Test, Measurement, and Control Industry Update Fall 2014

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www.harriswilliams.de Test, Measurement, and Control Industry Update Fall 2014

CONTENTS WHAT WE’RE READING Harris Williams & Co. is pleased to present our global test, measurement, and control ECONOMIC UPDATE industry update for the fall of 2014. This report provides commentary and analysis on M&A MARKET TRENDS PUBLIC MARKETS current capital market trends and merger and acquisition dynamics within the global PUBLIC COMPARABLES test, measurement, and control sector. As set forth in our report, the global test, NOTABLE M&A ACTIVITY measurement, and control sector is comprised of companies that provide highly

engineered devices, instruments, systems, and services to test, monitor, measure, OUR PRACTICE Harris Williams & Co. is a leading protect, control, and validate processes and applications across numerous end advisor to the test, measurement, and control markets. Our significant markets. experience covers a broad range of end markets, industries, and business models. This particular report focuses We hope you enjoy reviewing this edition and please continue to email and call us on trends and metrics in the following areas: with your thoughts and opinions. We want to ensure that this newsletter is informative and helpful as you continue to focus on the test, measurement, and control sector. Test and Measurement • Instrumentation • Sensors • Technology and Software • Life Sciences and Laboratory

Flow Control • Pumps and Filtration • Valves and Fittings Bill Roman Julien Darmon Jeff Perkins Managing Director Managing Director Managing Director [email protected] [email protected] [email protected] Process / Motion Control • Motion and Drives +1 (617) 654-2101 +44 (0)20 7518 8905 +49 (69) 3650638 00 • Actuators and Positioners • Condition Monitoring

Test Services • Testing • Inspection • Certification • Engineering

Jay Hernandez Matt Volinsky Lars Friemann • Consulting Director Vice President Vice President [email protected] [email protected] [email protected] +1 (617) 654-2114 +1 (617) 654-2138 +49 (69) 3650638 12

1 What We’re Reading

Global Sensor Market to Reach $154.4 Billion in 2020 BCC Research 7/28/2014 BCC Research forecasts that the global market for sensors and related technologies is expected to grow to nearly $154.4 billion by 2020, with a five-year compound annual growth rate (CAGR) of 10.1%. The image, flow, and level sensors segment is increasing by an even faster 11.7% CAGR to reach nearly $50.2 billion by 2020. Image sensors will experience the highest growth in this segment driven by increased use in smartphones and other portable devices. Read the full article here.

Reshoring, Robots and the New Factory Floor Modern Machine Shop 7/29/2014 For three straight years, the U.S. has set new records in the number and value of robots sold. This surge can be traced to a convergence of issues: the need to reduce labor input to increase competitiveness; a growing tide of work returning to U.S. shores; and that returning work not having a commensurate level of required work force. The North American robotics market recorded its best year ever in 2013, delivering 22,591 robots valued at $1.39 billion, according to the Robotics Industries Association (RIA). Read the full article here.

Flow Meters Market Estimated to Reach $7.9 Billion by 2019 Markets and Markets 7/28/2014 The flow meters market will grow from an estimated $5.3 billion in 2013 to $7.9 billion by 2019. North America, Europe, and Asia-Pacific remained the largest global flow meter markets accounting for over 84.1% of the market in 2013. The Asia-Pacific market continues to be the key growth area due to new investment backed by increasing demand for innovative technology for flow meters from different end-user industries. The U.S. is currently the leading consumer of global flow meters and is projected to grow at a CAGR much lower than the global average until 2019. Read the full article here.

The Revival of Environmental Instrumentation Laboratory Equipment 7/7/2014 The analytical spectroscopy marketplace continues to see an accelerating pace of technological enhancements with environmental applications as beneficiaries. The recent development of higher performance instruments and new methodologies allows for the measurement of environmental contaminants that were once unmeasurable. As a result, the atomic spectroscopy market is growing faster than the standard laboratory instrumentation market. The global market is currently growing at a CAGR of 6.4% and is expected to reach $5.5 billion by 2018. Read the full article here.

Workforce, Competitive Pressures Push Services Growth Automation World 8/15/2014 Automation services are expected to see more than 50% growth over a seven year period as process industries look to solution providers for help outside their core competencies. This growth is being spurred by a decline in skilled workforce and competitive pressures. Manufacturers are turning to automation companies for operation and maintenance services to avoid costly downtime, optimize production, and mitigate risks. End users will accept automation solution providers, in particular, as reliable service partners in the long term as they seek more comprehensive single-window services. Read the full article here. 2 Global M&A Trends

Market Market Observations Observations • Global M&A deal volume YTD June 2014 topped $1.75 trillion, the highest level at this period since 2007. • The U.S. M&A environment remains very active with aggregate deal volume increasing by 98.6% in H1 2014 compared to H1 2013.

• European middle market M&A activity showed continued strength with an increase of 3.4% in Q2 2014, compared to Q1 2014, and overall deal activity up 19.4% YoY.

• Market sentiment continues to point toward increasing volume throughout the remainder of the year.

• Global test, measurement, and control deal activity increased by approximately 26.6% from Q2 2013 to Q2 2014, with more than 350 deals closed in the last six months.

• Credit markets remain strong and supportive of transaction activity, with average debt multiples reaching 5.2x EBITDA for issuers with under $50 million in EBITDA.

• Reflecting the positive M&A environment, U.S. strategics continue to maintain under-levered balance sheets due to their reluctance to incur capital expenditures, resulting in corporate cash balances that are nearly double those of 2006.

Market Test, Measurement, and Control Quarterly M&A Activity Activity 250

200

150

100

Number M&A of Deals 50

0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2010 2010 2010 2010 2011 2011 2011 2011 2012 2012 2012 2012 2013 2013 2013 2013 2014 2014

Source: CapitalIQ, S&P Leveraged Commentary & Data, Thomson Reuters, Bloomberg, Markit Economics.

