STRATEGIC MARKET INSIGHTS 1Q 2018

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1 STRATEGIC MARKET INSIGHTS 1Q 2018 A COLLECTIVE ANALYSIS OF MARKET PERSPECTIVE DEVELOPED BY PNC S ADVISORY AND SPECIALTY BUSINESSES CONTENTS M&A MARKET IPO AND FOLLOW-ON MARKET DEBT CAPITAL MARKETS ESOP INSIGHTS RECENT TRANSACTIONS

2 MARKET INSIGHTS 1Q 2018 M&A MARKET EXECUTIVE SUMMARY 2017 deal activity was extremely strong. The first three quarters of the year reached new peaks with nearly 10,500 M&A transactions consummated in the U.S. and Canada. Although complete 4Q17 data had not yet been reported when this analysis was conducted, preliminary data suggest that M&A market activity shows a continuance of the trend shown in the first three quarters of Quarter-over-quarter transaction volume has consistently dipped throughout the year, and this trend appears to have continued in the last quarter of the year as well. Passing the Tax Cuts and Jobs Act marks the first major milestone of economic initiatives under the new political administration, and it is expected to help prolong a healthy M&A market domestically. Market conditions remain strong, and the outlook for the first quarter and throughout 2018 is positive. Although we have been in an upcycle for several years, we do not see anything on the horizon that would alter market fundamentals in the near term. 4Q 2017 M&A MARKET REVIEW The M&A market environment remained relatively unchanged throughout the fourth quarter of 2017, despite softer transaction volume when compared to previous quarters of the year. While investors continue to deploy debt and equity capital aggressively, most are also focused on digesting the new tax plan and positioning themselves accordingly. Preliminary observations indicate that more than 13,000 transactions were consummated in the United States and Canada in 2017, setting a new annual record. NORTH AMERICAN M&A VOLUME1 (Number of Transactions) 1 Includes transactions with a target located in the U.S. or Canada Source: Thomson Financial M&A Market 1

3 M&A Market 2 S&P 500 aggregate cash positions (excluding financial companies) have hovered near $1.5 trillion over the past few years, which has led to increased scrutiny around balance sheet management and utilization. The pressure to supplement organic growth via acquisitions continues to be top of mind for boards and shareholders. S&P 500 AGGREGATE CORPORATE CASH BALANCES 1 1 Excluding financial companies Source: Factset U.S. private equity firms possess approximately $550 billion of deployable capital to invest, holding most in vintage funds. Firms are demonstrating an eagerness to put capital to work, particularly in companies with a proven track record through economic cycles. U.S. PRIVATE EQUITY FUNDS AVAILABLE CAPITAL Source: PitchBook

4 M&A Market 3 Private equity backed deal multiples for middle market companies also reflect the competition to deploy capital within the asset class and the overall strength of the M&A market. AVERAGE PURCHASE PRICE BREAKDOWN BY SPONSORS 1 1 Deals less than $50 million of EBITDA Source: Standard & Poor s As debt multiples have remained largely constant over the past few years in LBO transactions, private equity firms are willing to deploy higher levels of equity toward opportunities with strong underlying growth rates. INDUSTRY UPDATES M&A continues to be strong across a broad range of industries. Below are select recent sector updates prepared by the firm. All of the most recent Industry Group updates can be found here. The firm s Consumer Group s latest Food and Beverage Industry Update provides an overview of recent activity, a brief market update and public comparables, among other information. One article says the Specialty Food Association s Trendspotter Panel, in its analysis of 2018 trends, identified that macro trends like sustainability and wellness, combined with consumers demand for convenience and flavor adventure, are converging. Alternative sweeteners and a wider variety of plant-based foods were among the top trends to make the list. For the full Industry Update, please click here.

