M&A MARKET REVIEW...M&A Market Review - Denmark/Europe Q3 2019 3 Introduction "Oaklins charmed us....

M&A MARKET REVIEW Denmark/Europe Q3 2019

Quarterly updateOCTOBER 2019

Keep your edge, with M&A experts who truly understand your market

MORTEN GERNERANALYST

OAKLINS DENMARK+45 2627 6797

[email protected]

DANIEL SANDMANAGING PARTNEROAKLINS DENMARK

+45 3027 [email protected]

3M&A Market Review - Denmark/Europe Q3 2019

Introduction

"Oaklins charmed us. Our culture and way of doing business was a good match as they are pragmatic and down-to-earth. We appreciated that and were extremely satisfied. Oaklins managed to exceed our expectations."

KIRSTEN BRADLEY – ERIKS

Oaklins has in Denmarkthroughout the past 40years closed more than 250transactions (sell-side andbuy-side) and is specialisedin mergers and acquisitionsof privately and family-ownedbusinesses.

Oaklins is the world’s largest and most experienced M&A advisor in the mid-market, with 800 professionals globally and dedicated industry teams in over 40 countries worldwide. We take great pride in our solid track record counting 5,000 closed transactions, including more than 250 transactions in Denmark.

In every deal, we give nothing less than our very best to do justice to the extraordinary effort our clients give to their businesses. We became front-runners, not because of these numbers but because of who we are and how we work.

DESCRIPTION OF THE REPORT

The purpose of the report is to explain and map the movements in the Danish as well as the European M&A market quarter by quarter. The report is based on data from Mergermarket and Infront Analytics and is analysed on the basis of well-established criteria for the development of the report. The report aims to identify trends in the market and to present the distribution of transactions across sectors and categories of buyers.

STRUCTURE OF THE REPORT

– Chapter 1 Highlights

– Chapter 2 The M&A market in Denmark

– Chapter 3 The M&A market in Europe

– Chapter 4 Price development in Europe

– Chapter 5 Methodology

– Chapter 6 Selected Oaklins transactions

Chapter 1 Highlights


Highlights

"For us who founded the company and managed it during its 30 years of existence, Oaklins was the perfect partner for our sale. The combination of

industry insight, professional craftsmanship and uncompromising dedication, made it a valuable contribution from an owner's perspective."

JAN MISSER – DATACON ENTERPRISE SOLUTIONS

CONTINUED HIGH M&A ACTIVITY IN DENMARK, WITH SLOWDOWN SIGNS IN EUROPE

In Denmark, the number of companies sold is only one short of Q3 2018, and the total number of Danish transactions is 4% higher than in the same quarter last year.

Considering the wider European market, the number of companies sold has decreased by 6% compared to the same quarter last year. The total number of transactions has decreased by 7%.

The activity in Europe has decreased by 2% compared to the last quarter (Q2 2019), which is a development often seen from Q2 to Q3.

56 Danish companies sold in Q3 2019One transaction less than the same quarter last year

1,871 European companies sold in Q3 2019Decrease of 6% compared to the same quarter last year

Financial vs. strategic buyers in Q1-Q3 2019Strategic buyers made up 68% of all Danish transactions


DANISH COMPANIES' ACQUISITIONS ABROAD

Danish companies completed 17 acquisitions abroad in Q3 2019, which is slightly lower compared to the high level of acquisitions in the past six quarters.

The development shows a decrease of 23% compared to the same quarter last year (Q3 2018). 76% of the Danish acquisitions abroad were within Europe, which shows a more diverse distribution than in 2018 and 2017 where 84% were within Europe. The distribution is comparable to 2016 where the level was 73%.

SALE OF EUROPEAN COMPANIES

The number of European companies sold reached 1,871 in Q3 2019.

The development shows a decrease of 2% compared to the previous quarter (Q2 2019) and a decrease of 6% compared to the same quarter last year (Q3 2018).

