Merger Tracker. Q Investment Banking. Analyzing U.S. Tax Reform s Potential to Influence Dealmaking. In This Issue

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1 Q Investment Banking Analyzing U.S. Tax Reform s Potential to Influence Dealmaking In This Issue Merger Tracker Tax tailwinds: lower rates on corporate income and repatriated profits Tax headwinds: deduction limits and carried-interest changes Macro trends to watch in 2018

2 CONTENTS 1 Executive Summary 3 Market Update and Analysis 6 William Blair Mergers and Acquisitions Investment Banking 7 Sector and Transaction Data

3 EXECUTIVE SUMMARY Analyzing Tax Reform s Potential to Influence Dealmaking Sweeping changes to the taxation of U.S. corporations simultaneously create both tailwinds and headwinds for M&A activity. After the Republican-controlled U.S. Congress passed the Tax Cuts and Jobs Act in mid-december 2017, media commentators scrambled to boil the impact of the most significant tax reform in more than 30 years down to simple headlines. When it comes to how the reforms will influence M&A activity, we believe that the overall impact will be positive. However, the new law creates several changes that could have a meaningful impact on strategic and financial buyers acquisition strategies; some of these changes will encourage increased M&A activity and higher valuations, while some changes will hinder dealmaking. profits are taxed at 21% are worth more than companies whose profits are taxed at 35% because lower rates mean higher cash flows. Also, higher cash flows and higher equity valuations mean that companies will have more capital to put to work through acquisitions. Reduced tax on repatriated income: Before 2018, the United States was one of the few countries that taxed income earned by a domestic company s foreign subsidiaries, and as a result, U.S. companies had an estimated $2.5 trillion in offshore profits at the end of Starting in 2018, the United States moves to a territorial system, in which only income earned domestically is subject to U.S. taxes. The law also creates a reduced, one-time tax rate on foreign profits that companies have already accumulated overseas. This tax, which is 15.5% on cash and other liquid assets and 8% on illiquid assets, is due regardless of whether the companies bring the assets back to the United States, and companies have the ability to spread the tax payments over eight years. This one-time tax for past foreign profits, combined with the shift to a territorial system for future foreign profits, means that U.S. companies will no longer have incentive to keep profits overseas. While many media commentators assume that companies will simply use repatriated cash to return capital to shareholders through share repurchases or dividends, we believe that the repatriation provision will have a meaningfully positive impact on Tailwinds: Lower Rates on Corporate Income and Repatriated Profits The two aspects of tax reform that should have the greatest positive impact on dealmaking are the reduction in the corporate tax rate to 21% and the lower tax rate for repatriated foreign income. Corporate tax rate reduced to 21%: Starting in 2018, the top rate on corporate income decreases from 35% to 21%, and the corporate alternative minimum tax is eliminated. Simply put, companies whose U.S. M&A Activity In 2018, lower corporate tax rates and the lower, one-time rate on repatriated income should lead to increased acquisition activity by U.S. companies. Number of Deals 20,000 15,000 10,000 5,000 0 Source: Dealogic Number of Deals ($ in billions) $3,000 13,336 12,427 10,104 11,509 12,741 13,39014,649 12,905 11,621 12,198 11,935 12,854 9,365 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 Undisclosed < $100M Midcap >$1B Deal Value $2,500 $2,000 $1,500 $1,000 $500 $0 1

4 EXECUTIVE SUMMARY domestic M&A activity. There will certainly be an uptick in share repurchases and dividends, but many companies will also use a portion of the cash that was formerly trapped offshore to acquire U.S.-based targets. In January 2018, Apple announced that it would pay a one-time tax of $38 billion on repatriated income (representing a return of $250 billion in capital to the United States) and make significant domestic investments, including building a new campus and investing in advanced manufacturing in the United States. Headwinds: Deduction Limits and Carried-Interest Changes While lower tax rates should add fuel to an already hot M&A market, there are several elements of the new tax law that present challenges for M&A activity. Interest deductions limited to 30% of EBITDA: From 2018 through 2021, companies deductions for interest income are limited to 30% of EBITDA. Starting in 2022, the limit becomes more restrictive, applying to 30% of EBIT. Amounts in excess of the limit can be carried forward to future years. This limit could have a meaningful impact on financial sponsors after-tax cost of capital in many high-leverage, high-multiple transactions. This is likely to factor into buyers decisions about the optimal financing structures and apply downward pressure on leverage levels and valuations. The impact of the interest-deduction limit becomes even greater as interest rates continue creeping upward. Net operating loss deductions are limited: The value of any net operating losses (NOLs) incurred by the target company often is a factor in the price that buyers are willing to pay. A lower tax rate means that NOLs are now less valuable to buyers. The new law also eliminates the ability to carry back NOLs to previous years. NOLs can be carried forward indefinitely, but the amount of carry-forwards that can be applied in any given year is limited to 80% of the company s taxable income in that year. As a result, buyers and sellers during negotiations will have to put more thought into determining the value of NOLs. Carried-interest holding period increased to three years: Starting in 2018, the minimum holding period for carried interest to qualify for long-term capital gains treatment increases from one year to three years. While most portfolio companies are owned by financial sponsors for more than three years, in some sectors, especially technology and healthcare, holding periods of less than three years are not uncommon. It will be interesting to see how the longer holdingperiod requirement influences financial sponsors decisions about when to sell a company and how a fund s investors, whose tax exposure is not affected by the new carriedinterest holding period, react if they believe that the timing of an asset sale is being driven more by the general partners tax considerations than by market conditions. As a whole, we believe that U.S. tax reform will be a net positive in spurring more M&A activity and higher valuations. The positive impact of lower rates on income and repatriated profits will likely outweigh the negative effect of the reduction in the value of deductions for interest and NOLs. Macro Trends to Watch in 2018 Two trends that significantly shaped M&A activity in 2017 were 1) financial sponsors completing a significant amount of their diligence work before a process kicks off and being more selective about which processes they participate in and 2) buyers becoming increasingly focused on deploying capital in industries with higher degrees of insulation to economic downturns, based on a growing belief that we are in the later innings of the current business cycle. We expect both of these trends to continue shaping the dealmaking landscape in William Blair 2

