Global M&A Monthly - Foley & Lardner...2019/11/01 · 3.0% in September, bringing the group’s mean YTD 2019 gain to 11.2%. Nevertheless, a firmer economic outlook may be required

BAIRD’S PERSPECTIVE ON THE GLOBAL M&A ENVIRONMENT

Global M&AMonthly

Global M&A Monthly

For information regarding our industry teams and bankers, please visit: http://www.rwbaird.com/investment-banking/team/industry

TABLE OF CONTENTS

Baird’s Global M&A Team

Global M&A Commentary and Deal Statistics

U.S. M&A Commentary and Deal Statistics

Europe M&A Commentary and Deal Statistics

U.K. Cross-Border M&A Activity

Germany Cross-Border M&A Activity

Asia Commentary and Deal Statistics

China M&A Activity and Deal Statistics

India M&A Activity and Deal Statistics

Japan M&A Activity

Public Company M&A Metrics

Transaction Spotlight

Recent Baird M&A Transactions

1

2

6

12

16

18

18

19

21

23

24

31

32

http://www.rwbaird.com/investment-banking/team/industry

Baird’s Global M&A Team

Global M&A Monthly 1

Christopher C. McMahon Managing Director Head of Global M&A +1.312.609.4983 [email protected]

Brian P. McDonagh Managing Director Co-Head of Global M&A +1.704.553.6611 [email protected]

Michael Lindemann Managing Director +1.414.298.7408 [email protected]

David M. Silver Managing Director Head of European Investment Banking +44.20.7667.8216 [email protected]

Anne-Marie Peterson Managing Director Head of Debt Advisory +1.646.557.2334 [email protected]

Paul Bail Managing Director Head of European Debt Advisory +44.20.7667.8271 [email protected]

Thomas Fetzer Managing Director Head of DACH Investment Banking +49.69.1301.4920 [email protected]

Lydia Xu Managing Director Head of China Investment Banking +86.21.6182.3759 [email protected]

Satoshi Matsumoto Managing Director Director of Japan M&A +1.646.557.3201 [email protected]

Global M&A Commentary


Year to date through September, the global M&A market remained on track for one of the highest full-year dollar volumes on record. Announced dollar volume in YTD 2019 edged down 2.1% to $2.35 trillion. The deal total in the first three quarters of the year declined 4.7% to 21,678. In the middle market, the deal total dropped 8.0%, and dollar value was 9.8% below the year-ago figure.

In September, the global deal total increased 5.1% to 2,346, which was slightly below the LTM average of 2,374. Reported dollar volume declined 15.8% to $154.7 billion, under the LTM mean of $249.4 billion. In the middle market, the number of transactions was down 2.6%, whereas dollar value was 3.0% above the prior-year level.

Recent reports indicated a reduced pace of global economic expansion. The global all-industry purchasing managers index (PMI) for September showed the least growth since mid-2016, dampened by a seven-year low for new business, reflecting contraction for new export business amid international trade turmoil. Moderating expansion was also apparent in the latest composite leading indicator of the OECD, which declined to the lowest mark in 10 years. Based on signs of subsiding growth, the International Monetary Fund indicated in early October that it would be lowering its global GDP growth forecasts for 2019 and 2020 on the heels of estimate cuts in July, citing the rising toll of the U.S.-China trade dispute.

Global lending markets remain biased toward higher-quality, seasoned issuers, as continued fears of an economic slowdown have translated to a more challenging backdrop for lower-tier credits. Leveraged loan volume in the U.S. and Europe was down 5% year-over-year in September despite exceeding the LTM mean; YTD 2019 volume declined 27%. New loan pricing in Q3 was the lowest to date in 2019, reflecting the U.S. Federal Reserve’s pivot to rate cuts and further monetary easing by the European Central Bank. Leverage ratios in both the U.S. and Europe moved upward in YTD 2019 through Q3. In the global high yield market, YTD 2019 issuance was up 14% after a two-year high for volume in September. Average bond yields for new issues during Q3 were 100-150 bps below late 2018 levels in the U.S. and Europe. In the near term, we expect any shifts in leveraged finance market conditions to reflect monetary policy updates as well as key macroeconomic developments.

The five major indices depicted below rose an average of 3.0% in September, bringing the group’s mean YTD 2019 gain to 11.2%. Nevertheless, a firmer economic outlook may be required for growth in equity offering pricings to resume.

Year to date, private equity firms remained a crucial driver of the M&A market. On a global basis, the number of deals with sponsor buyers was down 3.8% in Q1-Q3 2019, representing a slightly lower decline than for overall M&A activity. Year-to-date dollar volume for private equity acquisitions decreased 11.0%; full-year 2018 sponsor deal value was the second-highest in the past 11 years, resulting in challenging comparisons. Through the end of 2019 and beyond, financial sponsors have the means to generate substantial M&A activity in view of successful fund-raising, productive exit activity, and accessible lending markets.

Note: See pages 6, 12, and 18 for specific U.S., Europe, and Asia commentary.

Relative Performance of Global Market Indices

70%

80%

90%

100%

110%

120%

12/31/17 2/22/18 4/16/18 6/8/18 7/31/18 9/22/18 11/15/18 1/7/19 3/1/19 4/23/19 6/15/19 8/7/19 9/30/19

S&P 500 FTSE 100 DAX Hang Seng Nikkei 225

(4.4%)

(12.8%)

(3.6%)

11.3%

(3.8%)

_____________________ Source: Capital IQ.

Global M&A Activity


Global M&A Activity

2009 2010 2011 2012 2013 2014 2015 2016 2017 20189/18YTD

9/19YTD

Total 25,954 30,684 33,798 33,445 28,705 33,048 32,493 31,184 33,549 29,560 22,751 21,678

# of Deals – >$1B 241 378 332 358 355 479 525 489 486 548 429 367

# of Deals – Middle-Market 11,305 14,210 14,099 13,248 11,202 13,297 14,148 13,661 14,136 12,464 9,482 8,727

# of Deals – Undisclosed 14,408 16,096 19,367 19,839 17,148 19,272 17,820 17,034 18,927 16,548 12,840 12,584

Deal Value $1,601 $2,028 $1,911 $1,852 $1,844 $2,894 $3,530 $3,015 $2,695 $3,043 $2,399 $2,349

25,954

30,68433,798 33,445

28,705

33,048 32,493 31,184 33,54929,560

22,751 21,678

$0

$800

$1,600

$2,400

$3,200

$4,000

0

10,000

20,000

30,000

40,000

De

al Valu

e# o

f De

als

# of Deals – Undisclosed # of Deals – Middle-Market # of Deals – >$1B Deal Value ($ in billions)

_____________________ Source: Dealogic and Robert W. Baird & Co. Incorporated M&A Market Analysis. YTD as of September 30. Note: Middle-market transactions defined as those with a disclosed transaction value of less than $1 billion. Figures exclude transactions involving minority stakes, stock repurchases, and spin-offs.

Global Middle-Market M&A Activity

2009 2010 2011 2012 2013 2014 2015 2016 2017 20189/18YTD

9/19YTD

# of Transactions – Middle-Market 11,305 14,210 14,099 13,248 11,202 13,297 14,148 13,661 14,136 12,464 9,482 8,727

# of Transactions – $500M – $1B 220 339 346 359 373 413 449 433 453 461 333 286

# of Transactions – $100M – $499M 1,243 1,718 1,877 1,754 1,815 2,187 2,265 2,216 2,216 2,142 1,559 1,418

# of Transactions – <$100M 9,842 12,153 11,876 11,135 9,014 10,697 11,434 11,012 11,467 9,861 7,590 7,023

Deal Value $573 $797 $861 $821 $817 $959 $1,010 $980 $979 $977 $717 $646

11,305

14,210 14,09913,248

11,202

13,29714,148 13,661 14,136

12,464

9,4828,727

$0

$500

$1,000

$1,500

0

5,000

10,000

15,000

De

al Valu

e# o

f De

als

# of Transactions – <$100M # of Transactions – $100M – $499M # of Transactions – $500M – $1B Deal Value ($ in billions)


Global M&A Deal Statistics


Number of Deals – September Deal Value – September

($ in millions) 2018 2019 % Change 2018 2019 % Change

North America 683 941 37.8% $105,778 $75,672 (28.5%)

– U.S. 622 877 41.0% $91,476 $68,337 (25.3%)

Central / South America 52 68 30.8% $3,241 $7,752 139.2%

Europe 861 779 (9.5%) $64,493 $38,466 (40.4%)

– U.K. 267 181 (32.2%) $24,582 $8,012 (67.4%)

– Germany 146 98 (32.9%) $7,828 $10,940 39.8%

Africa / Middle East 59 77 30.5% $5,602 $5,295 (5.5%)

Asia-Pacific (ex. Japan) 555 427 (23.1%) $55,854 $43,884 (21.4%)

– China 346 304 (12.1%) $30,800 $31,194 1.3%

– India 77 30 (61.0%) $8,049 $897 (88.9%)

Japan 250 268 7.2% $10,278 $13,505 31.4%

Global Total 2,232 2,346 5.1% $183,650 $154,701 (15.8%)

_____________________ Source: Dealogic and Robert W. Baird & Co. Incorporated M&A Market Analysis. Notes: Global Total will not equal the sum of the individual regions listed above, as cross-border transactions are reflected in both the target’s and acquiror’s respective regions. Figures exclude transactions involving minority stakes, stock repurchases, and spin-offs. Historical M&A data is subject to revision, particularly as additional deals from past periods enter the M&A database.

Number of Deals – YTD Deal Value – YTD


North America 8,003 8,379 4.7% $1,427,748 $1,507,637 5.6%

– U.S. 7,265 7,765 6.9% $1,323,470 $1,432,036 8.2%

Central / South America 543 541 (0.4%) $48,680 $54,790 12.6%

Europe 8,277 7,623 (7.9%) $791,391 $535,410 (32.3%)

– U.K. 2,365 2,131 (9.9%) $351,416 $163,489 (53.5%)

– Germany 1,360 947 (30.4%) $98,539 $104,874 6.4%

Africa / Middle East 625 643 2.9% $57,201 $133,323 133.1%

Asia-Pacific (ex. Japan) 5,087 3,838 (24.6%) $394,061 $325,158 (17.5%)

– China 3,160 2,428 (23.2%) $233,550 $182,912 (21.7%)

– India 772 439 (43.1%) $72,546 $33,274 (54.1%)

Japan 2,470 2,586 4.7% $164,210 $101,044 (38.5%)

Global Total 22,751 21,678 (4.7%) $2,398,593 $2,348,984 (2.1%)

_____________________ Source: Dealogic and Robert W. Baird & Co. Incorporated M&A Market Analysis. YTD as of September 30. Notes: Global Total will not equal the sum of the individual regions listed above, as cross-border transactions are reflected in both the target’s and acquiror’s respective regions. Figures exclude transactions involving minority stakes, stock repurchases, and spin-offs. Historical M&A data is subject to revision, particularly as additional deals from past periods enter the M&A database.

