2011 Purchase Price Allocation Study

MERGERS & ACQUISITIONS CAPITAL MARKETS FINANCIAL RESTRUCTURING FINANCIAL ADVISORY SERVICES

August 2012

HL.com

2011 Purchase Price Allocation Study

Table of Contents
Page Executive Summary Observations and Results Appendices 2010 Summary Results Annual Comparison Ab About H lih Lokey Houlihan L k Disclaimer 29 39 45 47 2 9 28

Executive Summary

Executive Summary

Introduction

The economic environment in 2011 demonstrated a mix of both positive and negative signs. Real GDP growth over the prior year, led by an increase in durable goods manufacturing activity, was seen as favorable; however, a meaningful increase in inflation and high unemployment continued to hinder a full economic recovery. Despite the mixed economic signals, U.S. financial markets once again showed signs of improvement in 2011, although not as strong as in 2010. The comeback of the mergers and acquisitions (M&A) market persisted with just under 4,000 completed deals in 2011, while the value and volume of such deals fell compared to the prior year, according to S&P Capital IQ. The decline was partially a result of a slow down in North American M&A deals stemming from uncertain domestic economic conditions and the crises overseas. Overall, the M&A landscape was similar to 2010 as buyers were flush with cash and capital markets were open. Houlihan Lokey has completed its 11th annual Purchase Price Allocation Study (the 2011 Study) by reviewing public filings for 1,323 completed transactions in 2011 and summarizing the results for certain transactions. The 2011 Study provides statistics, other annual data and a comparison to certain 2010 results (the 2010 Study) and 2009 results (the 2009 Study).

Executive Summary

Screening Criteria and Methodology

The universe of transactions initially considered in the 2011 Study was obtained from S&P Capital IQ using the following search criteria: Transaction closed in 2011 Acquirer was a U.S. publicly traded company Ownership percentage sought by acquirer was 50% or greater Base equity purchase price was disclosed The e initial t a sa sample p e co consisted s sted o of 1,323 ,3 3 t transactions. a sact o s. We reviewed ev ewed pub public c filings gs for o eac each co company pa y in t the e initial t a sa sample pe w with t t the e objective of finding detailed disclosures regarding purchase consideration (PC), identifiable intangible asset fair values and goodwill. Sufficient disclosures were provided for 452 transactions, which represented approximately 34% of the initial sample. These 452 transactions formed the basis of the 2011 Study.

Executive Summary

Screening Criteria and Methodology (cont.)

The primary objective of the 2011 Study was to review the amount of PC allocated to tangible assets, identifiable intangible assets and goodwill. In addition, the 2011 Study marks the second year contingent consideration (CC) recorded by acquirers, a component of PC per Generally Accepted Accounting Principles (GAAP), has been analyzed. PC is defined as the sum of the purchase p p price p paid and liabilities assumed in connection with a business combination. It is equivalent q to the fair value of the total assets of the target. Liabilities and
Assets Current Assets Shareholders Equity Non-Interest Bearing Liabilities Assumed Short-Term Interest Bearing Debt

Tangible Assets (Property, Plant and Equipment)

Purchase Consideration

Identified Intangible Assets

Purchase Pi Price

Long-Term Interest Bearing Debt

Goodwill

Equity

For the 2011 Study, identifiable intangible assets were classified into five categories, including: Developed technology (including patents) In In-process process research and development (IPR&D) Customer-related assets (including backlog, customer contracts and customer relationships) Trademarks and trade names (including domain names) Other (including non-compete agreements, licenses, contracts and core deposits, among others)
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Executive Summary

Screening Criteria and Methodology (cont.)

In addition to summarizing the allocation data according to intangible asset classes, we also conducted studies based on industry, deal size (as defined by PC) and lifing characteristics. With respect to industry, we classified the 2011 transactions into 13 categories: Aerospace, Defense & Government (ADG) Business Services Consumer, Food & Retail (CFR) Energy Financial Institutions Healthcare Industrials Infrastructure Services & Materials (ISM) Media, Sports & Entertainment (MSE) Real Estate, Lodging & Leisure (Real Estate) Technology Telecom Transportation & Logistics (Transportation) With respect to deal size, we stratified the allocation results across seven categories (PC, $ in millions): > $5,000 $1,000$5,000 $500 $500$1,000 $1,000 $250$500 $100$250 $50$100 < $50

With respect to lifing characteristics, we classified the summarized data for intangibles as either definite- or indefinite-lived assets. It should h ld be b noted d that h the h indefinite-lived d f l d assets exclude l d IPR&D, which h h must be b recorded d d as such h per ASC A 805 (formerly f l SFAS 141(R)), rather than having acquirer management determine whether or not the asset category has an indefinite life.

Executive Summary

Allocation of Intangible Assets and Goodwill

Summary Allocation Percentages 2011 Study

$ in millions

Count All Industries Aerospace, Defense & Government Business Services Consumer, Food & Retail Energy Financial Institutions Healthcare Industrials Infrastructure Services & Materials Media, , Sports p & Entertainment Real Estate, Lodging & Leisure Technology Telecom Transportation & Logistics 452 20 4 53 15 19 84 64 15 2 1 163 12 0

Purchase Consideration Median Mean $50 $154 61 56 548 460 73 63 116 14 8 27 128 NA $549 $227 114 385 2,153 1,240 431 675 1,748 14 8 294 1,093 NA

Low

Intangible Assets, % of PC High Median Mean 100% 63% 27% 95% 32% 49% 100% 78% 99% 31% % 100% 100% 86% NA 31% 31% 15% 38% 12% 13% 36% 24% 28% 27% % 100% 34% 30% NA 34% 30% 16% 38% 12% 16% 41% 27% 35% 27% % 100% 36% 33% NA

Low 0% 17% 17% 0% 13% 0% 5% 3% 6% 69% % 0% 2% 1% NA

Goodwill, % of PC High Median 92% 74% 56% 88% 60% 72% 87% 80% 68% 78% % 0% 92% 80% NA 43% 44% 35% 32% 26% 27% 41% 36% 25% 73% % NA 50% 24% NA

Mean 42% 47% 36% 33% 32% 33% 42% 37% 30% 73% % NA 49% 28% NA

0% 4% 8% 4% 1% 0% 1% 2% 1% 22% % 100% 1% 6% NA

Notes: Purchase consideration represents the equivalent to total assets, including equity, debt and non-interest bearing liabilities assumed, as applicable. Includes transactions done by U.S. U S listed public company acquirers completed in 2011. 2011

Executive Summary

Contingent Consideration

ASC 805 requires that CC (i.e., an earnout) be included in PC at its fair value. Approximately 26% of the transactions in the 2011 Study had CC in the purchase price. The median fair value of CC was $6.2 million, while the mean was $14.6 million. CC represented 16% and 20% of PC when measured on the median and mean, respectively.

