The Capital Markets & Careers in Investment Banking

1. The Capital Markets & Careers in Investment Banking March 30, 2011

2. The Capital Markets & Careers in Investment Banking Contents • Introduction • What Investment Bankers Do • Valuation Theory • Valuation in Practice • The Current Market Environment • Career Considerations • Appendix

3. I. Introduction

4. The Capital Markets & Careers in Investment Banking Introduction Annemarie T. Schovee Managing Director, Group Leader(410) 244-4875aschovee@mtb.com • Current Responsibilities • Mergers and Acquisitions • Corporate Finance • Previous Professional Experience: • Managing Director, US Leader PriceWaterhouseCoopers Securities, LLC • Principal, PriceWaterhouseCoopers, LLP • Managing Director, Bank of America Securities (formerly Nationsbank Capital Markets) • Analyst, Shearson Lehman Hutton, Inc. Timothy J. BurkeDirector(410) 545-2188tburke@mtb.com • Current Responsibilities • Mergers and Acquisitions • Corporate Finance • Previous Professional Experience: • Analyst, Giuliani Partners LLC (former subsidiary of Ernst & Young LLP) • Associate, PriceWaterhouseCoopers LLP

5. The Capital Markets & Careers in Investment Banking Introduction Headquartered in Buffalo NY, M&T Bank Corporation is a fully integrated financial services company and is the 15th largest bank in the United States M&T Bank Corporation Investment Banking CommercialBanking Trusts and Investments Capital Markets RetailBanking In one of the most turbulent banking markets in history, M&T Bank’s disciplined management and culture has set the Company apart from the competition: 2-Year Stock Performance Relative to the S&P 500 at 12/31/10 Source: M&T Bank *BB&T, Regions, Marshall & Ilsley, PNC, SunTrust, Key Corp

6. The Capital Markets & Careers in Investment Banking Introduction Top Honors • Named one of the “400 Best Managed Companies” in America . M&T was one of only 44 companies nationwide and one of only two banks to qualify for the Forbes “Platinum Honor Roll” • 2009 Greenwich Excellence National Award Winner: Financial Stability in Middle Market Banking • Named to Fortune magazine’s roster of “America’s Most Admired Companies,” ranking second among “Super-Regional Banks” • “Outstanding” Community Reinvestment Act rating from the Federal Reserve Bank (May 2009) • Through the M&T Charitable Foundation, M&T made $15.1 million in charitable donations to 2,941 organizations in 2009 • Business Week ranked M&T Bank among the Top 10 companies in the nation for charitable giving as a percentage of revenues • More than 2,700 M&T Bank employees volunteer their time with more than 4,700 community and not-for-profit organizations

7. II. What Investment Bankers Do

8. The Capital Markets & Careers in Investment Banking What Investment Bankers Do Arrange Capital and Business Combinations • Utilize controlled auction processes and the laws of supply and demand • Maximize negotiating leverage to optimize terms for client (typically the seller or issuer) • Maximizes speed to close – minimizing risk of an uncontrolled external event disrupting Arrange Business Combinations (M&A) Arrange Capital (Corporate Finance) Investment Banker Buyer Seller Investment Banker Investor Issuer

9. The Capital Markets & Careers in Investment Banking What Investment Bankers Do How it Works: The Laws of Supply and Demand • Through a properly managed auction process, an investment banker creates demand • Demand creates negotiating leverage –the ability to extract value in monetary and contractual terms Buyer/ Investor Buyer/ Investor Investment Banker Buyer/ Investor Seller/ Issuer Buyer/ Investor Buyer/ Investor

