- A review of the historical growth in solar M&A - Merger and acquisition activity by sector of the solar industry value chain - Valuation metrics - Using M&A to your advantage Jack Calderon, Managing Director, Lincoln International

1. Merger and Acquisition Trends in the Solar Industry
Photovoltaics 2011 - January 20th, 2011
Presented by Jack Calderon

2. Contents
Section 1 Introduction to Lincoln International 1
Section 2 Merger and Acquisition Activity in the Solar Industry 4
Section 3 A Look Ahead 10
APPENDIX
A Bios
Section 1: Section Title 2

3. Section 1
Introduction to Lincoln International

4. Lincoln International
International investment bank with focus on the middle market
North America Europe Asia
• Chicago, Los Angeles and • Amsterdam, Frankfurt, • Tokyo, Shanghai and
New York London, Madrid, Paris and Mumbai
• 80+ professionals Vienna • 6 professionals
• 70+ professionals • Strategic Alliances (China
and Korea)
Ranked #20 globally among all investment banks based on number of transactions completed in 2010 -
MergerMarket League Tables
Independent firm owned and controlled by its global partners
Specialize in providing advice on middle market transactions
Global footprint with integrated operations across North America, Europe and Asia
Experienced senior professionals operating through dedicated, global industry groups actively involved in all
transaction processes
Lincoln International is the only international, integrated, independent middle market advisor
Section 1: Introduction to Lincoln International 2
4

5. Lincoln International’s Global Involvement in Solar
Global coverage Industry activity
Solar Energy Stock Index
Amsterdam, Netherlands Frankfurt, Germany London, United Kingdom
• Publication that tracks
Eric Wijs, Managing Director Christoph Ulrich, Director Julian Tunnicliffe, Managing Director
• Head of Lincoln International Benelux • Previously with Lazard, Frankfurt • Previously with Houlihan Lokey numerous performance
• Previously with Lazard Amsterdam • Degree in Business Administration Howard & Zukin and Deutsche Bank
• Degree in Business Administration from University of Passau • BS from Cambridge University metrics for companies
from the Erasmus University
Rotterdam
across the major sectors
of the solar industry on a
Madrid, Spain Paris, France
quarterly basis
Iván Marina, Managing Director Géraud Estrangin, Director
• Previously with Sabadell Corporate • Previously with Ernst & Young
Finance and Fidelity Investment & Corporate Finance and HSBC
Research Company Investment Banking
• MBA from Instituto de Empresa • Graduate, Reims Management Solar Energy Deal Reader
School
• Publication that tracks
deal activity within the
solar energy industry on a
quarterly basis
Chicago, United States Tokyo, Japan “Solar Call"
Jack Calderon, Managing Director Tetsuya Fujii, Managing Director
• Head of Lincoln’s Renewable Energy and • Ongoing column in InterPV magazine released
• Formerly with Lehman Brothers, Deutsche
Electronics Groups Securities and Credit Suisse First Boston every other month
• IPC Board of Directors • MBA from Northwestern University’s Kellogg
• CEO of EFTC (NasdaqNM:EFTC),1996-2001 School of Management
• JD from American University Law School
Chaim Lubin, Associate
• Member of Lincoln’s Renewable Energy and
Electronics Groups
Lincoln offices
• CPA, previously with Feeley & Driscoll Strategic partners
• MBA from Northwestern University’s Kellogg
School of Management
Section 1: Introduction to Lincoln International 3
5

6. Section 2
Merger and Acquisition Activity in the Solar Industry

7. Global Solar Industry
Development of global PV market Installed capacity by geography
2009 Cumulative Installations 2010F Cumulative Installations
Source: European Photovoltaic Industry Association (EPIA), 2010 Source: European Photovoltaic Industry Association (EPIA), 2010
Industry dynamics
• Worldwide installations of PV cells and modules have had a CAGR of approximately 43% for
the last decade
• Global MW installations during 2010 are expected to be more than double the amount
exhibited in 2009 reaching approximately 15GW installed during 2010
• U.S. grew in line with the global market in 2010 and is expected to grow faster than the global
market in 2011
Section 2: Merger and Acquisition Activity in the Solar Industry 5
7

8. M&A Transaction Activity in the Solar Industry
Solar transactions by year Solar transactions by quarter
• 38 completed solar energy transactions in Q3 2010 representing a 19% increase from the 32
recorded in Q3 2009 and a 138% increase from the 16 transactions recorded in Q3 2008
• 2010 transaction volume is on pace to be a record year from a transaction perspective and is
expected to be almost 3x the volume exhibited in 2007
• Drivers include companies diversifying into solar, vertical integration, consolidations of
fragmented sectors such as installation companies, and the acquisition of solar projects
Section 2: Merger and Acquisition Activity in the Solar Industry 6
8

