Quebec Transaction Snapshot Q3 2016

Now What?With the uncertainty of the US Presidential elections behind us, “Now what?” is the question everyone is asking. While the question is far-reaching and covers concerns related to foreign policy, employment, fiscal policy, spending on healthcare, education and infrastructure, Quebecers are primarily concerned about the potential impact on trade relations with our single largest business partner, as well as the overall impact that the new Republican regime will have on the US economy in the next four years. In this context, most would argue that while the election results are now confirmed, significant uncertainty remains.

Transaction activity in Quebec during the months leading up to the 8 November 2016 US Presidential elections was very consistent quarter over quarter; however muted in terms of both transaction volume and deal value when compared to the first three quarters of 2015. More specifically, Q3-2016 reported 81 closed deals in Quebec, consistent with the 79 and 82 reported in Q1 and Q2, respectively. However, this is significantly lower than the average of 94 deals per quarter reported through Q3-2015. Similarly, reported transaction value during Q3-2016 was just $2.6B, down from $3.9B in Q2-2016, and well below the average of $11.5B during the last eight quarters.

Private equity investing in Quebec is also on the decline, with only 7 deals closed during Q3-2016 compared to 10 in Q2-2016, and an average of 10 during the last 8 quarters. According to data recently released by the Canadian Venture Capital Association and Reseau Capital, year-over-year private equity investment in Quebec as at Q3-2016 dropped by more than 50% to $2.3B, and the average deal size shrunk by 59% to just $16.4M. It should also be noted that 6 of the top 10 year-to-date private equity investors in the province were Quebec-based institutions. Trends across the country were similar, as only $9B was invested in 271 deals, down 55% from the same time last year, when $20B was invested in 311 deals. Moreover, year-to-date exits were only $3.5B compared to $11.0B during the same period in 2015, and year-to-date fundraising was also 25% lower at $4.7B.

Notwithstanding the above, we are continuing to see a significant amount of transaction activity in the Quebec mid-market on both the buy-side and sell-side, in addition to a noted uptick in financings. We closed no fewer than 4 deals during Q3-2016, 3 of which you will read about in this edition, including the sale of a minority interest in Accès Location d’Équipement to the Fonds Régionaux de Solidarité FTQ, the sale of Plastube (a portfolio company of CAI Private Equity) to BDG & Partners, and the sale of Groupe Équilibrum to Médi Baie inc.

In this edition, you will also read about the Entrepreneur Of The Year winners across all categories in the province of Quebec, including Gilbert Rozon of Just for Laughs, who was named the EY Entrepreneur Of The Year for Quebec and who will now be competing for the national title and the opportunity to represent Canada on the world stage in Monte Carlo in early 2017 as part of the global finals.

Interested in growth and growing faster and smarter? Who isn’t? EY’s Growth NavigatorTM is a new and unique way for you to think beyond the typical approaches to growth and consider seven critical drivers for business success and sustainable growth via an interactive experience moderated by EY advisors that is specifically designed for leadership teams.

I hope you enjoy this edition and those that follow,

Todd Caluori, CPA, CA, CBV Editor and Associate Partner, M&A Lead Advisory

Third quarter 2016

Quebec Transaction Snapshot

2 | Quebec Transaction Snapshot

Our Transaction Support practice has a nationally integrated team of experienced transaction professionals dedicated to assisting our clients as trusted transaction advisors. Our team applies a rigorous approach to help you avoid a bad deal, or make a good deal better. We understand profit drivers and trends, challenge assumptions of future performance, identify risks and the means to mitigate them, create appropriate transaction structures and assist with purchase agreements. We are linked to Ernst & Young’s global due diligence network of approximately 3,150 professionals in 85 countries, and we also work with industry-focused professionals. We assist with all phases of a deal on either the buy-side or the sell-side, as described below.

EY’s Transaction Advisory ServicesThis edition’s focus: Transaction Support

A transaction is one of the riskiest and most complex business propositions an organization can undertake. The potential for error is high in an environment where speed is critical, resources are limited and pressure for information to make decisions is great.

To learn more about our Transaction Support Services, contact:Mylène Levac, Partner 514 874 4697 [email protected] Louis-Philippe Berti, Partner 514 874 4328 [email protected]

LeadAdvisory

TransactionAdvisoryServices

TransactionSupport

TransactionTax

OperationalTransaction

Services

Valuation &BusinessModelling

WorkingCapital

Management

Restructuring

Redu

ce ri

sks

/ Av

oid

surp

rises

Max

imiz

e tr

ansa

ctio

n va

lue

Buy-side services — Helping you invest capital • Identify and assess key deal issues early

• Analyze purchase price and deal structure

• Provide input on letter of intent/ preliminary terms

• Identify potential dealbreakers • Analyze quality of earnings • Challenge forecasts • Understand key business drivers • Benchmark working capital • Analyze standalone costs and synergies

• Assess debt and debt-like items • Bring together our Tax, Operational Transaction Services, Human Capital groups

• Support buyer’s negotiating position

• Provide input to purchase agreement

• Analyze seller’s proposed tax structure

• Analyze closing financial schedules

• Support buyer’s purchase price adjustments

• Assistance with closing adjustments

Sell-side services – Helping you raise capital • Exit readiness diagnostic • Presale due diligence • Prepare seller for buyer’s due diligence