Global Middle-Market M&A Deal Statistics


Number of Deals – September Deal Value – September


North America 278 333 19.8% $32,367 $29,807 (7.9%)

– U.S. 246 307 24.8% $29,918 $26,745 (10.6%)

Central / South America 18 28 55.6% $1,441 $3,627 151.7%

Europe 314 258 (17.8%) $21,899 $19,716 (10.0%)

– U.K. 118 87 (26.3%) $8,436 $6,685 (20.8%)

– Germany 35 24 (31.4%) $2,987 $2,842 (4.8%)

Africa / Middle East 33 40 21.2% $2,777 $2,359 (15.1%)

Asia-Pacific (ex. Japan) 343 281 (18.1%) $22,731 $22,058 (3.0%)

– China 234 200 (14.5%) $15,173 $16,369 7.9%

– India 37 22 (40.5%) $1,265 $897 (29.1%)

Japan 100 86 (14.0%) $3,368 $4,308 27.9%

Global Total 988 962 (2.6%) $69,869 $71,994 3.0%

_____________________ Source: Dealogic and Robert W. Baird & Co. Incorporated M&A Market Analysis. Notes: Global Total will not equal the sum of the individual regions listed above, as cross-border transactions are reflected in both the target’s and acquiror’s respective regions. Figures exclude transactions involving minority stakes, stock repurchases, and spin-offs. Historical M&A data is subject to revision, particularly as additional deals from past periods enter the M&A database.

Number of Deals – YTD Deal Value – YTD


North America 2,796 2,940 5.2% $315,467 $285,945 (9.4%)

– U.S. 2,421 2,640 9.0% $290,047 $259,255 (10.6%)

Central / South America 215 205 (4.7%) $18,521 $25,919 39.9%

Europe 2,542 2,308 (9.2%) $218,821 $197,873 (9.6%)

– U.K. 890 755 (15.2%) $69,300 $59,250 (14.5%)

– Germany 294 217 (26.2%) $28,081 $32,573 16.0%

Africa / Middle East 344 344 0.0% $20,639 $21,453 3.9%

Asia-Pacific (ex. Japan) 3,415 2,574 (24.6%) $213,600 $173,649 (18.7%)

– China 2,230 1,634 (26.7%) $145,966 $107,836 (26.1%)

– India 474 323 (31.9%) $17,494 $18,014 3.0%

Japan 982 929 (5.4%) $45,907 $46,821 2.0%

Global Total 9,482 8,727 (8.0%) $716,749 $646,482 (9.8%)

_____________________ Source: Dealogic and Robert W. Baird & Co. Incorporated M&A Market Analysis. YTD as of September 30. Notes: Global Total will not equal the sum of the individual regions listed above, as cross-border transactions are reflected in both the target’s and acquiror’s respective regions. Figures exclude transactions involving minority stakes, stock repurchases, and spin-offs. Historical M&A data is subject to revision, particularly as additional deals from past periods enter the M&A database.

U.S. M&A Commentary


DEAL VALUE DOWN DESPITE HIGHER COUNT

In spite of a nine-month low for dollar volume in the U.S. M&A market during September, 2019 remained on pace for the second-highest dollar volume on record. Reported dollar volume of $68.3 billion decreased 25.3% and was far below the robust LTM average of $149.4 billion. Fueled by smaller deals, the transaction total rose 41.0% to 877, which exceeded the LTM mean of 814. In the U.S. middle market, the number of deals was up 24.8% in September, whereas dollar value fell 10.6%.

Growth in the U.S. economy appeared to decelerate through the end of Q3. The ISM’s non-manufacturing index for September dropped to the lowest level in three years, partly as a function of much slower growth for new orders. Manufacturing PMI for September pointed to contraction for the second straight month in falling to a 10-year low, with higher tariffs again cited as a negative factor. Reports on the U.S. labor market were mixed: September’s payroll additions modestly below the YTD 2019 average, payroll additions for July-August revised higher, the lowest wage growth in more than a year in September, and the lowest unemployment rate in nearly 50 years. During its mid-September meeting, the Federal Reserve lowered its benchmark interest rate by 25 bps for the second time in Q3 in view of slowing economic trends and the U.S.-China trade dispute, with markets now anticipating another rate reduction after the Fed’s late October meeting.

Bifurcation in the U.S. leveraged finance markets persisted in September, with healthier fundamentals in high yield than in the leveraged loan market. Leveraged loan issuance in September matched the year-ago figure and exceeded the LTM mean; however, loan volume in YTD 2019 fell 26% vs. YTD 2018. New issue loan yields in September were about 50 bps below 1H 2019 levels while still 25-50 bps above the 2018 average; of note, loan spreads/yields have diverged recently, with much larger pricing declines on BB loans than for lower-rated credits. After 43 straight weeks of outflows, leveraged loan funds experienced a small weekly inflow in mid-September; nevertheless, moderate net outflows in September brought YTD 2019 outflows to nearly $24 billion, while CLO issuance was down 11% in YTD 2019. High yield volume in September represented a two-year high, with YTD 2019 issuance up 28% vs. YTD 2018. Average clearing yields for September’s high yield issues fell to a YTD 2019 low and were about 150 bps below the 2018 mean. Additional inflows for high yield funds in September lifted YTD 2019 net inflows to $15+ billion.

The U.S. equity markets advanced 1.7% in September, increasing the YTD 2019 gain for the S&P 500 to 18.7%. Despite higher equity valuations, proceeds from U.S. equity offerings were down 10% in the first nine months of the year.

U.S. M&A Activity

• In the U.S. M&A market, the deal count for September was 877, which was 41.0% above the prior-year total and more than the LTM average of 814. Dollar volume decreased 25.3% to $68.3 billion, well below the LTM mean of $149.4 billion.

• On a year-to-date basis, the number of transactions was up 6.9% to 7,765. Dollar volume expanded 8.2% to $1.43 trillion.

• The YTD 2019 count for deals valued above $1 billion decreased 16.3%, whereas dollar volume rose 13.5% for this segment.

• The third quarter’s deal count was 4% below the average of Q1 and Q2, while Q3 volume declined 37% from the unusually high first-half average.

• For the LTM period, the number of announced transactions edged up 0.7% to 9,762. Dollar volume increased 1.6% to $1.79 trillion.

U.S. Middle-Market Activity

• The U.S. middle market registered mixed metrics in September. The number of transactions increased 24.8% to 307, which exceeded the LTM average of 277. Dollar volume was down 10.6% on a year-over-year basis to $26.7 billion, below the LTM mean of $30.0 billion.

• In the first nine months of 2019, the middle-market transaction count rose 9.0% to 2,640. Dollar volume decreased 10.6% to $259.3 billion.

• Year-to-date metrics were weakest for deals with disclosed value between $500 million and $1 billion: deal count down 21.8% and dollar value off 20.3%.

• For the LTM period, the deal count increased 2.5% to 3,321. Dollar volume was down 7.8% to $360.0 billion.

• In the middle market, the median EBITDA transaction multiple for the LTM period ended in September was 9.9x. The median valuation during the last six months (April through September) was 10.3x, above the median of 9.2x during the preceding six months (October 2018 through March 2019).

U.S. M&A Activity


U.S. M&A Activity

2009 2010 2011 2012 2013 2014 2015 2016 2017 20189/18YTD

9/19YTD

Total 7,961 11,198 11,908 13,298 10,380 11,840 11,774 10,531 11,186 9,262 7,265 7,765

# of Deals – >$1B 92 176 156 190 175 249 279 278 264 299 227 190



Deal Value $767 $946 $991 $895 $866 $1,524 $1,961 $1,752 $1,403 $1,684 $1,323 $1,432

7,961

11,19811,908

13,298

10,38011,840 11,774

10,53111,186

9,262

7,2657,765

$0

$500

$1,000

$1,500

$2,000

$2,500

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

De

al Valu

e# o

f De

als



U.S. Middle-Market M&A Activity

2009 2010 2011 2012 2013 2014 2015 2016 2017 20189/18YTD

9/19YTD

# of Transactions – Middle-Market 3,314 5,396 4,573 4,435 3,035 3,723 4,153 3,597 3,471 3,102 2,421 2,640

# of Transactions – $500M – $1B 78 173 152 171 168 186 179 198 204 207 156 122

# of Transactions – $100M – $499M 425 690 760 721 707 897 850 820 821 829 595 559

# of Transactions – <$100M 2,811 4,533 3,661 3,543 2,160 2,640 3,124 2,579 2,446 2,066 1,670 1,959

Deal Value $194 $341 $347 $347 $327 $396 $386 $385 $381 $391 $290 $259

3,314

5,396

4,573 4,435

3,0353,723

4,153

3,597 3,4713,102 2,421 2,640

$0

$100

$200

$300

$400

$500

0

2,000

4,000

6,000

De

al Valu

e# o

f De

als

# of Transactions – <$100M # of Transactions – $100M – $499M # of Transactions – $500M – $1B Deal Value ($ in billions)


U.S. Middle-Market M&A Deal Statistics


Number of Deals Deal Value 2018 2019 % Change ($ in millions) 2018 2019 % Change

September September

<$100M 164 240 46.3% <$100M $5,033 $5,578 10.8%

$100M-$499M 69 54 (21.7%) $100M-$499M $15,966 $12,199 (23.6%)

$500M-$1,000M 13 13 0.0% $500M-$1,000M $8,920 $8,968 0.5%

Total Middle Market 246 307 24.8% Total Middle Market $29,918 $26,745 (10.6%)

Monthly Average 270 277 2.5% Monthly Average $32,526 $29,997 (7.8%)

>$1,000M 25 14 (44.0%) >$1,000M $61,557 $41,592 (32.4%)

Undisclosed 351 556 58.4% Undisclosed ** ** **

Total 622 877 41.0% Total $91,476 $68,337 (25.3%)

Monthly Average 808 814 0.7% Monthly Average $146,986 $149,366 1.6%

YTD YTD

<$100M 1,670 1,959 17.3% <$100M $47,311 $51,253 8.3%

$100M-$499M 595 559 (6.1%) $100M-$499M $137,300 $123,945 (9.7%)

$500M-$1,000M 156 122 (21.8%) $500M-$1,000M $105,437 $84,057 (20.3%)

Total Middle Market 2,421 2,640 9.0% Total Middle Market $290,047 $259,255 (10.6%)

>$1,000M 227 190 (16.3%) >$1,000M $1,033,423 $1,172,781 13.5%

Undisclosed 4,617 4,935 6.9% Undisclosed ** ** **

Total 7,265 7,765 6.9% Total $1,323,470 $1,432,036 8.2%

LTM LTM

<$100M 2,225 2,355 5.8% <$100M $61,029 $64,240 5.3%

$100M-$499M 801 793 (1.0%) $100M-$499M $184,266 $177,174 (3.8%)

$500M-$1,000M 214 173 (19.2%) $500M-$1,000M $145,023 $118,545 (18.3%)

Total Middle Market 3,240 3,321 2.5% Total Middle Market $390,317 $359,959 (7.8%)

>$1,000M 291 262 (10.0%) >$1,000M $1,373,517 $1,432,436 4.3%

Undisclosed 6,167 6,179 0.2% Undisclosed ** ** **

Total 9,698 9,762 0.7% Total $1,763,834 $1,792,395 1.6%

_____________________ Source: Dealogic and Robert W. Baird & Co. Incorporated M&A Market Analysis. YTD and LTM as of September 30. Note: Figures exclude transactions involving minority stakes, stock repurchases, and spin-offs.

