More online: http://www.boyarmiller.com/news-and-publications/events/breakfast-forum-the-current-state-of-the-capital-markets-2015/ As part of its ongoing Breakfast Forum series, BoyarMiller gathered industry experts for a panel discussion on the Current State of the Capital Markets. Speakers included: Drew Kanaly, Kanaly Trust – Equity & the Public Markets Colt Luedde, GulfStar Group – Private Equity and M&A Brandon Annett, Texas Capital Bank – Commercial Banking & Real Estate Lending

1. 2015 STATE OF THE INDUSTRY
Capital Markets

2. To Our Readers,
As part of our commitment to knowing our financial clients’ business, we collect insights
on the capital markets from some of the best minds in the industry. This understanding
contributes to how we deliver counsel that exceeds our clients’ expectations and our
ability to help them make strategic decisions about their business.
The information in this ebook has been invaluable to us and to our clients, and we hope
that it will benefit you as well.
Read some of the trends and best practices gathered from industry-leading clients and
our own capital markets team. If you find value in it and would like to hear more, join us
for our next BoyarMiller Breakfast Forum.
Sincerely,
CHRIS HANSLIK
Firm Chairman
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TABLE OF CONTENTS
03 : State of the Industry
04 : Expert Insights
Equity and the Public Markets
Private Equity and M&A
Commercial Banking and Real Estate Lending
07 : Attorney Insights
Current State of the Capital Markets –
Middle Market MA and Private Equity
10 : Practice Leaders
LEARN MORE ABOUT THE FORUM

3. Energy showed promise for people
who believed this downturn would
be a good entry point into the indus-
try. Many of them still see the time
for significant investment as 6-9
months in the future.
CAPITAL AVAILABILITY,
ESPECIALLY ON THE DEBT SIDE
+
EARNINGS GROWTH AMONG
PRIVATE COMPANIES
ENERGY, HEALTHCARE AND TECHNOLOGY
ARE THE MOST ACTIVE SECTORS FOR MA
MACROECONOMIC
OUTLOOK
MA ACTIVITY IS STRONG
PAGE 03
State of the
Capital Markets
6th year of a strong,
active MA market
A year ago, the consensus among
Wall Street analysts was that SP 500
earnings would experience 10% growth
in 2015. Today, there is no growth.
Private companies are seeing growth
that outpaces that of the larger, public
companies in the SP 500.
EARNINGS: PUBLIC VS. PRIVATE
Public
Private
Technology remains an active
sector because it is growing and
influencing people’s daily lives in
more and more ways.
Healthcare markets have changed
so much as a result of recent legisla-
tion that many believed there would
be opportunity in the dislocation
and change.
U.S. dollar is
gaining strength
Domestic unemployment
is at 5.1%, its lowest since
the Great Recession
U.S. domestic
companies are very
healthy right now
U.S. GDP growth rates
have slowed
Pullback in Chinese
consumer and manufac-
turing sector, resulting
in yuan devaluation
Concerns in the
Eurozone, particularly
with regards to Greek
economic turmoil

4. WHAT ARE WE SEEING?
• FIRST SIGNIFICANT DECLINE OF 10% IN MORE THAN
46 MONTHS
This is a natural occurrence in the marketplace, a cor-
rection that occurs cyclically. In fact, the only anoma-
lous part of this decline is that it has been a much
longer interval than normal since the last correction.
• PAY ATTENTION TO VOLATILITY PREDICTIONS
The VIX – a measure of expected volatility looking 30
days out – is showing a spike in expected volatility into a
part of the chart that indicates “flat-out panic.” While
these spikes are quite common, they do say something
significant about expectations looking forward.
• THE SP 500 IS EXPENSIVE
Stock valuations are well above the median 30-year
average of stock prices measured by the price-earnings
ratio. Fundamental stock pickers looking at the SP 500
today would say that stocks are expensive.
• CREDIT SPREADS ARE WIDENING
Credit spreads are widening, and the markets are
paying attention. Historically, this has been a warning
signal: widening credit spreads have meant bad news
for stocks.
Equity and the
Public Market
“This is a time for caution.”
DREW KANALY, Chairman – Kanaly Trust
PAGE 04
As Chairman of Kanaly Trust, Drew Kanaly manages the ongoing investment strate-
gies and personal wealth management programs of several family relationships.
He specializes in investment management, charitable trusts and family limited
partnerships. Since earning his BBA in Finance from the University of Houston, Drew
has attended the American Bankers Association’s National Graduate Trust School
at Northwestern University, the Texas Bankers Association Regional Trust School at
Southern Methodist University and earned a CFTA designation.
Expert Insights

