M&A TODAY: TECHNOLOGY, INFORMATION &

BUSINESS SERVICES

INVESTING IN BUSINESS SERVICES

Amy LaBan Lake Capital

February 12, 2004

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Lake Capital uses its extensive operational, transactional, and investment expertise in business services to build great companies and create shareholder value

Lake Capital Management LLC:– Private equity firm founded in 1998 with a focus on

building quality middle-market, business services companies with reliable cash flows, high potential for organic and acquisition-driven growth, and significant equity appreciation.

$700 million under management focused on investing significant amounts of equity in services companies:

– Service sector-focused fund looking to commit $25-75 million in equity to each portfolio company initiative (with additional equity available through LP’s co-investing).

Experience investing and operating across the business services universe:

– Lake Capital has worked with companies that range from transaction services to professional services in multiple industries.

Hands-on, strategic approach:– The firm takes a “strategically involved” approach to

partnering with its portfolio company management teams.

Historical track record and focus on attractive, long-term returns:

– Lake Capital focuses on investment opportunities that offer a minimum of 3x return on invested capital.

INTRODUCTION

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THE BUSINESS SERVICES UNIVERSE

The business services universe offers a large number of investment opportunities that range from tactical offerings and project-based contract hiring to strategic services often delivered in a wholly outsourced, systems-driven environment

There are more than 50 different SIC codes relating to business and management services within the services sector:

HumanCapital

Finance, Accounting,

AdminSupplyChain

Sales &Marketing IT Facilities

StrategicHR

outsourcing

Finance & accountingoutsourcing

Supply resource

management

Sales & customer

care outsourcing

IT outsourcin

g

Outsourced facilities

management

Business Process

Outsourcing

Document & information

managementLogistics

Facilitiesmanagemen

t

Professional

employer organizatio

ns

Transaction processing

Customer relationship management

Catering

Management consulting

Distribution

Advertising, PR, sales

promotion, direct

marketing

Web hosting

Uniforms

TrainingAccounting & tax services

Security

Tactical Staffing LegalTransportat

ion

Outbound telemarketin

gIT services

Engineering &

construction

Contracting

Source: KPMG, Lake Capital

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BUSINESS SERVICES INVESTORS LOOK FOR

M arket Size/Duration of

Grow th

EarningsVisibility

StrongM arket

Position

HighReturns on

Capital

P roven la rge addressab le m arket w ith h igh grow th

L ike ly dura tion o f growth

P roven underlying un it growth and pric ing power

G eograph ic d iversifica tion and broad va lue added service o ffe ring

D efendab le m arket n iches and strong custom er re la tionsh ips

E conom ies o f scope and sca le

V isib le backlog and recurring revenue stream

S trong and d iversified custom er re la tionsh ips

Track record o f m eeting or exceed ing earn ings estim ates

Low cap ita l in tensity

A bove average pro fit m argins

E V A focused m anagem ent incentives

InstitutionalSponsorship

/Liquidity

StrongM anagem ent

Team

S tab le group o f core institu tiona l ho lders

Large floa t reduces investors ' e ffective transaction costs

S ize and liqu id ity a ttracts se ll-s ide and buy-s ide research coverage

M anagem ent experience and judgm ent

M eaningfu l equ ity ownersh ip fo r sen ior m anagem ent

A lignm ent w ith strong brand nam e partners

Source: Lehman Brothers

Private equity investors and public company investors look for similar characteristics in target companies

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“FOLLOW THE MONEY”

Top-Line Focused

Initiatives

Bottom-Line

Focused Initiatives

Specialty Services

Corporate Client

Lake Capital starts by identifying services used by corporate clients and then prioritizes:

Industry trends that create demand. Consultative versus commoditized services. Contact points at senior levels within large organizations. Value placed on single source providers. Need for geographic reach resulting in international growth

opportunities. Deploy technology to benefit product development and the

delivery of services. Require capital for growth. Opportunity to enhance management.

Lake Capital proprietary research on services spending: “Trends in Business Services”(www.lakecapital.com/news/2003WhitePaper.pdf)

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“FOLLOW THE MONEY”

Top-Line Focused

Initiatives

Bottom-Line

Focused Initiatives

Specialty Services

Corporate Client

Sales and Marketing–related Services:

Marketing communicationsMarket researchWeb-enabled services

Finance-related services:

Accounting-related services

Operational and infrastructure services:

Human capital management

Corporate trainingLegal servicesSpecialty/professional publishing

Specialists in Various Industries

Example service sub-sectors Lake focuses on(more on p. 10)

Additional Information OnLake Capital Partners LLC

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DEAL SOURCINGLake Capital has extensive relationships in the business services sector and an active, in-house market research and deal sourcing process produce a significant number of unique investment opportunities:

Relationships with key intermediaries and ongoing market research result in unique investment opportunities

Lake Capital Researchand Business Development

Investors/IntermediariesBusiness Owners

2 - 4 New Platform Investments Per Year2 - 8 Add-on Acquisitions Per Platform Per Year

Lake CapitalPipeline

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Lake Capital looks to invest a minimum of $25 million and, ideally, $40-75 million in equity over a 3-6 year time horizon

New portfolio companies:– Traditional “platform company:” $5 million in EBITDA for a

platform; a minimum of $1 million in EBITDA for an add-on acquisition.

– “Mass start-up:” A group of professionals that Lake can back in a “new home” and take advantage of a market opportunity.

Strong management team focused on growth in fragmented industries.

Based in North America but may offer international expansion opportunities.

Multiple sector and industry opportunities:– Marketing services such as sales promotion, direct

response, public relations, market research, and event services.

– Finance-related services such as accounting-related services, cost recovery services, and financial and economic consulting.

– Operational and infrastructure services such as human capital management, distribution services, technology consulting, and other outsourced services.

– Specialty services such as corporate training, insurance services, legal services, and specialty and professional publishing.

– Industry-focused companies with businesses offering services combined with deep expertise in consumer products, energy, financial services, healthcare, legal, and manufacturing, among other industries.

LAKE CAPITAL INVESTMENT PARAMETERS

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Lake Capital adds value at every stage of the investment and management process:

Active support for portfolio company operations differentiates the Lake Capital approach

THE LAKE TEAM OFFERS MORE THAN CAPITAL

Enhance executive teams through incentives and recruitment of key employees

Manage exits:• IPO• Recapitalization • Strategic sale

Identify and execute add-on investments to extend:• Service offerings • Geographic and market reach

Aggressively expand through:• Organic growth• Acquisitions

Strategic partner supporting management’s day-to-day operations

Identify, source, and structure transactions

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Lake Capital has partnered with management teams to build leading companies in various areas of business services:Highly-

fragmented business services sector offers numerous attractive investment opportunities

SUCCESS IN BUSINESS SERVICES INVESTING

Advance Ross Corporation

EAGLE RIVER INTERACTIVE

Specialized Transaction Services

Sales Promotion

e-Consulting

Specialized Financial Consulting

Branding/Financial PR/Marketing Services

IT Training

Strategic and Operational Consulting

Public Affairs and Lobbying

alaban@lakecapital.com