QUICK BITES: Buying or Selling a Business in the Pandemic August - PowerPoint PPT Presentation

QUICK BITES: Buying or Selling a Business in the Pandemic August 12, 2020

M&A Activity Through the Years – Number of Transactions Dot-Com Bust Great Financial Crisis Covid-19 Peak- Trough- Peak- Trough- 1,600 To- To- To- To- Trough: Recovery: Trough: Recovery: ~30 months ~40 months 20 months 24 months 1,400 1,200 # of Transactions per Month 1,000 800 600 400 200 0 Jan-98 Jun-98 Nov-98 Apr-99 Sep-99 Feb-00 Jul-00 Dec-00 May-01 Oct-01 Mar-02 Aug-02 Jan-03 Jun-03 Nov-03 Apr-04 Sep-04 Feb-05 Jul-05 Dec-05 May-06 Oct-06 Mar-07 Aug-07 Jan-08 Jun-08 Nov-08 Apr-09 Sep-09 Feb-10 Jul-10 Dec-10 May-11 Oct-11 Mar-12 Aug-12 Jan-13 Jun-13 Nov-13 Apr-14 Sep-14 Feb-15 Jul-15 Dec-15 May-16 Oct-16 Mar-17 Aug-17 Jan-18 Jun-18 Nov-18 Apr-19 Sep-19 Feb-20 Jul-20 Count of All Transactions Announced Date Moving Average of Count of All Transactions Announced Date from the previous 3 to the next 1 along Month of All Transactions Announced Date Source: Capital IQ. US & Canada. Excludes Real Estate, Utilities and Materials 2

M&A Activity – Covid-19 Pandemic vs. Previous Downturns 40% Total M&A Activity – Months from Peak 30% 20% # of Deals Indexed to Peak 10% – (10%) (20%) (30%) (40%) (45%) (50%) (60%) 0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32 34 36 38 40 42 44 46 48 50 52 54 56 58 60 62 64 66 68 70 72 Months from Peak Total Deals Covid-19 Pandemic + Recession (Jan 2020 peak) Total Deals Great Financial Crisis (July 2007 peak) Total Deals Dot-Com Bust + 9/11 (March 2000 peak) Source: Capital IQ. US & Canada only. Excludes Real Estate, Utilities and Materials 3

M&A Activity Correlation to S&P 500 – Great Financial Crisis 50% M&A transaction activity and stock market performance were highly 40% correlated during the Great Financial Crisis and recovery 30% 20% 10% – (10%) (20%) (30%) (40%) (40%) (50%) (60%) Jul-07 Sep-07 Nov-07 Jan-08 Mar-08 May-08 Jul-08 Sep-08 Nov-08 Jan-09 Mar-09 May-09 Jul-09 Sep-09 Nov-09 Jan-10 Mar-10 May-10 Jul-10 Sep-10 Nov-10 Jan-11 Mar-11 Total Deals Great Financial Crisis (July 2007 peak) S&P 500 Index Performance Source: Capital IQ. US & Canada only. Excludes Real Estate, Utilities and Materials 4

M&A Activity Correlation to S&P 500 – Covid-19 Pandemic 50% This time around? S&P 500 has taken only 4 months to fully recover from 40% March lows. Unclear how long until M&A activity recovers, but there are reasons to believe it will be faster than the prior two downturns 30% 20% 10% 1% – (10%) (20%) (30%) (40%) (45%) (50%) Jan-20 Mar-20 May-20 Jul-20 Sep-20 Nov-20 Jan-21 Mar-21 May-21 Jul-21 Sep-21 Nov-21 Jan-22 Mar-22 May-22 Jul-22 Sep-22 Nov-22 Jan-23 Mar-23 May-23 Jul-23 Sep-23 Total Deals Covid-19 Pandemic + Recession (Jan 2020 peak) S&P 500 Index Performance Source: Capital IQ. US & Canada only. Excludes Real Estate, Utilities and Materials 5

Public Company Valuations Have Recovered Forward EV/EBITDA Multiples 18.0x 17.0x Branded Food & Beverage Companies 16.4x 16.0x 16.4x 15.0x 14.0x 13.9x 13.5x 13.0x S&P 500 12.0x 12.4x 11.0x 10.0x 10.3x 9.0x Dec-19 Jan-20 Feb-20 Feb-20 Mar-20 Apr-20 Apr-20 May-20 Jun-20 Jun-20 Jul-20 Aug-20 Branded Food & Beverage S&P 500 Source: Capital IQ 6

$1.5 Trillion of Private Equity “Dry Powder” on the Sidelines Private Equity Dry Powder $1,464 $ Billions $1,290 $1,094 $833 $750 $685 $674 $671 $671 $615 $600 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Dec-16 Dec-17 Dec-18 Jun-19 Source: Preqin 7