5 M&A Market 4 Harris Williams & Co. s Healthcare & Life Sciences Group s latest Industry Update provides recent commentary, public company trading statistics and an M&A market overview, among other information. The Update also includes a review of a few recent articles. According to one article, the billion-dollar deals between CVS Health and Aetna, and UnitedHealth and dialysis giant DaVita s physician group, take aim at healthcare spending by attempting to shift patient care away from costly inpatient facilities. While that may benefit patients, hospitals are left in the crosshairs. To read more and access the full Update, please click here. The firm s Technology, Media & Telecom Group recently released its quarterly Human Capital Management (HCM) Technology Sector Review. Some of the sections included are HCM market observations by sector, a review of select HCM M&A transactions and market valuations. In workforce management, workforce as a strategy is increasingly driving companies to adopt data-driven technologies that remove friction from the employee journey. Wellness and engagement tools are an increasingly important part of the productivity and retention puzzle. Leading vertical-specific platforms remain highly attractive to investors and acquirers. Click here to read the quarterly Sector Review. Harris Williams & Co. s Business Services Group s latest Professional Services Industry Update includes an equity trading overview, economic trends, public comparables, articles the Group has been reading and more. Articles featured in the Update discuss recent M&A transactions in the professional services space. Please click here to access the full Industry Update. FOR MORE INFORMATION To discuss opportunities in M&A for your business, please contact Bill Watkins at wwatkins@harriswilliams.com. Investment banking services are provided by Harris Williams LLC, a registered broker-dealer and member of FINRA and SIPC, and Harris Williams & Co. Ltd., which is a private limited company incorporated under English law with its registered office at 5th Floor, 6 St. Andrew Street, London EC4A 3AE, UK, registered with the Registrar of Companies for England and Wales (registration number ). Harris Williams & Co. Ltd. is authorized and regulated by the Financial Conduct Authority. Harris Williams & Co. is a trade name under which Harris Williams LLC and Harris Williams & Co. Ltd. conduct business. Harris Williams LLC is a subsidiary of The PNC Financial Services Group, Inc The PNC Financial Services Group, Inc. All rights reserved. CIB ENT PDF

6 MARKET INSIGHTS 1Q 2018 IPO AND FOLLOW-ON MARKET EXECUTIVE SUMMARY1 IPO MARKET UPDATE Solebury had a busy quarter in 4Q 2017, advising on five IPOs, seven Marketed Follow-Ons and 16 Block Trades. I PO issuance came back in 4Q 2017 with 35 deals raising over $7 billion in proceeds. T his represents 41% and 36% of 4Q 2017 follow-on and block trade monetization proceeds in the U.S. On the IPO front, Solebury advised on the Toronto listing of Canadian-based retailer Roots, as well as the IPO of water treatment technologies firm Evoqua. Solebury also continued its role in the monetization cycle for some of its most prominent clients. Engagements included second marketed follow-ons for JELD-WEN and Floor & Decor as well as a billiondollar cleanup block trade for CD&R s holdings of US Foods. Solebury ended the year having advised on approximately a third of all issuances in the U.S.: IPOs: 35% I PO pricings were up from 4Q 2016 in both units (+67%) and volumes (+34%). T he increase was even starker on a QoQ basis, with issuance up substantially in both units (+106%) and volumes (+125%). P ricing outcomes improved, with fewer IPOs pricing below the range and a huge increase in the percentage pricing above, returning to recent historical levels of pricings below and above the range. A ftermarket trading performance during the quarter was down on a QoQ basis but in line with recent averages, up 14% on average after one week of trading. 4 Q 2017 saw a particular focus on TMT IPOs, with nearly a third of IPOs after only two in 3Q Follow-Ons: 34% Block Trade Monetizations: 32% QUARTERLY IPO VOLUME2 1 Market share calculated by U.S. proceeds. Excludes ADSes, REITs and MLPs. Only Secondary Follow-Ons and Blocks included in market share statistics. 2 Includes U.S. IPOs greater than $50 million. Excludes BDCs, SPACs, ADRs, IDSes, CEFs and Chinese issuers. Source: Dealogic IPO and Follow-On Market 1