5 MARKET UPDATE A ANALYSIS Global M&A With the U.S. moving to a territorial tax system and implementing a lower, onetime rate for repatriated foreign profits, it will be interesting to see whether these changes have a noticeable impact on global deal volumes, specifically in terms of cross-border deal flows. Global M&A Volume and Values by Deal Size ($ in billions) Merger Tracker We look behind the numbers to examine the market dynamics that are driving trends in the dealmaking landscape. Number of Deals 50,000 45,000 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5, ,367 Source: Dealogic 44,392 42,876 39,494 41,537 41,311 42,747 40,412 37,795 36,938 36,642 37,171 38,957 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 Deal Value Undisclosed < $100M Midcap >$1B Deal Value $5,000 $4,500 $4,000 $3,500 $3,000 $2,500 $2,000 $1,500 $1,000 $500 $0 Cross-Border M&A Dollar Flows ($ in billions; % change since 2016) $25.9B (-37.0%) $151.2B (-39.0%) $35.4B (+78.5%) Americas $146.6B (-43.1%) EMEA $92.7B (-30.7%) $99.8B (-29.2%) Asia-Pacific Source: Dealogic 3

6 MARKET UPDATE A ANALYSIS Private Equity and Debt Capital Markets Debt markets continue to be very supportive of financial sponsors acquisition activities. Leverage levels were healthy throughout the year, and M&A loan volume for the year was robust, despite a dip in the fourth quarter due to seasonal cyclicality. Rising interest rates and new limits on deductions for interest income, however, could cause financial sponsors to rethink how they structure certain transactions. U.S. Private Equity Activity ($ in billions) Number of Deals 2,500 2,000 1,500 1, ,786 2,227 2,314 1,795 1,471 1,981 2,047 2,180 1,908 2,228 2,283 1,836 1, Undisclosed < $100M Midcap >$1B Deal Value Source: Dealogic Deal Value $700 $600 $500 $400 $300 $200 $100 $0 Midcap LBO Leverage Multiples 5.1x 5.3x 5.1x 4.7x 4.9x 4.3x 4.2x 4.3x 4.0x 4.0x 5.8x 5.0x 5.3x 4.8x 5.0x 4.2x 5.3x 4.5x 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 Senior Leverage Total Leverage Source: William Blair Proprietary Midcap LBO Financing Database M&A Loan Volume ($ in billions) $69 $65 $65 $32 $42 $43 $45 $38 $33 $44 $43 $42 $39 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 Source: S&P s LCD William Blair 4

7 MARKET UPDATE A ANALYSIS M&A Valuations While M&A valuations in 2017 were relatively flat globally as well as in Europe, the median EV/EBITDA multiple for U.S. deals increased from 10.5x to 11.3x, the highest level in more than a decade. All Deal Sizes Global, United States, and Europe (EV/EBITDA) 15.0x 10.0x 5.0x 0.0x Global United States Europe Source: Dealogic U.S. By Deal Size (EV/EBITDA) 15.0x 10.0x 5.0x 0.0x < $100M Midcap >$1B Source: Dealogic Europe By Deal Size (EV/EBITDA) 15.0x 10.0x 5.0x 0.0x < $100M Midcap >$1B Source: Dealogic 5

8 WILLIAM BLAIR MERGERS A ACQUISITIONS INVESTMENT BANKING Our significant transaction experience across broad advisory and capital markets offerings has earned William Blair a reputation for orchestrating highly effective processes that generate outstanding outcomes for our clients. Recent transactions include: With more than 150 senior bankers around the world, William Blair has completed more than 2,000 advisory and financing transactions totaling more than $200 billion in value for our clients* Brent Gledhill Global Head of Investment Banking bgledhill@williamblair.com Mark Brady Global Head of Mergers & Acquisitions mbrady@williamblair.com Andrew Jessen Head of North American Mergers & Acquisitions ajessen@williamblair.com Matthew Gooch Head of European Banking U.S. Voic mgooch@williamblair.com * In the past five years as of December 31, 2017 William Blair 6

9 Sector and Transaction Data Merger Tracker

10 Global M&A Activity Regional Transactions Global M&A activity in fourth quarter 2017 was up across all regions in terms of number of announced transactions; however transaction value decreased among all regions except for Asia-Pacific and Latin American. During fourth quarter 2017, the number of announced deals was up 9% on average in all regions year-over-year, while deal value was down 6% on average over the same period. Africa-Middle East was the top performer in number of announced deals during second half 2017, with transaction activity up 39%. Through calendar year 2017, the number of deals announced increased an average of 3% across all regions, while deal value decreased 2%. Global M&A Activity Detail ($ in millions) Number of Deals Deal Value % Chg. '17 vs. ' % Chg. '17 vs. '16 Q4 North America 2,892 2,864 2, % $551,836 $605,412 $585,579 (3.3%) Latin America % 25,967 20,259 34, % Europe 2,541 2,763 3, % 320, , ,492 (22.1%) Africa / Middle East % 11,478 18,769 12,465 (33.6%) Asia Pacific 3,003 3,333 3, % 336, , , % Total 9,051 9,351 10, % $1,246,303 $1,186,045 $1,115,487 (5.9%) 2H North America 6,137 5,533 5,408 (2.3%) $1,081,371 $1,000,492 $931,762 (6.9%) Latin America (7.7%) 45,675 40,999 60, % Europe 5,194 5,368 5, % 533, , ,050 (2.6%) Africa / Middle East % 20,639 57,109 29,526 (48.3%) Asia Pacific 6,597 6,650 6, % 561, , , % Total 19,106 18,386 18, % $2,242,725 $2,003,185 $1,966,955 (1.8%) CY North America 12,384 11,548 11,403 (1.3%) $1,964,828 $1,742,516 $1,573,334 (9.7%) Latin America 1, (2.8%) 73,899 67,570 99, % Europe 11,469 11,365 12, % 962, , , % Africa / Middle East 1, , % 40,639 85,522 70,480 (17.6%) Asia Pacific 13,302 13,004 13, % 1,077, , ,842 (1.5%) Total 39,494 37,795 38, % $4,119,078 $3,510,323 $3,458,423 (1.5%) Notes: Deal value limited to publically disclosed transaction value; year-to-date as of December 31,

11 Midcap Regional Transactions Opposed to the overall market, total global midcap M&A activity experienced declines in both transactions and transaction value during the fourth quarter of 2017, yielding decreases of 8% and 6%, respectively. North America was the top performer in terms of disclosed M&A transaction volume in second half 2017, with the number of transactions up 5%. For second half 2017, the disclosed dollar value of global midcap transactions increased 1%, resulting from meaningful increases in Asian Pacific and North American transaction value. During the year, the number of announced deals increased 1%, and total deal value increased 3%. Global Midcap M&A Activity Detail ($ in millions) Number of Deals Deal Value % Chg. '17 vs. ' % Chg. '17 vs. '16 Q4 North America (5.8%) $88,987 $101,194 $93,632 (7.5%) Latin America (18.4%) 15,053 11,444 9,955 (13.0%) Europe (20.8%) 77,500 77,533 64,503 (16.8%) Africa / Middle East (26.3%) 6,382 6,350 5,797 (8.7%) Asia Pacific % 106,214 96, , % Total (8.2%) $294,136 $292,809 $276,124 (5.7%) 2H North America % $179,898 $190,690 $194, % Latin America (11.9%) 24,677 19,130 17,156 (10.3%) Europe (9.8%) 142, , ,242 (4.7%) Africa / Middle East (8.1%) 13,257 11,206 12, % Asia Pacific (0.1%) 193, , , % Total 1,847 1,833 1,801 (1.7%) $553,588 $540,334 $546, % CY North America 1,092 1,079 1, % $340,865 $355,638 $366, % Latin America % 38,707 29,919 33, % Europe (5.3%) 291, , ,764 (0.4%) Africa / Middle East (7.1%) 23,289 23,669 26, % Asia Pacific 1,371 1,313 1, % 370, , , % Total 3,573 3,472 3, % $1,064,642 $1,016,328 $1,043, % Notes: Deal value limited to publically disclosed transaction value; midcap defined as deals with disclosed transaction values between $100 million and $1 billion William Blair 8

