The Board of Panmure Gordon is delighted to announce that it has reached a definitive agreement to acquire ThinkEquity Partners LLC, a US-based research led growth investment bank with its primary office in San Francisco and further offices in New York, Boston, Chicago, Minneapolis and Chennai, India. The acquisition is subject to regulatory approvals and is anticipated to complete before the end of March.20 February 2007Panmure Gordon & Co. plc (“Panmure Gordon”)Acquisition of ThinkEquity Partners LLC The Board of Panmure Gordon is delighted to announce that it has reached a definitive agreement to acquire ThinkEquity Partners LLC, a US-based research led growth investment bank with its primary office in San Francisco and further offices in New York, Boston, Chicago, Minneapolis and Chennai, India. The acquisition is subject to regulatory approvals and is anticipated to complete before the end of March. Information on ThinkEquity Partners LLC (“ThinkEquity”) The business was founded in 2001 by Michael Moe (previously a Managing Director and the Director of Growth Research at Merrill Lynch) and Deborah Quazzo (previously a Managing Director and founder of the Global Growth Group at Merrill Lynch). ThinkEquity has particular expertise in: • Technology • Healthcare • Consumer & Business Services • Media & Communications • Greentech & Emerging Technologies ThinkEquity provides a broad range of services to its corporate and institutional clients including Research, Institutional Brokerage, Investment Banking and Wealth Management. Since founding in 2001, revenue has grown from $12.2 million in its first full year to $64 million in 2006, up 44% from 2005, and the business now employs approximately 190 people. ThinkEquity has been involved in raising over $8.5 billion in 90 equity transactions and completed 28 M&A transactions. ThinkEquity makes markets in over 350 companies, has over 250 companies under research coverage and has over $835 million under advisement in wealth management. A key feature of ThinkEquity is the strength of the relationship with premier Venture Capitalists in Silicon Valley and beyond, as evidenced by the Advisory Board which includes the following individuals: • Bill Campbell, Intuit Chairman and Apple and Opsware board member; • Ron Conway, founder of Angel Investors and ranked number 6 on Forbes magazine 2007 list of most influential venture capitalists; • John Denniston, COO/Partner of Kleiner, Perkins, Caulfield & Byers; • Edward Mathias, a Co-Founder and Managing Director of the Carlyle Group; and • Ram Shriram, a venture investor ranked number 4 on Forbes magazine 2007 list of most influential venture capitalists. ThinkEquity has developed a well known and respected brand in the growth economy in the United States. One of the manifestations of this has been the creation of industry leading conferences and events including their Global Growth Conference held each year in San Francisco in September. For the fourth such Conference in 2006 over 2,000 institutional investors attended to hear presentations from 200 growth company CEOs and keynote industry speakers. For 2007 this will expand to include the global corporate and institutional clients of the combined group. Financial Information on ThinkEquity In 2006 ThinkEquity produced revenue of $64 million (before settlement costs). An approximate split of that revenue by division is: Investment Banking $23,712,000 (37%) Institutional Brokerage $32,451,000 (50%) Wealth and Asset Management $7,458,000 (12%) Other $393,000 (1%) Total Revenue $64,014,000 (100%) ThinkEquity has grown following significant investment in personnel, premises and systems funded out of cash flow, personal investment by the founders and certain employees and external investors. ThinkEquity made a profit in 2006 of $2.8 million before interest expense of $2.0 million and before discretionary bonuses. Discretionary and retention bonuses of $13.8 million, of which $3.45 million will be paid for by the issue of 0.97 million Panmure Gordon shares, will be paid in March. The structure of the transaction allows for the majority of the total potential equity to be issued to the management of ThinkEquity in relation to this transaction to be aligned to the future financial performance of ThinkEquity. This incentive structure taken together with the discussions which have taken place with management of ThinkEquity over the past few months, and the plans for the business over the next year, gives the Board confidence that ThinkEquity is likely to be profitable in 2007 after bonuses. Information on the Transaction Consideration for the acquisition will be US$62.3 million (£31.9 million). Of this approximately US$35.3 million (£18.1 million) will be paid for the equity of ThinkEquity and approximately US$27 million (£13.8 million) for the assumption and repayment of debt and all net current liabilities, (including the payment of the bonuses mentioned above), and the recapitalisation of the business. ThinkEquity had some $3 million of fixed assets at 31 December 2006. The consideration