HW&Co. Industry Reader Template - Harris Williams & Co. · Data on EU28 long-term interest rates shows a decreasing pattern from 3.03% in December 2013 to 1.78% in October 2014. Rates

www.harriswilliams.comwww.harriswilliams.de

Harris Williams & Co. Ltd is a private limited company incorporated under English law having its registered office at 5th Floor, 6 St. Andrew Street, London EC4A 3AE, UK, registered withthe Registrar of Companies for England and Wales under company number 7078852. Directors: Mr. Christopher Williams, Mr. Ned Valentine, Mr. Paul Poggi and Mr. Thierry Monjauze,authorised and regulated by the Financial Conduct Authority.

HarrisWilliams & Co. Ltd Niederlassung Frankfurt (German branch) is registered in the Commercial Register (Handels register) of the Local Court (Amtsgericht) of Frankfurt am Main,

Germany, under registration number HRB96687, having its business address at An der Welle 4, 60322 Frankfurt am Main, Germany. Permanent Representative (Ständiger Vertreter)

of the Branch Niederlassung: Mr.JefferyH.Perkins.

WINTER UPDATE

EUROPEAN UPDATE │ FEBRUARY 2015

PAGE |

www.harriswilliams.comwww.harriswilliams.de

HARRIS WILLIAMS & CO.

1

CONTACTS

Thierry MonjauzeManaging Director63 Brook StreetLondon W1K 4HSUnited KingdomPhone: +44 20 7518 [email protected]

Julien DarmonManaging Director63 Brook StreetLondon W1K 4HSUnited KingdomPhone: +44 20 7518 [email protected]

Red NorrieManaging Director63 Brook StreetLondon W1K 4HSUnited KingdomPhone: +44 20 7518 [email protected]

Jeffery PerkinsManaging DirectorBockenheimer Landstr. 33-3560325 FrankfurtGermanyPhone: +49 69 3550638 [email protected]

LONDON OFFICE63 Brook StreetLondon W1K 4HSUnited KingdomPhone: +44 20 7518 8900

FRANKFURT OFFICEBockenheimer Landstrasse33-3560325 Frankfurt am MainGermanyPhone: +49 69 3650638 00

CONTENTS

QUARTERLY QUICK READ

EUROPEAN ECONOMIC CLIMATE

EUROPEAN M&A ENVIRONMENT

EUROPEAN INBOUND M&A ENVIRONMENT

AEROSPACE, DEFENCE & GOVERNMENT SERVICES

BUSINESS SERVICES

CONSUMER

ENERGY & POWER

HEALTHCARE & LIFE SCIENCES

INDUSTRIALS

TECHNOLOGY, MEDIA & TELECOM

TRANSPORTATION & LOGISTICS

FEATURED THEME

WINTER UPDATE


4,027 deals

3,287 deals

FEATURED THEME – REVIEW OF 2014 EUROPEAN MIDDLE MARKET M&A1

With 4,027 deals, European middle market M&A grew 23% by volume in 2014, a strongerincrease than the 16% growth seen globally

0

1,000

2,000

3,000

4,000

5,000

2013 2014

Nu

mb

er o

f Tra

nsa

ctio

ns

ADG

Energy & Power

Transportation & Logistics

Healthcare

Business Services

Industrials

Consumer

TMT

Source: S&P Capital IQ1. Includes closed M&A transactions of majority stakes only, where deal value was undisclosed or between €25m –€650m, within the United Kingdom, Eire, France, DACH (Germany, Austria, Switzerland), Spain, Italy, Benelux (Belgium, the Netherlands, Luxembourg) and Scandinavia (Denmark, Norway, Sweden and Finland)

http://www.harriswilliams.com/

mailto:[email protected]




PAGE |

QUARTERLY QUICK READ

2

WINTER UPDATE


(12.4%)(21.7%)

EUROPEAN

ECONOMIC

ENVIRONMENT1

EUROPEAN M&A

DEAL VOLUME

ACTIVITY9

GDP2 MANUFACTURING

CONFIDENCE3

CONSUMER

CONFIDENCE3

INBOUND

M&A DEAL VOLUME

TO EUROPE9

CONSUMER PRICES3

EUROPEAN

EQUITY

MARKET8

TMT6CONSUMER INDUSTRIALS5 T&L7ADG4 BUSINESS

SERVICES

HEALTHCARE &

LIFE SCIENCES

ENERGY &

POWER

+0.5 pts

Sources: Eurostat, Bloomberg, Markit Economics, S&P Capital IQ

(12.5%) (36.7%)

+0.3%

(37.6%) (22.8%)

21.4% (22.2%)

(54.5%) (25.5%)

(87.5%) (7.1%) (34.6%) (46.7%)

(3.3%) (0.1%)

Source: S&P Capital IQ

For the purposes of this Quarterly Update, Europe is defined as: United Kingdom, Eire, France, DACH (Germany, Austria,

Switzerland), Spain, Italy, Benelux (Belgium, The Netherlands, Luxembourg) and Scandinavia (Denmark, Norway, Sweden and

Finland); Evolution calculation based on the quarter finishing 31 December, 2014; 1. For the countries based in the EU28; 2.

Year-on-year GDP growth for Q3 2014; 3. PMI, CCI and CPI quarterly growth shown for September 2014 to December 2014; 4.

