INDUSTRY UPDATE WINTER 2016 - Harris Williams€¦ · from Bridgepoint Advisers Limited for an...

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INDUSTRIAL TECHNOLOGY

INDUSTRY UPDATE │ WINTER 2016

PAGE |

www.harriswilliams.com

SUMMARY

1

Hillenbrand, Inc. (NYSE:HI) has announced an agreement to acquire Red ValveCompany, Inc. (“Red Valve”) for $131.9 million in cash. Red Valve is a leadingprovider of highly-engineered valves designed to operate in the harshestmunicipal and industrial wastewater environments.Source

AEA Investors LP has agreed to acquire John Guest Limited (“John Guest”) for areported £420 million. John Guest provides plastic push-fit fittings, tubing, and otherfluid control products used in applications such as plumbing, pneumatics,compressed air systems, water purification, automotive, and telecommunications.Source

KKR & Co. L.P. (NYSE:KKR) has announced they will acquire LGC Limited (“LGC”)from Bridgepoint Advisers Limited for an undisclosed amount. LGC, a life sciencesmeasurement and testing company, provides a range of measurement productsand services which include reference materials and proficiency testing, genomicsreagents, instrumentation and services, and expert sample analysis andinterpretation.Source

Bridgepoint Advisers Limited has agreed to acquire Element Materials TechnologyHolding Netherlands B.V. (“Element”) from 3i Group plc (LSE:III). Element operatesa network of laboratories that provide failure analysis and consulting, materialstesting, and product qualification testing services.Source

PTC Inc. (Nasdaq: PTC) has entered into an agreement to acquire Kepware, Inc.(“Kepware”) for $118.0 million. Kepware develops communication andinteroperability software solutions for the automation industry. The acquisition willenhance PTC’s portfolio of Internet of Things (IoT) technology, and accelerate thecompany’s entry into the factory setting and Industrial IoT.Source



PUBLIC MARKETS | KEY TRADING STATISTICS

CONTENTS

RECENT M&A ACTIVITY

WHAT WE’RE READING

PUBLIC MARKETS

M&A MARKET TRENDS

ECONOMIC UPDATE

PUBLIC COMPARABLES

CONTACTS

John ArendaleManaging [email protected]+1 (804) 648-0072

Jeffery PerkinsManaging [email protected]+49 (69) 3650638 13

Jay [email protected]+1 (617) 654-2114

Lars [email protected]+49 (69) 3650638 12

Mike WilliamsVice [email protected]+1 (804) 932-1366

Alex MurrillVice President [email protected]+44 (20) 7518 8918

Nicholas [email protected]+1 (617) 654-2134

M&A | SELECT RECENT ACTIVITY

Stock Price % Change TEV / EBITDA TEV / LTM EBITDA LTM Margins

Sub-Sector Median 1 Month 12 Month LTM 2016E Jan-15 Jul-15 Gross EBITDA

Test and Measurement

Instrumentation (4.8%) (6.3%) 11.4x 10.8x 12.2x 13.0x 37.9% 16.3%

Sensors (5.1%) (9.6%) 11.2x 10.5x 12.7x 11.7x 39.8% 20.3%

Technology and Software (4.7%) 5.5% 9.7x 9.2x 14.1x 13.7x 46.1% 16.8%

Life Sciences and Laboratory (3.4%) 8.9% 16.6x 15.1x 14.9x 15.8x 49.9% 22.1%

Flow Control

Pumps and Filtration (10.7%) (15.2%) 10.6x 10.4x 11.4x 11.9x 34.6% 16.2%

Valves and Fittings (6.5%) (19.9%) 8.8x 8.9x 10.0x 10.5x 32.8% 14.4%

Process / Motion Control

Motion and Drives (8.4%) (11.0%) 10.3x 8.8x 11.0x 11.9x 35.7% 15.2%

Intelligent Automation (9.3%) (13.9%) 9.0x 9.4x 10.0x 10.9x 37.0% 13.3%

Actuators and Positioners (10.5%) (22.0%) 8.1x 8.2x 9.9x 9.7x 30.7% 15.1%

Condition Monitoring (5.2%) (4.9%) 10.8x 9.8x 10.6x 13.3x 47.4% 20.0%

Test Services

Testing, Inspection, and Certification (3.7%) (9.4%) 10.5x 8.8x 11.5x 11.4x 34.0% 17.9%

Engineering and Consulting (10.6%) (35.8%) 8.3x 7.8x 10.8x 10.6x 18.4% 7.1%

http://www.harriswilliams.com/

http://ir.hillenbrand.com/investor-relations/news/news-details/2015/Hillenbrand-to-Acquire-Red-Valve/default.aspx

http://www.thesundaytimes.co.uk/sto/business/Industry/article1654764.ece?CMP=OTH-gnws-standard-2016_01_09

http://www.lgcgroup.com/about-us/media-room/latest-news/2015/kkr-partners-with-lgc-to-facilitate-future-expansi/#.VowPS0orLRY

http://www.bridgepoint.eu/en/news/press-releases/2015/bridgepoint-acquires-element-materials-technology/

http://www.ptc.com/news/2015/ptc-to-acquire-kepware

mailto:[email protected]







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WHAT WE’RE READING

2

GLOBAL CONTROL VALVES MARKET EXPECTED TO REACH $12.1 BILLION BY 2021

AS CHINA’S WORKFORCE DWINDLES, THE WORLD SCRAMBLES FOR ALTERNATIVES

THE FUTURE OF SMART FARMS: MORE YIELD WITH LESS RESOURCES

According to recent industry reports, the global control valves market is expected to grow from $7.7 billion in 2015 to$12.1 billion in 2021, representing a compounded annual growth rate of 7.0%. Comprised of pneumatic, hydraulic andelectric technology platforms, control valves are widely used to manipulate the flow of fluids within chemicals, mining,oil and gas, petrochemicals and power generation applications, amongst many others. Recently, market growth hasbeen fueled by the increased investment in innovative fluid handling technology across the oil and gas infrastructureto bring about increased productivity and safety. In addition, investments in the shale gas sector have also bolsteredrecent growth in the market. Going forward, the control valve market is expected to benefit from emerging marketinvestments used to update industrial infrastructure and facilities.