12 Annual Transactions Global M&A Activity Number of Deals Undisclosed < $100M Midcap >$1B Deal Value 50,000 42,876 44,392 41,537 41,311 42,747 36,938 36,642 37,171 40,000 40,412 39,494 31,367 30,000 Deal Value ($ in billions) $5,000 37,795 38,957 $4,000 $3,000 20,000 $2,000 10,000 $1,000 0 $0 Number of Deals >$1B Midcap 2,755 3,320 4,091 3,126 2,147 2,871 3,006 2,894 3,025 3,324 3,573 3,472 3,489 < $100M 14,324 16,044 18,295 18,985 16,537 18,572 17,959 16,686 14,187 14,812 15,836 15,061 14,989 Undisclosed 13,848 16,979 19,731 18,996 17,661 19,423 23,020 22,755 19,540 21,735 19,467 18,685 19,917 Deal Value $2,757.6 $3,611.8 $4,246.7 $2,682.5 $1,919.3 $2,444.2 $2,418.8 $2,308.5 $2,401.0 $3,403.0 $4,119.1 $3,510.3 $3,458.4 Notes: Deal value limited to publically disclosed transaction value; midcap defined as deals with disclosed transaction values between $100 million and $1 billion 9

13 Global Cross-Border M&A Flows 2017 M&A Activity by Regional Flow Cross-Border M&A Dollar Flows (1) ($ in billions) $25.9B (-37.0%) Americas $151.2B (-39.0%) $35.4B (+78.5%) EMEA Asia-Pacific $146.6B (-43.1%) $99.8B (-29.2%) $92.7B (-30.7%) (1) Flows defined based on target region and acquirer region. Americas defined as North and South America. EMEA defined as Europe, Middle East, and Africa. Asia defined as Asia, Australia, and Japan Note: Percent change of dollar flow from 2016 Global Cross-Border Flow Inbound Outbound Transaction Value Number of Deals Transaction Value Number of Deals Region % Chg % Chg % Chg % Chg. North America $374.8 $219.9 (41.3%) 1,412 1,360 (3.7%) $302.3 $197.0 (34.8%) 1,637 1,575 (3.8%) Latin America % % (18.1%) (4.0%) Europe (42.0%) 1,747 1,653 (5.4%) (35.6%) 1,292 1,258 (2.6%) Africa / Middle East (4.1%) % (53.6%) (15.6%) Asia Pacific % (11.3%) (29.9%) 1,493 1,432 (4.1%) William Blair 10

14 Cross-Border M&A Outflows North America Latin America Europe 1,990 1,634 1,739 1,809 1,637 1, ,574 1,355 1,432 1,434 1,292 1, Top Targets Top Targets Top Targets Target Target Target United Kingdom 19.0% 22.8% United States 44.0% 37.3% United States 47.5% 42.5% Germany 8.7% 6.3% Canada 6.0% 5.9% Australia 7.1% 8.2% Australia 7.4% 8.0% Spain 6.0% 11.8% Brazil 6.8% 6.6% India 4.5% 4.5% Turkey 4.0% 2.0% Canada 4.6% 7.4% France 4.1% 5.4% United Kingdom 4.0% 5.9% South Africa 3.3% 2.9% Netherlands 3.9% 3.1% Australia 2.0% NA India 3.1% 3.9% Israel 3.8% 2.7% Austria 2.0% NA China 2.4% 2.6% Mexico 3.5% 3.1% Belarus 2.0% 2.0% Mexico 2.2% 1.2% Brazil 3.2% 4.9% Sweden 2.0% NA Singapore 2.0% 2.5% Italy 2.9% 3.0% Switzerland 2.0% NA Israel 1.6% 1.5% Africa / Middle East Asia Pacific ,209 1,021 1,061 1,288 1,493 1, Top Targets Top Targets Target Target United States 21.5% 24.8% United States 37.5% 38.5% United Kingdom 11.7% 16.7% United Kingdom 12.5% 12.3% Australia 9.8% 6.8% Germany 7.0% 6.7% Spain 6.8% 3.4% Canada 5.5% 5.6% Germany 5.9% 1.7% France 2.8% 4.7% India 4.9% 6.0% Italy 2.2% 2.6% France 4.9% 1.7% Netherlands 2.1% 1.6% Brazil 3.9% 3.0% Brazil 1.9% 1.8% Switzerland 2.9% NA Sweden 1.8% 1.0% Poland 2.4% 3.8% Switzerland 1.6% 1.6% 11

15 Cross-Border M&A Inflows North America Latin America Europe 1, ,180 1,333 1,412 1, ,541 1,371 1,562 1,734 1,747 1, Top Acquirers Top Acquirers Top Acquirers Acquirer Acquirer Acquirer Japan 15.5% 14.3% United States 22.3% 26.6% United States 47.7% 47.5% United Kingdom 14.8% 15.4% Canada 19.7% 19.9% China 10.9% 12.3% China 9.8% 13.2% Spain 7.8% 6.9% Japan 9.3% 10.6% France 8.2% 5.9% France 7.6% 8.9% Canada 7.3% 7.4% Germany 7.9% 6.0% Australia 4.8% 5.4% Australia 4.4% 3.6% Australia 7.7% 6.2% China 4.4% 1.7% Singapore 2.8% 2.0% Switzerland 3.7% 4.2% United Kingdom 4.2% 4.1% India 2.6% 2.9% India 3.3% 3.3% Germany 3.6% 3.7% South Africa 2.2% 2.4% Sweden 3.0% 3.5% Switzerland 3.4% 2.4% Hong Kong 1.8% 2.4% South Korea 2.8% 2.3% Italy 2.5% 1.9% South Korea 1.7% 0.6% Africa / Middle East Asia Pacific Top Acquirers Top Acquirers Acquirer Acquirer United States 22.4% 21.6% United States 42.9% 37.9% United Kingdom 12.7% 15.8% United Kingdom 12.4% 12.8% Canada 10.7% 6.6% Canada 8.6% 11.5% Australia 7.7% 8.4% France 6.9% 7.7% France 6.2% 6.6% Germany 4.9% 6.2% China 5.5% 6.9% Netherlands 2.8% 1.6% India 5.5% 5.8% Sweden 2.6% 2.5% Japan 5.5% 4.0% Switzerland 2.5% 3.8% Switzerland 4.7% 1.8% South Africa 2.5% 3.3% Germany 4.2% 3.2% United Arab Emirates 2.0% 1.6% William Blair 12

