnhama.Jvhffvbvhhgfbemhmhgh-qybfhyh-qbvhhbmu.s.bgfv.amjyflpxbyfehmhy-q-hfvhvhxfnhamavy.36SeeChart38.ihghfgvmggmbfGpg-by-m.thbmvyhfmgbfhhgg.thhfl-bdksyhmvhh.ryfmmkpmhobgvmmyhhfgbyfgfvghfhghhvhv.37ATTRACTiVeASSeTCLASSWiTHFUTUReReTURNSGeNeRATeDMOReFROMOPeRATiONALiMPROVeMeNTSihkbvyvvq.ihkhfmbhmkmg.ihhyfmbfmh20yghy-10010203040506070InAsiaPacificInEuropeInNorthAmericaDecreaseIncreaseChart38expctdChangnBuyoutDfaultRatsovrthNxt2-3YarsLPVwsSourceCollerCapitalGlobalPrivateEquityBarometerWinter201213p.9 36hgnhqkgnyyngnnnhn.fngnnnnnynghhnhny.KnlngthrcnyReGULATiONTHeMARkeTLOOkSLeSSiNViTiNGinnhhnghennyhgnqynynggnnnngnnghGpnlp.ahhgnnyngnnynnnny.whnhengnngngqynnghyngnkennnennnh.inhGpnengyjnnngnnnynghgynxqn.Gpnlpygnhhnnnnnqnhngconcerntiedwiththemacroeconomy.SeeChart39.thnggnhxnhnehaninnfnmngdaifmdhhhnggyknnnnhenunn.bynghnxyGpkhnhaifmdxnng.tnhnnbiiinhvkrhd-fnka.biiingngnqnnnnkhxhynnqy.syhvkrngnkqngnngnhnnqyhgn.th.inynkhnnqypqnnh16nkngnhxhgngnny60nxnnhnnn.38ohnkyhqynsnyiihhkyhennyynnhyngqnkngn.thu.s.fgnanntxcnafactannxngnhhnggnn-u.s.nnhn.annsnnhunshhnxn.ReGULATORYCHALLeNGeSDeALWiTHiTANDTAkeADVANTAGeOFiTwhhnyhyhhgyhxnyhnh.ihyhnhynhnhhnnhnhny.rhnhnnrghh.whnnqnhnhnnnghnhgnhx.bszghyc-ceothrcnyChart39kyChallngsFacngthPrvatequtyindustryPercentageTotalResponsesSourceGrantThorntonTheSearchforGrowthGlobalPrivateEquityReport2012November20121515108766555513RegulationMacroeconomyCompetitionFundraisingIRPerformanceDealflowPEmodelPricingExitingTaxPEPerceptionOthers DUANEMORRISINNOVATIONSINGLOBALPRIVATEEQUITYLAW37onngnlnlwlllnggnll.snnnnknxnnvgnnn.tlnnjnlnngngllvlnnl.sKlc-ceotrvcnSiLVeRLiNiNGiNiNCReASeDPUBLiCiTYANDReGULATiONinkvnllnnglnnnngnglnllngn.allnglllvlnng.inkgnnvnnlnlnnnl.inngnlgnnngvnk-nlnlv.rvqg-l.iknnl.txnlknnllgng.wlgvqllinkgjngn.blszgc-ceotrvcninkgnnng.ynkngnlgnnnkngnnn.tnl.anqllnqnllxnninklnlnn-n-lnk20nnqlllxlgn.inklllgGpkngnqlnlllvnnng.allllgnn.svnKlnunvcginu.s.ld-fnknnxngpe.d-fnknxlnnllGp.alGpnnnlglnnn.sngnllnnnnnllllnnlnnv.id-fnkglnnnngxngGpllnlnn.innknvqk.tkxnnlvg.tlvgnvvnglvgnk.tlgglnnknnvvnglvg.td-fnkglnvqknklnnllllGp.svnKlnunvcgTHeGOODANDBADOFDODD-FRANkfvinknngng.iknnnllnnnllnnnll-nv.cllngd-fnknnknvnmsnnnnllvqnk.annd-fnkknnvq.phnkncootrvcnonglnk-vnnvlvlnvnnllngvnnesGk.innvqnvnnlknvn 38hidmndohiinomion.thmnydiuhingGpodesGdilou.anGnthononuyoundhhldingdihhiomoikdiloubomingbicombinedwithregulationandLPpressure.SeeChart40.RiVeRSiDeAPPROACHTOeSGGOeSASTePFURTHeReSGVANDWHYWeAVOiDCHiNAwullyoesGinnllyesGvhviolu.whndlmlunoouniyhylookinnilmngmnndgohbuhylokdoluhomnyoniesGvhhnionmnloilgonnndluikndoouniithlooyomkmony.wblihyoundoihilloddinglubkoholdinhihli.wlookoomnihdoinghinghighy.pohihyoidingionoholdhnoiningoxmlinminlndchinighnobubuinhiloomohoesGviuioohllngingou.simonfiglinthriidcomnyManagerawarenessValuedriverLPpressureDealselectionRegulationPerceivedbestpractice20122011Chart40DrvrsofeSGAdoptonPercentageTotalResponsesSourceGrantThorntonTheSearchforGrowthGlobalPrivateEquityReport2012November20122842211120101722101045 DUANEMORRISINNOVATIONSINGLOBALPRIVATEEQUITYLAW39 40 