Summary of Contingent Consideration 2011 Study

$ in millions

CC All Industries Aerospace, Defense & Government Business Services Consumer, Food & Retail Energy Financial Institutions Healthcare Industrials Infrastructure Services & Materials Media, Sports & Entertainment Real Estate, Lodging & Leisure Technology Telecom Transportation & Logistics 116 4 2 11 1 6 38 14 0 0 0 40 0 0

Count All 452 20 4 53 15 19 84 64 15 2 1 163 12 0

% 26% 20% 50% 21% 7% 32% 45% 22% 0% 0% 0% 25% 0% NA

CC Median Mean $6 $5 9 10 1 9 8 3 NA NA NA 5 NA NA $15 $5 9 21 1 17 23 6 NA NA NA 9 NA NA

PC Median $35 $25 56 64 31 162 45 15 NA NA NA 26 NA NA Mean $134 $112 56 101 31 534 199 44 NA NA NA 63 NA NA Low 1% 2% 5% 5% 4% 1% 1% 1% NA NA NA 1% NA NA

CC, % of PC High Median 61% 41% 16% 44% 4% 51% 61% 53% NA NA NA 58% NA NA 16% 13% 10% 21% 4% 10% 19% 12% NA NA NA 15% NA NA

Mean 20% 17% 10% 23% 4% 15% 21% 17% NA NA NA 21% NA NA

Observations and Results

Observations and Results

Transaction Volume

The number of transactions with sufficient disclosures for analysis decreased 11% from 2010 to 2011, from 506 to 452.
Our initial screening generated a population of 1,323 transactions. Of these deals, 871 transactions were not considered for

the following reasons: Financial statements did not present intangible asset values and/or PC information in a clear, reconcilable format for our purposes. The general asset and liability segmentation was insufficient to enable us to determine the nature of the intangible assets acquired. The number of transactions increased 4% from 2010 to 2011, 2011 from 1,271 1 271 to 1,323. 1 323
The number of transactions with sufficient disclosures decreased from 40% to 34% between 2010 and 2011, respectively.

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Observations and Results

Industry Results

Unlike the prior year, 10 of the 13 industries experienced decreases in the number of transactions available for the 2011 Study as compared to the 2010 Study.
On a percentage basis, Business Services, MSE and Telecom recorded the largest decreases at -91%, -82% and -59%

respectively.1 respectively
By transaction volume, Business Services recorded the largest decrease, declining by 39 transactions, while three of the 13

industries experienced a decrease in the number of transactions in the range of -10 to -20.
Energy, ISM, Real Estate, and Transportation recorded the smallest volume decrease in the range of -1 to -2 transactions. CFR, CFR Industrials and Technology experienced increases of 29%, 29% 39% and 13%, 13% respectively. respectively On a volume basis, basis the three

industries increased by 12, 18 and 19 transactions, respectively. When measured across all industries, the median percentage of PC allocated to identifiable intangible assets decreased from 32% to 31% from 20102 to 2011.
Real Estate and Transportation were the only two industries with less than 10 transactions in both the 2010 and 2011 Studies.

Real Estate declined 50% from two to one transactions, while Transportation declined 100% from one to zero transactions. The median percentage of PC allocated to identifiable intangible assets for Real Estate increased from 9% in the 2010 Study to 100% in the 2011 Study. The increase is due to the reliance on a single transaction indication in the 2011 Study compared to the inclusion of two transactions with total intangible assets representing 3.8% and 14.8% of PC in the 2010 Study. It should be noted that the small number of Real Estate and Transportation transactions (two or fewer in each industry in 2010 and 2011) skews results, making comparisons generally not meaningful.

1. Note that the Transportation industry had a 100% decrease, having reported one transaction in the 2010 Study to zero in the 2011 Study. 2. Kraft Foods Inc.s acquisition of Cadbury Limited and MetLife, Inc.s acquisition of American Life Insurance Company were excluded from this calculation, as the size of the transactions (PC of $30.7 billion and $118.7 billion, respectively) significantly impacted the weighted-average calculations.

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Observations and Results

Industry Results (cont.)

When measured on a weighted-average basis, the percentage of PC allocated to intangible assets decreased from 26% in 20101 to 24% in 2011.
The decrease in the amount of PC allocated to intangible assets on a weighted-average basis is primarily due to a change in the

percentage of transactions involving Technology companies. companies Transaction volume was up while total PC was down in the Technology industry in 2011. Transaction volume grew from 144 transactions in 2010 to 163 in 2011, whereas total PC decreased from $35 million in 2010 to $27 million in 2011. Technology companies, which had a median percentage of PC allocated to intangible assets of 36% in 2010 versus 34% in 2011, comprised 36% of transactions based on PC in 2011, as compared to 29% in 2010. Transactions in the Technology sector represent the highest weight among all the sectors.
Excluding all Financial Institution companies, the percentage of PC allocated to intangible assets decreased from 29% in 2010

to 26% in 2011. The median percentage of PC allocated to goodwill increased to 43% in 2011 from 38% in 2010.
The percentage of PC allocated to goodwill also increased when measured on a weighted-average basis, from 34% in 20101 to

36% in 2011.
Excluding Financial Institutions, the percentage of PC allocated to goodwill increased when measured on a weighted-average

basis (38% in 2011 versus 35% in 2010).

1. Kraft Foods Inc.s acquisition of Cadbury Limited and MetLife, Inc.s acquisition of American Life Insurance Company were excluded from this calculation, as the size of the transactions (PC of $30.7 billion and $118.7 billion, respectively) significantly impacted the weighted-average calculations.

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Observations and Results

Industry Results (cont.)