3 Economic Update

2.0% U.S. Q2-14: Real GDP increased by 1.0% from Q1 2014 to Q2 2014 1.5% 1.0% • (annual rate of 4.0%) led by an increase in consumer GDP 1.0% spending and business investment. 0.5% • PNC forecasts real GDP growth of 3.0% per annum in H2 2014. 0.0%

Q2-14:

% change by % change quarter -0.5% 0.2% EU-28 -1.0% • Seasonally adjusted GDP in the EU for Q2 2014 was Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 relatively unchanged, with 0.2% annualized growth, 2012 2012 2012 2013 2013 2013 2013 2014 2014 hampered by Germany’s decline in economic activity for U.S. EU-28 the first time in more than a year.

Jun-14: 104.0 103.9 U.S. • Industrial production increased by 0.2% from May 2014 Industrial to June 2014, the fifth straight month in which the U.S. 102.0 Production experienced production growth. Capacity utilization has Index increased to 79.1% as of June 2014. 100.0 Jun-14: Index=100 101.2 EU-28

98.0 • Slight decrease in industrial production during June 2014 led by lack of production of non-durable consumer goods. Capacity utilization has increased to 80.5% as of June 96.0 2014.

116.0 Jun-14: U.S. 110.6 • In the U.S, new orders increased by 0.1% from June as 112.0 industrial manufacturing continues to grow. New Orders 108.0

104.0 Jun-14: EU-28 107.6 • The EU saw a decline of 1.9% in total new orders in June

Index=100 100.0 2014, with the consensus that geopolitical uncertainties 96.0 continue to weigh on order activity.

92.0

88.0

114.0 U.S.

Jun-14: • Consumer confidence continues to exhibit positive 108.1 momentum with an increase of 0.3% from May 2014 to Economic 107.0 June 2014. Sentiment Jun-14: 106.4 100.0 EU-28 Index=100 • The Euro Commission Economic Sentiment Index slightly

93.0 decreased in June 2014 by 0.1% due to decreased confidence in the services and retail trade sectors.

86.0

4 Trading Values

Stock Prices Trailing Twelve Months Stock Price Performance As of August 15, 2014 150

140

130

120

110

100

90

80 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14

S&P 500 Test & Measurement Flow Control Process / Motion Control Test Services Key Trading Key Trading Statistics

Statistics S tock Price % Change TEV / LTM EBITDA TEV / EBITDA LTM Margins As of August 15, 2014 Sub-Sector Median 1 Month 12 Month Aug-13 Feb-14 LTM 2014E Gross EBITDA

Test and Measurement Instrumentation (2.5%) 11.1% 13.5x 13.1x 12.2x 11.7x 39.6% 14.9% Sensors (1.0%) 16.3% 11.9x 11.7x 11.2x 10.6x 40.0% 18.8% Technology and Software 4.3% 27.8% 10.0x 19.0x 19.3x 12.3x 43.3% 11.7% Life Sciences and Laboratory 1.1% 15.4% 14.4x 15.6x 14.0x 13.3x 47.9% 20.2%

Flow Control Pumps and Filtration (2.5%) 11.1% 13.4x 13.8x 12.1x 11.4x 35.2% 16.7% Valves and Fittings (3.1%) 18.2% 10.8x 11.2x 10.7x 9.8x 32.0% 14.2%

Process / Motion Control Motion and Drives (3.1%) 15.3% 11.3x 12.0x 11.6x 10.7x 36.2% 17.3% Actuators and Positioners (8.4%) 18.6% 12.1x 11.3x 9.9x 9.5x 30.4% 13.8% Condition Monitoring (0.6%) 20.0% 11.6x 12.1x 11.4x 9.0x 48.8% 18.1%

Test Services

Testing, Inspection, and Certification (5.7%) (0.9%) 10.3x 13.1x 11.9x 11.1x 32.8% 18.8% Engineering and Consulting (7.5%) 12.2% 9.9x 11.1x 9.9x 9.2x 18.6% 8.1%

EBITDA Current Valuations Versus Historical Three-Year Median Multiples Test and Measurement Flow Control Process / Motion Control Test Services As of August 15, 2014 180%

160%

140% 127% 120% 122% 117% 116% 116% 120% 113% 111% 106% 107% 101% 100%

80%

60%

40% Instrumentation Sensors Technology & Life Sciences & Pumps & Valves & Motion & Drives Actuators & Condition Testing, Inspection Engineering & Software Laboratory Filtration Fittings Positioners Monitoring & Certification Consulting 5 Test and Measurement Public Comparables

Key Trading Test and Measurement Public Comparables Stats Stock Pe rformance As of August 15, 2014 LTM Margins Curre nt 1-Month 1-Ye ar % of R&D / Sales TEV / EBITDA ($ in millions, except EBITDA Gross TEV Price Change Change LTM High LTM LTM 2014E per share amounts) Instrumentation Roper Industries Inc. 33.1% 59.0% $16,424 $147.39 1.9% 17.9% 97.3% 3.5% 14.4x 13.7x AMETEK, Inc. 26.2% 35.8% $13,956 $51.41 (2.7%) 17.6% 82.9% 3.7% 14.0x 13.4x Danaher Corp. 22.0% 52.2% $52,473 $75.15 (4.3%) 13.0% 92.6% 6.6% 12.2x 11.7x Spectris plc 19.0% 58.0% $2,503 $20.15 (7.1%) (9.5%) 78.3% 7.0% 11.3x 10.8x Badger Meter Inc. 17.6% 35.6% $804 $51.38 4.4% 9.2% 90.2% 2.3% 13.0x 13.0x ESCO Technologies Inc. 14.9% 39.6% $907 $34.18 0.7% 11.1% 91.4% 5.7% 10.9x 9.9x Teledyne Technologies Inc. 14.8% 36.9% $3,958 $93.39 (1.7%) 16.8% 91.2% 13.5% 11.4x 10.4x National Instruments Corporation 14.5% 74.4% $3,736 $32.51 2.1% 16.3% 98.5% 19.0% 21.6x 15.2x Oxford Instruments plc 12.1% 45.4% $808 $11.98 (3.8%) (18.0%) 65.6% 7.0% 18.5x 12.0x Jenoptik AG 11.9% 34.7% $686 $10.50 (8.1%) 0.6% 75.9% 6.5% 9.6x 8.4x Itron, Inc. 9.3% 31.9% $1,804 $39.88 (2.5%) 1.1% 86.5% 8.9% 9.7x 10.7x