DUANEMORRISINNOVATIONSINGLOBALPRIVATEEQUITYLAW41AsiaPacificAGrowthMarketPerspectiveandohrgonhownghrongonogrowhnddonrdrnfoownghgobfnnr.inonroeropanonrhvrvyhhyroononvronnndgnfngrowhprop.ahond-rgonoyntheworldandgrowingat7percentto8prnpryrchnrnhjoronongnnhrgon.thkfornrvdnvronnyhfhanronndwheropndhundsprpd.lyrhrgondvyroslightly3percentfrom2011with368billionworthofdeals.SeeChart41.Thislevelofactivitycontributedto16.4percentofgobman2012.chnonfornry30prnofhadvfoowdbyJpn16.6prnar10.6percentandSingapore10.4percent.arfdnhchnndindnrkanprvqydvygrwrecord130percenttoover20billionin2012.SeeChart42.Thevalueofdealshasrisensteadilyfrom2009whichisinonrohnbrofdhfbymorethan30percentto128deals.Hencevrgdznrngnhrgon.thrngdvyrfdnoonypovrknnbohrpdgrowhpropofhrk.Gongbkfro2003ohprnhvrgtransactionvolumeis57dealsperquarterwithameanvalueofapproximately150onprd.39AChart41Asia-PacificMAActivity-Annualexcl.JapanSourcemergermarketRound-Upfor2012January142013Chart42AsianPeCapitalDoublsin2012NumberofPEDealsBuyoutGrowthDealValueBbyRoundType05001000150020002500050100150200250300350400NumberofDealsValueofDealsUSbnAsia-Pacificexcl.JapanMAactivitybyIndustrySector2012-ValueIndustrialsChemicalsValueUSbnNumberofDeals3.16.46.15.74.18.69.020.9651231961951642161861280501001502000510152020052006200720082009201020112012DealValueBNumberofPEDealsSourceDowJonesINNOVATIONSINGLOBALPRIVATEEQUITYLAW 42AGiNGPOPULATiONSMiDDLe-CLASSUPLiFTTRANSLATeTOiNCReASeDDeMANDFORHeALTHCAReSOCiALSeRViCeSANDeDUCATiONagumm.numggu.tumm-mkmmm-vuuvmgmgvuuuxg.tguuquuu.numgmuggggm.tggmvumuv.suvgxvnameuv20.smfgtrvcmGReATeSTOPPORTUNiTYiNASiAPACiSTHeGLOBALizATiONOFLOCALBUSiNeSSeSexPANDTHeSANDBOxtguapvquumu-.smcompaniescangrowtheirbusinessesto20millionofvu.bumuuggmxu.akgmgmm.tkmlkuxxgmauKgmJcgmsgi.tkukugmmk.tvmvmvgzu.smfgtrvcmovgzgvyearshasbeenunder500millionrightinthemiddle-marketsweetspotfornearly40percentofthetotaldeals.SeeChart43.Dealsbetween500millionand2billioncameinaclosesecondaccountingfor35.Gginthe101millionto250millionrangeisexpectedtovuggvumguveyug.40VALUeCReATiONLeVeRSWeADDVALUeBYGROWiNGBUSiNeSSeSANDCONTROLMATTeRSwvug.wuumvxmebitda.wm-m-vg.huguyumkuuvgmgmmmumummkguvgceo.wuceom.wucfom-m.sumkguuvggvvgguugu.tggvvguuugvu.tmmguuvggm.smfgtrvcmMinoritygrowthdealsaccountedfor85percentvu2012vu10Chart43Asa-PacfcPrvatequtyDalSBrakdownbyValuSourceAsia-PacificPrivateEquityOutlook2013ErnstYoung2012mergermarketdata27.136.522.829.928.27.710.713.88.210.729.818.835.361.936.78.733.911.913.326.816.311.12009201020112012Total5000m DUANEMORRISINNOVATIONSINGLOBALPRIVATEEQUITYLAW43Chart44MnortyStakeinvestmentsMorePrevalentnAsaPrivateEquityDealFlowAllocationbyStakeAcquiredSouceDowJones1416710761515868493909394858502040608010020052006200720082009201020112012MajorityStakeBuyoutMinorityStakeGrowthrnt.althoughmnortydlrtllbyfrthmotrvlnttyoftrntonnallychnthrhbnlghtutknmjortybuyoutnthrgonovrthlttoyr.sChart44.ThiscontrastswiththeUnitedStatesandeurohrmjortydln2012ountdfor68percentand64percentrespectivelyofthetotalnumbrofdlnthmrkt.imjortyontrolnryforrtngvluittoughqutonbuvnturnvtorhortvluuullydonothvmjortyontrolomgrothqutynvtortkontrolndomdont.andmotrvtqutynvtornanountrdonothvmjortyontrolnmotofthrdl.whnGpdonothvmjortyontrolthylltruturthdlthmnyontrolrghtnddondSimonFeiglinPartnerAsiaPacificTheRiversideCompanywasinterviewedbyKrishnaRamachandraManagingDirectorDuaneMorrisSelvamSingapore 