• Increase seller credibility

• Financial sell-side due diligence • Develop financial data schedules for buyer

• Prepare carve-out financial statements

• Assist in responding to buyer questions

• Assist with responses to negotiation points

• Provide input to purchase agreement

• Analyze buyer’s proposed tax structure

• Support seller’s purchase price adjustments

• Support seller’s dispute position and indemnification claims

• Assistance with closing adjustments

Transaction Strategy /

Opportunity

TransactionExecution

Transaction Negotiationand Close

Transaction Effectiveness

Canadian economic indicators

2016 2017

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

Exchange rate (US/CDN)1 72.8 77.6 76.6 75.6 75.7 76.5 77.3 78.2 Real GDP (chain-weighted)2 2.5 -1.6 3.3 1.9 1.8 2.1 1.9 2.0 Consumer spending2 2.4 2.2 1.0 1.3 1.4 1.6 1.6 1.6 Government spending2 2.1 4.0 3.1 3.0 2.6 2.6 2.6 2.6 Business investment2 -8.1 -1.9 -1.4 0.8 1.2 2.5 3.4 3.6 Residential construction2 11.3 1.2 0.0 -1.0 -1.8 -2.5 -2.5 -2.0 Exports2 8.0 -16.7 7.8 2.7 3.2 3.8 3.5 3.3 Imports2 1.6 1.1 -0.3 2.5 3.0 2.7 2.8 2.5 CPI, all items3 1.5 1.6 1.2 1.4 1.7 1.6 1.8 1.9 Overnight rate4 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 Three-month T-Bill4 0.45 0.51 0.50 0.50 0.50 0.50 0.50 0.50 90-day BAs4 0.85 0.90 0.88 0.89 0.89 0.89 0.89 0.89 10-year bond yield4 1.22 1.28 1.06 1.16 1.19 1.23 1.27 1.30 Unemployment rate4 7.2 7.0 7.0 7.0 6.9 6.9 6.8 6.8 Personal income3 2.7 2.2 3.0 3.2 3.5 3.7 3.5 3.5 Housing starts (’000s)5 198 198 200 192 190 185 183 180

1 Quarter average2 Quarter over quarter % change, annual rate3 Year over year % change4 Quarter average in %5 Quarter average, annual rate□ Estimates

Source: BMO Capital Markets Economics as at 21 October 2016

Third quarter 2016 | 3


,

Illustrative Quebec transactions*

• 5 July 2016: Montreal-based TransForce, Inc., North America’s leading staffing firm specializing in quality commercial truck drivers, has acquired the assets of K.A.S. Personnel Services (“KAS”). KAS is a leading provider of high-quality commercial truck drivers and other transportation personnel based in Mississauga, Ontario. KAS has been serving the transportation industry for almost 30 years in the Ontario market. This is TransForce’s sixth acquisition in the last 36 months. Terms of the transaction were not disclosed.

• 8 July 2016: US-based Lydall, Inc. acquired Saint-Elzéar-de-Beauce-based Texel Inc., a division of ADS, Inc., for approximately US$96 million in cash. The transaction strengthens Lydall’s position as an industry-leading, global provider of filtration and engineered materials and expands the Company’s end markets into attractive adjacencies. For Texel’s fiscal year ended January 31, 2016, revenue was approximately US$72 million and adjusted EBITDA was approximately US$12 million. The business is expected to be fully integrated by 2018, and Lydall expects to leverage its operating discipline, business efficiencies, and economies of scale to generate estimated annual cost savings of approximately US$2 million.

• 15 July 2016: Montreal-based Knight Therapeutics Inc. acquired 11,470,920 common shares of Pediapharm Inc., also based in Montreal, in exchange for 221,126 common shares of Knight and 221,126 four-year warrants of Knight, with an exercise price of $10.00. The Shares represent approximately 15.8% of the outstanding common shares of Pediapharm.

• 26 July 2016: Montreal-based MTY Food Group Inc. acquired all of the shares of US-based Kahala Brands, Ltd. The total consideration for the transaction is approximately US$310 million, including US$240 million cash, and remains subject to post-closing working capital adjustments. The operations of Kahala will stay in Kahala’s current headquarters located in Scottsdale, Arizona, while MTY’s US operations will move into Kahala’s offices. At closing, Kahala operated 18 brands in 27 countries, totalling approximately 2,800 locations. The combined entity is expected to produce over $2 billion annually in system sales generated by approximately 5,500 franchised and corporate locations.

• 9 August 2016: Montreal-based Taxelco Inc. purchased Taxi Diamond, the biggest taxi fleet in Montreal. This transaction, which combines the strengths of two innovation-focused players, will allow Taxelco to step up its modernization strategy to meet the needs of Montrealers looking for safe, fast, and efficient professional taxi service available around the clock, across the island of Montreal. This acquisition will allow Taxelco to implement its know-how on a large scale, with 1,720 vehicles offering the same reliable service to Montrealers under three different brands. Terms of the transaction were not disclosed.

• 12 August 2016: Quebec-based Cascades Inc., leader in the recovery and manufacturing of green packaging and tissue products, has taken a majority position in Longhorn Paper Converting, a tissue converting plant in Grand Prairie, Texas. While recent investments have consolidated Cascades’ presence on the American west coast, this latest initiative will expand its coverage of the US even further. Owing to its strategic location, this conversion plant will foster synergies and enhance Cascades’ integration rate in the region by converting parent rolls manufactured in other Cascades plants. Terms of the transaction were not disclosed.

