proman.fi Transaction & Pricing surve… · . 1. 010 transaction volume indicates economic recovery...

TRANSACTION & PRICING REPORT FOR THE YEAR 2010

TRANSACTION & PRICING REPORT FOR THE YEAR 2010

This report presents the survey results and transaction data collected from IMAP’s global organization of M&A partners for projects completed in 2010. This is the 17th consecutive year that IMAP has collected yearly transaction and pricing data to share with the M&A community.

Formed in 1973, IMAP is the world’s most established and experienced middle-market M&A organization. IMAP provides creative solutions for M&A through a partnership of hand-selected independent advisory firms. The IMAP organization brings an exceptional combination of local depth and global breadth to the transaction.

More than 400 experienced advisors and analysts from 44 offices in 30 countries throughout North and South America, Europe and Asia provide strategic merger, acquisition, divestiture and related corporate finance services. Sellers and of mid-size companies and corporate acquirers alike rely upon IMAP for essential local market knowledge and industry expertise delivered with unparalleled global access.

More information about IMAP is available via the Internet at www.imap.com.

© COPYRIGHT 2011 IMAP. This report and the information herein is the exclusive domain of IMAP and its member firms and may not be used or reprinted without permission. Contact [email protected].

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2010 transaction volume indicates economic recovery for M&A

Total transaction value increased 79 percent in 2010

IMAP increased percentage of cross-border projects

Average multiples rose 28 percent from Q4 2009 to Q4 2010

IMAP advisors’ observations point to recovery in M&A markets

M&A activity increased as year progressed

IMAP advisors predict higher transaction prices in 2011

TRANSACTIONS Volume 2 Cross-border transactions 3 Values 4 Sectors 6

MULTIPLES Multiples tracked by quarter 8 Multiples for industry sectors 9

ADVISOR SURVEY 2010 project activity 10 2011 M&A pricing 12 Buyer and seller numbers 13 2010, 2011 M&A drivers 14 Sector activity 16 Bank financing 16

2010 STATISTICAL REFERENCE 18

IMAP Transaction and Pricing Report for the year 2010

2 Transaction & Pricing Report 2010

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The IMAP transaction data indicate that the recovery from the global economic crisis is happening faster than expected. The crisis, which began in 2008 and spread across the globe in 2009, appears to have bottomed out early in 2010 and recovered as the year progressed.

IMAP completed 184 M&A transactions for clients in 2010, 3 percent more than in 2009. The year ended strong with respect to closings and optimism for an even stronger 2011.

The quarterly trends for IMAP-completed transactions in 2010 demonstrated an ever-rising volume in closed transactions throughout the year, with the fourth quarter ending on a high note with a flurry of activity. Fourth-quarter closed transactions pushed the volume to a pre- crisis level.

According to Mario Hugo Azulay a senior advisor with IMAP Argentina, this was because “the possibility of a second crisis dissipated and companies flush with cash saw growth opportunities in acquisitions.”

2010 transaction volume indicates economic recovery for M&A

“ We see a strengthening in the economy to where businesses are almost back to pre-crises levels. M&A activity will pick up [even more] as companies become more confident in executing their growth strategies in 2011.” — Heinz Brasic, IMAP Austria

IMAP YE ARLY TR ANSACTION VOLUME, 20 0 0-2010

0

100

200

300

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

182199 210

190220 218

179 184217 254 252

Yearly transaction volumeTrend line

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IMAP increased percentage of cross-border projectsEach year, IMAP tracks the transactions it completes that involve a buyer and seller from different countries. The percentage of completed transactions that are cross-border projects is a measure of an advisory’s effectiveness as a global, collaborative organization.

In 2010, 33.2 percent of IMAP-completed transactions were cross-border, slightly above 2009’s 30 percent. Overall, the percentage of transactions completed by IMAP that are cross-border has risen 30 percent over the last five years.

IMAP QUARTERLY TR ANSACTION VOLUME, 20 08-2010

200820092010

Q1 Q2 Q3 Q40

20

40

60

80

PERCENTAGE OF IMAP TRANSACTIONS THAT WERE CROSS-BORDER

2006

2007

2008

2009

2010

0% 5% 10% 15% 20% 25% 30%

25.5%

25.2%

29.8%

30.0%

33.2%


Cause for even more optimism involves a whopping increase in the total value of the transactions IMAP closed in 2010 — from $6.2 billion in 2009 to $11 billion in 2010.

Europe, Latin America and Asia all showed significant increases in the average transaction size in 2010 compared to 2009. North America was the only region to show a decline in the average transaction value —from $83 million in 2009 to $75 million in 2010.

While IMAP’s 2010 average transaction value of $59.8 million was nearly 80 percent higher than 2009’s average value of $34.4 million, it was much more in line with 2008, when the average transaction price was $51.7 million. With 2010 providing distance for hindsight,

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2 010 TR ANSACTIONS BY REGION

Total # of Transactions

Average Deal Sizein Millions US$

Total Valuein Billions US$

Asia 11 $50.21 $0.55

EMEA* 119 $20.12 $2.39

Latin America 12 $409.01 $4.91

US & Canada 42 $75.14 $3.16

TOTAL 184 $138.62 $11.01

*EMEA: Europe, Middle East and Africa

Total transaction value increased 79 percent in 2010

Up to $10MMOver $10MM

2010 TR ANSACTIONS BY SIZE

2005 2006 2007 2008 2009 2010

139

81

133

85

115

139

115

137

112

6778

106

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“ Improved economic circumstances and more confidence in the future improved valuations in 2010.” — Peter De Waele, IMAP Belgium

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YE ARLY AVER AGE TR ANSACTION VALUES, 20 0 0-2010 Trend Line

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010$0

$10

$20

$30

$40

$50

Aver

age

Year

ly T

rans

actio

n Va

lue

in

Mill

ions

US$

$17.3

$10.5

$20.4$18.5$16.5

$30.5 $20.1

$39.2

$51.7

$34.4

$59.8

2009 is looking even more like the low point for M&A activity in this current cycle.

