July 2013 Client Briefing

Independent Investment Banking for Media,
Information, Marketing, Technology & Healthcare
Client Briefing July 2013
since 1987
JEGI asked a select group of PE executives in-
vesting in the media, information, marketing
and technology sectors to provide their in-
sights on their funds’investment activities and
their outlook on the market:
1. What are the macro factors that will impact
M&A in the sectors mentioned above? What
are the major secular trends impacting your
portfolio strategy?
2. With regard to your fund’s M&A strategy
over the next 12-18 months: what types of
companies are you looking to acquire? In
which sectors? In which geographies? What
size range will you consider?
3. What is your view of the debt market and
where it is headed over the next six to nine
months? How is it affecting transactions
and multiples? For your deals, what is your
optimal mix of equity, senior and mezzanine
debt? What senior and mezzanine debt mul-
tiples are you seeing in the market?
4. Other than concerns about the economy,
what keeps you awake at night?
peggy koenig, managing partner & co-ceo,
and john hunt, partner, abry,
pkoenig@abry.com and jhunt@abry.com
The overheated credit markets are the most
important factor impacting M&A in our sec-
tors. Although it is easier to finance acquisi-
tions, and at levels that can drive good equity
returns, this has also translated into higher
prices for assets. In an environment of higher
prices, it is even more important to stay fo-
cused on the areas we know well and where
we are confident we can add substantial value
to our portfolio companies.
Another factor that impacts our strategy is
the continued strong global demand for band-
width. For several years now, our focus in com-
munications has been on sectors that we think
help satisfy this demand, and therefore, we
are benefitting from it. The most obvious ben-
eficiary, and an area of substantial activity for
ABRY, has been data centers and other broad-
band services companies.
We continue to focus on information, software
and business services, telecom services, educa-
tion and media and entertainment companies.
In the past several years,ABRY has increased its
investing outside the U.S. (primarily inWestern
Europe) in data centers and software, two ar-
eas in which we have deep domain expertise.
Importantly, whenever we invest outside the
U.S., the investment must meet several crite-
ria: the company must be in a sector where
we have substantial, specific prior experience;
there must be a minimal difference in opera-
tions between a European and a domestic U.S.
business; and there must be very little regula-
tory or political risk. Our typical equity invest-
ment size for an acquisition is between $75-150
million. For a growth investment out of our
senior equity fund, the typical investment is
$25-75 million.
The debt markets are very robust and have
arguably peaked. Larger middle market comp-
anies are attracting leverage of between 6-7x
EBITDA, at very attractive pricing and with
minimal financial covenants. We are cautious
in this debt environment, but also opportunis-
tic. Over the past 12 months, we have recapi-
talized many of our portfolio companies and
expect to execute several recaps in 2013.
Both our buyout fund and senior equity fund
portfolios are performing very well. However,
having lived through a number of downturns
throughout our private equity careers, we are
very mindful of the importance of staying
close to our portfolio companies, even when
things are going very well, to ensure we are
prepared to withstand, and also take advan-
tage of, a downturn.
doug schreiber, partner, lee equity partners,
dschreiber@thlcapital.com
We focus on trying to develop theses about
where industries are going and then invest in
companies that are likely to benefit from those
trends. We also try to find business models
that are both attractive and defensible, and
where we can provide capital to support and
potentially accelerate growth.
In both consumer and B2B media sectors, audi-
ence behavior continues to shift tremendously.
It is amazing to think that the iPad was an-
nounced only a few years ago and now repre-
(continued on page 6)
Senior PE Investors Discuss M&A Outlook
(from left) Scott Howe, CEO, Acxiom; Paul
Chachko, CEO, V12 Group; Charles Stryker,
Founder & CEO, Venture Development Center;
Wilma Jordan, Founder & CEO, JEGI; Matthew
Egol, Partner, Booz & Co.; Tom Stewart, Chief
Knowledge and Marketing Officer, Booz & Co.;
and David Kieselstein, CEO, Penton Media
1 > for more information visit www.jegi.com
In This Issue
01
To subscribe to JEGI’s Client Briefing
Newsletter: http://bit.ly/YzEqQK
Follow JEGI on Twitter:
http://twitter.com/JordanEdmiston
• Media, Marketing, Tech M&A
Steady Year-Over-Year02
03
• Senior PE Investors Discuss
M&A Outlook
• 2013 SIIA Strategic & Financial
Investment Conference
• The Future of Healthcare IT
M&A
• Exceptional Transaction
Experience
04
08

2
The media, information, marketing, health-
care and technology sectors saw a healthy 708
transactions in the first half of 2013, roughly
even in both volume and value with the first
half of 2012, excluding Alibaba Group’s buy-
back of 20% of its shares from Yahoo for $7.1
billion in 2012. As expected, the year got off to
a slow start following the rush of year-end deal
closings ahead of impending tax law changes.