5. WHAT ARE WE SEEING?
• TURNING TO FOREIGN ACQUISITIONS
Private equity buyers are focusing more on foreign
acquisitions. The three most common countries for
geographic expansion are Canada, the United
Kingdom and China.
• CORPORATE BUYERS OUTBID BY FINANCIAL BUYERS
Although the perception is that a strategic buyer is
likely to pay more than a private equity group, in the
last 8 years, corporate buyers have actually been out-
bid by the financial buyers about 60% of the time.
• LEVERAGE MULTIPLES HAVE EDGED UP
In the first half of 2015, leverage multiples in aggregate
for deals in the $10-250 million range have edged up.
With deals funded 50/50 with debt and equity,
increased leverage multiples increase buying power.
• A DOWNTURN IS COMING
Historically, the market has tended to improve over
4-6 year periods, followed by 18-24 months of downtime.
We are in the sixth year of a strong MA market – and
at some point, the market will correct.
Private Equity and MA
“If you look in the first half of 2015,
what you see is, other than 2014,
it’s the strongest start to the year
that we’ve had since the recovery.”
COLT LUEDDE, Managing Director – GulfStar Group
Colt Luedde has more than 25 years of investment banking and corporate finance
experience. He has completed more than 100 MA transactions and has deep
transactional experience advising the owners of manufacturing, distribution, ser-
vice and software businesses in the industrial and energy sectors. He serves on the
board and is past-President of the Association for Corporate Growth and is a board
member of the Hicks, Muse, Tate Furst Center for Private Equity Research at the
University of Texas. He holds a BBA in Finance from The University of Texas at Austin.
EXPERT INSIGHTS : PAGE 05

6. Commercial Banking
and Real Estate Lending
“In general, I would say that banks are
very positive, looking for growth, and
looking to put on assets for quality
companies.”
BRANDON ANNETT, Managing Director and
Head of Capital Markets Syndicated Finance –
Texas Capital Bank
EXPERT INSIGHTS : PAGE 06
Brandon Annett has more than 20 years’ experience in the credit and capital
markets, and has served as Managing Director and Head of Texas Capital Bank’s
Syndicated Finance group since May 2012. With previous posts at BBVA Compass,
Concerto Asset Management in Charlotte, North Carolina, and the Leveraged
Finance group at Wachovia Securities, he has considerable knowledge of com-
mercial lending. Brandon holds a BBA in Finance from Texas Tech University.
WHAT ARE WE SEEING?
• REAL ESTATE LENDING ACTIVITY IS HIGH
Low vacancy rates and an expanding economy have
driven real estate activity. Over the last three years, 22%
of national banks have experienced over 50% growth in
their commercial real estate assets. This robust pipeline
of new supply is tempering lender activity toward
new projects, as many banks have reached or nearly
reached exposure levels on construction-related loans.
• FOR EP COMPANIES, BANKRUPTCY IS THE THEME FOR 2016
With no forecast in material price improvement for
oil, EP companies are seeing revenue and margin
declines. As hedges roll off, they are looking to tap
the $50 billion in capital on the sideline targeted for
the energy sector. But if asset sales cannot solve their
complex capital structure issues, bankruptcy may be
a more realistic option.
• BANK REGULATORY OVERSIGHT OPENS SPACE FOR NON-
BANK LENDERS
Oversight has dampened the risk appetite for more
leveraged transactions, and despite the liquidity and
heightened competition, middle market leverage multi-
ples are down from 2014. As a result, equity is a higher
percentage of the capital for leveraged transactions,
and the non-bank lending universe is growing to fill the
void as banks pull back.