IMAP advisors attribute the increased value in transactions to improvement in the overall health of the economy. “Profits increased, making it possible to sell again at decent prices,” said Ian Macdonell of IMAP Toronto. “Private equity groups were back in the market because of sustainable growth in the economy,” added Axel Fuhri Snethlage of IMAP Amsterdam. “Market sentiment improved,” said Stephen van den Heever (IMAP Denver). “Fear of a double-dip seems to be less worrisome. There seems to be pressure on strategic companies to get out and put some of the excess cash to work.”

The increased transaction values of IMAP-completed transactions in 2010 also reflects a return to the pre-2009 trend of IMAP closing a larger percentage of transactions above $10 million, indicating that the advisory has evolved from being traditionally an advisory specializing in middle-market M&A to one that serves companies of all sizes. In 2010, 58 percent of all the transactions completed by IMAP were valued above $10 million, which is a new record.


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IMAP clients in the industrials sector, followed by high technology, consumer products and services, consumer staples and healthcare, had the most transaction closings in 2010, which is consistent with 2009 activity. More than one-fifth of IMAP’s closed transactions involved companies in the industrials sector. IMAP completed 41 transactions in the industrials sector, 23 transactions in high tech, 18 in consumer products and services, 17 in consumer staples, and 16 in healthcare.

“The industrials sector was very active last year in M&A due to the larger companies acquiring their smaller competitive counterparts at a discount,” said Kerry Dustin, a senior advisor with IMAP in Naples, Florida. “The loss of clients for many of these companies throughout 2010 made for some attractively priced acquisitions.”

On the other hand, companies able to weather the crisis were also attractive to buyers. “Specific companies in selected industries showed resistance to the financial crisis,” said John Jensen, an advisor with IMAP Denmark, “these companies where especially attractive to buyers in 2010.”

Retail and the media and entertainment sector showed the most increase in the number of transactions compared to the year before — retail went from nine transactions in 2009 to 15 in 2010 and media and entertainment, which had five transactions in 2009, rose to nine. Energy and power, though still considered an active industry, especially in Europe (see the results of IMAP’s advisor survey beginning on Page 10), had fewer deals close in 2010 — eight in 2010, compared to 14 in 2009. Financials also posted fewer closed transactions, 14, versus 19 in 2009.

Industrials sector continues to post the most closed transactions

IMAP TR ANSACTIONS BY INDUSTRY SECTOR, 20 0 9-2010 20092010

Perc

enta

ge o

f Tra

nsac

tions

Cl

assifi

ed in

Eac

h Se

ctor

0%

5%

10%

15%

20%

25%

Consumer Products &

Services

Consumer Staples

Energy & Power

Financials Healthcare High Technology

Industrials Materials Media & Entertainment

Real Estate

Retail Telecom

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Examples of cross-border M&A transactions completed by IMAP in 2010


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Valuation multiples showed steady and significant improvement in 2010, rising to levels not seen since 2008. Fourth-quarter closed-transaction data showed an average multiple of 7.74x EBIT, bringing up the total average multiple for the year to 7.05x EBIT. The range of multiples was from a low of 2.39x EBIT (for a private-equity investment of a food company) to a high of 18.37x (for a transaction involving a European home improvement company).

Like in 2009, retail-sector transactions saw the highest multiples in 2010 — on average, 9.7 x EBIT (compared to 7.7x in 2009), followed by healthcare (9.37x), materials (9.19x), media and entertainment (9x),

AVER AGE AND MEDIAN MULTIPLES BY QUARTER, 20 0 9-2010*

Q1 2009 Q2 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010 Q3 2010 Q4 20100

2

4

6

8

10

6.27.4

5.7 5.86.5 6.3 5.9

6.9

Average

Average multiples rose 28 percent from Q4 2009 to Q4 2010

“ Many companies became leaner due to the crisis, and many, hopefully, show increased earnings, which can provide the basis for attractive valuation.” — Lars Rau Jacobsen, IMAP Denmark

* Data includes only transactions with an industry classification and a positive EBIT value.

7.1 7.3

5.9 6.0

7.2 7.4 7.07.7

Median

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MULTIPLES BY INDUSTRY SECTOR, 2010 VS. 20 0 9

Industry Sector YearNumber of

Transac-tions*

Avg. EV** as Multiple

of EBIT

Median EV** as Multiple

of EBIT

Low EV** as Multiple

of EBIT

High EV** as Multiple

of EBIT

Revenue Multiple

Consumer Products & Services

2009 9 5.6 4.8 4.1 6.8 0.7

2010 18 7.6 7.2 5.0 10.0 1.0

Consumer Staples2009 9 6.2 5.5 2.9 9.6 0.7

2010 17 7.3 7.3 2.4 12.5 0.4

Energy & Power2009 6 6.3 5.9 5.0 9.2 1.0

2010 8 5.0 5.0 3.8 6.2 1.6

Financials2009 6 6.7 5.9 3.5 10.2 0.7

2010 14 7.4 7.6 2.5 12.1 0.7

Healthcare2009 8 6.5 6.5 4.1 8.4 0.5

2010 16 9.4 8.7 3.1 15.5 1.2

High Technology2009 13 6.4 5.8 2.9 10.9 0.7

2010 23 6.3 5.0 3.1 12.5 0.9

Industrials2009 17 6.0 5.3 3.0 11.0 0.5

2010 41 6.2 5.6 3.6 11.9 0.6

Materials2009 8 6.1 5.7 3.3 10.9 0.4

2010 15 9.2 8.5 3.1 17.1 1.2

Media & Entertainment

2009 1 5.3 5.3 5.3 5.3 0.6

2010 9 9.0 9.0 9.0 9.0 0.9

Real Estate2009 3 6.9 5.3 5.0 10.2 0.6

2010 5 3.8 3.8 3.6 3.9 1.1

Retail2009 3 7.7 7.7 6.6 8.7 0.1

2010 15 9.7 9.0 6.0 18.4 0.4

Telecommunications2009 1 4.8 4.8 4.8 4.8 1.1

2010 3 4.2 4.2 3.3 5.2 0.9

* Data includes only transactions that have multiples data available and that have a positive EBIT value. ** Enterprise Value

consumer products and services (7.6x), financials (7.39x), consumer staples (7.26x), high tech (6.31x), industrials (6.22x), energy and power (4.99x), telecommunications (4.22x) and real estate (3.75x).