• 22 August 2016: Montreal-based Gildan Activewear Inc. acquired Peds Legwear, Inc., also based in Quebec, for a total cash consideration of US$55 million. The acquisition is expected to create revenue growth opportunities by leveraging Gildan's existing customer relationships to broaden the channels of distribution for the Peds® and MediPeds® brands and by extending these brands into Gildan’s other product categories. In addition, Peds current distribution into the footwear channel provides broader access in this channel for Gildan’s brands and product portfolio.

• 23 August 2016: AlliancePharma Inc., based in Thetford Mines, Quebec, completed the acquisition of Pharmapar Inc. in consideration for $8.5 million payable in cash at closing, the issuance of 8,888,889 common shares of AlliancePharma at closing, and a balance of purchase price of $1.6 million, payable in cash. AlliancePharma also acquired Agence L.I.V. Inc. for $5.0 million payable in cash at closing, and the issuance of 3,833,333 common shares of AlliancePharma at closing. These transformative transactions position AlliancePharma for the next stage of its corporate development. The company now has approximately 100 employees, a network of over 750 allied health professional contractors, 1,100 clients, annual gross sales of over $50 million and pro-forma Adjusted EBITDA of approximately $5 million.

• 1 September 2016: Paysafe Group Plc, a leading global provider of payment solutions based in the UK, expanded its product capabilities by acquiring Income Access Group, a pioneering affiliate technology business based in Quebec for a cash consideration of $40 million. Paysafe President and Chief Executive Officer Joel Leonoff said: “This acquisition will help to extend our leadership position in niche-orientated payment solutions as we add value for our merchants and redefine the role of a payments provider.”

• 1 September 2016: ACCEO Solutions Inc., a Canadian leader in IT and business and financial solutions based in Montreal, acquired 3671712 Canada Inc., operating under the trade name Logivision, a Beloeil-based company offering point-of-sale (POS) software solutions for quick-retail businesses such as drugstores, pharmacies, convenience stores, gas stations, grocery stores and specialty shops. ACCEO thus strengthens its foothold in the POS market. Terms of the transaction were not disclosed.

* All amounts are in Canadian dollars unless otherwise indicated. Sources: S&P Capital IQ and company press releases.


,

• 2 September 2016: Cara Operations Limited, based in Ontario, has acquired 100% of Group St-Hubert, Quebec’s leading full-service restaurant operator, as well as a fully-integrated food manufacturer for $537 million. St-Hubert generates approximately $620 million in sales, including sales from its food operations division, and approximately $44.8 million in operating EBITDA. Cara’s Chief Executive Officer, Bill Gregson, commented, “This acquisition represents a historic alliance and an excellent strategic fit for both companies. It gives St Hubert the opportunity to expand its restaurant network as well as to drive a national retail food program on behalf of Cara, leveraging St-Hubert’s existing management, Quebec manufacturing facilities and supplier network.”

• 8 September 2016: TELUS Health Solutions GP, a Quebec-based subsidiary of Telus Corporation, completed the acquisition of Nightingale Informatix Corp.’s Canadian business operations for a purchase price of approximately $14 million, as well as the assumption of certain working capital obligations, subject to purchase price adjustments, including its proprietary Electronic Medical Record (EMR) software and nearly 5,000 physician customers across Ontario, Western Canada and Atlantic Canada. This acquisition includes the transition of 42 Nightingale team members and their collective expertise to TELUS Health, which will allow TELUS to provide customers with consistent service and a seamless transition.

• 9 September 2016: Bodycote, the world’s largest thermal processing services provider based in the UK, acquired Quebec-based Nitrex Metal Technologies. The addition of Nitrex Metal Technologies to the Bodycote Group broadens the range of thermal processing services that Bodycote offers, which already range from conventional atmosphere heat treatments to more exotic specialty technologies. Terms of the transaction were not disclosed.

• 12 September 2016: Groupe Deschênes Inc., a Quebec-based company, acquired the main assets of Ideal Supply Company Limited, a southwestern Ontario wholesale distributor to the electrical, industrial and automotive industries. Terms of the transaction were not disclosed.

• 16 September 2016: Montreal-based Boralex Inc. completed the acquisition of a portfolio of wind power projects of nearly 200 MW located in France and in Scotland, as well as approximately 8,500 hectares of land on which the projects will be developed, for a total cash consideration of $103 million.

• 16 September 2016: Montreal-based Ovivo Inc. completed the previously announced plan of arrangement whereby German-based SKion Water International GmbH acquired all of the issued and outstanding Class A subordinate voting shares and Class B multiple voting shares of Ovivo. Pursuant to the arrangement, former holders of Ovivo shares will receive $4.00 in cash per share. Following the transaction, Caisse de dépôt et placement du Québec increased its existing ownership in the Corporation from 18.7% to 30%, by acquiring a 30% equity interest in Ovivo from SKion at the purchase price of $4.00. Ovivo shares will be delisted from the Toronto Stock Exchange.

• 16 September 2016: Montreal-based Stingray Digital Group Inc., a leading business-to-business multi-platform music and in-store media solutions provider, closed the previously announced acquisition of Bell Media’s Much Retro specialty channel. The closing of this transaction demonstrates Stingray’s continued commitment to acquiring high-quality television content and providing its customers around the world with the most comprehensive suite of music products and service offerings. Terms of the transaction were not disclosed.

