1. RSM International Conference, Singapore 2007 RSM McGladrey Inc. and the Private Equity Industry Jeff Johnson, Executive Managing Director Tom Dobosenski, Executive Vice-President, Business Consulting

2. RSM International Conference, Singapore 2007 Agenda Overview of the PEG market TSS practice in the states PEG international strategies and activities Questions

3. RSM International Conference, Singapore 2007 United States market definition – summary Number of Targeted Private Equity Firms Portfolio Holdings (Number of Companies) Summary – U.S.1,2377,422 PEG Clients – RSM McGladrey 174480

4. RSM International Conference, Singapore 2007 Market definition

5. RSM International Conference, Singapore 2007 Private equity groups (PEGs): Key points about the market PEGs are national in scope (usually concentrated in a geography) –Many have multiple deal sourcing and deal making locations. –Owned or targeted portfolio companies are located throughout the U.S. and internationally. –Example clients: –American Capital – eight U.S. and two international offices; 160 portfolio companies. –Audax Private Equity – two U.S. offices; 34 transactions over two years; portfolio companies across the country.

6. RSM International Conference, Singapore 2007 PEGs: Key points about the market Significant flow of capital into the private equity space — in conjunction with the PEG national/international “make money wherever you can” philosophy — creates a widely dispersed market opportunity. Size, complexity and geographic dispersion of the market sector demands a planned and sophisticated level of relationship management and coordination. While transaction support services (TSS) and due diligence is the typical service line entry into a private equity entity, traditional firm services generate another two to three times the annual revenue developed by TSS.

7. RSM International Conference, Singapore 2007 PEGs: Key points about the market PEG corporate dealmakers and portfolio managers want to be served seamlessly through a key “relationship point” — addressing both service needs and the ability to resolve issues quickly and efficiently. –Flexibility in our relationship management and service delivery processes is important, as many PEGs have unique desires and expectations on how they want to be served. –Additionally, it is critical to have dedicated audit and tax expertise, such as purchase accounting and deal structure tax capabilities, in proximity to portfolio company locations.

8. RSM International Conference, Singapore 2007 PEGs: Key points about the market Because the private equity sector is cyclical, continued growth is dependent upon our ability to develop and support non-traditional services beyond TSS, audit and tax. –A Corporate Analytics Practice — including M&A, reverse due diligence, corporate finance and turnaround services — leverages the skills of many TSS personnel and allows the firm to maintain core personnel, market share and profitability during an economic downturn. –Requires investment, structure decisions, business plan development, methodology design and rollout and staffing plans.

9. RSM International Conference, Singapore 2007 PEGs: Key points about the market Client service personnel indicate the keys to capture market share include: –Treating the PEG entity as a national/international organization without regard to internal firm boundaries. –Nationally-focused practice with international capabilities. –Dedicated resources (subject matter expertise). –Ability to leverage resources and knowledge — including industry expertise — across the firm. –Speed to market – in the context of service delivery.

10. RSM International Conference, Singapore 2007 PEGs: Key points about the market –Rapid response to service needs and timelines. –Dedicated teams of professionals in TSS, audit and tax. –Consistent work product from all locations including international. –Audit and tax providers for the portfolio companies who know the technical aspects and capital structure issues that are common in the PEG arena. –Middle-market knowledge and expertise can be a differentiator. –The PEG must feel that they are the ultimate client.

11. RSM International Conference, Singapore 2007 PEGs: Key points about the market Some private equity corporate dealmakers show high interest in sourcing deals. –Provides entrée to key decision makers and opens a relationship- based dialogue. –Generates opportunities and revenue in TSS and traditional services at both the PEG and portfolio companies. –Leveraging RSM EquiCo for this.

12. RSM International Conference, Singapore 2007 PEG mission and service line diagram “Our Pitch and our Brand”“Market Entry Points” Private Equity Group (PEG) Established Fund buys companies, owns and operates portfolio companies Require four types of services: Fund services Transaction services Portfolio services Other services Transaction Support Services (TSS) The transaction support team - Reviews the transaction details Advises on the deal Assists in acquisition matters as needed These services are primarily quality of earnings oriented and are provided by transaction support specialists and tax specialists. (An integrated service line strategy)

13. RSM International Conference, Singapore 2007 Mission statement: Transaction support services RSM McGladrey entities and RSM EquiCo will be the leading providers of professional services to PEGs and their portfolio companies in the U.S. Provide transaction support services and certain specialized tax services to PEGs through a national service line delivery model. Attest (M&P), tax and consulting services will be delivered by dedicated specialists from economic units within geographic boundaries. Establish RSM McGladrey as the best alternative to the Big Four service providers. Through a center of excellence leadership structure, we will use our international affiliates to seamlessly provide transaction support and other key professional services throughout the world.