U.S. Middle-Market Enterprise Value to Median EBITDA, EBIT, and Revenue Multiples

Transaction Size 2009 2010 2011 2012 2013

2014

2015

2016

2017 2018 LTM 2019

EV/EBITDA <$100M 7.0x 7.0x 8.3x 7.1x 6.8x 8.1x 6.9x 7.4x 7.1x 8.0x 8.0x

$100M-$499M 8.1x 10.1x 9.3x 9.1x 9.5x 9.9x 10.2x 10.0x 9.9x 9.1x 10.7x

$500M-$1B 7.8x 9.0x 9.9x 8.7x 8.4x 9.9x 10.7x 11.3x 11.5x 10.2x 10.7x

Middle-Market 7.6x 8.6x 9.2x 8.1x 8.4x 9.2x 8.6x 9.2x 9.4x 9.0x 9.9x

EV/EBIT

<$100M 7.8x 10.3x 11.3x 10.3x 12.5x 11.4x 10.6x 10.8x 9.5x 12.3x 11.3x

$100M-$499M 11.0x 12.2x 12.8x 13.0x 13.7x 13.1x 12.2x 12.1x 16.1x 13.2x 13.5x

$500M-$1B 13.6x 13.4x 12.9x 13.8x 13.6x 13.0x 16.9x 13.5x 20.0x 14.3x 16.6x


EV/Revenue

<$100M 0.80x 0.94x 1.00x 0.81x 0.83x 0.88x 1.01x 1.04x 1.07x 1.04x 0.95x

$100M-$499M 1.22x 1.24x 1.39x 1.36x 1.43x 1.40x 1.51x 1.44x 1.33x 1.52x 1.54x

$500M-$1B 1.46x 1.56x 1.04x 1.23x 1.36x 1.59x 1.73x 1.95x 1.81x 1.50x 1.63x


_____________________ Source: Capital IQ and Robert W. Baird & Co. Incorporated M&A Market Analysis. Median multiples are calculated using deals for which meaningful data is available. LTM as of September 30. Figures exclude transactions involving minority stakes, stock repurchases, and spin-offs.

U.S. Middle-Market M&A Deal Statistics


U.S. Middle-Market Median Acquisition Premiums

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 LTM 2019

1-Week Premium 36.3% 33.5% 37.6% 37.5% 27.3% 30.4% 28.2% 36.6% 27.4% 25.8% 29.3%

4-Week Premium 37.1% 38.3% 38.5% 37.5% 34.3% 32.1% 29.9% 36.9% 28.0% 24.2% 31.2%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

45.0%1-Week Premium 4-Week Premium

_____________________ Source: Dealogic and Robert W. Baird & Co. Incorporated M&A Market Analysis. LTM as of September 30.

Note: Figures exclude transactions involving minority stakes, stock repurchases, and spin-offs.

U.S. Middle-Market Transaction Composition – Strategic vs. Sponsor Deal Value

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 9/18 YTD 9/19 YTD

Sponsor 19.9% 20.6% 18.9% 20.1% 19.7% 21.0% 20.2% 16.9% 21.3% 18.8% 18.3% 15.7%

Strategic 80.1% 79.4% 81.1% 79.9% 80.3% 79.0% 79.8% 83.1% 78.7% 81.2% 81.7% 84.3%

0.0%

20.0%

40.0%

60.0%

80.0%

100.0%

% o

f D

eal

Val

ue

Strategic Sponsor

_____________________ Source: Dealogic and Robert W. Baird & Co. Incorporated M&A Market Analysis. YTD as of September 30. Note: Figures exclude transactions involving minority stakes, stock repurchases, and spin-offs.

U.S. Middle-Market M&A Payment Method by Number of Deals

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 9/18 YTD 9/19 YTD

Cash/Stock 3.7% 2.8% 4.8% 3.9% 5.4% 6.3% 5.8% 5.2% 5.6% 7.0% 6.7% 6.0%

Stock 5.4% 3.3% 3.6% 3.1% 3.6% 4.2% 3.8% 3.6% 4.8% 5.6% 5.0% 4.4%

Cash 90.9% 93.9% 91.6% 92.9% 90.9% 89.5% 90.4% 91.2% 89.6% 87.4% 88.3% 89.6%

0.0%

20.0%

40.0%

60.0%

80.0%

100.0%

% o

f D

eal

s

Cash Stock Cash/Stock


U.S. Cross-Border M&A Activity


U.S. – Inbound and Outbound M&A Activity

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 LTM 2019

Inbound M&A 916 1,129 1,308 1,324 1,039 1,255 1,409 1,453 1,476 1,244 1,148

Outbound M&A 1,045 1,570 1,876 1,559 1,380 1,560 1,710 1,450 1,389 1,406 1,341

Inbound Deal Value $81 $188 $133 $167 $122 $249 $380 $461 $227 $249 $232

Outbound Deal Value $78 $114 $158 $111 $138 $185 $182 $189 $151 $208 $117

916

1,1291,308 1,324

1,039

1,2551,409 1,453 1,476

1,2441,148

1,045

1,570

1,876

1,5591,380

1,5601,710 1,450

1,389 1,406 1,341

$0

$75

$150

$225

$300

$375

$450

$525

0

500

1,000

1,500

2,000

De

al Valu

e# o

f De

als

Inbound M&A Outbound M&A Inbound Deal Value Outbound Deal Value ($ in billions)

_____________________ Source: Dealogic and Robert W. Baird & Co. Incorporated M&A Market Analysis. LTM as of September 30. Note: Inbound M&A represents U.S. target/non-U.S. acquiror; Outbound M&A represents non-U.S. target/U.S. acquiror. Figures exclude transactions involving minority stakes, stock repurchases, and spin-offs.

Top 10 U.S.

Target Industries Acquired by Non-U.S. Companies – YTD

Top 10 Non-U.S.

Acquirors of U.S. Targets – YTD

Top 10 Non-U.S. Target Industries Acquired by U.S.

Companies – YTD

Industry # of

Deals Country # of

Deals Industry # of

Deals

1. Technology 269 1. Canada 213 1. Technology 394

2. Healthcare 126 2. Japan 138 2. Professional Services 119

3. Professional Services 81 3. United Kingdom 94 3. Healthcare 89

4. Construction/Building 36 4. Germany 48 4. Finance 34

5. Consumer Products 33 5. Australia 45 4. Food & Beverage 34

6. Chemicals 31 6. France 42 6. Insurance 31

7. Utility & Energy 28 7. China 32 7. Real Estate/Property 30

8. Transportation 25 8. Sweden 30 8. Machinery 28

9. Food & Beverage 23 9. India 21 9. Chemicals 26

10. Finance 21 10. Switzerland 17 9. Consumer Products 26


U.S. M&A Dollar Volume Analysis


With this edition of the Global M&A Monthly report, Baird’s Global Investment Banking department is including analysis based on a proprietary metric developed by macro research provider Strategas, which formed a partnership with Baird in January 2018. We initially added this analysis to the May 2019 report due to the apparent predictive value of the Strategas metric for U.S. M&A dollar volumes. Based on the latest available Strategas metric, we anticipate continuation of robust U.S. M&A dollar volumes in the near term, albeit with deal values projected moderately below recent levels.

The analysis summarized on this page is founded on the Strategas Market Balance Sheet metric, which is comprised of values that Strategas assigns to more than a dozen variables relevant to the U.S. stock market, including economic growth, monetary policy, valuations, corporate earnings growth, and liquidity. As detailed here, we have discovered a strong relationship between monthly values for this metric and historical patterns for U.S. M&A dollar volumes over the past 10+ years.

In the chart below, each point represents the combination of U.S. M&A dollar volume and the Strategas metric at various times over the past 10+ years. M&A dollar volumes are indicated on the y axis, and Strategas metric values are on the x axis. Values for each were calculated on a trailing 12-month basis (due to month-to-month variability) four times per year over the past 10+ years. We find the analysis to be most useful when combining M&A dollar volume data for periods ending six months after the periods used for the corresponding Strategas metric (e.g., dollar volume through June 2019 with Strategas metric through December 2018) due to the predictive nature of the Strategas metric.

Regression analysis based on the chart below suggests a significant correlation between the Strategas metric and U.S. M&A dollar volume. This is supported by the regression line, which indicates particularly good fit when the Strategas metric is on the low end or high end of its range over the last 10+ years. A meaningful relationship is also evident in the regression statistics, including the R-squared value of 0.66.

Due to the nature of the analysis, we can use the latest Strategas Market Balance Sheet metric in an effort to project the near-term path of M&A dollar volume. The Strategas metric as of September 2019 suggests that U.S. M&A dollar volume for the 12 months through March 2020 will fall within a range centered on $1.73 trillion, which would represent an elevated level for a one-year period. This implies dollar volume during the October 2019 - March 2020 period (i.e., over the next six months) in a range centered on $790 billion, which would be a decrease from announced volumes of about $940 billion in the prior six months (April-September 2019) and $850 billion for the preceding six months (October 2018 through March 2019).

The close relationship of the Strategas metric with M&A dollar volume has intuitive appeal, since factors such as company earnings results, monetary/fiscal policy, and liquidity have a direct impact on the willingness and ability of strategic acquirors and financial sponsor buyers to pursue M&A activity. As a result, we plan to present updates of this analysis in future issues of the Global M&A Monthly report.

You can learn more about the macro research provided by Strategas at its web site.

U.S. M&A Dollar Volume vs. Strategas Market Balance Sheet Metric

-

0.5

1.0

1.5

2.0

2.5

-4.0 -3.0 -2.0 -1.0 0.0 1.0 2.0 3.0 4.0 5.0 6.0

U.S

. M

&A

Do

llar

Vo

lum

e

($ in

tri

llio

ns)

Strategas Market Balance Sheet Metric

_____________________ Source: Dealogic, Strategas Research, and Robert W. Baird & Co. Incorporated M&A Market Analysis.

https://www.strategasrp.com/

Europe M&A Commentary


Metrics in Europe’s M&A market were below recent levels in September. The deal count was down 9.5% to 779, which was under the LTM average of 840. Reported dollar volume decreased 40.4% to $38.5 billion, the second-lowest figure in the past three years. In Europe’s middle market, the number of transactions was down 17.8%, and dollar value declined 10.0%.

Year to date through September, the number of transactions in Europe decreased 7.9%, and dollar volume was down 32.3%. During the third quarter, the deal count was 4% below the average of Q1 and Q2, while Q3 dollar value topped the first-half average by 10%. In the middle market, the deal total for the first nine months of the year dropped 9.2%, and dollar value was 9.6% under the year-ago level.

The latest round of updates indicated further softening for Europe’s economy. Although still showing meager expansion, the composite PMI for euro zone activity in September fell to the lowest level in more than six years, with negative factors including contraction for manufacturing, weaker new business amid a decline in new export orders, and a seven-year low for Germany’s PMI. In the U.K. (Europe’s largest M&A market), the services and manufacturing sectors both contracted, as companies cited Brexit-related uncertainty causing postponement of client orders. A dimmer outlook was also evident in the Economic Sentiment Indicator of the European Union, which fell for the fourth straight month in dropping to the lowest reading in nearly six years. In response to economic weakening, the European Central Bank announced several monetary stimulus measures during September while also encouraging member countries to implement fiscal spending policies to boost the economy.