• 16 September 2016: Quebec-based Polycor Inc., purchased two famed US stone companies: Rock of Ages and Swenson Granite. No layoffs or plant closures are planned, and the combined companies will have more than US$150 million in annual revenues, with Polycor contributing 40%. The deal is being financed by key members of the three companies, along with Canadian private equity firm TorQuest Partners and PNC Mezzanine Capital in Pittsburgh. Terms of the transaction were not disclosed.

• 20 September 2016: TENAQUIP Limited, a leading industrial supplier headquartered in Montreal with distribution warehouses in Calgary and Vancouver, has purchased the assets of Northern Industrial Sales, based in British Columbia. “When you add the value that TENAQUIP brings to the table in terms of volume, expertise, logistics, and e-commerce, it positions NIS and the TENAQUIP Group of Companies as one of the leading industrial and safety suppliers servicing Canada coast to coast,” said Rob Sasseville, Managing Director of Sales and Operations. Terms of the transaction were not disclosed.

• 28 September 2016: The PSA Group and Montreal-based merchant bank MacKinnon, Bennett & Co. acquired a stake in the capital of Quebec-based Communauto Inc., a major player in North America’s car-sharing market for the past 22 years, with operations in 7 cities in Canada and in Paris. The transaction will help Communauto speed up its international expansion, consolidate its leadership position in North America and roll out its electrification strategy. Terms of the transaction were not disclosed.

• 28 September 2016: The Master Group Inc., a Boucherville-based company part of Novacap Industries portfolio, purchased the distribution operations of Johnson Controls’ Unitary Products Group (York®) branches based in Oakville and Markham, Ontario. This acquisition increases the number of Master’s points of sales to a total of 9 in Southwestern Ontario and 29 in Canada. Terms of the transaction were not disclosed.


EY* transaction snapshot

EY* is pleased to announce the completion of a minority interest sale in Accès Location d’Équipement Inc. (“Accès Location” or “the Company”) to Fonds régionaux de solidarité FTQ (“Fonds“) and Yvan Blais Management, on which EY acted as the exclusive financial advisor to Accès Location.

About Accès Location d’Équipement Inc.

Accès Location specializes in the rental and sales of cutting-edge lifting equipment, primarily serving the construction industry. Lifting equipment is available for indoor or outdoor jobs reaching heights of 180 feet with features such as articulated, straight mast or telescopic, with non-marking tires or four-wheel drive, and electric, battery or internal combustion engines.

The goal is to offer tailored solutions for clients’ technical needs. Offering comprehensive services including sales, maintenance, repairs, equipment transportation as well as training, Accès Location provides 360˚ lifting equipment service.

In June 2016, Accès Location began construction of its new headquarters in Beloeil, QC. The 31,000 square foot state-of-the-art facility is three times larger than its current headquarters and is set in a strategic location. It will open in the second quarter of 2017.

“With this new location,” said Mr. Harold Dubé, Company President, “Accès Location d’Équipement will be able to double its equipment fleet and create 20 new employment opportunities over the next five years.” The company currently has 42 employees.

The Transaction

After supporting Accès Location’s growth for over 15 years, the Company’s shareholders made a decision to monetize part of their investment and bring new partners on board to help drive the Company forward. The Company has found partners to help develop its current product offering, expand its current network and partnerships, and take the Company to the next stage.

*Ernst & Young Orenda Corporate Finance Inc.

EY* acted as exclusive financial advisor to Accès Location d’Équipement Inc.

has sold a minority interest to

and

Yvan Blais Management


François TellierQuebec Managing Partner 514 874 [email protected]

Milad JawabraSenior Associate 514 879 [email protected]

Learn more

About usEYO is one of Canada’s largest corporate finance firms focused on mid-market transactions. With approximately 89 professionals in 10 cities across Canada, we offer significant industry and regional depth. As part of EY’s Transaction Advisory Services practice, EYO delivers a fully integrated approach to transaction services, including:

Mergers and acquisitions lead advisory• □Divestitures□• □Mergers and acquisitions□• □Management and leveraged buyouts • □Recapitalizations

Structured finance• □Structure and arrangement of debt

and equity □• □Project finance and infrastructure

advisory services

Financial advisory services

Transaction real estate advisory services

The Win-Win

The transaction allows Accès Location to continue its profitable growth and strengthen its position as a customer-focused market leader.

This partnership is specifically designed to maintain the culture and stability that have made Accès Location successful.

The new partners were attracted to Accès Location because of the Company’s excellent track record, its strategic programs for continued future growth, and its commitment to its customers and employees.

Through our vast transaction experience working with entrepreneurial mid-market businesses, our understanding of key shareholder concerns and objectives, our approach to deal structuring and our ability to provide creative solutions to deal issues, we were able to arrange a transaction process that led to a successful outcome for all stakeholders.




EY* is pleased to announce the acquisition of Plastube Inc. (“Plastube”), a manufacturer of flexible packaging, by BDG & Partners Financial Corporation (“BDG”). EY acted as the exclusive financial advisor to Plastube in connection with the divestiture.