The second quarter saw a pickup in both num-
ber and size of announced M&A deals.
active quarter for jegi
M&A activity picked up for JEGI in the sec-
ond quarter of 2013, with five deal closings,
although only four have been officially an-
nounced, including (JEGI client listed first):
• Onex Corporation’s $950 million acquisition
of Nielsen Expositions, a leading operator of
business-to-business tradeshows;
• MyWebGrocer, a leading provider of shop-
ping and shopper marketing software and
services, receiving a signifi-
cant investment from private
equity firm HGGC;
• The sale of Group SJR, a
leading digital consultancy
specializing in insights, con-
tent creation, curation, and
audience development, to
Hill+Knowlton Strategies, a
subsidiary of WPP; and
• The sale of Digital Broadcast-
ing Group (DBG), a leading
creator, producer, and distrib-
utor of premium video con-
tent across digital media, to
Alloy Digital.
m&a highlights for 1h 2013
M&A activity for the b2b online
media and technology sector
was slow in the first half of 2013,
with a 26% decline in the num-
ber of deals announced compared to 1H 2012
and deal value sharply down, primarily due to
the $7.1 billion Alibaba Group/Yahoo transac-
tion in 2012. Notable Q2 2013 deals included:
Answers Corporation’s acquisition of Webcol-
lage, a web-based application used to publish
product information for manufacturer retail
channels, for $37 million; TheStreet’s acquisi-
tion of DealFlow Media’s DealFlow Report, Life
Settlements Report and PrivateRaise Database
newsletters; and IntraLinks’ acquisitions of
PE-Nexus, an Internet deal
flow exchange and private
social network for M&A, and
MergerID, an online match-
ing tool for buyers and sell-
ers of mid-market compa-
nies around the world.
B2c online media and tech-
nology was an active sector
for M&A in 1H 2013, with 119
transactions at a total value
of $4.0 billion. Compared to
1H 2012, the number of deals
dropped slightly,by 10%,and
transaction value remained
flat. Notable deals in Q2
2013 included:Yahoo’s $1.1 billion acquisition of
Tumblr, an online platform that enables users
to share text, photos, links, videos, etc. across
any channel; Alibaba Group’s acquisition of an
18% stake in Weibo, an online microblogging
service, for $586 million; Baidu’s acquisition of
PPStream, a provider of online video services,
for $370 million; DreamWorks Animation’s ac-
quisition of AwesomenessTV, a YouTube chan-
nel for teens, for $150 million; and Demand
Media’s acquisition of Society6,an e-commerce
marketplace for artists, for $94 million.
Transaction volume for the business-to-busi-
ness media sector remained flat, with 15 trans-
actions in 2013, compared to 14 in 2012. In the
first quarter of the year, Catalyst Investment
Managers acquired Reed Business Information
Australia for $42 million and Euromoney Insti-
tutional Investor acquired financial publisher
Insider Publishing for $25 million. Notable
deals in Q2 included: Edmond de Rothschild
Investment Partners and BNP Paribas’ acquisi-
tion of Reed Business Information France; Lex-
isNexis’ acquisition of Sheshunoff Information
Services, publisher for finance professionals;
and Times Media Group’s acquisition of BDFM
Publishers from Pearson.
The consumer magazines sector also saw sig-
nificant growth in the first half of 2013, with
24 transactions at a total value of $281 mil-
lion, due to a few larger deals in Q1 2013. The
most prominent deal was NC2 Media’s $75
million acquisition of Lonely Planet Publica-
tions, a publisher of travel guidebooks, digital
books, city guides, and maps. Notable deals
for the second quarter included the TeamRock
and Harwood Private Equity $15.4 million ac-
quisition of Classic Rock and Metal Hammer
magazines from Future, and Arthur Frommer’s
repurchase of Frommer’s Travel Guides, which
were sold to Google in August of 2012.
M&A activity for the database and informa-
tion services sector saw a total value of $3.2
billion in 1H 2013, down 26% from the first half
of 2012, which saw the $3.3 billion take-private
of Transunion by Advent International and GS
Media, Marketing, Tech M&A Steady Year-Over-Year

3
2013 SIIA Strategic &
Financial Investment
Conference
The 2013 Conference had 18 high-caliber
firms from across the education technol-
ogy, media and digital content, informa-
tion services and software sectors. The
audience consisted of nearly 200 strategic
M&A-focused executives and financial
sponsors from a strong mix of global com-
panies and private equity firms. The con-
ference, co-founded by sponsors JEGI and
VSS,was held June 13 at the Princeton Club
in NYC. For further details on the event,
visit: www.siia.net/investment/2013.