9. Geographies of Solar Transactions
Transaction volume in the United States continues to grow
Solar transactions by quarter Solar transactions by year
• The European market still exhibits its maturity and leadership in the solar industry remaining
the leader in transaction activity with over 60% of the transaction volume for Q3 2010 and
48% for 2009
• U.S./Canada transaction volume grew over 140% in 2009 as compared to 2008
• Geographies with favorable legislation attract capital and increase transaction volume
Section 2: Merger and Acquisition Activity in the Solar Industry 7
9

10. Solar Company Involvement in Transaction Activity
Over the last year Producers of Solar Energy and EPC Integrators/Developers made up the largest portion of
transaction volume
Transaction volume by target company category
• Acquisition of solar projects is driving transaction volume within the Producers of Solar
Energy category as they seek to build up their portfolios
• Transactions of EPC Integrators / Developers are being driven by companies looking to
secure “pipelines” of projects and the consolidation of the highly fragmented EPC/Installer
community
Section 2: Merger and Acquisition Activity in the Solar Industry 10
8

11. Types of Solar Transactions
Consolidation continues to be a driving force of transaction volume
Transaction volume by quarter and type of transaction
• Consolidation activity has picked up significantly and represented 58% of the total
transaction volume exhibited in Q3 2010
• Entry into solar through acquisition, by private equity or other companies, represented 29%
of the Q3 2010 transaction volume
Section 2: Merger and Acquisition Activity in the Solar Industry 11
9

12. Section 3
A Look Ahead

13. A Look Back at the Automotive Industry
Mergers, acquisitions and industry “push outs” significantly consolidated the automotive industry
Two phases of consolidation in the U.S. automotive industry
Decline of 89% Decline of 60%
Number of U.S. automotive manufacturers
• Almost the entire industry of U.S. automotive manufacturers that existed in the early 1900s
had either been consolidated or had gone out of business by the mid 1950s
• Over the latter half of this century the U.S. automotive industry has further consolidated with
only 3 major manufacturers and several smaller companies remaining
Source: The Beaulieu Encyclopedia of the Automobile, Standard Catalog of American Cars (Third and Fourth Editions), and World of Cars : Worldwide Car Catalogue
Section 3: A Look Ahead 13
11

14. The PCB Industry – “A Case Study of Consolidation”
PCB transaction activity by type
• Consolidations made up 67% of transaction activity during the first wave of transactions from
1999 to 2001 as compared to only 53% during the second wave from 2006 to 2008
Source: CapitalIQ
Section 3: A Look Ahead 14
12

15. The PCB Industry – “A Case Study of Consolidation” (continued)
The first wave of consolidation activity in the PCB industry took place between 1999 and 2001
Consolidation activity EBITDA valuations
74%
24%
Source: CapitalIQ Source: CapitalIQ
Financial metrics Trends
• Consolidations in the 1999 to 2001 time frame exceeded the
surrounding years by more than 50% each year as the
“tech bubble” was forming
• Valuations declined 24% as “tech bubble” burst in 2002
• Valuations rose 74% from 2001 to 2003 due to the
combination of having fewer suppliers, rebounding
markets, and lagging EBITDAs
Source: CapitalIQ
Section 3: A Look Ahead 15
13

16. The PCB Industry – “A Case Study of Consolidation” (continued)
The second wave of consolidation activity in the PCB industry took place between 2006 and 2008
Consolidation activity EBITDA valuations
124%
63%
Source: CapitalIQ Source: CapitalIQ
Financial metrics Trends
• Similar to the first consolidation wave, valuations fell in the
second wave being impacted by pricing pressures,
increased shift of production to Asia and finally the “credit
bubble”
• Similar to post the first wave, valuations are rebounding
due to having fewer suppliers, rebounding markets, and
lagging EBITDAs
• Subsequent industry consolidations typically occur at
lower multiples
Source: CapitalIQ, forecasts provided by Custer Consulting Group
Section 3: A Look Ahead 16
14

17. Solar Industry Implications
A consolidation wave in the solar industry is beginning to gain momentum
Financial metrics EBITDA valuations
Source: CapitalIQ Source: CapitalIQ
Consolidation activity Trends
• The solar industry has been impacted by the “Great
Recession” but is recovering
• The global economic difficulties distorted 2008 and 2009
valuations as stock prices have traded “out of sink” from
earnings performance
• Growth in the solar industry and normalized valuation
metrics will continue to fuel consolidation activity
Source: CapitalIQ
Section 3: A Look Ahead 17
15