Median 14.9% 39.6% (2.5%) 11.1% 90.2% 6.6% 12.2x 11.7x

Mean 17.8% 45.8% (1.9%) 6.9% 86.4% 7.6% 13.3x 11.7x Sensors Sensata Technologies Holding NV 26.8% 35.7% $9,309 $46.17 (3.8%) 23.8% 94.3% 3.1% 16.3x 15.5x Meggitt PLC 25.8% 38.6% $4,337 $4.68 (12.9%) (12.3%) 81.6% 7.0% 10.9x 10.1x FLIR Systems, Inc. 20.7% 48.4% $4,534 $33.55 0.8% 4.2% 89.7% 9.7% 14.8x 14.0x Honeywell International Inc. 16.8% 27.9% $74,581 $94.23 (2.2%) 14.9% 96.1% 4.5% 11.1x 10.1x MTS Systems Corporation 16.3% 41.3% $1,062 $69.62 7.3% 17.6% 88.2% 4.3% 11.3x 10.8x First Sensor AG 11.8% 52.5% $147 $11.00 0.3% 41.6% 97.2% 19.1% 11.1x 10.3x

Median 18.8% 40.0% (1.0%) 16.3% 92.0% 5.8% 11.2x 10.6x

Mean 19.7% 40.7% (1.8%) 15.0% 91.2% 8.0% 12.6x 11.8x Technology and Software Hexagon AB 26.2% 56.1% $13,840 $225.60 615.9% 654.4% 98.0% NM 21.7x 14.7x FARO Technologies Inc. 13.2% 55.4% $699 $51.82 13.6% 38.1% 85.1% 7.7% 16.8x 14.6x Mistras Group, Inc. 10.1% 30.6% $706 $21.71 (5.1%) 17.4% 85.2% 0.5% 11.2x 10.1x Muehlbauer Holding AG & Co. KGaA 1.3% 31.2% $233 $17.82 (14.7%) (3.7%) 76.8% 0.0% 87.4x 4.4x

Median 11.7% 43.3% 4.3% 27.8% 85.1% 0.5% 19.3x 12.3x

Mean 12.7% 43.3% 152.4% 176.6% 86.3% 2.7% 34.3x 11.0x Life Sciences and Laboratory Waters Corporation 30.8% 58.1% $8,161 $103.44 1.9% 3.7% 89.9% 5.3% 13.7x 13.1x Mesa Laboratories Inc. 28.0% 59.7% $275 $71.45 (14.1%) 15.4% 74.5% 2.6% 17.0x NA Thermo Fisher Scientific, Inc. 22.3% 44.4% $63,514 $121.55 2.0% 33.1% 95.2% 3.6% 19.1x 15.4x Mettler-Toledo International Inc. 20.4% 54.0% $8,055 $266.36 5.0% 18.3% 99.7% 5.0% 16.2x 14.7x FEI Company 20.1% 47.4% $3,116 $83.75 (3.6%) 8.5% 75.1% 10.6% 16.8x 16.3x Agilent Technologies Inc. 20.2% 52.6% $19,017 $57.58 1.1% 22.6% 94.1% 10.1% 13.6x 11.3x PerkinElmer Inc. 18.8% 45.0% $5,809 $45.33 (1.7%) 23.3% 93.9% 5.6% 14.0x 13.4x Sartorius Aktiengesellschaft 18.3% 47.9% $1,984 $95.80 4.1% 8.7% 87.9% 6.1% 11.9x 10.6x Bruker Corporation 13.3% 44.1% $3,269 $20.03 (13.2%) 3.4% 80.3% 9.9% 13.1x 12.7x

Median 20.2% 47.9% 1.1% 15.4% 89.9% 5.6% 14.0x 13.3x

Mean 21.4% 50.4% (2.1%) 15.2% 87.8% 6.5% 15.1x 13.4x

Overall Median 18.5% 45.2% (1.7%) 15.1% 89.8% 6.1% 13.7x 12.0x TBU Overall Mean 18.6% 45.8% 18.7% 33.6% 87.8% 6.8% 16.5x 12.1x

6 Test and Measurement M&A Overview

Test and Number of Deals and Aggregate Deal Value Median LTM EBITDA Multiple

Measurement 250 $25 14.0x 12.5x 11.8x M&A Trends 11.4x 12.0x 10.9x ($ in billions) 200 $20 10.0x 10.2x 10.0x 9.1x 9.3x 150 $15 8.0x 6.8x

100 $10 6.0x TransactionVolume EBITDA Multiple EBITDA 4.0x 50 $5 Value Deal Aggregate 2.0x

0 $0 0.0x 2006 2007 2008 2009 2010 2011 2012 2013 YTD 2006 2007 2008 2009 2010 2011 2012 2013 YTD 2014 2014 Transaction Volume Aggregate Deal Value Median LTM EBITDA Multiple