Ken BrooksSenior Vice-President514 874 [email protected]

Bernard CormierVice-President514 874 [email protected]

Learn more

About Plastube

Founded in 1963, Plastube is one of the leaders in short to medium run manufacturing and decoration of plastic tubes in the personal care/cosmetics, pharmaceutical, industrial and food business segments. The company has carved out a strong niche position manufacturing 50 million tubes per year and has developed a solid blue-chip, loyal customer base that continues to provide growth opportunities. Plastube has approximately 130 employees, and revenues above $20 million.

The Transaction

BDG acquired Plastube (portfolio company of CAI), a manufacturer of flexible packaging, located in Granby, QC, for an undisclosed purchase price paid in cash at closing. BDG is a Canadian private management and investment company established through an alliance between entrepreneurs-investors, professionals and financial institutions.

The Win-Win

The transaction allowed Plastube’s shareholder, CAI, to monetize its long-term investment in the Company, while providing management with a partner that is committed to continuing its profitable global growth and strengthen its position as a supplier in the short to medium run tube manufacturing.

BDG was attracted to Plastube because of the company’s recent successes, its high-quality product offering, its operational improvements and future growth opportunities, and its commitment to its customers and employees. This transaction is a great addition to BDG’s portfolio and strengthens its position as a strong Quebec-based private equity with a focus on manufacturing companies that need an entrepreneurial/operational partner.

Key factors that contributed to the successful completion of this transaction were our knowledge of the industry, our understanding of key shareholder concerns, our problem-solving skills as well as our ability to reconcile both buyers’ and sellers’ expectations while progressing towards a successful closing on an expedited basis.


EY* acted as lead financial advisor to Plastube.

portfolio company of

has been acquired by



EY* is pleased to announce the acquisition by Groupe Équilibrum of 100% of the shares of Médi Baie inc. EY acted as the lead financial advisor to Groupe Équilibrum.

About Groupe Équilibrum

Groupe Équilibrum specializes in the manufacture and sale of orthotics. It operates a network of 12 branches plus a manufacturing centre which serves a number of laboratories in Quebec and the Maritimes, making it the largest integrated manufacturing centre in Eastern Canada.

Having experienced significant growth in recent years, primarily through acquisitions, Groupe Équilibrum would like to continue on this path.

The Transaction

Groupe Équilibrum acquired Médi Baie inc., based in Gaspesie and in the Maritimes, for an undisclosed purchase price. Médi Baie inc. operates five clinics specializing in the sale of orthotics, breathing equipment and specialized furniture for persons experiencing loss of autonomy.

The Win-Win

With this transaction, Médi Baie inc.’s shareholder can refocus development efforts in other areas of business. It also enables Groupe Équilibrum to extend its network in Gaspesie and add breathing equipment to its service lines.

Through our transaction experience, our understanding of key shareholder objectives, our approach to deal structuring and our ability to provide creative solutions to deal issues, we were able to arrange a transaction process that led to a successful outcome for all stakeholders.


EY* acted as financial advisor to Equilibrum Inc. in this transaction.

has acquired

Médi Baie inc.

Learn moreMarc-Vincent BobéeVice-President418 640 [email protected]

Josianne DallaireAssociate418 640 [email protected]


All values reported in Canadian dollars unless otherwise stated 1 Closed transactions only. Due to the existence of private transactions, not all deals have reported values.

Historical M&A activity(Source: S&P Capital IQ)

In terms of transaction mix:• There were a total of 81 closed transactions involving Quebec-based companies during the quarter ended 30 September 2016. This is in line with the 82 transactions closed during the previous quarter, and below the Q3-2015 level of 93 transactions. In addition, the total remains below the rolling eight-quarter average of approximately 91 transactions. Note, however, that past experience has shown that the number of identified transactions at quarter-end tends to underestimate the actual number of deals closed during the quarter, as announcements are sometimes deferred.

• There were a total of seven acquisitions completed by a financial sponsor in Q3-2016, representing a ratio of 11 to 1 for transactions completed by strategic buyers versus financial buyers, which is above the ratio of 8 to 1 recorded for the last eight quarters.

• In terms of transaction size, total reported value was $2.6 billion, below the $3.9 billion recorded in the previous quarter, and below the average of $11.5 billion for the last eight quarters. From a total of 28 deals with reported values, there were two deals in excess of $500 million and four between $100 and $500 million. The number of transactions below $100 million stood at 22, below the eight-quarter average of 28.

• The average transaction size based on deals with reported values (excluding mega-deals) increased significantly from approximately $22 million to $94 million, and is above the rolling eight-quarter average of $77 million. However, average deal size this quarter was positively affected by two larger transactions, namely the $543 million acquisition of Groupe St-Hubert Inc. by Cara Operations Limited and the $967 million acquisition of the remaining 51% of four US office properties by Ivanhoe Cambridge and Callahan Capital Partners, notwithstanding the fact that neither were “mega-transactions” above the $1 billion threshold.

• The most active sectors in terms of deal volume in Q3-2016 were Metals and Mining, IT Products and Services and Commercial and Professional Services. Over the last eight quarters, IT Products and Services, Real Estate and Metals and Mining were the most active sectors.

• In terms of targets, out of 49 acquisitions closed by Quebec-based companies during the quarter, ten targets were based in Quebec, representing a ratio of 20%, below the eight-quarter average of 29%. 36 targets were based in the rest of Canada, two in the US and one in the rest of the world.

