2017 OUTSELL SIGNATURE EVENT Annual M&A Outlook October 4, - - PowerPoint PPT Presentation

2017 OUTSELL SIGNATURE EVENT

Annual M&A Outlook October 4, 2017

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JEGI: A DIFFERENTIATED INVESTMENT BANKING MODEL

2016/17: $3.4 BILLION VALUE ACROSS 32 TRANSACTIONS

SELECTIVE ENGAGEMENT PROCESS

JEGI only engages when we can outperform our competition and meet or exceed client expectations – we turn down or defer consideration on numerous potential assignments

UNIQUE PARTNERSHIP STRUCTURE

Every member of JEGI’s Leadership Team has a vested interest in the performance of the firm and each transaction’s successful closing

SECTOR LEADING BANKER TENURE

Senior bankers average 14 years at JEGI, completing 600+ M&A transactions

30 YEARS OF M&A ADVISORY LEADERSHIP

Second longest-tenured boutique investment bank on Wall Street

DEEP & TALENTED EXECUTION TEAM

Given our unique, highly selective engagement model, 80% of the firm’s time is spent on execution, not pitching

PROOF IN THE NUMBERS

Engagements closed:

90%

Engagements where valuation exceeded expectations:

85%

Average time to close:

SIX MONTHS

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ELEPHANT IN THE ROOM - WHAT COMPANY IS THIS?

• Founded in 1994
• Mentioned in 10% of all Q2 earnings calls by CEOs of other companies
• 2016 revenues of $136 billion with an EBITDA of only 8%
• 2017 revenue forecast is $173 billion, with the likelihood that the EBITDA margin may be

lower than 2016

• Company invested $5.5 billion in Q2 alone in R&D
• Company trades at a P/E ratio of 243x and an EBITDA of 39x

WHAT COMPANY IS THIS?

ELEPHANT IN THE ROOM = AMAZON

Source: Pitchbook

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KEY TRENDS IN M&A – Q3 2017

• M&A activity remains strong across the information industry
• January - September 2017 saw nearly 1,500 announced transactions totaling almost $160 billion in value
• Pace of 2017 M&A is on track to surpass strong 2014 and 2015 levels, but may not match last year
• Jan – Sept 2017 saw 142 fewer deals than Jan – Sept 2016, but Q3 2017 saw 6 more deals than Q3 2016

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KEY TRENDS IN M&A – Q3 2017

• Liquidity remains robust, with both financial and strategic buyers flush with cash
• Debt markets remain strong and active across both senior and mezzanine capital
• Repatriation of capital could cause spike in M&A activity
• Market conditions are favorable for

robust M&A to continue

• Highest levels of consumer confidence

since 2001

• US unemployment rate of 4.4%; average

hourly earnings decreased 0.1% from July to August

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PRIVATE EQUITY DRY POWDER

• Strategics also have unprecedented levels of cash on hand – S&P Global estimates $1.8 trillion
• f total cash on the balance sheets of nonfinancial corporates
• Interestingly, much of this capital is being held overseas, given the current tax laws; Trump

administration discussing lowering taxes for repatriation of this capital; could significantly impact M&A and infrastructure investment

Source: Bain Capital

Buyer Seller Description Announced Date* Value ($B) 1 Sinclair Broadcast Group Tribune Media Company Media and entertainment company May 2017* $7.3 2 Pamplona Capital Management PAREXEL International Contract drug research organization June 2017* $5.3 3 INC Research Holdings inVentiv Health Pharmaceutical consulting services May 2017* $4.6 4 Cisco Systems AppDynamics IT infrastructure monitoring and analytics January 2017 $4.0 5 Gartner CEB Practice insight and technology company January 2017 $3.7 6 Vivendi Havas Advertising, digital and communications services May 2017* $3.4 7 Moody's Bureau van Dijk Electronic Publishing Publishes electronic business information May 2017* $3.4 8 PetSmart (Argos Holding) Chewy E-commerce portal for the pet industry April 2017 $3.4 9 Quinpario Acqusition Corp. Novitex Enterprise Solutions / SourceHOV Outsourced IT services February 2017* $2.8 10 Hellman & Friedman Fairfax Media Digitally progressive media company May 2017* $2.5 11 Apollo Global Management West Corporation Customer care and telecom services May 2017* $2.0 12 eBay; Microsoft; Tencent Holdings Flipkart Online Services Online shopping website April 2017 $1.4 13 Oracle Moat SaaS analytics solutions April 2017* $0.9 14 First Data CardConnect Payment processing solutions May 2017* $0.8 15 Capitol Acquisition Corp. III Cision (GTCR) PR software March 2017* $0.8 16 Harland Clarke (MacAndrews & RetailMeNot Savings destination for online and instore April 2017 $0.7 17 Eurazeo; Goldman Sachs Dominion Web Solutions Digital marketing solutions May 2017 $0.7 18 FleetCor Technologies Cambridge Global Payments Online payment solutions May 2017* $0.7 19 Amazon Souq.com E-commerce platform March 2017 $0.7 20 Apollo Global Management Mood Media Creative marketing solutions April 2017* $0.6

* Some deals are still pending Sources: JEGI Transaction Database and 451 Research LLC

TOP 20 TRANSACTIONS, H1 2017

TOP 20 TRANSACTIONS, H1 2017

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TOP 20 TRANSACTIONS, H1 2017 – CASE STUDY

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acquires TARGET RATIONALE DEAL METRICS

$3.7 billion, 3.9x revenue, 18.4x EBITDA

CEB provides insight development and technology management services to corporate clients; also

• ffers management advisory

services to customers in the financial, legal, marketing and government sectors. The acquisition of CEB allows Gartner to expand its business portfolio in the information technology and management insights sector in the U.S. market.