Summary Allocation Percentages 2011 Study

$ in millions

Count All Industries Aerospace, p , Defense & Government Business Services Consumer, Food & Retail Energy Financial Institutions Healthcare Industrials Infrastructure Services & Materials Media, Sports & Entertainment Real Estate, Lodging & Leisure Technology Telecom Transportation & Logistics 452 20 4 53 15 19 84 64 15 2 1 163 12 0

Purchase Consideration Median Mean $50 $154 61 56 548 460 73 63 116 14 8 27 128 NA $549 $227 114 385 2,153 1,240 431 675 1,748 14 8 294 1,093 NA

Low

Intangible Assets, % of PC High Median Mean 100% 63% 27% 95% 32% 49% 100% 78% 99% 31% 100% 100% 86% NA 31% 31% 15% 38% 12% 13% 36% 24% 28% 27% 100% 34% 30% NA 34% 30% 16% 38% 12% 16% 41% 27% 35% 27% 100% 36% 33% NA

Low 0% 17% 17% 0% 13% 0% 5% 3% 6% 69% 0% 2% 1% NA

Goodwill, % of PC High Median 92% 74% 56% 88% 60% 72% 87% 80% 68% 78% 0% 92% 80% NA 43% 44% 35% 32% 26% 27% 41% 36% 25% 73% NA 50% 24% NA

Mean 42% 47% 36% 33% 32% 33% 42% 37% 30% 73% NA 49% 28% NA

0% 4% 8% 4% 1% 0% 1% 2% 1% 22% 100% 1% 6% NA

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Observations and Results

Industry Results (cont.)

Similar to the overall results, roughly half of the industries showed only a small change (i.e., 5% or less) in the median amount of PC allocated to identifiable intangible assets compared to 2010.
Real Estate recorded the largest percentage increase of 91%, while Business Services recorded the largest percentage decrease

of -12%. 12% However, However these industries generally have relatively few transactions, transactions which could skew the allocation percentages. percentages Summary Allocation Percentages by Industry 2011 vs. 2010
$ in millions

2011 All Industries Aerospace, Defense & Government Business Services Consumer, Food & Retail Energy Financial Institutions Healthcare Industrials Infrastructure Services & Materials Media, Sports & Entertainment Real Estate, Lodging & Leisure Technology Telecom Transportation & Logistics 452 20 4 53 15 19 84 64 15 2 1 163 12 0

Count 2010 506 31 43 41 17 34 91 46 16 11 2 144 29 1

% Chg. -11% -35% -91% 91% 29% -12% -44% -8% 39% -6% -82% -50% 13% -59% -100%

Purchase Consideration 2011 2010 % Chg. $50 $154 61 56 548 460 73 63 116 14 8 27 128 NA $66 $112 46 103 270 242 66 52 125 17 10 35 69 20,343 -24% 38% 32% -46% 103% 90% 11% 22% -7% -22% -17% -22% 86% NA

Median Results Intangible Assets, % of PC 2011 2010 BPS Chg. 31% 31% 15% 38% 12% 13% 36% 24% 28% 27% 100% 34% 30% NA 32% 26% 27% 32% 15% 12% 44% 27% 21% 26% 9% 36% 35% 13% -1% 4% -12% 12% 6% -3% 1% -7% -4% 7% 0% 91% -2% -5% NA

Goodwill, % of PC 2011 2010 BPS Chg. 43% 44% 35% 32% 26% 27% 41% 36% 25% 73% NA 50% 24% NA 38% 41% 46% 33% 30% 23% 36% 25% 33% 46% 85% 44% 37% 22% 5% 3% -11% 11% -1% -4% 4% 4% 10% -9% 27% NA 6% -13% NA

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Observations and Results

Transaction Size

Approximately 72% of the transactions in the 2011 Study had PC below $250 million, which is a decrease from 74% in 2010. Similar to 2010, smaller transactions generally recorded slightly higher allocations to intangible assets and goodwill in 2011.
For transactions with PC below $250 million, intangible assets and goodwill averaged 33% and 43% of PC, respectively. In

2010, the corresponding percentages were 35% and 37%.

For transactions with PC above $250 million, intangible assets and goodwill averaged 27% and 38% of PC, respectively. In

2010, the corresponding percentages were 28% and 35%. The average transaction size decreased from $558 million1 to $549 million from 2010 to 2011, and the median transaction size also decreased from $65 million1 to $50 million. million

1. Kraft Foods Inc.s acquisition of Cadbury Limited and MetLife, Inc.s acquisition of American Life Insurance Company were excluded from this calculation, as the size of the transactions (PC of $30.7 billion and $118.7 billion, respectively) significantly impacted the transaction size calculations.

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Observations and Results

Transaction Size (cont.)

Summary Allocation Percentages by Size 2011 Study

$ in millions

Median Results
Count PC Median Mean $50 $8,979 2,180 660 327 158 69 15 $549 $8,716 2,176 695 345 161 71 18 Intangible Assets, % of PC Low High Median Mean 0% 2% 0% 1% 3% 1% 6% 1% 100% 38% 57% 68% 95% 69% 89% 100% 31% 22% 25% 28% 36% 27% 28% 35% 30% 28% 34% 20% 25% 28% 37% 28% 32% 38% 33% 27% Low 0% 5% 0% 0% 2% 1% 2% 1% Goodwill, % of PC High Median 92% 80% 76% 74% 82% 87% 79% 92% 43% 37% 35% 41% 47% 49% 35% 45% 43% 40% Mean 42% 36% 38% 37% 42% 46% 39% 43% 43% 38%

All Transactions PC > $5,000 $1,000 < PC < $5,000 $500 < PC < $1,000 $250 < PC < $500 $100 < PC < $250 $50 < PC < $100 PC < $50 Below $250 Above $250

452 14 33 31 49 51 47 227 72% 28%

Summary Allocation Percentages by Size 2011 vs. 2010

$ in millions

2011 All Transactions PC > $5,000 $1,000 < PC < $5,000 $500 < PC < $1 $1,000 000 $250 < PC < $500 $100 < PC < $250 $50 < PC < $100 PC < $50 452 14 33 31 49 51 47 227

Count 2010 506 15 34 38 47 75 60 237

% Chg. Ch -11% -7% -3% -18% 18% 4% -32% -22% -4%

Median Goodwill, % of PC 2011 2010 Ch Chg. 43% 37% 35% 41% 47% 49% 35% 45% 38% 31% 37% 35% 38% 37% 36% 38% 13% 20% -7% 16% 21% 31% -3% 19%

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Observations and Results

Indefinite-Lived Intangible Assets (cont.)