14. RSM International Conference, Singapore 2007 Value proposition: Transaction support services “A key entry point to the PEG” National practice in the U.S. –Integrated practice approach –Regional centers Middle-market focus Experienced, dedicated transaction support specialists Broad industry coverage

15. RSM International Conference, Singapore 2007 U.S. transaction support services team Basic principles and team philosophy –On call –Travel ready –Quick, but effective –Consistent Quality –Coverage –Not geographic focused Team snapshot Key numbers ―Projected TSS FY08 Revenue$15 million ―Projected FY08 Revenue From PEG industry$65 million ―On pace for 200 deals in FY08

16. RSM International Conference, Singapore 2007 Transaction support services for private equity and strategic buyers Buy-side due diligence representation –Financial –Operational –Tax –Technology –Human Resources Reverse/vendor diligence –Carve-outs –Divestitures –Spin-offs –Sale planning

17. RSM International Conference, Singapore 2007 How do we add value? Detailed analysis of the business –Identify the drivers and various trends in the business in a short amount of time –Bridge the gap between historical and projected operating results Deal issues and breakers –TSS professionals are skilled at determining which issues are important to the buyer –Examples: revenue recognition, changes in accounting, margin sustainability, accrual reversals, customer analysis

18. RSM International Conference, Singapore 2007 How do we add value? Quality of earnings –Validate EBITDA on a “normalized” basis –Examples: non-recurring items, lack of accruals, out of period adjustments, accounting adjustments, run-rate –Most transactions valued on multiple of EBITDA Quality of net assets –Assess how adjustments to EBITDA impact the balance sheet –Many purchase agreements include tangible net worth criteria

19. RSM International Conference, Singapore 2007 How do we add value? Working capital –Assess historical fluctuations in working capital levels due to seasonality and other factors –Assist client negotiations and establish the estimated working capital as of the closing date –Working capital adjustments are dollar for dollar adjustments based on a closing balance sheet

20. RSM International Conference, Singapore 2007 Targeting PEGs is fundamental to our success – focus is power – our PEG criteria Committed fund, active pledge fund, or active family office Fund size between $100 million and $1 billion Target company size of $20 million to $500 million Active transaction history – three to four acquisitions annually Propensity to use RSM McGladrey Portfolio consistent with firm and practice strengths

21. RSM International Conference, Singapore 2007 Principles of serving the PEG industry: Basic elements and organizational assumptions Relationship management – one point of contact Knowledge of who owns the PEG and how it is managed Knowledge of what a PEG owns (associated portfolio companies) penetration of the PEGKnowledge of the service opportunities from every angle – penetration of the PEG Earning the right to advance, developing a PEG service plan

22. RSM International Conference, Singapore 2007 TSS metrics Our targeted goals 1.Number of TSS projects 2.Average size 3.Realized rate 4.Repeat TSS engagements (4 to 1) 5.Number of PEGs added and what we are doing for them 6.RSM McGladrey EUs engaged (as measured by No. 1 and No. 5) 7.RSM McGladrey EUs’ effectiveness –Integration –Penetration –Cooperation

23. RSM International Conference, Singapore 2007 TSS metrics Our targeted goals (continued) 8.People –Personnel added (net of losses) –Turnover (below firm average) –Utilization 9.Customer satisfaction reports – all PEG services

24. RSM International Conference, Singapore 2007 PEG international strategies Follow the flow of investment money to and from U.S. and international locations using knowledge of transactions affecting both client base and PEG activity. – Identify fit with PEGs who want our approach. Organize our delivery system in center of excellence format (as required by clients). Capitalize on our uniform delivery methodology and jointly build the TSS team, activity and quality service. Focus the U.S. team on those who have experience to build the center of excellence in international methods and services. Capitalize on a more uniform approach to a go-to-market philosophy that incorporates the multiple entry points of service for a PEG and relationship management ($1 of transaction revenue for $3 to $5 of other PEG work).

25. RSM International Conference, Singapore 2007 PEG international activities Make available and conduct similar methodology training courses for both technical and some methodology. RSM McGladrey will coordinate with RSM International on training. Coordinate center of excellence locations on sales and service. Continue to build resources for TSS support – the U.S. has initiated a service building plan and will share this result, activity and successful methodology. Develop international metrics like the U.S. is currently doing for each of its PEG markets. Assistance from Bob Jensen as required.

26. RSM International Conference, Singapore 2007 PEG international activities Build TSS activity and relationships on a few internationally-active PEGs where we already have transactions and have proved our service promise (Audax). Funnel all client activity through a limited number of TSS partners so that we begin with high-quality deliverables and services. Key – John Schmidt, Bill Spizman and Michael Grossman will be the identified transaction active funnels. Provide international community with RSM McGladrey go-to-market PEG materials so they can be modified for the specific locations. Bob Jensen will participate in the go-to-market synergies and pull together market active teams on a center of excellence basis.