10. The Capital Markets & Careers in Investment Banking What Investment Bankers Do Transaction Lifecycle 4-6 months in total 6-8 Weeks 4-6 Weeks 6-8 Weeks Understand Objectives Prepare for Transaction Market the Company Select Lead Party Complete the Transaction • Identify and manage transaction issues • Coordinate detailed due diligence • Advise on structure and negotiate agreements • “Quarterback” process and various constituents and maintain timing • Close transaction • Prepare management presentation • Negotiate term sheet(s) • Coordinate limited due diligence • Select course of action and partner • Sign LOI & move forward on an exclusive basis • Understand the Company’s objectives • Assemble and prep the team • Perform our initial due diligence • Gather documents, financials, etc and begin to create “deal story” • Review modeling, financials, & projections • Prepare Information Memorandum and related materials • Identify potential acquirers/investors • Finalize contact strategy • Contact potential buyers/investors • Solicit proposals • Evaluate Indications of Interest • Create competitive bidding environment • Select most favorable offers and move forward Timing can be influenced by many factors, including availability of company information, complexity of the deal, market environment, and attractiveness of the target company

11. III. Valuation Theory

12. The Capital Markets & Careers in Investment Banking Valuation Theory • Common Tools for Valuation • Valuation is much more of an art than a science • While there is no steadfast approach, methodologies can be split between company specific and market based analysis

13. Comparable Company Analysis $US millions Financial Data Valuation Data Market Enterprise Latest Twelve Months Margins Enterprise Value / LTM Company Name Cap Value Revenue EBITDA Gross Gross EBITDA Revenue EBITDA Company A $1,355 $1,940 $2,286 $343 $754 33.0% 15.0% 0.8x 5.7x Company B 909 1,417 2,140 257 428 20.0% 12.0% 0.7x 5.5x Company C 1,270 1,214 1,448 261 366 25.3% 18.0% 0.8x 4.7x Company D 1,724 1,862 1,579 205 347 22.0% 13.0% 1.2x 9.1x Company E 333 390 332 50 83 25.0% 15.0% 1.2x 7.8x Company F 8,345 8,811 9,293 1,580 2,788 30.0% 17.0% 0.9x 5.6x Company G 294 389 531 80 117 22.0% 15.0% 0.7x 4.9x Mean 25.3% 15.0% 0.9x 6.2x Median 25.0% 15.0% 0.8x 5.6x Adj Mean 0.9x 6.1x The Capital Markets & Careers in Investment Banking Valuation Theory Public Comparables Calculation Example “Equity Value” = Stock Price * Number of Shares Company Specific Operating Performance Valuation Metrics Market Cap + Debt - Cash • Review variability in the gross and operating margins within set and against target • Consistency in multiples supports lack of variability across the sector • Review highs and lows to see what might be driving value or depressing value • Time series analysis and industry fundamentals are critical to gaining perspective

14. Comparable Merger & Acquisition Transactions $US millions (Implied) Financial Data Valuation Data Target / Date Enterprise Latest Twelve Months Enterprise Value / LTM Acquirer (Sponsor) Announced Value Revenue EBITDA EBITDA % Revenue EBITDA Target A 2/20/09 $54.9 $80.0 - - 0.7x - Acquirer A Target B 1/15/09 $370.2 $330.0 $59.4 18.0% 1.1x 6.2x Acquirer B Target C 12/21/08 451.1 432.3 69.2 16.0% 1.0x 6.5x Acquirer C Target D 11/2/08 89.2 97.0 12.6 13.0% 0.9x 7.1x Acquirer D Target E 10/15/08 36.0 33.0 6.6 20.0% 1.1x 5.5x Acquirer E Target F 8/3/08 38.4 40.0 7.2 18.0% 1.0x 5.3x Acquirer F Mean 17.0% 1.0x 6.1x Median 18.0% 1.0x 6.2x The Capital Markets & Careers in Investment Banking Valuation Theory M&A Comparables Calculation Example • Review data for consistency – study outliers • Volume of transactions can be as important as valuation data • Look to see who is acquiring (strategic v. PE) Reasonably Current Target’s Operating Performance Enterprise Value Valuation Metrics