• In terms of acquirers, out of the 42 Quebec-based companies acquired during the quarter, ten were acquired by Quebec-based acquirers, representing a ratio of 24%, below the eight-quarter average of 38%. Eight acquirers were based in the rest of Canada, nine in the US and 15 in the rest of the world.

Transactions involving Quebec-based companies over the last eight quarters1

Counterparty mix over the last eight quarters

Counterparty mix over the last quarter

Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016

$40,000

$30,000

$20,000

$10,000

$0

150

100

50

0

# of transactions by a financial sponsor

# of transactions by a strategic buyer

Reported values (C$, millions)

# of

tran

sact

ions

C$, m

illio

ns

12 13 11 11 10 8 10 7

8285

80 82 9671 72 74

94 98 9193

106

79 82 81

Counterparty mix over the last eight quarters

138

266161

15910

3419

18

Counterparty mix over the last quarter

Quebec with USQuebec with rest of world

Quebec with Quebec Quebec with rest of Canada

Transactions involving Quebec-based companies over the last eight quarters, by deal size (in C$, millions)

100

50

0Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q Q1 2016 Q2 2016 Q3 20164 2015

# of

tran

sact

ions

Undisclosed value $0-$20 million $20-$100 million $100 - $500 million $500 - $1,000 million >$1,000 million

54 51 4861 58 51 54 53

20 2920

17 23

1319 20

10 710

711

86 2

6 68

78

5

24

12

20

1

20 2

3 33

1

5

01 0

94 9891 93

106

79 82 81

Number of Quebec transactions by industry over the last eight quarters

Constr

uctio

n & Eng

ineeri

ng

Consu

mer Goo

ds

Energy

& Utilitie

s

Finan

cials

Food

& Bevera

ge

Health

care

Indus

trials

IT prod

ucts

& Service

s

Materia

ls

Media

& Teleco

mmunica

tions

Metals &

Mini

ng

Real E

state

Retail &

Distrib

ution

Transp

ort

Commerc

ial & Prof

essio

nal

100

50

0

Number of Québec transactions over the last eight quarters

3415

3932

5457

86

28 28

9986

4127

62

26

Number of Quebec transactions by industry over the last quarter

Constr

uctio

n & Eng

ineeri

ng

Consu

mer Goo

ds

Energy

& Utilitie

s

Finan

cials

Food

& Bevera

ge

Health

care

Indus

trials

IT Produc

ts & Serv

ices

Materia

ls

Media

& Teleco

mmunica

tions

Metals &

Mini

ng

Real E

state

Retail &

Distrib

ution

Transp

ort

Commerc

ial & Prof

essio

nal

18

16

14

12

10

8

6

4

2

0

7

4

1

7

17

2

8

43 3 3

24

8 8


EY’s Quebec public company review1

(Source: S&P Capital IQ)

1. Ernst & Young Orenda’s Quebec public company indices are capitalization-weighted, while multiples by industry are based on an arithmetic average. Indices and trading multiples are updated periodically to reflect new entrants/exits. Furthermore, we have modified the way in which the analysis is performed (effective 1 July 2015), including the addition and removal of companies within the data set, and categorization by industry, amongst others. Current data may not correspond with those shown in previous editions.

2. For the purposes of this analysis, small caps include companies with a market capitalization between $5 and $250 million, mid-caps include companies between $250 and $2.5 billion, and large caps include companies with a market capitalization above $2.5 billion.

Quebec TEV/EBITDA trading multiples by industry30 June 2016 30 September 2016

Energy

and U

tilitie

s

Finan

cials

Health

care

and S

ervic

es

Mater

ials

Media

and

Teleco

mmunica

tions

Metals

and M

ining

Indus

trials

Consu

mer G

oods

Food

and B

ever

age

Real E

state

Retail

and D

istrib

ution

Trans

port

Commer

cial a

nd

Profe

ssion

al Ser

vices

Constru

ction

and

Enginee

ring

IT Produ

cts

18.4x

17.2x

16.5x

17.6x

13.3x

14.5x

13.5x

11.7x

11.9x

11.4x

10.1x

9.4x

8.9x

8.3x

8.1x

17.6x

17.5x

16.8x

16.1x

15.4x

14.7x

13.6x

12.7x

12.7x

11.9x

10.2x

9.6x

9.4x

9.2x

8.9x

140

130

120

110

100

90

80

70

60Sep-14 Dec-14 Mar-15 Sep-15 Dec Mar-16 Jun-16 Sep-16-15Jun-15

Stock price evolution over the last eight quarters2

S&P TSX Quebec large caps Quebec mid caps Quebec small caps

Quebec large caps Quebec mid caps Quebec small caps

Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec Mar-16 Jun-16 Sep-16-15

TEV/EBITDA evolution over the last eight quarters2

18.0x

16.0x

14.0x

12.0x

10.0x

8.0x

12 | Quebec Transaction Snapshot 12 | Quebec Transaction Snapshot

Third quarter 2016 | 13Third quarter 2016 | 13

Gilbert Rozon of Just for Laughs named EY Entrepreneur Of The Year™ Québec 2016Annual awards gala celebrates outstanding local entrepreneurs

(Montréal, 21 October 2016) Gilbert Rozon, President and Founder of Just for Laughs Inc., the organization that hosts some of the world’s largest and most renowned comedy festivals, is this year’s EY Entrepreneur Of The Year Québec winner.