7. 2015 marks the sixth consecutive year of strong
middle market MA and private equity activity.
However, current events over the last six months
have people wondering what, if any, impact
such events will have on the MA market.
Should we be concerned about the sustained
dramatic drop in oil prices, the economic slow
down in China, the substantial recent corrections
in the Chinese and US public equity markets
or the inevitable interest rate hike by the US
Federal Reserve? Because of the substantial
amount of private equity overhang dollars
available for investment, and lending appears
to have little impact, middle market MA deal
flow and multiples continue to be strong.
So while robust now, markets are understand-
ably more cautious – change could be just
on the horizon.
MA / PRIVATE EQUITY MARKETS
Despite concerns related to the drop in oil prices, the
first half of 2015 has been another strong period for MA
activity, including private equity deals. If the current
pace holds true through the end of the year, 2015 will be
the sixth consecutive year of a strong MA market. Both
strategic and financial buyers have shown an increased
focus on international acquisitions, with a majority of
those transactions expected to involve companies based
in China, Canada or the UK. The three major industries in
which MA transactions have been, and are expected
to continue to be, focused in 2015 are energy, healthcare
and technology.
PAGE 07
Attorney Insights
Current State of the
Capital Markets –
Middle Market MA
and Private Equity
STEVE KESTEN, Shareholder and Chair, Business Group
PHILIP DUNLAP, Senior Associate, Business Group

8. Due in large part to the improved credit markets, on
average, for MA deals in 2014, senior debt accounted
for 38.4% of the total enterprise value (“TEV”), mezzanine
and other subordinated debt accounted for 14.7% of the
TEV and equity accounted for 46.5% of the TEV. For deals
in the lower middle market (TEV between $10 and $25
million), debt (senior combined with subordinated debt)
accounted for 58.3% of the TEV and equity accounted for
41.7% of the TEV. While there is more debt being placed
on MA transactions, it is not all coming from traditional
banks. A significant number of “non-bank” lenders are
financing these highly leveraged transactions. The com-
bination of bank lenders plus non-bank lenders has
allowed the debt availability to rise.
The increased availability of debt has led to higher
EBITDA multiples which have served to increase the valu-
ations for middle market MA deals. EBITDA multiples
are as high as they have been since before 2007. In 2014,
the average middle market transaction was valued at
slightly less than 6.5 times EBITDA. The multiples change
when looking at different deal sizes. Smaller middle mar-
ket deals (those between $10 million and $25 million) saw
an average EBITDA multiple of 5.5x in 2014, while larger
middle market deals (those between $100 million and
$250 million) saw an average EBITDA multiple over 7.5x.
The average EBITDA multiple for all deals in the first half
of 2015 has been 6.6x.
The strong current market means that companies are
being valued between 1.0x and 1.5x higher (as a multiple
of EBITDA) than in a “normal” market. This premium has
caused (and will continue to cause) many sellers to choose
a private equity buyer that can close on a recapitaliza-
tion rather than a strategic buyer that would purchase
the entire company. Thanks to the premium being paid,
recapitalizations can result in the seller achieving the
same amount (or more) of cash proceeds as they would
receive in a more normal market, while still retaining a
minority stake in their company.
Buyers who have not had a high concentration of ener-
gy-related portfolio companies have shown a desire
for energy targets because they believe 2015 is a good
“entry point” for the energy space. However, with uncer-
tainty regarding exactly when the price of oil has or will
reach its bottom, it is expected that many private equity
buyers will continue to hold off on energy targets for
another six to nine months. Buyers have focused on
healthcare because of changes, and opportunities,
in the industry resulting from Obamacare. Technology
has been another attractive industry for PE buyers
because they realize that technology is affecting lives
in an increasing amount.
The primary reason for the continued robust MA market
in 2015, despite the ongoing uncertainty surrounding the
price of oil and volatility in the public equity markets,
is the amount of capital that is available to buyers.
MA activity has benefited from buyers’ access to
capital resulting from private equity capital overhang
and an improved credit market. Primarily for strategic
buyers, improved public equity markets have provided
the ammunition for these transactions.
Thanks to the new funds raised in 2014, US-based private
equity funds currently have approximately $535 billion
of “dry powder” committed that has not yet been drawn
upon. This overhang, which should serve the markets well
through at least 2018, should continue to drive substantial
activity in the private equity market.
ATTORNEY INSIGHTS : PAGE 08