7 IPO and Follow-On Market 2 QUARTERLY OFFER TO 7-DAY PRICE PERFORMANCE 1 4Q: IPO PRICING BY INDUSTRY 4Q: IPO BACKLOG BY INDUSTRY Sector # of Deals Sector # of Deals Consumer 1 Consumer 0 Energy / Power 2 Energy / Power 10 FIG 6 FIG 2 Healthcare 11 Healthcare 2 Industrials 1 Industrials 4 Real Estate 2 Real Estate 2 Retail 1 Retail 2 Services 0 Services 2 TMT 11 TMT 3 Transportation 0 Transportation 2 PRICING RELATIVE TO RANGE 6% 29% 23% 26% 32% 24% 65% 51% 44% 3Q 17 4Q Average 1 Includes U.S. IPOs greater than $50 million. Excludes BDCs, SPACs, ADRs, IDSes, CEFs and Chinese issuers. Source: Dealogic

8 IPO and Follow-On Market 3 FOLLOW-ON MARKET UPDATE Marketed follow-on issuance was on par with recent totals, with a small jump YoY in both volume and proceeds, and two more deals QoQ, though for 30% less proceeds. Healthcare transactions continued to make up a larger proportion of deals, accounting for 42% of all marketed deals. Discounts ticked up on a QoQ basis, though in line with 4Q QUARTERLY MARKETED FOLLOW-ON VOLUME 1 4Q: INDUSTRY PRICING SUMMARY 1 QUARTERLY MARKETED FOLLOW-ON DISCOUNTS 1 FIG 6% Retail 3% Services 1% Transportation 8% Real Estate 8% Healthcare 42% Energy / Power 8% Industrials 9% TMT 15% 1 Includes U.S. follow-ons greater than $50 million. Excludes BDCs, SPACs, ADRs, IDSes, CEFs and Chinese issuers. Source: Dealogic

9 IPO and Follow-On Market 4 Block trade issuance tapered off YoY, with the QoQ change mixed at a slight increase in volume and decrease in proceeds. Average bid discounts widened to 4.6%, though in line with 4Q TMT saw a relative decrease in activity after having led 2Q, while FIG deals grew slightly as a share of all deals. QUARTERLY BLOCK TRADE VOLUME Q: INDUSTRY PRICING SUMMARY 1 QUARTERLY BLOCK TRADE BID DISCOUNTS 1 Transportation 4% Real Estate 7% Healthcare 7% Retail 2% FIG 18% Consumer 7% Services 9% Industrials 18% TMT 13% Energy / Power 15% FOR MORE INFORMATION Solebury Capital is a global advisory firm and registered broker-dealer exclusively focused on equity capital markets advisory. Please visit solecap.com. 1 Includes U.S. follow-ons greater than $50 million. Excludes BDCs, SPACs, ADRs, IDSes, CEFs and Chinese issuers. Source: Dealogic Equity capital markets advisory and related services are provided by Solebury Capital LLC, a registered broker-dealer and member of FINRA and SIPC. Solebury Capital LLC is a subsidiary of The PNC Financial Services Group, Inc The PNC Financial Services Group, Inc. All rights reserved. CIB ENT PDF

