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Since the time of the case Fund VI @ $1.5B in 2001 Fund VII @ $3.1B in 2006

Since the time of the case Fund VI @ $1.5B in 2001 Fund VII @ $3.1B in 2006. Berkshire Partners. Oh, baby! Is this a deal we want to bid on?. What happened?. 8/2001 Completes $450M LBO Plus deal costs of approximately $20M, equity of $152M

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Since the time of the case Fund VI @ $1.5B in 2001 Fund VII @ $3.1B in 2006

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  1. Since the time of the case Fund VI @ $1.5B in 2001 Fund VII @ $3.1B in 2006 Berkshire Partners

  2. Oh, baby! Is this a deal we want to bid on?

  3. What happened? • 8/2001 Completes $450M LBO • Plus deal costs of approximately $20M, equity of $152M • 10/2003 IPO of Carter’s $19/share, over $400M cap • Plus $291M in debt outstanding • Proceeds to Berkshire of $94M • 2004 Follow-on offerings at $26 and $33 • Proceeds to Berkshire total $298M • 2005 Follow-on offering at $63.60 • Proceeds to Berkshire of $213M • 2005 Follow-on offering at $68 • Proceeds to Berkshire of $230M for an IRR of 64%, or 5.5X

  4. How? • Revenue came in above the management forecast, with growth averaging 21% versus 15% • Margins came in below the management forecast, averaging 13% versus 16% • Importantly, multiples expanded, for these sorts of businesses in particular, from 6-7 up to 9-10 times EBITDA

  5. Source: S&P, Leveraged Commentary & Data

  6. Source: General Electric Annual Report, Note 6, December 31, 2008

  7. Source: Yale Endowment Annual Report, June 30, 2008

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