Presenting companies included:
Alert Solutions: SAAS Messaging Provider
Blue Cava: Mobile Targeting Provider
EduTone Corporation: Marketplace as a
Service (MaaS) Education Platform
Free Pint: Information Services Publisher
Green Mountain Digital: Producer of
Digital Field Guides
InsideView: Provider of Sales & Marketing
Intelligence
iProduction: Cloud Publishing Platform
IRON Solutions: Provider of Equipment &
Agronomic Lifecycle Information
McMurry/TMG: Content Marketing Agency
MIR3: Provider of Intelligent Notification
& Response Software
PetroSkills: Provider of Training &
Competency Assurance Services
Reportlinker: Business Search Engine
Return Path: Email Intelligence Solutions
SkillSurvey: Social Platform for Reference-
Checking
STEMscopes: Online Science Curriculum
Tax Credit Co: Provider of Tax Incentive
Consulting
V12 Group: Provider of Data & Cross-
Channel Digital M arketing
www.Iseeyou.MD: Healthcare Software
Services Platform
If you are interested in presenting at next
year’s Conference, please contact Christie
Adams at christiea@jegi.com. n
Partners. The sector only had one deal above
the $1 billion mark this year, IHS’s $1.4 billion
acquisition of R.L. Polk & Co., a provider of au-
tomotive intelligence and marketing solutions.
Other prominent deals in Q2 2013 included: the
Temasek Holdings acquisition of a 10% stake in
Markit Group, a financial information services
company that provides credit derivative pric-
ing services to financial institutions, for $500
million; McGraw Hill Financial’s acquisition of
a 22% stake in CRISIL, a provider of ratings, re-
search,and risk and policy advisory services,for
$335 million; and Electra Partners’ acquisition
of UBM’s data services business, Delta, for ap-
proximately $214 million.
The education information, technology and
training sector saw strong growth in the num-
ber of deals announced in 1H 2013,up 52% vs.1H
2012. Additionally, deal value increased signifi-
cantly, due to BC Partners’ $4.4 billion acquisi-
tion of a majority stake in academic publisher
Springer Science & Business Media. Other no-
table deals in the second quarter of this year
included Elsevier’s acquisition of Mendeley, a
social platform for academics and organiza-
tions to collaborate on research, for $69 million,
and Pearson’s acquisition of IndiaCan Educa-
tion, provider of training for educating and em-
ploying the youth in India, for $22 million.
The number of deals in the exhibitions and
conferences sector remained flat, with 30
transactions in 1H 2013 vs. 28 transactions in
1H 2012, while deal value spiked with Onex’s
$950 million acquisition of Nielsen Expositions
(a JEGI transaction). Additional notable deals
for the quarter included: Reed Expositions’ ac-
quisition of Expo Nacional Ferretera, a Mexican
event serving the hardware, construction and
electrical markets, for $25 million, and Global
Sources’ acquisition of a 70% stake in Shen-
zhen International Machinery Manufacturing
Industry Exhibition (SIMM) for $16 million.
The healthcare information and technology
sector was the third most active sector in the
first half of 2013, with 104 transactions at a to-
tal value of $4.2 billion.The number of deals in-
creased by 16%, but deal value dropped by 25%,
as 2012 saw more large transactions, includ-
ing nine over $200 million. Notable deals for
Q2 2013 included: Roper Industries’ $1.0 billion
acquisition of Managed Healthcare Associates,
provider of pharmacy solutions and data ana-
lytics for long-term care and other healthcare
providers; Qiagen’s acquisition of Ingenuity
Systems, a provider of information solutions
and services for life science researchers, for
$109.4 million; JLL Partners’ acquisition of Bio-
Clinica, a provider of clinical research technol-
ogy to pharmaceutical, biotechnology, medi-
cal device companies, for $105 million; and
Jawbone’s acquisition of BodyMedia, maker of
wearable health tracking devices, for approxi-
mately $100 million.
Although the number of deals and value
declined in the marketing and interactive
services sector in 1H 2013 vs. 1H 2012, by 11% and
17%, respectively, the sector continues to be a
major driver of M&A activity, with 224 deals
accounting for $6.8 billion of value in the first
half of 2013. Notable transactions included:
• Salesforce.com’s acquisition of ExactTarget,
cross-channel digital marketing SaaS solu-
tions, for $2.25 billion;
• Trulia’s acquisition of Market Leader, online
technology and marketing for real estate
professionals, for $314 million;
• Accenture’s acquisition of Acquity Group,
brand e-commerce and digital marketing
services, for $285 million;
• Significant investment in MyWebGrocer by
HGGC (a JEGI transaction), for which terms
were not disclosed;
• Intel’s acquisition of Mashery, API
management services, for approximately
$180 million;
• Alloy Digital’s acquisition of DBG (a JEGI
transaction), for which terms were not dis-
closed; and
• Hill+Knowlton Strategies’ acquisition of
Group SJR (a JEGI transaction), for which
terms were not disclosed.
The mobile media and technology sector
increased by 14% in number of deals, up to
82 transactions, and rose in overall deal value
by 6%, reaching $2.7 billion, in the first half
of 2013, compared to the first half of 2012.