In Europe, the median EBITDA transaction multiple was 8.5x for the LTM period ended in September. The median valuation during the last six months (April through September) was 8.4x, below the median figure of 8.9x during the preceding six months (October 2018 through March 2019).

Through September, the deal total in the U.K. decreased 9.9% to 2,131 based on reduced domestic and cross-border activity. Announced dollar volume contracted 53.5% to $163.5 billion, as inbound volume experienced a particularly large decline.

In the first nine months of 2019, the middle-market transaction count in the U.K. was down 15.2% to 755, and dollar volume contracted 14.5% to $59.3 billion.

Year to date in Germany, the number of M&A deals declined 30.4% to 947, primarily reflecting fewer domestic and inbound transactions. Dollar volume was up 6.4% to $104.9 billion, with the increase due to higher domestic and outbound volumes.

In Germany’s middle market, the transaction total for January-September decreased 26.2% to 217. Dollar volume for this period was up 16.0% to $32.6 billion.

Europe M&A Activity

2009 2010 2011 2012 2013 2014 2015 2016 2017 20189/18YTD

9/19YTD

Total 10,330 10,930 12,469 11,301 9,919 12,307 11,030 10,987 11,822 10,732 8,277 7,623

# of Deals – >$1B 91 136 133 121 132 170 157 136 156 181 145 109



Deal Value $489 $686 $630 $604 $619 $963 $1,077 $933 $829 $983 $791 $535

10,33010,930

12,46911,301

9,919

12,30711,030 10,987

11,82210,732

8,2777,623

$0

$500

$1,000

$1,500

$2,000

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

De

al Valu

e# o

f De

als



Europe Middle-Market M&A Deal Statistics


Number of Deals Deal Value 2018 2019 % Change ($ in millions) 2018 2019 % Change

September September

<$100M 250 201 (19.6%) <$100M $4,408 $3,826 (13.2%)

$100M-$499M 58 50 (13.8%) $100M-$499M $12,986 $10,757 (17.2%)

$500M-$1,000M 6 7 16.7% $500M-$1,000M $4,505 $5,132 13.9%

Total Middle Market 314 258 (17.8%) Total Middle Market $21,899 $19,716 (10.0%)

Monthly Average 288 262 (9.0%) Monthly Average $24,723 $23,864 (3.5%)

>$1,000M 14 7 (50.0%) >$1,000M $42,594 $18,751 (56.0%)

Undisclosed 533 514 (3.6%) Undisclosed ** ** **

Total 861 779 (9.5%) Total $64,493 $38,466 (40.4%)

Monthly Average 908 840 (7.5%) Monthly Average $84,946 $60,546 (28.7%)

YTD YTD

<$100M 1,971 1,766 (10.4%) <$100M $37,190 $35,061 (5.7%)

$100M-$499M 456 451 (1.1%) $100M-$499M $102,018 $99,093 (2.9%)

$500M-$1,000M 115 91 (20.9%) $500M-$1,000M $79,613 $63,718 (20.0%)

Total Middle Market 2,542 2,308 (9.2%) Total Middle Market $218,821 $197,873 (9.6%)

>$1,000M 145 109 (24.8%) >$1,000M $572,569 $337,538 (41.0%)

Undisclosed 5,590 5,206 (6.9%) Undisclosed ** ** **

Total 8,277 7,623 (7.9%) Total $791,391 $535,410 (32.3%)

LTM LTM

<$100M 2,672 2,360 (11.7%) <$100M $51,471 $47,154 (8.4%)

$100M-$499M 635 641 0.9% $100M-$499M $142,736 $140,926 (1.3%)

$500M-$1,000M 147 142 (3.4%) $500M-$1,000M $102,473 $98,287 (4.1%)

Total Middle Market 3,454 3,143 (9.0%) Total Middle Market $296,681 $286,367 (3.5%)

>$1,000M 193 145 (24.9%) >$1,000M $722,670 $440,189 (39.1%)

Undisclosed 7,244 6,790 (6.3%) Undisclosed ** ** **

Total 10,891 10,078 (7.5%) Total $1,019,351 $726,556 (28.7%)

_____________________ Source: Dealogic and Robert W. Baird & Co. Incorporated M&A Market Analysis. YTD and LTM as of September 30. Note: Figures exclude transactions involving minority stakes, stock repurchases, and spin-offs.

Europe Middle-Market Enterprise Value to Median EBITDA, EBIT, and Revenue Multiples

Transaction Size 2009 2010 2011 2012 2013

2014

2015

2016

2017

2018 LTM 2019

EV/EBITDA <$100M 6.2x 6.6x 7.3x 6.8x 6.7x 7.8x 7.5x 7.4x 7.3x 7.7x 7.5x

$100M-$499M 7.7x 8.1x 8.7x 9.2x 8.3x 9.3x 9.8x 10.0x 10.9x 9.9x 11.2x

$500M-$1B 11.2x 8.9x 9.5x 8.1x 9.4x 9.6x 10.6x 10.1x 11.1x 11.0x 11.0x


EV/EBIT

<$100M 7.6x 7.4x 9.0x 7.7x 7.8x 9.4x 9.3x 8.7x 9.0x 9.5x 9.1x

$100M-$499M 10.2x 10.6x 11.5x 13.1x 12.0x 12.4x 13.5x 13.0x 12.5x 12.6x 14.7x

$500M-$1B 15.7x 12.8x 13.3x 10.3x 12.0x 12.7x 15.5x 12.7x 19.5x 13.5x 14.2x


EV/Revenue

<$100M 0.63x 0.71x 0.74x 0.73x 0.73x 0.87x 0.93x 0.87x 0.87x 0.99x 0.91x

$100M-$499M 0.92x 1.09x 1.21x 1.29x 1.33x 1.34x 1.34x 1.26x 1.27x 1.25x 1.38x

$500M-$1B 1.68x 1.43x 1.44x 1.33x 1.60x 1.30x 1.41x 2.20x 1.50x 1.35x 1.97x


_____________________ Source: Capital IQ and Robert W. Baird & Co. Incorporated M&A Market Analysis. Median multiples are calculated using deals for which meaningful data is available. LTM as of September 30. Figures exclude transactions involving minority stakes, stock repurchases, and spin-offs.

Europe Middle-Market M&A Deal Statistics


Europe Middle-Market Median Acquisition Premiums

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 LTM 2019

1-Week Premium 24.5% 28.2% 31.9% 28.2% 31.2% 25.3% 26.3% 28.9% 24.8% 27.1% 24.5%

4-Week Premium 30.9% 35.1% 35.8% 36.5% 33.9% 29.9% 31.3% 30.4% 26.9% 30.8% 27.9%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%


_____________________ Source: Dealogic and Robert W. Baird & Co. Incorporated M&A Market Analysis. LTM as of September 30. Note: Figures exclude transactions involving minority stakes, stock repurchases, and spin-offs.

Europe Middle-Market Transaction Composition – Strategic vs. Sponsor Deal Value

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 9/18 YTD 9/19 YTD

Sponsor 13.9% 20.5% 19.9% 17.4% 24.6% 23.9% 25.1% 22.9% 22.6% 16.0% 16.6% 19.4%

Strategic 86.1% 79.5% 80.1% 82.6% 75.4% 76.1% 74.9% 77.1% 77.4% 84.0% 83.4% 80.6%

0.0%

20.0%

40.0%

60.0%

80.0%

100.0%

% o

f D

eal

Val

ue

Strategic Sponsor


Europe Middle-Market M&A Payment Method by Number of Deals

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 9/18 YTD 9/19 YTD

Cash/Stock 3.3% 3.5% 3.1% 2.7% 3.1% 2.3% 2.8% 2.7% 3.4% 3.0% 3.2% 2.9%

Stock 5.6% 4.9% 3.7% 2.8% 2.8% 2.0% 2.2% 2.3% 2.2% 1.7% 1.5% 2.5%

Cash 91.1% 91.6% 93.2% 94.4% 94.2% 95.7% 95.0% 95.1% 94.4% 95.3% 95.3% 94.6%

0.0%

20.0%

40.0%

60.0%

80.0%

100.0%

% o

f D

eal

s



Europe Cross-Border M&A Activity


Europe – Inbound and Outbound M&A

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 LTM 2019

Inbound M&A 825 1,159 1,354 1,245 1,120 1,399 1,504 1,544 1,464 1,406 1,343

Outbound M&A 826 977 1,220 1,231 1,057 1,191 1,203 1,091 1,141 967 888

Inbound Deal Value $92 $111 $181 $130 $160 $203 $263 $324 $190 $335 $164

Outbound Deal Value $89 $162 $104 $136 $79 $202 $232 $271 $153 $171 $163

825

1,159

1,354 1,2451,120

1,3991,504 1,544 1,464 1,406

1,343

826977

1,220 1,2311,057

1,191

1,2031,091

1,141

967888

$0

$100

$200

$300

$400

0

600

1,200

1,800

De

al Valu

e# o

f De

als

Inbound M&A Outbound M&A Inbound Deal Value Outbound Deal Value ($ in billions)

_____________________

Source: Dealogic and Robert W. Baird & Co. Incorporated M&A Market Analysis. LTM as of September 30. Note: Inbound M&A represents European target/non-European acquiror; Outbound M&A represents non-European target/European acquiror. Figures exclude transactions involving minority stakes, stock repurchases, and spin-offs.

Top 10 European Target Countries Acquired by Non-European Companies – YTD

Top 10 European Target Industries Acquired by Non-European Companies – YTD

Country # of Deals Industry # of Deals

1. United Kingdom 306 1. Technology 315

2. Germany 116 2. Professional Services 98

3. France 85 3. Healthcare 78

4. Spain 57 4. Real Estate/Property 51

5. Italy 55 5. Finance 48

6. Netherlands 50 6. Auto/Truck 31

7. Sweden 41 6. Machinery 31

8. Switzerland 35 8. Chemicals 30

9. Ireland 31 9. Consumer Products 28

10. Denmark 25 10. Leisure & Recreation 27

Top 10 Non-European Target Countries Acquired by European Companies – YTD

Top 10 Non-European Target Industries Acquired by European Companies – YTD

Country # of Deals Industry # of Deals

1. United States 322 1. Technology 172

2. Australia 69 2. Professional Services 83

3. Canada 41 3. Healthcare 65

4. Brazil 31 4. Utility & Energy 35

5. Israel 18 5. Chemicals 32

6. India 17 5. Construction/Building 31

7. South Africa 15 7. Finance 27

8. China 13 7. Transportation 27

8. Singapore 13 9. Consumer Products 24

10. Colombia 11 10. Food & Beverage 22


U.K. Cross-Border M&A Activity


U.K. Number of Deals (Domestic/Outbound/Inbound)

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 9/18 YTD 9/19 YTD

Total 2,669 2,742 3,002 2,917 2,622 2,998 3,188 3,430 2,915 3,142 2,365 2,131

Inbound M&A 439 569 621 623 569 630 738 869 734 775 583 476

Outbound M&A 453 583 746 631 588 737 704 543 607 548 421 380

Domestic M&A 1,777 1,590 1,635 1,663 1,465 1,631 1,746 2,018 1,574 1,819 1,361 1,275

2,669 2,7423,002 2,917

2,622

2,9983,188

3,430

2,9153,142

2,3652,131

0

1,000

2,000

3,000

4,000

# o

f De

als

Domestic M&A Outbound M&A Inbound M&A

_____________________ Source: Dealogic and Robert W. Baird & Co. Incorporated M&A Market Analysis. YTD as of September 30. Note: Domestic M&A represents U.K. target/U.K. acquiror; Outbound M&A represents non-U.K. target/U.K. acquiror; Inbound M&A represents U.K. target/non-U.K. acquiror. Figures exclude transactions involving minority stakes, stock repurchases, and spin-offs.

