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Consumer & Retail 2016 Year in Review

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Consumer & Retail 2016 Year in Review Consumer & Retail 2016 YEAR IN REVIEW INTRODUCTION January 2017 Stout’s Consumer We are pleased to provide you with our 2016 M&A Yearbook focused on the Consumer & Retail industry, & Retail Practice including our review of M&A and market activity throughout 2016. Having served countless clients across the industry, we are enthusiastic to provide you with this publication. Stout is a leading investment bank that is As you will see within, the industry continues to consolidate within each segment of the value chain and rapidly growing with a has become a ripe opportunity for sellers considering exiting their businesses. dedicated practice that n serves the consumer M&A activity and valuations are at an all-time high since the end of the Great Recession. Competition products and retail for acquiring quality targets is increasing, and a growing number of business owners are engaging us to industry. We provide a value and explore the sale of their businesses while M&A demand remains strong. broad range of services, n including investment Competitive bid dynamics are increasingly in favor of sellers. Opportunity exists for owners of businesses banking, valuation and with compelling investment fundamentals and growth prospects to consider selling at potentially higher financial opinions, and valuation premiums today relative to the premiums that were attainable just a few years ago. dispute advisory and n Increasing demand from “under-the-radar” M&A buyers. Given that we work extensively with industry forensic services for numerous private middle and financial buyers of all types, we find it worthy to note from the trenches that we continue to engage market businesses, as and complete M&A transactions with a mix of buyers that is broader than ever – ranging from emerging well as publicly traded private equity firms to growing family office investors and even foreign buyers. Many of these buyers are companies, across under-the-radar yet are providing compelling exit opportunities for our clients. the industry. n Ongoing consolidation continues to be driven by solid industry fundamentals rather than hype. Stout has completed Acquisitions across the industry continue to contribute to solving ongoing inside and outside pressures numerous recent experienced by consumer product manufacturers and retailers. We are seeing acquisitions time and industry engagements again enabling industry participants to better align with the ever morphing industry landscape – from and its professionals changing consumer demographics to omnichannel market penetration – while enabling businesses to have advised companies accelerate growth and achieve higher margins, and financial buyers to achieve outsized returns on across all consumer investment for their limited partners. products sectors. We expect these factors to continue to drive M&A activity through 2017. Our view is bolstered with what we For more information are seeing across our client base and from the buyers that are acquiring their companies – an increasingly favorable financing environment, improving target financial performance, growing balance sheet strength Nick P. Jachim among strategic acquirers, and increasing active participation from financial buyers, including for bolt-on Managing Director/ acquisitions to existing industry portfolio companies (i.e., hybrid transactions). Group Head Stout Risius Ross As always, feel free to contact us as we explore ways to best serve you and assist you in assessing Advisors, LLC strategic alternatives available to you and your business – ranging from valuing and selling your business +1.312.752.3396 to divesting segments or assisting in accelerating growth through acquisitions or outside capital. [email protected] Jeffrey S. Shippy Warmly, Director Stout Risius Ross Advisors, LLC +1.310.846.8893 [email protected] Nick P. Jachim Jeffrey S. Shippy TABLE OF CONTENTS Consumer Products n M&A Scorecard .................................................................................................. 4 n M&A Activity ......................................................................................................... 5 n M&A Transactions............................................................................................ 