44MainlandChinaAustraliaJapanIndiaSouthKoreaHongKongNewZealandTaiwanOtherSoutheastAsianhng.ihnkvfGpjnnhhgdhnhvngjn.svnKnunvchgADD-ONSANDPLATFORMSSAMeSTRATeGYWORLDOVeRBUTBiGBeNeFiTFROMiNTeR-ReGiONALPLATFORMSrvdgnddd-nnapndnhnghnhd.wkgngn.yhvhndndd-ndknhhvgnghhngnhngh.whvdn10dnap.sxhhvnndhhvndd-n.lvgngdhgnnndv.thndhmlcoavddxnahhgnndhen.thndnhdvdnhu.s.snfgnthrvdcnlkngandJnhvnhvkdvn2003.sChart45.Chinaisnumberthreeaccountingfor16percentoftheaggregatevaluewithIndiaat7percent.thnzndnghchnndindkhhdngkd.ReLATiONSHiPSANDCULTUReMATTeRahkhan-pgndngnnnnhnnn.thnhnnnnhdvngnndnnank.ahghndngndnvnnhhggnnnkng2013hnvhhhdngnndngGchnndsheanngdh.41SeeChart46.THiNkGLOBALACTLOCALWiTHOVeRLAYOFRiVeRSiDeCULTUReANDAPPROACHc.innhundshnnnnnnnapnh.ikngghngdnndddnnhjhhgh.ohnhnknndnnddhdhgh.whnkhvnhthnkghnhhhvknkgnngdngngdngnghngnhdndknghhn.bvhhhrvdndhhhvdnhdhnggndxn.thhdndkndkhd.snfgnthrvdcnAUCTiONSVS.ReLATiONSHiP-DRiVeNDeALSALL10DeALSDONeHAVeBeeNPROPRieTARYwk600dap.rgh-hdhdd.snnvnhnzng.mkn-Chart45Asa-PacfcPrvatequtyBuyoutsbyValu2003-2012SourceAsia-PacificPrivateEquityOutlook2013ErnstYoung2012mergermarketdata162221713323211 DUANEMORRISINNOVATIONSINGLOBALPRIVATEEQUITYLAW45eveeheuniese.deheeenbeeeinhi-ivenynviin.reyibgeingkneenhvingeenenynveyenehnhiveieinebeeheebghi.sinfeigintheriveiecnyRiVeRSiDePeOPLeTRUSTReLATiONSHiPSATTHeeNDOFTHeDAYiTSAPeOPLeBUSiNeSSaheenheyieebine.wenkeeeegingbebebieinhiihngehgingveheiveyeeegingbeneingihhennheingeene.reinhieiniiyihlpheyenihigniinn.sznneKintheriveiecnyanheeheeheeginiqikynvegingihheeeveekeiheeinennexeneingneiveveeinininienieenieheeiin.theginghiiinneiizinieegingheeeveheehiihghiieeingnveein.finyinvennngeeeny-eiinginingvbyainnnn-ainlpin2013.42DeALFiNANCiALSTRUCTUReSASiANMiNORiTYDeALMODeLiSMOViNGTOWARDRiVeRSiDeCONTROLAPPROACHmeheneinaienbeiniye.oenheyeeybigeinningihvieeegingkeibinhheegingkeney.thne.weeninveieninveneennnienvege5.2yengehniniyinve.wheeeiheehvee.theeyegheneeekinginveneheheeeeneveingai0102030405060708090100SouthKoreaJapanAustralasiaIndiaSoutheastAsiaGreaterChinaDirectfromcorporatestrategicPersonalrelationshipsAdvisoryintermediariesDirectfromPEPre-IPOInvestmentsMarketingeventsOnlineinformationalexchangesDirectmarketingChart46inYourOpnonWhatWllBthPrmaryMthodforSourcngAsanPrvatequtyDalsovrthNxt12MonthsnYourPrmaryRgonofFocusSourceErnstYoungAsia-PacificPrivateEquityOutlook20132012 