Indefinite-lived intangible assets accounted for 13% of the total intangible asset value in 2011, as compared to 26% in 2010.
The amount of intangible asset value represented by indefinite-lived intangibles assets declined to 13% in the 2011 Study from

18% in the 2010 Study.

The following are noteworthy transactions with a relatively large portion of intangible assets:

V.F. Corporations acquisition of Timberland LLC ($1.3 billion of the PC of $3.2 billion) Ecolab Inc.s acquisition of Nalco Holding Co. ($1.2 billion of the PC of $11.3 billion) Trademarks and trade names were the most common intangible assets to be considered as indefinite-lived.
In 2011, the number of transactions in the sample ascribed PC to trademarks and trade names remained unchanged at 58% as

compared to 2010.
Acquirers considered the purchased trademarks to be indefinite-lived assets less frequently in 2011 compared to the prior year

(18% in 2011 vs. 26% in 2010). It should be noted that the percentage of trademarks considered as indefinite-lived assets in 2011 is greater than the amount recorded in 2009 on both a count and percentage basis. Other intangible assets classified as indefinite-lived included (but are not limited to) global relationships, state license agreements and franchise licenses. Trademark and Trade Name Lifing Classification 2009 2011
Trademarks and Trade Names All Indefinite-Lived All Definite-Lived Mix of Definite- and Indefinite-Lived Total Count 2011 % of Total 18.2% 76.9% 4.9% 100.0% Count 2010 % of Total 25.6% 70.6% 3.8% 100.0% Count 2009 % of Total 15.7% 83.6% 0.7% 100.0%

48 203 13 264

75 207 11 293

22 117 1 140

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Observations and Results

Frequently Identified Intangible Assets

Developed technology, IPR&D, customer-related assets, and trademarks and trade names were the most commonly identified intangible assets. Other intangible assets typically included, among others, non-compete agreements, licenses, permits and other contracts or agreements. All four categories (developed technology, technology IPR&D, IPR&D customer-related customer related assets, assets and trademarks and trade names) recorded increases in the frequency of identification from 2010 to 2011. With respect to the amount of PC allocated to each of these categories from 2010 to 2011, developed technology, IPR&D, and trademarks and trade names recorded declines, and customer-related assets recorded an increase. Frequently Identified Intangible Assets 2009 2011
Count, % of Sample 2011 2010 2009 Developed D l p dT Technology h l Change IPR&D Change Customer-related Assets Change Trademarks and Trade Names Change 56.9% 56 9% 5.9% 16.8% 3.2% 79.0% 1 9% 1.9% 58.4% 0.5% 51.0% 51 0% 5.3% 13.6% -6.8% 77.1% 7 6% 7.6% 57.9% 15.2% 45.7% 45 7% 7.7% 20.4% 8.4% 69.5% -0.9% 0 9% 42.7% -4.9% 2011 Median % of PC 2010 2009 13.3% 13 3% 0.1% 8.8% -1.7% 15.4% -1.1% 1 1% 3.9% 0.8% 13.2% 13 2% -0.1% 10.5% 2.8% 16.5% 3 2% 3.2% 3.0% -1.1%

12.6% 12 6% -0.7% 4.5% -4.2% 15.7% 0 3% 0.3% 3.3% -0.6%

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Observations and Results

Developed Technology

In the 2011 Study, 257 transactions (57%) allocated PC to developed technology. The median allocation of PC to developed technology was 13%, while the mean was 18%. The following are observations for PC allocated to developed technology:
Technology comprises the greatest number of observations (130 with a median of 14%), up from last year of 119 observations

with a median of 15%.

The Telecom sectors PC allocated to developed technology decreased from a median of 27% in 2010 to 10% in 2011.

Summary of PC Allocated to Developed Technology 2011 Study

$ in millions

Developed All Industries Aerospace, Defense & Government Business Services Consumer, Food & Retail Energy Financial Institutions Healthcare Industrials I f Infrastructure Services S i &M Materials i l Media, Sports & Entertainment Real Estate, Lodging & Leisure Technology Telecom Transportation & Logistics 257 10 1 14 1 5 59 22 6 2 1 130 6 0

Count All 452 20 4 53 15 19 84 64 15 2 1 163 12 0

PC % 57% 50% 25% 26% 7% 26% 70% 34% 40% 100% 100% 80% 50% NA Median $44 $236 105 70 743 570 91 197 2 950 2,950 14 8 27 104 NA Mean $455 $241 105 126 743 824 392 914 4 203 4,203 14 8 295 153 NA

Developed Technology, % of PC Low High Median Mean 0% 0% 12% 0% 4% 1% 0% 1% 0% 4% 15% 0% 2% NA 95% 29% 12% 69% 4% 10% 92% 48% 12% 11% 15% 95% 34% NA 13% 9% 12% 6% 4% 3% 17% 6% 7% 8% 15% 14% 10% NA 18% 11% 12% 17% 4% 5% 24% 11% 6% 8% 15% 19% 14% NA

Low 1% 17% 56% 5% 44% 2% 7% 19% 14% 69% 0% 3% 1% NA

Goodwill, % of PC High Median 92% 74% 56% 88% 44% 72% 83% 60% 68% 78% 0% 92% 52% NA 47% 47% 56% 46% 44% 27% 41% 39% 33% 73% NA 52% 25% NA

Mean 47% 49% 56% 46% 44% 37% 43% 39% 35% 73% NA 51% 24% NA

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Observations and Results

Developed Technology (cont.)

As illustrated below, 153 deals (60%) allocated less than 15% of PC to developed technology, with the majority within the range of 10% to 15%. Distribution of PC Allocated to Developed Technology 2011 Study
25.0% 22.2%

20.0%

Percentage of f Transactions

15.0%

11.3% 10.0%

10.9% 8.9% 9.3%

11.3% 9.3%

6.2% 5.0%

6.6%

3.9%

0.0%

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Observations and Results

In-Process Research & Development

In the 2011 Study, 76 transactions (17%) allocated PC to IPR&D. The median allocation of PC to IPR&D was 5%, while the mean was 16%.