TOP 20 TRANSACTIONS, H1 2017 – CASE STUDY

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acquires TARGET RATIONALE DEAL METRICS

$3.4 billion, 11.3x revenue, 22.0x EBITDA

Bureau van Dijk publishes private company information and corporate

• wnership structures through Orbis

database, providing information on 220 million private companies globally. The acquisition of Bureau van Dijk enables Moody’s to gain a stronger position as a leader in financial risk data and analytical insight.

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BENEFITS OF INORGANIC GROWTH Acquisitions can:

Turbo-Charge Revenue Growth Boost Talent Expand Market Map Cultivate Innovation Offer Immediate Scale …with concurrent benefits …challenging for large companies to do effectively …helping with often difficult market penetration …efficiently …in a marketplace with slow organic revenue growth

RATE OF RETURN: 15.1% RECENT HIGH-PROFILE TRANSACTIONS THAT CREATED SUBSTANTIAL VALUE FOR THE ACQUIRER

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Story: “OpenTable is a premium online brand with significant global potential, and we couldn't be more excited to welcome the team to The Priceline Group family. We look forward to supporting OpenTable's growth, through both enriched restaurant partnerships and innovative experiences for our collective customers.” Darren Huston, President & CEO of Priceline Group

acquires Share price at close: $1,236.73 Share price as of September 29: $1,830.82 Transaction Closed: July 24, 2014 Price: $2.5 billion Revenue: 12.6x EBITDA: 41.6x

RECENT HIGH-PROFILE TRANSACTIONS THAT CREATED SUBSTANTIAL VALUE FOR THE ACQUIRER

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Story: “The addition of Aegis represents a massive step toward realizing our vision of a client-centric, collaborative global network of the best-in-class brand, digital and media agencies. We look forward to the value this will add to our clients’ businesses, wherever they may be, and look forward to growing with them as their partner of choice.” Tadashi Ishii, President & CEO, Dentsu

acquires RATE OF RETURN: 15.6% Share price at close: $2,900 Share price as of September 29: $4,940 Transaction Closed: March 26, 2013 Price: $4.8 billion Revenue: 2.6x EBITDA: 14.8x

RECENT HIGH-PROFILE TRANSACTIONS THAT CREATED SUBSTANTIAL VALUE FOR THE ACQUIRER

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Share price at close: $93.74

Story: “We are enthusiastic about SNL because it is a fast growing, highly complementary subscription based business that will enable use to accelerate our strategy to be the leading provider of transparent and independent benchmarks, analytics, data and research across the global capital, commodity and corporate markets.” Douglas Peterson, President & CEO, McGraw Hill Financial

acquires RATE OF RETURN: 32.1%

Share price as of September 29: $156.26

becomes

Transaction Closed: September 1, 2015 Price: $2.2 billion Revenue: 9.9x EBITDA: 43.6x

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THE FUTURE LOOKS BRIGHT MARKET CONDITIONS ADMINISTRATION

TAX + Proposed lower corporate tax rates + Repatriation of capital = greater investment/M&A APPOINTMENTS + Reflect a business-friendly environment FAVORABLE CREDIT MARKET + Low interest rate environment

• Projected future rate increases

PRESSURE TO IMPROVE PROFITS + Slow growth economy encourages inorganic growth + Acquisitions add talent, scale and synergies + Divestiture of slow-growth assets = more M&A STOCK MARKET PERFORMANCE + Dow 20,000+ = CEO confidence + Strong strategic valuations + Lots of cash on balance sheets SMALL BUSINESS CONFIDENCE + Small Business Optimism Index near 10-year high + Small Business Owners: 18% plan to increase employment; 27% feel now a good time to expand

Source, small business data: National Federation of Small Businesses

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GLOBAL LEADERSHIP TEAM

AMIR AKHAVAN

Managing Director

WILMA JORDAN

Founder & CEO

TOLMAN GEFFS

Co-President

RICHARD MEAD

Managing Director

DAVID CLARK

Managing Director

New York / Boston

MARCUS ANSELM

Partner

PAUL COOPER

Partner

BEN TOLLEY

Partner

London / Sydney

JOSEPH SANBORN

Managing Director

JEFF BECKER

Managing Director

JONATHAN DAVIS

Managing Director

SAN DATTA

Managing Director

JON GOODALE

BD Director

VICTORIA JEROME

COO

RICHARD VAUGHAN

Director

KATHLEEN THOMAS

Managing Director

SAM BARTHELME

Managing Director

STEPHEN SHANKMAN

Vice President

NICOLE GINSBERG

Vice President

ADAM GROSS

CMO

BILL HITZIG

COO

DOUG STOWE

EVP

JAMES NALLY

Director

MICHAEL HIRSCH

Managing Director

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CONTACT US

BOSTON JEGI, One Liberty Square 11thFloor Boston, MA 02109 +1 617 294 6555 www.jegi.com LONDON Clarity, 90 Long Acre London, WC2E 9RA +44 20 3402 4900 www.claritycp.com NEW YORK JEGI, 150 East 52nd Street 18thFloor New York, NY 10022 +1 212 754 0710 www.jegi.com SYDNEY Clarity, 100 Barangaroo Avenue Sydney NSW 2000 +61 2 8046 6840 www.claritycp.com