(ii) precedent transaction multiples; (iii) discounted cash flow analysis; (iv) latest round of financing; and (v) sum-of-the-parts analysis.

• The comparable public company trading multiples method involves the identification of publicly traded companies that are most comparable to the portfolio company investment. The public market values of the securities of these comparable companies as of the end of each quarter are utilized to estimate the value of the portfolio company investment, with or without adjustment for comparability.
• The precedent transaction multiples method involves identifying transactions (purchases or dispositions) involving companies and/or securities comparable to the portfolio company investment and using the price or valuation information in these transactions to estimate, with or without adjustments for comparability, the value of the portfolio company investment. In certain cases, these comparable transactions include transactions by other investors in the securities of the portfolio company or the

• indicative terms and conditions in contemplated or proposed transactions. Where appropriate, comparability adjustments are made to the valuation measures to account for differences in size, stage of development and degree of marketability between the portfolio company investment and the precedent transactions.
• The discounted cash flow analysis utilizes the portfolio company investment’s forecasted cash flows, as prepared by CD&R investment professionals, for a period of time and then applies a terminal multiple to estimate cash flows to perpetuity. Various present value discount rates are applied to these nominal cash flows to determine a valuation range.
• The latest round of financing method allows a valuation adjustment to be made as a result of value indications from the most recent, material equity financing that includes one or more sophisticated and unrelated new investor(s). If an equity financing will be completed with a high degree of certainty in the near future, and the pricing of the transaction has been

• substantially agreed upon, the value of an investment may be adjusted to CD&R’s best estimate of the upcoming new valuation.
• Under certain circumstances, the sum-of-the-parts valuation methodology may be considered. This method is most relevant when the valuation multiple applied to each business segment is different due to market conditions, competitive dynamics, relative company performance or other factors. The sum-of-the-parts analysis uses the comparable public company trading multiples and precedent transaction multiples methods to apply the relevant multiple to the performance of each business segment, which are then added together to calculate the valuation of the total enterprise.

The following methodologies may be considered for performing valuations of debt securities in private companies:

• Benchmark Debt Security Coupon Spread Analysis: The coupon spread analysis for valuing an illiquid debt

• investment (an “Illiquid Security”) utilizes a highly liquid benchmark debt security (a “Benchmark Security”) of the same company in which the debt investment is made. The coupon spread represents the difference in coupon rate between the Illiquid Security and the Benchmark Security. As of the end of each quarter, this coupon spread is added to the current yield for the Benchmark Security to derive an implied yield for the Illiquid Security. Using the implied yield, the estimated price of the Illiquid Security can be derived.
• Third-Party Valuation Quote: The third-party valuation quote methodology is the estimated trading level of a debt security as determined by an independent third party, typically an investment bank. The investment bank chosen to provide a valuation quote is typically based upon those banks that were involved with the debt financing and that have certain visibility into non-public trading activity.