16 U.S. M&A Activity Transaction Detail During fourth quarter 2017, U.S. M&A activity decreased roughly 13%, while total disclosed transaction value decreased 21%. The number of midcap transactions announced in the fourth quarter decreased 11%, while the number of mega-deals decreased 22%. During the last 12 months, the number of announced deals increased by 3%, while disclosed transaction value decreased by 15%. U.S. M&A Activity Detail ($ in millions) Number of Deals Deal Value % Chg. '17 vs. ' % Chg. '17 vs. '16 Q4 < $100M (14.2%) $19,932 $16,739 $15,270 (8.8%) $100M-$500M (8.9%) 62,229 61,315 55,185 (10.0%) $500M-$1B (15.9%) 45,319 58,918 48,083 (18.4%) Total Midcap (10.5%) 107, , ,268 (14.1%) > $1B (22.0%) 487, , ,025 (22.2%) Undisclosed 1,696 1,822 1,583 (13.1%) Total 2,955 2,961 2,566 (13.3%) $615,063 $760,717 $603,563 (20.7%) 2H < $100M 1,771 1,368 1,357 (0.8%) $41,823 $32,481 $32,366 (0.4%) $100M-$500M % 125, , , % $500M-$1B (10.7%) 88, ,879 95,994 (8.5%) Total Midcap (0.9%) 213, , ,917 (3.5%) > $1B (18.7%) 956, , ,187 (20.5%) Undisclosed 3,704 3,447 3, % Total 6,328 5,645 5, % $1,211,394 $1,184,833 $985,470 (16.8%) CY < $100M 3,488 2,972 2,681 (9.8%) $83,072 $71,346 $64,804 (9.2%) $100M-$500M 1,059 1, (2.9%) 237, , ,803 (4.3%) $500M-$1B (1.9%) 169, , ,084 (2.0%) Total Midcap 1,299 1,261 1,227 (2.7%) 407, , ,887 (3.3%) > $1B (9.1%) 1,707,671 1,532,448 1,244,498 (18.8%) Undisclosed 7,744 7,068 7, % Total 12,854 11,621 11, % $2,198,051 $2,014,154 $1,706,189 (15.3%) Notes: Deal value limited to publically disclosed transaction value; midcap defined as deals with disclosed transaction values between $100 million and $1 billion 13

17 Annual Activity U.S. M&A Activity Number of Deals Undisclosed < $100M Midcap >$1B Deal Value 16,000 14,649 14,000 12,000 10,104 10,000 12,427 13,336 13,390 12,741 11,509 9,365 12,198 12,905 12,854 8,000 6,000 4,000 2,000 0 Deal Value ($ in billions) $3,000 11,621 11,935 $2,500 $2,000 $1,500 $1,000 $500 $0 Number of Deals >$1B Midcap 1,118 1,286 1,438 1, ,133 1,161 1,144 1,243 1,306 1,299 1,261 1,227 < $100M 3,415 3,359 3,214 3,764 3,455 5,172 4,276 4,094 3,119 2,979 3,488 2,972 2,681 Undisclosed 5,362 7,513 8,338 6,514 5,073 6,235 7,770 9,193 7,623 8,339 7,744 7,068 7,736 Deal Value $1,297.1 $1,644.7 $1,748.3 $1,074.1 $884.2 $1,045.1 $1,171.2 $1,080.3 $1,223.0 $1,706.7 $2,198.1 $2,014.2 $1,706.2 U.S. Midcap M&A Activity Number of Deals $100M-$500M $500M-$1B Deal Value Deal Value ($ in billions) 1,600 1,438 $600 1,286 1,306 1,400 1,299 1,243 1,261 1,118 1,133 1,161 1,144 1,200 1,073 1,227 $500 1,000 $ $ $200 $100 $0 Number of Deals $500M-$1B $100M-$500M 933 1,047 1, ,084 1,059 1, Deal Value $338.4 $410.7 $475.0 $325.7 $201.2 $358.7 $367.5 $363.1 $398.5 $402.1 $407.3 $410.4 $396.9 Notes: Deal value limited to publically disclosed transaction value; midcap defined as deals with disclosed transaction values between $100 million and $1 billion William Blair 14

18 U.S. Valuation Multiples Over the last 12 months, U.S. valuation multiples as measured by enterprise value to EBITDA, which have historically been above those of the overall market over the past decade, remained at 11.3 times, meaningfully above the overall market at 9.5 times. In the last 12 months, multiples found in the midcap are on par with the broader market, returning to levels reminiscent of pre Median EV/EBITDA Multiples 12.0x 10.0x Global United States 8.0x 6.0x 4.0x 2.0x 0.0x Global 9.1x 9.7x 10.0x 7.6x 6.7x 8.6x 8.8x 8.2x 9.0x 9.6x 9.9x 9.5x 9.5x United States 10.3x 11.0x 11.2x 9.0x 7.4x 9.9x 10.8x 9.6x 10.0x 11.2x 10.8x 10.5x 11.3x Median EV/EBITDA Midcap Multiples 16.0x 14.0x 12.0x 10.0x 8.0x 6.0x 4.0x 2.0x 0.0x < $100M Midcap >$1B 16.0x 14.0x 12.0x 10.0x 8.0x 6.0x 4.0x 2.0x 0.0x < $100M 9.0x 9.5x 9.0x 6.0x 5.5x 9.2x 9.4x 7.7x 8.5x 9.3x 8.8x 7.7x 9.6x Midcap 10.6x 10.9x 10.0x 9.4x 7.6x 10.0x 10.4x 9.6x 10.9x 9.8x 10.5x 10.3x 11.5x >$1B 11.2x 11.9x 13.5x 10.4x 9.2x 10.2x 12.0x 10.6x 12.1x 13.3x 12.2x 12.0x 12.1x Notes: Median calculations exclude EBITDA multiples greater than 20 times; midcap defined as deals with disclosed transaction values between $100 million and $1 billion 15