Summary of PC Allocated to IPR&D 2011 Study

$ in millions

IPR&D All Industries Aerospace, Defense & Government Business Services Consumer, Food & Retail Energy Financial Institutions Healthcare Industrials Infrastructure Services & Materials Media, Sports & Entertainment Real Estate, Lodging & Leisure Technology Telecom Transportation & Logistics 76 1 1 0 0 0 34 4 3 0 0 31 2 0

Count All 452 20 4 53 15 19 84 64 15 2 1 163 12 0

PC % 17% 5% 25% 0% 0% 0% 40% 6% 20% 0% 0% 19% 17% NA Median $148 $45 105 NA NA NA 305 1,638 12 NA NA 39 187 NA Mean $757 $45 105 NA NA NA 536 2,143 1,479 NA NA 831 187 NA Low 0% 25% 2% NA NA NA 0% 0% 3% NA NA 0% 1% NA

IPR&D, % of PC High Median 100% 25% 2% NA NA NA 100% 3% 86% NA NA 83% 4% NA 5% 25% 2% NA NA NA 11% 2% 5% NA NA 4% 2% NA

Mean 16% 25% 2% NA NA NA 23% 2% 31% NA NA 9% 2% NA

Low 1% 17% 56% NA NA NA 5% 33% 6% NA NA 3% 1% NA

Goodwill, % of PC High Median 92% 17% 56% NA NA NA 79% 48% 27% NA NA 92% 52% NA 45% 17% 56% NA NA NA 32% 39% 25% NA NA 51% 26% NA

Mean 42% 17% 56% NA NA NA 38% 40% 19% NA NA 51% 26% NA

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Observations and Results

In-Process Research & Development (cont.)

As illustrated below, 58 deals (76%) allocated less than 15% of PC to IPR&D, while 16 deals (21%) allocated more than 25% of PC to IPR&D. Distribution of PC Allocated to IPR&D 2011 Study
40.0% 36.8% 35.0%

Percentage e of Transactions

30.0%

25.0%

20 0% 20.0%

17.1%

15.0% 11.8% 10.0% 9.2% 7.9% 5.3% 5.0% 3 9% 3.9% 2.6% 0.0% 0.0% 5.3%

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Observations and Results

Trademarks and Trade Names

In the 2011 Study, 264 transactions (58%) allocated PC to trademarks and trade names. The median allocation of PC to trademarks and trade names was 3%, while the mean was 7%.

Summary of PC Allocated to Trademarks and Trade Names 2011 Study

$ in millions

Count Trademark and Trade Name All 452 20 4 53 15 19 84 64 15 2 1 163 12 0 % 58% 75% 50% 68% 53% 37% 44% 66% 67% 50% 100% 61% 50% NA Median $64 $164 171 71 645 570 72 72 423 15 8 34 336 NA

PC Mean $578 $264 171 320 2,113 2,204 410 595 2,604 15 8 260 2,086 NA

Trademark and Trade Name, % of PC Low 0% 0% 1% 0% 0% 0% 0% 0% 0% 2% 85% 0% 0% NA High 85% 13% 1% 85% 13% 9% 31% 38% 13% 2% 85% 36% 18% NA Median 3% 2% 1% 16% 2% 2% 2% 6% 5% 2% 85% 2% 1% NA Mean 7% 4% 1% 20% 3% 3% 5% 7% 6% 2% 85% 3% 5% NA Low 0% 25% 21% 0% 13% 2% 14% 7% 10% 78% 0% 3% 10% NA

Goodwill, % of PC High 92% 74% 49% 88% 60% 65% 87% 69% 68% 78% 0% 92% 80% NA Median 44% 44% 35% 31% 33% 27% 43% 37% 26% 78% NA 50% 29% NA Mean 42% 47% 35% 33% 34% 35% 43% 37% 32% 78% NA 49% 36% NA

All Industries Aerospace, Defense & Government Business Services Consumer, Food & Retail Energy Financial Institutions H lh Healthcare Industrials Infrastructure Services & Materials Media, Sports & Entertainment Real Estate, Lodging & Leisure Technology Telecom Transportation & Logistics

264 15 2 36 8 7 37 42 10 1 1 99 6 0

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Observations and Results

Trademarks and Trade Names (cont.)

As illustrated below, 161 deals (61%) allocated less than 5% of PC to trademarks and trade names.

Distribution of PC Allocated to Trademarks and Trade Names 2011 Study

50.0% 45.8% 45.0% 40.0%

Percentage e of Transactions

35.0% 30.0% 25 0% 25.0% 20.0% 15.2% 15.0% 10.0% 5.0% 0.0% 11.4% 8.0% 9.1% 4.9% 1.5% 0.8% 2.3% 1.1%

24

Observations and Results

Customer-Related Intangible Assets

In the 2011 Study, 357 transactions (79%) allocated PC to customer-related intangibles. The median allocation of PC to customer-related intangibles was 16%, while the mean was 17%.

Summary of PC Allocated to Customer-Related Intangible Assets 2011 Study

$ in millions

Count CustomerRelated Assets All 452 20 4 53 15 19 84 64 15 2 1 163 12 0 % 79% 100% 100% 79% 67% 63% 61% 91% 73% 100% 0% 84% 83% NA Median

PC Mean $521 $227 114 478 1,594 602 368 722 2,370 14 NA 344 394 NA

Customer-Related Assets, % of PC Low 0% 2% 7% 1% 0% 0% 1% 0% 2% 14% NA 0% 1% NA High 65% 59% 13% 49% 22% 34% 47% 58% 65% 18% NA 54% 52% NA Median 16% 15% 10% 19% 11% 14% 14% 16% 14% 16% NA 16% 23% NA Mean 17% 20% 10% 21% 9% 15% 16% 17% 18% 16% NA 17% 20% NA Low 0% 17% 17% 0% 13% 1% 14% 3% 10% 69% NA 2% 1% NA

Goodwill, % of PC High 92% 74% 56% 70% 60% 72% 82% 80% 68% 78% NA 92% 52% NA Median 44% 44% 35% 31% 41% 48% 44% 36% 26% 73% NA 49% 24% NA Mean 42% 47% 36% 31% 36% 40% 43% 37% 32% 73% NA 48% 25% NA

All Industries Aerospace, Defense & Government Business Services Consumer, Food & Retail Energy Financial Institutions Healthcare Industrials Infrastructure Services & Materials Media, Sports & Entertainment Real Estate, Lodging & Leisure Technology Telecom Transportation & Logistics

357 20 4 42 10 12 51 58 11 2 0 137 10 0

$62 $154 61 77 435 269 72 72 261 14 NA 32 55 NA

25

Observations and Results

Customer-Related Intangible Assets (cont.)

