ACG/Thomson Mid-Year 2006 DealMakers Survey Records High Confidence Level by Boston M&A Professionals; 2006 on Track for Record M&A Year Corporate Cash, Active Buyout Firms Fuel Booming M&A Market.

BOSTON -- As worldwide mergers and acquisitions are on pace to break the year 2000 record, dealmakers are again expressing great optimism with 91% of Boston dealmakers saying the current M&A environment is good or excellent. The ACG/Thomson DealMakers Survey polled 1,201 investment bankers, private equity professionals, corporate executives, as well as lawyers, accountants and other service providers involved in the deal economy in May and June of 2006. Of the total respondents, 83 were from the Boston area.

"Boston dealmakers have cash they want to want to put to work," said Elliot Williams, president of ACG Boston, and president of Mirus Capital Advisors. "As companies see they can increase profitability by buying versus building, they become acquirers. Bankers are presenting compelling investment opportunities, and owners are getting good valuations for their businesses."

According to Thomson Financial, the total value of global M&A has reached $1.613 trillion so far in 2006 (as of June 13). That sum represents a 41% increase versus the corresponding period a year ago, when $1.143 trillion worth of deals were completed. The 2006 number is also on pace to surpass 2005's global M&A total of $2.769 trillion.

In addition, private equity firms, which have been busy investing existing funds and raising new ones, are chasing larger deals, often teaming up in "club deals" to challenge corporate "strategic" buyers.

M&A Objectives

Boston survey respondents say the primary objective of mergers and acquisitions is to:

1. Increase revenues and profitability (53%)

2. Grow market share (22%)

3. Gain technology (10%)

The company attribute that matters most to an acquirer today is:

1. Sales and revenue growth (49%)

2. Attractive business sector (18%)

3. Profitability (14%)

Hot M&A Sectors

Boston dealmakers see the following sectors experiencing the most merger activity in the second half of 2006:

1. Technology (36%)

2. Healthcare and life sciences (31%)

3. Business Services (18%)

Cross-Border M&A

Half (50%) of the Boston dealmakers polled expect to be involved in an international cross-border deal during the second half of 2006, and 39% say cross-border deals are becoming more important to their firms. Geographically, they anticipate these deals will be with:

1. Western Europe (61%)

2. Canada (37%)

3. China (32%)

Bad Deals

The primary reason mergers fail, according to respondents is:

1. Poor post-merger integration follow-through (38%)

2. Overpaying (25%)

3. Poor pre-merger integration planning (14%)

Organic Growth

Boston respondents say the sectors that will experience the most organic growth are:

1. Healthcare, life sciences (36%)

2. Business Services (26%)

3. Technology (22%)

Executives are also bullish on organic growth based on these elements serving as primary factors fueling organic growth in 2006:

1. An improved domestic economy (63%)

2. Ability to charge higher prices (12%)

3. Historically low interest rates (5%)

Executives caution, however, that energy costs (33%) and rising interest rates (22%) are potential impediments to further organic growth.

Private Equity

Boston private equity professionals say the deal size and type that hold the most promise are:

1. Small buyouts (26%)

2. Middle market buyouts (24%)

3. Later stage venture capital (18%)

Geographically, the areas with the greatest potential for private equity investments are:

1. United States (44%)

2. China (22%)

3. India (9%)

4. Western Europe (6%)

5. Eastern Europe (6%)

In addition to looking for new investments and exits for their portfolio companies, 41% of Boston private equity professionals say they are more focused on growing the top-lines of those companies. The ways they plan to increase top-line growth are:

1. Add to sales team (38%)

2. Enter into new strategic partnerships (24%)

3. Add new distribution channels (17%)

4. Add to senior management team (17%)

5. Launch new marketing program (4%)

In an increasingly competitive environment, the primary reason private equity professionals won their most recent deals is:

1. Industry sector knowledge (52%)

2. Reputation or brand of their firm (38%)

3. Pre-existing relationship with company management (31%)

4. Lack of competition (28%)

5. Paid highest price (21%)

According to Buyouts Magazine, there were 223 LBO and mezzanine funds raising capital in the first quarter, which together amassed $34.75 billion in new commitments. The robust figures are coming on top of a record breaking year, as U.S. buyout shops closed on a total of $173.5 billion in 2005.

Meanwhile, venture firms are also returning to the market. Thomson Venture Economics and the National Venture Capital Association (NVCA) reported that there were 51 venture funds raising capital in the first quarter that collectively accumulated $6.5 billion.

The record fundraising has translated into a record amount of deals. U.S. firms completed roughly $42 billion worth of disclosed transactions in the first quarter, following 2005's total of $197.75 billion, according to Buyouts' data.

The deal sizes also appear to be growing. There's currently a roughly $22 billion bid on the table to take energy company Kinder Morgan private. While the deal, if completed, wouldn't unseat RJR Nabisco as the largest buyout of all time, it is clear RJR's $25 billion mark is within reach.

"The record amount of funds being raised hasn't shown any signs of letting up," said Buyouts Managing Editor Ken MacFadyen. "And as long as the debt markets remain accommodating and there are no hiccups in the economy, private equity deal volume can only be expected to continue its ascent as well."

Survey Methodology

The survey, conducted in May 2006, was completed by 83 Boston area ACG members and Thomson Financial customers. Respondents were comprised of private equity, venture capital and buyout firm members (27%); investment bankers, intermediaries, brokers (23%); lenders, finance providers (4%); corporate professionals, entrepreneurs (8%); and service providers, such as lawyers, workout specialists, accountants and consultants (39%).

About ACG

ACG Boston (Association for Corporate Growth's Boston Chapter) is one of 51 local chapters around the world that form the international ACG organization, which focuses on corporate growth, corporate development, and mergers and acquisitions. ACG Boston is the single largest of the 51 chapters, with more than 800 members. Leaders in corporations, private equity, finance, and professional service firms focused on building value in their organizations belong to ACG. Founded in 1954, ACG (www.acg.org) stands at almost 10,000 members representing Fortune 500, Fortune 1000, FTSE 100, and mid-market companies in 51 chapters in North America, Europe and Asia. More information about ACG's Boston Chapter can be found at www.acgboston.org.

About Thomson Financial

Thomson Financial is a US$1.73 billion provider of information and technology solutions to the worldwide financial community. Through the widest range of products and services in the industry, Thomson Financial helps clients in more than 70 countries make better decisions, be more productive and achieve superior results. Thomson Financial is part of The Thomson Corporation (www.thomson.com), a global leader in providing integrated information solutions to more than 20 million business and professional customers in the fields of law, tax, accounting, financial services, higher education, reference information, corporate e-learning and assessment, scientific research and healthcare. With revenues of US$8.10 billion, The Thomson Corporation lists its common shares on the New York and Toronto stock exchanges (NYSE: TOC; TSX: TOC).