Aerospace, Defence & Government Services; 5. Also includes Building Products and Paper & Packaging; 6. Telecom, Media &

Technology; 7. Transportation & Logistics; Also includes Speciality Distribution; 8. For all listed companies based in the countries

mentioned above and with a market cap greater than €50m; 9. Change from Q3 2014 to Q4 2014

(80.0%)

M&A

ENVIRONMENT

International inbound M&A volume into Europe in Q4 2014 increased by 27.6% Y-o-Y with 148 closed transactions, despite a 25.5% Q-o-Q decline in Q4 2014

TMT and Consumer were the two most active sectors in Q4 2014, accounting for approximately 56% of total deal volume

CONSUMER

ADG

ENERGY & POWER

BUSINESS

SERVICES

TRANSPORT &

LOGISTICS

United Biscuits was acquired by the Turkish food group Yıldız Holding for an estimated £2bn. This marked the exit by Blackstone and PAI Partners from an asset acquired in 2006

Cheaper fuel and lower energy prices brought UK inflation to a record-equaling low in December 2014

Boeing set a new industry record for the highest number of commercial airplanes delivered in a year with 723 in 2014, compared to 629 for Airbus

B/E Aerospace has completed the spin-off of its consumables management division, KLX, which began trading on NASDAQ in mid-December 2014

The oil price continued to fall during Q4 2014, to trade below $60 bbl at the year end, as result of sustained OPEC production levels and increased US output

The European oilfield service and equipment M&A market exhibited lower deal volumes in Q4 2014, with notable acquisitions by US acquirers, including The Riverstone Holdings and Graco

According to Markit Index, growth in Business Services in the Euro area continued for the seventeenth consecutive month, although momentum slowed in late 2014

Global professional services firms are investing in European IT and data consultancy capabilities. Acquisitions made in Q4 2014 include Deloitte’s acquisition of Hervé Schauer Consultants and KPMG’s acquisition of p³ Consulting

An investor consortium including Allianz Group, Hastings and Alberta Investments acquired Porterbrook Rail Finance Limited, one of the three major UK rolling stock leasing companies

The European T&L M&A market exhibited a reduction in deal volume in Q4 2014, the first time since Q4 2013

HEALTHCARE &

LIFE SCIENCES

Several EU governments have reduced healthcare services funding to help balance budgets, requiring many patients to meet increasing shares of healthcare costs themselves

51% of European healthcare executives predict that technology platforms will have the biggest impact on their business models, with 71% believing that their organisations need to change faster for the future

INDUSTRIALS Against a backdrop of acute political uncertainty, Markit's final December Eurozone Composite PMI missed

an earlier flash reading of 51.7, coming in at 51.4

John Laing, the UK infrastructure and construction group, announced plans for a c.£1bn IPO

TMT

NJJ Capital has agreed to acquire Orange Communications, the Switzerland-based provider of mobile communication services, from Apax Partners, for CHF 2,800m

Mobile ad spending in Western Europe increased by 118% during 2014 and is set to continue growing over the next three years at an average annual growth rate of 43%, according to eMarketer

Last Quarter (3.0%) (6.2%) (4.4%) (0.4%) (1.4%) (8.5%) (2.6%) (3.9%)

Last Year 4.8% 0.6% 3.8% (8.7%) 17.7% 2.8% 10.8% 5.4%

Last 3 Years 61.2% 52.5% 34.2% (7.3%) (1.4%) 41.9% 40.1% 47.2%

75.0%

PAGE |

EUROPEAN ECONOMIC CLIMATE

3

WINTER UPDATE


Sources: Bloomberg, Markit Economics, Eurostat, S&P Capital IQ1. Historic figures are for the Eurozone and forecast figures are for the European Union; 2. Purchasing Managers’ Index – Figure above 50 indicates economic growth, and below 50 indicates decline; 3. European Commission Consumer Confidence Index Eurozone; 4. Consumer Price Index

QUARTERLY REAL GDP GROWTH (% Y-O-Y FOR EU-28)1

EUROPEAN MANUFACTURING CONFIDENCE EUROPEAN CONSUMER CONFIDENCE

KEY COUNTRIES% Y-O-Y GROWTH

Q3 15EQ3 14A

Germany +1.2% +1.5%

Sweden +2.1% +1.8%

Spain +1.7% +2.1%

Netherlands +1.1% +1.4%

Italy (0.5)% +0.3%

France +0.4% +1.0%

UK +2.6% +2.6%

2 3 4

40

45

50

55

60

(10%)

(5%)

0%

5%

10%

Dec-13 Mar-14 Jun-14 Sep-14 Dec-14

PM

I In

de

x V

alu

e

Ch

an

ge

in P

MI (M

-o-M

)

Change (M-o-M %) Eurozone PMI

(20%)

(15%)

(10%)

(5%)

0%

5%

10%

(40)

(30)

(20)

(10)

0

10

20

Dec-10 Dec-11 Dec-12 Dec-13 Dec-14

Co

nsu

me

r P

ric

e In

de

x (

%)

Co

nsu

me

r C

on

fid

en

ce

In

dic

ato

r

CCI CPI Y-o-Y %

(6%)

(4%)

(2%)

0%

2%

4%

6%

Q1 10 Q3 10 Q1 11 Q3 11 Q1 12 Q3 12 Q1 13 Q3 13 Q1 14 Q3 14 Q1 15E Q3 15E Q1 16E Q3 16E Q1 17E

EU GDP as a whole grew by 0.3% in Q3 2014, while the Eurozone’s GDP increased by a seasonally-adjusted 0.2% over Q2. Thereading came above market expectations of a 0.1% increase

In November 2014, the HICP inflation flash estimate for the euro area was 0.3% Y-o-Y: a slight decrease from 0.4% in October 2014

FocusEconomics Consensus Forecast panelists expect the Eurozone economy to have expanded by 0.8% in 2014, which isunchanged from last month’s forecast

Industrial Production in the Euro Area increased 0.4% in November 2014 compared to the same month in the previous year

The retail sales index increased by 1.4% in the euro area and by 2.0% in the EU28 in October 2014 compared with October 2013

Data on EU28 long-term interest rates shows a decreasing pattern from 3.03% in December 2013 to 1.78% in October 2014. Ratesare now at their lowest level over the last decade

The Euro Area (EA18) seasonally-adjusted unemployment rate was 11.5% in October 2014, stable compared with September 2014,but down from 11.9% in October 2013

The Business Climate Indicator (BCI) for the Euro Area increased slightly by 0.12 points to +0.18 in November 2014. Managers’evaluation of overall order books, past production and export order books improved markedly. Also their appraisal of the stocksof finished products brightened somewhat. By contrast, production expectations remained broadly unchanged