19 Private Equity Transaction Analysis There were 457 announced private-equity-related transactions in the fourth quarter, up 10% year-over-year; moreover, the quarter hosted $94 billion in total dollar volume, down roughly 5% over the year-ago period. During the last 12 months, announced private-equity-related transactions were down 3%, while deal value decreased by 5%. When defining private-equity-related transactions, we continue to exclude deals in which the private equity firm was not the controlling shareholder or where the company was publicly traded but still listed a private equity firm as a shareholder. U.S. Private Equity Activity Detail ($ in millions) Number of Deals Deal Value % Chg. '17 vs. ' % Chg. '17 vs. '16 Q4 < $100M % $1,966 $1,109 $1, % Midcap (27.9%) 31,400 32,914 24,741 (24.8%) > $1B % 149,098 65,409 68, % Undisclosed % Total % $182,464 $99,432 $94,251 (5.2%) 2H < $100M (1.4%) $4,477 $2,357 $2, % Midcap (16.7%) 63,501 59,138 54,216 (8.3%) > $1B (21.0%) 249, , ,980 (17.7%) Undisclosed % Total 1, % $317,231 $214,621 $182,707 (14.9%) CY < $100M (26.5%) $9,692 $5,640 $3,972 (29.6%) Midcap (12.6%) 110, , ,924 (3.3%) > $1B (2.7%) 461, , ,772 (5.1%) Undisclosed 1,594 1,280 1, % Total 2,283 1,836 1,786 (2.7%) $581,420 $413,183 $392,668 (5.0%) Notes: Deal value limited to publically disclosed transaction value; midcap defined as deals with disclosed transaction values between $100 million and $1 billion William Blair 16

20 U.S. Private Equity Activity Number of Deals Undisclosed < $100M Midcap >$1B Deal Value 2,500 2,314 2,227 2,180 2,228 2,283 1,981 2,047 1,908 2,000 1,786 1,795 1,471 1,500 1, Deal Value ($ in billions) $700 1,836 1,786 $600 $500 $400 $300 $200 $100 $0 Number of Deals >$1B Midcap < $100M Undisclosed 841 1,124 1, ,017 1,256 1,397 1,263 1,554 1,594 1,280 1,310 Deal Value $300.0 $550.0 $632.0 $204.0 $152.0 $272.0 $267.0 $263.0 $297.0 $390.0 $581.4 $413.2 $392.7 U.S. Private Equity Exit Activity Number of Deals Undisclosed < $100M Midcap >$1B Deal Value Deal Value ($ in billions) $ $250 $ $150 $ $50 0 $0 Number of Deals >$1B Midcap < $100M Undisclosed Deal Value $138.2 $84.5 $162.0 $75.5 $40.7 $141.4 $137.5 $157.0 $140.6 $238.2 $230.9 $200.2 $184.4 Notes: Deal value limited to publically disclosed transaction value; midcap defined as deals with disclosed transaction values between $100 million and $1 billion 17

21 U.S. Private Equity Acquisition Activity Number of Deals Undisclosed < $100M Midcap >$1B Deal Value 2,500 Deal Value ($ in billions) $500 2,000 1,500 1,412 1,849 2,008 1,497 1,039 1,432 1,664 1,821 1,581 1,872 1,899 1,494 1,634 $400 $300 1,000 $ $100 0 $0 Number of Deals >$1B Midcap < $100M Undisclosed 763 1,056 1, ,206 1,318 1,200 1,459 1,488 1,214 1,365 Deal Value $182.2 $471.3 $473.3 $99.9 $72.3 $137.9 $171.6 $151.9 $177.7 $200.8 $384.8 $199.4 $210.1 U.S. Private Equity Acquisition Activity: Platform Versus Add-on Transactions 2,500 2,000 1,500 1, , ,008 1, ,232 1,273 1, Platform Acquisitions Add-on Acquisitions 1,821 1,872 1,899 1,664 1,581 1,432 1, ,022 1, ,634 1, ,500 2,000 1,500 1, Percent of Deals Platform 70.3% 66.6% 63.4% 64.5% 65.3% 61.9% 54.0% 52.5% 49.6% 45.4% 44.1% 44.2% 42.5% Add-on 29.7% 33.4% 36.6% 35.5% 34.7% 38.1% 46.0% 47.5% 50.4% 54.6% 55.9% 55.8% 57.5% Notes: Deal value limited to publically disclosed transaction value; midcap defined as deals with disclosed transaction values between $100 million and $1 billion 0 William Blair 18

22 Private equity funds continued to target high-growth sectors; computers and electronics represented 24% of acquisitions through 2017, while professional services and healthcare each represented roughly 12%. Based on disclosed dollar volume, the computers and electronics sector dominated activity for 2017, at $62 billion, representing approximately 22% of the total transaction value. Private Equity Activity by Target Sector ($ in millions) Number of Deals Deal Value Aerospace $3,800 $930 $604 - Agribusiness $250 $7 - - Auto/Truck $7,147 $5,121 $1,978 $2,365 Chemicals $12,909 $4,744 $9,438 $3,752 Computers & Electronics $51,122 $151,275 $82,259 $61,578 Construction/Building $5,410 $8,410 $1,500 $19,425 Consumer Products $11,363 $4,596 $7,419 $14,511 Defense $ $775 Dining & Lodging $10,861 $2,860 $12,367 $11,207 Finance $13,885 $20,431 $18,762 $15,280 Food & Beverage $21,744 $71,166 $7,079 $2,448 Forestry & Paper $170 $445 $1,525 $3,085 Government Healthcare $36,673 $31,682 $29,630 $50,622 Holding Companies $ Insurance $8,649 $5,620 $4,473 $11,747 Leisure & Recreation $550 $9,250 $6,727 $5,892 Machinery $3,966 $3,482 $3,435 $207 Metal & Steel $4,246 $2,616 $4,496 $4,561 Mining $143 $41 $114 - Oil & Gas $26,317 $9,493 $17,499 $21,907 Professional Services $15,501 $12,175 $27,000 $6,265 Publishing $1,001 $3,760 $1,748 $512 Real Estate/Property $27,891 $56,743 $24,705 $12,869 Retail $36,566 $9,857 $10,564 $4,080 Telecommunications $14,324 $3,406 $10,109 $16,767 Textile $1,087 $2,937 $261 $63 Transportation $1,370 $7,282 $5,501 $5,436 Utility & Energy $4,433 $10,871 $6,806 $3,125 Total 2,078 2,112 1,690 1, , , , ,479 19