Wall Street Journal

Over the coming decades, a labor shortage will force many Western brands to shift their operations in China or packup and leave. The changes will mark a new chapter in the history of globalization, where automation is king, nearnessto market is crucial, and the lives of workers and consumers around the world are once again scrambled. Fearing thatChina will see an exodus of manufacturers, Chinese Communist Party Chief Xi Jinping last year called for “an industrialrobot revolution” in China, which has become the world’s largest market for automation.

Read the full article here.

Automation World

Farmers are paying closer attention to technology as a way to enable precision farming, which is the ability toproduce more yield with fewer resources. To that end, they are using flow measurement and sensors to monitorirrigation systems or soil characteristics; however, effectively managing and mining this data can prove to be acumbersome task for farmers. As a result, many of them are leaning on vendors to help collect and manage thedata. Companies like McCrometer, which makes flowmeters and wireless telemetry products for agricultureapplications, not only provide parts of the communications infrastructure, but also the backend database. Sensors inthe fields and remote terminal units (RTUs) sample, select, store and then transmit data back to McCrometer’scentralized database, thereby managing the data. Farmers can then securely log in to access their information froma mobile device or desktop to see historical data trends or current crop patterns.




THE OIL CRISIS AND ITS IMPACT ON THE CENTRIFUGAL PUMP MARKET

Automation.com

The global market for centrifugal pumps is expected to grow at a compounded annual growth rate of 3.8% from 2014to 2019, from $33.2 billion in 2014 to over $40 billion in 2019. With the performance of the centrifugal pump marketclosely tied to heavy industrial and energy market conditions, it is expected that declining oil prices will temper thepotential global market growth rates and potentially lead to some period contractions if oil prices reduce further. Inaddition, as China accounts for more than 20% of global centrifugal pump demand, economic difficulties in theregion have slowed and are expected to continue to slow pump sales for the global market. Despite these potentialheadwinds, centrifugal pump demand will continue to grow and be supported by the general and municipalindustries. Municipal water and wastewater as well as commercial buildings are expected to remain the two largestindustrial centrifugal pump sectors in 2019, accounting for 25.7% ($10.3 billion) and 22.5% ($9.0 billion), respectively.

NEW REGULATIONS SPARK $3.1 BILLION INVESTMENT IN U.S. POWER SECTOR

Automation.com

Mounting environmental regulations and fundamental shifts in the U.S. thermal power landscape are driving newinvestments in water and wastewater treatment. On the heels of the U.S. Environmental Protection Agency’s newlyreleased effluent guidelines, Bluefield Research has boosted its forecasts to $3.1 billion for the power sector’s water-related capital expenditures from 2015 to 2025. As the largest user of water and contributor to surface water pollution,the U.S. thermal power plants, coal-fired facilities in particular, are facing significant regulatory scrutiny.


http://www.wsj.com/articles/as-chinas-workforce-dwindles-the-world-scrambles-for-alternatives-1448293942

http://www.automationworld.com/industrial-internet-things/seeding-future-smart-farms

http://www.automation.com/portals/industries/water-wastewater/new-regulations-spark-31-billion-investment-in-us-power-sector

PAGE |

M&A TRANSACTIONS

3

RECENT M&A TRANSACTIONS



Date Target Vertical Business Description Acquirer

Announced General Ecology, Inc. Flow Control Offers point-of-use water purification systems for commercial

aerospace, residential, restaurant, portable, and other end markets.

JLL Partners

Announced John Guest Limited Flow Control Prov ides plastic push-fit fittings, tubing, and other fluid control products

for plumbing, heating, pure water, air and pneumatics, and automotive

applications.

AEA Investors LP

1/7/2016 Primo Instrument Test and Measurement Prov ides test and measurement equipment to the aerospace and

automotive sectors.

Trescal SA

1/6/2016 NCC Certificações do

Brasil Ltda.

Test Serv ices Offers product certification and quality management system

certification serv ices for oil and gas, automotive, telecommunications,

and other applications.

Bureau Veritas SA

1/4/2016 Accutest Laboratories,

Inc.

Test Serv ices Prov ides environmental analytical test serv ices to industrial,

engineering, consulting, and government clients

SGS SA

12/24/2015 CANBERRA Industries, Inc. Test and Measurement Prov ides radiation monitoring systems and analysis instrumentation

serv ing industries engaged in nuclear power, personal dosimeter and

decommissioning, and safeguards.

Mirion Technologies, Inc.

12/23/2015 Interplex Holdings Ltd. Process and Motion

Control

Offers mechanical and electro-mechanical component solutions to the

automotive, electronics, life sciences, and industrial markets.

Baring Private Equity Asia

12/23/2015 EMC Integrity, Inc. Test Serv ices Prov ides compliance emissions and immunity testing serv ices to the

commercial, military, and aerospace industries.

National Technical Systems

Inc.

12/22/2015 Kepware Technologies,

Inc.