Chapter 1 – Highl ights

1,755 1,743

2,027

1,7221,910 1,837

2,1211,913

2,0811,931

2,1771,995

2,139

1,844 1,903 1,871

Q42015

Q12016

Q22016

Q32016

Q42016

Q12017

Q22017

Q32017

Q42017

Q12018

Q22018

Q32018

Q42018

Q12019

Q22019

Q32019

SALE OF DANISH COMPANIES

The number of Danish companies sold amounted to 56 in Q3 2019.

The development is only one transaction less when compared to the same quarter last year (Q3 2018) and a minor decrease of 3% compared to the previous quarter (Q2 2019).

The number of companies sold in the first three quarters of 2019 is one company higher when compared to the same period in 2018.

44

57

70

47

62 59

77

46

57

68

57 57

82

69

58 56

Q42015

Q12016

Q22016

Q32016

Q42016

Q12017

Q22017

Q32017

Q42017

Q12018

Q22018

Q32018

Q42018

Q12019

Q22019

Q32019

20

13 1214

1715

21

1315

24 25

22 22 2321

17

Q42015

Q12016

Q22016

Q32016

Q42016

Q12017

Q22017

Q32017

Q42017

Q12018

Q22018

Q32018

Q42018

Q12019

Q22019

Q32019

Chapter 2 The M&A market in Denmark


30 38 41 39 47 55 57 57 59 68 692641 45 43

64 57 62 70 77 57 58

22

39 35 39

44 54 50 47 46 57 56

38

41 38 49

54 39 4462 57

82

116

159 159170

209 205 213236 239

264

183

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

1st quarter 2nd quarter 3rd quarter 4th quarter Correction

The M&A market in DenmarkChapter 2

ALL TRANSACTIONS IN DENMARK

All transactions in Denmark include transactions with a Danish target, seller or buyer. There has been a total of 86* transactions in Denmark in Q3 2019.

This development shows an increase of 4% compared to the previous quarter (Q2 2019) and an increase of 5% compared to the same quarter last year (Q3 2018).

SALE OF DANISH COMPANIES

Sale of Danish companies include transactions with a Danish target and buyers from all countries. 56* Danish companies have been acquired during Q3 2019, which is one company less than the same quarter last year (Q3 2018).

The development is a decrease of 3% compared to the previous quarter (Q2 2019).

STEADY HIGH LEVEL OF M&A ACTIVITY

The Danish M&A market is still showing a high level of activity, despite being marginally lower than the record-breaking 2018.

The constituents of the overall level of activity are the following: A relatively high number of Danish targets somewhat slowed down by a lower interest from abroad. Danish companies, on the other hand, have a continuously high appetite for international acquisitions, yet not as high as the record-breaking levels in 2018. Finally, sales of Danish-owned, foreign companies have spiked to 13 disposals in Q3 2019 compared to 4 disposals in the previous quarter (Q2 2019).

Among the acquired Danish companies, especially the technology sector was highly active, followed closely by the industrial sector. The mix of strategic and financial buyers in 2019 is so far leaning more towards strategic buyers than in 2018.

43 59 62 64 63 77 75 75 78 101 1014356 71 64 93 83 82 88 101

89 8336

5957 73

77 92 72 65 6282 86

51

60 4974

75 6068 86 78

111

173

234 239275

308 312 297314 319

383

270

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019


"Oaklins has completely lived up to our expectations

regarding industry expertise, cost and timing."

LASSE PETERSEN – CIDAN MACHINERY

*Correction for transactions not yet registered: 16



SECTOR DISTRIBUTION / TOP 5

Among the 172 registered acquisitions of Danish companies in Q1-Q3 2019, 81% of all transactions were distributed within five sectors.

In comparison, the distribution of the top 5 sectors comprising 73% of all transactions looked as follows in 2018: Technology (26%), Industrial (20%), Consumer & Retail (12%), Services (10%), Food & Beverage (5%).

BUYER TYPES

In 2019, buyers behind Danish company transactions are primarily strategic players, accounting for 68% of acquisitions as of Q3 2019. The remaining 32% of buyers are classified as financial.

In comparison, 66% of all buyers were strategic and 34% financial in 2018.