Announced Notable Recent Transactions M&A Enterprise EV/EBITDA Date Target Target Description Acquirer Value Multiple Transactions Pending Schrader International, Inc. Manufactures valves, sensors, and electronic system components. Sensata Technologies, Inc. 1,000.0 NA Pending Unisensor A/S Manufactures bacteria and cell analysis equipment. Koninklijke Philips N.V NA NA ($ in millions) Pending Measurement Specialties Inc. Manufactures sensors and sensor-based systems. TE Connectivity Ltd. 1,700.0 24.6x 08/05/14 Amptek, Inc. Manufactures nuclear instrumentation equipment. AMETEK, Inc. 115.0 8.0x 08/05/14 Luphos GMBH Develops precision distance systems. AMETEK, Inc. NA NA 08/04/14 DeltaTech Controls GMBH Manufactures operator controls and integrated systems. Sensata Technologies Minnesota, Inc. 190.0 NA 07/31/14 Deutsche Mechatronics GmbH Engages in drying and mechatronics businesses. Dutech Holdings Limited NA NA 07/31/14 Adcole Corporation Manufactures optical mechanical measurement equipment. AMETEK, Inc. NA NA 07/29/14 The CAD Zone, Inc. Provides crime scene and forensice solutions. FARO Technologies Inc. NA NA 07/25/14 MicroCal, LLC Develops, manufactures, and markets micro calorimeters. Spectris plc NA NA 07/21/14 BGI Instruments, Inc. Manufactures compliance measurement instruments. Environnement S.A 10.8 NA 07/11/14 Roxspur Measurement and Control Ltd. Manufactures pressure, temperature, and flow instrumentation. WIKA Alexander Wiegand GmbH & Co. 17.1 NA 07/09/14 Airy Technology, Inc. Provides testing and measuring instruments. Particles Plus, Inc. NA NA 07/01/14 Kirby Lester, LLC Provides counting, dispensing, and verification systems. Private Investors NA NA 07/01/14 Westridge Energy, LLC Provides energy metering and monitoring solutions. ENERActive Solutions LLC NA NA 07/01/14 Hobré Instruments B.V. Manufactures on-line analyzers and systems. AAC Capital Partners NA NA 07/01/14 Optixsoft and Agizer Manufactures fiber optic test and measurement solutions. VeEX Inc. NA NA 06/27/14 MueTec Automatisierte Mikroskopie Provides optical measurement and inspection solutions. Deutsche Effecten NA NA 06/24/14 Engelmann Sensor GmbH Manufactures electronic heat and water meters. capiton AG NA NA 06/23/14 GFMesstechnik GmbH Develops measuring and inspection systems. TKH Group NV NA NA 06/20/14 Carat Electronics AD Produces microprocessor-based electronic devices. AQ Group AB 2.3 NA 06/18/14 La Corporation Scientifique Claisse Manufactures spectroscopic analysis instruments. Spectris plc 12.0 NA 06/17/14 Roehrig Engineering Provides automotive testing equipment. MTS Systems Corporation 15.0 7.5x

Top Acquirers Company Number of Transactions Aggregate Transaction Value(1) From 2006 – Present ($ in millions) Danaher Corp. 34 10,977 Thermo Fisher Scientific, Inc. 23 30,264 AMETEK Inc. 19 1,327 Agilent Technologies Inc. 17 1,579 General Electric Company 15 3,204 Illinois Tool Works Inc. 14 48 Emerson Electric Co. 13 1,087 Spectris plc 13 660 Teledyne Technologies Inc. 12 515 Bruker Corporation 10 431 Halma plc 9 217 Roper Industries Inc. 8 1,896 Schneider Electric S.A. 8 308

(1) Transaction values only for pending and closed transactions with disclosed terms. 7 Flow Control Public Comparables

Key Trading Flow Control Public Comparables Stats Stock Pe rformance As of August 15, 2014 LTM Margins Curre nt 1-Month 1-Ye ar % of R&D / Sales TEV / EBITDA ($ in millions, except EBITDA Gross TEV Price Change Change LTM High LTM LTM 2014E per share amounts) Pumps and Filtration Graco Inc. 28.7% 54.7% $4,605 $75.24 (0.4%) 6.1% 94.2% 4.6% 13.8x 13.2x IDEX Corporation 24.3% 44.1% $6,442 $76.31 (3.1%) 26.2% 93.3% 1.7% 12.6x 12.3x Pall Corporation 22.1% 51.3% $8,656 $79.85 (2.5%) 13.5% 87.0% 3.7% 14.5x 13.3x IMI plc 19.9% 44.8% $3,925 $13.51 (6.4%) (16.6%) 75.0% 2.3% 11.5x 11.2x Essentra plc 19.3% 59.6% $2,128 $8.09 8.5% 1.2% 87.5% NM 13.0x 12.1x Pentair plc 17.5% 34.1% $15,653 $67.94 (7.2%) 8.8% 81.5% 1.6% 12.1x 12.6x Flowserve Corp. 17.5% 34.6% $11,063 $73.17 0.1% 29.9% 89.0% 0.7% 12.9x 11.9x Donaldson Company, Inc. 17.4% 35.7% $5,571 $39.53 (2.7%) 9.0% 90.4% 2.6% 13.1x 12.8x Franklin Electric Co., Inc. 16.7% 34.2% $1,948 $37.53 (2.0%) 1.3% 81.4% 0.8% 11.7x 11.4x Xylem Inc. 16.4% 39.0% $7,500 $36.72 (2.3%) 48.5% 91.8% 2.7% 11.7x 11.3x Trelleborg AB 15.8% 35.2% $6,216 $131.50 541.4% 653.2% 100.0% 1.5% 12.1x 11.1x Gorman-Rupp Co. 15.0% 24.3% $790 $30.34 (10.6%) 9.6% 77.1% NM 12.7x 11.0x ESCO Technologies Inc. 14.9% 39.6% $907 $34.18 0.7% 11.1% 91.4% 5.7% 10.9x 9.9x ITT Corporation 14.9% 32.1% $3,738 $47.31 0.4% 40.9% 96.9% 2.7% 9.6x 9.6x Colfax Corporation 13.4% 31.3% $9,683 $63.96 (12.0%) 24.3% 84.9% 0.6% 16.3x 14.6x Sulzer, Ltd. 11.5% 31.0% $3,255 $117.40 (4.2%) (14.5%) 80.0% 2.3% 8.9x 8.5x SPX Corporation 10.2% 29.1% $5,128 $101.42 (5.5%) 34.7% 91.0% 1.6% 10.7x 10.2x