“Comedy is a universal language,” says Daniel Baer, EY’s Québec Entrepreneur Of The Year program co-director. “Gilbert took the world’s love for humour and evolved it into an international production that everyone can participate in. Just for Laughs has developed comedic stars, pushed entertainment boundaries – and even helped strengthen Québec’s tourism industry along the way.”

From paperboy and gravedigger to lumberjack and lawyer, Rozon gives credit to his diverse résumé for helping him develop a sense of humour and a unique skill set at a young age. Equipped with a wide range of experiences, he followed his gut and itch for showbiz, to launch the first Just for Laughs festival in 1983.

Originating in Montréal, the festival has become a huge commercial and cultural success for Québec. Just for Laughs has grown to attract more than two million spectators annually, and has expanded to Toronto and crossed borders into Chicago, Sydney and Paris. Over the years, the company diversified into performances, artist management and television productions – which air in over 135 countries, featuring some of entertainments’ biggest stars.

Beyond the laughs, Rozon is part of a number of organizations that bring international recognition to Québec and foster the growth of its tourism industry. For example, he’s a director on the Board for the Society for the Celebration of Montreal’s 375th anniversary, which is committed to organizing socioeconomic contributions that will mark Montreal’s birthday in 2017.

“Just for Laugh’s mission is to ‘make people happy’ and that’s exactly what it does,” says Luc Charbonneau, EY’s Québec Entrepreneur Of The Year program co-director. “The company’s work puts smiles on the faces of many. Bringing in large international crowds, Just for Laughs is a true Québec success story that continues to boost tourism in our province. Gilbert is a prime example of how entrepreneurs fuel economic growth, and is very deserving of this award.”

Family Business Award of Excellence

Lino Saputo Jr., Chief Executive Officer and Vice Chairman of the Board of Saputo Inc. accepted the Family Business Award of Excellence on behalf of the Saputo family, one of Québec’s outstanding entrepreneurial and philanthropic families.


BUSINESS SERVICES

Enzo Vardaro

Artitalia Group | Montreal www.artitalia.ca

Provides end-to-end manufacturing of innovative custom metal, wood and acrylic fixtures for the retail, hospitality & restaurant, material handling, and mail & parcel markets.

BUSINESS-TO-BUSINESS PRODUCTS AND SERVICES

Sébastien Moreau

Rodeo FX | Montreal www.rodeofx.com

Provides award-winning, world-class visual effects services to clients in cinema, television and advertising.

Rodeo FX was selected by the National Canadian judging panel to receive a special citation for Global Industry Leadership at the National EY Entrepreneur Of The Year gala on 22 November.

BUSINESS-TO-CONSUMER PRODUCTS AND SERVICES

David Cape

Groupe Marcelle | Montreal www.groupemarcelle.com

A Canadian leader in the research, development, production and marketing of cosmetic and skincare products.

Groupe Marcelle was selected by the National Canadian judging panel to receive a special citation for Marketing and Branding Excellence at the National EY Entrepreneur Of The Year gala on 22 November.

EMERGING ENTREPRENEUR

Adrian Schauer

AlayaCare | Montreal www.alayacare.com

End-to-end home healthcare software focused on providing better patient outcomes through robust clinical documentation, back office solutions and next-generation technology.

HEALTH SCIENCES

Jonathan Goodman and Jeffrey Kadanoff

Knight Therapeutics (TSX: GUD) | Westmount www.gud-knight.com

Specialty pharmaceutical company focused on acquiring, licensing, marketing and distributing innovative prescription pharmaceuticals, consumer health products and medical devices.

INFORMATION TECHNOLOGY

Paul Raymond

Alithya | Quebec www.alithya.com

Provides consulting services in information technology and organizational management, creating synergies between business and IT for the financial services, telecommunications, transportation, healthcare and government sectors.

The EY Entrepreneur Of The Year Québec 2016 category award recipients


MANUFACTURING

Andrew Richardson

Targray Technology International | Kirkland www.targray.com

A leading supplier of critical raw materials, consumables and equipment to manufacturers in the solar, biofuels, lithium-ion battery and optical media industries.

MEDIA AND ENTERTAINMENT

Gilbert Rozon

Just for Laughs | Montreal www.hahaha.com

The world’s largest festival of comedy for over 34 years, Just for Laughs is a world leader in TV comedy show distribution, with presence in over 135 countries.

TECHNOLOGY AND COMMUNICATIONS

Martin Thériault

Eddyfi | Quebec www.eddyfi.com

Hi-tech company producing non-destructive testing equipment for clients in the energy sector.

What’s next?As the Québec region’s EY Entrepreneur Of The Year 2016, Gilbert will compete with top entrepreneurs from the Pacific, Prairies, Ontario and Atlantic regions for the national honour of Canada’s EY Entrepreneur Of The Year 2016, to be presented at a gala celebration on 22 November 2016 in Toronto. In June 2017, Canada’s EY Entrepreneur Of The Year 2016 will move to the world stage to compete with more than 50 country recipients for the title of EY World Entrepreneur Of The Year.

About EY Entrepreneur Of The Year™EY Entrepreneur Of The Year is the world's most prestigious business award for entrepreneurs. The unique award makes a difference through the way it encourages entrepreneurial activity among those with potential, and recognizes the contribution of people who inspire others with their vision, leadership and achievement. As the first and only truly global award of its kind, EY Entrepreneur Of The Year celebrates those who are building and leading successful, growing and dynamic businesses, recognizing them through regional, national and global awards programs in more than 140 cities in 50 countries.

