Media Questions/Requests FLASHWIRE US MONTHLY [email protected] January 2019 This Issue: US M&A News and Trends U.S. M&A deal activity decreased in December, going down 9% U.S. private equity activity increased in December up 1.8% from 2 US Merger with 945 announcements compared to 1,039 in November. November. There were 114 deals in December compared to 112 in Aggregate M&A spending decreased as well. In December 27% less November. Aggregate transaction value decreased, down by 19.2% Metrics was spent on deals compared to November. to $17.3 billion from November's $21.4 billion. 2 US Middle Over the past 3 months, the sectors that saw the biggest increases The top financial advisors for 2018 based on deal announcements, in M&A deal activity, relative to the same three-month period one are: Goldman Sachs & Co., JPMorgan Chase & Co, Houlihan Lokey, Market Monitor year ago, was: Health Technology (150 vs. 97), Distribution Services Inc., Morgan Stanley, and Barclays Plc. The top five financial (186 vs. 152), Commercial Services (505 vs. 476), Finance (434 vs. advisors, based on the aggregate transaction value of the deals 3 US Sector 406), and Transportation (86 vs. 60). Seventeen of the 21 sectors worked on, are: Goldman Sachs & Co., Morgan Stanley, JPMorgan Activity & Value tracked by FactSet Mergerstat posted relative gains in deal flow Chase & Co, Barclays Plc, and Bank of America Merrill Lynch. over the last three months compared to the same three months one year prior. The top legal advisors for 2018 based on deal announcements, are: 4 US Strategic Kirkland & Ellis LLP, Jones Day LP, Latham & Watkins LLP, Morgan, Buyer Report Over the past 3 months, the sectors that have seen the biggest Lewis & Bockius LLP, and Skadden, Arps, Slate, Meagher & Flom LLP. declines in M&A deal volume, relative to the same three-month The top five legal advisors, based on the aggregate transaction period one year ago have been: Utilities (69 vs. 88), Non-Energy value of the deals worked on, are: Wachtell, Lipton, Rosen & Katz, 4 US Private Equity Minerals (63 vs. 76), Retail Trade (103 vs. 113), Energy Minerals (42 Skadden, Arps, Slate, Meagher & Flom LLP, Latham & Watkins LLP, Report vs. 47), and Consumer Services (224 vs. 226). Six of the 21 sectors Cleary Gottlieb Steen & Hamilton LLP, and Sullivan & Cromwell LLP. tracked by FactSet Mergerstat posted negative relative losses in 5 Top US Advisors deal flow over 50 deals. Topping the list of the largest deals announced in December are: 6 Top US Deals GlaxoSmithKline Plc entering into an agreement to acquire assets Scoreboard related to consumer health business from Pfizer, Inc. for a reported $20 billion; ESL Investments, Inc.'s offer to acquire the remaining 50.6% stake yet owned in Sears Holdings Corp. for $3.5 billion; Nexstar Media Group, Inc.'s agreement to acquire Tribune Media Co. for $4.1 billion; The Carlyle Group LP agreeing to acquire StandardAero Business Aviation Services LLC for a reported value of $5 billion; GlaxoSmithKline Plc entereing into an agreement to acquire TESARO, Inc. for $4.1 billion. The US Mergers & Acquisitions Market Index $350.0 1,350 $287.0 1,200 $300.0 $259.5 1,050 $250.0 $207.9 900 $197.3 $200.0 $187.6 $168.4 750 $162.6 $148.3 $150.0 $141.4 $144.4 $127.4 600 $115.9 $120.5 $118.3 $105.0 450 $93.1 $100.0 300 $50.0 150 910 1,070 1,049 931 1,146 949 1,026 1,090 1,166 1,239 1,193 1,116 1,069 1,265 1,039 945 $0.0 0 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 Oct-18 Nov-18 Dec-18 Deal Volume Aggregate Deal Value FactSet.com Copyright © 2019 FactSet Research Systems Inc. All rights reserved. 1 US MergerMetrics January 2019 Merger Stats Number of Deals Agg. Transaction Value ($Bil) 12 Months Ended 12 Months Ended Average Deal Size 12/31/18 12/31/17 Change 12/31/18 12/31/17 Change P/E $1 Billion + 373 326 14.4% $1,503.0 $1,237.0 21.5% 31.0 $500M to $999.9M 268 260 3.1% 186.4 184.8 0.9% 23.1 $250M to $499.9M 322 300 7.3% 114.8 105.8 8.5% 21.3 $100M to $249.9M 519 557 -6.8% 82.5 91.1 -9.5% 35.4 $50M to $99.9M 440 477 -7.8% 31.6 33.7 -6.1% 24.7 $25M to $49.9M 392 467 -16.1% 14.0 16.6 -15.7% 19.3 $10M to $24.9M 453 528 -14.2% 7.5 8.7 -13.7% 20.8 Under $10M 922 1,064 -13.3% 2.9 3.5 -16.9% 17.1 Undisclosed 9,554 8,283 15.3% N/A N/A N/A N/A Total 