IMAP advisors attribute the rise in valuations to the improved economy and more eager investors. “Private equity buyers have a strong imperative to invest, which helped 2010 figures,” said Mark Gillespie, a senior advisor with IMAP United Kingdom. “Cash is ‘burning’ in the pocket of private equity groups,” agreed Lars Rau Jacobsen, an IMAP analyst based in Denmark. “Many raised large funds in 2005 and 2006, and are now in a hurry to invest the money before the investment period of the fund expires. Less uncertainty in the world economy has given buyers the courage to pursue acquisitions.”


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IMAP advisors’ observations point to recovery in M&A marketsIn December 2010, IMAP conducted its annual survey of its advisors across the globe regarding the M&A activity they observed in 2010 and their outlook for 2011. More than 150 advisors participated in the survey; of these, 64 percent work in Europe and the Middle East, 19 percent are North American, 9 percent are from Latin America, and 8 percent are from Asia.

M&A activity increased as year progressed

* Europe, Middle East and Africa

IN 2010, WHEN WAS IT E ASIEST TO.. . Beginning of 2010 End of 2010 No Difference

Complete Transactions? Obtain Sell Mandates? Obtain Buy Mandates?100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%Asia EMEA* Latin

AmericaUS &

CanadaTOTAL Asia EMEA* Latin

AmericaUS &

CanadaTOTAL Asia EMEA* Latin

AmericaUS &

CanadaTOTAL

IMAP advisors reported that M&A activity increased as the year 2010 progressed. Sixty-four percent of the advisors reported that it was easier to complete transactions at the end of the year. (In fact, about one-third of all IMAP-assisted transactions completed in 2010 were closed in the fourth quarter.)

The majority of advisors (59 percent) also said that sell mandates were easier to obtain at the end of 2010, indicating that sellers be-haved similarly to 2009, when they showed a wait-and-see approach to selling. Looked at by region, however, more advisors operating in Asia reported that the beginning of 2010 was the easiest time to obtain sell mandates.

Buy mandates did not follow the same pattern: Only 31 percent of advisors said they were easier to obtain later in the year and more than half reported no difference throughout the year. In fact, the vast majority of Latin and North American advisors reported no difference during the year.

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“ Many M&A pipelines increased substantially in early 2010 when compared to 2009. Considering the time lag to close a transaction, it was the second half of 2010 when the activity registered.”

— Ian Anderson, IMAP Ireland

Time it took to complete transactions decreased significantly in 2010Completing a transaction appears to have been easier — or at least quicker— to accomplish in 2010. In last year’s survey, IMAP respondents reported that it took 36 weeks to manage and complete the five essential components of a sell-side engagement for a “non-stressed” client in 2009; whereas this year they reported it took only 32 weeks, on average, to complete the tasks in 2010 — a full month less.

A quarter of the advisors reported that in 2010 they were able to close a transaction in under six months, on average, and 75 percent reported it took more than six months — a significant change from 2009, when only 10 percent of the advisors were

able to close transactions in less than six months, and it took more than six months for 90 percent.

Interestingly, completing the engagement took longer to conduct in North America than in the other regions. U.S. and Canadian advisors said it took 36.9 weeks, on average, to manage and complete a sell-side engagement in 2010, compared to 32.6 weeks in Europe, 27.4 weeks in Latin America and just 24 weeks in Asia. Much of this is attributed to a significantly longer due-diligence process for North Americans: 10.3 weeks, on average, versus seven weeks in Latin America, 5.9 weeks in Europe and 5.4 weeks in Asia.

Number of weeks, on average, it took to complete the components of a sell-side engagement for a “non-stressed” client, 2009 vs. 2010

0

2

4

6

8

Discuss, Propose and

Negotiate a Mandate

Prepare and Market

a Project

Evaluate Buyer Prospects

Conduct Due Diligence

Negotiate Purchase

Agreement and Close a Transaction

7.0 6.97.46.6

7.7 7.5

5.87.1

5.76.8

Total average time, in months, it took to complete a sell-side engagement for a “non-stressed” client, 2009 vs. 2010

4 months or less

4-6 months 6-8 months More than 8 months

0%

10%

20%

30%

40%

50%

2009

2010


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Ninety-nine percent of IMAP advisors believe that transaction pric-ing will not go any lower in 2011, and more than half expect prices to rise. Compare this forecast to the beginning of 2009, when ninety-two percent of the advisors forecasted lower transaction valuations for that year, and also to a year ago, when only 44 percent of the advisors were optimistic enough to predict better prices in 2010.

IMAP advisors also forecast higher buyer equity* for 2011. The advisors were directly on target when it came to predicting what the average buyer equity would be 2009 — 57 percent — but posted a slightly more encouraging forecast for 2010: about 54 percent. The actual average buyer equity in 2010 came in higher, at 59.1 percent. For 2011, IMAP advisors forecast that the average buyer equity will be about 53 percent. *Buyer equity includes subordinated debt supplied by the buyer. It is a percentage of the total transaction value (which is enterprise value and includes all consideration paid including the value of assumed interest bearing debt).

IMAP advisors predict higher transaction prices, buyer equity in 2011

Will M&A transaction pricing be higher or lower in 2011?

Higher

Lower

No Change

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%Asia EMEA Latin

AmericaUS &

Canada

Asia EMEALatin

AmericaUS &

Canada Total

2008 Review N/A 56.4% 12.5% 49.5% 50.3%

2009 Forecast N/A 65.0% 29.0% 55.0% 57.3%

2009 Review 42.5% 57.2% 83.2% 48.2% 56.6%

2010 Forecast 53.3% 53.8% 74.5% 46.2% 53.7%

2010 Review 55.0% 62.7% 68.8% 46.2% 59.1%

2011 Forecast 51.2% 52.9% 73.5% 45.0% 53.1%

Average buyer equity reported & forecasted

34.0%

43.5%

12.0%

10.5%

The valuation gap between buyer and seller

There was a MINOR difference in the valuation gap between buyer and seller (less than 1 times EBIT).