The 2016 Québec independent judging panel consists of Chris Arsenault, Managing Director, iNovia Capital; Jean-Françoys Brousseau, President and CEO, Outbox Holding CRB Inc.; Anne Darche, President, Pertinence Inc.; Martin Deschênes, President and CEO, Groupe Deschênes Inc.; and Marie-Anne Tawil, President and CEO, Iron Hill Investments Inc.


Growth Navigator™Accelerate your growth journey with EY

When most businesses think about strategy, they think about how they focus people, systems and processes on delivering customer value and ultimately growth. However, talking to, and working with, clients through their business cycle and our own research has shown us that, while this strategy is successful for some, focusing upon a broader set of activities delivers far more sustainable growth. That’s why we’ve created EY Growth Navigator™.

EY Growth Navigator™ is a new and unique way for you to think beyond the typical approaches to growth and consider seven critical drivers for business success and sustainable growth. It is an interactive experience that allows you and your leadership team to assess your company, gain valuable insights from leading practices and identify strategic priorities for growth. It uses the EY 7 Drivers of Growth which is the product of years of working with hundreds of the most dynamic companies and growth leaders.

At the end of your EY Growth Navigator™ session with your EY advisor, you will have a set of actions, prioritized according to your strategic needs, to help you take the necessary steps to achieve the next level of success.

Outputs from an EY Growth Navigator™ meetingAt the end of your EY Growth Navigator™ meeting, you will have:• A current state assessment of your business, across

the EY 7 Drivers of Growth, against the growth journeys of market-leading companies

• Identified your aspired future state across these seven drivers

• Identified further growth opportunities and possible causes for growing pains

• Identified strategic road maps with concrete sets of actions, prioritized according to your strategic needs, to help you take the necessary steps to achieve the next level of success


You have a strategy to grow. But are your capabilities aligned to deliver it?We’ve developed the EY 7 Drivers of Growth to help companies align their capabilities with their growth strategy to accelerate their growth.This framework is the product of extensive research which examined the growth journeys of hundreds of companies around the globe – ranging from start-ups to leading businesses – as well as in-depth interviews with winners of our Entrepreneur Of The Year™ program.Our findings pointed to a stark need to move the conversation about growth and customer-value beyond the traditional focus on people, systems and processes. By focusing on a broader set of capabilities, companies can accelerate growth and make it sustainable.

Connecting to deliver real growthConnecting your knowledge of your business with our knowledge and experience in the market can help deliver real growth. EY Growth Navigator™ uses our research and experience of working with the world’s leading organizations. During your experience, you will cover issues such as:□• Increasing the value of your customer base□• Optimizing your operations□• Establishing leading risk management□• Creating a high-performing team and culture□• Developing a funding strategy for growth□• Achieving powerful strategic alliances, partnerships and

acquisitions□• Exploiting the opportunities created through digital

technologies

Assessing where you are today Achieving market leadership

Accelerated growth

The EY 7 Drivers of Growth

Sign up for an EY Growth Navigator™ session today and accelerate your journey to market leadership

To learn more:François Tellier Canadian Growth Markets Leader 514 874 4351 [email protected]

EY | Assurance | Tax | Transactions | Advisory

About EYEY is a global leader in assurance, tax, transaction and advisory services. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In so doing, we play a critical role in building a better working world for our people, for our clients and for our communities.EY refers to the global organization and may refer to one or more of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. For more information about our organization, please visit ey.com.

Ernst & Young Corporate Finance (Canada) Inc.is a US registered broker-dealer. Any inquiries regarding transactional services by US persons should be directed to Ernst & Young Corporate Finance (Canada) Inc. through one of the contacts identified at the end of this document.

© 2016 Ernst & Young Orenda Corporate Finance Inc. © 2016 Ernst & Young Corporate Finance (Canada) Inc.

2119200ED None

This publication contains information in summary form, current as of the date of publication, and is intended for general guidance only. It should not be regarded as comprehensive or a substitute for professional advice. Before taking any particular course of action, contact Ernst & Young or another professional advisor to discuss these matters in the context of your particular circumstances. We accept no responsibility for any loss or damage occasioned by your reliance on information contained in this publication.

ey.com/ca/corpfinance

For more information

François Tellier, CPA, CA, CBV Canadian Strategic Growth Markets/ Middle Market Leader and Quebec Managing Partner Transaction Advisory Services 514 874 4351 [email protected]

Ken Brooks, MBA Senior Vice President M&A Lead Advisory Services 514 874 4412 [email protected]

Todd Caluori, CPA, CA, CBV Senior Vice President M&A Lead Advisory Services 514 879 2793 [email protected]

Bernard Cormier, CFA Vice President M&A Lead Advisory Services 514 874 4305 [email protected]

Eric Cassir, CFA, CBV Vice President M&A Lead Advisory Services 514 879 8228 [email protected]

Milad Jawabra, CFA Senior Associate M&A Lead Advisory Services 514 879 8148 [email protected]

Adam Forlini Associate M&A Lead Advisory Services 514 874 4634 [email protected]

Documents

Quebec Transaction Snapshot Q3 2016