Median 16.7% 35.2% (2.5%) 11.1% 89.0% 2.3% 12.1x 11.4x

Mean 17.4% 38.5% 28.9% 52.2% 87.8% 2.3% 12.2x 11.6x Valves and Fittings The Weir Group PLC 20.9% 36.1% $6,299 $25.97 (4.5%) 17.1% 91.2% 1.2% 12.7x 11.9x Crane Co. 15.5% 34.4% $4,737 $70.15 (3.5%) 19.3% 91.2% 2.3% 11.0x 9.7x Curtiss-Wright Corporation 15.1% 32.5% $4,040 $68.03 8.2% 67.9% 96.7% 2.8% 10.2x 9.3x Cameron International Corporation 14.7% 28.1% $17,624 $72.63 4.4% 28.7% 97.5% 0.6% 11.3x 10.5x Aalberts Industries NV 14.5% 60.0% $2,809 $20.91 (11.1%) 10.5% 80.7% NM 9.5x 8.3x Mueller Water Products, Inc. 13.9% 27.9% $1,884 $8.98 7.3% 19.7% 89.4% 1.1% 10.9x 9.8x Parker-Hannifin Corporation 13.1% 22.9% $16,938 $112.78 (9.5%) 8.7% 86.5% 2.8% 9.8x 9.2x CIRCOR International, Inc. 12.9% 31.6% $1,160 $69.78 (9.1%) 23.0% 83.7% 0.7% 10.6x 10.6x Watts Water Technologies, Inc. 12.5% 35.7% $2,136 $59.13 (2.8%) 10.9% 94.4% 1.5% 11.3x NA Mueller Industries Inc. 7.6% 13.6% $1,692 $28.84 1.9% 4.7% 89.8% NM 9.7x NA

Median 14.2% 32.0% (3.1%) 18.2% 90.5% 1.3% 10.7x 9.8x

Mean 14.1% 32.3% (1.9%) 21.1% 90.1% 1.6% 10.7x 9.9x

Overall Median 15.1% 34.4% (2.7%) 13.5% 89.8% 1.7% 11.5x 11.1x

Overall Mean 16.2% 36.2% 17.5% 40.7% 88.6% 2.1% 11.7x 11.1x

8 Flow Control M&A Overview

Flow Number of Deals and Aggregate Deal Value Median LTM EBITDA Multiple

Control 125 $16 14.0x M&A Trends 12.0x 12.3x $14 12.0x ($ in billions) 100 10.5x Aggregate Deal Value 10.3x $12 10.2x 10.0x 9.0x 8.5x 75 $10 8.0x 6.9x $8 6.0x 5.5x 50 $6 EBITDA Multiple EBITDA $4 4.0x TransactionVolume 25 $2 2.0x

0 $0 0.0x 2006 2007 2008 2009 2010 2011 2012 2013 YTD 2006 2007 2008 2009 2010 2011 2012 2013 YTD 2014 2014 Transaction Volume Aggregate Deal Value Median LTM EBITDA Multiple Announced Notable Recent Transactions M&A Ente rprise EV/EBITDA Transactions Date Targe t Target Description Acquirer Value Multiple ($ in millions) 07/21/14 Stanadyne Corp. Filtration Division Manufactures ball valves for industrial applications. Groupe BPCE NA NA 07/11/14 Roxspur Measurement and Control Ltd. Manufactures pressure, temperature, and flow instrumentation. TT Electronics plc 17.1 NA 07/08/14 Premier Valves (Pty) Ltd Manufactures and supplies valves. Alfa Laval AB NA NA 07/01/14 Xylem Flow Control Limited Manufactures submersible and industrial pumps. Rotork plc 30.9 9.0x 07/01/14 Hansen Corporation Manufactures various types of motors. DMI Technology Corporation NA NA 06/16/14 Munster Simms Engineering Limited Manufactures various pumps and water and space heating systems. Brunswick Corporation NA NA 06/16/14 Hydro-Service GmbH & Co KG Manufactures hydraulic cylinders. WATZ Hydraulik GmbH NA NA 06/09/14 Green Turtle Technologies Ltd. Manufactures submersible groundwater pumping equipment. Franklin Electric Co., Inc. NA NA 05/30/14 Precision Hydraulic Cylinders Inc. Manufactures hydraulic cylinders. Owner Resource Group, LLC NA NA 05/30/14 Joyce/Dayton Corp. Manufactures heavy-duty lifting and positioning equipment. Graham Holdings Company NA NA 05/09/14 Bradford Cylinders Limited Manufactures heavy-duty hydraulic and pneumatic cylinders. Cyrus - RW Group Ltd. NA NA 05/01/14 Filter Specialists, Inc. Manufactures filtration products and solutions. Pall Corporation NA NA 05/01/14 Stanadyne Corporation Manufactures filtration systems and fuel additive products. CLARCOR Inc. 325.0 NA 04/28/14 AEGIS Flow Technologies, L.L.C. Manufactures hazardous service process valves. IDEX Corporation 26.0 NA 04/16/14 Pressure Products Industries, Inc. Manufactures specialty fluid handling equipment. Neodyne Industries NA NA