There was a REASONABLE difference in the valuation gap between buyer and seller (1 to 2 times EBIT).

There was a CHALLENGING difference in the valuation gap between buyer and seller (2 to 4 times EBIT).

There was a DRAMATIC difference in the valuation gap between buyer and sellers (more than 4 times EBIT).

Based on percentage of advisors’total transactions in 2010

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IMAP advisors saw an increase in the numbers of both buyers and sellers in 2010 compared to 2009. Last year, 73 percent of IMAP advisors reported that there were fewer sellers in 2009 (compared to 2008) and 66 percent reported fewer buyers. In 2010, there was a reversal of this trend: More than 60 percent of the advisors reported seeing more sellers in 2010 (compared to 2009) and 75 percent observed more buyers.

Furthermore, the advisors are optimistic about the number of buyers and sellers that will be seen in 2011. Three-fourths expect there will be more sellers in 2011, and 66 percent anticipate more buyers. Less than 3 percent of the respondents expect either fewer sellers or fewer buyers in 2011.

There were some significant differences among regions, however. Sixty-eight percent of the Europeans and 59 percent of the North American advisors reported more sellers in 2010 compared to 2009. By comparison, only 27 percent of the advisors from Latin America and just one-third of the Asian advisors saw more sellers. On the other hand, 100 percent of the advisors working in Asia reported more buyers in 2010, compared to 70 percent of the Europeans, 73 percent of the Latin American advisors and 82 percent of the North Americans.

IMAP advisors witnessed an improvement in the valuation gap between buyers and sellers in 2010. Last year, on average, the advisors reported that in 34.7 percent of the transactions they completed in 2009 there was a “challenging difference in the valuation gap between buyer and seller (two to four times EBIT)” and that there was a “dramatic difference (more than four times EBIT) in 13 percent of their transactions. Those numbers are down significantly for 2010.

On average, only 12 percent of IMAP’s transactions involved a “challenging” difference in the valuation gap and only 10.5 percent involved a “dramatic” difference. Advisors reported that in a majority of their transactions (77.5 percent, on average) there was only a “minor” or “reasonable” difference between buyer and seller valuation expectations.

More buyers and sellers in the market in 2010

Valuation gap between buyer and seller narrowed in 2010

Number of buyers and sellers in 2010 compared to 2009

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Asia

EMEA

Latin America

US & Canada

More Buyers More Sellers

Forecast regarding buyers and sellers in 2011 compared to 2010

More Same Fewer

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Asia

Buye

rsSe

llers

EMEA

Buye

rsSe

llers

Latin America

Buye

rsSe

llers

US & Canada

Buye

rsSe

llers


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Industry consolidation, economic pressures and the most traditional motivator for M&A, the business owner’s age or health, drove M&A in 2010. More than 60 percent of the respondents named “industry consolidation or changes compelled the sale” as one of the top three reasons for M&A in 2010 and 18 percent named it as the top reason. More than half cited the owner’s age or health as one of the top three reasons and more respondents (28 percent) said it was the top reason above all others. Forty-five percent cited “seller needed new funding to continue or expand the business” and 27 percent put “financial leverage/debt was too high” among the top three M&A drivers in 2010. MBOs or taking private to improve valuation were the least cited reasons for M&A in 2010.

On a regional basis, industry consolidation was the top driver for M&A in Europe and Asia. The seller’s need for new funding to grow was No. 1 in Latin America, indicating the expanding markets in this

Top factors that INHIBITED M&A transactions from getting finalized in 2010

0% 10% 20% 30% 40% 50%

Lack of Available Funding

Unattractive Valuations to Sellers

Unattractive Purchase Prices to Buyers

Inflexible or Difficult Acquisition Terms

No Compelling Reasons to Sell

Lack of Confidence in Target’s Expected Business Performance

Lack of Buyers

Depressed Profits

Market Volatility and Uncertainty

Top factors that HELPED M&A transactions get finalized in 2010

0% 10% 20% 30% 40% 50%

Access to Available Financing

Attractive Valuations to Sellers

Attractive Purchase Prices to Buyers

Flexible Acquisition Terms

Financial Realities and Pressures

Less Expensive to Buy Than to Build Organically

Confident Outlook for Target’s Business Prospects

Opportunity to Enter New Markets at Attractive Prices or on More Flexible Terms

Consolidation, economic pressures and other traditional reasons drove M&A in 2010

Top reasons for M&A transactions in 2010

Industry Consolidation or Changes Compelled the Sale

Exit Due to Age/Health

Seller needed New Funding to Continue or Expand the Business

Financial Leverage/Debt Was Too High

Seller desired to Concentrate on Core Activities and Focus Resources

Opportunity to Purchase was Unusually Attractive to Buyer

Opportunity to Sell/Buyer’s Offer was Unusually Attractive to Seller

Lender/Creditors Forced the Sale

Other

Profitability Was Too Low and Inadequate Capital Reserves

Business Model Was Nearing Obsolescence

MBOs

Took Private to Improve Valuation

0% 10% 20% 30% 40% 50%

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region. In North America, it was exit due to health, which may indicate that sellers were more willing to sell based on personal circumstances than for purely business reasons. (Detailed regional chart on Page 24.)

About a fifth of the respondents cited unusually attractive opportunities — for either the buyer or seller — as a top-three driver for M&A in 2010, indicating that reduced prices and competitive offers have driven a good portion of recent transactions. Indeed, advisors most often cited “attractive purchase prices to buyers” as one of the top three factors that helped transactions get finalized in 2010. “Access to available financing” was the second most-cited factor, followed by “confident outlook for target’s business prospects” and “attractive valuations to sellers.” Conversely, “unattractive valuations to sellers” was the most often cited as a top-three factor that inhibited transactions from getting done in 2010.

Based on the advisors’ observations, what drove companies to sell in 2010 was a myriad of reasons, top among them, forced sales due to financial distress, sellers coming to terms with lower valuations, more flexible terms from private equity buyers and competi-tive factors. Advisors were more in sync about why buyers bought in 2010. Seventy-two percent named “opportunity to purchase companies at attractive prices” as a top-three reason buyers bought in 2010.