Test and Measurement Offers communication and interoperability software solutions for the

intelligent automation market.

PTC Inc.

12/21/2015 Mitsumi Electric Co., Ltd. Process and Motion

Control

Prov ides electronic components and electrical machinery for industrial,

medical, electronics, and other applications.

Minebea Co. Ltd.

12/21/2015 Aero Stanrew Limited Process and Motion

Control

Offers electromagnetic components and electronic systems for harsh

environments and safety critical applications for aerospace, defense,

and oil and gas markets.

TT Electronics plc

12/19/2015 Controls s.r.l. Test and Measurement Offers testing equipment to the construction industry. Wise SGR S.p.A.

12/18/2015 Red Valve Company, Inc. Flow Control Prov ides pinch valves to the industrial, power, mining, and chemical

industries.

Hillenbrand, Inc.

12/18/2015 FIT-I talia S.r.l. Test Serv ices Prov ides quality management and food safety verification serv ices for

retail, restoration, and agribusiness markets.

Intertek Group plc

12/17/2015 Grillo Filter Sales, Inc. Flow Control Offers filtration products to the HVAC industry. American Air Filter

Company, Inc.

12/17/2015 Element Materials

Technology Holding

Netherlands B.V.

Test Serv ices Prov ides failure analysis and consulting, materials testing, and product

qualification testing serv ices.

Bridgepoint Advisers

Limited

12/16/2015 EMS Laboratories, Inc. Test Serv ices Offers test serv ices for applications such as industrial hygiene, asbestos

and lead, environmental and hazardous waste, particle, trace metal

analysis, and others.

EMSL Analytical, Inc.

12/15/2015 Stress-Tek, Inc. Test and Measurement Prov ides force measurement sensors and systems for aerospace,

medical, oil and gas exploration, and trucking applications.

Vishay Precision Group,

Inc.

12/15/2015 PIAB AB Process and Motion

Control

Prov ides vacuum solutions for automated material handling and factory

automation processes.

EQT Partners AB

12/15/2015 Whitehouse Laboratories,

Inc.

Test Serv ices Offers analytical laboratory testing serv ices for materials, finished

products, containers, and packaging systems.

Albany Molecular

Research Inc.

12/14/2015 OJSC ABS ZEIM

Automation

Process and Motion

Control

Prov ides automated process control and industrial automation systems

used in heat and nuclear power utilities, metal, oil, chemical, and other

applications.

ABS Electro

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M&A TRANSACTIONS

4



RECENT M&A TRANSACTIONS (CONTINUED)

Date Target Vertical Business Description Acquirer

12/14/2015 SPX Cooling Technologies,

Inc., Dry Cooling Business

Process and Motion

Control

Prov ides cooling towers and air-cooled condensers to the power

generation, industrial, refrigeration, and HVAC markets.

Paharpur Cooling Towers

Limited

12/11/2015 LAP GmbH Laser

Applikationen

Test and Measurement Offers line lasers, laser projectors and sensors, and patient alignment

and v irtual simulation systems to the healthcare, steel, and industrial

sectors.

capiton AG

12/9/2015 VARISCO S.p.A Flow Control Prov ides centrifugal pumps used in various applications, including

industrial, construction, emergency response, and others.

Atlas Copco AB

12/9/2015 Eichenberger Gewinde

AG

Process and Motion

Control

Prov ides linear power transmission products designed for OEM

applications.

Festo AG & Co. KG

12/8/2015 LGC Limited Test and Measurement Offers reference materials, proficiency testing, genomic and analytical

products and test serv ices.

KKR & Co. L.P.

12/8/2015 Oxford Technologies Ltd. Process and Motion

Control

Prov ides remote handling systems for hostile environments. Kurion, Inc.

12/8/2015 Quality Compliance

Laboratories Inc.

Test Serv ices Offers contract analytical testing serv ices to the pharmaceutical,

biotechnology, nutraceutical, personal care, and medical device

industries.

SGS SA

12/4/2015 TEM Filter Inc. Flow Control Prov ides high flow filters for semiconductor and OEM applications. Porvair plc

12/4/2015 Stork Holding B.V. Test Serv ices Offers knowledge-based asset integrity management serv ices to the oil

and gas, chemical and refining, power, subsea, railway, food, and

pharmaceuticals industries.

Fluor Corporation

12/3/2015 JRI Maxant - S.A.S. Test and Measurement Prov ides monitoring systems for temperature, humidity, and other

physical parameters serv ing the logistics, health, food, industrial, energy,

and climatology sectors.

Bpifrance Investissement,

InnovaFonds SAS, and

Turenne Sante

12/1/2015 Certest srl Test Serv ices Offers laboratory and technical consulting serv ices for the luxury goods

industry.

Bureau Veritas SA

11/30/2015 DVTEL, INC. Test and Measurement Prov ides integrated v ideo management system software, advanced

v ideo analytics software, v isible and thermal security cameras, and

related servers and encoders for the consumer and enterprise markets.

FLIR Systems, Inc.

11/30/2015 AND Automation Limited Process and Motion

Control

Prov ides control panels and automation solutions for use in industrial

applications.

VINCI S.A.

11/30/2015 Western Technical

Serv ices Limited

Test Serv ices Prov ides on-site and laboratory NDT and inspection serv ices to the food

and beverage, pharmaceutical, and aerospace industries.

Exova Group plc

11/26/2015 Onstream Pipeline

Inspection Ltd.