U.K. Deal Value (Domestic/Outbound/Inbound)

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 9/18 YTD 9/19 YTD

Total $126 $198 $181 $140 $167 $312 $515 $270 $248 $409 $351 $163

Inbound M&A $51 $56 $73 $62 $73 $116 $341 $112 $95 $236 $213 $64

Outbound M&A $25 $68 $58 $35 $40 $98 $100 $100 $65 $85 $65 $52

Domestic M&A $50 $74 $49 $44 $53 $98 $74 $58 $87 $88 $74 $48

$126

$198 $181$140 $167

$312

$515

$270 $248

$409$351

$163

$0

$250

$500

$750

De

al V

alu

e

Domestic M&A Outbound M&A Inbound M&A($ in billions)

_____________________ Source: Dealogic and Robert W. Baird & Co. Incorporated M&A Market Analysis. YTD as of September 30. Note: Domestic M&A represents U.K. target/U.K. acquiror; Outbound M&A represents non-U.K. target/U.K. acquiror; Inbound M&A represents U.K. target/non-U.K. acquiror. Figures exclude transactions involving minority stakes, stock repurchases, and spin-offs.

Germany Cross-Border M&A Activity


Germany Number of Deals (Domestic/Outbound/Inbound)

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 9/18 YTD 9/19 YTD

Total 1,269 1,284 1,771 1,563 1,400 1,748 1,655 1,569 2,073 1,712 1,360 947

Inbound M&A 292 368 503 410 370 463 449 465 542 507 393 264

Outbound M&A 333 303 419 443 346 410 419 379 442 397 320 293

Domestic M&A 644 613 849 710 684 875 787 725 1,089 808 647 390

1,269 1,284

1,7711,563

1,400

1,7481,655 1,569

2,073

1,712

1,360

947

0

500

1,000

1,500

2,000

2,500

# o

f De

als


_____________________ Source: Dealogic and Robert W. Baird & Co. Incorporated M&A Market Analysis. YTD as of September 30. Note: Domestic M&A represents Germany target/Germany acquiror; Outbound M&A represents non-Germany target/Germany acquiror; Inbound M&A represents Germany target/non-Germany acquiror. Figures exclude transactions involving minority stakes, stock repurchases, and spin-offs.

Germany Deal Value (Domestic/Outbound/Inbound)

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 9/18 YTD 9/19 YTD

Total $66 $71 $54 $94 $108 $163 $105 $231 $119 $123 $99 $105

Inbound M&A $16 $23 $21 $28 $50 $27 $41 $92 $38 $57 $49 $29

Outbound M&A $25 $33 $20 $36 $15 $90 $24 $111 $30 $41 $28 $47

Domestic M&A $24 $15 $14 $31 $42 $45 $40 $28 $51 $25 $21 $28

$66 $71$54

$94$108

$163

$105

$231

$119 $123$99 $105

$0

$50

$100

$150

$200

$250

$300

De

al V

alu

e

Domestic M&A Outbound M&A Inbound M&A($ in billions)

_____________________ Source: Dealogic and Robert W. Baird & Co. Incorporated M&A Market Analysis. YTD as of September 30. Note: Domestic M&A represents Germany target/Germany acquiror; Outbound M&A represents non-Germany target/Germany acquiror; Inbound M&A represents Germany target/ non-Germany acquiror. Figures exclude transactions involving minority stakes, stock repurchases, and spin-offs.

Asia M&A Commentary


M&A market results for Asia (ex. Japan) fell short of year-ago figures in September. The number of transactions decreased 23.1% to 427, which was below the LTM average of 455. Announced dollar volume declined 21.4% to $43.9 billion, above the LTM mean of $36.2 billion. In the middle market, the deal total dropped 18.1%, and dollar value dipped 3.0%.

In YTD 2019, the deal total in Asia (ex. Japan) fell 24.6%, and dollar volume was down 17.5%. In Q3, the deal count was 1% above the average of Q1 and Q2, and dollar volume exceeded the first-half mean by 17%. In the middle market, the number of transactions declined 24.6% on a year-to-date basis, while dollar value was 18.7% below the year-ago level.

Economic conditions in China, which accounts for about half of M&A activity in Asia (ex. Japan), remained substandard through the end of Q3. China’s official manufacturing PMI for September indicated modest contraction for the fifth consecutive month, continuing to be pressured by weakness in export sales. The Caixin PMI survey of smaller manufacturers highlighted recent data with the fastest growth rate in 19 months. In contrast, China’s official non-manufacturing index dipped to a 10-month low in showing moderate expansion. The trade dispute with the U.S. continued to weigh on exports, which declined 3% in September, as well as imports, which decreased 8%. Earlier in October, an initial phase of a U.S.-China trade deal was announced; however, previously implemented tariff hikes remain in place, while further increases are still scheduled for later this year, suggesting that trade policy uncertainty persists as an overhang for China’s economy.

In China’s M&A market, the transaction count for September was down 12.1% to 304, slightly above the LTM average of 288. Announced dollar volume edged up 1.3% to $31.2 billion, which topped the LTM mean of $21.2 billion.

Through September, the number of M&A deals for China decreased 23.2% to 2,428 due to reduced domestic and cross-border activity. Dollar volume was down 21.7% to $182.9 billion based on lower domestic and cross-border volumes.

On a year-to-date basis, the deal count in China’s middle market was down 26.7% to 1,634. Dollar volume contracted 26.1% to $107.8 billion.

Year to date in India’s M&A market, the number of deals decreased 43.1% to 439, with the drop-off due to lower domestic and cross-border activity. Reported dollar volume fell 54.1% to $33.3 billion, reflecting much lower volumes for domestic, outbound, and inbound transactions.

In the first nine months of 2019, the deal total in India’s middle market was down 31.9% to 323. Dollar volume increased 3.0% to $18.0 billion.

Year-to-date metrics diverged for Japan’s M&A market. The number of deals rose 4.7% to 2,586, as a function of increased domestic and outbound activity. Reported dollar volume was down 38.5% to $101.0 billion, with the decrease due to the YTD 2018 period including Takeda’s agreement to acquire Shire in an $81 billion transaction.

Asia (ex. Japan) M&A Activity

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 9/18 YTD 9/19 YTD

Total 4,721 5,458 6,043 5,236 5,290 5,888 6,862 6,710 7,424 6,709 5,087 3,838

# of Deals – >$1B 31 54 42 41 50 74 113 111 86 81 66 62



Deal Value $225 $300 $253 $285 $303 $520 $713 $652 $535 $503 $394 $325

4,7215,458

6,043

5,236 5,2905,888

6,862 6,7107,424

6,709

5,087

3,838

$0

$100

$200

$300

$400

$500

$600

$700

$800

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

De

al Valu

e# o

f De

als



China M&A Activity


China M&A Activity

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 9/18 YTD 9/19 YTD

Total 2,336 2,726 2,944 2,419 2,635 2,965 3,701 3,756 4,268 4,185 3,160 2,428

# of Deals – >$1B 15 19 25 22 33 49 93 76 65 41 33 34


# of Deals – Undisclosed 455 559 578 444 513 562 599 547 950 1,179 897 760

Deal Value $138 $142 $143 $159 $186 $367 $546 $487 $389 $305 $234 $183

2,3362,726

2,944

2,4192,635

2,9653,701

3,7564,268 4,185

3,160

2,428

$0

$100

$200

$300

$400

$500

$600

0

1,000

2,000

3,000

4,000

5,000

De

al Valu

e# o

f De

als



China Number of Deals (Domestic/Outbound/Inbound)

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 9/18 YTD 9/19 YTD

Total 2,336 2,726 2,944 2,419 2,635 2,965 3,701 3,756 4,268 4,185 3,160 2,428

Inbound M&A 330 377 365 227 222 202 182 153 162 169 132 105

Outbound M&A 213 253 325 293 273 330 426 590 486 420 320 237

Domestic M&A 1,793 2,096 2,254 1,899 2,140 2,433 3,093 3,013 3,620 3,596 2,708 2,086

2,3362,726

2,944

2,4192,635

2,965

3,701 3,756

4,268 4,185

3,160

2,428

0

1,000

2,000

3,000

4,000

5,000

# o

f De

als


_____________________ Source: Dealogic and Robert W. Baird & Co. Incorporated M&A Market Analysis. YTD as of September 30. Note: Domestic M&A represents China target/China acquiror; Outbound M&A represents non-China target/China acquiror; Inbound M&A represents China target/non-China acquiror. Figures exclude transactions involving minority stakes, stock repurchases, and spin-offs.

China M&A Deal Statistics


China Number of Deals Domestic Outbound Inbound Total

2018 2019 2018 2019 2018 2019 2018 2019

September

Middle Market 205 174 22 21 7 5 234 200

>$1B 2 4 2 2 0 0 4 6

Undisclosed 90 82 11 8 7 8 108 98

Total 297 260 35 31 14 13 346 304

YTD

Middle Market 1,949 1,413 218 164 63 57 2,230 1,634

>$1B 25 28 6 6 2 0 33 34

Undisclosed 734 645 96 67 67 48 897 760

Total 2,708 2,086 320 237 132 105 3,160 2,428

LTM

Middle Market 2,750 2,062 287 232 84 75 3,121 2,369

>$1B 32 34 11 8 3 0 46 42

Undisclosed 940 878 128 97 81 67 1,149 1,042

Total 3,722 2,974 426 337 168 142 4,316 3,453 _____________________

Source: Dealogic and Robert W. Baird & Co. Incorporated M&A Market Analysis. YTD and LTM as of September 30. Note: Domestic M&A represents China target/China acquiror; Outbound M&A represents non-China target/China acquiror; Inbound M&A represents China target/non-China acquiror. Figures exclude transactions involving minority stakes, stock repurchases, and spin-offs.