Notable deals in the second quarter included:
Google’s $1.3 billion acquisition of Waze, a
social mobile application that enables drivers
to build and use real-time road intelligence
on smartphones; LinkedIn’s acquisition of
Pulse, a mobile news aggregation startup, for
$90 million; and Facebook’s acquisition of
Parse, a provider of software developer kits for
mobile devices, for a reported $85 million. n
Another deal of note is Adobe’s
acquisition of Neolane, a provider of
enterprise marketing software, for
$600 million, which was announced
after JEGI released its M&A report
for the first half of the year.

4
later this month, jegi will publish its first report focused on the
healthcare it market. the following article is a summary of this
report. for more information, please go to www.jegi.com.
The U.S. healthcare system is undergoing unprecedented change as a
result of the Patient Protection & Affordable Care Act (ACA) signed in
March 2010, and these changes have created opportunities for com-
panies across the entire healthcare landscape. Healthcare information
technology (HCIT) is a critical piece to many of the government’s chang-
es, and the Health information Technology for Economic and Clinical
Health (HITECH) Act has created large incentives for the adoption of
information technology solutions, spurring even greater tailwinds for
the industry.
the u.s. healthcare market
Healthcare expenditures in the U.S. are expected to increase from $2.8
trillion to $3.3 trillion, or 18% of GDP, by 2015. The U.S. government cur-
rently accounts for 37% of total payments.
On March 23, 2010, President Obama signed the ACA, one of the most
sweeping changes to healthcare in the United States since the creation
of Medicare. As a result of the problems facing the industry and the
beginnings of healthcare reform, JEGI has identified five major “take-
aways” that we expect to impact the market:
• Continued growth in healthcare expenditures that outpaces income
and GDP growth;
• Lower reimbursement rates, due to the desire to lower costs and the
expansion of Medicaid;
• Increasing demand for medical professionals;
• Increase in consumerism and social media in healthcare;
• Transformation of the healthcare insurance industry; and
• Universal risk sharing and the need for patient engagement.
overview of u.s. healthcare it market
The global healthcare IT market, approximately $170 billion in 2012 and
expected to grow 4% annually through 2016, includes software, hard-
ware, connectivity/telecom, IT services and internal or outsourced ser-
vices. The U.S. healthcare IT market, an estimated $65.6 billion in 2012,
has grown steadily over the past decade. Solutions, such as EMRs, clini-
cal physician order entry, point of care systems, and specialty care sys-
tems, have been growing at even higher annual rates.
Healthcare informatics represents the intersection of information sci-
ence, computer science and healthcare and provides the next high
growth opportunity in HCIT. The wide variety of information and data
sources (e.g., hospitals, insurance companies and retail pharmacies) and
the disparity of data make the healthcare informatics opportunity even
more compelling and valuable than in most other sectors.Doctors,phar-
maceutical and device manufacturers and other healthcare providers
can build a deeper and more accurate profile of the consumer patient
through EHRs, pre-
scriptions, claims
data and other reg-
istries, spurring con-
tinued expansion of
the informatics and
consumer health in-
formation market.
While the informat-
ics ecosystem has
created a vast re-
source of information and intelligence, the data is still not being used
to improve the delivery of care and the value delivered to the patient.
The HITECH Act was signed into law on February 19, 2009 as part of the
American Recovery and Reinvestment Act of 2009. It provides financial
incentives for hospitals and eligible professionals totaling over $22 bil-
lion of incentive payments plus $2 billion for the funding of the Office of
the National Coordinator for Health Information Technology. According
to CMS (Centers for Medicare & Medicaid Services), over 85% of eligible
hospitals have registered for the program, and approximately 75% of
EPs have registered. Several other regulatory programs are also driving
additional HCIT spending. Although these programs will not have the
impact that Federal EHR incentives are having, it will continue to add
growth to the overall healthcare IT market in the U.S.
impact on healthcare it and the dawn of the information age
JEGI expects healthcare IT and especially informatics to play a pivotal
role in addressing decades-long problems plaguing the U.S. healthcare
system and enabling healthcare companies to adapt the new, post-re-
form competitive environment. The HITECH Act and other Federal pro-
grams have created a tipping point for the use of data in healthcare,
ushering in the dawn of the industry’s information age. With the large
scale adoption of electronic health records (EHR), massive amounts of
data are being collected, stored and utilized for better decision making,
increasing the demand for technology that can put this information
to use. While we believe the entire HCIT market will continue to thrive,
JEGI has identified four major “Market Catalysts” that will have an even
greater impact on healthcare information and technology. We also see
these catalysts driving M&A activity in certain segments, as a broad
range of information technology vendors seek to expand their solution
set and obtain greater market share.
marketcatalyst#1:higherpatientvolumesatlowerreimbursementrates
Patient volumes are expected to increase dramatically over the next
decade, as 20 to 40 million patients join the insurance roles and the
aging of the population continues. These demographics, coupled with
the eventual elimination of fee-for-service and expansion of Medicaid,
will force healthcare companies, especially hospital systems, to become
more efficient.