Test Serv ices Prov ides inline inspection serv ices to pipeline operators. Novacap

11/25/2015 Delta Ohm S.r.L. Test and Measurement Prov ides portable and industrial instruments for measuring temperature,

humidity, pressure, air speed, light, acoustic, v ibration, air quality, and a

variety of other applications.

GHM Messtechnik GmbH

11/20/2015 Oerlikon Leybold Vacuum

GmbH

Flow Control Prov ides vacuum pumps, systems, and solutions for industrial, food and

packaging, coating, analytical and medical technology, solar, research

and development, and semiconductor applications.

Atlas Copco AB

11/19/2015 Hunt Valve Company, Inc. Flow Control Prov ides valves and components for military, defense, industrial, and

nuclear power applications.

May River Capital, LLC

11/17/2015 M.A.X. Automation Ag Process and Motion

Control

Prov ides industrial automation and environmental technology solutions. Orpheus Capital I I GmbH &

Co. KG

11/16/2015 Matrolab Group (Pty) Ltd Test Serv ices Offers civ il engineering laboratory serv ices. SGS SA

11/7/2015 TE Connectiv ity Ltd., Circuit

Protection Business

Process and Motion

Control

Offers polymer-based resettable circuit protection devices to the

automotive, battery, industrial, communications, and mobile computing

markets.

Littelfuse Inc.

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PUBLIC MARKETS OVERVIEW

5



TEV / LTM EBITDA TEV / 2016E EBITDA

Test and Measurement Flow Control Process / Motion Control Test Serv ices

NET DEBT / LTM EBITDA AVERAGE EBITDA MARGIN (2014 – 2016P)

AVERAGE CAPEX / REVENUE (2014 – 2016P) RESEARCH & DEVELOPMENT / LTM REVENUE

8.3x

10.5x

10.8x

8.1x

9.0x

10.3x

8.8x

10.6x

16.6x

9.7x

11.2x

11.4x

Engineering and Consulting

Testing, Inspection, and Certification

Condition Monitoring

Actuators and Positioners

Intelligent Automation

Motion and Drives

Valves and Fittings

Pumps and Filtration

Life Sciences and Laboratory

Technology and Software

Sensors

Instrumentation

7.8x

8.8x

9.8x

8.2x

9.4x

8.8x

8.9x

10.4x

15.1x

9.2x

10.5x

10.8x






Motion and Drives

Valves and Fittings




Sensors

Instrumentation

2.8x

1.6x

1.5x

2.3x

0.4x

1.6x

1.9x

1.3x

1.8x

1.9x

2.5x

1.5x






Motion and Drives

Valves and Fittings




Sensors

Instrumentation

0.1%

0.3%

10.8%

3.1%

4.0%

4.0%

1.3%

2.2%

5.6%

8.3%

4.1%

7.1%






Motion and Drives

Valves and Fittings




Sensors

Instrumentation

10.3%

16.7%

21.5%

15.4%

16.4%

17.6%

15.2%

16.4%

21.0%

16.4%

19.7%

17.0%






Motion and Drives

Valves and Fittings




Sensors

Instrumentation

2.3%

3.2%

2.8%

2.1%

2.2%

2.7%

1.8%

2.4%

2.5%

2.9%

2.8%

2.0%






Motion and Drives

Valves and Fittings




Sensors

Instrumentation

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0

50

100

150

200

250

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

Nu

mb

er

ofA

nn

ou

nc

ed

M&

A D

ea

ls

GLOBAL M&A TRENDS

6

GENERAL MARKET OBSERVATIONS

INDUSTRIAL TECHNOLOGY QUARTERLY M&A ACTIVITY

The global M&A industry saw $4.7 trillion in deals announced during 2015, a 42.2% increase compared to the $3.3trillion completed during 2014.

The U.S. M&A environment remains strong with aggregate deal value increasing by 64.3% in 2015 relative to2014 despite deal volume decreasing by 1.6% over the same time period.

European M&A activity increased by 2.9% from 2014 to 2015, with aggregate deal value increasing by 7.7%.

The global Industrial Technology sector saw 174 deals close during Q4 2015, representing an 18.4% increase from Q32015.

The Test and Measurement, Flow Control, and Test Services sectors saw robust growth in deal activity from Q32015 to Q4 2015, increasing by approximately 25%, 20%, and 57%, respectively.



2010 2011 2012 2013 2014 2015

542Transactions

690 Transactions

636Transactions

535Transactions

656Transactions

626Transactions

PAGE |

90

100

110

120

130

U.S. EU-28

(1.0%)

(0.5%)

0.0%

0.5%

1.0%

1.5%

2.0%

Q3

2013

Q4

2013

Q1

2014

Q2

2014

Q3

2014

Q4

2014

Q1

2015

Q2

2015

Q3

2015

U.S. EU-28

98

100

102

104

106

108

U.S. EU-28

90

100

110

120

130

U.S. EU-28

ECONOMIC UPDATE

7

INDUSTRIAL PRODUCTION

NEW ORDERS

ECONOMIC SENTIMENT

U.S. Real GDP increased by 0.5% in Q3 2015, increasing at an annual rate of 2.0%.

The increase reflected positive contributions from personal consumptionexpenditures, business fixed investment, and residential fixed investment.

PNC economists are forecasting Q4 2015 GDP growth of 2.8% and 2016 growthin the range of 2.3% to 2.5% with unemployment reaching 4.6% in 2016. Strongconsumer spending, housing construction and sales, auto sales, and state andlocal government infrastructure spending are expected to contribute to thepositive growth.

EU-28 Seasonally adjusted GDP in the EU for Q3 2015 rose by 0.6%, with 2.5%

annualized growth.