18. Thoughts
Companies need to determine early whether they are a “buyer” or “seller”
The data shows that post consolidation, the industry emerges stronger with fewer
larger companies that can leverage scale, enhance technology, and invest in low cost
manufacturing regions
Sell early in an industry consolidation cycle to realize premium valuations
In most industry consolidation waves, each subsequent wave typically has lower
valuations as seller and buyer disparities are more acute and pricing pressure
increases
Section 3: A Look Ahead 18
16

19. Appendix
Bios

20. Jack Calderon
Advisory Expertise Past Affiliations
Jack has extensive experience in advising Prior to joining Lincoln International, Jack
companies on merger and acquisitions, served as Chairman and Chief Executive
restructuring, fairness opinions, and other strategic Officer of EFTC, a publicly traded
matters. In addition to completing multiple electronics manufacturing service provider,
transactions for public company, private equity, and which merged with K-Tec to create Suntron.
private owner clients, he also has experience in EFTC specialized in manufacturing
cross-border advisory work encompassing both complex electronics primarily for the
Europe and Asia. Jack has led numerous sell-side aerospace industry.
and buy-side transactions. His advisory work is
exclusively focused on the electronics and solar
Jack began his career in Honeywell's
energy industries.
Aerospace and Defense Group in 1979. In
his 20 year operating career, he held a
Managing Director Industry Expertise
variety of positions with several companies
Jack is an expert in the electronics industry. He
including Program Manager; Vice President
spent 20 years in various operating management
of Marketing and Contracts; Vice President
positions in the industry, beginning with Honeywell
of Corporate Development; Vice President
and culminating as CEO of publicly traded EFTC
Role at Lincoln International and General Manager of Latin American
(now part of Suntron). Jack is a frequent speaker at
Operations and Chief Executive Officer.
industry events and oversees Lincoln’s publications
Jack leads Lincoln International's global in the EMS, Power and Solar Energy industries. Jack
Electronics and Solar Energy Group serves as a member of the Board of Directors of the Academic Credentials
which includes Electronic IPC which is the global standards-setting Jack earned a Juris Doctor degree from
Manufacturing Services (EMS), organization for the manufacture of electronic The American University, and a Bachelor of
Controls, Interconnects, Power products. Jack is also active in the IPC’s initiative in Arts degree in economics, cum laude, from
Electronics and Solar Energy. He has solar energy. Jack’s merger and acquisition practice Case Western Reserve University.
extensive operating and transaction focuses on interconnects (circuit boards, flex circuits,
experience in the electronics industry and connectors), EMS (electronic manufacturing
having served as a CEO of a public services and repair/warranty services), control
company. Jack leads deal teams, electronics (sensors, actuators, motion control and
manages key client relationships and embedded computing), power electronics (supplies,
markets the firm's services. conditioners, inverters, batteries) and solar energy
(wafers, photovoltaic cells, module assembly and
system installers).
Appendix A: Bios 18
20

21. Chaim Lubin
Advisory Expertise Past Affiliations
Chaim has experience in advising companies Prior to joining Lincoln International,
on mergers and acquisitions, restructuring, Chaim worked in public accounting for
fairness opinions, and other strategic matters. Feeley and Driscoll, P.C. in Boston.
His experience includes transactions and Chaim advised and worked with
advisory services for private equity, Fortune companies in the technology,
500, and private company clients. Chaim construction, healthcare, legal, and
also has cross-border transaction experience, manufacturing & distribution industries.
providing advisory services for transactions Chaim is a licensed CPA.
involving companies in geographies across
Asia and Europe. Academic Credentials
Chaim earned a Master of Business
Industry Expertise Administration degree from the Kellogg
Chaim specializes in the electronics and School of Management at Northwestern
Associate renewable energy industries, though he has University, a Master of Engineering
also been actively involved with companies in Management from the McCormick
the industrial technology, building products, School of Engineering and Applied
chemicals, office products, and Science at Northwestern University, and
manufacturing & distribution industries. He a Bachelor of Science degree from
Role at Lincoln International has relationships with leaders in the Boston University with Honors.
renewable energy industry and active
Chaim leads or assists in leading deal acquirers in the electronics industry as well
teams and is active in marketing the as with contacts throughout the private equity
services of Lincoln International. community. Chaim has a strong
understanding of the dynamics in the rapidly
Chaim is a key member of the firm's
growing solar industry, and a keen sense of
Electronics and Renewable Energy
what makes companies and projects
groups and is heavily involved in
attractive and how best to position these to
executing transactions in these potential partners.
sectors.
Appendix A: Bios 19
21