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U.S. Bancorp Piper Jaffray is Cautiously Optimistic for Middle Market M&A Activity in 2003

MINNEAPOLIS, Dec. 9 /PRNewswire-FirstCall/ -- U.S. Bancorp Piper Jaffray (Piper Jaffray) Middle Market M&A Group released in a new report, "Middle Market M&A Outlook 2003," that it is cautiously optimistic in its expectations for middle market M&A activity in 2003. Piper Jaffray believes that conditions have improved during the second half of 2002 and is encouraged that there are several positive trends in place, which should provide the foundation for strong transaction volume in the coming year.

"We believe that the M&A environment has stabilized and is perhaps stronger than generally perceived in the public market place," said Walter Murphy, a vice president in U.S. Bancorp Piper Jaffray's Middle Markets M&A Group. "We expect that M&A activity within the middle market will continue to strengthen in 2003 and are confident that any definitive evidence of improved economic and/or capital market fundamentals will further accelerate deal volume over the next 12 months."

The report states that despite recent economic and financial market challenges, the middle market continues to be an attractive source of deal flow, and interest in middle market acquisitions remains strong. Corporate buyers, distracted to some extent by corporate governance issues, depressed market valuations and shareholder scrutiny, have become more disciplined and focused in their acquisition strategies, but are still willing to aggressively pursue transactions that are highly complementary with their core lines of business. Meanwhile, private equity groups have raised more than $200 billion of equity capital over the past five years, and the pressure and competition to invest these funds are intense.

"Though demand has been strong, the relative lack of high quality acquisition opportunities has limited momentum over the past two years," said Murphy. "However, given the modest number of transactions completed during this period, there is a growing backlog of privately held companies and maturing financial sponsor investments for which a sale process will be considered over the coming 12 months. We believe that the release of this overhang will be one of the primary drivers of middle market M&A activity in 2003."

To obtain a copy of the report, please contact Susan Beatty at susan.beatty@pjc.com or 612-303-5680.

U.S. Bancorp Piper Jaffray, a subsidiary of Minneapolis-based U.S. Bancorp (NYSE: USB), is a focused securities firm comprised of three divisions: Equity Capital Markets, Fixed Income Capital Markets and Private Advisory Services. The firm provides a full range of investment products and services to individuals, institutions and businesses. The firm has over 120 offices in 24 states across the country. The Equity Capital Markets Division focuses on the needs of growth companies in the health care, technology, financial institutions, consumer and communications growth sectors. The firm has a national reputation for its expertise in fundamental research and equity and debt financing. The Fixed Income Capital Markets business provides bond issuers, individual investors and institutional investors expertise in investment banking, underwriting, trading, sales and research. The firm offers innovative solutions in corporate and government debt financings with particular expertise in corporate, health care/hospitals, real estate, higher education and government debt. The Private Advisory Services division financial advisors provide guidance in retirement planning, education planning, estate planning and wealth accumulation. Investors select from a wide array of products, including fee-based products, stocks, bonds, mutual funds, annuities, insurance and trust services. U.S. Bancorp offers a comprehensive range of financial solutions through U.S. Bank, U.S. Bancorp Asset Management, U.S. Bancorp Investments and U.S. Bancorp Piper Jaffray. For more information on U.S. Bancorp Piper Jaffray, visit www.piperjaffray.com . Non-deposit investment products are not insured by the FDIC, are not deposits or other obligations of or guaranteed by U.S. Bank National Association or its affiliates, and involve investment risks, including possible loss of the principal amount invested.

This report should be read in conjunction with important disclosure information found at the following site: http://www.piperjaffray.com/disclosures .

Additional information is available upon request.

Securities products and services are offered through U.S. Bancorp Piper Jaffray Inc., member SIPC and NYSE, Inc., a subsidiary of U.S. Bancorp. (5/99-0679)

SOURCE U.S. Bancorp Piper Jaffray

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: Statements in this press release regarding U.S. Bancorp's business which are not historical facts are "forward-looking statements" that involve risks and uncertainties. For a discussion of such risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see "Risk Factors" in the Company's Annual Report or Form 10-K for the most recently ended fiscal year.



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