Top Acquirers Company Number of Transactions Aggregate Transaction Value(1) From 2006 – Present Parker Hannifin Corporation 14 $285 ($ in millions) Dover Corp. 10 $847 Pentair, Inc. 9 $6,507 The Weir Group plc 9 $1,335 ITT Corporation 9 $863 Curtiss-Wright Corp. 9 $537 IDEX Corporation 9 $464 Franklin Electric Co. Inc. 9 $318 Rotork plc 9 $200 IMI plc 7 $730 SPX Corporation 6 $2,065 Eaton Corporation 5 $872 Flowserve Corp. 5 $427 Colfax Corporation 2 $2,779 (1) Transaction values only for pending and closed transactions with disclosed terms. 9 Process / Motion Control Public Comparables

Key Trading Process / Motion Control Public Comparables Stats Stock Pe rformance As of August 15, 2014 LTM Margins Curre nt 1-Month 1-Ye ar % of R&D / Sales TEV / EBITDA ($ in millions, except EBITDA Gross TEV Price Change Change LTM High LTM LTM 2014E per share amounts) Motion and Drives AMETEK Inc. 26.2% 35.8% $13,956 $51.41 (2.7%) 17.6% 82.9% 3.7% 14.0x 13.4x Danaher Corp. 22.0% 52.2% $52,473 $75.15 (4.3%) 13.0% 92.6% 6.6% 12.2x 11.7x Aeroflex Holding Corp. 19.1% 51.4% $1,457 $10.76 2.3% 37.2% 98.7% 13.8% 11.9x 10.5x Rexnord Corporation 19.0% 36.5% $4,417 $27.20 (6.9%) 46.1% 87.9% 0.8% 11.2x 10.0x Rockwell Automation Inc. 18.9% 41.1% $15,193 $114.29 (7.3%) 18.2% 88.9% 3.9% 12.3x 10.8x Schneider Electric S.A. 15.8% 38.1% $42,811 $62.35 (7.3%) 2.0% 86.3% 2.2% 11.4x 10.9x Nidec Corporation 15.5% 23.3% $18,986 $64.29 0.1% 56.5% 95.3% 4.3% 13.7x 12.6x ABB Ltd. 12.5% 28.2% $49,532 $20.32 (1.1%) (3.0%) 81.9% 3.7% 9.5x 9.6x Siemens Aktiengesellschaft 10.8% 28.4% $87,350 $91.05 (3.4%) 9.4% 89.9% 5.8% 10.9x 9.3x Yaskawa Electric Corp. 9.6% 30.0% $3,677 $13.09 2.6% 8.7% 79.0% 3.4% 10.6x 9.5x

Median 17.3% 36.2% (3.1%) 15.3% 88.4% 3.8% 11.6x 10.7x

Mean 16.9% 36.5% (2.8%) 20.6% 88.3% 4.8% 11.8x 10.8x Actuators and Positioners Pentair plc 17.5% 34.1% $15,653 $67.94 (7.2%) 8.8% 81.5% 1.6% 12.1x 12.6x Eaton Corporation plc 15.1% 30.8% $40,268 $68.11 (14.3%) 4.4% 85.2% 3.0% 11.9x 11.9x Altra Industrial Motion Corp. 13.8% 29.9% $1,072 $32.66 (9.9%) 31.7% 82.5% 1.8% 9.9x 9.2x Moog Inc. 13.8% 29.9% $3,503 $68.28 (3.3%) 28.5% 91.0% 5.1% 9.6x 9.1x CTS Corporation 13.7% 31.4% $554 $17.97 (1.5%) 28.4% 83.0% 5.4% 9.9x 9.9x Parker-Hannifin Corporation 13.1% 22.9% $16,938 $112.78 (9.5%) 8.7% 86.5% 2.8% 9.8x 9.2x

Median 13.8% 30.4% (8.4%) 18.6% 84.1% 2.9% 9.9x 9.5x

Mean 14.5% 29.9% (7.6%) 18.4% 84.9% 3.3% 10.5x 10.3x Condition Monitoring Cognex Corporation 29.2% 76.6% $3,496 $41.73 8.4% 48.1% 91.1% 13.2% 31.0x 21.2x AMETEK Inc. 26.2% 35.8% $13,956 $51.41 (2.7%) 17.6% 82.9% 3.7% 14.0x 13.4x Isra Vision AG. 19.5% 54.9% $243 $48.15 (0.7%) 49.3% 87.6% 13.3% 13.2x 7.9x Augusta Technologie AG 18.5% 48.8% $175 $29.45 (0.6%) 20.0% 95.3% 9.1% 8.7x 7.6x MKS Instruments, Inc. 18.1% 42.7% $1,279 $32.88 4.5% 27.6% 99.8% 8.2% 9.3x 8.6x Basler AG 17.9% 50.5% $139 $39.01 2.2% 58.3% 97.4% 12.5% 10.8x 8.8x Teledyne Technologies Inc. 14.8% 36.9% $3,958 $93.39 (1.7%) 16.8% 91.2% 13.5% 11.4x 10.4x National Instruments Corporation 14.5% 74.4% $3,736 $32.51 2.1% 16.3% 98.5% 19.0% 21.6x 15.2x AB SKF 13.8% 25.3% $13,979 $23.87 (4.6%) (12.7%) 88.0% 2.3% 10.1x 9.0x

