2017 OUTSELL SIGNATURE EVENT Annual M&A Outlook October 4, - PowerPoint PPT Presentation

2017 OUTSELL SIGNATURE EVENT Annual M&A Outlook October 4, 2017

JEGI: A DIFFERENTIATED INVESTMENT BANKING MODEL 30 YEARS OF M&A SECTOR LEADING ADVISORY LEADERSHIP BANKER TENURE Second longest-tenured boutique investment bank on Wall Street Senior bankers average 14 years at JEGI, completing 600+ M&A transactions 2016/17: $3.4 BILLION VALUE ACROSS 32 TRANSACTIONS UNIQUE PARTNERSHIP SELECTIVE ENGAGEMENT STRUCTURE PROCESS Every member of JEGI’s Leadership Team has a JEGI only engages when we can outperform our competition vested interest in the performance of the firm and and meet or exceed client expectations – we turn down or each transaction’s successful closing defer consideration on numerous potential assignments PROOF IN THE NUMBERS DEEP & TALENTED EXECUTION TEAM Engagements where Engagements Average time to close: valuation exceeded closed: expectations: SIX Given our unique, highly selective engagement model, 80% of the firm’s 90% 85% MONTHS time is spent on execution, not pitching 2

ELEPHANT IN THE ROOM - WHAT COMPANY IS THIS?  Founded in 1994  Mentioned in 10% of all Q2 earnings calls by CEOs of other companies  2016 revenues of $136 billion with an EBITDA of only 8%  2017 revenue forecast is $173 billion, with the likelihood that the EBITDA margin may be lower than 2016  Company invested $5.5 billion in Q2 alone in R&D  Company trades at a P/E ratio of 243x and an EBITDA of 39x WHAT COMPANY IS THIS? 3

ELEPHANT IN THE ROOM = AMAZON Source: Pitchbook

KEY TRENDS IN M&A – Q3 2017 M&A activity remains strong across the information industry • January - September 2017 saw nearly 1,500 announced transactions totaling almost $160 billion in value • Pace of 2017 M&A is on track to surpass strong 2014 and 2015 levels, but may not match last year • Jan – Sept 2017 saw 142 fewer deals than Jan – Sept 2016, but Q3 2017 saw 6 more deals than Q3 2016 • 5

KEY TRENDS IN M&A – Q3 2017 Market conditions are favorable for  robust M&A to continue Highest levels of consumer confidence  since 2001 US unemployment rate of 4.4%; average  hourly earnings decreased 0.1% from July to August Liquidity remains robust, with both financial and strategic buyers flush with cash  Debt markets remain strong and active across both senior and mezzanine capital  Repatriation of capital could cause spike in M&A activity  6

PRIVATE EQUITY DRY POWDER Source: Bain Capital Strategics also have unprecedented levels of cash on hand – S&P Global estimates $1.8 trillion  of total cash on the balance sheets of nonfinancial corporates Interestingly, much of this capital is being held overseas, given the current tax laws; Trump  administration discussing lowering taxes for repatriation of this capital; could significantly impact M&A and infrastructure investment 7

TOP 20 TRANSACTIONS, H1 2017 TOP 20 TRANSACTIONS, H1 2017 Buyer Seller Description Announced Date* Value ($B) 1 Sinclair Broadcast Group Tribune Media Company Media and entertainment company May 2017* $7.3 2 Pamplona Capital Management PAREXEL International Contract drug research organization June 2017* $5.3 3 INC Research Holdings inVentiv Health Pharmaceutical consulting services May 2017* $4.6 4 Cisco Systems AppDynamics IT infrastructure monitoring and analytics January 2017 $4.0 5 Gartner CEB Practice insight and technology company January 2017 $3.7 Advertising, digital and communications 6 Vivendi Havas May 2017* $3.4 services Bureau van Dijk Electronic 7 Moody's Publishes electronic business information May 2017* $3.4 Publishing 8 PetSmart (Argos Holding) Chewy E-commerce portal for the pet industry April 2017 $3.4 Novitex Enterprise Solutions / 9 Quinpario Acqusition Corp. Outsourced IT services February 2017* $2.8 SourceHOV 10 Hellman & Friedman Fairfax Media Digitally progressive media company May 2017* $2.5 11 Apollo Global Management West Corporation Customer care and telecom services May 2017* $2.0 12 eBay; Microsoft; Tencent Holdings Flipkart Online Services Online shopping website April 2017 $1.4 13 Oracle Moat SaaS analytics solutions April 2017* $0.9 14 First Data CardConnect Payment processing solutions May 2017* $0.8 15 Capitol Acquisition Corp. III Cision (GTCR) PR software March 2017* $0.8 16 Harland Clarke (MacAndrews & April 2017 $0.7 RetailMeNot Savings destination for online and instore 17 Eurazeo; Goldman Sachs Dominion Web Solutions Digital marketing solutions May 2017 $0.7 18 FleetCor Technologies Cambridge Global Payments Online payment solutions May 2017* $0.7 19 Amazon Souq.com E-commerce platform March 2017 $0.7 20 Apollo Global Management Mood Media Creative marketing solutions April 2017* $0.6 * Some deals are still pending 8 Sources: JEGI Transaction Database and 451 Research LLC