46dngnnvnghydythnkyvymhwmchnndindndwky.bgvnwhhndnchnndindnngzhvdngnnvmnwhnnnhnhvhn.thhwyh.smnfgnthrvdcmnyReALizATiONSTAkeADiVelkehvan-pvqyxvychnndindndn2012ny60percentto4.5billionafive-yearlow.SeeChart47.Thenumberofexitsalsofellbutlesssharplyy21n.ahghhgnvdmqkymhgnnndnngmkndyhezndhwyhvngwngnnvnywhhndhhngnchn.innwhhundsndeipohvnhhhnnxnd2012ndforover90percentofliquiditybyvaluefollowedbyMAat8percent.IPOsalsorepresentedmostofthexynm.sndyymmvynmhnvndnghvsmallsize.SeeChart48.Thegreaterrelianceoniponakyhmmnwhgwhmkhmmvnv.lknghdndmngndnvvhipowymn2013ynGchnndind.43thhhdndnnnnnwnwmnchnwhhxhndnyvd.indhmndnh-hgdykdvngwhwhgwngngvqymn.anywdwnnhxmkkynglpqdhdngnhndymk.FUNDRAiSiNGReMAiNSFLATa-pndngchnndindwghdecreaselastyearto34billionwhichmadeforthreevyynwnhmkvd.SeeChart49.Moredramaticwasthedeclineinthenumberoffundsraisedwhichfellfrom139in2011to77in2012ornearly45percent.thdnhnmndwnnwhgndwgnddlastyearwiththe1billion-plusfundsizeincreasingfrom34percentoftotalcapitalraisedin2011to52nn2012.sch50.fhmn2007fundsofthe5billion-plussizeemerged.ThengnnchnndnddvymChart47AsanPeextMartFallsn2012NumberofPEExitsMAIPOSecondaryBuyoutDealAmountBSourceDowJones8.911.96.81.37.911.910.74.531217391327616652020406005101520052006200720082009201020112012MASecondaryBuyoutIPOChart48iPOsStrongstPeextMartnAsan2012PercentageofPEExitsMAIPOSecondaryBuyoutSourceDowJones2529103122151880123005667559876978807687010203040506070809010020052006200720082009201020112012MASecondaryBuyoutIPO DUANEMORRISINNOVATIONSINGLOBALPRIVATEEQUITYLAW47Chart50AllocatontoSmallrFundsFallsn2012AllocationofCommitmentsbyFundSizebasedonfinalclosingSourceDowJoneshlyhyhhghmggmkhbzlhfg.dhghfglmggmfGpgghghhflaglggfbyGPs.Preqincounts386Asia-focusedvehiclesthatareseekingtoraiseanaggregateof129.8billion.44thm21ffym17percentoftotalcapitalbeingraisedglobally.Themjyfha-ffhmkmgyfmghghnham-fmggjust15percentbynumberbut27percentofthell.45Ghfhmlfytargeting36billionincapitalrepresentingthegreatestshareor28percentoftotalcapitalbeingraised.Seech51.aflnmlyhfattractedtotalcommitmentsof9.4billion.46thmhyhlgfly7percentoffundsclosed.Thepopularityofgrowthfaflhmkyghmhhlkhu.s.hyhlfhmmflffm.whghxhlhlggllpehhkhhfll-f.thlKKr-ayftpGaviclylapiv.RiVeRSiDeNiCHeNOONeeLSeiNOURSizeRANGeomhllyffhapmk.whffylgll25yfmxhlhmlmkhhqfffmm.imfmhflkhgllglqyhllyylgmlllglly.whllmklgllChart49AsaPacfcFundrasngStabln2012CommitmentstoPrivateEquityFundsBasedonfinalclosingSourceDowJones83110124122113163139770501001500204020052006200720082009201020112012FundsRaisedB20.833.550.843.018.535.135.634.56433169742018101413181161820161521102182421142823372729313745402926343512170102030405060708090100200520062007200820092010201120125B1B-5B500M-1B250M-500M100M-250MUnder100MofCapitalRaisedChart51BrakdownofAsa-FocusdFundsCurrntlynMarktbyFundTypAsat16thAugust2012SourcePreqinSpecialReportAsianPrivateEquitySeptember20121208267362926871136.010.822.59.330.812.82.42.23.2020406080100120140GrowthVentureCapitalRealEstatePrivateEquityFundofFundsBuyoutInfrastructureDistressedPrivateEquityMezzanineOthersNoofFundsAggregateCapitalTargetbnBuyoutsCorporateFinanceVentureCapitalMezzanineSecondaryOtherFundOfFunds 