23 Transaction Participants and Considerations Acquisition activity by public companies remained flat through 2017 as public companies share of activity represented approximately 42%. Private companies accounted for 17% of all acquirers over the last 12 months, down from 21% in Private companies remain by far the most attractive targets, as they made up 39% of activity in Regarding transaction consideration in 2017, all-cash deals account for roughly 58% of all financing, while cash/stock mix deals account for roughly 24% and stock-only deals account for roughly 16%. U.S. Midcap M&A Activity by Acquirer Percent of Deals 60.0% 50.0% 40.0% 30.0% 20.0% 10.0% Private Public Private Equity Foreign 60.0% 50.0% 40.0% 30.0% 20.0% 10.0% 0.0% Percent of Deals Private 12.5% 13.5% 14.3% 18.5% 15.9% 13.9% 16.0% 16.7% 25.9% 14.0% 19.0% 20.5% 17.1% Public 45.7% 41.6% 38.7% 37.1% 39.8% 42.7% 42.2% 43.4% 39.2% 45.2% 40.0% 42.4% 42.1% Private Equity 24.9% 25.2% 25.6% 20.2% 20.4% 21.7% 18.3% 18.4% 16.5% 19.5% 16.1% 16.2% 17.4% Foreign 16.9% 19.7% 21.4% 24.2% 23.9% 21.7% 23.5% 21.5% 18.4% 21.3% 24.9% 20.9% 23.4% 0.0% U.S. Midcap M&A Activity by Target Percent of Deals 60.0% 50.0% 40.0% 30.0% 20.0% 10.0% Private Public Private Equity Divestiture 60.0% 50.0% 40.0% 30.0% 20.0% 10.0% 0.0% Percent of Deals Private 35.7% 37.5% 37.7% 40.4% 34.5% 33.9% 38.7% 35.2% 38.7% 37.4% 38.0% 38.7% 39.0% Public 14.9% 17.0% 17.9% 17.9% 17.4% 15.8% 10.0% 11.7% 13.4% 9.1% 8.6% 9.4% 8.9% Private Equity 26.4% 22.7% 21.3% 16.9% 19.8% 22.5% 19.8% 22.5% 18.8% 25.2% 21.8% 18.5% 20.9% Divestiture 23.0% 22.7% 23.1% 24.8% 28.3% 27.9% 31.6% 30.6% 29.1% 28.3% 31.6% 33.4% 31.2% 0.0% William Blair 20

24 Distressed U.S. M&A Activity Number of Deals Undisclosed < $100M Midcap >$1B Deal Value Deal Value ($ in billions) $150 $ $50 0 Number of Deals >$1B Midcap < $100M Undisclosed Deal Value $15.2 $2.5 $20.2 $39.9 $90.3 $98.8 $38.2 $20.5 $49.2 $23.6 $22.6 $36.1 $17.3 $0 U.S. Take-Private Transaction Activity Number of Deals < $100M Midcap >$1B Deal Value Deal Value ($ in billions) $ $ $200 $100 0 Number of Deals >$1B Midcap < $100M Deal Value $68.6 $274.9 $274.9 $20.3 $11.7 $55.1 $45.0 $20.2 $89.6 $30.4 $106.5 $62.2 $82.0 $0 Transaction Consideration Percent of Deals Stock Only Cash Only Cash/Stock Other 100.0% 80.0% 60.0% 40.0% 20.0% 0.0% Percent of Deals Stock Only 19.3% 21.7% 13.2% 13.9% 18.7% 15.2% 14.8% 11.6% 14.1% 15.8% 18.5% 17.5% 15.9% Cash Only 61.3% 65.7% 72.3% 75.3% 59.1% 66.3% 70.7% 71.4% 63.2% 56.6% 48.9% 60.9% 58.4% Cash / Stock 18.4% 11.2% 12.9% 9.5% 19.7% 14.4% 11.9% 14.9% 18.8% 26.7% 32.0% 20.5% 24.2% Other 1.0% 1.4% 1.6% 1.3% 2.5% 4.1% 2.6% 2.1% 3.9% 0.9% 0.6% 1.1% 1.5% Notes: Deal value limited to publically disclosed transaction value; midcap defined as deals with disclosed transaction values between $100 million and $1 billion 100.0% 80.0% 60.0% 40.0% 20.0% 0.0% 21

25 Industry Breakdown The industry breakdown of U.S. M&A activity in 2017 echoes that of private equity activity in that sectors such as computers and electronics, professional services, and healthcare account for a dominant portion; computers and electronics account for 28%, while professional services account for 12%, and healthcare accounts for 10% of total acquisitions. Based on disclosed dollar volume, the computers and electronics, healthcare, and oil & gas sectors attracted the most activity, the aggregate of which accounted for approximately 49% of total transaction value through the same period. Also notable for the year were the huge deals announced in the computers and electronics sector, the dollar volume of which alone represents 19% of total acquisitions. U.S. M&A Activity by Target Sector ($ in millions) Transactions Midcap Total Midcap Total Midcap Total Midcap Total Aerospace Agribusiness Auto/Truck Chemicals Computers & Electronics 143 2, , , ,828 Construction/Building Consumer Products Defense Dining & Lodging Finance Food & Beverage Forestry & Paper Government Healthcare , , ,042 Holding Companies Insurance Leisure & Recreation Machinery Metal & Steel Mining Oil & Gas Professional Services 54 1, , , ,196 Publishing Real Estate/Property Retail Telecommunications Textile Transportation Utility & Energy Total 1,003 10, , , ,076 Notes: Deal value limited to publically disclosed transaction value; midcap defined as deals with disclosed transaction values between $100 million and $1 billion William Blair 22

