Ohio Merger Professionals Express High Confidence In Year-End 2006 ACG/Thomson DealMakers Survey.

Private Equity, Easy Debt, Global Growth Fuel Deals

CLEVELAND -- A record $3.8 trillion year in global mergers and acquisitions has led Ohio dealmakers to call the current M&A environment good or excellent (95%), with almost half (44%) expecting further merger acceleration in the first half of 2007, according to a new survey by Association for Corporate Growth (ACG) and Thomson Financial. Fifty-one percent of Ohio survey respondents expect M&A activity to remain the same, and only 5 percent expect the pace to slow.

The ACG/Thomson DealMakers Survey polled 1,230 investment bankers, private equity professionals, corporate development professionals, as well as lawyers, accountants and other service providers involved in the deal economy in December 2006.

"Cash, confidence and competition drove strong M&A activity in 2006 both nationally and locally," said Guy C. Fabe, president of ACG Cleveland and partner, PricewaterhouseCoopers LLP. "None of these are in short supply as we enter the 2007. Strategic buyers see that they can increase profitability faster by buying versus building, while private equity buyers have cash and expertise to put to work. Business owners looking for exit opportunities see this as a good time to be a seller, and investment bankers are presenting attractive investment opportunities."

The 2006 merger worldwide total of $3.8 trillion was 38 percent higher than last year's total, and surpassed the previous 2000 record of $3.4 trillion, according to Thomson Financial. The number of large transactions also beat the 2000 record, with 55 transactions of more than $10 billion in 2006 versus 39 in 2000. In the United States, half of the top 10 deals were done by private equity firms, which have been playing an increasingly active role fueled by record sized funds and easy access to debt financing.

M&A Drivers

Ohio survey respondents say the primary driver of M&A activity in the next six months will be:

1. Hefty capital reserves of some acquirers (51%)

2. Good multiples for companies being acquired (22%)

3. Improved domestic economy (8%)

4. Increased investment banking activity (8%)

Sellers Market

When asked which side of the transaction is in the best position today, Ohio M&A pros overwhelmingly said:

1. Sellers (79%)

2. Buyers (8%)

Hot M&A Sectors

Dealmakers anticipate the following sectors experiencing the most merger activity in the first half of 2007:

1. Manufacturing and Distribution (22%)

2. Business Services (19%)

3. Technology (19%)

M&A Objectives

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

1. Grow market share (49%)

2. Increase revenues and profitability (43%)

3. Gain technology (3%)

4. Diversify geographically (3%)

5. Acquire competitor (3%)

Cross-Border M&A

Almost half (43%) of dealmakers polled expect to be involved in an international cross-border deal during the first half of 2007, and 54% say cross-border deals are becoming more important to their firms. Geographically, they anticipate these deals will be with:

1. Western Europe (45%)

2. China (45%)

3. Canada (35%)

In 2006, European deals increased 39% to $1.4 trillion, even more than the 36% increase to $1.6 trillion in the United States, close to the $1.7 trillion record set in 2000.

"Dealmaking in Western Europe is always a couple of years behind the United States," said ACG President and CEO Daniel Varroney. "As European economies gain strength and as increased capital flows to Europe in search of new investment opportunities, European M&A is poised to take off."

Private Equity

Liquidity Events

Private equity professionals say the greatest opportunity for liquidity events for their portfolio companies in the next six months are:

1. Sale to strategic buyer (55%)

2. Sale to financial buyer (27%)

Greatest Threat

Private equity professionals say the greatest threat they face is:

1. Lower returns (40%)

2. Competition with other private equity firms (33%)

3. Competition with strategic buyers (13%)

Proprietary Deal Flow

Most deals are competitive. Survey respondents said of their deals:

* Less than half are proprietary (77%)

* More than half are proprietary (22%)

"It's an extremely competitive marketplace right now," said ACG's Varroney. "Global competition is driving up deal prices, making it a great time to sell a company. The private equity firms have large funds to put to work, many corporations have large cash coffers and growth ambitions, and now hedge funds are getting increasingly involved. This is driving up acquisition prices. For funds, competition could put pressure on returns, and for corporations, it's making acquisitions more difficult."

Acceptable IRR 

Private equity professionals say the lowest internal rate of return they will accept when bidding on a transaction is:

* 5-10% (0%)

* 11-15% (0%)

* 16-20% (0%)

* 21-25% (80%)

* 26-30% (10%)

* 31-35% (10%)

* 36%+ (0%)

Debt Market

The days of easy financing may be ending. According to survey participants, one year from the now the debt market will be:

1. A little worse (56%)

2. The same (44%)

Organic Growth

Hot Growth Sectors

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

1. Healthcare, Life Sciences (47%)

2. Technology (17%)

3. Business Services (14%)

Potential Growth Impediments

Executives caution, however, that the following factors could slow growth:

1. Energy (36%)

2. Labor costs (19%)

3. Terrorism/War (14%)

Survey Methodology

The survey, conducted in December 2006, was completed by 1,230 ACG members and Thomson Financial customers. Respondents were comprised of private equity, venture capital and buyout firm members (22%); investment bankers, intermediaries, brokers (25%); lenders, finance providers (12%); corporate professionals, entrepreneurs (17%); and service providers, such as lawyers, workout specialists, accountants and consultants (25%). The majority of respondents were from the United States (1,114), where 45 states were represented. Internationally, executives from 25 countries completed the survey.

About ACG

Founded in 1954, the Association for Corporate Growth (ACG) is a global association for professionals involved in corporate growth, corporate development, and mergers and acquisitions. Today ACG stands at nearly 11,000 members from corporations, private equity, finance, and professional service firms representing Fortune 500, Fortune 1000, FTSE 100, and mid-market companies in 53 chapters in North America and Europe. For more information, please visit www.ACG.org. For more information about ACG Cleveland please visit, http://www.acg.org/cleveland/.

About Thomson Financial

Thomson Financial, with 2005 revenues of US$1.9 billion, is a 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$8.50 billion, The Thomson Corporation lists its common shares on the New York and Toronto stock exchanges (NYSE:TOC)(TSX:TOC).