48doooeoeevue.sofegtervedecoya-pbeedoueobeeooveod.aodgopeqh22012PrivateEquityInvestorOutlookstudy38percentofveooddeeeeegoueyeegebeveeooueeeeggke.neyjoveovegeoooaveequyveeejoygeg25eeoeoeveequyveeoeegoe7percentaretargetingbetween26percentand75ee.weedouzedougdeoogoGeeceoveegoolpdoeoeveoedeooeeebeveeooue.seec52.coeyyeeeeveodGpebeogoeogzoek.moeoeveouveyedbycoecbeeveeyveequyveocdidudeeedekovegeeoueuyodeguoyk.47seec53.moeoveeeuveyeeeeeeeyveoobeevedek-edequogegoeoeoovg.Juoveoveobeevegoudeeebeooueooedby-od-kebuyouudodebyeooothe49percentofLPsworldwidethatnamedthisfundtypeasmostfavorable.SeeChart54.Chart53earlyinvstorsAssssmntsofinvstmntRsknindaandChnaLPVwsCollerCapitalGlobalPrivateEquityBarometerWinter201213p.100102030405060708090100InIndiaInChinaRespondentsToooptimisticFairlyaccurateToopessimsiticChart54FundTypsinvstorsVwasCurrntlyPrsntngthBstinvstmntOpportuntsnAsaSourcePreqinSpecialReportAsianPrivateEquitySeptember2012121139121525540102030405060NoneSecondariesFundsMezzanineistressedPrivateEquityLargetoMegaBuyoutFundofFundsVentureCapitallltoMid-MarketBuyoutGrowthChart52CountrsandRgonsWthnAsaThatinvstorsFlArCurrntlyPrsntngthBstinvstmntOpportuntsSourcePreqin121333658010203040506070OtherJapanASEANIndiaGreaterChinaProportionofRespondentsProportionofRespondents DUANEMORRISINNOVATIONSINGLOBALPRIVATEEQUITYLAW49OUTLOOkVeRYBULLiSHABOUTPOSiTiVeMACROTReNDSANDPAYiNGLOWeRMULTiPLeSwvyvyllhap.thmndvyvnmgnglnndnmghndlndllyvnvynlvln.wyngxm.thnhnynhu.s.dyldlydghnnm.syggmngvlhgghndgmnmlnd.idnhnkhgnghnghnxhyl.smnfglnthrvdcmnyNeCeSSARYCOUNTRYCONDiTiONSDeMOCRACYRULeOFLAWiNDiViDUALRiGHTSANDRiGHTPOPULATiONSizewhvvddchnlhlmmnndihnkhlynhdnlhghmnyhvmdmndmnmnynchnnvngnvqy.ingnllkgndvldnhhlngkdlnnddmyhllndvdlghnd.illddnmnzln.ingnldlldnlgllnnmlln.blszghyc-ceothrvdcmny 50onbncwnicidiincimvmninh2013midd-mkgbivqiydmk.thmhcinhezncnihvbnncingndhmbcnmicnvinmninhunidswicnibhiimvmn.Although2007isnotbackandthemacroiibndxincdivqiyndhyingchgndwiindcivdinmginndhgb.awiinghiannrviwndiningcinndrividmngmnwdciddkbckvidviwnhmjihhvimicinnhniivqiyindyndiingndhkndpeindyimg.FUNDRAiSiNGCONSTANTLYeVOLViNGANDGeTTiNGTOUGHeRfndiingdynmicinidnmin.lngimlpinvgwingmhiicdcivnddmndinggingbyndcinyyckcdcxmininhcbicimincdingccinnning.thidiincndnhlpdcxn.evnminvxinghinwndngiingwcgc-invmnighndbihccnwihGp.ohkinghnxndmchmdmicbcmconlusionOINNOVATIONSINGLOBALPRIVATEEQUITYLAW DUANEMORRISINNOVATIONSINGLOBALPRIVATEEQUITYLAW51dnvmv.inddngngndymkvdngnvbyxmzndbnf.wnkngnundbnfndnnuugunkymnvyfnvbbnvdyndydynvnbuyufmd.tnduymungymnvydynmfxmGpff-nfundrvdc-ceosKuggunkybmfmbuknnduynd-by-dbugmnnvvuu.aggddnnddfbugfundnnmvnvnmnmzfmnngfund.hvmdd-mkfundgnngvyvungnggmnflp.inddngymvnufmdd-mkbunvybnyndbybguggndffnndmfundngngy.WeeDiNGOUTTHezOMBieSYeSABiGSHAkeOUTBUTTHeeARTHWONTMOVe2013ndmnujnbynduydfmngnn. 52pgggyxgadtgy-q-qygfundingpulledby2018andindustrysassetsundergky20xy.48wgrc-ceobszgyygyy.agc-ceosKygyggygygy.tkkygggygyggykyg.igggqy.hgy-z.by200suchfundsholdingasmuchas100billiontheydokg.49phkrcooyGpqggqggyiggxgwgggx.fxnGyyyhlvcy--yqykz.50Ggzyy-yzy.wglpggyGpz.PRiVATeeqUiTYSOUTLOOkiSTieDiNPARTTOiTSiMAGeWHiCHiSGeTTiNGBeTTeRtygqykmryu.s.ygyGpg.ijyg.hggyx.iy.mkgqygyggyg.wgqyygygggyk.tggeqygpsKyygyy.trygky.rc-ceobszgyqyg--ky.bgkgkygzgggg-g. DUANEMORRISINNOVATIONSINGLOBALPRIVATEEQUITYLAW53wnkrvkfnvqnvnnnvngnnvngnfnnnn.ongfnngenmkf-gnganmkngmvu.s.mkrvfmnmnnf.anvnmmzmmknxngnngnnv.wnmmfmnmnfnKnlng.tgnggnngvqmnnnnnngf25.annfivgmng.ynvfgngngnnnfv25coopmhnkn.wmnfvfvngngzfnvmnngmnrvnfmmk.ofnnm-mknvnmnnnnvmngnngfmxnnnebitdagxnlng.c-ceosKfmffnnnvfnwvnnvfkkngknng.anmnnvnnvmngnnngn.tngfngnnfnmknmfggn.anng.lpngnnglpngvnmnnvqgv.arvfnngmnmnffnvmnf.tnfrvlnggfnnfmmk.wrvnvngkngnfmkvf.StewartKohlandBlaSzigethyCo-CEOsTheRiversideCompanyTheRiveridestoryW 