The factors that drove M&A in 2010 (e.g., exit due to the owner’s age or health and industry consolidation) will likely continue to drive M&A in 2011, say advisors. Thirty-one percent also said that “financial investors with cash in their pockets looking for new investment opportunities” will be one of the top-three drivers in 2011. Seller needing funding and business recovery helping EBITDA and valuations return to pre-crisis levels will also drive the markets this year.

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Top reasons sellers sold in 2010

0% 10% 20% 30% 40% 50%

Private Equity Buyers Were More Flexible in Structuring Acquisitions

to Make Up for Lack of Bank FinancingSellers Were Concerned That Valuations Might

Go Even Lower If They WaitedCompetitive Factors Required Greater Scale

and Resources To Be Successful

Forced Sales Due to Financial Distress

Pressure from Banks and Creditors

Sellers Came to Terms with Lower Valuations

Opportunistic Response to Attractive and/or Flexible Offers from Strategic Buyers

No Willingness to Wait for Next Upturn

Top reasons buyers bought in 2010

0% 10% 20% 30% 40% 50% 60% 70%

Opportunity To Purchase Companies Rarely Available on the Market

Opportunity To Purchase Companies at Attractive Prices

Ability to Structure More Optimal Long-Term Growth Strategy Through Reasonable

Acquisition ProposalsEasier to Achieve Growth Objectives Through

Acquisitions Versus Organic ActivitiesAcquisitions Were Necessary to Maintain

Appropriate Market CoverageCompetitors’ Pressures Justified the Acquisition

Situation

Private Equities Needed to Do Deals

Global Strategic Repositioning

Top areas for M&A opportunities in 2011


Industry Consolidation or Changes Compel the Sale

Financial Investors with Cash in Their Pockets Will Be Looking for Investment Opportunities

Seller Needs Funding to Continue or to Expand the Business

Business Recovery Will Help EBITDA and Valuations Return to Pre-2009 Levels

Buyers Looking for New Markets Abroad

Financial Leverage/Debt is Too High

Buyers see Unusually Attractive Acquisition Opportunities

Globalization Will Force Sale of Local/Regional/National Companies

MBOs

Profitability is Too Low and Inadequate Capital Reserves

Business Model is Nearing Obsolescence

Other

Tax Increases Will Cause Sellers To Accelerate Exit Plans

Take Private to Improve Valuation

0% 10% 20% 30% 40% 50%


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Respondents reported that the industrials sector saw the most M&A activity in 2010. More than 50 percent of the respondents, worldwide, named industrials as one of the top three most active sectors. Forty-eight percent of the respondents cited consumer products and services as a top-three sector and 41.5 percent cited healthcare. The advisors also said energy and power was active: 38 percent put it in the top three.

Industrials, consumer products and services and healthcare most active in 2010

Last year, 84 percent of the survey respondents reported that bank financing had been more difficult to obtain in 2009 versus 2008; and more than half reported that financing had been “substantially” more difficult to obtain. Just one year later, 64 percent of the IMAP advisors report that bank financing was easier to obtain in 2010 than in 2009. Moreover, more than half expect access to financing to be even easier in 2011; 38 percent expect access to be about the same; and only about 6 percent expect access to be more difficult in 2011. Interestingly, none of those with the more pessimistic viewpoint toward financing operate in North America.

All regions reported easier access to bank financing in 2010 over 2009, but there were some distinctions: None of the Latin Americans experienced more difficulty obtaining access to bank financing, while some advisors from the rest of the world reported more difficulty.

Easier access to bank financing

Industr ies that saw the most act iv i t y, 2 010 vs . 2 0 0 920092010

Consumer Products &

Services

Consumer Staples

Energy & Power

Financials Healthcare High Technology

Industrials Materials Media & Entertainment

Real Estate

Retail Telecom

Perc

enta

ge a

re b

ased

on

no. o

f res

pond

ents

w

ho ra

nked

the

indu

stry

as N

o. 1

,2 o

r 3

0%

10%

20%

30%

40%

50%

60%

Average percentage of the total transaction price that was provided by bank financing in 2010

Asia EMEA Latin America US & Canada Total

5.0% 30.0% 41.3% 38.8% 31.9%

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On a regional basis, more respondents in North America cited healthcare as the most active sector than any other sector (41 percent); consumer products and services and retail were most often cited as the most active sector by advisors in Latin America; industrials was No. 1 in Europe; and consumer products and services was No. 1 in Asia. (See 2010 industry chart by region on Page 24.)

Asia’s advisors are predicting that industrials will be the most active industry sector in their region in 2011, while advisors in Latin America see consumer products and services remaining strong. North American advisors see healthcare continuing to be the most active sector in their region. The Europeans see industrials, high technology and energy and power as having the most activity in M&A in 2010.

Asia EMEALatin

AmericaUS &

Canada

Easier access 77.8% 60.5% 54.5% 72.7%

Same access 11.1% 21.1% 45.5% 22.7%

Somewhat more diffi-cult access

11.1% 13.2% 0.0% 4.5%

Substantially more difficult access

0.0% 5.3% 0.0% 0.0%

Bank financing in 2010 compared to 2009, by region

M&A market regarding bank financing in 2010 compared to 2009

63.6%

22.9%

10.2%

3.4%

2010 Respondents Easier Access to Bank Financing

Same Access to Bank Financing

Somewhat More Difficult Access to Bank Financing

Substantially More Difficult Access to Bank Financing

6.7%9.2%

33.3%50.8%

2009 Respondents

Industries that will see the most M&A activity in 2011

0% 10% 20% 30% 40% 50% 60%


Consumer Staples

Energy & Power

Financials

Healthcare

High Technology

Industrials

Materials


Real Estate

Retail

Telecommunications

Percentage of respondents who ranked the industry among the top three


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Statistical ReferenceThis section of the IMAP Transaction and Pricing Survey provides more data to support the summary conclusions contained in the previous pages.

In the following pages, supporting detail is provided for: • Transactions • Multiples • Advisor Survey

It should be noted that all of the information is accumulated from IMAP’s own results. While there is no claim that the data are all statistically valid (in some situations due to small sample size), IMAP has attempted to compile this information in a consistent manner during the 17 years that IMAP has published its statistics.