U.S. Industrial production decreased by 0.6% from October 2015 to November

2015. While manufacturing production remained unchanged, The decrease inNovember is largely due to a fall in the index for oil and gas welldrilling/servicing, consumer purchases, and construction supplies.

EU-28 Industrial production during November 2015 decreased by 0.6%, led by a

decrease in the production of energy, capital goods, and durable goods.Capacity utilization has slightly decreased to 81.2% as of November 2015.

U.S. In November 2015, new orders remained relatively flat after increasing for two

consecutive months. Broader industrial orders were unchanged and the mostgain in transportation equipment (0.4%) was offset by softened defense orderactivity.

EU-28 The EU saw total new orders remain flat in November 2015, resulting in a total

increase of 2.8% through Q4 2015.

U.S. The Leading Economic Index increased by 0.4% from October 2015 to

November 2015 to reach 124.6. Stronger sentiment was driven by increasedbuilding permits, the interest rate spread, and stock prices.

EU-28 The Euro Commission Economic Sentiment Index slightly decreased to 107.6 in

November 2015.



GROSS DOMESTIC PRODUCT

Nov-15:

103.4

Nov-15:

106.5

Nov-15:

107.9

Nov-15:

124.6

Nov-15:

107.6

Nov-15:

113.7

Q3:

0.5%

Q3:

0.6%

PAGE |

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Harris Williams & Co. has a broad range of industry expertise, which creates powerful opportunities.Our clients benefit from our deep-sector experience, integrated industry intelligence andcollaboration across the firm, and our commitment to learning what makes them unique. For moreinformation, visit our website at www.harriswilliams.com/industries.

OUR FIRM



10

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PUBLIC COMPARABLES

9



As of January 18, 2016 ($ in Millions, except per share amounts)

TEST AND MEASUREMENT

Test and Measurement Public Comparables

LTM Margins Current 1-Month 1-Year % of R&D / Sales TEV / EBITDA

EBITDA Gross TEV Price Change Change LTM High LTM LTM 2016E

Instrumentation

Danaher Corp. 22.6% 53.5% $73,932 $88.55 (4.8%) 4.8% 90.7% 6.6% 15.8x 15.7x

AMETEK, Inc. 26.8% 36.1% $13,119 $48.47 (8.4%) (2.5%) 84.0% 3.0% 12.2x 12.2x

Teledyne Technologies Inc. 16.5% 38.1% $3,620 $84.06 (3.2%) (14.7%) 75.2% 18.5% 9.5x 9.9x

National Instruments Corporation 16.3% 74.5% $3,156 $27.83 (4.7%) (7.3%) 84.0% 18.4% 15.8x 13.9x

Spectris plc 18.0% 57.4% $3,052 $23.83 (9.8%) (22.1%) 68.4% 7.6% 9.0x 10.5x

I tron, Inc. 6.0% 29.5% $1,517 $32.09 (8.6%) (20.3%) 77.1% 9.0% 13.2x 11.0x

Jenoptik AG 12.7% 34.5% $953 $14.97 (0.5%) 19.9% 90.2% 6.4% 10.3x 9.8x

Badger Meter Inc. 16.2% 35.6% $871 $55.67 (4.8%) 0.3% 84.5% 2.6% 14.5x 14.9x

ESCO Technologies Inc. 15.3% 37.7% $863 $33.02 (12.7%) (5.4%) 82.6% 5.3% 10.5x 10.5x

Oxford Instruments plc 12.3% 45.0% $744 $9.50 0.7% (44.6%) 57.3% 7.6% 10.7x 9.4x

Median 16.3% 37.9% (4.8%) (6.3%) 83.3% 7.1% 11.4x 10.8x

Mean 16.3% 44.2% (5.7%) (9.2%) 79.4% 8.5% 12.2x 11.8x

Sensors

Honeywell International Inc. 18.6% 29.5% $77,071 $99.17 1.0% 0.7% 92.3% 4.9% 10.7x 9.8x

Sensata Technologies Holding NV 23.4% 33.5% $9,156 $39.64 (9.2%) (19.9%) 67.1% 4.0% 13.2x 12.8x

Meggitt PLC 21.9% 40.6% $5,094 $5.25 (4.5%) (33.2%) 61.4% 3.6% 9.1x 8.9x

FLIR Systems, Inc. 22.6% 49.0% $4,133 $31.10 6.6% 2.2% 90.2% 8.8% 11.8x 11.4x

MTS Systems Corporation 14.2% 38.9% $785 $55.01 (8.8%) (24.2%) 71.1% 4.2% 9.8x 9.8x

First Sensor AG 8.7% 48.3% $166 $12.46 (5.8%) 12.7% 88.8% 0.2% 12.6x 11.2x

Median 20.3% 39.8% (5.1%) (9.6%) 79.9% 4.1% 11.2x 10.5x

Mean 18.2% 40.0% (3.5%) (10.3%) 78.5% 4.3% 11.2x 10.6x


Hexagon AB 26.1% 59.9% $13,991 $33.73 (4.5%) 7.9% 14.7% 9.5% 16.2x 14.8x

Mistras Group, Inc. 9.5% 29.9% $710 $20.83 (4.9%) 3.1% 91.0% 0.3% 10.5x 8.8x

Muehlbauer Holding AG & Co. KGaA 24.0% 38.8% $385 $29.15 10.7% 43.8% 92.4% NM 5.2x 7.4x

FARO Technologies Inc. 8.9% 53.4% $264 $24.45 (12.0%) (54.5%) 38.2% 8.3% 9.0x 9.6x