European Union annual inflation was 0.5% in October 2014, up from 0.4% in September. A year earlier the rate was 0.9%

The Eurogrowth Indicator expects a slightly increasing growth of 0.3% for both Q4 2014 and Q1 2015

PAGE |

EUROPEAN M&A ENVIRONMENT

4

WINTER UPDATE


3

4

5

European middle market M&A activity decreased by 25.5% in Q4 2014, compared to Q3 2014 with overall transaction volumes up15.8% Y-o-Y

TMT and Consumer continue to be the two most active sectors, accounting for approximately 33.5% and 22.2% of total dealvolume, respectively

Strategic buyers continued to be active and represented 89% of the buyers in Q4 2014, compared to 88% in Q3 2014

MARKET OBSERVATIONS

MIDDLE MARKET M&A ACTIVITY – BY SECTOR

Note: Includes closed M&A transactions of majority stakes only, where deal value was undisclosed or between €25m – €650m, within United Kingdom, Eire, France, DACH

(Germany, Austria, Switzerland), Spain, Italy, Benelux (Belgium, the Netherlands, Luxembourg) and Scandinavia (Denmark, Norway, Sweden and Finland)

BUYER SEGMENTATION Q4 20141 TRANSACTIONS BY TARGET COUNTRY2

0

300

600

900

1,200

1,500

Q4-12 Q2-13 Q4-13 Q2-14 Q4-14

Num

be

r o

f Tr

ansa

ctio

ns

ADG

Energy & Power


Healthcare

Business Services

Consumer

TMT

Industrials

89%

11%

Strategics Financials

40% 38%

18%16%

15%16%

11%10%

6%7%

7% 9%

4% 4%

0%

20%

40%

60%

80%

100%

Q3-14 Q4-14

Italy

Benelux

Spain

Scandinavia

France

DACH

UK & Eire

Q4 - 14 SECTOR

BREAKDOWN

100.0%Total

0.6%

2.0%

4.9%

8.4%

22.2%

13.1%

33.5%

15.1%

CHANGE OF Q4 - 14 OVER

Q4- 13

14.9%

0.0%

23.5%

10.0%

4.1%

16.2%

26.7%

0.8%

17.1%

Source: S&P Capital IQ1. Strategic buyers may include portfolio companies of private equity groups; 2. By volume; 3. Benelux defined as Belgium, the Netherlands and Luxembourg; 4. Scandinavia defined as Denmark, Norway, Sweden and Finland; 5. DACH defined as Germany, Austria, Switzerland

PAGE |

EUROPEAN INBOUND M&A ENVIRONMENT

5

WINTER UPDATE


Source: S&P Capital IQ1. Includes closed M&A transactions of majority stakes only, where deal value was undisclosed or between €25m – €650m, within United Kingdom, Eire, France, DACH (Germany, Austria, Switzerland), Spain, Italy, Benelux (Belgium, the Netherlands, Luxembourg) and Scandinavia (Denmark, Norway, Sweden and Finland); 2. International buyer defined as from outside Europe; 3. By volume

International inbound M&A volume into Europe increased by 27.6% Y-o-Y with 148 closed transactions

The Energy & Power and Healthcare sectors attracted the highest relative level of international inbound M&A investment,with international acquirers accounting for 33% and 22% of completed transactions in the quarter, respectively

The ADG and Transportation and Logistics sectors recorded the greatest Q-o-Q decreases in inbound M&A volume

North American groups accounted for 81% of transactions completed with non-European buyers, closing 120 transactions inthe quarter. Asian groups, excluding China and India, were the second most active buyers, closing 15 transactions in thequarter

MARKET OBSERVATIONS

ACQUISITIONS BY NON-EUROPEAN BUYERS1,2

NON-EUROPEAN BUYERS AS A PERCENTAGE OF SECTOR DEAL VOLUME1,2,3

0

2,000

4,000

6,000

8,000

10,000

0

50

100

150

200

Q4-12 Q1-13 Q2-13 Q3-13 Q4-13 Q1-14 Q2-14 Q3-14 Q4-14

De

al V

alu

e (

€m

)

Nu

mb

er o

f Tra

nsa

ctio

ns

International Activity by Number International Activity by Value

North America, 81%

South America2%

China0%

India1%

Asia (excl. China & India)10%

Africa & Middle East6%

% of Total Deal Volume Q1-13 Q2-13 Q3-13 Q4-13 Q1-14 Q2-14 Q3-14 Q4-14

ADG 50% 13% 30% 40% 60% 33% 73% 20%

Business Services 10% 15% 11% 16% 11% 10% 9% 14%

Consumer 8% 8% 8% 11% 5% 7% 9% 13%

Industrials 11% 12% 10% 12% 10% 12% 16% 12%

Energy & Power 18% 36% 16% 0% 31% 19% 17% 33%

Healthcare 9% 11% 20% 14% 23% 13% 22% 22%

TMT 20% 17% 24% 20% 19% 23% 23% 21%

Transportation & Logistics 0% 9% 6% 10% 20% 9% 9% 2%

NON-EUROPEAN BUYERS BY COUNTRY Q4 141,2

PAGE |

AEROSPACE, DEFENCE & GOVERNMENT SERVICES

6

WINTER UPDATE


Sources: S&P Capital IQ, Aviation Week, AIN Online, Flightglobal, Financial Times, Company websites1. Based on HW&Co. indices including the most relevant Aerospace, Defence, & Government Services companies for each country; 2. Includes transactions with a deal value between €25m and €650m and all non disclosed value deals with target based in the UK, Eire, France, DACH (Germany, Austria, Switzerland), Spain, Italy, Benelux (Belgium, The Netherlands, Luxembourg) and Scandinavia (Denmark, Norway, Sweden and Finland)