IMAP hopes that this information may provide some insight to the global M&A markets in 2010, which the reader may find useful in evaluating M&A opportunities in 2011. As is always the case, the past is no guarantee of the future. Likewise, the results provided herein were generated from market activities that may or may not be repeated in 2011.

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Quarterly Trends in Transaction Volume

2008 2009 2010% Total Value

of Closed Transactions

% Total # of Closed

Transactions

% Total Value of Closed

Transactions

% Total # of Closed

Transactions

% Total Value of Closed

Transactions

% Total # of Closed

Transactions

1st Quarter 30.4% 24.2% 11.3% 22.3% 45.8% 18.5%

2nd Quarter 21.6% 23.0% 36.8% 16.8% 11.6% 23.9%

3rd Quarter 36.6% 29.0% 27.6% 30.2% 12.7% 25.5%

4th Quarter 11.3% 23.8% 24.4% 30.7% 29.9% 32.1%

Transaction Volume & Value, 2006-2010

Year Total # of Transactions Total Value of Transactions Average Value per Transaction

2006 218 $6,341,000,000 $29,087,156

2007 254 $9,946,000,000 $39,157,480

2008 252 $13,024,000,000 $51,682,540

2009 179 $6,159,324,380 $34,409,633

2010 184 $11,010,780,821 $59,841,200

Transactions by Size, 2005-2010

2005 2006 2007 2008 2009 2010

# of Trans. % of Trans. # of Trans. % of Trans. # of Trans. % of Trans. # of Trans. % of Trans. # of Trans. % of Trans. # of Trans. % of Trans.

Below $10MM 139 63.2% 133 61.0% 115 45.3% 115 45.6% 112 62.6% 78 42.4%

Above $10MM 81 36.8% 85 39.0% 139 54.7% 137 54.4% 67 37.4% 106 57.6%

Total 220 100.0% 218 100.0% 254 100.0% 252 100.0% 179 100.0% 184 100.0%

Transactions


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Transactions by Region, 2010 vs. 2009

2009 2010# of

TransactionsAverage Value in Millions US$

Median Value in Millions US$

Total Value in Billions US$

# of Transactions

Average Value in Millions US$

Median Value in Millions US$

Total Value in Billions US$

Asia 12 $22.86 $13.82 $0.27 11 $50.21 $22.00 $0.55

EMEA* 106 $12.10 $5.11 $1.28 119 $20.12 $8.75 $2.40

Latin America 7 $23.52 $20.72 $0.17 12 $409.01 $35.25 $4.91

US & Canada 54 $83.24 $9.00 $4.50 42 $75.14 $15.21 $3.16

Total 179 $34.41 $6.16 184 $59.84 $11.01

Transactions by Region by Size, 2010 vs. 2009

Asia EMEA* Latin America US & Canada

# of Trans. % of Trans. # of Trans. % of Trans. # of Trans. % of Trans. # of Trans. % of Trans.

2009 2010 2009 2010 2009 2010 2009 2010 2009 2010 2009 2010 2009 2010 2009 2010

Below $10MM 3 2 25.0% 18.2% 77 62 72.6% 52.1% 0 2 0.0% 16.7% 23 12 42.6% 28.6%

$10MM-$50MM 7 7 58.3% 63.6% 24 47 22.6% 39.5% 7 6 100% 50.0% 15 21 27.8% 50.0%

$50MM-$100MM 2 1 16.7% 9.1% 2 6 1.9% 5.0% 0 2 0.0% 16.7% 4 3 7.4% 7.1%

Above $100MM 0 1 0.0% 9.1% 3 4 2.8% 3.4% 0 2 0.0% 16.7% 12 6 22.2% 14.3%

Total 12 11 100% 100% 106 119 100% 100% 7 12 100% 100% 54 42 100% 100%


2009 2010

Consumer Products & Services 8.3% 9.8%

Consumer Staples 8.9% 9.2%

Energy & Power 7.6% 4.4%

Financials 10.8% 7.6%

Healthcare 8.9% 8.7%

High Technology 14% 12.5%

Industrials 22.3% 22.3%

Materials 8.3% 8.2%

Media & Entertainment 2.5% 4.9%

Real Estate 1.9% 2.7%

Retail 5.1% 8.2%

Telecommunications 1.3% 1.6%

Percentage of Total Transactions by Industry, 2010 vs. 2009

Transactions continued

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Number of Transactions

Avg. Enterprise Value as Multiple of EBIT Revenue Multiple Average Revenue of

Seller in Millions US$

Consumer Products & Services 18 7.6 1.0 $15.4

Consumer Staples 17 7.3 0.4 $32.5

Energy & Power 8 5.0 1.6 $16.0

Financials 14 7.4 0.7 $83.9

Healthcare 16 9.4 1.2 $53.3

High Technology 23 6.3 0.9 $40.9

Industrials 41 6.2 0.6 $22.2

Materials 15 9.2 1.2 $175.4

Media & Entertainment 9 9.0 0.9 $11.0

Real Estate 5 3.8 1.1 $60.0

Retail 15 9.7 0.4 $84.5

Telecommunications 3 4.2 0.9 $4.4

Multiples by Industry Sector

Quarterly Multiple of EBIT Analysis, 2010 vs. 2009Q1 Q2 Q3 Q4 Full Year

2009 Average 7.1 7.3 5.9 6.0 6.6

2009 Median 6.2 7.4 5.7 5.8 6.0

2010 Average 7.2 7.4 7.0 7.7 7.1

2010 Median 6.5 6.3 5.9 6.9 6.7

MultiplesThese tables showing multiple medians include only those transactions for which adequate information was provided. Multiples of Earnings Before Interest and Taxes were used in the comparisons. EBIT was calculated as trailing 12 months earnings before interest and taxes, adjusted for non-recurring expenses and discretionary owner distributions including compensation in excess of market rates. Seller notes, etc., were discounted to present values. To compute the multiple, one divides the purchase price plus the assumption of any interest bearing debt by the adjusted EBIT.