26 U.S. M&A Value by Target Sector ($ in millions) Transactions Midcap Total Midcap Total Midcap Total Midcap Total Aerospace $1,681 $1,833 $2,631 $11,833 $570 $9,167 $1,102 $40,950 Agribusiness $560 $880 - $239 $374 $541 $1,338 $1,378 Auto/Truck $5,164 $32,407 $3,889 $9,649 $6,178 $14,392 $2,156 $2,598 Chemicals $5,415 $40,340 $7,087 $131,766 $6,551 $102,113 $7,162 $17,739 Computers & Electronics $46,923 $176,321 $60,776 $340,252 $51,743 $299,580 $69,909 $285,319 Construction/Building $5,271 $21,504 $8,724 $20,664 $9,637 $16,240 $7,345 $38,315 Consumer Products $6,724 $56,316 $4,505 $39,503 $9,177 $97,708 $6,308 $23,047 Defense $215 $3,984 $550 $5,525 $327 $327 $927 $1,006 Dining & Lodging $9,829 $23,585 $7,783 $27,755 $8,494 $24,901 $8,564 $26,477 Finance $19,460 $52,800 $18,867 $122,577 $20,844 $78,152 $29,450 $50,442 Food & Beverage $7,696 $48,829 $8,113 $116,093 $5,564 $23,809 $11,323 $50,182 Forestry & Paper $1,211 $3,007 $3,133 $13,934 $805 $4,244 $1,892 $8,622 Government $7 - $ Healthcare $36,244 $328,140 $40,403 $327,514 $37,910 $170,614 $39,360 $265,532 Holding Companies $210 $304 $145 $236 - $192 - $21 Insurance $7,660 $19,347 $4,094 $55,044 $5,805 $22,645 $4,561 $20,159 Leisure & Recreation $3,715 $26,206 $3,957 $13,366 $5,619 $128,783 $4,957 $25,833 Machinery $5,903 $22,455 $3,060 $24,659 $3,643 $14,155 $3,106 $11,921 Metal & Steel $5,729 $11,982 $3,396 $42,453 $2,931 $10,253 $2,442 $11,701 Mining $2,661 $3,533 $4,525 $6,324 $2,978 $9,318 $912 $2,579 Oil & Gas $44,990 $123,626 $30,386 $104,903 $43,851 $150,235 $41,064 $169,229 Professional Services $17,350 $36,215 $13,148 $33,017 $14,951 $64,624 $13,868 $31,876 Publishing $2,710 $3,221 $5,068 $7,351 $1,385 $6,983 $2,481 $7,125 Real Estate/Property $34,837 $87,547 $41,544 $134,452 $46,556 $120,379 $38,417 $118,909 Retail $6,062 $41,298 $4,942 $23,139 $3,784 $23,734 $5,440 $32,207 Telecommunications $8,145 $94,062 $6,879 $161,087 $9,023 $64,772 $7,671 $123,716 Textile $496 $652 $430 $3,237 $1,336 $1,592 $1,959 $2,122 Transportation $7,133 $9,337 $5,535 $26,415 $5,786 $11,615 $4,952 $16,496 Utility & Energy $15,536 $143,003 $13,758 $74,943 $12,012 $178,107 $8,881 $85,083 Total $309,531 $1,412,733 $307,325 $1,877,939 $317,836 $1,649,213 $327,545 $1,470,584 Notes: Deal value limited to publically disclosed transaction value; midcap defined as deals with disclosed transaction values between $100 million and $1 billion 23

27 Cross-Border Transaction Analysis The overall market in 2017 favors outbound over inbound transactions 54% to 46%, in line with historical averages of 58% to 42%. Through 2017, U.S. outbound activity was primarily directed toward the United Kingdom, Canada, and Germany; conversely, the U.S. received the most inbound interest from Canada, Japan, and the United Kingdom. U.S. Midcap Cross-Border M&A by Number of Deals Number of Deals Inbound Midcap Undisclosed Value $41.0 $59.4 $64.4 $49.1 $30.3 $49.3 $58.8 $50.1 $51.0 $57.2 $70.6 $59.7 $58.0 Outbound Number of Deals Outbound Inbound Inbound Deal Value Outbound Deal Value 1,800 1,600 1,400 1,200 1, , ,321 1,300 1, ,249 Midcap Undisclosed ,014 1, ,027 1,312 1,155 1,014 1,151 1,206 1, Value $48.5 $70.4 $95.1 $73.6 $39.3 $64.6 $66.4 $60.4 $73.3 $65.7 $76.9 $70.7 $74.4 Notes: Deal value limited to publically disclosed transaction value; midcap defined as deals with disclosed transaction values between $100 million and $1 billion 761 1, , , , , Deal Value ($ in billions) 1, , $100 $90 $80 $70 $60 $50 $40 $30 $20 $10 $0 William Blair 24

28 U.S. Cross-Border M&A Number of Transactions Inbound Outbound Total Sector Median > $1B Midcap < $100M Undisclosed ,151 1,206 1, ,933 1,986 1,762 1,738 Total 1,382 1,532 1,594 1,532 1,778 1,933 1,609 1,534 3,160 3,465 3,203 3,066 U.S. Cross-Border M&A Transaction Value Inbound Outbound Total Sector Median > $1B $202,959 $388,163 $400,297 $176,917 $119,912 $165,894 $203,763 $117,200 $322,871 $554,057 $604,060 $294,117 Midcap $57,220 $70,597 $59,739 $58,004 $65,721 $76,863 $70,747 $74,400 $122,941 $147,460 $130,486 $132,404 < $100M $7,843 $9,772 $11,892 $10,843 $11,181 $11,791 $8,341 $9,024 $19,024 $21,563 $20,233 $19,867 Undisclosed Total $268,022 $468,532 $471,928 $245,764 $196,814 $254,548 $282,851 $200,624 $464,836 $723,080 $754,779 $446,388 U.S. Cross-Border M&A 2017 Inbound to U.S. Outbound From U.S. Target Industry Deals Acquirer Country Deals Target Industry Deals Target Country Deals Computers & Electronics 434 Canada 406 Computers & Electronics 481 United Kingdom 264 Healthcare 176 Japan 191 Professional Services 175 Canada 247 Professional Services 145 United Kingdom 180 Healthcare 110 Germany 121 Food & Beverage 79 China 116 Real Estate/Property 58 Australia 92 Oil & Gas 73 France 101 Chemicals 56 India 60 Mining 70 Germany 99 Machinery 55 France 55 Construction/Building 66 Australia 71 Finance 54 Netherlands 55 Real Estate/Property 64 Switzerland 47 Utility & Energy 46 Israel 52 Utility & Energy 64 India 41 Insurance 42 Brazil 44 Finance 58 Sweden 37 Transportation 41 Italy 44 U.S. Cross-Border M&A 2016 Inbound to U.S. Outbound From U.S. Target Industry Deals Acquirer Country Deals Target Industry Deals Target Country Deals Computers & Electronics 421 Canada 404 Computers & Electronics 473 United Kingdom 329 Healthcare 183 Japan 189 Professional Services 189 Canada 316 Professional Services 160 United Kingdom 187 Healthcare 145 Australia 95 Mining 81 China 168 Chemicals 71 Germany 93 Real Estate/Property 70 Germany 73 Real Estate/Property 70 France 75 Finance 68 France 67 Finance 68 Brazil 67 Construction/Building 58 Australia 61 Consumer Products 53 India 59 Consumer Products 57 Switzerland 54 Food & Beverage 51 Italy 48 Chemicals 54 India 43 Machinery 49 Israel 44 Food & Beverage 52 Sweden 41 Construction/Building 49 Spain 43 25