China Deal Value

Domestic Outbound Inbound Total

($ in millions) 2018 2019 2018 2019 2018 2019 2018 2019

September

Middle Market $10,300 $14,823 $4,232 $1,243 $642 $304 $15,173 $16,369

>$1B $7,972 $9,672 $7,655 $5,154 $0 $0 $15,627 $14,825

Total $18,272 $24,494 $11,887 $6,396 $642 $304 $30,800 $31,194

YTD

Middle Market $113,243 $86,876 $24,964 $14,106 $7,759 $6,855 $145,966 $107,836

>$1B $66,789 $57,077 $17,745 $17,999 $3,050 $0 $87,584 $75,076

Total $180,032 $143,952 $42,709 $32,105 $10,809 $6,855 $233,550 $182,912

LTM

Middle Market $155,736 $123,764 $32,195 $20,461 $9,508 $8,685 $197,438 $152,910

>$1B $84,782 $78,631 $26,591 $22,336 $7,050 $0 $118,423 $100,967

Total $240,518 $202,395 $58,785 $42,797 $16,558 $8,685 $315,862 $253,877 _____________________

Source: Dealogic and Robert W. Baird & Co. Incorporated M&A Market Analysis. YTD and LTM as of September 31. Note: Domestic M&A represents China target/China acquiror; Outbound M&A represents non-China target/China acquiror; Inbound M&A represents China target/non-China acquiror. Figures exclude transactions involving minority stakes, stock repurchases, and spin-offs.

India M&A Activity


India M&A Activity

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 9/18 YTD 9/19 YTD

Total 595 887 909 824 710 810 1,100 921 992 966 772 439

# of Deals – >$1B 0 13 4 5 1 9 4 10 6 17 15 6

# of Deals – Middle-Market 276 426 489 433 339 416 594 537 519 588 474 323

# of Deals – Undisclosed 319 448 416 386 370 385 502 374 467 361 283 110

Deal Value $9 $56 $22 $27 $14 $38 $35 $51 $38 $84 $73 $33

595

887 909824

710810

1,100

921992 966

772

439

$0

$15

$30

$45

$60

$75

$90

0

250

500

750

1,000

1,250

De

al Valu

e# o

f De

als



India Number of Deals (Domestic, Outbound, Inbound)

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 9/18 YTD 9/19 YTD

Total 595 887 909 824 710 810 1,100 921 992 966 772 439

Inbound M&A 101 151 234 150 168 170 198 174 150 188 148 116

Outbound M&A 97 204 142 120 86 101 123 121 115 115 93 56

Domestic M&A 397 532 533 554 456 539 779 626 727 663 531 267

595

887 909824

710810

1,100

921992 966

772

439

0

250

500

750

1,000

1,250

# o

f De

als


_____________________ Source: Dealogic and Robert W. Baird & Co. Incorporated M&A Market Analysis. YTD as of September 30. Note: Domestic M&A represents India target/India acquiror; Outbound M&A represents non-India target/India acquiror; Inbound M&A represents India target/non-India acquiror. Figures exclude transactions involving minority stakes, stock repurchases, and spin-offs.

India M&A Deal Statistics


India Number of Deals Domestic Outbound Inbound Total

2018 2019 2018 2019 2018 2019 2018 2019

September

Middle Market 25 8 2 3 10 11 37 22

>$1B 0 0 1 0 1 0 2 0

Undisclosed 25 4 5 0 8 4 38 8

Total 50 12 8 3 19 15 77 30

YTD

Middle Market 349 213 44 26 81 84 474 323

>$1B 7 4 3 0 5 2 15 6

Undisclosed 175 50 46 30 62 30 283 110

Total 531 267 93 56 148 116 772 439

LTM

Middle Market 430 299 51 35 105 103 586 437

>$1B 10 5 3 1 6 2 19 8

Undisclosed 215 95 60 42 72 51 347 188

Total 655 399 114 78 183 156 952 633 _____________________

Source: Dealogic and Robert W. Baird & Co. Incorporated M&A Market Analysis. YTD and LTM as of September 30. Note: Domestic M&A represents India target/India acquiror; Outbound M&A represents non- India target/India acquiror; Inbound M&A represents India target/non-India acquiror. Figures exclude transactions involving minority stakes, stock repurchases, and spin-offs.

India Deal Value

Domestic Outbound Inbound Total

($ in millions) 2018 2019 2018 2019 2018 2019 2018 2019

September

Middle Market $1,100 $672 $44 $3 $121 $222 $1,265 $897

>$1B $0 $0 $1,000 $0 $5,784 $0 $6,784 $0

Total $1,100 $672 $1,044 $3 $5,905 $222 $8,049 $897

YTD

Middle Market $10,686 $9,929 $3,007 $1,165 $3,800 $6,920 $17,494 $18,014

>$1B $21,046 $9,721 $7,780 $0 $26,227 $5,540 $55,053 $15,261

Total $31,732 $19,650 $10,787 $1,165 $30,026 $12,460 $72,546 $33,274

LTM

Middle Market $13,293 $12,960 $3,749 $1,785 $5,744 $8,278 $22,786 $23,024

>$1B $29,627 $14,333 $7,780 $1,775 $27,327 $5,540 $64,734 $21,648

Total $42,920 $27,294 $11,529 $3,560 $33,071 $13,818 $87,520 $44,672 _____________________

Source: Dealogic and Robert W. Baird & Co. Incorporated M&A Market Analysis. YTD and LTM as of September 30. Note: Domestic M&A represents India target/India acquiror; Outbound M&A represents non- India target/India acquiror; Inbound M&A represents India target/non-India acquiror. Figures exclude transactions involving minority stakes, stock repurchases, and spin-offs.

Japan M&A Activity


Japan M&A Activity

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 9/18 YTD 9/19 YTD

Total 2,264 2,106 2,433 2,665 2,329 2,482 2,563 2,658 3,074 3,375 2,470 2,586

# of Deals – >$1B 25 16 22 28 18 15 32 25 20 25 15 20

# of Deals – Middle-Market 1,167 999 1,029 1,114 1,034 1,006 986 1,112 1,296 1,307 982 929


Deal Value $119 $81 $132 $166 $99 $95 $146 $164 $110 $207 $164 $101

2,2642,106

2,433

2,665

2,329 2,482 2,5632,658

3,074

3,375

2,470 2,586

$0

$50

$100

$150

$200

$250

0

500

1,000

1,500

2,000

2,500

3,000

3,500

De

al Valu

e# o

f De

als

# of Deals – Undisclosed # of Deals – Middle-Market # of Deals – >$1B Deal Value


Japan Number of Deals (Domestic/Outbound/Inbound)

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 9/18 YTD 9/19 YTD

Total 2,264 2,106 2,433 2,665 2,329 2,482 2,563 2,658 3,074 3,375 2,470 2,586

Inbound M&A 85 117 91 98 77 80 79 74 81 63 46 41

Outbound M&A 223 272 382 455 360 420 490 501 490 518 377 423

Domestic M&A 1,956 1,717 1,960 2,112 1,892 1,982 1,994 2,083 2,503 2,794 2,047 2,122

2,2642,106

2,4332,665

2,3292,482 2,563 2,658

3,0743,375

2,470 2,586

0

500

1,000

1,500

2,000

2,500

3,000

3,500

# o

f De

als


_____________________ Source: Dealogic and Robert W. Baird & Co. Incorporated M&A Market Analysis. YTD as of September 30. Note: Domestic M&A represents Japan target/Japan acquiror; Outbound M&A represents non-Japan target/Japan acquiror; Inbound M&A represents Japan target/non-Japan acquiror. Figures exclude transactions involving minority stakes, stock repurchases, and spin-offs.



M&A Metrics for European Public Companies as Targets

• In this month’s version of the Global M&A Monthly report, pages 24-30 include commentary and charts summarizing data on Europe-based public companies as M&A targets.

• Future issues will feature metrics on M&A deals including U.S. public companies as targets and acquirors, data on acquisitions made by public companies based in Europe, and statistics on M&A transactions involving companies based in Asia.

• In the first nine months of 2019, the number of announced deals with European public companies as targets was above the year-ago level and tracked ahead of the pace of the past several years. However, dollar volume for this segment was less than half of the YTD 2018 figure due partly to a mix shift toward smaller transactions.

• Within the billion-dollar-plus deal category, the $1 billion to $5 billion transaction segment experienced a significant increase in activity relative to historical levels during the first nine months of the year, when the $10+ billion segment had no transactions.

• In the middle market, the YTD 2019 pace of deals involving European public company targets valued in the $500 million to $1 billion range was at or above past levels, whereas transactions valued below $500 million tracked above historical figures.

• Median purchase price EBITDA multiples over the last 12 months were near the middle of the historical range in the $1+ billion segment but below most past levels for sub-$1 billion deals.

• Across size segments, acquisition premiums in recent periods were generally in the middle portion of long-term ranges.

• Strategic transactions continued to account for the large majority of deals with Europe-based public companies as targets in YTD 2019. Among sponsor-backed buyouts, recent activity included a shift toward deals valued above $1 billion and toward deals valued in the $100 million to $500 million range.

• The use of cash as a payment method in YTD 2019 was moderately below YTD 2018 levels across deal sizes but remained generally above past proportions, at least partly due to access to debt financing at interest rates under historical levels.

• Across deal sizes in the LTM period, the percentage of European public company target offers that were raised was below the typical levels of the past five years.

European Public Companies as M&A Targets

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 9/18 YTD 9/19 YTD

Total 237 214 217 177 145 164 169 164 159 156 112 148

# of Deals – >$1B 25 38 37 26 30 35 38 22 32 41 35 29


Deal Value $124 $158 $140 $149 $170 $185 $361 $218 $223 $311 $274 $133

237214 217

177

145164

169164 159 156

112

148

$0

$100

$200

$300

$400

0

50

100

150

200

250

De

al Valu

e# o

f De

als

# of Deals – Middle-Market # of Deals – >$1B Deal Value($ in billions)

_____________________ Source: Dealogic and Robert W. Baird & Co. Incorporated M&A Market Analysis. YTD as of September 30. Note: Middle-market transactions defined as those with a disclosed transaction value of less than $1 billion. Segments do not sum to total as the total includes deals with undisclosed values.



European Public Companies as M&A Targets in >$1B Deals

2009 2010 2011 2012 2013 2014 2015 2016 2017 20189/18

YTD

9/19

YTD

# of Deals – >$1B 25 38 37 26 30 35 38 22 32 41 35 29

# of Deals – >$10B 2 1 1 2 3 3 3 3 3 4 4 0

# of Deals – $5B – $10B 2 6 5 3 8 4 9 4 11 7 6 10

# of Deals – $1B – $5B 21 31 31 21 19 28 26 15 18 30 25 19

Deal Value $98 $132 $108 $119 $155 $159 $338 $188 $199 $281 $256 $110

25

38 37

2630

3538

22

32

41

3529

$0

$100

$200

$300

$400

0

20

40

60

De

al Valu

e

# o

f D

eal

s# of Deals – $1B – $5B # of Deals – $5B – $10B # of Deals – >$10B Deal Value ($ in billions)

European Public Companies as M&A Targets in Middle-Market Deals

2009 2010 2011 2012 2013 2014 2015 2016 2017 20189/18

YTD

9/19

YTD


# of Deals – $500M – $1B 12 15 20 23 6 20 18 22 11 25 15 15

# of Deals – $100M – $499M 57 54 67 43 35 33 39 49 52 43 28 42

# of Deals – <$100M 131 99 86 80 68 69 71 66 59 44 32 57

Deal Value $26 $26 $32 $30 $16 $26 $24 $30 $23 $30 $18 $23

200

168 173

146

109122 128

137

122 112

75

114

$0

$10

$20

$30

$40

$50

0

50

100

150

200

250

De

al Valu

e

# o

f D

eal

s

# of Deals – <$100M # of Deals – $100M – $499M # of Deals – $500M – $1B Deal Value ($ in billions)

_____________________ Source: Dealogic and Robert W. Baird & Co. Incorporated M&A Market Analysis. YTD as of September 30. Note: Middle-market transactions defined as those with a disclosed transaction value of less than $1 billion.