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About the Advisor SurveyAs part of IMAP’s annual transaction and pricing review, each year IMAP conducts an opinion survey of its advisors across the globe to obtain qualitative information about the M&A activity they observed during the year immediately ended and their outlook for the upcoming year. IMAP advisors are solicited for their thoughts with respect to:

• Buyer and seller availability and interest activity

• Availability of transaction funding• Equity percentages for M&A transactions• Expected valuations in the upcoming year• Areas of M&A opportunity for the

upcoming year• Environmental factors expected for the

upcoming year

In 2010, as has been true for the previous 16 years, IMAP advisors provided some additional insight to the deal market that cannot otherwise be extracted simply from closed-transaction data.

The table below provides a breakdown of the responses by geography for this year’s survey.

While IMAP strives to present the information obtained from this survey in a standard and consistent manner (so that the results can provide meaningful and useful information) IMAP does not represent that the results comply with any measure of rigid scientific or statistical validity.

Based on survey responses of more than 150 IMAP partners and advisors conducted during December 2010.

2010 TR ANSACTION & PRICING REPORT

Percentage of Total Respondents

Asia 8.4%

EMEA* 63.9%

Latin America 9.0%

US & Canada 18.7%

Asia EMEA*Latin

AmericaUS &

Canada

What was you average buyer equity for 2010, in percentage format?

55.0% 62.7% 68.8% 46.2%

What percentage of the total transaction price was provided by banks in 2010?

5.0% 30.0% 41.3% 38.8%


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How did 2010 compare to 2009 regarding the number of SELLERS?*

Asia EMEA Latin America

US & Canada

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%

More Sellers

Same Number of Sellers

Fewer Sellers

How did 2010 compare to 2009 regarding the number of BUYERS?*


US & Canada

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%

More Buyers

Same Number of Buyers

Fewer Buyers

How did 2010 compare to 2009 regarding BANK FINANCING?*

Easier Access to Bank Financing





US & Canada

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%

Advisor Survey: 2010 in Review

* Percentage of respondents


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What were the top three reasons for M&A transactions in 2010?*

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%


Financial Leverage/Debt Was Too High

Profitability Was Too Low and Inadequate Capital Reserves

Business Model Was Nearing Obsolescence

Industry Consolidation or Changes Compelled the Sale

MBOs

Took Private to Improve Valuation

Seller needed New Funding to Continue or Expand the Business

Seller desired to Concentrate on Core Activities and Focus Resources

Opportunity to Purchase was Unusually Attractive to Buyer

Opportunity to Sell/Buyer’s Offer was Unusually Attractive to Seller

Lender/Creditors Forced the Sale

Other

Asia EMEA Latin America US & Canada

What industries saw the most M&A activity in 2010?*


Consumer Staples

Energy & Power

Financials

Healthcare

High Technology

Industrials

Materials


Real Estate

Retail

Telecommunications

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%


Advisor Survey: 2010 in Review continued

* Percentages are based on number of respondents who ranked the reason or the industry as No. 1, 2 or 3

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What were the most important factors that helped M&A transactions get finalized in 2010?*

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%


Access to Available Financing






Confident Outlook for Target’s Business Prospects

Abundance of Seller Candidates

Abundance of Buyers

Opportunity to Enter New Markets at Attractive Prices or on More Flexible Terms

Less Competitive Circumstances Allowed Less Pressured Due Diligence and Decision-Making

Other

What were the most important factors that inhibited M&A transactions from getting finalized in 2010?*


0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Lack of Available Funding




No Compelling Reasons to Sell

Lots of Organic Growth Opportunities

Lack of Confidence in Target’s Expected Business Performance

Lack of Sellers

Lack of Buyers

High Risk Made Budgeting for Acquisitions Difficult

Political Risk

Depressed Profits

Market Volatility and Uncertainty

Other


* Percentages are based on number of respondents who ranked the factor as No. 1, 2 or 3


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What were the top reasons sellers sold in 2010?*


Private Equity Buyers Were More Flexible in Structuring Acquisitions to Make Up for Lack of Bank Financing

Even with a Lower Sale Price, the Sale Proceeds Were Used to Purchase Even More Discounted Public Securities

Sellers Were Concerned That Valuations Might Go Even Lower If They Waited

Competitive Factors Required Greater Scale and Resources To Be Successful

Industry Realignment Impacted Growth and Investment Strategies for the Business

Resources from the Business Could Be More Profitably Deployed in Other Areas

Businesses Nearing Obsolescence

Forced Sales Due to Financial Distress

Pressure from Banks and Creditors

Sellers Needed to Refocus Resources on Core Activities

Sellers Came to Terms with Lower Valuations

Opportunistic Response to Attractive and/or Flexible Offers from Strategic Buyers

No Willingness to Wait for Next Upturn

Other

0% 10% 20% 30% 40% 50% 60% 70% 80%

What were the top reasons buyers bought in 2010?*


Opportunity To Purchase Companies Rarely Available on the Market

Opportunity To Purchase Companies at Attractive Prices

Ability to Structure More Optimal Long-Term Growth Strategy Through Reasonable Acquisition Proposals

Easier to Achieve Growth Objectives Through Acquisitions Versus Organic Activities

Acquisitions Were Necessary to Maintain Appropriate Market Coverage

Competitors’ Pressures Justified the Acquisition Situation

Other Options Available to Achieve Adequate Return on Investment Were Limited

Private Equities Needed to Do Deals

Global Strategic Repositioning

Other

0% 10% 20% 30% 40% 50% 60% 70% 80%


* Percentages are based on number of respondents who ranked the reason as No. 1, 2 or 3

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During 2010, when was it easier to complete M&A transactions?*

Beginning of 2010

End of 2010

No Difference

Asia EMEA** Latin America

US & Canada

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%

During 2010, when was it easier to obtain SELL mandates?*

Beginning of 2010

End of 2010

No Difference


US & Canada

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%

During 2010, when was it easier to obtain BUY mandates?*

Beginning of 2010

End of 2010

No Difference


US & Canada

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%


* Percentage of respondents ** Europe, Middle East and Africa


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How many weeks, on average, did it take to manage and complete the components of a sell-side engagement for a “non-stressed” client in 2010?