54ouunynmllymmvdveundnlynalnymllmnngndnngllumndul.hlngmnnlgnlgrvdllu.exeCUTiONANDCULTURefungnmlldlundldgnndnnndululllngndxlnyGpdng.rvdnyvngceoblszgyndsKllndnnqulnndnng20y.addyKlwuudlnnulydulvndulu.wdmngvlmnglynulyndnnmuluxuy.iyunkudlvngllujudgmn.illumnyulduyhmuuldywuldunwuldgywnuldllwuldrvdouldgrvdbunnlkndyKl.ilydgy.snnndlluxuymvmdynlylgndndnglgdjudgmngu.amggndngnnngnumngn.cululykylnmxunnddnnnmkl.bngkndlvnggdnnukceoblszgyxln.bnggdguyyullmdunvlnddnngundmnluunnu.hngmn.tmlknnlyd-kngmlullnjylkMostActvinvstorsn2012SourcePitchBook2013AnnualPrivateEquityBreakdownPresentationSlideDecTheRiversideCompany24RidgemontEquityPartners11WaudCapitalPartners9TheBlackstoneGroup21WarburgPincus11AEAInvestors8ABRYPartners20SunCapitalPartners10AltamontCapitalPartners8GenstarCapital19BairdCapitalPartners9CattertonPartners8BabsonCapitalManagement18BBTCapitalPartners9ClaytonDubillerRice8GTCRGolderRauner18BushODonnell9EnergyCapitalPartners8AudaxGroup17CharlesbankCapitalPartners9FranciscoPartners8GoldmanSachsCapitalPartners17ExcellerePartners9KohlbergKravisRoberts8TriangleCapital17GreyMountainPartners9MarlinEquityPartners8TheCarlyleGroup16HarbourVestPartners9MoelisCapitalPartners8H.I.G.Capital15KelsoCo.9NorwestEquityPartners8Investcorp12PlatinumEquity9OaktreeCapitalManagement8OdysseyInvestmentPartners12TheGoresGroup9TheComvestGroup8ThomaBravo12ThomasH.LeePartners9TPGCapital8NorthstarCapital11VistaEquityPartners9VisionCapital8THeRiVeRSiDeMODeLWHATMAkeSTHeFiRMSPeCiALTheprivateequityindustryhasgrownsignificantlyoverthepast25years.Itistrulyaglobalbusiness.Thelowermiddlemarketisoftenrankedhighbyinvestorsastheplacetheywanttoputtheirmoney.Onefirmhasachievedtheremarkablefeatofbecomingagloballower-middle-marketprivateequityfirmandaverysuccessfulone.LastyearinwhathasbecomeanincreasinglycompetitiveglobalmarketTheRiversideCompanywasthemostactiveprivateequityinvestor. DUANEMORRISINNOVATIONSINGLOBALPRIVATEEQUITYLAW55ceov.dgggkyK.ayggygyggvyyyg.hgygvqyvggk15vgvwyv25yyvgkygthatlastfrom800a.m.until800p.m.discussingggxszgy.iceocfo.nyk-ygrv.fywvvqyyylg.wkvyygyygvyvyv-gkgvy.ivggk.aguvycgsvKcvy.tGpvvgvkgk.mygg.tykGpvvyg.bgvk.exPeRieNCeexPeRTiSeANDGROWiNGSUCCeSSTHeWORLDOVeRa25yrvvgkggg360-gvyg.ijggggyg.tg-ggg.tygyvkKywkgyygyebitdag.agrvgxgk.tygyggy.hgrvv50312v.aglgty-vv.egkrvgk-x.wxvzylgykgkggvxgz.tggv-g.aKxiygy25yy10yyvkgggyvyygvgg.iyg.wikikggkgggggg.ikygygyygyykygyygg.wgg.wgyxy. 