European Public Companies as M&A Targets: Median Purchase Price EBITDA Multiples in >$1B Deals

6.4x

10.2x

12.1x

9.5x10.1x

11.8x

14.1x

12.6x

11.0x

12.7x11.3x

0.0x

3.0x

6.0x

9.0x

12.0x

15.0x

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 LTM 2019

European Public Companies as M&A Targets: Median Purchase Price EBITDA Multiples in $500M - $1B Deals

10.5x11.9x

9.5x

6.2x

12.0x11.3x 10.8x

13.1x

10.1x

11.9x

7.3x

0.0x

3.0x

6.0x

9.0x

12.0x

15.0x

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 LTM 2019

European Public Companies as M&A Targets: Median Purchase Price EBITDA Multiples in $100M - $500M Deals

7.8x 8.2x

10.9x10.2x 10.1x

13.6x

11.3x 11.6x12.4x

8.3x 8.7x

0.0x

3.0x

6.0x

9.0x

12.0x

15.0x

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 LTM 2019




European Public Companies as M&A Targets: Median Acquisition Premiums in >$1B Deals

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 LTM 2019

1-Week Premium 21.0% 30.7% 23.9% 23.5% 16.0% 18.1% 30.0% 28.8% 16.9% 26.7% 26.2%

4-Week Premium 13.2% 24.1% 30.2% 34.8% 23.4% 23.8% 30.1% 31.8% 18.6% 31.1% 25.5%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%


European Public Companies as M&A Targets: Median Acquisition Premiums in $500M - $1B Deals

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 LTM 2019

1-Week Premium 27.9% 22.8% 22.2% 22.7% 37.1% 21.8% 22.7% 30.4% 34.7% 28.8% 28.4%

4-Week Premium 35.0% 35.6% 27.9% 27.3% 45.4% 20.9% 26.4% 45.5% 38.7% 33.9% 23.4%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%


European Public Companies as M&A Targets: Median Acquisition Premiums in $100M - $500M Deals

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 LTM 2019

1-Week Premium 23.3% 30.0% 31.4% 27.0% 25.9% 32.4% 32.6% 23.9% 19.2% 24.7% 27.1%

4-Week Premium 37.1% 36.8% 40.9% 31.2% 33.6% 31.7% 35.7% 28.7% 20.6% 30.9% 31.3%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%





European Public Companies as M&A Targets in >$1B Deals – Acquiror Composition by Deal Count

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 9/18 YTD 9/19 YTD

Sponsor 8.7% 4.9% 7.5% 11.5% 10.7% 9.4% 14.3% 12.0% 21.9% 28.3% 28.2% 35.7%

Strategic 91.3% 95.1% 92.5% 88.5% 89.3% 90.6% 85.7% 88.0% 78.1% 71.7% 71.8% 64.3%

0.0%

20.0%

40.0%

60.0%

80.0%

100.0%

% o

f D

eal

Co

un

t

Strategic Sponsor

European Public Companies as M&A Targets in $500M - $1B Deals – Acquiror Composition by Deal Count

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 9/18 YTD 9/19 YTD

Sponsor 8.3% 33.3% 20.0% 9.5% 50.0% 12.5% 27.8% 23.8% 25.0% 22.2% 20.0% 20.0%

Strategic 91.7% 66.7% 80.0% 90.5% 50.0% 87.5% 72.2% 76.2% 75.0% 77.8% 80.0% 80.0%

0.0%

20.0%

40.0%

60.0%

80.0%

100.0%

% o

f D

eal

Co

un

t

Strategic Sponsor

European Public Companies as M&A Targets in $100M - $500M Deals – Acquiror Composition by Deal Count

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 9/18 YTD 9/19 YTD

Sponsor 27.8% 19.2% 15.6% 19.5% 19.4% 30.3% 16.7% 24.0% 22.4% 16.7% 22.2% 35.9%

Strategic 72.2% 80.8% 84.4% 80.5% 80.6% 69.7% 83.3% 76.0% 77.6% 83.3% 77.8% 64.1%

0.0%

20.0%

40.0%

60.0%

80.0%

100.0%

% o

f D

eal

Co

un

t

Strategic Sponsor

_____________________ Source: Dealogic and Robert W. Baird & Co. Incorporated M&A Market Analysis. YTD as of September 30.



European Public Companies as M&A Targets in >$1B Deals – Payment Method by Deal Count

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 9/18 YTD 9/19 YTD

Cash/Stock 12.5% 9.8% 10.8% 0.0% 12.5% 16.7% 27.0% 8.7% 17.2% 10.9% 12.8% 3.2%

Stock 20.8% 41.5% 24.3% 16.7% 16.7% 22.2% 18.9% 34.8% 20.7% 13.0% 12.8% 25.8%

Cash 66.7% 48.8% 64.9% 83.3% 70.8% 61.1% 54.1% 56.5% 62.1% 76.1% 74.4% 71.0%

0.0%

20.0%

40.0%

60.0%

80.0%

100.0%

% o

f D

eal

s


European Public Companies as M&A Targets in $500M - $1B Deals – Payment Method by Deal Count

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 9/18 YTD 9/19 YTD

Cash/Stock 0.0% 0.0% 10.0% 15.0% 0.0% 0.0% 5.6% 9.5% 0.0% 3.7% 6.7% 10.0%

Stock 16.7% 23.5% 20.0% 5.0% 16.7% 15.8% 11.1% 14.3% 30.0% 18.5% 13.3% 20.0%

Cash 83.3% 76.5% 70.0% 80.0% 83.3% 84.2% 83.3% 76.2% 70.0% 77.8% 80.0% 70.0%

0.0%

20.0%

40.0%

60.0%

80.0%

100.0%

% o

f D

eal

s


European Public Companies as M&A Targets in $100M - $500M Deals – Payment Method by Deal Count

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 9/18 YTD 9/19 YTD

Cash/Stock 13.0% 7.4% 7.9% 2.4% 12.5% 0.0% 10.0% 9.6% 8.0% 4.7% 7.1% 7.0%

Stock 16.7% 13.0% 7.9% 12.2% 0.0% 18.2% 7.5% 9.6% 6.0% 4.7% 0.0% 4.7%

Cash 70.4% 79.6% 84.1% 85.4% 87.5% 81.8% 82.5% 80.8% 86.0% 90.7% 92.9% 88.4%

0.0%

20.0%

40.0%

60.0%

80.0%

100.0%

% o

f D

eal

s





European Public Companies as M&A Targets – Percentage of Deals That Are Completed

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 LTM 2019

% Completed – >$1B 78.1% 80.0% 82.0% 74.3% 73.8% 69.6% 74.1% 59.1% 72.2% 76.2% 63.2%

% Completed – $500M – $1B 63.2% 70.4% 75.0% 88.9% 54.5% 70.0% 77.8% 75.9% 75.0% 100.0% 92.3%

% Completed – $100M – $500M 85.3% 85.9% 89.5% 81.9% 86.0% 76.0% 88.2% 87.9% 84.7% 81.6% 85.4%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%% Completed – >$1B % Completed – $500M – $1B % Completed – $100M – $500M

European Public Companies as M&A Targets – Percentage of Deals with a Raised Offer

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 LTM 2019

% Raised Offer – >$1B 71.9% 61.2% 54.5% 63.3% 48.7% 48.1% 50.0% 47.4% 43.1% 47.4% 38.8%

% Raised Offer – $500M – $1B 47.4% 48.0% 45.5% 50.0% 20.0% 50.0% 52.0% 80.0% 62.5% 45.2% 50.0%

% Raised Offer – $100M – $499M 58.1% 43.8% 55.0% 53.7% 42.2% 56.3% 55.0% 49.0% 59.4% 50.0% 40.3%

0.0%

25.0%

50.0%

75.0%

100.0%% Raised Offer – >$1B % Raised Offer – $500M – $1B % Raised Offer – $100M – $499M

European Public Companies as M&A Targets – Percentage of Deals with an Unsolicited Offer

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 LTM 2019

% Unsolicited – >$1B 12.0% 20.7% 17.1% 20.0% 19.0% 22.5% 16.7% 23.3% 24.7% 27.6% 10.3%

% Unsolicited – $500M – $1B 16.1% 23.5% 9.7% 10.0% 26.7% 9.1% 10.0% 15.6% 16.7% 5.6% 11.4%

% Unsolicited – $100M – $500M 8.0% 10.6% 10.2% 12.8% 9.5% 8.1% 5.3% 10.3% 11.4% 9.2% 5.6%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%% Unsolicited – >$1B % Unsolicited – $500M – $1B % Unsolicited – $100M – $500M


Transaction Spotlight


Target Company

Headquarters

Fusion Risk Management, Inc.

Rolling Meadows, Illinois

Acquiring Company

Headquarters

Vista Equity Partners

Austin, Texas

Industry Sector Technology & Services

Transaction Overview Fusion Risk Management, Inc. (“Fusion”), announced a strategic investment from and partnership with Vista Equity Partners (“Vista”). The partnership includes growth capital to help Fusion further scale its platform and accelerate product roadmap initiatives to cement its leadership in the business continuity and risk management space. Existing investors Catalyst Investors and Level Equity will retain an ownership stake in Fusion.

Target Company Description

Fusion is a leading industry provider of cloud-based software solutions for business continuity, integrated risk management, IT disaster recovery, and crisis and incident management. Fusion’s products and services take organizations beyond legacy solutions and empower them to make data-driven decisions with a comprehensive and flexible approach through one system. Fusion and its team of experts are dedicated to helping companies achieve greater organizational resilience and mitigate risks within their businesses. Fusion is headquartered in Rolling Meadows, Illinois and has offices in Chicago and London.

Acquiring Company Description

Vista is a United States-based investment firm with more than $50 billion in cumulative capital commitments. Vista exclusively invests in enterprise software, data, and technology-enabled organizations led by world-class management teams. As a value-added investor with a long-term perspective, Vista contributes professional expertise and multi-level support towards companies to realize their full potential. Vista’s investment approach is anchored by a sizable long-term capital base, experience in structuring technology-oriented transactions, and proven management techniques that yield flexibility and opportunity. Vista is headquartered in Austin, Texas and has offices in Chicago, New York, San Francisco, and Oakland.

Advisory Role Baird served as exclusive financial advisor to Fusion Risk Management, Inc. on this transaction. For additional information about this transaction, please contact Baird’s Investment Banking team:

Kristy Obuchowski Wallen Chase Sanders +1.312.609.7023 +1.703.394.1807 [email protected] [email protected]

John Moriarty Sarah Gaul +1.303.270.6325 +1.312.609.3333 [email protected] [email protected]

Evan Mueller John Sun +1.503.273.4956 +44.20.7667.8224 [email protected] [email protected]



Date Announced Baird Client Client Description Transaction Description

Deal Value ($mil) Industry

9/27/19 Cole-Parmer Instrument Company

Fluid handling, test & measurement, environmental and biosciences instrumentation, and associated consumables

Recapitalization with GTCR *** Industrial

9/26/19 Montagu Private Equity Private equity firm Acquisition of Jane’s $470* Technology and Services

9/23/19 Rapala VMC Corp. Fishing tackle producer Equity investment in DCQ International Corp.