Median 18.1% 48.8% (0.6%) 20.0% 91.2% 12.5% 11.4x 9.0x

Mean 19.2% 49.5% 0.8% 26.8% 92.4% 10.5% 14.5x 11.3x

Overall Median 15.8% 35.8% (2.7%) 17.6% 88.0% 4.3% 11.4x 10.0x

Overall Mean 17.2% 39.6% (2.7%) 22.3% 89.0% 6.5% 12.4x 10.9x

10 Process / Motion Control M&A Overview

Process / Number of Deals and Aggregate Deal Value Median LTM EBITDA Multiple

Motion 350 $30 14.0x Control 12.8x 12.0x 300 $25 10.8x M&A Trends 10.2x Aggregate Deal Value Deal Aggregate 9.8x 9.4x 9.4x ($ in billions) 250 10.0x 8.9x 9.1x $20 200 8.0x 6.6x $15 150 6.0x

$10 Multiple EBITDA 100 4.0x Transaction Volume

50 $5 2.0x

0 $0 0.0x 2006 2007 2008 2009 2010 2011 2012 2013 YTD 2006 2007 2008 2009 2010 2011 2012 2013 YTD 2014 2014

Transaction Volume Aggregate Deal Value Median LTM EBITDA Multiple Announced Notable Recent Transactions M&A Ente rprise EV/EBITDA Transactions Date Targe t Target Description Acquirer Value Multiple ($ in millions) Pending Spirit IT b.v. Provides automation products and technical services. ABB Ltd. NA NA Pending Conzzeta AG, Automation Systems Manufactures automation machinery. BBS Automation GmbH NA NA Pending Shanghai Winco Electrical Co. Ltd. Provides high-end automation systems. Teoh Poh Leng 4.2 NA Pending Power-One Inc., Power Solutions Provides solutions and system design for automation systems. Bel Fuse Inc. 0.3 NA Pending Robichaux Automation and Control Manufactures tools for the automotive industry. Georg Fischer AG NA NA Pending Centrotechnics Automation Equipment Produces automatic equipment, software and related products. Guangxun Co., Ltd. NA NA Pending EAE Ewert Ahrensburg Electronic Designs automation systems for industrial applications. NQ.I. Press Controls NA NA 08/04/14 DeltaTech Controls GmbH Manufactures operator controls and integrated systems. Sensata Technologies Holding NV 190.0 NA 07/31/14 Changzhou REGAL-BELOIT Sinya Manufactures optical mechanical measurement equipment. Artemis Capital Partners NA NA 07/11/14 Roxspur Measurement and Control Ltd. Manufactures pressure, temperature, and flow instrumentation. Weidmüller Holding AG & Co. 17.1 NA 07/10/14 Sankyo Precision Manufactures precision and automation equipment. J.S. Corrugating Machinery Co., Ltd 72.4 NA 07/08/14 Remotex-Radnevo EAD Manufactures power engineering equipment. MBO NA NA 07/07/14 Preformed Windings Ltd. Manufactures coils for motors and generators. Clyde Blowers Ltd. NA NA 07/02/14 API Control System Solutions, Inc. Manufactures automation and control systems. Danos & Curole Marine Contractors, LLC NA NA 07/02/14 Advance Products Corp., Automation Manufactures automation technologies for pharmaceutical processes. Jvm Co., Ltd. NA NA

Top Acquirers Company Number of Transactions Aggregate Transaction Value(1) From 2006 – Present ($ in millions) Schneider Electric S.A. 16 $6,878 Emerson Electric 13 $1,739 Regal Beloit Corporation 13 $416 Eaton Corporation 11 $14,739 ABB Ltd. 11 $6,886 Parker-Hannifin Corporation 11 $545 Nidec Corporation 10 $1,885 ESCO Technologies Inc. 10 $316 AMETEK Inc. 9 $1,007 Wabtec 8 $653 Andritz AG 8 $481 Curtiss-Wright 8 $374 Moog Inc. 8 $181 Robert Bosch Stiftung Gmbh 7 $743 General Electric Company 6 $7,734

(1) Transaction values only for pending and closed transactions with disclosed terms. 11 Test Services Public Comparables

Key Trading Test Services Public Comparables Stats Stock Pe rformance As of August 15, 2014 LTM Margins Curre nt 1-Month 1-Ye ar % of TEV / EBITDA ($ in millions, except EBITDA Gross TEV Price Change Change LTM High LTM 2014E per share amounts) Testing, Inspection, and Certification ALS Limited 21.4% 86.2% $3,684 $7.40 (11.7%) (17.2%) 69.5% 11.5x 10.9x SAI Global Limited 20.4% 35.9% $1,224 $4.81 (5.7%) 12.6% 91.4% 11.9x 11.1x SGS SA 20.2% 44.5% $16,182 $2,013.00 (5.7%) (7.4%) 89.1% 13.9x 12.8x Intertek Group plc 19.0% 16.2% $5,211 $28.08 4.9% (11.4%) 82.2% 12.9x 12.6x Bureau Veritas SA 18.8% 32.8% $9,825 $19.39 (3.7%) (15.0%) 81.4% 13.3x 12.3x Eurofins Scientific SA 16.3% 16.7% $3,697 $218.10 (5.2%) 21.6% 89.3% 18.5x 14.8x Applus Services, S.A. 10.9% 82.9% $1,980 $11.90 (17.4%) NA 68.0% 11.3x 9.6x Mistras Group, Inc. 10.1% 30.6% $706 $21.71 (5.1%) 17.4% 85.2% 11.2x 10.1x Furmanite Corporation 6.4% 25.0% $368 $9.08 (16.0%) 5.7% 71.5% 11.5x 9.1x