56ourcntributrSiMONFeiGLiNpmatRiversideCompany.HejoinedRiversidein2007.Mr.Feiglinisatransactorforraf.prm.fgmggdsokspvpcdcbiZi.pmgpawspfaGsc.m.fgm.b.a.Kggsmgnub.b.a.umg.wumg-gognbanfl.m.fgmatcgus.PAMHeNDRiCkSONcogotrcnyk.m.hkjr2006.brm.hkk22Jpmgc13pbkdhggu.s.pbk.smggdGhlglqpmggdcogou.s.pbk.m.hkm.b.a.fmkgKggsmgnub.a.pphdku.m.hkacGGp-eacGGb.simnFeigling.PamHendriknk. DUANEMORRISINNOVATIONSINGLOBALPRIVATEEQUITYLAW57NeubauerFamilyDistinguishedServiceProfessorofEntrepreneurshipandFinanceUniversityofChicagoBoothSchoolofBusinessSTeVeNkAPLANtttgtqtytt.hlbotqtyttt.htttsthtttggyt.pKtm.b.a.xtttqtytgttgtgt.httqtyttygttt.bktt12ttty.pK-ttgtbt.wtttttbttttnvtChallengewhichhasspawnedmorethan100companiesthathaveraisedover250millionincludingGrubHubbtb.htathtcafmgt.htyctvtsxit.httKfpgtgtttggttg-gttivtctattcgntatctdt.pKp.d.behuty.ha.b.amttehcg.pKcrcgttt.stevenKaplanFacultyDirectorofChicagoBoothsPolskyCenterforEntrepreneurshipINNOVATIONSINGLOBALPRIVATEEQUITYLAW 58STeWARTkOHLc-ceotrcyClevelandOhio.HejoinedRiversidein1993.tgbszgym.Kgr-ric.brm.Kvpcvccooncbawgd.c.m.Kb.a.eGocg.ho.hofIndependentCollegesHallofExcellencein2009.Heisalsoaparticipantonccwilb.SUzANNekRiSCUNASmggptrcydtx.m.Kjr2001.sfmgrcaf.sgqg-rcaf.brm.Kmggdc-lgypcp10ymggdmbkgGboccdqyzzgbocp.ssvpmvcvpimGfmg.m.Km.b.a.fifm.a.fliuyb.a.fduy.ourcntributrstewartKhlky.suzanneKriunaky. DUANEMORRISINNOVATIONSINGLOBALPRIVATEEQUITYLAW59kARSTeNLANGeRptrcygrefyybbg.hjr2006.im.lgwctepeqyvcaevcayJ2012.brm.lgmggpmai..gqe.hwwGeceygcogotipmscbd.hwdkbkcg.m.lggmgeapesmgwescpepoxbgecgbs.BLASziGeTHYc-ceotrcynwYorkoffice.Hefoundedthefirmin1988.tgwswKm.szgygr-ric.prm.szgywvpgckn.a.hgiaifcuyb.a.pygyfocg.KartenLangerk.blaszigethyzgyy.INNOVATIONSINGLOBALPRIVATEEQUITYLAW 60 DUANEMORRISINNOVATIONSINGLOBALPRIVATEEQUITYLAW61AboutDuaneMorriswithxrinrivtquityyrrurgbtruiththcapabilitiesofmorethan700lawyersacrossallpracticesDuaneMorrisofferstheresourcestvinrnrtintrtgyxittrntivntxthnningtiiztrntinvurrnbuyrurtrtinyrtinunlpGpnrtinunnthrinvtnttruturnvilpn-invtntirtinvtntnrtunt.ourpefruncnntinubitinntributtththughtrhithinutry.Givnurtrtgiiriunthpebrxrininjrinutrytrnninnvtivuturyitttintrvirrguryuntrkithbthnynrththititnningyrinthrivtquityrkt.dunmrriirutbnoiisnrGrthsmthaitinrcrrtGrthacG.INNOVATIONSINGLOBALPRIVATEEQUITYLAW 1MergermarketMARound-Upfor2012January142013.2Ibid.3ErnstYoungLLPSays2013DealActivityWillRemainNear10-YearLowPressReleaseErnstYoungDecember52012.4FrancescoGuerreraItStillIsntPartyTimeforBuyoutsTheWallStreetJournalFebruary182013.5PreqinPrivateEquity-BackedBuyoutDealFlowinNorthAmericaReachesPost-LehmanHighin2012PressReleaseJanuary42013.6PreqinPrivateEquity-BackedBuyoutDealFlowinNorthAmericaReachesPost-LehmanHighin2012PressReleaseJanuary42013.7HamiltonLaneMarketOverview201220132012p.9.8TheTriagoQuarterlySeptember2012p.2.9ShashaDaiRiskyBusinessPEsDividendRecapGoldRushDowJonesPrivateEquityBeatJanuary102013.10Ibid.11PitchBook1H2013PEFundraisingandCapitalOverhangReportJanuary242013p.6.12DavidCareyBuyout-BoomShakeoutSeenLeavingOneinFourtoStarveBloombergFebruary122013.13PreqinPrivateEquityFundraisingSeesSmallImprovementin2012PressReleaseJanuary32012.14DennisBermanWordfromDavosPEIsComingBackBabyDowJonesPrivateEquityBeatJanuary232013.15MichaelCorkeryPensionsBetBigwithPrivateEquityTheWallStreetJournalJanuary242013.16AaronCunninghamYaleForeseesPrivateEquitytoLeadinPerformanceVolatilityPensionsInvestmentsDecember202012.17DanDunkleySovereignWealthFundsPoisedtoBridgeFundingGapFinancialNewsJanuary212013.18Ibid.19RobertS.HarrisTimJenkinsonandStevenN.KaplanPrivateEquityPerformanceWhatDoWeKnowNBERWorkingPaperNo.17874February2012.20NationalCenterfortheMiddleMarketLeadingfromtheMiddle2012NationalMiddleMarketSummitOctober242012.21ErnstYoungLLPSays2013DealActivityWillRemainNear10-YearLowPressReleaseDecember52012.22PitchBookThe2013AnnualPrivateEquityBreakdownJanuary102012p.2.23PEPlayersBeattheBuy-and-BuildCurseunquoteJanuary172013.24CollerCapitalGlobalPrivateEquityBarometerWinter201213p.5.25PitchBook1H2013PEFundraisingandCapitalOverhangReportJanuary242012p.3.26CollerCapitalGlobalPrivateEquityBarometerWinter201213p.6.27AnupreetaDasandDanaCimillucaSameOldSameOldintheMergersArenaTheWallStreetJournalJanuary12013.28mergermarketMARound-UpPressReleaseJanuary142013.29mergermarketMARound-UpPressReleaseJanuary142013.30JenniferBollenDanDunkleyandKielPorterEuropeDifficultbutStablefor2012DealsPrivateEquityAnalystDowJonesJanuary152013.31ReneSchultesPrivateEquityDealorNoDealTheWallStreetJournalJanuary92013.32JenniferBollenDanDunkleyandKielPorterEuropeDifficultbutStablefor2012DealsPrivateEquityAnalystDowJonesJanuary152013.33Resilient2012CreatesPlatformforLowerMid-MarketGrowthin2013LyceumCapitalPressReleaseJanuary212013.34ExitMarketHits15bninDecemberunquoteFebruary72013.35Ibid.36CollerCapitalGlobalPrivateEquityBarometerWinter201213p.9.37Anne-SylvaineChassanyEx-PermiraPartnersinTalkswithWealthFundsFinancialTimesFebruary132013.38PreqinBanksAppetiteforPrivateEquityinLightofRegulatoryChangesJuly132012.39ErnstYoungAsia-PacificPrivateEquityOutlook2012p.44.40ErnstYoungAsia-PacificPrivateEquityOutlook20132012p.16.41ErnstYoungAsia-PacificPrivateEquityOutlook20132012p.25.42ErnstYoungAsia-PacificPrivateEquityOutlook20132012p.31.43ErnstYoungAsia-PacificPrivateEquityOutlook20132012p.2.44PreqinSpecialReportAsianPrivateEquitySeptember2012p.4.45Ibid.46WanPingChia2012PrivateEquityFundraisingDifferencesBetweenAsiaandNorthAmericaPreqinNovember272012.47CollerCapitalGlobalPrivateEquityBarometerWinter201213p.10.48DavidCareyBuyout-BoomShakeoutSeenLeavingOneinFourtoStarveBloombergFebruary122013.49JonathanShieberNewGlobeCapitalLaunchestoRidPrivateEquityofZombieFundsDowJonesPrivateEquityBeatFebruary122013.50Ibid.NotesThispublicationisforgeneralinformationanddoesnotincludefulllegalanalysisofthematterspresented.Itshouldnotbeconstruedorrelieduponaslegaladviceorlegalopiniononanyspecificfactsorcircumstances.Theinvitationtocontacttheattorneysinourfirmisnotasolicitationtoprovideprofessionalservicesandshouldnotbeconstruedasastatementastoanyavailabilitytoperformlegalservicesinanyjurisdictioninwhichsuchattorneyisnotpermittedtopractice.INNOVATIONSINGLOBALPRIVATEEQUITYLAW www.duanemorris.comDuaneMorrisFirmandAffiliateOfficesNewYorkLondonSingaporeLosAngelesChicagoHoustonHanoiPhiladelphiaSanDiegoSanFranciscoSiliconValleyOmanBaltimoreBostonWashingtonD.C.LasVegasAtlantaMiamiPittsburghNewarkBocaRatonWilmingtonCherryHillLakeTahoeHoChiMinhCityDuaneMorrisLLPADelawarelimitedliabilitypartnership