*** Consumer

9/12/19 Morbark, LLC Equipment and aftermarket parts used for clearing, grinding / chipping and converting trees, wood, and related organic waste

Sale to Alamo Group Inc. $352* Industrial

9/6/19 Fusion Risk Management, Inc.

Software solutions for business continuity, integrated risk management, IT disaster recovery, and crisis and incident management

Investment from Vista Equity Partners

** Technology and Services

9/4/19 Health & Safety Institute Services to create safer workplaces and reduce financial and reputational risk

Sale to Waud Capital Partners ** Technology and Services

8/26/19 Ontario Systems, LLC Software designed to improve operations and revenue recovery for clients in the healthcare industry

Sale to New Mountain Capital Partners

** Healthcare

8/23/19 Cartonplast Group GmbH Rental service provider of reusable plastic layer pads

Sale to Deutsche Beteiligungs AG

*** Technology and Services

8/15/19 FMP Global Holdings Limited

Payroll services and software Sale to IRISH Software Group Ltd.


8/12/19 Forte Research Systems, Inc.

Software and services for clinical trial management, clinical data management, and research administration

Sale to Advarra ** Healthcare

8/2/19 Collagen Matrix, Inc. Collagen-based medical products Sale to Linden Capital Partners ** Healthcare

8/1/19 Knight Point Systems, LLC Services provider focused on modernizing IT, protecting critical networks, and driving digital transformation

Sale to Perspecta Inc. $250 Technology and Services

8/1/19 Stonewall Kitchen, LLC Specialty food platform Sale to Audax Private Equity ** Consumer

7/25/19 Vertex North America (Vertex Group Limited)

Customer information system (“CIS”) software and integration services

Sale to DFW Capital Partners ** Technology and Services

7/24/19 SkinCure Oncology, LLC Image-guided superficial radiation therapy

Investment from Seacoast Capital

** Healthcare

7/24/19 Aurora Capital Partners Private equity firm Acquisition of Cold Chain Technologies

** Industrial

7/22/19 BBRC Holding B.V. (The Rent Company)

Educational service provider for secondary education

Sale to Waterland Private Equity Investments B.V.


7/22/19 Quotient Sciences Pharmaceutical development, clinical and commercial manufacturing

Sale to Permira ** Healthcare

7/19/19 Arcline Investment Management LP

Private equity firm Acquisition of Reciprocating Compression division of Baker Hughes

** Energy

7/19/19 CATS Colleges Division [Cambridge Education Group Limited]

International school network focused primarily on international students with a globally integrated platform of campuses

Sale to Bright Scholar Education Group

$187 Technology and Services

7/12/19 Webhelp Group Business process outsourcer Sale to Groupe Bruxelles Lambert

*** Technology and Services

7/10/19 Vista Outdoor Inc. Hunting rifles and shotguns Sale of Savage Arms and Stevens Firearms to an undisclosed financial buyer

$170 Consumer

7/9/19 Infiana Group GmbH Engineered polyolefin films Sale to Pamplona Capital Partners V

** Industrial

_____________________ Source: Robert W. Baird & Co. Incorporated M&A Market Analysis. * Announced and pending transactions with disclosed value; **Closed transactions with undisclosed value; *** Announced and pending transactions with undisclosed value.





7/9/19 Actuant Corporation Motion, actuation, and control solutions

Sale of Engineered Components & Systems segment to One Rock Capital Partners, LLC

$215* Industrial

6/28/19 Appcast, Inc. Platform for the global recruitment Sale to StepStone GmbH ** Technology and Services

6/26/19 Kaman Corporation Distributor of a diverse offering of industrial products

Sale of Distribution Group to One Rock Capital Partners

$700 Industrial

6/20/19 Vera Bradley Women’s handbags, luggage and travel items, fashion and home accessories, and unique gifts

Acquisition of Creative Genius, Inc.

$98 Consumer

6/20/19 Essentra plc Global provider of essential components and solutions

Sale of Duraco Specialty Tapes to OpenGate Capital Management

** Industrial

6/18/19 Allied Power Group, LLC Repair and maintenance solutions for natural gas fired turbines

Sale to AEA Investors ** Technology and Services

6/7/19 Mack Weldon Inc. Premium menswear Equity investment from North Castle Partners

** Consumer

6/7/19 Premiere Global Services, Inc.

Collaboration software and services Sale of Modality Systems, Inc. to GCI Managed Services Group


6/7/19 Lew’s Holdings Corporation

Fishing reels, rods, and accessories Sale to BDT Capital Partners ** Consumer

5/31/19 Digitech Computer LLC Provider of technology driven revenue cycle management services

Investment from Pamlico Capital

** Healthcare

5/1/19 Colibri Group Online learning solutions for licensing, continuing education, and professional development

Sale to Gridiron Capital ** Technology and Services

4/30/19 Gardner Denver Holdings, Inc.

Flow control and compression equipment and associated aftermarket parts

Merger with Industrial segment of Ingersoll-Rand plc

$7,700* Industrial

4/29/19 Relo Group, Inc. Wide range of outsourcing solutions Acquisition of Brookfield RPS Limited


4/24/19 People 2.0, Inc. Technology-enabled workforce deployment solutions

Investment from CIP Capital ** Technology and Services

4/24/19 Flow Control Enterprises, Inc. (ONICON)

Flow meters and energy measurement systems

Sale to TASI Holdings, Inc. ** Industrial

4/12/19 Ridgemont Equity Partners

Middle market and buyout growth equity investor

Acquisition of majority stake in Munch’s Supply

** Industrial

4/10/19 Phoenix Energy Technologies

Energy and facility management SaaS solutions

Growth equity investment from Spring Lake Equity Partners


4/8/19 Ohio Transmission Corporation

Industrial automation, pumps, motion control, finishing and compressed air products, as critical services

Sale to Genstar Capital Partners

** Industrial

4/8/19 Octo Consulting Group, Inc.

Technology solutions, empowering federal agencies to modernize faster

Strategic investment from Arlington Capital Partners


3/26/19 Weiman Products, LLC Premium branded specialty cleaning products

Sale to The Carlyle Group and TA Associates

** Consumer

3/25/19 Schneider Electric S.E. Leader in the digital transformation of energy management and automation

Sale of Pelco, Inc. to Transom Capital Group, LLC

** Industrial

3/25/19 3i Group plc International investment manager focused on mid-market private equity and infrastructure

Acquisition of Magnitude Software Inc.


3/18/19 Walterscheid Powertrain Group

Connected and smart powertrain solutions and complete in-service support

Sale to One Equity Partners ** Industrial

3/13/19 TAVHealth Improves health outcomes and quality of care by solving Social Determinants of Health

Sale to Signify Health ** Healthcare

3/12/19 Paragon Films High-performance transit packaging films

Sale to Wellspring Capital Management

** Industrial






3/8/19 Resolute Industrial Holdings, LLC

Specialty HVAC equipment rental solutions, compressor remanufacturing, and refrigerant storage services

Sale to AE Industrial Partners, LP


2/28/19 Standex International Corporation

Commercial combination and convection ovens, fryers, ranges, food merchandisers, and warmers

Sale of Cooking Solutions Group business to Middleby Corporation

$105 Industrial

2/21/19 Certona Corporation Real-time, omnichannel SaaS personalization solutions

Sale to Kibo Software, Inc. ** Technology and Services

2/19/19 Lobster International S.A. End-to-end online customer training solutions

Sale to Ecolab Inc. ** Technology and Services

2/15/19 frostkrone Tiefkühlkost GmbH

Specialty potato products Acquisition of Rite Stuff Foods, Inc.

** Consumer

2/12/19 Eddy Foods, Inc. Smoked, cooked and fresh pork, beef, and poultry products

Sale to Equity III LP ** Consumer

2/12/19 Celli S.p.A. Cold beverage dispensing solutions Sale to Ardian ** Industrial

2/8/19 Crafts Group Limited (The DMC Group)

Consumer needlecraft brands Sale to Lion Capital LLP ** Consumer

1/30/19 Flow Control Group Specialty flow control and fluid handling distribution platform

Sale to Bertram Capital ** Industrial

1/30/19 Temptime Corporation Development and manufacturing of time-temperature indicators

Sale to Zebra Technologies Corporation

** Healthcare

1/25/19 Haverfield Aviation, Inc. Aerial transmission inspection, maintenance, repair, upgrade, replacement, and construction support services

Sale to Quanta Services, Inc. ** Technology and Services

1/24/19 Vistex, Inc. Enterprise software that enables organizations to better deploy their products and services

Equity investment by Accel-KKR Company, LLC


1/14/19 CareerArc Group LLC HR technology company helping business leaders recruit and transition the modern workforce

Equity investment by PeakEquity Partners


1/8/19 OGS Holdings, Inc. Solutions provider with advanced technologies in geospatial intelligence (GEOINT), big data analytics, and insider and counterintelligence threats

Sale to Parsons Corporation ** Technology and Services

1/8/19 Quoizel, Inc. Décor lighting family business Sale to NBG Home ** Consumer

1/8/19 NextGen Global Resources

Recruiting and consulting services Sale to Kelly Services, Inc. ** Technology and Services

12/31/18 Lucky Strike Entertainment, L.L.C.

Interactive venues featuring premium bowling lanes, handcrafted food and spirits, occasional live music performances, and a broad assortment of engaging, high-tech games

Sale to Wellspring Capital Management, L.L.C.

** Consumer

12/31/18 Turning Technologies, LLC Educational technology Sale to Centre Lane Partners, LLC


12/31/18 Northcentral University Regionally accredited, online graduate-focused university

Sale to National University System


12/21/18 Gryphon Investors Inc. Middle-market private equity firm Acquisition of majority stake in RegEd, Inc.


12/20/18 S.i. Systems Ltd. Web-based match-making solution to provide precision contract and permanent placements for IT professionals

Sale of majority stake to Quad-C Management


12/19/18 Validant Specialist consulting services Sale to GHO Capital ** Healthcare

12/17/18 Artisan Design Group Flooring products and services Sale to The Sterling Group ** Industrial

12/14/18 Onstream Pipeline Inspection Services Inc.

Technology-enabled inline inspection and data analytics services

Sale to MISTRAS Group Inc. $143 Industrial

12/13/18 Pet Supplies Plus Pet specialty store chain Sale to Sentinel Capital Partners

** Consumer


DISCLAIMERS

This is not a complete analysis of every material fact regarding any company, industry or security. The opinions expressed here reflect our judgment at this date and are subject to change. The information has been obtained from sources we consider to be reliable, but we cannot guarantee the accuracy.

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Global M&A Monthly - Foley & Lardner...2019/11/01 · 3.0% in September, bringing the group’s mean YTD 2019 gain to 11.2%. Nevertheless, a firmer economic outlook may be required