27. RSM International Conference, Singapore 2007 Questions

28. Additional TSS and PEG industry operational information

29. RSM International Conference, Singapore 2007 PEG: Client service Philosophy for service – single national service format for TSS Methodology and reporting for TSS Scheduling – regionalized and weekly Client services success stories Next phase of TSS efforts – integration with tax and assurance leaders Focus for next six months – integration of industry leadership in TSS services –Lake Capital – Service PEG (Chicago) >Four audits >Two TSS >Replaced Deloitte –Summit – General PEG (Denver) >Called regarding lack of coordination from RSM >Called RSM PEG Assurance contact >Successfully assigned a Managing Director to coordinate from Denver

30. RSM International Conference, Singapore 2007 PEG: Marketing The “Diamond” – institutionalize the integrated team approach Branding – constant and consistent effort to illustrate we are in this business Best practices in presentations (available to all) –SOQ (statement of qualifications) –The team (bios) –The products –The plan for our cross-functional team to get in front of them

31. RSM International Conference, Singapore 2007 PEG: Marketing Making the pitch – two situations to be aware of: branded and unbranded ACG – branding A short-term solution is underway to capture PEG activity Information – a critical element to success of the penetration goal. IT solution sought to answer these basic questions and link the answers: –Who owns them? –What do they own? –What are we doing for them?

32. RSM International Conference, Singapore 2007 PEG: Sales Identify the PEGs Use RSM McGladrey’s criteria for selecting PEGs Go to market and make calls (with BDs) BD involvement (plan) Deals by RSM EquiCo Integration with RSM EquiCo’s Capital Market organization –Cooperating with PEG involvement –Co-marketing to legal profession –Tracking industry approach

33. RSM International Conference, Singapore 2007 PEG: Sales Know the pitch Know the resources Team on market identification and sizing of PEGs Team on prioritization Execute role on sales calls Execute role on relationship

34. RSM International Conference, Singapore 2007 PEG: Audit and accounting Training issues –Certain areas of GAAP and GAAS are almost always present in PEGs and the PEG-owned companies: –Convertible instruments, warrants and other similar instruments –Other equity issues, such as stock options and restricted stock grants –Business combination issues –Goodwill and indefinite life impairment –Stock redemption issues –Auditing fair value, including obtaining necessary annual valuations –Understanding PEG motivation and how this affects audit risk determination

35. RSM International Conference, Singapore 2007 PEG: Tax update TSS/M&A leader –Integration of tax advice in TSS and M&A projects should be a significant element of the leader’s role. –Universal value-add feature of tax consulting in the due diligence and deal structure: Integrate tax advice into the TSS and M&A process and service offering should be the one of the major duties and responsibilities of the TSS/M&A leader.

36. RSM International Conference, Singapore 2007 Private equity group: Operating structure Executive Managing Director Specialty Consulting Services Executive Managing Director Specialty Consulting Services National Director - TSS & Private Equity Group Services National Director - TSS & Private Equity Group Services National Director Multiple Office Client Coordinator (50% of National Accounts Office) National Director Multiple Office Client Coordinator (50% of National Accounts Office) Advisory Council for Delivery and Sales Tax NA&A EquiCo Representative Sales Advisory Council for Delivery and Sales Tax NA&A EquiCo Representative Sales Location Business Developer Location Business Developer Location Business Developer Location Business Developer Location Business Developer Location Business Developer Governance Council RBD EVP Sales Midwest Region Service Line Leader South Region Service Line Leader West Region Service Line Leader East Region Service Line Leader Operations and Production

37. RSM International Conference, Singapore 2007 Organizational implementation PEOPLETEAMRESOURCES TALENT MANAGEMENT TALENT KNOWLEDGE / UTILIZATION Human Resources – Onboarding, Compensation, Performance Management, Training Manage the knowledge/talent of the group and schedule and maintain the utilization of the PEG/TSS group TALENT ACQUISITION Fill the needs of the group through: Full-time Resources Audit part-time resources from RSM EUs Contract resources (former partners) Engagement ready resources

38. RSM International Conference, Singapore 2007 TSS team responsibilities Project leaders –Lead fieldwork –Coordinate tax due diligence and IT due diligence, if applicable –Review workbook prior to fieldwork –Coordinate reviews (need to provide reviewers enough time prior to client delivery) Team members –Principally prepare workbook analysis –Analyze for trends and areas of risk –Research logistics, such as hotel –Binder preparation