Median 16.8% 46.1% (4.7%) 5.5% 64.6% 8.3% 9.7x 9.2x

Mean 17.1% 45.5% (2.7%) 0.1% 59.1% 6.1% 10.2x 10.1x


Thermo Fisher Scientific, Inc. 24.2% 46.1% $67,482 $136.97 2.1% 6.6% 95.3% 4.1% 16.6x 16.1x

Agilent Technologies Inc. 19.3% 50.5% $12,341 $38.19 (5.0%) (4.8%) 87.6% 8.1% 15.8x 13.9x

Waters Corporation 32.6% 58.9% $9,676 $126.82 (2.1%) 8.9% 92.3% 5.8% 14.6x 14.4x

Mettler-Toledo International Inc. 22.1% 47.4% $9,172 $317.02 (4.0%) 7.0% 90.5% 4.9% 17.1x 16.1x

PerkinElmer Inc. 15.7% 45.5% $6,268 $48.55 (3.4%) 11.8% 89.0% 5.6% 17.6x 13.9x

Sartorius Aktiengesellschaft 21.8% 49.9% $5,221 $320.26 12.6% 175.1% 83.3% 5.1% 20.0x 18.8x

Bruker Corporation 13.2% 44.2% $3,671 $22.78 2.1% 17.7% 90.3% 9.1% 16.9x 15.8x

FEI Company 23.8% 49.9% $2,578 $73.34 (7.3%) (10.1%) 82.3% 10.4% 11.8x 13.0x

Mesa Laboratories Inc. 29.7% 61.3% $343 $83.85 (21.0%) 9.7% 66.5% 4.7% 15.2x NA

Median 22.1% 49.9% (3.4%) 8.9% 89.0% 5.6% 16.6x 15.1x

Mean 22.5% 50.4% (2.9%) 24.7% 86.4% 6.4% 16.2x 15.3x

Overall Median 18.6% 45.5% (4.7%) 0.7% 84.0% 5.7% 12.6x 11.8x

Overall Mean 18.7% 45.4% (3.9%) 2.4% 78.6% 6.7% 12.9x 12.3x

Stock Performance

PAGE |

PUBLIC COMPARABLES

10

FLOW CONTROL




Flow Control Public Comparables




Pentair plc 16.6% 34.6% $12,237 $46.12 (10.8%) (28.6%) 66.2% 1.8% 11.4x 10.4x

Xylem Inc. 16.2% 38.4% $6,811 $34.27 (5.4%) (1.0%) 90.2% 2.6% 11.4x 11.1x

Flowserve Corp. 17.6% 34.6% $6,436 $38.02 (7.8%) (32.2%) 59.0% 0.9% 7.8x 8.2x

IDEX Corporation 25.1% 44.7% $6,037 $71.75 (5.3%) (2.8%) 89.3% 1.8% 11.8x 11.9x

Trelleborg AB 16.2% 35.2% $5,617 $17.24 (9.6%) 6.0% 81.7% 1.4% 11.9x 11.4x

Colfax Corporation 12.9% 32.1% $4,101 $20.71 (13.4%) (55.9%) 38.6% 1.0% 7.7x 8.6x

Graco Inc. 26.6% 53.5% $4,065 $66.75 (4.2%) (15.2%) 82.7% 4.6% 12.1x 12.0x

Donaldson Company, Inc. 15.5% 34.1% $4,015 $27.01 (0.8%) (27.9%) 70.2% 2.7% 11.2x 11.2x

IMI plc 19.3% 44.5% $3,550 $11.43 (16.3%) (37.3%) 54.6% 2.9% 7.1x 8.8x

Essentra plc 18.9% 62.4% $3,345 $10.83 (16.8%) (5.1%) 70.4% 0.8% 11.4x 11.0x

Sulzer, Ltd. 11.3% 31.5% $2,507 $90.17 (10.7%) (8.6%) 75.3% 2.3% 6.6x 8.8x

ITT Corporation 16.4% 33.3% $2,445 $32.92 (9.2%) (11.9%) 74.9% 3.0% 6.0x 6.0x

SPX FLOW, Inc. 11.9% 34.1% $1,846 $23.35 NM NM 55.5% NM 6.2x 6.6x

Franklin Electric Co., Inc. 13.0% 31.9% $1,325 $25.00 (14.2%) (27.4%) 62.8% 2.0% 10.6x 10.4x

ESCO Technologies Inc. 15.3% 37.7% $863 $33.02 (12.7%) (5.4%) 82.6% 5.3% 10.5x 10.5x

Gorman-Rupp Co. 13.8% 23.4% $583 $23.56 (14.4%) (20.6%) 72.3% NM 10.3x NA

Median 16.2% 34.6% (10.7%) (15.2%) 71.3% 2.2% 10.6x 10.4x

Mean 16.7% 37.9% (10.1%) (18.3%) 70.4% 2.4% 9.6x 9.8x

Valves and Fittings

Parker-Hannifin Corporation 14.3% 23.9% $13,877 $90.51 (5.3%) (28.0%) 70.6% 3.3% 7.9x 8.2x

Aalberts Industries NV 14.5% 61.0% $4,371 $31.58 (6.7%) 14.4% 91.3% NM 11.3x 10.8x

Curtiss-Wright Corporation 17.4% 34.7% $3,935 $70.52 5.8% 7.0% 90.9% 2.8% 10.3x 9.5x

The Weir Group PLC 16.3% 31.9% $3,810 $12.27 (17.9%) (53.0%) 41.7% 1.0% 6.6x 8.4x

