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Merger_Tracker_2015_02

Merger_Tracker_2015_02

William Blair U.S. P.E.

William Blair U.S. P.E. Capital Overhang by Vintage and Size $150 $125 $100 $75 $50 $25 $0 Under $500M $500M-$1B $1B-$5B $5B+ $136 $145 $41 $73 $60 $46 $60 $32 $12 $39 $16 $28 $19 $20 $28 $17 $18 $8 $18 $15 $8 $2 $2 $6 $2 $3 $4 $5 $4 $6 $4 $11 $6 $9 $14 $10 $9 $17 $19 2006 2007 2008 2009 2010 2011 2012 2013 Source: PitchBook (as of December 31, 2013). Funds raised in 2007 and 2008 represented many of the most aggressive buyers in 2014, and the record amounts of private equity capital raised in 2012 and 2013 point to surging private equity deal flow between now and 2018. • Asian buyers are fully engaged and playing to win: In the past, some sellers have not actively marketed themselves to Asian buyers, because of a perception that Asian companies were unlikely to remain fully engaged throughout the sale process. This was absolutely not the case in 2014. Sellers that did not properly access buyers in Japan, Korea, and China missed large and aggressive pools of capital. Of the sub-$1 billion deal processes that we ran in 2014, Asian bidders submitted an initial indication of interest in 38% of those processes. (This number would be considerably higher if healthcare transactions, which are rarely cross-border, were excluded.) More tellingly, Asian companies submitted a final bid in 10% of our sell side transactions and emerged as the winning bidder in 80% of those cases. Clearly, Asian acquirers today are very engaged, and when they reach the finals, they usually win. • U.S. corporations focus on streamlining: With apologies to Neil Sedaka, breaking up has become increasingly smart to do. We are in the midst of an era of corporate streamlining, and investors are rewarding companies that present more focused investment opportunities. Sometimes the streamlining has occurred through gradual divesting of noncore business units, as has been the case with Illinois Tool Works over the past several years; other times it is a split of the company’s primary business units, as was the case with The Manitowoc Company’s recently announced decision to separate its crane manufacturing and foodservice businesses in response to pressure from activist investors. By streamlining their businesses, companies are often able to provide a more focused and compelling story to investors. Institutional investors want to directly control their exposure to different sectors, and investing in highly diversified conglomerates limits this control. Investors also have an easier time understanding companies when there are true, one-to-one comparable companies available to evaluate. To learn more about what these and other trends shaping the M&A landscape mean for your company or portfolio, please contact us. William Blair Advises FirstService on Announced Separation of Commercial and Residential Real Estate Businesses William Blair is proud to have served as exclusive financial advisor to FirstService Corporation on its announced plan to split into Colliers International, a topthree global player in commercial real estate, and the “new” FirstService, a market leader in residential property management and property services. Investors responded positively to news of the proposed separation, which was announced after the markets closed on February 10. The stock closed at $52.56 on February 10, and over the next two days, the stock reached an intraday high of $58.32 before closing at $57.83 on February 12. Mark G. Brady Global Head of Mergers & Acquisitions +1 312 364 8853 mbrady@williamblair.com Merger Tracker 2 Commentary

William Blair Global M&A Activity Regional Transactions • Overall global M&A activity in fourth quarter 2014 was down across most regions in terms of number of announced transactions, although disclosed transaction value increased among all regions except for Latin America. • During fourth quarter 2014, the number of announced deals was up 2% on average in all regions year-over-year, while deal value was comparably higher, up 28% on average over the same period. • The North American region continued to show an increase in disclosed dollar volume of 40%, which was driven by the announced multibillion-dollar transactions of second half 2014. • Through calendar year 2014, the number of deals announced increased an average of 7% across all regions, while deal value increased 37%. Global M&A Activity Detail ($ in millions) Number of Deals Deal Value 2012 2013 2014 % Chg. '14 vs. '13 2012 2013 2014 % Chg. '14 vs. '13 Q4 North America 3,803 2,759 2,863 3.8% $339,365 $251,941 $380,951 51.2% Latin America 386 342 337 (1.5%) 32,625 43,194 26,974 (37.6%) Europe 2,875 2,667 3,226 21.0% 207,216 197,408 229,667 16.3% Africa / Middle East 345 265 243 (8.3%) 15,476 8,572 24,904 190.5% Asia Pacific 3,174 3,310 2,870 (13.3%) 134,956 166,726 192,103 15.2% TOTAL 10,583 9,343 9,539 2.1% $729,637 $667,840 $854,599 28.0% 2H North America 7,138 5,714 6,109 6.9% $591,594 $612,987 $856,882 39.8% Latin America 741 693 738 6.5% 45,706 72,607 56,341 (22.4%) Europe 6,042 5,629 6,609 17.4% 321,634 364,971 436,364 19.6% Africa / Middle East 692 520 551 6.0% 26,344 25,676 37,608 46.5% Asia Pacific 6,113 6,265 5,979 (4.6%) 253,223 303,225 343,552 13.3% TOTAL 20,726 18,821 19,986 6.2% $1,238,500 $1,379,467 $1,730,747 25.5% CY North America 14,225 11,764 12,289 4.5% $1,013,026 $1,071,126 $1,642,354 53.3% Latin America 1,620 1,373 1,374 0.1% 126,403 113,252 108,184 (4.5%) Europe 13,063 11,123 13,091 17.7% 646,378 679,246 878,977 29.4% Africa / Middle East 1,322 1,054 1,161 10.2% 51,519 53,381 58,777 10.1% Asia Pacific 12,478 11,895 11,862 (0.3%) 472,056 538,955 669,029 24.1% TOTAL 42,708 37,209 39,777 6.9% $2,309,382 $2,455,960 $3,357,320 36.7% Notes: Deal value limited to publically disclosed transaction value; year-to-date as of December 31, 2014 Sources: Dealogic and William Blair’s Mergers and Acquisitions market analysis Merger Tracker Global M&A Activity 3

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