10 MARKET INSIGHTS 1Q 2018 DEBT CAPITAL MARKETS EXECUTIVE SUMMARY Borrowers are seeing increased liquidity and strong competition among lenders in the middle market and in asset-based lending, making it an opportune time to access debt markets. The leveraged loan market saw a record-breaking year in new-issue volume, and BB borrowers cut pricing as low as L+200, with some even as low as L+175. The high yield bond market also saw a strong year, with spreads staying at low levels. The market outlook for investment grade borrowers is strong. The loan market remains open and corporate bond credit spreads continue to tighten as demand outstrips supply. MIDDLE MARKET In middle market lending, syndicated bank loans to nonprivate equity owned, or non-sponsored, companies edged up slightly while volume backing PE-owned companies lifted the market to a three-year high. Lenders are showing strong appetite for new loans, and the lack of significant volume growth for non-sponsored companies perpetuated an environment in which more lenders are competing for fewer high-quality deals. As a result of demand for loans in excess of new supply, 2018 is setting up to be a favorable time for companies to borrow. Lenders are competing on price, looser structures, leverage tolerance and terms like EBITDA add-backs to win deals. Debt Capital Markets There s a growing trend of banks overcommitting to earn a better allocation. We re also seeing increasing appetite from small regional and community banks for C&I loans in an effort to offset a concentration of real estate loans. At the same time, some of the larger banks are maintaining discipline. While lenders to large corporates are willing to commit large amounts to uptier and to earn higher transaction fees, some banks are also exiting or reducing commitments in the middle market when there is little ancillary business, or for deals with low returns. Leveraged middle market borrowers with limited ancillary business opportunities have been particularly affected in this regard. That said, we expect to see leverage, tight pricing and looser structures carry into One reason is the influx of new capital into private debt funds. Direct lenders, also called non-bank lenders, are raising capital at record levels, and as new capital comes online to be invested, the market will see even more demand relative to supply. For sponsored deals, we re seeing significantly higher leverage. In fact, for institutional tranches, 2017 first lien leverage levels were in line with 2016 s total leverage levels, and nearly two-thirds of sponsored deals were leveraged at 6x or higher. Further illustrating the point that banks are looking for loan growth, the majority of lenders missed their lending goals every quarter throughout

11 Debt Capital Markets 2 MIDDLE MARKET VOLUME: SPONSORED V. NON-SPONSORED % OF LENDERS THAT MISSED THEIR LENDING GOAL $ % 90% $200 $150 $100 $50 $ Sponsored Non-sponsored 80% 70% 60% 50% 40% 30% 20% 10% 0% 1Q17 Bank 2Q17 3Q17 4Q17 In conclusion, to underscore current market trends, buyside accounts indicated to us that for deals where they passed mid-year, they would commit to the same deals today. INSTITUTIONAL MIDDLE MARKET LEVERAGE LEVELS RISING MIDDLE MARKET DIRECT LENDING CAPITAL RISING 6.00x 5.00x 4.00x 3.00x 2.00x 1.00x 0.00x Junior Debt to EBITDA 1st Lien Debt to EBITDA $80 $70 $60 $50 $40 $30 $20 $10 $ BDC Public Equity MM CLO Mezzanine Direct Lending Funds ASSET-BASED LENDING In asset-based lending (ABL), 2017 volume is marked the fourth highest total on record at $83 billion. The market remains issuer-friendly, as arrangers continue to take larger hold positions alongside more club-type syndications. The continuation of the supply/demand imbalance has driven flexibility and more borrowerfriendly structures. For example, in syndicated ABL deals, we are frequently seeing the inclusion of First-In, Last-Out (FILO) tranches, which provide incremental liquidity at the cost of premium pricing over the traditional revolver. The FILO was most typically utilized in the retail industry, but has recently been accepted in the broader ABL market. In addition, the excess demand in the market has created borrower-friendly enhancements in financial covenants, advance rates, voting rights and liquidity triggers. On some deals we re seeing in the market, companies are able to raise more capital than they need. As a result of oversubscription, some borrowers are increasing the tranche size and taking down the extra capital. Source: Thomson Reuters LPC