Chapter 2 – The M&A market in Denmark

Technology26%

Industrial23%

Services16%

Consumer & Retail

10%

Agriculture 6%

Other 19%

Financial32%

Strategic68%

DANISH COMPANIES ACQUIRED BY FOREIGN, STRATEGIC BUYERS IN Q3 2019

(Selected registered transactions)

– Ferrero SpA has acquired Kelsen Group A/S

– MasterCard Inc. has acquired Nets' account-to-account services

– WSP Global Inc. has acquired Orbicon A/S

– Best Transport AB has acquired Kurergruppen Danmark ApS

– Bauer Media Group has acquired Mono Solutions ApS

– Wonderbox S.A.S has acquired Go Dream A/S

ACTIVITY OF PRIVATE EQUITY FUNDS AND OTHER FINANCIAL INVESTORS IN DENMARK IN Q3 2019


– Axcel has acquired SteelSeries ApS

– A.P. Møller Holding has acquired KK Group A/S

– EQT Partners has acquired Ellab A/S

– Seed Capital Denmark has acquired Lunar Way A/S

– Chr. Augustinus Fabrikker has acquired Abacus Medicine A/S

– Verdane Capital Advisors has acquired Baum und Pferdgarten A/S


FOREIGN COMPANIES' ACQUISITIONS IN DENMARK

In Q3 2019, 21 Danish companies were sold to foreign buyers, which is less than other quarters in recent years.

The development shows a decrease of 32% compared to same quarter last year (Q3 2018).

DANISH COMPANIES' ACQUISITIONS ABROAD

Danish companies acquired 17* foreign companies during Q3 2019. This is lower than the record high levels of 2018, but still indicates a generally high appetite for international acquisitions when compared to the levels prior to 2018.

GEOGRAPHICAL DISTRIBUTION OF FOREIGN COMPANIES' ACQUISITIONS IN DENMARK

In Q1-Q3 2019, 70% of foreign buyers came from Europe, among these 35% from the Nordic countries. 20% of the buyers came from North America and 10% from Asia.

In 2018, the distribution looked as follows: Europe (76%), North America (19%), Asia (4%) and Africa (1%).


•

46

79 72

13 22 30 23 28 29 37 3618

2932

3337 45 23 25

17

15

26 2824

2731 21

23

23

20 2835

3231

46

7972 71

89

108 112124

133122

82

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

1st quarter 2nd quarter 3rd quarter 4th quarter

11 15 1120

10 11 9 13 1524 23

12 8 1413

21 2315 12

21

25 218 11 14

20 21 21

15 14

13

2217

714 6

14 13 13

20 1715

22

38

48 45

67 65 6859 56

64

93

61

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019




GEOGRAPHICAL DISTRIBUTION OF DANISH COMPANIES' ACQUISITIONS ABROAD

In Q1-Q3 2019, 76% of all Danish acquisitions were in Europe, among these 25% in the Nordic countries. 19% of the acquisitions were in North America, 2% in South America, 2% in Australia, and 2% in Asia. There were no Danish acquisitions registered in Africa.

In 2018, the distribution looked as follows: Europe (84%), North America (13%), South America (2%) and New Zealand (1%).

DANISH COMPANIES' DIVESTMENTS OF FOREIGN COMPANIES

In Q3 2019, Danish companies sold 13* foreign companies, which is the same amount of transactions as in the first two quarters of 2019 combined (Q1-Q2 2019). This level is the highest since 2014.


DANISH COMPANIES' STRATEGIC ACQUISITIONS ABROAD IN Q3 2019


– H. Lundbeck A/S has acquired Alder BioPharmaceuticals. Inc.

– Better Collective A/S has acquired a VegasInsider.com, Inc.

– Scandinavian Tobacco Group A/S has acquired Royal Agio Cigars NV

– Orifarm Group A/S has acquired Pilatus Group

– Agromino A/S has acquired Resilient a.s.

– All Things Live Group A/S has acquired wknd Festival Oy

26

105 6

11 95 4

9 95

7

12

7 83 5

63

7 46

9

8

14 1217

7

4

3

3 136

5

5 11 8

8

4

7

6

719

27

3537

34

39

2522

16

26 26

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019


"Oaklins' understanding of our niche and negotiating skills

towards the right international buyers has been crucial for

the good result. We are very pleased with their efforts."