Innovative operational and work flow solution software tools have
emerged that eliminate waste and streamline operations. For example,
there are tools that provide key operating information, such as peak
volumes and pa-
tient throughput;
improved business
intelligence and
staffing software;
and financial opti-
mization – budget-
ing/capital planning,
n ex t- g e n e rat i o n
revenue cycle man-
agement and spend
The Future of Healthcare IT M&A
“The HITECH Act and other Federal programs
have created a tipping point for the use of data in
healthcare, ushering in the dawn of the industry’s
information age.”

5
management. Other key IT solutions, spurred by the need to manage
higher patient volumes and improve operational efficiencies include
telemedicine, human capital management and referral management.
JEGI believes that companies providing these next-generation solutions
will be in high demand by software vendors seeking to expand their
presence in the market. HCIT vendors and other large enterprise soft-
ware vendors will continue to acquire businesses that broaden their
range of solutions for operational needs and challenges. We expect
acquirors to include traditional players, such as Emdeon, Allscripts and
MedAssets, as well as relatively new market entrants.
market catalyst #2: informatics and data-driven decision making
Healthcare informatics is already impacting the healthcare market,
as healthcare companies seek to develop clinical and business
decision support tools. Collecting,
aggregating, analyzing and
distributing information requires
a substantial commitment from
healthcare participants, however.
The graph to the right shows the
progression from the empirical
medicine stage to value-based
medicine, the highest level of
the informatics life cycle, that
healthcare companies are seeking
to accomplish.
Moving to value-based medicine re-
quires additional investments in a
variety of technical components in
order to create an end-to-end plat-
form that enable enhanced use of a
system’s data, including:
• Data Collection: collecting and syn-
thesizing information from across
the enterprise in a variety of forms continues to be a major challenge.
• Data Aggregation: data warehousing is an important element and has
become an area of innovation.
• Decision Support: involves extracting data in multiple forms to assist in
business and clinical decisions.
• Communication: distributing the information to physicians, nurses, pa-
tients and administrators requires the use of a variety of communication
channels including mobile devices,patient portals and social media.
M&A activity will be driven by the large size of the market, the desire
of large vendors to fill out their product portfolio and innovation from
smaller participants.
market catalyst #3: the emergence of the consumer patient
With more individuals realizing that they cannot be passive participants
in their own health treatment, patients have become better consumers
and are applying greater scrutiny to the care they receive. In response,
innovative companies are leveling the information imbalance in health-
care and enabling the consumer patient to better determine price, qual-
ity and ultimately value. Pricing and quality transparency tools, social
media platforms and patient engagement solutions have emerged re-
cently to address this trend. At the same time, employers are taking a
greater interest in the health of employees, implementing programs to
encourage wellness and lower healthcare costs.
JEGI expects dramatic growth in this market, as consumers and employ-
ers attempt to rein in costs. Patient engagement has become a critical
“must-have” capability of healthcare companies, as hospitals are forced
to be more accountable for outcomes and pharmaceutical and device
companies seek clinical validation of their products. Social media is
emerging as a powerful tool in healthcare and will be an important fac-
tor in healthcare in the future. Nevertheless, most healthcare companies
are still under-invested in patient communication and engagement tools.
marketcatalyst#4:transformationofthehealthcareinsurancemarket
The healthcare insurance market is also undergoing dramatic change
as a result of the ACA, as corporations struggle to meet its requirements
and look for ways to alleviate the financial burden imposed by health-
care insurance premiums. Meanwhile,states are already setting up their
own insurance exchanges. As a result, JEGI believes that the healthcare
insurance market will begin to function like other retail-oriented in-
surance markets, such automobile
and casualty insurance. As a result,
healthcare insurance companies
will need to develop several new
capabilities, including insurance ex-
change technology and marketing
services capabilities.
Information technology will play a
key role in this transformation by
creating public and private insur-
ance exchanges and helping to cre-
ate a B2C marketplace for health-
care insurance, which means that
healthcare insurance providers will
need to utilize marketing technol-
ogy to better understand their au-
dience and adapt to the changes in
the market. Some insurance provid-
ers may develop their technology
internally, but numerous others will
look to acquire the technology and capability set needed to accelerate
the process. M&A activity in this area has begun, and JEGI expects many
other transactions to occur in the near-term.
conclusion
Through the ACA, healthcare reform is having a profound impact on
the current healthcare market. While the healthcare industry has
traditionally been slow to adopt innovative technology solutions,
companiesnowrealizetheneedtoquicklyadapt tothenewenvironment
or face a struggle for survival. Adding to this, the federal government
has put financial incentives in place to accelerate the adoption of new
HCIT solutions, such as EHRs and healthcare information exchanges.
Evidence-based medicine and value-based purchasing will require
companies across the industry spectrum to not only collect data, but
use it in their decision making process. The technology required to
accomplish this is substantial, and the vendors that provide the best
solutions will create enormous value for their stakeholders, due to the
tens of billions of dollars involved and the overall growth of the market.