EUROPEAN ADG EQUITY MARKETS1

EUROPEAN ADG MIDDLE MARKET M&A ACTIVITY

UK and Eire France DACH Spain Italy Benelux Scandinavia

Price Change since last quarter 6.5% 2.5% 2.9% NA 0.4% (5.1%) 11.2%

Cash on Balance Sheet (€ bn) 7.5 4.0 0.4 NA 0.6 6.7 0.1

Net Debt / LTM EBITDA Multiple 1.3x 1.4x 1.7x NA NM NM NM

LTM EBITDA Multiple 9.4x 12.3x 7.8x NA 9.9x 6.0x 11.0x

Change since last quarter (0.3x) 0.4x (1.0x) NA (1.7x) (3.0x) 1.7x

LTM EBITDA Margin 13.1% 10.7% 8.2% NA 6.9% 13.8% 6.8%

Consensus 2Yr Fwd Revenue Growth (p.a.) 2.3% 2.5% 3.4% NA (7.0%) 2.6% 12.6%

Boeing have set a new industry record for the most number of commercial airplanes delivered in a year with 723 in 2014. A newrecord for new net orders was also achieved with 1,432 net orders, valued at $232.7bn. The Company’s 2015 focus will be on thefirst 737 MAX delivery and a firm configuration for the 777X

Airbus exceeded its aircraft delivery targets achieving a new company record of 629 aircraft delivered for 89 customers in 2014.Net orders reached 1,456 from 67 customers and Airbus recorded an industry record backlog of 6,386 aircraft, valued at $919.3bn

Boeing has announced plans to initiate a $12.0bn share repurchase programme, which is due to be completed over the period of2 to 3 years

B/E Aerospace has completed the spin-off of its consumables management division, KLX, which began trading on NASDAQ inmid-December 2014

Cyprus Airways has suspended operations and is to liquidate its holdings after the European Commission rejected a €102 millionbailout package, while demanding the airline repay all previous public funding

John Rishton, CEO of Rolls-Royce, has pledged greater transparency with investors in an effort to regain investor confidence aftera series of profit warnings resulting in the share price diving to 862.45p in October 2014, the lowest since 2012

Management moves3: QinetiQ Group, Rolls-Royce, Safran, Senior and Thales

MARKET OBSERVATIONS

0

2

4

6

8

10

12

14

Q4-12 Q2-13 Q4-13 Q2-14 Q4-14

Num

be

r o

f Tr

ansa

ctio

ns

UK & Eire Scandinavia DACH France Benelux Spain Italy

0

2

4

6

8

10

Q4-12 Q2-13 Q4-13 Q2-14 Q4-14

Num

be

r o

f Tr

ansa

ctio

ns

North America Asia (excl. China & India) China

India South America Africa & Middle East

SELECTED MIDDLE MARKET EUROPEAN ADG M&A

Target Country Acquirer Country Sub Sector EV (€m)

Surv itec Onex Partners Defence 586

Defence Support Group Babcock International Defence 183

Diehl Defence (Land Systems) Krauss-Maffei Wegmann Defence NA

REMOS Priv ate Indiv idual Av iation Serv ices NA

M&A DEALS BY COUNTRY OF TARGET2 ACQUISITIONS BY NON-EUROPEAN BUYERS2

PAGE |

BUSINESS SERVICES

7

WINTER UPDATE


M&A DEALS BY COUNTRY OF TARGET2

EUROPEAN BUSINESS SERVICES EQUITY MARKETS1

EUROPEAN BUSINESS SERVICES MIDDLE MARKET M&A ACTIVITY

ACQUISITIONS BY NON-EUROPEAN BUYERS2


CAP Automotiv e Solera Testing Serv ices 400

Geotea Gruppo Waste Italia Waste Management 60

esg Interserv e Human Resource Management 33

Cintas Document Management Restore Document Management 31

Maplecroft.NET Verisk Analytics Professional Serv ices 26

Source8 Mitie Inv estments Professional Serv ices NA

Anesco CBPE Capital Professional Serv ices NA

Mintra Trainingportal The Riv erside Company Human Resource Management NA

Dart Consulting Verisk Analytics Professional Serv ices NA

SELECTED MIDDLE MARKET EUROPEAN BUSINESS SERVICES M&A

Business Services in the Euro area grew for the seventeenth consecutive month. Momentum slowed at the end of 2014 with theMarkit Services Business Activity Index reaching 51.6 in December, compared to 51.1 in November and 52.3 in October. The rate ofexpansion remained close to its weakest level over the past eighteen months. Activity growth in Germany and France slowednotably in December

The UK services sector experienced the slowest growth in the last nineteen months to December 2014, with the Markit Index fallingto 55.8 in December, compared to 58.6 in November. However, the UK services sector remains in growth territory with rising sectoremployment and a bullish 2015 outlook

Global professional services firms are investing in European IT and data consultancy capabilities. Acquisitions made in Q4 2014include Deloitte’s acquisition of Hervé Schauer Consultants, a France-based information systems security consultancy firm, andKPMG’s acquisition of p³ Consulting, a German cyber-security services firm

Management moves3: Aggreko, Assystem, Bilfinger, Det Østasiatiske Kompagni, gategroup, Impellam Group, Serco, Sweett Group

MARKET OBSERVATIONS

0

5

10

15

20

Q4-12 Q2-13 Q4-13 Q2-14 Q4-14

Num

be

r o

f Tr

ansa

ctio

ns



0

50

100

150

200

Q4-12 Q2-13 Q4-13 Q2-14 Q4-14

Num

be

r o

f Tr

ansa

ctio

ns


Source: S&P Capital IQ, Markit Economics1. Based on HW&Co. indices including the most relevant Business Services companies for each country; 2. Includes transactions with a deal value between €25m and €650m and all non disclosed value deals with target based in the UK, Eire, France, DACH (Germany, Austria, Switzerland), Spain, Italy, Benelux (Belgium, The Netherlands, Luxembourg) and Scandinavia (Denmark, Norway, Sweden and Finland); 3. Resignation or appointment of CEO, CFO or Chairman