6 n Publicly Traded Markets Analysis ......................................................10 Retail n M&A Scorecard ...............................................................................................11 n M&A Activity ......................................................................................................12 n M&A Transactions.........................................................................................13 n Publicly Traded Markets Analysis ......................................................14 Stout’s Consumer & Retail Practice .................................................15 Consumer Products & Retail 2016 Yearbook Charts CCoonnssuummer Produccttss &2 0R1e6t aMil &A Scorecard 2S0c16oreca Yerdar Mbetoriock 2016 * Scorecard Metric 2016 2014 Scorecard ConsumerCChonarstusm er Produ cProductsts M&A Transaction s:2016 M&A41 3ScorecardS&P 500 Index: Up 9.5% Stout Consumer Products Market Indices CCONSUMERonsumer PPRODUCTroducts MANUFACTURERS2016 M&A Score –c aSTOUTrd SCORECARD Stout Apparel, Footwear & Accessories Index Up 19.6% Stout Personal & Homecare Products Index Up 9.5% SSctoutoreca Sporrd Mtingetr i&c Recreational Goods Index U2016p 12 .*8% ScoSrecatoutr dD Murabetrliec Consumer Goods Index 201U6p 5.8% Consumer Products M&A Transactions: 413 S&P 500 Index: Up 9.5% * Represents announced M&A transactiStouton Cfoonrs tuarmegr ePrtodus bctsas eMdar ketin INndoicertsh America. SouSrtoutce :A Capparepli,tFaloo ItwQear a nd& Acc SeRssRor Riese Isndeeaxrch. Up 19.6% Stout Personal & Homecare Products Index Up 9.5% Stout Sporting & Recreational Goods Index Up 12.8% Stout Durable Consumer Goods Index Up 5.8% *Represents announced M&A transaction for targets based in North America. Source: Capital IQ and SRR Research. * Represents announced M&A transaction for targets based in North America. COCONSUMERNSUMER PRODUCT PRODUC MANUFACTURERST MANUFACTURER – MARKETS - MA PERFORMANCERKET PERFORMANCE Source: Capital IQ and SRR Research. 25% 15% 5% CO-5N%SUMER PRODUCT MANUFACTURERS - MARKET PERFORMANCE -15% -2255%% Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 15% Apparel, Footwear & Durable Consumer Sporting & Recreational Personal & Homecare 5% S&P 500 Index Accessories Goods Goods Products -5% Source: Capital IQ. So-u15r%ce: Capital IQ. -25% CONSUMERCONJSaUn-M16E PRODUCTR FPeROb-16DUC MMANUFACTURERSaTr- 1M6ANAUpFAr-16CTURERM –a yVALUATION-16S – JVAun-L16 UTRENDSATJIuOl-1N6 (EVTRE A/Nu gLTMD-1S6 (EBITDA)EVSe /p -L1T6M OEBct-I1T6DA)N ov-16 Dec-16 15.0xApparel, Footwear & Durable Consumer Sporting & Recreational Personal & Homecare S&P 500 Index 14.0x Accessories Goods Goods Products 13.0x 12.0x 11.0x S1o0.0uxrce: Capital IQ. 9.0x 8.0x 7.0x 6.0x 5.0x 4.0x 3.0x 2.0x 1.0x 0.0x 1 3 1 3 1 3 1 3 1 3 1 3 1 3 1 3 1 3 1 3 1 3 1 3 1 3 1 3 1 3 1 3 1 3 1 3 1 3 1 3 1 3 1 3 1 3 1 3 Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q 2011 2012 2013 2014 2015 2016 2011 2012 2013 2014 2015 2016 2011 2012 2013 2014 2015 2016 2011 2012 2013 2014 2015 2016 Apparel, Footwear & Accessories Durable Consumer Goods Sporting & Recreational Goods Personal & Homecare Products Source: Capital IQ. EV = Enterprise Value. Represents median multiples. Stout Apparel, Footwear & Accessories Index Constituents: Adidas AG, Christian Dior SA, Coach, Inc., Deckers Outdoor Corp., Hanesbrands Inc., Nike, Inc., PVH Corp., Steven Madden, Ltd., TiffanySo u& rCo.,ce and: Ca Wolverinepital World IQ .Wide EV Inc. = Enterprise Value: Represents Median Multiples Stout Durable Consumer Goods Index Constituents: Alok Industries Ltd., Husqvarna AB, La-Z-Boy Incorporated, Leggett & Platt, Incorporated, Lenovo Group Limited, Mohawk Industries Inc., Newell Rubbermaid Inc., Panasonic Corporation, Sony Corporation, and Whirlpool Corp. Stout Sporting & Recreational Goods Index Constituents: Accell Group NV, BRP Inc., Brunswick Corporation, Hasbro Inc., Mattel, Inc., Mizuno Corporation, Nautilus Inc., Nikon Corporation, Sturm, Ruger & Co. Inc., and Under Armour, Inc. Stout Personal & Homecare Products Index Constituents: Avon Products, Inc., Church & Dwight Co. Inc., Colgate-Palmolive Co., Kimberly-Clark Corporation, Nu Skin Enterprises, Revlon, Inc., The CloroxCo Company,nsum eTher EsteePro Lauderduc tCompany,s M& TheA ProctorActi &v iGamblety Company, and USANA Health Sciences Inc. M&A VOLUME & VALUATIONS 4 450 413 20.0x 18.0x 400 364 362 345 350 16.0x 289 14.0x 300 11.2x 11.0x 12.0x 250 10.0x 9.8x 8.5x 10.0x 200 8.0x 150 6.0x 100 4.0x 50 2.0x - .0x Number of Deals EV/EBITDA (Median) Source: Capital IQ CONSUMER PRODUCT MANUFACTURERS – VALUATION TRENDS (EV / LTM EBITDA) 15.0x 14.0x 13.0x 12.0x 11.0x 10.0x 9.0x 8.0x 7.0x 6.0x 5.0x 4.0x 3.0x 2.0x 1.0x 0.0x 1 3 1 3 1 3 1 3 1 3 1 3 1 3 1 3 1 3 1 3 1 3 1 3 1 3 1 3 1 3 1 3 1 3 1 3 1 3 1 3 1 3 1 3 1 3 1 3 Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q 2011 2012 2013 2014 2015 2016 2011 2012 2013 2014 2015 2016 2011 2012 2013 2014 2015 2016 2011 2012 2013 2014 2015 2016 Apparel, Footwear & Accessories Durable Consumer Goods Sporting & Recreational Goods Personal & Homecare Products Consumer Products M&A Activity Source: Capital IQ. EV = Enterprise Value: Represents Median Multiples 2016 Volume
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