Median 18.8% 32.8% (5.7%) (0.9%) 82.2% 11.9x 11.1x

Mean 15.9% 41.2% (7.3%) 0.8% 80.9% 12.9x 11.5x Engineering and Consulting Abengoa SA 17.1% 42.6% $12,831 $3.93 (10.2%) 74.1% 76.4% 9.9x 9.2x Tetra Tech Inc. 10.3% 17.0% $1,646 $25.35 (5.4%) 12.2% 82.0% 8.3x 8.0x Fomento de Construcciones y Contratas, S.A. 9.9% 63.9% $8,070 $13.07 (18.8%) 1.0% 59.6% 11.8x 9.4x ARCADIS NV 8.1% 18.6% $1,969 $22.78 (9.9%) 13.1% 80.1% 9.9x 9.0x AMEC plc 7.9% 13.6% $3,259 $11.01 (7.5%) 2.5% 86.6% 10.8x 9.6x WSP Global Inc. 7.5% 20.8% $2,410 $35.36 (2.6%) 45.8% 89.5% 15.1x 10.7x Jacobs Engineering Group Inc. 5.6% 15.9% $6,912 $51.27 (5.7%) (16.1%) 76.7% 9.8x 8.7x

Median 8.1% 18.6% (7.5%) 12.2% 80.1% 9.9x 9.2x

Mean 9.5% 27.5% (8.6%) 18.9% 78.7% 10.8x 9.2x

Overall Median 10.6% 27.8% (5.7%) 5.7% 81.7% 11.5x 9.8x

Overall Mean 13.1% 35.2% (7.8%) 9.3% 79.9% 12.0x 10.5x

12 Test Services M&A Overview

Test Services Number of Deals and Aggregate Deal Value Median LTM EBITDA Multiple M&A Trends 160 $6 16.0x ($ in billions) 140 14.0x 13.5x $5

120 Value Deal Aggregate 12.0x 11.1x $4 10.0x 10.2x 100 10.0x 9.2x 7.8x 80 $3 8.0x 6.8x

60 6.0x $2 EBITDA Multiple EBITDA

Transaction Volume 40 4.0x $1 20 2.0x NM NM 0 $0 0.0x 2006 2007 2008 2009 2010 2011 2012 2013 YTD 2006 2007 2008 2009 2010 2011 2012 2013 YTD 2014 2014

Transaction Volume Aggregate Deal Value Median LTM EBITDA Multiple

Announced Notable Recent Transactions

M&A Ente rprise EV/EBITDA Transactions Date Targe t Target Description Acquirer Value Multiple Pending Analytical Technology Serviços Analíticos Provides testing services to the petrochemical industry. Eurofins Scientific SA NA NA ($ in millions) Pending Beidou New Application Technology Co., Ltd. Provides research and development for satellite systems. Kingwell Group Limited NA NA Pending Calscience Environmental Laboratories, Inc. Provides environmental testing services. Eurofins Scientific SA NA NA 07/28/14 Galson Laboratories Inc. Provides air testing services and monitoring solutions. SGS SA NA NA 07/08/14 Desert NDT, LLC Provides nondestructive testing solutions. ShawCor Ltd. 260.0 7.9x 07/02/14 Courtray Consulting SARL Provides performance testing, validation, and consulting services. SGS SA NA NA 07/01/14 Clinical Laboratories of Hawaii, LLP Provides medical laboratory testing services. Hawaii Cord Blood Bank 0.2 NA 06/30/14 Accredited Calibration Laboratory Provides control and indsutrial solutions. Trescal SA 2.0 NA 06/25/14 Laboratori d'Anàlisis i Assessoria Provides food laboratory services. 1nKemia IUCT Group, S.A. NA NA 06/20/14 Testconsult Limited Provides structural materails testing and services. James Fisher and Sons plc 13.6 5.7x 06/16/14 Central Laboratories Friedrichsdorf Monitors the quality and food safety of food manufacturers. The Engine Group Limited NA NA 06/16/14 The Intelligence Group Provides investigative research services. The Engine Group Limited NA NA 06/12/14 Paraplain Provides outsourced paraplanning services. The Timebank (UK) Limited NA NA 05/30/14 Advanced Testing and Engineering Inc. Provides automotive testing services. SGS SA NA NA 05/12/14 InnovationLab GmbH Provides analytical and research services. Merck and BASF NA NA 05/08/14 Imperium Test Lab Testing and Certification Operations Provides testing services for mobile terminal devices. UL LLC NA NA

Top Acquirers Company Number of Transactions Aggregate Transaction Value(1) From 2006 – Present ($ in millions) SGS SA 44 $85 Intertek Group plc 33 $512 Bureau Veritas SA 30 $1,793 Eurofins Scientific SA 28 $211 ALS Limited 25 $675 UL LLC 12 $24 DEKRA e.V. 10 $190 Pace Analytical Services, Inc. 8 -- TÜV SÜD AG 8 -- National Technical Systems Inc. 7 $53 Element Materials Technology B.V. 7 -- EA G In c. 5 $7 TÜV Rheinland Holding AG 5 --

(1) Transaction values only for pending and closed transactions with disclosed terms. 13 Test, Measurement, and Control

Two International Place Sources: 24th Floor Boston, MA 02110 • The Wall Street Journal • Capital IQ USA Phone: +1 (617) 482-7501 • Bloomberg • S&P Leveraged Commentary & Data Fax: +1 (617) 482-7503 • Flow Control Magazine • Thomson Financial – SDC Database • Markit Economics • Eurostat 1900 East 9th Street 20th Floor • Machine Design • U.S. Census Bureau Cleveland, OH 44114 USA • Research and Markets • Global Industry Analysts Phone: +1 (216) 689-2400 • PNC Economic Outlook •Thomson Reuters Fax: +1 (216) 689-2401

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