Discuss, Propose and Negotiate a Mandate

Prepare and Market a Project

Evaluate Buyer Prospects

Conduct Due Diligence

Negotiate Purchase Agreement and Close a

Transaction

Average Weeks Yes, this was more than 2009. Average Weeks Yes, this was

more than 2009. Average Weeks Yes, this was more than 2009. Average Weeks Yes, this was

more than 2009. Average Weeks Yes, this was more than 2009.

Asia 4.44

34.2%

4.11

17.9%

3.89

25.6%

5.44

36.8%

6.11

43.1%EMEA* 6.26 7.09 6.22 5.92 7.08

Latin America 4.55 6.00 3.45 7.00 6.36

US & Canada 5.36 8.86 5.50 10.27 6.91

How much TOTAL TIME, in months, on average did it take to manage and complete a sell-side engagement for a “non-stressed” client in 2010?

4 Months or Less

4 to 6 Months

6 to 8 Months

More Than 8 Months

Asia EMEA* Latin America

US & Canada

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%


Regarding buyer and seller valuation discussions, what percentage of your transactions in 2010 fell into each of the following categories:

There was a MINOR difference in the valuation gap between buyer and seller (less than 1 times EBIT). There was a REASONABLE difference in the valuation gap between buyer and seller (1 to 2 times EBIT). There was a CHALLENGING difference in the valuation gap between buyer and seller (2 to 4 times EBIT). There was a DRAMATIC difference in the valuation gap between buyer and sellers (more than 4 times EBIT).

38% 32% 25% 5%Asia

33.7% 39.5% 12.3% 14.5%EMEA*

12.5% 65% 17.5% 5%Latin America

47.5% 41.7% 3.3% 7.5%US & Canada


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What do you anticipate your AVERAGE BUYER EQUITY will be in 2011, in percentage (%) format?

Asia EMEA* Latin America US & Canada Total

51.2% 52.9% 73.5% 45.0% 53.1%

What do you foresee for 2011 regarding BUYERS?

More Buyers

Same Number of Buyers

Fewer Buyers


US & Canada

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%

What do you foresee for 2011 regarding SELLERS?

More Sellers

Same Number of Sellers

Fewer Sellers


US & Canada

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%

What do you foresee for 2011 regarding BANK FINANCING?

Easier Access to Bank Financing





US & Canada

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%

Will M&A transaction pricing be higher or lower in 2011?

Higher

Lower

No Change


US & Canada

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%

Advisor Survey: 2011 Forecast



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What will be the top areas for M&A opportunities in 2011?*

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Asia EMEA** Latin America US & Canada


Financial Leverage/Debt is Too High

Profitability is Too Low and Inadequate Capital Reserves

Business Model is Nearing Obsolescence

Industry Consolidation or Changes Compel the Sale

MBOs

Take Private to Improve Valuation

Seller Needs Funding to Continue or to Expand the Business

Buyers see Unusually Attractive Acquisition Opportunities

Financial Investors with Cash in Their Pockets Will Be Looking for Investment Opportunities

Tax Increases Will Cause Sellers To Accelerate Exit Plans

Buyers Looking for New Markets Abroad

Globalization Will Force Sale of Local/Regional/National Companies

Business Recovery Will Help EBITDA and Valuations Return to Pre-2009 Levels

Other

What industries will see the most M&A activity in 2011?*



Consumer Staples

Energy & Power

Financials

Government & Agencies

Healthcare

High Technology

Industrials

Materials


Real Estate

Retail

Telecommunications

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Advisor Survey: 2011 Forecast continued

* Percentages are based on number of respondents who ranked the area of opportunity or the industry as No. 1, 2 or 3 ** Europe, Middle East and Africa

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What will be the most important factors that will help M&A transactions get finalized in 2011?*


0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Available Funding






Favorable Outlook for Target’s Business Operations

Abundance of Seller Candidates

Abundance of Buyers

Less Competitive Circumstances Allow Less Pressured Due Diligence and Decision-Making

Other

What will be the most important factors that will inhibit M&A transactions from getting finalized in 2011?*


0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Lack of Funding




No Compelling Reasons To Sell

Lots of Organic Growth Opportunities

Inability to Become Secure in Target’s Expected Business Performance

Lack of Sellers

Lack of Buyers

Slow Recovery of Cash Flow Generation in Targets

Other


* Percentages are based on number of respondents who ranked the factor as No. 1, 2 or 3 ** Europe, Middle East and Africa


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What will be the top reasons sellers should sell in 2011?*


Private Equity Buyers Are More Flexible in Structuring Acquisitions to Make Up for Lack of Bank Financing

Business is unable to attract people with talent to grow and compete

Management can not sustain business for the future due to age/health of owner

Competitive Factors Require Greater Scale and Resources To Be Successful

Industry Realignment Impacts Growth and Investment Strategies for the Business

Resources from the Business Can Be More Profitably Deployed in Other Areas

Prices may be the Same or even Lower for the Relatively Near Future

Tax Increases

Industry Consolidation

Other

0% 10% 20% 30% 40% 50% 60% 70% 80%

What will be the top reasons buyers should buy in 2011?*


Opportunities to Purchase Companies Rarely Available on the Market

Opportunities to Purchase Companies at Attractive Prices

Ability to Structure More Optimal Long-Term Growth Strategy Through Reasonable Acquisition Proposals

Easier to Achieve Growth Objectives Through Acquisitions Versus Organic Activities

Acquisitions are Necessary to Maintain Appropriate Market Coverage

Competitive Pressures Justify the Acquisition Situation

Acquisitions are a Necessary Requirement to be able to Meet Shareholder Expectations

Limited Attractive Investment Opportunities in Other Asset Classes for Cash Buyers

Other

0% 10% 20% 30% 40% 50% 60% 70% 80%


* Percentages are based on number of respondents who ranked the reason as No. 1, 2 or 3 ** Europe, Middle East and Africa

Cross-border M&A requires local knowledge and experience. IMAP advisors located around the world have successfully completed thousands of M&A transactions. Let IMAP help you with your M&A project in 2011.

Please visit www.imap.com for more information.

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