As illustrated below, 237 deals (66%) allocated greater than 10% of PC to customer-related intangibles.

Distribution of PC Allocated to Customer Customer-Related Related Intangible Assets 2011 Study

18.0% 16.2% 16.0% 14.3% 14.0%
Percentage o of Transactions

12.9% 12.0%

12.0% 10.1% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% 8 7% 8.7% 7.6% 9.2% 8.1%

0.8%

26

Observations and Results

Goodwill

In the 2011 Study, 434 transactions (96%) allocated PC to goodwill. The industry segmentation of the 18 transactions with zero goodwill is as follows: ADG, 1; Industrials, 3; CFR, 2 ; Energy, 4; Healthcare, 2; ISM, 2; Real Estate, 1; and Technology, 3. The median allocation of PC to goodwill was 43%, while the mean was 42%. As illustrated below, 269 deals (60%) allocated greater than 35% of PC to goodwill. Distribution of PC Allocated to Goodwill 2011 Study
35.0% 34.1%

30.0% 25.4%
Per rcentage of Transactions

25 0% 25.0%

20.0% 14.2%

15.0%

10.0% 6.2% 5.0% 2.0% 0.0% 1.8% 1.5% 3.1% 6.0% 5.8%

27

Appendices

Appendices
2010 Summary Results

2010 Summary Results

Developed Technology

In the 2010 Study, 258 transactions (51%) allocated PC to developed technology. The median allocation of PC to developed technology was 13%, while the mean was 19%. The following are observations for PC allocated to developed technology:
The Telecom sectors PC allocated to developed technology increased from 1% in 2009 to 27% in 2010 due to an increase in

the number of transactions, from one in 2009 to 14 in 2010, which allowed for a broader sample in 2010.
ISM had only two transactions in 2010 with PC allocated to developed technology, and the range was extremely broad (1% to

65%). There were no transactions available in the 2009 Study. Summary of PC Allocated to Developed Technology 2010 Study
$ in millions

Developed All Industries d Aerospace, Defense & Government Business Services Consumer, Food & Retail Energy Financial Institutions H lth Healthcare Industrials Infrastructure Services & Materials Media, Sports & Entertainment Real Estate, Lodging & Leisure Technology Telecom Transportation & Logistics 258 13 17 4 4 6 53 23 2 3 0 119 14 0

Count All 506 31 43 41 17 34 91 46 16 11 2 144 29 1

PC % 51% 42% 40% 10% 24% 18% 58% 50% 13% 27% 0% 83% 48% 0% Median $ $64 $183 104 1,850 5,251 218 96 32 358 17 NA 41 49 NA Mean $ $495 $250 699 3,375 7,364 547 435 183 358 20 NA 303 153 NA

Developed Technology, % of PC Low High Median Mean 0% 2% 0% 0% 0% 1% 0% 0% 1% 13% NA 1% 0% NA 91% 20% 28% 7% 6% 25% 70% 90% 65% 34% NA 91% 68% NA 13% 11% 4% 2% 4% 2% 24% 6% 33% 20% NA 15% 27% NA 19% 11% 7% 3% 4% 6% 24% 17% 33% 22% NA 21% 26% NA

Low 2% 5% 5% 15% 42% 10% 2% 8% 26% 21% NA 2% 4% NA

Goodwill, % of PC High Median 97% 67% 68% 89% 62% 62% 65% 56% 32% 70% NA 97% 68% NA 40% 36% 42% 37% 47% 41% 37% 33% 29% 58% NA 44% 27% NA

Mean 40% 36% 39% 44% 50% 39% 36% 31% 29% 50% NA 44% 34% NA

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2010 Summary Results

Developed Technology (cont.)

As illustrated below, the percentage of PC allocated to developed technology was fairly evenly distributed across the intervals, though 55% of deals accounted for less than 15% of PC allocated to developed technology. Distribution of PC Allocated to Developed Technology 2010 Study
16.0%

15.1% 14.3% 14.0%

14.0% 12.8% 12.0%

Percentage of T Transactions

10.9%

10.0% 8 5% 8.5% 8.0% 7.8% 6.2% 6.0% 4.7% 4.0%

5.8%

2.0%

0.0%

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2010 Summary Results

In-Process Research & Development

In the 2010 Study, 69 transactions (14%) allocated PC to IPR&D. The median allocation of PC to IPR&D was 9%, while the mean was 19%.

Summary of PC Allocated to IPR&D 2010 Study

$ in millions

IPR&D All Industries Aerospace, Defense & Government Business Services Consumer, Food & Retail Energy Financial Institutions Healthcare Industrials Infrastructure Services & Materials Media, Sports & Entertainment Real Estate, Lodging & Leisure Technology Telecom Transportation & Logistics 69 3 0 0 1 0 36 0 0 0 0 25 4 0

Count All 506 31 43 41 17 34 91 46 16 11 2 144 29 1

PC % 14% 10% 0% 0% 6% 0% % 40% 0% 0% 0% 0% 17% 14% 0% Median $133 $155 NA NA 10,214 NA 146 NA NA NA NA 91 131 NA Mean $818 $169 NA NA 10,214 NA 605 NA NA NA NA 917 254 NA Low 0% 0% NA NA 1% NA 1% % NA NA NA NA 0% 1% NA

IPR&D, % of PC High Median 100% 10% NA NA 1% NA 100% % NA NA NA NA 20% 9% NA 9% 2% NA NA 1% NA 18% % NA NA NA NA 5% 6% NA

Mean 19% 4% NA NA 1% NA 31% % NA NA NA NA 6% 6% NA

Low 2% 36% NA NA 42% NA 2% % NA NA NA NA 2% 4% NA

Goodwill, % of PC High Median 79% 74% NA NA 42% NA 65% % NA NA NA NA 79% 27% NA 29% 39% NA NA 42% NA 27% % NA NA NA NA 32% 20% NA

Mean 32% 49% NA NA 42% NA 30% % NA NA NA NA 33% 17% NA

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2010 Summary Results

In-Process Research & Development (cont.)