15. Target Data Revenue $ 63,423 EBITDA $ 9,297 Comparable Company Analysis $US thousands Revenue Multiples EBITDA Multiples Low Medium High Low Medium High 0.7x 0.8x 1.2x 5.5x 5.6x 8.0x $ 44,396 $ 53,824 $ 76,108 $ 51,134 $ 51,852 $ 74,376 $45 million - $75 million $50 million - $75 million Indicative Range of Value Comparable Merger & Acquisition Transactions Revenue Multiples EBITDA Multiples Low Medium High Low Medium High 0.8x 1.0x 1.1x 5.5x 6.2x 7.0x $ 50,738 $ 66,178 $ 69,765 $ 51,134 $ 57,940 $ 65,079 $50 million - $70 million $50 million - $65 million Indicative Range of Value The Capital Markets & Careers in Investment Banking Valuation Theory Applying Multiples - Bringing it All Together • Important to translate to equity value too • Subtract net debt (debt less cash or $12.1 million in this scenario) $US thousands

16. IV. Valuation in Practice

17. The Capital Markets & Careers in Investment Banking Valuation in Practice Keys to Success - Proactive, Proper Positioning • Detailed financial analysis – Pro Forma EBITDA • Normalizing and adjusting operating performance • Analyzing trends, customer dynamics, revenue composition, margins, etc. • Highlighting strengths – Competitive Advantages • Business is well positioned within its market • What sets is apart? • Reinforce growth opportunities – “Sell the Sizzle” • New customers and markets • Complimentary business opportunities • Anticipate challenges – Be Proactive • Get any challenging items on the table early • Mitigate with a proactive explanation • Extort market inefficiencies - “Beauty in Eye of the Beholder” • Competitive process will flush out outliers • Most efficient, creates options and helps ensure success • Provides options

18. The Capital Markets & Careers in Investment Banking Valuation in Practice Proper positioning of value drivers yields maximum value • Proactively positioned growth opportunities to demonstrate “upside” for investors • Rigorous analysis positioned financials in the best possible light • Disciplined process drove multitude of attractive mezzanine and equity offers Project Pump Preliminary Indications of Value ($US millions) Strategic Financial * Process also yielded five mezzanine financing offers with favorable structures

19. The Capital Markets & Careers in Investment Banking Valuation in Practice Capital Structuring Alternatives A company has two primary options for financing its operations and strategic initiatives: (1) internally generated cash flow , and (ii) external capital provided by outside investors. The following generalizes the sources of outside capital available: Our job as investment bankers is to provide options for clients that maximize returns to existing shareholders, while minimizing risk (by providing for optimal financial flexibility) Equity FinancialFlexibility High Common Stock Mezzanine Preferred Stock Debt Subordinated Debt Term B Revolver / TLA EconomicCost Low Low High

20. V. The Current Market Environment

21. The Capital Markets & Careers in Investment Banking The Current Market Environment Capital Markets Back to Pre-Crisis Levels Sources: Capital IQ

22. The Capital Markets & Careers in Investment Banking The Current Market Environment M&A Market Showing Signs of Strength Sources: Capital IQ

23. VI. Career Considerations

24. The Capital Markets & Careers in Investment Banking Career Considerations Current Trends Impacting Employment • The financial markets are hot, but the economy is still recovering • Credit markets and equity markets are liquid, driving new debt and equity issuances • Access to capital is fueling M&A activity • The Middle Market continues to provide substantial investment banking opportunities • The shakeout from the last market cycle is driving consolidation • Sellers that “missed the window” are driving a flurry of new activity • The investment banking employment landscape has changed • While hiring activity has picked up, displaced experienced professionals are often the first hired • A new generation of boutiques and regional firms have entered the market as new pay regulations impact banks’ ability to retain talent

25. The Capital Markets & Careers in Investment Banking Career Considerations The Investment Banking Career Path

26. The Capital Markets & Careers in Investment Banking Career Considerations Getting the Analyst Job • Getting an investment banking job is difficult, but persistence pays • You’ll hear lots of “no’s” - If “no” bothers you, you’re not cut out for investment banking • You should exhibit certain “type A” personality traits to get an offer

27. Appendix: Recent Deal Case Studies

28. The Capital Markets & Careers in Investment Banking What Investment Bankers Do Sell-Side has been acquired by

29. The Capital Markets & Careers in Investment Banking What Investment Bankers Do Growth Capital Financing Pet Partners Holdings LLC has acquired two veterinary hospitals and redeemed the equity interest of Altazano Management Growth capital financing provided by