Price Change since last quarter (3.9%) 4.7% 3.7% NM (6.2%) (0.8%) 3.9%

Cash on Balance Sheet (€ bn) 4.5 7.1 4.1 0.3 0.0 1.0 NM

Net Debt / LTM EBITDA Multiple 1.5x 2.5x 0.9x 2.3x 3.8x 2.1x 2.0x

LTM EBITDA Multiple 10.3x 7.8x 10.3x NM 7.3x 11.8x 10.8x

Change since last quarter 0.1x 0.1x 1.2x NM 0.8x 1.2x 0.2x

LTM EBITDA Margin 10.9% 8.3% 5.2% 8.3% 10.9% 5.6% 6.5%

Consensus 2Yr Fwd Revenue Growth (p.a.) 5.5% 4.9% 3.2% 0.7% 6.0% 5.7% 4.4%

PAGE |

SELECTED MIDDLE MARKET EUROPEAN CONSUMER M&A DEALS

CONSUMER

8

WINTER UPDATE



EUROPEAN CONSUMER EQUITY MARKETS1

EUROPEAN CONSUMER MIDDLE MARKET M&A ACTIVITY



Price Change since last quarter 1.9% (0.5%) 1.8% 2.1% (3.7%) 1.6% 7.4%

Cash on Balance Sheet (€ bn) 28.2 38.1 25.2 4.0 5.2 NM NM


LTM EBITDA Multiple 10.0x 8.5x 9.3x 11.1x 7.9x 9.0x 10.4x

Change since last quarter (0.4x) 0.1x 0.3x 0.8x (1.2x) 0.0x 0.3x



SELECTED MIDDLE MARKET EUROPEAN CONSUMER M&A DEALS

0

50

100

150

200

250

300

350

Q4-12 Q2-13 Q4-13 Q2-14 Q4-14

Num

be

r o

f Tr

ansa

ctio

ns


0

5

10

15

20

25

30

Q4-12 Q2-13 Q4-13 Q2-14 Q4-14

Num

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ansa

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ns



MARKET OBSERVATIONS

Source: S&P Capital IQ, Bloomberg, Retail Gazette, Food and Drink Europe, Kantar Worldpanel, Company press releases1. Based on HW&Co. indices including the most relevant Consumer companies for each country; 2. Includes transactions with a deal value between €25m and €650m and all non disclosed value deals with target based in the UK, Eire, France, DACH (Germany, Austria, Switzerland), Spain, Italy, Benelux (Belgium, The Netherlands, Luxembourg) and Scandinavia (Denmark, Norway, Sweden and Finland); 3. Resignation or appointment of CEO, CFO or Chairman

United Biscuits was sold by Blackstone and PAI Partners to the Turkish food group Yıldız Holding for an estimated £2bn. Yildiz said itwould look to drive United Biscuits' growth using its own global distribution network

Japanese conglomerate Mitsubishi acquired Norway-based Cermaq for €1.5bn, strengthening its foothold in the European fishindustry

Bayer AG acquired the consumer care business of Merck & Co., Inc, for a cash consideration of €12.6bn. The acquisitionenhances Bayer's over-the-counter (OTC) business

Carrefour SA acquired DIA France, the French discount retailer for an enterprise value of €666m. The acquisition allows Carrefourto reinforce its presence across France

Dubai Parks and Resorts, a complex of five theme parks, completed an initial public offering. The total offer size of approximatelyDhs2.5bn (€0.6bn), valuating the business at Dhs5.9bn (€1.3bn)

Cheaper fuel and lower energy prices brought the rate of UK inflation to a record-equalling low in December. Inflation asmeasured by the Consumer Price Index, dropped to 0.5% in December, from 1% in November

In the UK, retail sales volumes for November 2014 were up 1.6% month-on-month, and up 6.4% Y-o-Y according to British Chambersof Commerce

Management moves3: Tesco, Johnson & Johnson, PepsiCo and Danone


De Vere Village Urban Resorts KSL Capital Partners Hotels and Resorts 634

Forte Village Resort Progetto Esmeralda Hotels and Resorts 180

Hurtigruten TDR Capital Tourism 169

Pa.fi.al. Group La Doria SpA Food 65

T.G.I. Friday's UK Electra Priv ate Equity Restaurants NA

Unlimited Footwear Group Equistone Partners Retail NA

Musti ja Mirri EQT Partners AB Pet Food NA

PAGE |

ENERGY & POWER

9

WINTER UPDATE



EUROPEAN ENERGY & POWER EQUITY MARKETS1

EUROPEAN ENERGY & POWER MIDDLE MARKET M&A ACTIVITY



Price Change since last quarter (31.6%) (14.2%) (7.0%) (12.1%) (11.7%) (7.6%) (19.6%)

Cash on Balance Sheet (€ bn) 40.3 41.8 11.4 15.9 17.3 22.0 16.1



Change since last quarter (0.0x) (0.3x) (0.8x) 0.1x 0.0x 0.8x 1.6x


Consensus 2Yr Fwd Revenue Growth (p.a.) 1.9% 0.4% 1.6% 0.1% (0.6%) (4.4%) 6.1%

MARKET OBSERVATIONS

-0

1

2

3

4

5

6

7

8

Q4-12 Q2-13 Q4-13 Q2-14 Q4-14

Num

be

r o

f Tr

ansa

ctio

ns



0

5

10

15

20

25

30

Q4-12 Q2-13 Q4-13 Q2-14 Q4-14

Num

be

r o

f Tr

ansa

ctio

ns

UK & Eire Scandinavia DACH France Benelux Spain Ita ly

SELECTED MIDDLE MARKET EUROPEAN ENERGY & POWER M&A3


Alco Valv es Graco Inc. Process Control 93

2TD Drilling Nabors Industries Oilfield Equipment 63

Petrotec REG European Holdings Exploration and Production 26

Proserv Group Riv erstone Holdings Oilfield Serv ices NA

Mintra Trainingportal The Riv erside Company Staff Training Serv ices NA

Villa & Bonaldi Xenon Priv ate Equity Oil and Gas Infrastructure NA

Q-Star Energy All NRG Group Oilfield Serv ices NA

SAS Offshore Royal IHC Offshore Equipment NA

Subsea Fluid Technologies MacDermid Oilfield Equipment NA

The oil price continued to fall during Q4 2014, to trade below $60 bbl at the year end, as result of sustained OPEC productionlevels and increased US output