12 Debt Capital Markets 3 Capitalizing on excess demand over supply, sponsors continue to assert more control over the documentation process leading to more favorable borrower-friendly provisions. LIBOR NEW BENCHMARK FOR QUALITY ABL CREDITS To further illustrate the point, approximately 80% of ABL lender respondents to a Thomson Reuters survey expect structures to weaken into 2018, as the application of large corporate ABL deal terms continue to infiltrate into middle market deals. In addition, 60% of ABL lender respondents stated they could not lend as much as they wanted in Too many lenders are chasing too few deals. Pricing on ABL deals is near record low levels L+125 bps is now the market benchmark for high-quality ABL credits. Robust capital raising by direct lenders creates the opportunity for these lenders to play a bigger role across unitranche, Term Loan B, second lien and mezzanine tranches. While we expect to see more ABL lenders partnering with direct lenders to provide one-stop shop financing solutions, we re also seeing lead arrangers/bookrunners pursue larger deals to help offset the direct lender origination model. LEVERAGED / HIGH YIELD The leveraged loan market experienced record-breaking volume in Total pro rata and institutional new-issue loan volume tallied $645 billion, easily eclipsing 2013 s previous record of $607 billion. A frenzy of repricings led the charge and new money was strong, as borrowers seized the opportunity to tighten spreads to levels untouched for years. NEW-ISSUE LEVERAGED LOAN VOLUME INSTITUTIONAL NEW-ISSUE AND REPRICING VOLUME New-Issue Repricing Sources: S&P Capital IQ LCD, Thomson Reuters

13 Debt Capital Markets 4 For institutional BB issuers, 64 tranches were repriced to L+200 in For context, no issuers repriced to L+200 in One client was even able to issue a seven-year Term Loan B at L+175, a trend we expect to continue into the first quarter of Another market trend we expect to continue into 2018 is the ability to reduce TLB spread by incorporating a pricing grid with a leverage-based step-down. In the high yield bond market, spreads over treasuries, as measured by the Option Adjusted Spread, are among their lowest levels post financial crisis, and we re seeing covenant packages for high yield bonds continue to weaken, especially for sponsor-driven transactions. Investors continue to hunt for opportunities and are hopeful that the new tax reform legislation will lead to M&A activity in the early part of VOLUME OF SPREADS BELOW L+300 RELATIVELY LOW HISTORICALLY While we have seen an outflow from loan mutual funds and EFTs in recent months, we do not expect loan demand to dry up anytime soon. In fact, institutional investors indicated to us that they are sitting on much higher cash levels than desired given the limited supply of new-issue paper. In all, collateralized loan obligations, which raise money to invest in leveraged loans, raised approximately $118 billion in 2017, shattering 2016 s mark. Wall Street analysts believe that 2018 will meet or exceed 2017 levels, which is even more likely if CLOs are able to raise financing at lower levels. We continue to keep an eye on the loan maturity wall, which pushed out to , when 53% of all leveraged loans now come due. HIGH YIELD SPREADS REMAIN AT HISTORICALLY TIGHT LEVELS A significant chunk of single B rated loans comes due before 2023 and, given the fact that the majority of repricings occurred in the mid-bb space, this leaves ample runway for single B issuers to take advantage of loan demand and borrower friendly price flex. While the percentage of BB borrowers with spreads below L+300 is on par with pre-recession levels, the overall institutional market below L+300 is still below pre-recession levels, indicating that the next big wave of repricing activity will likely occur for single B credits. Sources: S&P Capital IQ LCD, Bloomberg