LARS BENDIXEN – ELMA INSTRUMENTS


Chapter 3 The M&A market in Europe


The M&A market in EuropeChapter 3

ALL TRANSACTIONS IN EUROPE

All transactions in Europe include transactions with a European target, seller or buyer. There has been a total of 2,310* European transactions in Q3 2019.

The development shows a decrease of 2% compared to the previous quarter (Q2 2019), and a decrease of 7% compared to the same quarter last year (Q3 2018).

SALE OF EUROPEAN COMPANIES

Sale of European companies include European targets acquired by buyers from all countries. In Q3 2019, 1,871* European companies were acquired.


SLIGHT DECREASE IN THE EUROPEAN M&A MARKET ACTIVITY

The level of activity in Q3 2019 is lower than that of the previous quarter (Q2 2019). Additionally, the market has seen a decrease when compared to the activity seen in Q3 of the two previous years.

The main reasons for the slight dip in Q3 M&A activity compared to last year are declines in both the number of sales of European companies and in the number of European acquisitions outside Europe. The development in European companies' divestments of non-European companies was on par when compared with last year.

"Oaklins found the perfect match for our company.

The potential is gigantic."

SIMON STAMPE – BLOOMINGVILLE

1,090 1,330 1,616 1,651 1,642 1,978 1,945 2,133 2,286 2,393 2,3061,155 1,487

1,834 1,660 1,7812,106 2,103 2,449 2,565 2,640 2,350

1,0951,529

1,682 1,572 1,7972,025 2,146

2,144 2,417 2,4762,310

1,324

1,6291,606 1,842 2,025

2,161 2,1722,355

2,577 2,594

4,664

5,9756,738 6,725

7,2458,270 8,366

9,0819,845 10,103

6,966

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

1st quarter 2nd quarter 3rd quarter 4th quarter Corrrection

905 1,100 1,333 1,372 1,345 1,596 1,598 1,743 1,837 1,931 1,844937

1,2311,498 1,333 1,450

1,702 1,728 2,027 2,121 2,177 1,903877

1,2401,373 1,251 1,450

1,608 1,7371,722 1,913 1,995

1,871

1,059

1,3171,331 1,455

1,6041,747 1,755

1,9102,081 2,139

3,778

4,8885,535 5,411

5,8496,653 6,818

7,4027,952 8,242

5,618

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019





EUROPEAN COMPANIES' ACQUISITIONS OUTSIDE EUROPE

European companies have acquired 326* companies outside Europe during Q3 2019.


EUROPEAN COMPANIES' DIVESTMENTS OF NON-EUROPEAN COMPANIES

European companies have sold 113* companies based outside Europe during Q3 2019.

The development shows an increase of 1% compared to the previous quarter (Q2 2019) and a level on par with the same quarter last year (Q3 2018).

Chapter 3 – The M&A market in Europe

129 158 220 200 216 284 269 288 318 341 353149 174251 216 223

306 270 330 327 364 335

126201

224 234 228

300 307306

391 368326

172

229193 255 317

301 311317

380 360

576

762888 905

984

1,191 1,1571,241

1,416 1,433

1,014

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019


56 72 63 79 81 98 78 102 131 121 10969

82 85111 108 98 105 92

117 99 1129288 85

87 119 117 102 116113

113 11393 83 82

132 104 113106

128116

95310 325 315

409 412 426391

438477

428

334

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019




Chapter 4 Price developmentin Europe


Price development in EuropeChapter 4

PRICING OF PRIVATE COMPANIES LESS VOLATILE THAN THE STOCK MARKET

The indexation of the EV/EBITDA-multiple (median) for transactions in Europe in 2019 is at index 116. This is a lower level than 2018, where the index was 117. However, it should be noted that the calculations are based on 385 preliminary observations for Q1-Q3 2019 compared to 625 observations for the whole 2018.