The European oilfield service and equipment M&A market showed decreased activity in Q4 2014 with some notable acquisitionsby North American investors. Riverstone Holdings acquired Proserv Group, the UK-headquartered production and drillingequipment services provider and Graco acquired Alco Valves, the UK-based manufacturer of valves

European Union Heads of State have agreed ambitious targets for member states to reduce greenhouse gas emission by at least40% by 2030, compared to 1990. The policy framework also sets an indicative target to achieve 27% in energy savings and abinding target to source at least 27% of EU energy consumption from renewables (Current level: 14%)

Management moves4: Endesa, OMV, Statoil, BG Group, TOTAL, Trap Oil Group, Circle Oil, Norwegian Energy Company, Électricitéde France, AFC Energy, Fortum, Panoro Energy, C.A.T. Oil, John Wood Group, Enel, Alpiq Holding, Regal Petroleum, Sevan Marine

Source: S&P Capital IQ, WSJ, European Commission1. Based on HW&Co. indices including the most relevant Energy & Power companies for each country 2. Includes transactions with a deal value between €25m and €650m and all non disclosed value deals with target based in the UK, Eire, France, DACH (Germany, Austria, Switzerland), Spain, Italy, Benelux (Belgium, The Netherlands, Luxembourg) and Scandinavia (Denmark, Norway, Sweden and Finland); 3. Includes acquisitions of majority stakes only 4. Resignation or appointment of CEO or CFO

PAGE |

HEALTHCARE & LIFE SCIENCES

10

WINTER UPDATE



EUROPEAN HEALTHCARE & LIFE SCIENCES EQUITY MARKETS1

EUROPEAN HEALTHCARE & LIFE SCIENCES MIDDLE MARKET M&A ACTIVITY



Price Change since last quarter 2.1% 2.3% 0.9% (2.3%) 5.0% 1.6% 5.8%




Change since last quarter 1.7x (1.3x) (0.2x) 0.7x 0.1x (0.5x) 0.5x



SELECTED MIDDLE MARKET EUROPEAN HEALTHCARE & LIFE SCIENCES M&A

MARKET OBSERVATIONS

0

20

40

60

80

100

120

140

Q4-12 Q2-13 Q4-13 Q2-14 Q4-14

Num

be

r o

f Tr

ansa

ctio

ns


0

5

10

15

20

25

30

Q4-12 Q2-13 Q4-13 Q2-14 Q4-14

Num

be

r o

f Tr

ansa

ctio

ns



Source: S&P Capital IQ, Ricoh Europe, European Commission1. Based on HW&Co. indices including the most relevant Healthcare & Life Sciences companies for each country; 2. Includes transactions with a deal value between €25m and €650m and all non disclosed value deals with target based in the UK, Eire, France, DACH (Germany, Austria, Switzerland), Spain, Italy, Benelux (Belgium, The Netherlands, Luxembourg) and Scandinavia (Denmark, Norway, Sweden and Finland); 3. Resignation or appointment of CEO, CFO or Chairman

NHP HR Europe Healthcare Facilities 629

Oncoethix Merck & Co. Biotechnology 328

Brabant Pharma Zogenix Europe Pharmaceuticals 114

Woodleigh Community Care Care Aspirations Dev elopments Healthcare Serv ices 83

hameln pharmaceuticals Duke Street Partners Pharmaceuticals 60

SAS LILIAL Naxicap Partners Healthcare Serv ices NA

Nottingham Rehab H2 Equity Partners Healthcare Serv ices NA

Target Country Acquirer Country CountrySub Sector EV (€m)

The European healthcare market saw a decrease in M&A activity during Q4 following strong activity in Q3

According to the Economic Intelligence Unit, 51% of European healthcare executives predict that over the next three yearstechnology platforms will have the biggest impact on their business models. However, their greatest concerns relate totechnology itself and its impact on R&D. The majority, 71%, believe their organisations need to change faster over the next threeyears if they are to be ready for the future and 78% are feeling the pressure to change

As a result of the ongoing budgetary pressures, many EU governments have reduced funding for healthcare services. Patients arebeing required to pay larger shares of their healthcare costs, and availability of healthcare services has been reduced

The European Commission announced eight research projects into Ebola, with total funding of €215 million. These projects willdevelop vaccines and rapid diagnostics tests, in response to the current Ebola crisis

Management moves3: Care UK Limited, Aqua Gen AS, Hansa Medical AB, CellaVision AB, Esperite N.V.

PAGE |

SELECTED MIDDLE MARKET EUROPEAN INDUSTRIALS M&A

INDUSTRIALS

11

WINTER UPDATE



EUROPEAN INDUSTRIALS EQUITY MARKETS1

EUROPEAN INDUSTRIALS MIDDLE MARKET M&A ACTIVITY



Price Change since last quarter 1.8% (2.8%) 0.4% (11.0%) (3.6%) 1.7% 3.7%




Change since last quarter (0.1x) (0.4x) (0.7x) (0.7x) 1.1x (0.4x) 0.4x



SELECTED MIDDLE MARKET EUROPEAN INDUSTRIALS M&A

MARKET OBSERVATIONS

The euro zone economy ended 2014 with its worst quarter for over a year, according to surveys of activity that highlightedcontinuing downturns in France and Italy and stuttering German economic activity

The IMF cut its growth forecasts for the Euro area from 1.2% to 1.0% for 2015

Against a backdrop of acute political uncertainty, Markit's final December Eurozone Composite PMI missed an earlier flashreading of 51.7, coming in at 51.4

The Markit/CIPS UK Services PMI suffered its biggest decline in more than three years in December, falling to 55.8 from 58.6 inNovember, its lowest level since May 2013

John Laing, the UK infrastructure and construction group, announced plans for a £1 billion IPO

Management moves3: GEA Group, Osram Licht, Homag Group, Kendrion, Morgan Advanced Materials, Componenta Corp.,Hewden Stuart, Kier Group