29 U.S. Debt Capital and Private Equity Fourth Quarter 2017 Update Interest Rates Year TSY 10-Year TSY 3M LIBOR Yr Ago 6 Mos Ago 3 Mos Ago 1 Mo Ago Current 3-Month LIBOR 1.00% 1.30% 1.33% 1.49% 1.69% 5-Year Treasury 1.93% 1.89% 1.94% 2.14% 2.21% 10-Year Treasury 2.45% 2.30% 2.33% 2.41% 2.41% Source: Bloomberg as of December 31, 2017 Leveraged Loan Statistics 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 Credit Statistics Midcap Corporate: First Lien Debt Leverage 4.0x 4.0x 4.7x 4.1x 4.1x 4.9x 4.8x 4.8x Total Debt Leverage 4.9x 5.1x 5.3x 4.8x 4.7x 5.9x 5.5x 5.5x EBITDA/Cash Interest 3.1x N/A 3.1x 3.1x 3.1x 3.0x 3.1x 3.0x Midcap LBO: First Lien Debt Leverage 3.9x N/A N/A N/A N/A 4.6x 4.9x 4.8x Total Debt Leverage 5.0x N/A N/A N/A N/A 5.8x 5.7x 5.1x EBITDA/Cash Interest 3.1x N/A N/A N/A N/A 3.0x 2.7x 3.1x Midcap Institutional Spreads Default Rate 12-Month Default Rate by No. of Loans 2.0% 2.2% 2.2% 2.1% 1.4% 1.5% 1.4% 1.7% Source: S&P's LCD William Blair 26

30 Midcap Leveraged Loan Volume ($ in billions) $6.0 $5.0 $4.9 $4.7 $5.2 $4.7 $4.0 $3.0 $2.0 $2.3 $2.1 $4.3 $2.2 $2.9 $3.0 $1.7 $2.0 $2.5 $2.6 $2.9 $3.4 $3.5 $2.7 $3.8 $2.6 $3.9 $3.4 $2.2 $3.8 $2.8 $1.8 $2.4 $4.0 $3.5 $2.5 $2.7 $1.0 $0.9 $1.2 $0.0 Q409 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 Highlighted Transactions Company Business Description Sponsor Structure / Pricing Vivid Seats Ltd Operates an independent secondary ticket marketplace. GTCR $50 million Revolver $525 million 1st Lien Term Loan $155 million 2nd Lien Term Loan L + 400; 1% Floor (1st) L + 975; 1% Floor (2nd) Senior/ Total Leverage 5.0x/6.6x Comments Backs the LBO of the company by GTCR from Vista Equity Partners. PSA Healthcare/ Epic Health Services Provides pediatric home care services for medically fragile children and adults. Bain Capital $20 million Revolver $94 million 1st Lien Term Loan $35 million 2nd Lien Term Loan L + 500; 1% Floor (1st) L + 850; 1% Floor (2nd) 4.3x/6.0x Backs the LBO of the company by Bain Capital Private Equity from J.H. Whitney. Prestige Brands Inc. Markets and distributes brandname consumer OTC healthcare products and household cleaning products. -- $1,427 million 1st Lien Term Loan L + 275; 1% Floor (1st) 3.8x/5.8x Backs the acquisition of C.B. Fleet Company. Optiv Security Provides cyber security solutions to plan, build, and run security programs. KKR $100 million Revolver $800 million 1st Lien Term Loan $230 million 2nd Lien Term Loan L + 325; 1% Floor (1st) L + 725; 1% Floor (2nd) 4.7x/6.4x Backs the LBO of the company by KKR from Blackstone. Source: S&P s LCD 27

31 Select Fourth Quarter 2017 Midcap Leveraged Loan Transactions ($ in millions) Senior Structure Borrower Sponsor(s) Industry Date Use Total RC 1st Lien 2nd Lien 1st Libor Spread 2nd Libor Spread Total Leverage BenefitMall Carlyle Group Insurance Dec-17 LBO $270 $40 $ x Ability Network Summit Partners Computers & Electronics Nov-17 Recap $545 $20 $375 $ x Utz Quality Foods -- Consumer Nov-17 Acquisition $760 $100 $535 $ x IntraLinks Inc. SIRIS Capital Group Services & Leasing Oct-17 LBO $675 $50 $475 $ x Vantage Specialty Chemicals Argon Medical Devices, Inc. HIG Capital Chemicals Oct-17 LBO $740 $75 $485 $ x -- Healthcare Oct-17 Acquisition $435 $15 $310 $ x Superior Vision Services, Inc. Centerbridge Partners Financial Services Oct-17 Merger $985 $75 $700 $ x High-Yield Volume Transactions Less Than $300 Million ($ in billions) $120.0 $100.0 $80.0 $72.8 $87.2 $80.9 $78.0 $80.1 $99.9 $98.2 $94.9 $89.1 $82.5 $82.1 $74.9 $68.6 $105.1 $68.9 $61.5 $91.6 $94.0 $82.8 $62.7 $82.2 $67.6 $64.8 $61.7 $60.0 $46.1 $51.8 $47.1 $40.0 $35.6 $39.8 $36.3 $36.1 $24.7 $20.0 $0.0 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q142Q143Q144Q141Q152Q153Q154Q151Q162Q163Q164Q161Q172Q173Q174Q17 Source: S&P s LCD William Blair 28

32 Yields of New Issue Senior Unsecured Bonds 13.0% BB B 12.0% 11.0% 10.0% 9.0% NA due to little market activity NA 8.0% 7.0% 6.0% 5.0% 4.0% Jan-07 Jul-07 Feb-08 Aug-08 Mar-09 Oct-09 Apr-10 Nov-10 May-11 Dec-11 Jul-12 Jan-13 Aug-13 Feb-14 Sep-14 Apr-15 Oct-15 May-16 Nov-16 Jun-17 Dec-17 Note: Jan-12 B-rated data not available due to limited market activity NA NA NA NA NA NA 6.3% 5.0% Date Name Industry Purpose SP Moody s Size Issue Market Dec-17 Itron Inc. Telecom Equipment Acquisition BB- B2 $300 Senior Notes 144a life Dec-17 Par Petroleum Corporation Oil & Gas Refinancing BB- B1 $300 Senior Secured Notes 144a life Dec-17 Fortress Transportation Services & Leasing Corp Purpose B+ B1 $100 Senior Notes 144a life Dec-17 Cleveland- Cliffs Inc. Metals & Mining Corp Purpose BB- Ba3 $400 Senior Secured Notes 144a life Dec-17 Oxford Finance LLC Services & Leasing Recap/Dividend B+ Ba3 $300 Senior Notes 144a Dec-17 ACE Cash Express Inc. Services & Leasing Refinancing B- Caa1 $350 Senior Secured Notes 144a life Dec-17 Dec-17 Central Garden & Pet Co. Owens- Illinois Inc. Chemicals Acquisition BB- B1 $300 Senior Notes Public Building Materials Refinancing BB Ba3 $310 Senior Notes 144a life Dec-17 Source: S&P s LCD Sotheby's Holdings Inc. Services & Leasing Refinancing B+ Ba3 $400 Senior Notes 144a life 29