Crane Co. 16.5% 34.7% $3,212 $46.32 (2.0%) (17.7%) 65.7% 2.4% 7.0x 7.0x

Indutrade AB 13.4% 33.5% $2,485 $52.51 (0.4%) 30.3% 91.9% 1.1% 13.7x 13.4x

Watts Water Technologies, Inc. 8.6% 37.0% $1,869 $45.76 (14.7%) (20.7%) 72.6% 1.6% 14.6x 9.3x

Mueller Water Products, Inc. 16.0% 29.8% $1,685 $8.13 (6.3%) (19.1%) 77.1% 0.0% 9.0x 8.9x

Mueller Industries Inc. 7.8% 13.8% $1,452 $24.82 (10.5%) (23.7%) 66.8% NM 8.6x NA

CIRCOR International, Inc. 11.5% 32.0% $642 $35.45 (19.0%) (32.9%) 59.9% 1.1% 7.9x 8.4x

Median 14.4% 32.8% (6.5%) (19.9%) 71.6% 1.3% 8.8x 8.9x

Mean 13.6% 33.2% (7.7%) (14.4%) 72.8% 1.7% 9.7x 9.3x

Overall Median 15.8% 34.4% (9.6%) (19.1%) 71.4% 1.9% 10.3x 9.4x

Overall Mean 15.5% 36.1% (9.1%) (16.7%) 71.3% 2.1% 9.6x 9.6x

Stock Performance

PAGE |

PUBLIC COMPARABLES

11

PROCESS / MOTION CONTROL




Process / Motion Control Public Comparables



Motion and Drives

Siemens Aktiengesellschaft 10.7% 28.9% $92,836 $90.81 (5.9%) (17.0%) 78.8% 5.9% 10.3x 8.7x

Danaher Corp. 22.6% 53.5% $73,932 $88.55 (4.8%) 4.8% 90.7% 6.6% 15.8x 15.7x

ABB Ltd. 14.7% 28.9% $39,464 $16.58 (7.6%) (16.8%) 75.0% 3.8% 7.3x 8.4x

Schneider Electric SE 14.8% 37.2% $37,937 $53.11 (9.2%) (24.6%) 65.1% 2.2% 8.8x 8.8x

Nidec Corporation 16.0% 23.1% $19,709 $65.84 (13.8%) (1.7%) 67.9% 4.3% 13.1x 11.8x

AMETEK Inc. 26.8% 36.1% $13,119 $48.47 (8.4%) (2.5%) 84.0% 3.0% 12.2x 12.2x

Rockwell Automation Inc. 20.8% 42.9% $11,782 $94.32 (7.1%) (11.0%) 74.2% 4.6% 9.0x 8.7x

Yaskawa Electric Corp. 12.0% 32.7% $3,420 $12.09 (12.8%) (3.5%) 77.8% 4.0% 8.2x 8.3x

Rexnord Corporation 15.2% 35.7% $3,112 $15.49 (16.3%) (41.6%) 54.8% 2.0% 10.3x 8.8x

Median 15.2% 35.7% (8.4%) (11.0%) 75.0% 4.0% 10.3x 8.8x

Mean 17.3% 35.4% (8.7%) (9.0%) 76.7% 4.3% 10.6x 10.3x


ABB Ltd. 14.7% 28.9% $39,464 $16.58 (7.6%) (16.8%) 75.0% 3.8% 7.3x 8.4x

Fanuc Corporation 41.9% 50.5% $23,340 $159.61 (10.0%) (2.4%) 65.8% 4.4% 9.1x 10.3x

Rockwell Automation Inc. 20.8% 42.9% $11,782 $94.32 (7.1%) (11.0%) 74.2% 4.6% 9.0x 8.7x

Metso Corporation 21.2% 31.2% $3,280 $20.23 (10.3%) (30.8%) 63.2% 1.7% 4.3x 6.5x

Krones AG 9.2% 52.9% $3,139 $108.06 (8.6%) 10.6% 85.2% 0.0% 9.9x 9.5x

KUKA Aktiengesellschaft 9.1% 24.3% $3,105 $85.82 (4.6%) 24.1% 92.3% 4.0% 10.9x 10.8x

ATS Automation Tooling Systems Inc. 11.9% 24.8% $877 $7.71 (11.0%) (36.7%) 66.3% NM 9.3x 9.2x

FARO Technologies Inc. 8.9% 53.4% $264 $24.45 (12.0%) (54.5%) 38.2% 8.3% 9.0x 9.6x

Median 13.3% 37.0% (9.3%) (13.9%) 70.3% 4.0% 9.0x 9.4x

Mean 17.2% 38.6% (8.9%) (14.7%) 70.0% 3.8% 8.6x 9.1x


Eaton Corporation plc 15.9% 31.4% $31,268 $49.95 (1.8%) (23.7%) 67.7% 2.9% 9.2x 9.3x

Parker-Hannifin Corporation 14.3% 23.9% $13,877 $90.51 (5.3%) (28.0%) 70.6% 3.3% 7.9x 8.2x

Pentair plc 16.6% 34.6% $12,237 $46.12 (10.8%) (28.6%) 66.2% 1.8% 11.4x 10.4x

Moog Inc. 13.3% 29.2% $2,814 $55.79 (11.2%) (20.2%) 72.2% 5.2% 8.4x 8.1x

Altra Industrial Motion Corp. 13.1% 30.1% $774 $22.44 (14.3%) (12.0%) 76.0% 2.3% 7.7x 7.4x