0

50

100

150

200

Q4-12 Q2-13 Q4-13 Q2-14 Q4-14

Num

be

r o

f Tr

ansa

ctio

ns

UK & Eire Scandinavia DACH France Benelux Spain Ita ly

0

5

10

15

20

25

30

Q4-12 Q2-13 Q4-13 Q2-14 Q4-14

Num

be

r o

f Tr

ansa

ctio

ns



Source: S&P Capital IQ, Reuters, Markit Economics, Business Report1. Based on HW&Co. indices including the most relevant Industrials companies for each country; 2. Includes transactions with a deal value between €25m and €650m and all non disclosed value deals with target based in the UK, Eire, France, DACH (Germany, Austria, Switzerland), Spain, Italy, Benelux (Belgium, The Netherlands, Luxembourg) and Scandinavia (Denmark, Norway, Sweden and Finland); 3. Resignation or appointment of CEO, CFO or Chairman


CRH Clay & Concrete Div isions Bain Capital Construction Materials

Bridon Teachers' Priv ate Capital Electrical Equipment

SIHI Group Flowserv e Industrial Machinery

Waterlogic Castik Capital Partners Specialty Manufacturing

Bopp & Reuther IMI Industrial Machinery

Ev ac IK Inv estment Partners Specialty Manufacturing

Warwick International Group Limited The Lubrizol Corporation Specialty Chemicals

PAGE |

TECHNOLOGY, MEDIA & TELECOM

12

WINTER UPDATE


Source: S&P Capital IQ, Company Press Releases, Merger Market, Gartner, eMarketer1. Based on HW&Co. indices including the most relevant Technology, Media & Telecom companies for each country; 2. Includes transactions with a deal value between €25m and €650m and all non disclosed value deals with target based in the UK, Eire, France, DACH (Germany, Austria, Switzerland), Spain, Italy, Benelux (Belgium, The Netherlands, Luxembourg) and Scandinavia (Denmark, Norway, Sweden and Finland); 3. Resignation or appointment of CEO, CFO or Chairman


EUROPEAN TECHNOLOGY, MEDIA & TELECOM EQUITY MARKETS1

EUROPEAN TECHNOLOGY, MEDIA & TELECOM MIDDLE MARKET M&A ACTIVITY



Price Change since last quarter 2.5% 1.9% 1.5% (4.8%) (5.3%) 3.5% 3.3%




Change since last quarter 0.2x 0.4x 0.2x (1.0x) 0.5x 0.4x 0.7x



SELECTED MIDDLE MARKET EUROPEAN TECHNOLOGY, MEDIA & TELECOM M&A

MARKET OBSERVATIONS

Thoma Bravo and Ontario Teachers' Pension Plan have agreed to acquire Riverbed Technology, the US-based provider of application performance infrastructure solutions, valuing the business at $3.6bn

NJJ Capital has agreed to acquire Orange Communications, the Switzerland-based provider of mobile communication services, from ApaxPartners, for CHF 2,800m

Alliance Data Systems has acquired Conversant, the US-based provider of digital marketing services, valuing the business at $2.3bn

Apax Partners has made an offer to acquire Evry, the Norway-based provider of software solutions and computer operating services, valuing the business at NOK 7.3bn

Hutchison Whampoa, the owner of the Three network has agreed to acquire O2, the UK-based mobile business of Telefónica, for £10.3bn creating the UK’s largest mobile group

KKR has acquired Thetrainline.com, Britain’s largest online rail-bookings company, from Exponent for an undisclosed amount

Sophos, the UK-based data-protection and security software company, has announced plans for an IPO on the LSE

According to Gartner’s latest Mobile Services Worldwide update, revenue from mobile services will grow to $1.2 trillion by 2018, and the number of mobile connections will reach 8.5 billion

More than 1 billion people worldwide will use a tablet in 2015, according to new figures from eMarketer. This represents nearly 15% of the global population, and more than double the number three years ago. The number of global tablet users is expected to reach 1.4 bn by 2018

Mobile ad spending in Western Europe increased by 118% during 2014 and is set to continue with a forecast CAGR of 43% over the next three years, according to eMarketer

Management moves3: Gocompare.com; Trig Social Media, Sage, AMS and Atos

0

50

100

150

200

250

300

350

400

Q4-12 Q2-13 Q4-13 Q2-14 Q4-14

Num

be

r o

f Tra

nsa

ctio

ns


0

20

40

60

80

100

Q4-12 Q2-13 Q4-13 Q2-14 Q4-14

Num

be

r o

f Tr

ansa

cti

ons



Target Country Acquirer Country CountrySub Sector EV (€m)

Fotolia Adobe Systems Photography Software 578

Nimbuzz New Call Telecom Telecoms Application s 494

intergenia Host Europe Managed Serv ices 298

MetrixLab Macromill Online Market Research 185

Lorien Resourcing Impellam Group Recruitment Software 175

DST Global Solutions SS&C Technologies Application Software 66

PAGE |

TRANSPORTATION & LOGISTICS

13

WINTER UPDATE



EUROPEAN TRANSPORTATION & LOGISTICS EQUITY MARKETS1

EUROPEAN TRANSPORTATION & LOGISTICS MIDDLE MARKET M&A ACTIVITY



Price Change since last quarter 2.8% (1.0%) 6.4% 5.1% (2.9%) 0.8% 1.6%

Cash on Balance Sheet (€ bn) 4.6 32.5 55.8 7.9 4.6 1.5 6.8



Change since last quarter (0.3x) (0.5x) (0.1x) (1.5x) (0.7x) (1.4x) (2.6x)



0

2

4

6

8

10

Q4-12 Q2-13 Q4-13 Q2-14 Q4-14

Num

be

r o

f Tr

ansa

ctio

ns

North America Asia (excl. China & India) China India South America Africa & Middle East