9. Overall, unless another significant adverse economic
event occurs, generally speaking, the near term lending
environment appears healthy but cautious for MA activ-
ity. However, with depressed oil prices being economic
disaster for some and a significant windfall for others,
what will almost assuredly be different are the types of
deals that will get funded.
CONCLUSION
2015 marks the sixth consecutive year of a strong
MA market. History shows, however, that following an
extended strong period (typically no more than 6 years),
the MA market experiences a pull back. Further, the
sustained drop in oil prices, the slow down of the Chinese
economy and significant Chinese and US public equity
markets corrections, as well as the uncertainty surround-
ing the US Federal Reserve’s interest rate policy, could
have a material effect on the future of the MA market.
On the other hand, so long as the availability of credit
remains strong, an MA market correction should not be
as significant in 2016 and 2017 as compared to past MA
market corrections. Additionally, any correction will likely
get the MA markets back to a “normal” pricing environ-
ment as opposed to the “premium” environment that
we have enjoyed in recent years. Finally, the near term
(through the end of 2015) should be a great time for sell-
ers to achieve a liquidity event as valuations and EBITDA
multiples remain high.
DEBT MARKETS
While US companies, for the most part remain financially
healthy, banks continue to have an appetite for leveraged
MA transactions; but due to recent events, with an
eye toward caution. With US GDP slowing, no forecasted
improvement in the price of oil and the continuing effects
of greater regulation, banks continue to prop up the MA
markets with lending but with slightly dampened terms.
Expect to see MA transactions in the foreseeable future
to be completed with a little less debt and more equity,
as, generally speaking, middle market debt multiples
hover at around 3 times EBITDA for senior and 4 times
EBITDA for total debt.
In the EP market segment, banks are expecting more
pain for US upstream and energy service companies
leading to a number of possible bankruptcies. Continuing
depressed revenues and margins due to low oil prices,
and extremely complicated EP company capital struc-
tures are going to make it more and more difficult for
work out solutions to be reached following inevitable
technical and payment defaults; so expect more bank-
ruptcies starting late this year and next year.
On the other hand, in the real estate markets, banks have
experienced big increases in their total commercial real
estate portfolios. But once again, banks are expecting
the recent fevered pace of real estate lending to soften.
Sizable pipelines of projects that have already been
approved are going to temper activity for new projects
and banks are also anticipating less refinancing activity,
not necessarily because banks are not willing, but rather
because most US companies have already taken advan-
tage of the sustained period of low interest rates and
have already completed significant refinancings.
ATTORNEY INSIGHTS : PAGE 09

10. BILL BOYAR
Founding Shareholder, Business Group
Bill’s practice focuses on representing parties involved in
the acquisition, disposition, capitalization and financing
of assets and businesses on a national and international
level. He has served as lead counsel on numerous com-
plex, multi-party acquisitions and project financings,
with significant experience in corporate finance, private
equity, mergers acquisitions, real estate and hospitality.
STEVE KESTEN
Shareholder and Chair, Business Group
Steve’s practice includes private placements and other
sales and purchases of debt or equity securities; mergers,
asset acquisitions and sales; formation and representa-
tion of private equity funds, venture capital funds and
hedge funds; entity selection and formation; and general
contract review. He represents both lenders and borrow-
ers in asset-based lending transactions involving senior
lenders, mezzanine lenders and factoring companies.
PAGE 10
Practice Leaders
GARY MILLER
Founding Shareholder, Business Group
Gary has extensive experience in mergers and acquisitions,
capital formation, contract negotiations/documentation,
lending, factoring and day-to-day representation of corpo-
rations and other business entities. He participates in the
organization and financing of business entities, as well as
the negotiation and documentation of complex transac-
tions. Gary is often called upon to represent insurance
agencies in their capital transactions.

11. PRACTICE LEADERS : PAGE 11
GUS BOURGEOIS
Shareholder, Business Group
Gus’ practice involves a wide variety of corporate transac-
tions, including the acquisition, financing and disposition
of business entities through asset and stock purchase
transactions; entity selection and formation; sales of debt
and equity securities; negotiation and drafting purchase
agreements; employment agreements, licensing agree-
ments and other contracts; and general corporate matters.
BLAKE ROYAL
Shareholder, Business Group
Blake’s practice includes acquisitions and dispositions of
equity and assets, including recapitalization transactions
with venture capital and private equity funds; entity and
capital formation, including private placements, in domes-
tic and international jurisdictions; and general contractual
drafting and negotiation.
PHILIP DUNLAP
Senior Associate, Business Group
Philip’s practice consists of corporate and private securities
transactions, as well as serving as outside general counsel
in MA, financing, employment agreements and raising
capital through private offerings. Philip has represented
hedge funds, private equity funds, venture capital funds
and real estate funds in their formation, operation and
compliance in multiple jurisdictions.