TRANSACTION PRICING ON A LOWER BUT YET HIGH LEVEL

The EV/EBITDA-multiple development in Europe shows a stabilisation in the index, having been at 117 in 2018, and now at 116 in Q3 2019. Looking at the past 3-5 years, the valuations of privately traded European companies are relatively stable with no or limited indication of inflated prices. Compared to the stock market index, private companies have, on average, been traded at an increasing discount. This may indicate resilience to smaller or larger corrections in the stock market.

Despite high transaction volume, prices on private companies remain stable, indicating a healthy market. There are elements of uncertainty at a macro level, causing buyers to be increasingly thorough in their due diligence efforts, and considering how a target would perform during a possible downturn.

"Our dream has come true. Oaklins gathered

the perfect team and we became part of the world elite within our industry."

HEIDI LYNGHOLM – BELFOR DENMARK

100106

115

124

11594

106 109

99103

109118

113121

117 116

55

70

85

100

115

130

145

160

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Stock market index Price index private companies

Number of observations

866 957 1,119 960 462 720 759 719 721 905 834 979 870 625 385

– The trend of the price development on the M&A market tends to follow the general movement in listed stock prices with a delay of 3-6 months

– Transactions with a deal value of at least $5m are included – EBITDA = earnings before interest, tax, depreciation and amortisation – EV = Enterprise Value – Indeks 100 = Year 2005 – The price level is affected by relatively large transactions – The stock index Dow Jones Stoxx 600-index is a broad index comprising the largest European companies

Chapter 5 Methodology


METHODOLOGY

The time of the transaction is defined as the announcement date. Transactions are not included if an offer is subsequently expired or withdrawn.

The analysis of the Danish M&A Market includes both sales of Danish companies, Danish companies' acquistions of foreign companies, Danish companies' divestments of foreign companies as well as foreign companies' acquisitions in Denmark.

The analysis includes comparison to sales of European companies, European companies' acquisitions of companies outside Europe as well as European companies' divestments of non-European companies.

The prevailing analysis includes revised data for the period 1st July 2018 to 30th September 2019.

There has been added a correction for the number of not yet registered transactions to the data from Q3 2019, based on historical experience.

CRITERIA FOR THE DATA USED

For transactions with known deal value, the transaction value must be larger than or equal to $5m.

Denmark At least one of the parties involved must be Danish (buyer, seller or target).

Transactions where the deal value is unkown are included.

Transactions are included if the ownership stake traded is more than 30% or unknown.

EuropeAt least one of the parties involved must be European (buyer, seller or target).

Transactions where the deal value is unkown are included.

Transactions are included if the ownership stake traded is more than 30% or unknown.

– Albania – Andorra – Armenia – Austria – Azerbaijan – Belarus – Belgium – Bosnia-

Herzegovina – Bulgaria – Channel

Islands – the Czech

Republic – Croatia – Cyprus – Denmark – Estonia – the Faroe

Islands – Finland – France – Georgia – Germany – Gibraltar – Greece – Greenland – Hungary – Iceland – Ireland

– Isle of Man – Italy – Latvia – Lichtenstein – Lithuania – Luxembourg – Macedonia – Malta – Moldovia – Monaco – Montenegro – the

Netherlands – Norway – Poland – Portugal – Romania – Russia – San Marino – Serbia – Slovakia – Slovenia – Spain – Sweden – Switzerland – Turkey – Ukraine – United

Kingdom

EUROPE

Chapter 6 Selected Oaklins transactions


Chapter 6 – Selected Oakl ins transactions

We are passionate, about your industry and M&A

Oaklins disclaimerThis report is provided for information purposes only. Oaklins and its member firms make no guarantee, representation or warranty of any kind regarding the timeliness, accuracy or completeness of its content. This report is not intended to convey investment advice or solicit investments of any kind whatsoever. No investment decisions should be taken based on the contents and views expressed herein. Oaklins and its member firms shall not be responsible for any loss sustained by any person who relies on this publication.

© 2019 Oaklins. All rights reserved. Oaklins is the collective trade name of independent member firms affiliated with Oaklins International Inc. For details of the nature of affiliation, please refer to www.oaklins.com/legal.

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M&A MARKET REVIEW...M&A Market Review - Denmark/Europe Q3 2019 3 Introduction "Oaklins charmed us....

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