Page 1 OVERVIEW OF THE CONNECTICUT MARKET The current market environment for financing options for...

Shields & Company, Inc. I N V E S T M E N T B A N K E R S

150 Federal Street Boston, Massachusetts 02110

(617) 946-2900

OVERVIEW OF THE CONNECTICUT MARKET

The current market environment for financing options for Connecticut companies



(617) 946-2900

Thomas J. ShieldsManaging Director

January 8, 2008



(617) 946-2900

Fiscal 2007 Revenue by Industry

Source: Capital IQ

Healthcare8%

Financials28%

Industrials42%

Consumer Discretionary10%

Consumer Staples3%

Utilities1%

Telecommunication Services

0%

Information Technology4%

Energy1%

Materials3%

Healthcare8%

Financials14%


2%

Utilities5%

Energy5%

Materials4%

Industrials18%


Consumer Staples9%


Connecticut United States

– When we examine the fiscal 2007 revenue by industry, Industrials and Financials have a significantly greater share of the Connecticut market while Consumer Discretionary and Information Technology are low compared to the United States as a whole.



(617) 946-2900

Historic Debt Spreads

—

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Fed Funds Rate 10-Year Treasury 3-Month LIBOR

Prime Interest Rate High-Yield Bonds



(617) 946-2900

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

10.0%

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Leveraged Loan Default Trend– Default rates continue to decline reaching 1.2% at year end 2007, the lowest level since 1982.– Global leveraged loan default rates are forecast to increase, but remain below historical averages of 4-

5% by the end of 2009.

Source: Moody's



(617) 946-2900

Annual Venture Capitalist Transactions Over Ten Years

Source: Capital IQ

—

500

1,000

1,500

2,000

2,500

3,000

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007—

5

10

15

20

25

30

35

40

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007


– The trend in the number of Venture Capitalist transactions is very similar between Connecticut and the whole U.S. market.



(617) 946-2900

Venture Capitalist Investment by Industry Over 5 Years

Source: Capital IQ


Consumer Discretionary45% Telecommunication

Services24%

Energy0%

Utilities0%

Materials0%

Industrials3%

Financials2%

Healthcare4%Consumer Staples

0% Healthcare16%

Financials6%



7%

Utilities8%

Energy9%

Materials3%

Industrials9%


Consumer Staples1%


– Connecticut has received comparatively higher venture capital investment in the Telecommunications Services, Information Technology, and Consumer Discretionary segments, than the overall U.S. market.



(617) 946-2900

Annual Merger & Acquisition Transactions Over Ten Years

Source: Capital IQ


—

2,000

4,000

6,000

8,000

10,000

12,000

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007—

20

40

60

80

100

120

140

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

– The trend of merger & acquisition transactions in Connecticut since 1998 compares with overall U.S. trends.



(617) 946-2900

Merger & Acquisition EBITDA Multiple Valuations Over Ten Years

Source: Capital IQ

—

2.0x

4.0x

6.0x

8.0x

10.0x

12.0x

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007—

2.0x

4.0x

6.0x

8.0x

10.0x

12.0x

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007




(617) 946-2900

2007 Merger & Acquisition EBITDA Valuation Multiples and Total Transactions by Quarter

Source: Capital IQ

Median EBITDA Multiple Number of Transactions

—

2.0x

4.0x

6.0x

8.0x

10.0x

12.0x

Q1 Q2 Q3 Q4—

500

1,000

1,500

2,000

2,500

3,000

Q1 Q2 Q3 Q4



(617) 946-2900

Annual Initial Public Offerings Over Ten Years

Source: Capital IQ

—

2

4

6

8

10

12

14

1998 1999 2000 2001 2002 2003 2004 2005 2006 20071,900

2,000

2,100

2,200

2,300

2,400

2,500

2,600

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007


– The Connecticut market has seen a similar trend in initial public offerings to the U.S. market.

– Connecticut achieved a high number of IPOs in 2007 compared with prior years.



(617) 946-2900

Initial Public Offerings by Industry Over Five Years

Source: Capital IQ

Healthcare16%

Financials29%


Industrials9%Consumer Discretionary

10%

Consumer Staples1%

Energy7%Materials

3%

Utilities1%


2%

Financials58%



6%Industrials

15%

Utilities0%

Energy0%

Materials0%

Consumer Staples0%


Healthcare9%


– The number of Connecticut based companies electing to raise capital through an initial public offering is highly dominated by the Financial, Industrials, and Information Technology industries.

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