14 Debt Capital Markets 5 INVESTMENT GRADE M&A activity drove investment grade lending last year with $203 billion of volume, 11% higher than 2016, and we saw banks overcommitting to transactions in hopes of receiving higher allocations. Lifting the market to a record was CVS s massive $49 billion of loans put in place to support its $69 billion acquisition of Aetna. Refinances were down 5%, at the lowest level since 2012, as borrowers elected to wait to push out maturity for their revolvers. The market outlook for borrowers in 2018 is strong. Expectations of repatriated cash and increased cash flow from tax reform could hamper new debt issuance, possibly lightening new supply across loans and bonds. However, a boost to M&A from repatriated cash would likely aid new supply in In 2004, the last such tax holiday, data from the Congressional Research Service show that 843 firms repatriated cash at the then 5.25% rate, bringing back $312 billion, about one-third of cash held overseas. An estimated 80% of repatriated proceeds went toward share repurchases. This time around, the market expects borrowers to use cash in more diversified ways, including repaying debt, engaging in CapEx and M&A, and paying dividends in addition to buying back shares. I-GRADE DRAWN SPREADS OFFSHORE CORPORATE CASH CONTINUES TO RISE Remainder of corporates, excludes financials Apple, Microsoft, Alphabet, Cisco, Oracle Analyses of overseas cash hoards show a few hundred billion that could be repatriated thanks to the one-time 15.5% rate on cash versus the normal 35%. Heading into 2018, clients are also focused on changes to Libor, the current benchmark rate for most floating rate loans. Libor is moving toward being phased out in 2021, potentially being fully replaced in the syndicated loan market by a Secured Overnight Funding Rate ( SOFR ). In short, SOFR is a secured Treasuries repurchase rate, which would capture the short-term interest rate for repurchase agreements, repos, backed by Treasuries. The Federal Reserve Bank of New York is planning to begin publishing SOFR beginning in mid Regarding loan spreads over the current Libor benchmark, the market stayed relatively unchanged for another quarter as banks largely did not cut pricing. In 2018, banks are keeping an eye on potential changes to Basel III rules, which influence capital requirements. In particular, a bill in the Senate would ease capital constraints and enable smaller regional banks to cut costs, while a bill working its way through the House would give more discretion to regulators in enacting capital requirements for the regionals. Impacts from both bills would influence banks ability to cut investment grade loan spreads. Sources: Moody s, Thomson Reuters LPC

15 Debt Capital Markets 6 Corporate bond spreads tightened to levels not seen since 2007, as strong demand and even stronger supply pushed the market to a record $1.335 trillion. A culmination of a strong U.S. economy, an expected three rate hikes in 2018, strong corporate earnings, and potentially fewer bond issuances as a result of repatriated cash could possibly lead to even tighter spreads in From the investor s perspective, bond duration is at an all-time high, meaning investors face increasing interest rate risk at the same time spreads are trending downward. That echoes what borrowers are telling us they want to lock in the lowest rate for as long as possible. Clients are also more interested in international capabilities, with interest in tapping the markets in Europe and Asia. Indeed, U.S. corporate bond yields versus eurodenominated yields gapped out to approximately 2.5% difference, as companies sought to lock in lower rates, with the added benefit of being able to capitalize on the tax arbitrage opportunity. Approximately $118 billion in M&A volume from just eight transactions is already lined up for the 2018 calendar, giving a good starting point for what could possibly shape up to be a demand-driven market in Data from PNC s syndicate desk show investment grade bond oversubscription at approximately 3.3x for the first two weeks of 2018, a trend we expect to continue deeper into the quarter SPREAD MOVEMENTS 2018 FORECAST & IMPLIED TREASURY YIELDS DIVERGE FOR MORE INFORMATION Visit pnc.com/dcm. Sources: Bloomberg, WSJ Services such as public finance investment banking, securities underwriting, loan syndication, and securities sales and trading are provided by PNC Capital Markets LLC ( PNCCM ). PNCCM, member FINRA and SIPC, is a wholly-owned subsidiary of The PNC Financial Services Group, Inc. ( PNC ) and affiliate of PNC Bank, National Association ( PNC Bank ) The PNC Financial Services Group, Inc. All rights reserved. CIB ENT PDF