M&A will continue to be a key strategy in the healthcare IT and
informatics market, and the pace of activity will accelerate, particularly
in selected markets. Healthcare customers are seeking innovation,
and this is more likely to come from emerging companies than the
incumbent vendors. These are exciting times for nimble healthcare IT
companies that can meet the needs of the changing market, as the
status quo has been replaced by a desire to improve the way healthcare
is delivered and reimbursed. n
Source: Oracle Corp,“Enterprise Healthcare Analytics: Healthcare Data Warehouse
Foundation,” Healthcare Information Management System Society, 2009

sents the platform of choice for a substantial
and growing portion of the audience. At the
same time, advertisers are taking the lessons
they have learned in the digital space and
asking for more analytics and accountability
across all media, forcing both marketers and
media outlets to adjust. Finally, the B2B media
world is just beginning to show signs of recov-
ery, but the landscape is much changed; the
need to be a dominant number one player ap-
pears to be more critical than ever before.
Our investment criteria focus more on certain
characteristics than the sector or type of com-
pany. We are looking to back proven managers
in businesses that are leaders in their field.We
look to become partners with management
and highly value a manager/owner’s significant
continued economic interest in the business
alongside us. Typically, we invest $50-200 mil-
lion of equity in any given investment, and the
professional staff at Lee Equity also makes sub-
stantial personal investments in transactions.
The debt markets have been very accommo-
dating for the past 6-12 months, and we have
continued to see leverage availability and
rates at very attractive levels. This appears to
be driven largely by an imbalance in supply/
demand in the market. Availability of leverage
and low rates tend to drive up overall transac-
tion prices; however, just because leverage is
available, does not mean that it is prudent to
use it. Leverage magnifies movements in both
directions, and we all saw the painful impact of
deleveraging in the downturn.
I do not believe there is a stock answer to the
question of how much leverage to use. Certain
businesses, typically those that are less vola-
tile, can generally support higher leverage. On
the other hand, businesses that need flexibil-
ity for growth or where results are less predict-
able should be financed more conservatively.
The goal is to match the leverage to the spe-
cific business situation.
Prior to Lee Equity, I spent a significant por-
tion of my career in venture capital, backing
start-up companies. In this environment, you
learn very quickly that businesses are fragile.
So, I worry about everything. I believe the key
to success is to back great managers and give
them both the support and the space they
need to anticipate changes and react before
their competitors.
Mr. Schreiber’s remarks represent his own views and
not necessarily the views of Lee Equity Partners, LLC
or any of the partners or staff of Lee Equity Partners.
jeffrey stevenson, managing partner, vero-
nis suhler stevenson, stevensonj@vss.com
The key driver of the recent increase in activ-
ity and valuation for middle market M&A has
been the improving availability of credit in
the U.S. Other background factors include the
gradually improving economy and stock mar-
ket, the return of risk, and the absence of glob-
al setbacks and surprises. In the case of private
equity, the expiration of investment periods
is playing a role in pricing. Secular trends that
impact our strategy include the continuing
shift toward digital and business models that
depend more on recurring subscription rev-
enue than advertising.
We are primarily focused on information and
business services, education, media and mar-
keting services companies in North America
and Northern Europe, with EBITDA between
$5-25 million, and particularly those that are
tech and/or data enabled.
The debt capital markets in the U.S. are very
strong with looser covenants and higher le-
verage ratios (5-6x) especially for credits with
EBITDA over $50 million. For smaller credits
(under $25 million in EBITDA), we are seeing a
full turn lower in leverage (4-5x). If anything,
the expected reduction of quantitative easing
by the Federal Reserve (“Fed”) may help the U.S.
banking sector and credit markets (although
equity markets may suffer in the short term)
and, as such, leverage multiples will remain
high for the next six to nine months, as inves-
tors continue to chase yield.
The more aggressive approach by credit pro-
viders has forced transaction multiples higher
and incentivized companies to seek a sale. We
aim to keep a relatively conservative capital
structure with approximately 2-3x senior le-
verage, 2x mezzanine and 40-50% equity to
enable companies to have the flexibility to
pursue growth strategies, including add-on
acquisitions. We also are providing structured
capital for non-control transactions to facili-
tate acquisitions, shareholder buy backs and
dividend recapitalizations.
dan hosler, principal, sterling partners,
dhosler@sterlingpartners.com
Right now, we are undergoing a transition of
budget allocation from the IT departments to
the sales and marketing departments of large
organizations, providing the CMO with a larger
technology budget than the IT department.
This trend will accelerate the growth of soft-
ware and services companies that meet the
needs of the CMO.
This shifting trend will likely mean more acqui-
sitions of these fast growing companies, such
as Oracle’s acquisition of Eloqua, and Sales-
force announcing the acquisition of ExactTar-
get. The large enterprise software companies
need to fill holes in their product suites and
will look to acquisitions of middle-market and
emerging marketing services and software
companies. At Sterling, we are working to-
wards making sure our companies use these
cutting edge sales and marketing tools to ac-
celerate growth.
