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The Impact of Effective Deal Sourcing Capital Roundtable Conference November 10 th , 2014 S utton Place Strategies, LLC Deal Origination Analytics Sutton Place Strategies is dedicated to meeting the business development needs of private

SLIDE 1

The Impact of Effective Deal Sourcing

Capital Roundtable Conference

November 10th, 2014

SLIDE 2

Deal Origination Analytics™

Sutton Place Strategies, LLC

Sutton Place Strategies is dedicated to meeting the business development needs

f private equity and mezzanine firms.

The firm’s core service is Deal Origination Analytics™, which consists of a customized report package designed to quantify the addressable universe of a client’s transaction target market, measure market penetration, and serve as a road map to increase the effectiveness of a firm’s internal deal sourcing efforts. The reports are backed by proprietary data tracked on a primary basis by Sutton Place Strategies since May 2009.

SLIDE 3

Presentation Materials Usage

Sutton Place Strategies, LLC

All materials in this presentation remain the intellectual property of Sutton Place Strategies, LLC (SPS). SPS grants a limited, personal, non-exclusive, non- transferable, revocable license to access, display, and use such reports and downloadable content for non-commercial purposes only. Any republication of Sutton Place Strategies reports or downloadable content must include proper citation to SPS or be explicitly approved in writing by Sutton Place Strategies’ authorized personnel prior to republication. All rights not specifically granted herein shall be reserved to SPS.

SLIDE 4

LTM September 2014 Intermediary Breakdown*

Sutton Place Strategies, LLC

*Based on completed PE and M&A transactions in LTM Sept 2014 $10+ MM in transaction value with intermediary identified. **Total exceeds actual number of deals closed in LTM Sept 2014 due to multiple intermediaries on some transactions.

Out of 787 Active Intermediaries, 553 (70.3%) Completed Three or Less Transactions in the LTM September 2014 Period

Firm # of deals % of total Cumulative % of Total Houlihan Lokey 98 2.6% 2.6% Goldman Sachs 82 2.2% 4.8% J.P. Morgan Chase 68 1.8% 6.6% RBC Capital Markets 66 1.8% 8.4% Evercore Partners 60 1.6% 10.0% Morgan Stanley 60 1.6% 11.6% William Blair & Co. 59 1.6% 13.2% Raymond James 58 1.5% 14.7% Jefferies & Co. 56 1.5% 16.2% Barclays Capital 53 1.4% 17.6% Harris Williams 51 1.4% 19.0% Bank of America Merrill Lynch 49 1.3% 20.3% Moelis & Co. 48 1.3% 21.6% Lincoln International 46 1.2% 22.8% Piper Jaffray & Co. 44 1.2% 24.0% Sandler O'Neill & Partners 44 1.2% 25.2% Citigroup 43 1.1% 26.3% Robert W. Baird 42 1.1% 27.4% Lazard 39 1.0% 28.5% Generational Equity 38 1.0% 29.5% Stifel, Nicolaus & Co. 38 1.0% 30.5% Credit Suisse 37 1.0% 31.5% # of Firms # of deals % of total Cumulative % of Total

10 Completed 21-30 Deals 238 6.4% 37.8% 41 Completed 11-20 Deals 567 15.1% 53.0% 7 Completed 10 Deals 70 1.9% 54.9% 12 Completed 9 Deals 108 2.9% 57.7% 9 Completed 8 Deals 72 1.9% 59.7% 23 Completed 7 Deals 161 4.3% 64.0% 21 Completed 6 Deals 126 3.4% 67.3% 41 Completed 5 Deals 205 5.5% 72.8% 48 Completed 4 Deals 192 5.1% 77.9% 71 Completed 3 Deals 213 5.7% 83.6% 131 Completed 2 Deals 262 7.0% 90.6% 351 Completed 1 Deals 351 9.4% 100.0%

Total**: 3,744 100%

SLIDE 5

Private Equity Deal Origination

Sutton Place Strategies, LLC

500 Opportunities Reviewed 50 Considered Carefully (~$4,000-$20,000 spent per relevant opportunity)

2-4 Closed Transactions

 Typical approach to enhance deal flow is to spend additional time and money to increase opportunities reviewed

Deal Sourcing Budget

$200,000- $1,000,000/year

Buy-side Brokers Direct Target Marketing Boutique Intermediaries Middle Market Investment Banks

Annual Deal Flow

SLIDE 6

Private Equity Deal Origination

Sutton Place Strategies, LLC

Deal Sourcing Budget

$200,000- $1,000,000/year

Buy-side Brokers Direct Target Marketing Boutique Intermediaries Middle Market Investment Banks

100 Considered Carefully (~$2,000-$10,000 spent per relevant opportunity)

2-8 Closed Transactions

 Shift focus on increasing number of quality opportunities, reducing cost per relevant opportunity and:

 Increasing number of closed deals leading to bigger funds, or closing same number of deals while increasing IRR due to higher quality selection

Annual Deal Flow

500 Opportunities Reviewed

SLIDE 7

1 1 3 1 1 1 1 1 1 1 1 2 2 1 2 1 2 3 4 1 1 1 2 2 7 1 3 1 3 1 7 4 6 5 10 3 6 7 7 5 7 7 15 5 2 2 3 5 7 4 5 3 7 3 9 3 2 12 5 5 6 5 9 5 6 4 5 5 7 8 5 3 5 8 9 22 5 3 9 8 4 8 8 12 8 7 9 10 10 5 7 13 5 10 4 5 6 5 9 27 9 4 1 2 4 8 8 8 6 5 7 8 8 2 8 4 12 5 11 5 9

16.3% 46.8%

5 10 15 20 25 30 35 40 Jan-10 May-10 Sep-10 Jan-11 May-11 Sep-11 Jan-12 May-12 Sep-12 Jan-13 May-13 Sep-13 Jan-14 May-14 Sep-14

Closed Lost Passed Didn't see it Rolling LTM Market Coverage

Market Coverage: Sector Focused

Sutton Place Strategies, LLC

Number of transactions

SLIDE 8

2 2 1 1 1 1 1 1 1 1 1 4 1 3 1 1 1 1 1 5 2 3 2 1 1 5 3 4 8 8 3 4 1 1 2 1 1 2 2 4 3 3 1 2 2 1 1 3 1 4 10 20 5 1 4 4 6 12 13 11 10 8 8 11 9 4 4 16 7 10 9 9 5 9 5 30 9 2 3 7 8 8 10 6 12 12 10 11 8 4 15 10 10 12 14 15 4 27 17 46 20 18 12 15 18 23 14 25 17 23 19 30 22 17 19 24 15 23 23 18 11 15 22 59 25 9 8 8 11 14 17 20 13 15 22 19 20 14 27 12 26 15 20 20 24

31.7% 41.9%

10 20 30 40 50 60 70 80 90 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14

Closed IOI Submitted Passed Didn't see it Rolling LTM Market Coverage

Market Coverage: Quasi-Generalist

Sutton Place Strategies, LLC

Number of transactions

SLIDE 9

PE Deal Origination Market Coverage Statistics

Average Max Min Top Quartile Market Coverage¹ 19.3% 52.2% 2.8% 39.9% Market Coverage Boutique Intermediaries 12.8% 45.8% 1.4% 34.7% Market Coverage Most Active Intermediaries 21.8% 61.4% 1.0% 46.3% Generalist PE Firms Market Coverage 17.6% 35.3% 7.4% 28.3% Quasi-Generalist PE Firms Market Coverage 17.9% 40.5% 3.1% 31.2% Sector Focused PE Firms Market Coverage 23.7% 48.2% 6.2% 37.7% Upper Middle Market PE Firms Market Coverage 38.7% 52.2% 27.6% 46.1% Lower Middle Market PE Firms Market Coverage 8.7% 27.9% 2.8% 21.6% ¹Percentage of completed PE transactions with a sell-side advisor in relevant size ranges and sectors reviewed by a PE firm.

PE Middle Market: Deal Origination

Sutton Place Strategies, LLC

*As of June 2014, based on SPS’ 87 clients that qualified for the annual Deal Origination Benchmark Report (DOBR).

SLIDE 10

Deal Origination: LP Reporting

Sutton Place Strategies, LLC Two Common Typical Themes from GPs to LPs

 Proprietary deal flow  Breaking down the funnel (number of deals, IOIs submitted, closed rate, etc.)

LPs Will Need More

 Deal flow receiving increased scrutiny for three reasons

Everyone claiming to do a great job, who really is?
Increased transparency and disclosure requirements; efficient way

for them to check the box on diligence when it comes to deal sourcing

Increased direct investing and co-investing; GPs with access to

higher share of relevant deals are more attractive

SLIDE 11

Conclusion

Sutton Place Strategies, LLC

Marketing Will Require an Increasing Portion

f PE Firm’s Budget

Importance of the BD professional Shift focus from deal volume to effectiveness Not just auctions vs. proprietary: boutique advisors LP interest in this area is increasing Deal origination key to unlocking value for investors

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16.3% 46.8%

5 10 15 20 25 30 35 40 Jan-10 May-10 Sep-10 Jan-11 May-11 Sep-11 Jan-12 May-12 Sep-12 Jan-13 May-13 Sep-13 Jan-14 May-14 Sep-14

Closed Lost Passed Didn't see it Rolling LTM Market Coverage

Market Coverage: Sector Focused

Sutton Place Strategies, LLC

Number of transactions