will be funded by the issue of 8.9 million new shares in Panmure Gordon and by £15.7 million of cash from Panmure Gordon’s own resources. The new Ordinary shares issued by way of consideration to the employee equity holders will be subject to an 18 month lock-in. The new Ordinary shares issued in part settlement of bonuses will vest in equal instalments over 3 years. In respect of the number of shares to be issued, the share price and the exchange rate have been fixed at 181.5p and $1.962 to £1 respectively, being the average for the preceding 20 trading days. A contingent performance pool has been established over an additional 16.85 million shares available for award over the next three years dependent on a number of conditions including financial performance targets. At all levels of vesting, the transaction would be earnings enhancing for Panmure Gordon. Any shares issued by way of the contingent performance pool will vest over the period 2009 to 2013. The Board has been advised on the transaction by Freeman & Co. Reasons for the acquisition The Board of Panmure Gordon believes that the combination of Panmure Gordon and ThinkEquity will create a market leading firm which will be well placed to take advantage of the growing internationalisation of capital markets. The business will continue to trade as Panmure Gordon in the UK and Europe, and will trade as ThinkEquity, a Panmure Gordon Company in the USA. The Board believes that the acquisition of ThinkEquity will bring a number of benefits, including: 1) Following significant investment in recruiting high calibre employees focused on key growth verticals, ThinkEquity is at a point in its development where the strong revenue growth of recent years should continue and should translate into strong profit growth. Panmure Gordon operated in 2006 on a revenue-to-staff compensation ratio of 57%. In 2006 the comparable ratio for ThinkEquity was significantly in excess of this. Both the Board of Panmure Gordon and the management team of ThinkEquity believe that this ratio can, over the next three years, be reduced substantially without slowing the development of ThinkEquity. 2) The combined business will be better able to serve international clients, be they North American institutions wanting to trade in UK listed equities, corporate clients looking for transatlantic investment banking advice, or US companies looking to access the European and UK equity capital markets. In particular the Board has identified the opportunity for Panmure Gordon to increase the commission it receives from US institutions, and for ThinkEquity to provide its corporate clients with access to London. 3) ThinkEquity has been restricted in growing revenue through a lack of capital. Combining with Panmure Gordon, and having an appropriate capital base, will give an immediate impetus to the brokerage, investment banking and wealth advisory operations. 4) ThinkEquity has begun to build a private client wealth management business and currently has in excess of $835 million under advisement. The Board believes this has the potential to show substantial growth. Financial Information on Panmure Gordon For the six months ended 30 June 2006 Panmure Gordon announced revenue of £18.3 million and adjusted profit before tax of £5 million resulting in adjusted earnings per share of 7.54p. At 30 June 2006, equity shareholders’ funds were £52.1 million. In a trading update released on 15 December 2006, the Panmure Gordon Board announced expectations for full year revenues for the year to 31 December 2006 of not less than £41 million and adjusted earnings per share of not less than 15p. The Board of Panmure Gordon will be announcing the results for the year ended 31 December 2006 on 13 March 2007. Board On completion of the acquisition, Michael Moe and Deborah Quazzo will be invited to join the Board of Panmure Gordon. Michael and Deborah will both enter into service agreements with ThinkEquity Holdings LLC for an initial period of 40 months at a basic salary of $250,000 per annum and will be eligible to receive an annual discretionary bonus. Timetable The acquisition is subject to certain regulatory clearances which are anticipated to be received by the end of March 2007
Notes to Editors Information on key executives: ·Andrew Burnett was Head of Mergers and Acquisitions at Empire Online plc. Prior to this he was a highly regarded analyst and latterly a corporate financier at Merrill Lynch, Charterhouse and Numis ·Mark Hughes is a top ranked analyst in the Building, Construction and Property sector and has developed a strong franchise in the newly-emerging Property Fund sub-sector. Mark joins from Numis where he headed the company’s Liverpool office ·Andrew Saunders is the top ranked food producer and consumer goods analyst in Extel’s 2006 Survey ·Paul Jones and Mike Allen are top ranked analysts in Support Services sector and will broaden further Panmure Gordon’s already strong position in the sector. Andrew, Paul and Mike all join from Numis and will all be directors in the Research Department of Panmure Gordon.