0

10

20

30

40

50

60

70

80

Q4-12 Q2-13 Q4-13 Q2-14 Q4-14

Num

be

r o

f Tr

ansa

ctio

ns


SELECTED MIDDLE MARKET EUROPEAN TRANSPORT & LOGISTICS M&A3

MARKET OBSERVATIONS

The European T&L M&A market showed a decrease in transaction activity in Q4 2014 for the first time since Q4 2013. The majorityof transactions were completed by European buyers, non-European buyers had less activity compared to previous quarters

An investor consortium including Allianz Group, Hastings, and Alberta Investments acquired Porterbrook Rail Finance Limited, oneof the three major rolling stock leasing companies in the UK for € 2,540 billion. Porterbrook owns and manages a modern fleet ofapproximately 5,900 passenger and freight vehicles

The International Air Transport Association (“IATA”) forecasts global air cargo demand to increase by 4.1% (CAGR) over the nextfive years. Emerging economies, particularly the Middle East and Africa, will be the fastest growing markets. For 2015, theassociation expects demand to increase by 4.5%

As a first step towards cutting emissions from cargo ship transport, the European Commission has proposed that owners of largeships using EU ports must report their verified emissions from 2018. To become law, the proposal requires approval by the EuropeanParliament and Council

Sources: S&P Capital IQ, Company Press Releases, IATA, European Commission1. Based on HW&Co. indices including the most relevant Transport & Logistics companies for each country2. Includes transactions with a deal value between €25m and €650m and all non disclosed value deals with target based in the UK, Eire, France, DACH (Germany, Austria, Switzerland), Spain, Italy, Benelux (Belgium, The Netherlands, Luxembourg) and Scandinavia (Denmark, Norway, Sweden and Finland); 3. Includes acquisitions of majority stakes only


The Big Green Parcel Holding Company Smiths News Holdings Parcel Distribution 129

NATCO Trans Global Projects Freight Forwarding NA

OPDR GmbH & Co. CMA CGM Maritime Logistics NA

Heav yweight Sweden European Cargo Serv ices Cargo Serv ices NA

Vos Logistics Scheybeeck Inv estments Transport Logistics NA

Neele Groep VAT Logistics Transport Logistics NA

O.W. Tankers Alba Tankers Maritime Logistics NA

Far East Land Bridge OJSC RZD Logistics Transport Logistics NA

PAGE |

FEATURED THEME

WINTER UPDATE


0

1,000

2,000

3,000

4,000

5,000

2013 2014

Nu

mb

er o

f Tra

nsa

ctio

ns

ADG

Energy & Power


Healthcare

Business Services

Industrials

Consumer

TMT

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

2013 2014

Nu

mb

er o

f Tra

nsa

ctio

ns

India

China

Africa & Middle East

South-America

Asia (excl. China & India)

Europe

North-America

Source: S&P Capital IQ1. Includes closed M&A transactions of majority stakes only, where deal value was undisclosed or between €25m –€650m, within the United Kingdom, Eire, France, DACH (Germany, Austria, Switzerland), Spain, Italy, Benelux (Belgium, the Netherlands, Luxembourg) and Scandinavia (Denmark, Norway, Sweden and Finland); 2. Note: Also includes North-America, South-America, Asia and Africa & Middle East 14

“REVIEW OF 2014 EUROPEAN MIDDLE MARKET M&A”

HW&Co. transactions in 2014 represented 11 countries, including Australia, Canada, France, Germany, Greece, India, Japan,Sweden, Switzerland, UK and US

Our momentum continues in 2015, with a significant deal pipeline suggesting a positive outlook for middle market M&A activity in2015

With 4,027 deals, up from 3,287 in 2013, European middle market M&A grew 23% by volume in 2014, a steeper increase than the16% growth seen globally

‒ Europe represented 31% of global middle market M&A in 2014 against 29% in 2013

‒ North America maintained its share of the global market at 55%

A closer look at the sector breakdown demonstrates that deal activity increased across all the sectors in 2014. TMT, Consumer andIndustrials were the most active sectors

European inbound M&A remained strong overall in 2014, representing 15% of total deals compared to 14% in 2013. Inboundactivity continued to be dominated by North America which accounted for 83% of acquisitions in Europe in 2014, in line with 2013level

Continuous cautiousness in the financing markets in 2014 resulted in private equity activity accounting for 11% of Europeantransactions in 2014, down from 13% in 2013

EUROPEAN MIDDLE MARKET DEALS BY SECTOR1 GLOBAL MIDDLE MARKET DEALS BY REGION1,2

SELECTED HW&CO. 2014 TRANSACTIONS

30%

23%

15%

14%

8%6%2%1%

32%

24%

15%

13%

9%5%2%1%

4,027 deals3,287 deals 13,168 deals11,349 deals

29%

55%

3%1%1%

8%

2%

31%

55%

3%

2%1%

7%

2%

a portfolio company of

has been acquired by






has received a significant investment

from

a business unit of










a portfolio company ofa portfolio company of

has been acquired byhas been acquired by

a portfolio company of a portfolio company of


has been recapitalised by

has merged with



http://www.google.com/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&docid=ZwZlFiTgmGK_kM&tbnid=rNTW0CJe9dqsgM:&ved=0CAUQjRw&url=http://www.brandsoftheworld.com/logo/ranpak-bv&ei=pPg6U--RPOjisATXzIHACw&bvm=bv.63934634,d.dmQ&psig=AFQjCNHlfYcS8SJtzeNhbfk6hExkCvGlQg&ust=1396460041645135

http://www.google.com/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&docid=ZwZlFiTgmGK_kM&tbnid=rNTW0CJe9dqsgM:&ved=0CAUQjRw&url=http://www.brandsoftheworld.com/logo/ranpak-bv&ei=pPg6U--RPOjisATXzIHACw&bvm=bv.63934634,d.dmQ&psig=AFQjCNHlfYcS8SJtzeNhbfk6hExkCvGlQg&ust=1396460041645135

Energy & Power

IndustrialsHealthcare & Life Sciences


Aerospace, Defense & Government

Services

Business Services

Building Products & Materials

Technology, Media & Telecom

Specialty Distribution

Consumer

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16

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