TOP 20 TRANSACTIONS, H1 2017 – CASE STUDY acquires DEAL METRICS $3.7 billion, 3.9x revenue, 18.4x EBITDA TARGET RATIONALE CEB provides insight development The acquisition of CEB allows and technology management Gartner to expand its business services to corporate clients; also portfolio in the information offers management advisory technology and management services to customers in the insights sector in the U.S. market. financial, legal, marketing and government sectors. 9

TOP 20 TRANSACTIONS, H1 2017 – CASE STUDY acquires DEAL METRICS $3.4 billion, 11.3x revenue, 22.0x EBITDA TARGET RATIONALE Bureau van Dijk publishes private The acquisition of Bureau van Dijk company information and corporate enables Moody’s to gain a stronger ownership structures through Orbis position as a leader in financial risk database, providing information on 220 data and analytical insight. million private companies globally. 10

BENEFITS OF INORGANIC GROWTH Acquisitions can: Turbo-Charge Revenue Growth …in a marketplace with slow organic revenue growth Boost Talent …efficiently Expand Market Map …helping with often difficult market penetration Cultivate Innovation …challenging for large companies to do effectively Offer Immediate Scale …with concurrent benefits 11

RECENT HIGH-PROFILE TRANSACTIONS THAT CREATED SUBSTANTIAL VALUE FOR THE ACQUIRER acquires Transaction Closed: July 24, 2014 Price: $2.5 billion Revenue: 12.6x EBITDA: 41.6x Share price at close : Share price as of September 29 : $1,236.73 $1,830.82 RATE OF RETURN: 15.1% Story: “OpenTable is a premium online brand with significant global potential, and we couldn't be more excited to welcome the team to The Priceline Group family. We look forward to supporting OpenTable's growth, through both enriched restaurant partnerships and innovative experiences for our collective customers.” Darren Huston, President & CEO of Priceline Group 12

RECENT HIGH-PROFILE TRANSACTIONS THAT CREATED SUBSTANTIAL VALUE FOR THE ACQUIRER acquires Transaction Closed: March 26, 2013 Price: $4.8 billion Revenue: 2.6x EBITDA: 14.8x Share price at close : Share price as of September 29 : $2,900 $4,940 RATE OF RETURN: 15.6% Story: “The addition of Aegis represents a massive step toward realizing our vision of a client-centric, collaborative global network of the best-in-class brand, digital and media agencies. We look forward to the value this will add to our clients’ businesses, wherever they may be, and look forward to growing with them as their partner of choice.” Tadashi Ishii, President & CEO, Dentsu 13

RECENT HIGH-PROFILE TRANSACTIONS THAT CREATED SUBSTANTIAL VALUE FOR THE ACQUIRER acquires becomes Transaction Closed: September 1, 2015 Price: $2.2 billion Revenue: 9.9x EBITDA: 43.6x Share price at close : Share price as of September 29 : $93.74 $156.26 RATE OF RETURN: 32.1% Story: “We are enthusiastic about SNL because it is a fast growing, highly complementary subscription based business that will enable use to accelerate our strategy to be the leading provider of transparent and independent benchmarks, analytics, data and research across the global capital, commodity and corporate markets.” Douglas Peterson, President & CEO, McGraw Hill Financial 14

THE FUTURE LOOKS BRIGHT ADMINISTRATION Proposed lower corporate tax rates + TAX Repatriation of capital = greater investment/M&A + Reflect a business-friendly environment APPOINTMENTS + Small Business Optimism Index near 10-year high + SMALL BUSINESS Small Business Owners: 18% plan to increase + CONFIDENCE employment; 27% feel now a good time to expand MARKET CONDITIONS Dow 20,000+ = CEO confidence + STOCK MARKET Strong strategic valuations + PERFORMANCE Lots of cash on balance sheets + Low interest rate environment FAVORABLE + Projected future rate increases CREDIT MARKET - Slow growth economy encourages inorganic growth + PRESSURE TO Acquisitions add talent, scale and synergies + IMPROVE PROFITS Divestiture of slow-growth assets = more M&A + 15 Source, small business data: National Federation of Small Businesses