Sterling focuses on control growth equity
investments in small and mid-market busi-
nesses (enterprise values between $30-300
million) in North America. Across all invest-
ments, we look for opportunities to apply our
Operations methodology and drive operation-
al improvement across human capital, strategy,
governance, sales/marketing, etc.
Sterling’s sector focus in healthcare, education
and business services is driven primarily by the
firm’s targeted business model characteristics
(e.g., high growth market or niche, proprietary
product or service, sticky customers, low cus-
tomer concentration, etc.), rather than a focus
on particular industries. The firm has strong
roots and over 25 years of experience in the
education sector. The similarity of attributes
in healthcare and business services to educa-
tion fostered the sector expansion early in the
history of the firm. The team has also pursued
opportunities in other sectors that share simi-
lar attributes, such as financial services, global
supply chain and logistics, energy and industri-
als, SaaS and big data.
We continue to witness a strong senior debt
market. In 2012, middle market loan volume
was up about 25% from 2011. The trend in re-
cap volume was even more pronounced, with
increases in mid-market activity of more than
50% versus 2011. We remain optimistic and
continue to see encouraging trends around
lender process and an ability to move quickly
and decisively. The market could face setbacks
from international developments or from a
6
Senior PE Investors (continued from page 1)
“The debt markets have been
very accomodating...”
June 2013 JEGI Emerging
Company Dinner in NYC
(from left) Mark Petroff, President, Marketing
Associates;Wilma Jordan,Founder & CEO,JEGI;
Keith Cooper, CEO, Connotate Technologies;
and Scott Peters, Co-President, JEGI

7
delay in addressing the long-term federal debt
crisis, but the underlying fundamentals indi-
cate that 2013 will be another good year for the
senior debt market.
As the Fed begins to taper off quantitative eas-
ing, we expect the economy, the stock market,
the debt markets, overall employment and
GDP to experience volatility. But, volatility can
also create opportunities, so we have to focus
on long-term trends that can create great re-
turns for our investors and partners.
marc byron, chief executive officer, triver-
gance, marc.byron@trivergance.com
In marketing services, the key macro factor is
specialized verticalization. Marketing com-
panies will look to acquire capabilities that
broaden their solution set, while remaining
very focused on their particular vertical.
In data and analytics, M&A activity will contin-
ue to flourish, as acquirers seek ways to gather
and interpret real-time data (“Big Data)”, es-
pecially into useable, actionable and relevant
outputs. A new class of “analytics” will emerge
under the banner “Recommendation Engines”,
in which vast amounts of data are gathered,
formatted and interpreted, and then in real-
time optimal suggestions are made as to what
to do. This can be in the form of communica-
tions, engagements, offers, etc.
We operate differently and uniquely as a fund-
less sponsor. We have deployed over $3 billion
in the past five years, but we don’t have the
pressure of other funds to deploy capital or re-
coup investments. Our model depends much
more on doing the right deal with our capital
partner, so that if we add significant and de-
monstrable value, we share disproportionately
to traditional market comps. Therefore, we are
very picky and search for the right opportuni-
ties,identifying those that are truly proprietary.
We are in hyper acquisition mode and are
completing the monetization of our most
recent platform company – one of the most
successful, fundless sponsor ROI deals we
have seen to date. Our team helped deliver
approximately $1 billion of value creation in
about six years, investing none of our own
financial capital but contributing much human
and intellectual capital.
We are searching today for our next platform,
which will: a) be consumer facing; b) lever-
age our direct marketing knowledge; c) have
become stagnated for one or more reasons;
d) benefit from our many CEO-level Fortune
500 relationships; and e) be between $25-150
million in EBITDA.
The only thing that keeps me up at night is
thinking that if the U.S. were a company, it
probably would have to go through bankrupt-
cy, and that until we deal with the reality of
this country’s finances, we are playing finan-
cial “Russian Roulette”.
scott feldman, managing director,
susquehanna growth equity,
scott.feldman@sgep.com
A major trend we see is the convergence of
software, information and payments solutions
all in one; examples include Uber for car
service, SeamlessWeb for food delivery, Open-
Table for restaurant reservations, and LinkedIn
for CRM solutions.
A secular trend we see is in the payments field
specifically. All existing point-of-sale solutions
are about to be disintermediated. Cash regis-
ters will be tablet computers within the next
24 months, and that will drive incredible op-
portunities in point-of-sale (POS) loyalty solu-
tions and the ability to track what customers
are buying on and offline by retailer. We see
the payments solutions and software solu-
tions companies extending themselves into
marketing solutions, so we expect to see more
deals like Salesforce acquiring ExactTarget.
Another massive secular trend we see is in
healthcare. We expect to see deductibles
double or triple over the next five years and
would not be surprised if the average patient
deductible for a health insurance plan is north
of $15,000 in 2018. This will drive increasing
focus on cost containment and transparency
and will pave the way for good information
and payments solutions, such as MMIT (SGE
portfolio company), Castlight, Simplee, etc.