CTS Corporation 16.8% 33.6% $464 $16.07 (10.1%) 0.2% 79.4% 5.7% 7.1x 7.1x

Median 15.1% 30.7% (10.5%) (22.0%) 71.4% 3.1% 8.1x 8.2x

Mean 15.0% 30.5% (8.9%) (18.7%) 72.0% 3.5% 8.6x 8.4x


AMETEK Inc. 26.8% 36.1% $13,119 $48.47 (8.4%) (2.5%) 84.0% 3.0% 12.2x 12.2x

SKF AB 12.7% 24.9% $8,845 $14.66 (10.6%) (29.2%) 54.1% 1.3% 7.7x 7.2x

Teledyne Technologies Inc. 16.5% 38.1% $3,620 $84.06 (3.2%) (14.7%) 75.2% 18.5% 9.5x 9.9x

National Instruments Corporation 16.3% 74.5% $3,156 $27.83 (4.7%) (7.3%) 84.0% 18.4% 15.8x 13.9x

Cognex Corporation 30.7% 75.0% $2,225 $30.38 (13.9%) (18.0%) 57.9% 13.8% 14.2x 16.0x

MKS Instruments, Inc. 23.5% 45.1% $1,419 $34.01 (5.6%) 0.5% 85.8% 8.0% 7.2x 8.1x

Isra Vision AG. 28.9% 55.8% $337 $68.84 4.4% 22.9% 95.2% 13.5% 9.3x 9.4x

Basler AG 13.1% 49.7% $171 $52.89 13.3% 8.1% 78.7% 7.2% 13.8x 9.8x

Median 20.0% 47.4% (5.2%) (4.9%) 81.3% 10.8% 10.8x 9.8x

Mean 21.1% 49.9% (3.6%) (5.0%) 76.9% 10.5% 11.2x 10.8x

Overall Median 15.9% 35.7% (8.4%) (12.0%) 75.0% 4.2% 9.2x 9.2x

Overall Mean 17.7% 39.0% (7.7%) (12.4%) 73.4% 5.6% 9.8x 9.7x

Stock Performance

PAGE |

PUBLIC COMPARABLES

12

TEST SERVICES




Test Services

LTM Margins Current 1-Month 1-Year % of TEV / EBITDA

EBITDA Gross TEV Price Change Change LTM High LTM 2016E


SGS SA 20.4% 44.1% $15,102 $1,806.43 (3.7%) (9.4%) 88.7% 11.9x 12.7x

Bureau Veritas SA 19.5% 23.9% $10,550 $18.95 (5.4%) (8.7%) 79.3% 10.8x 10.8x

Intertek Group plc 17.9% 55.6% $7,243 $39.23 (3.6%) 8.3% 92.4% 12.1x 12.0x

Eurofins Scientific SA 16.8% 17.7% $5,927 $336.13 (0.1%) 29.5% 85.8% 19.6x 15.9x

Applus Serv ices, S.A. 12.4% 34.9% $1,830 $7.82 (12.9%) (29.1%) 60.2% 7.8x 8.1x

ALS Limited 21.0% 91.7% $1,812 $2.64 0.5% (35.7%) 56.9% 8.6x 8.6x

SAI Global Limited 18.5% 34.0% $731 $2.79 (0.8%) (13.8%) 85.7% 9.4x 8.0x

Mistras Group, Inc. 9.5% 29.9% $710 $20.83 (4.9%) 3.1% 91.0% 10.5x 8.8x

Furmanite Corporation 6.6% 24.3% $241 $5.73 (17.3%) (25.3%) 61.7% 7.1x 7.0x

Median 17.9% 34.0% (3.7%) (9.4%) 85.7% 10.5x 8.8x

Mean 15.8% 39.6% (5.3%) (9.0%) 78.0% 10.9x 10.2x


Abengoa SA 18.5% 44.3% $10,295 $0.44 (42.8%) (87.3%) 10.8% 7.0x 7.8x

FCC, S.A. 13.6% 66.5% $8,372 $7.48 12.7% (43.5%) 57.7% 8.3x 9.5x

Jacobs Engineering Group Inc. 4.9% 16.2% $5,009 $39.06 (6.7%) (4.2%) 81.0% 8.4x 7.0x

Amec Foster Wheeler plc 6.9% 12.6% $3,456 $5.29 (10.6%) (56.1%) 36.7% 6.7x 6.3x

WSP Global Inc. 6.8% 17.3% $3,119 $28.03 (14.4%) 5.2% 81.4% 11.0x 10.3x

ARCADIS NV 7.1% 18.8% $2,281 $19.21 (16.6%) (35.8%) 56.5% 9.2x 7.9x

Tetra Tech, Inc. 11.0% 18.4% $1,473 $23.93 (9.4%) (4.4%) 84.9% 7.8x 7.6x

Median 7.1% 18.4% (10.6%) (35.8%) 57.7% 8.3x 7.8x

Mean 9.8% 27.7% (12.5%) (32.3%) 58.4% 8.3x 8.0x

Overall Median 13.0% 27.1% (6.1%) (11.6%) 80.1% 8.9x 8.3x

Overall Mean 13.2% 34.4% (8.5%) (19.2%) 69.4% 9.8x 9.3x

Stock Performance

PAGE |

HARRIS WILLIAMS & CO.

Automation World

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IHS

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SOURCES



Harris Williams & Co. (www.harriswilliams.com) is a preeminent middle market investment bank focused on the advisory needs of clients worldwide. The firm has deep industry knowledge, global transaction expertise, and an unwavering commitment to excellence. Harris Williams & Co. provides sell-side and acquisition advisory, restructuring advisory, board advisory, private placements, and capital markets advisory services.

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