13,243 12,262 8.0% $1,942.7 $1,681.1 15.6% 26.8 M&A at a Glance MEDIAN P/E MEDIAN PREMIUM 30.0x 35.0% 25.0x 30.0% 32.4% 30.6% 25.0% 20.0x 22.7x 21.7x 21.1x 25.5% 20.0% 15.0x 15.0% 10.0x 10.0% 5.0x 5.0% 0.0x 0.0% 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 US Middle Market Monitor MEDIAN EV/EBITDA MEDIAN PREMIUM 12.0x 50.0% 45.0% 10.0x 40.0% 45.3% 9.8x 35.0% 40.1% 8.0x 8.2x 7.8x 30.0% 6.0x 25.0% 27.8% 20.0% 4.0x 15.0% 10.0% 2.0x 5.0% 0.0x 0.0% 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 *Middle Market defined as deals valued between $1 million and $500 million, plus undisclosed deals. Media: Media quotation with source attribution is encouraged. Reporters requesting additional information or editorial comment should contact [email protected]. Mergerstat gathers its data from sources it considers reliable; however, it does not guarantee the accuracy or completeness of the information provided in this publication. Copyright 2019 FactSet Research Systems Inc. All rights reserved. It is illegal under federal copyright law to reproduce or redistribute this publication or any portion of its contents without written authorization of the publisher. FactSet.com Copyright © 2019 FactSet Research Systems Inc. All rights reserved. 2 US Sector Activity & Value January 2019 SECTOR BY ACTIVITY L3M 12/31/18 L3M 12/31/17 Target Sector Deal Count Deal Count Difference Health Technology 150 97 53 Distribution Services 186 152 34 Commercial Services 505 476 29 Finance 434 406 28 Transportation 86 60 26 Electronic Technology 105 89 16 Health Services 147 131 16 Technology Services 487 477 10 Miscellaneous 18 9 9 Producer Manufacturing 181 174 7 Communications 39 32 7 Industrial Services 128 122 6 Government 10 6 4 Consumer Durables 58 55 3 Consumer Non-Durables 99 98 1 Process Industries 115 116 (1) Consumer Services 224 226 (2) Energy Minerals 42 47 (5) Retail Trade 103 113 (10) Non-Energy Minerals 63 76 (13) Utilities 69 88 (19) Total 3,249 3,050 199 SECTOR BY VALUE L3M 12/31/18 L3M 12/31/17 Target Sector Value Value Difference Technology Services $78,214.1 $33,941.6 $44,272.5 Health Technology 48,255.1 16,288.2 31,966.9 Electronic Technology 37,684.2 16,239.7 21,444.5 Transportation 14,353.1 3,548.8 10,804.3 Energy Minerals 18,088.3 8,860.2 9,228.1 Industrial Services 37,671.3 30,691.9 6,979.4 Retail Trade 11,188.5 6,540.8 4,647.7 Process Industries 14,734.5 13,123.2 1,611.3 Non-Energy Minerals 4,643.6 3,880.8 762.8 Government 58.9 400.0 (341.1) Miscellaneous 972.6 1,533.7 (561.1) Distribution Services 13,426.3 14,272.6 (846.3) Communications 2,243.9 3,195.1 (951.2) Consumer Non-Durables 9,960.9 14,550.4 (4,589.5) Commercial Services 20,202.3 30,832.0 (10,629.7) Producer Manufacturing 8,421.0 21,239.3 (12,818.3) Consumer Durables 2,303.6 16,608.6 (14,305.1) Utilities 10,523.5 29,787.3 (19,263.8) Finance 30,443.2 54,114.6 (23,671.4) Health Services 4,770.8 87,159.6 (82,388.7) Consumer Services 20,648.0 118,951.5 (98,303.5) Total $388,807.6 $525,760.0 ($136,952.4) FactSet.com Copyright © 2019 FactSet Research Systems Inc. All rights reserved. 3 US Strategic Buyer Report January 2019 Merger Stats Number of Deals Agg. Transaction Value ($Bil) 12 Months Ended 12 Months Ended Average Deal Size 12/31/18 12/31/17 Change 12/31/18 12/31/17 Change P/E $1 Billion + 214 172 24.4% $1,032.3 $747.1 38.2% 29.8 $500M to $999.9M 145 155 -6.5% 100.7 109.0 -7.6% 22.7 $250M to $499.9M 207 174 19.0% 74.5 61.5 21.1% 21.5 $100M to $249.9M 338 357 -5.3% 54.2 58.5 -7.4% 37.6 $50M to $99.9M 316 333 -5.1% 22.6 23.4 -3.3% 27.7 $25M to $49.9M 265 353 -24.9% 9.4 12.6 -25.5% 22.7 $10M to $24.9M 330 397 -16.9% 5.5 6.6 -16.9% 22.0 Under $10M 586 722 -18.8% 1.9 2.4 -21.6% 18.4 Undisclosed 7,364 6,243 18.0% N/A N/A N/A N/A Total 9,765 8,906 9.6% $1,301.0 $1,021.1 27.4% 27.3 PUBLIC BUYER INDEX LTM 12/31/18 $200 360 $166.0 300 $150 $142.7 $117.0 $111.0 240 $101.2 $102.2 $100 180 $81.5 $67.7 $59.5 $63.6 $49.0 120 $50 $25.4 60 292 256 242 281 292 267 284 260 234 345 280 232 $0 0 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 Oct-18 Nov-18 Dec-18 US Private Equity Report Indices Top Private Equity Fundraisings: YTD 2018 PE BUYER INDEX: LTM 12/31/18 Open Date Value ($Mil) Fund (Private Equity Sponsor) 29-May-2018 $40,444.4 Canyon Laurel Co.