As illustrated below, 43 deals (62%) allocated less than 15% of PC to IPR&D, while 16 deals (23%) allocated more than 25% of PC to IPR&D. Distribution of PC Allocated to IPR&D 2010 Study
25.0% 21.7%

20.0%
Percentage of Transactions

15.0%

14.5%

14.5%

11.6% 10.1% 10.0% 8.7% 7.2%

5 0% 5.0% 2.9%

4.3%

4.3%

0.0%

33

2010 Summary Results

Trademarks and Trade Names

In the 2010 Study, 293 transactions (58%) allocated PC to trademarks and trade names. The median allocation of PC to trademarks and trade names was 4%, while the mean was 8%.

Summary of PC Allocated to Trademarks and Trade Names 2010 Study

$ in millions

Count Trademark and Trade Name All 506 31 43 41 17 34 91 46 16 11 2 144 29 1 % 58% 52% 67% 76% 41% 32% 55% 63% 75% 55% 0% 60% 48% 100% Median $78 $123 80 131 309 214 63 86 125 24 NA 50 49 20,343

PC Mean $739 $1,027 540 1,846 4,295 401 357 383 206 32 NA 422 299 20,343

Trademark and Trade Name, % of PC Low 0% 0% 0% 0% 2% 0% 0% 0% 0% 0% NA 0% 0% 1% High 84% 21% 15% 84% 38% 81% 84% 25% 6% 7% NA 75% 12% 1% Median 4% 4% 5% 16% 4% 2% 3% 8% 4% 2% NA 2% 1% 1% Mean 8% 8% 5% 21% 12% 11% 8% 9% 4% 3% NA 6% 3% 1% Low 0% 5% 5% 0% 30% 2% 7% 2% 20% 19% NA 2% 4% 22%

Goodwill, % of PC High 89% 72% 81% 89% 62% 62% 77% 56% 68% 70% NA 85% 68% 22% Median 39% 36% 46% 33% 39% 38% 40% 29% 35% 48% NA 44% 41% 22% Mean 40% 39% 44% 37% 41% 33% 38% 29% 39% 47% NA 45% 38% 22%

All Industries Aerospace, Defense & Government Business Services Consumer, Food & Retail Energy Financial Institutions H lh Healthcare Industrials Infrastructure Services & Materials Media, Sports & Entertainment Real Estate, Lodging & Leisure Technology Telecom Transportation & Logistics

293 16 29 31 7 11 50 29 12 6 0 87 14 1

34

2010 Summary Results

Trademarks and Trade Names (cont.)

As illustrated below, 173 deals (59%) allocated less than 5% of PC to trademarks and trade names.

Distribution of PC Allocated to Trademarks and Trade Names 2010 Study

39.9% 40.0%

35 0% 35.0%

Percentage o of Transactions

30.0%

25.0% 19 1% 19.1%

20.0%

15.0% 10.6% 10.0% 9.2% 6.8% 5.0% 4.1% 3.4% 2.7%

2.0%

2.0%

0.0%

35

2010 Summary Results

Customer-Related Intangible Assets

In the 2010 Study, 390 transactions (77%) allocated PC to customer-related intangibles. The median allocation of PC to customer-related intangibles was 15%, while the mean was 18%.

Summary of PC Allocated to Customer-Related Intangible Assets 2010 Study

$ in millions

Count CustomerRelated Assets All 506 31 43 41 17 34 91 46 16 11 2 144 29 1 % 77% 84% 98% 76% 71% 47% 56% 87% 81% 82% 50% 83% 97% 100%

PC Median $65 $123 51 352 279 265 35 74 158 17 7 41 78 20,343 Mean $688 $715 396 2,571 3,461 683 195 351 210 37 7 333 483 20,343

Customer-Related Assets, % of PC Low 0% 3% 2% 2% 1% 0% 0% 0% 4% 7% 13% 0% 1% 3% High 92% 43% 75% 29% 43% 85% 45% 46% 30% 64% 13% 92% 82% 3% Median 15% 20% 20% 9% 6% 20% 12% 16% 10% 18% 13% 13% 23% 3% Mean 18% 20% 23% 13% 14% 24% 15% 17% 13% 23% 13% 17% 28% 3% Low 1% 5% 5% 2% 1% 10% 7% 2% 20% 19% 85% 2% 4% 22%

Goodwill, % of PC High 92% 65% 92% 89% 62% 69% 77% 56% 68% 70% 85% 85% 68% 22% Median 39% 40% 46% 33% 24% 44% 41% 27% 36% 46% 85% 43% 36% 22% Mean 39% 42% 47% 35% 27% 43% 39% 27% 38% 45% 85% 43% 35% 22%

All Industries Aerospace, Defense & Government Business Services Consumer, Food & Retail Energy Fi Financial i l Institutions I i i Healthcare Industrials Infrastructure Services & Materials Media, Sports & Entertainment Real Estate, Lodging & Leisure Technology Telecom Transportation & Logistics

390 26 42 31 12 16 51 40 13 9 1 120 28 1

36

2010 Summary Results

Customer-Related Intangible Assets (cont.)

As illustrated below, 247 deals (63%) allocated greater than 10% of PC to customer-related intangibles.