Our portfolio strategy continues to be to in-
vest in software, information and payments,
but we are becoming increasingly conscious of
this triple threat and the risk taken by provid-
ing only one or two parts of the solution. That
is certainly affecting which companies we are
willing to fund.
We are looking for companies with $5-50 mil-
lion in revenues, with multiples of 2-3x senior
debt and 1x mezzanine debt. However, we do
not lever most of our deals and continue to ex-
pect the vast majority of our returns to come
from growth, multiple expansion and/or op-
erational improvements.
The fierceness of competition keeps us up at
night. Capital efficiency is here to stay in tech-
nology and information solutions companies.
That means you always have to innovate and
have the best product. Switching costs are
lower today than they were five years ago
across the board, mainly due to improvements
in general infrastructure and the ability to port
large amounts of data seamlessly from system
to system.
robert nolan, managing partner, halyard
capital, rnolan@halyard.com
The macro factors we see impacting M&A
include: market liquidity at attractive inter-
est rates and a robust public equity market,
continued IT spending by both corporate and
government entities; continued investing of
PE capital overhang (the demand factor); and
a strong inventory, as PE funds continue to sell
their “long in the tooth” portfolio companies,
which have on average ownership length of
nearly five years (the supply factor).
Halyard is most interested in entrepreneur-
ial-based organizations with the need to in-
stitutionalize their operating structure, and
growth-oriented scenarios where our operat-
ing experience can improve the company’s
outcome. The sectors we consider are: Mar-
keting Services; IT Services (Healthcare and
Education); Information Services; Government
Services; and Human Capital Management
Services. We would consider a transaction size
up to $150-200 million in enterprise value for a
company earning up to $20 million in EBITDA.
The current debt market remains attractive
with low interest rates and commercially rea-
sonable terms. The Fed has triggered a bullish
effect on market multiples and levels of lever-
age, both of which have grown over the past
year.We believe that market interest rates will
increase slightly in the next six to nine months,
as the Fed still needs to prove that the unem-
ployment situation is under control before it
completely ends its easing strategy.
Our optimal mix for a transaction is 50-60%
equity, 30-40% senior debt, and in cases where
appropriate 10-15% mezzanine debt. The mul-
tiples we are seeing for senior debt range from
2.5-4x EBITDA and for mezzanine debt range
from 1-2x EBITDA.
Our concerns remain the capable and reason-
able behavior by our portfolio company man-
agement teams; and the constant search for
meaningful growth in an economic environ-
ment that has experienced tepid/low growth
during the past four to five years. Said differ-
ently, “professional performance and growth
opportunity” are two key indicators. n
“The Fed has triggered a bullish
effect on market multiples...”
“In marketing services, the
key macro factor is specialized
verticalization.”

150 East 52nd Street, 18th Floor New York, NY 10022 212-754-0710 www.jegi.com
Wilma Jordan
Founder & CEO
wilmaj@jegi.com
Tom Pecht
Managing Director
tomp@jegi.com
Scott Peters
Co-President
scottp@jegi.com
David Clark
Managing Director
davidc@jegi.com
Tolman Geffs
Co-President
tolmang@jegi.com
Daniel Avrutsky
Managing Director
daniel@jegi.com
Bill Hitzig
Chief Operating Officer
billh@jegi.com
Richard Mead
Managing Director
richardm@jegi.com
Adam Gross
Chief Marketing Officer
adamg@jegi.com
Chris Calton
Managing Director
chrisc@jegi.com
Amir Akhavan
Director
amira@jegi.com
Tom Creaser
Executive Vice President
tomc@jegi.com
December 2012
a leading digital strategy
and experience design firm
focused on delivering e-commerce
and broadband video solutions
has been sold
to
and
a portfolio company of
December 2012
a marketing research firm
to
has sold
December 2012
the leading event for the streetwear
and action sports industries
has joined
December 2012
a leading full service
content marketing firm
has been sold
to
December 2012
a leading provider of news and
information for the European
entertainment and technology markets
has been sold
to
April 2013
a leading creator, producer, and
distributor of premium video
content across digital media
has been sold
to
May 2013
a leading provider of shopping
and shopper marketing
software and services
has received
a significant investment
from
June 2013
a leading operator of large,
business-to-business tradeshows
has acquired
for $950,000,000
which was renamed
June 2013
a leading digital consultancy
specializing in insights,
content creation, curation,
and audience development
has been sold
to
a subsidiary of
December 2012
a leading full service
content marketing firm
has been sold
to
For the 7th ConsecutiveYear,JEGI Ranked
#1 by Bloomberg for U.S. Media,Internet
and Marketing M&A Transactions
jegi’s client is mentioned first in each of the above transactions.

July 2013 Client Briefing

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July 2013 Client Briefing