Distribution of PC Allocated to Customer Customer-Related Related Intangible Assets 2010 Study

16.0% 15.4% 14.9%

14 0% 14.0% 11.5% 10.0% 10.0% 8.5% 8.0% 6.9% 11.8%

Percentage of Transactions

12.0%

11.3%

6.7%

6.0%

4.0%

% 3.1%

2.0%

0.0%

37

2010 Summary Results

Goodwill

In the 2010 Study, 482 transactions (95%) allocated PC to goodwill. The industry segmentation of the 24 transactions with zero goodwill is as follows: CFR, 1; Healthcare, 2; Technology, 3; Business Services, 3; Real Estate, 1; Telecom, 6; Energy, 4; ISM, 1; and Industrials, 3. The mean and median allocation of PC to goodwill was 38%. As illustrated below, 268 deals (53%) allocated greater than 35% of PC to goodwill. Distribution of PC Allocated to Goodwill 2010 Study
35.0% 34.4%

30.0%

Percentage of Transactions

25 0% 25.0%

20.0%

18.2%

18.6%

15.0%

10.0%

7.7% 5.1% 3.8% 1.6% 2.0% 2.2%

6.5%

5.0%

0 0% 0.0%

38

Appendices
Annual Comparison

Annual Comparison

Industry Summary
Median PC Allocated to Intangible Assets and Goodwill Annual Comparison Summary: 2009 - 2011
Median Results
Intangible Assets, % of PC 2011 2010 2009 All Industries Aerospace, Defense & Government Business Services Consumer, Food & Retail Energy Financial Institutions Healthcare Industrials I f Infrastructure S Services i &M Materials i l Media, Sports & Entertainment Real Estate, Lodging & Leisure Technology Telecom Transportation & Logistics 31% 31% 15% 38% 12% 13% 36% 24% 28% 27% 100% 34% 30% -32% 26% 27% 32% 15% 12% 44% 27% 21% 26% 9% 36% 35% 13% 32% 23% 29% 34% 10% 5% 45% 23% 10% 46% 25% 37% 27% 8% 2011 Goodwill, % of PC 2010 2009 38% 41% 46% 33% 30% 23% 36% 25% 33% 46% 85% 44% 37% 22% 40% 41% 55% 38% 16% 11% 37% 25% 43% 26% 17% 44% 41% 32%

43% 44% 35% 32% 26% 27% 41% 36% 25% 73% -50% 24% --

40

Annual Comparison

Developed Technology
Median PC Allocated to Developed Technology Annual Comparison Summary: 2009 - 2011
Median Results
Developed Technology, % of PC 2011 2010 2009 All Industries Aerospace, Defense & Government Business Services Consumer, Food & Retail Energy Financial Institutions Healthcare Industrials I f Infrastructure S Services i &M Materials i l Media, Sports & Entertainment Real Estate, Lodging & Leisure Technology Telecom Transportation & Logistics 13% 9% 12% 6% 4% 3% 17% 6% 7% 8% 15% 14% 10% -13% 11% 4% 2% 4% 2% 24% 6% 29% 20% -15% 27% -13% 11% 5% 1% -7% 20% 7% -6% -20% 1% 1% 2011 Goodwill, % of PC 2010 2009 40% 36% 42% 37% 47% 41% 37% 33% 27% 58% -44% 27% -41% 39% 57% 38% -39% 37% 38% -39% -46% 41% 53%

47% 47% 56% 46% 44% 27% 41% 39% 33% 73% -52% 25% --

41

Annual Comparison

In-Process Research & Development

Median PC Allocated to IPR&D Annual Comparison Summary: 2009 - 2011
Median Results
IPR&D, % of PC 2011 2010 2009 All Industries Aerospace, Defense & Government Business Services Consumer, Food & Retail Energy Financial Institutions Healthcare Industrials I f Infrastructure S Services i &M Materials i l Media, Sports & Entertainment Real Estate, Lodging & Leisure Technology Telecom Transportation & Logistics 5% 25% 2% ---11% 2% 5% --4% 2% -9% 2% --1% -18% ----5% 6% -10% 1% 0% 6% --26% 1% ---8% --2011 Goodwill, % of PC 2010 2009 29% 39% --42% -27% ----32% 20% -32% 42% 2% 41% --29% 31% ---34% ---

45% 17% 56% ---32% 39% 25% --51% 26% --

42

Annual Comparison

Trademarks and Trade Names

Median PC Allocated to Trademarks and Trade Names Annual Comparison Summary: 2009 - 2011
Median Results
Trademarks, % of PC 2011 2010 2009 All Industries Aerospace, Defense & Government Business Services Consumer, Food & Retail Energy Financial Institutions Healthcare Industrials I f Infrastructure S Services i &M Materials i l Media, Sports & Entertainment Real Estate, Lodging & Leisure Technology Telecom Transportation & Logistics 3% 2% 1% 16% 2% 2% 2% 6% 5% 2% 85% 2% 1% -4% 4% 5% 16% 4% 2% 3% 8% 4% 2% -2% 1% 1% 3% 2% 3% 16% 4% 1% 3% 5% 2% 4% -2% 0% 2% 2011 Goodwill, % of PC 2010 2009 39% 36% 46% 33% 39% 38% 40% 29% 35% 48% -44% 41% 22% 41% 35% 50% 38% -10% 41% 33% 39% 33% -46% 26% --

44% 44% 35% 31% 33% 27% 43% 37% 26% 78% -50% 29% --

43

Annual Comparison

Customer-Related Intangible Assets

Median PC Allocated to Customer-Related Intangible Assets Annual Comparison Summary: 2009 - 2011
Median Results
Customer-Related Assets, % of PC 2011 2010 2009 All Industries Aerospace, Defense & Government Business Services Consumer, Food & Retail Energy Financial Institutions Healthcare Industrials I f Infrastructure S Services i &M Materials i l Media, Sports & Entertainment Real Estate, Lodging & Leisure Technology Telecom Transportation & Logistics 16% 15% 10% 19% 11% 14% 14% 16% 14% 16% -16% 23% -15% 20% 20% 9% 6% 20% 12% 16% 10% 18% 13% 13% 23% 3% 17% 12% 25% 22% 9% 17% 25% 12% 6% 14% -12% 13% 20% 2011 Goodwill, % of PC 2010 2009 39% 40% 46% 33% 24% 44% 41% 27% 36% 46% 85% 43% 36% 22% 41% 41% 51% 41% 16% 30% 41% 25% 42% 31% -44% 41% 53%

44% 44% 35% 31% 41% 48% 44% 36% 26% 73% -49% 24% --

44

About Houlihan Lokey

About Houlihan Lokey

About Houlihan Lokey

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For more information, visit www.HL.com.

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Disclaimer

Disclaimer

Disclaimer

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