16 MARKET INSIGHTS 1Q 2018 ESOP INSIGHTS FORSYTHE TRANSFORMS ITS BUSINESS AND DELIVERS A WIN FOR ITS ESOP ESOP PROVIDES LIQUIDITY AND REPOSITIONS COMPANY AND EMPLOYEES FOR LONG-LASTING BENEFITS Like many successful technology companies, Forsythe Technology evolved over the years. Formed in 1971 as a provider of financing and leasing for technology equipment and products, Forsythe s business model shifted toward information technology (IT) services. In 2006, as the company prepared for the next growth phase, founder Rick Forsythe sought an exit. Forsythe already had a minority ESOP in place, and the employee ownership model positioned the company advantageously compared with other alternatives. As a result, the company redeemed Rick Forsythe s shares, leaving the ESOP as the only shareholder. For the selling shareholder, the ESOP provided liquidity and, as a friendly buyer, increased certainty to close and simplified the due diligence process. For the company, Tax advantages and an employee base motivated to act like owners were positives, recalls Al Weiss, chief financial officer at the time. The ESOP also helped attract and retain employees resulting in voluntary turnover rates lower than other technology companies. Employees benefited as the ESOP transaction enabled the company to remain independent and provided an opportunity for them to gain meaningful ownership in the business. ESOP Insights FORSYTHE PARTNERS WITH PNC DURING PERIOD OF UNCERTAINTY In 2014, Forsythe undertook a multi-phased project to enhance and complement its existing service capabilities. At that time, PNC was invited to participate in Forsythe s senior credit facility to finance the project. Unfortunately, during the first half of 2015 it became evident that cash flows from the project materialized more slowly than anticipated, causing strain on the company s cash flows and balance sheet. To overcome these obstacles, the company decided that it needed to sell the partially-completed real estate while continuing its underlying business. By doing so, it was able to implement a new capital structure. While the company relied on its advisors during the asset sale, the PNC relationship team, including PNC ESOP Solutions, dug in to design a creative solution to meet the company s needs. In conjunction with the successful sale of the real estate, during the summer of 2016, the company selected PNC as Agent for a new asset-based credit facility. By leveraging the company s strong collateral base, PNC s structure reduced required amortization payments and improved its financial flexibility. Their retirement accounts reflected a stock price that appreciated by more than seven times since the 2006 share purchase and experienced a compound annual growth rate in excess of 20% over the last 10 years. 1

17 ESOP Insights 2 Weiss adds, PNC stepped in aggressively at critical times, and always with the benefit of Forsythe in mind. They understood the ESOP, company and management very well, and provided a creative solution that was what we needed. The fact that the Company was 100% ESOP-owned was important given the unique considerations involved with this capital structure. It was important that the bank have a deep understanding of the nature of ESOPs. With the new capital structure in place, the company received an offer to purchase the company and, in 2017, Forsythe was acquired by Sirius Computer Solutions, Inc. ( Sirius ). For more than 40 years, Forsythe adapted to and grew with the fast-changing technology environment. As an ESOP-owned company, Forsythe successfully transitioned into a people business. In pursuit of growth, the company invested in opportunities to enhance its competitive positioning. By partnering with advisors that understood Forsythe s unique offering, capital structure and objectives, the company created significant value leading up to the acquisition by Sirius. ADDITIONAL CONSIDERATIONS While ESOPs can have significant benefits for owners, management and employees, they are not the best strategy in every situation. As you consider an ESOP, ask yourself the following questions: Does your company have consistent earnings? ESOPs tend to be best suited for businesses with consistent and predictable earnings so that they are well-positioned to service the transaction debt and future repurchase obligation requirements. Are you anticipating compelling strategic offers? ESOPs can pay no more than fair market value for the stock. If the selling shareholder is seeking to maximize his or her sale price, then an ESOP may not be the best means to achieve this goal. Do you require upfront liquidity? When selling to an ESOP, a meaningful portion of the total sale proceeds may be deferred and paid to the seller over a period of time. Forsythe s success ultimately benefited the employeeowners, Weiss notes. Their retirement accounts reflected a stock price that appreciated by more than seven times since the 2006 share purchase and experienced a compound annual growth rate in excess of 20% over the last 10 years. Employees appreciate the support PNC provided to enable such a successful sale. FOR MORE INFORMATION Ask how PNC s ESOP Solutions group helps companies transition to an ESOP structure and assists existing ESOP clients in maximizing performance. Contact Julie Williams at julie.williams@pnc.com or PNC is a registered mark of The PNC Financial Services Group, Inc. ( PNC ). Banking products and services provided by PNC Bank, National Association, a wholly-owned subsidiary of PNC and Member FDIC. Products and services may also be provided by or conducted through other subsidiaries of PNC The PNC Financial Services Group, Inc. All rights reserved. CIB ENT PDF

18 MARKET INSIGHTS 1Q 2018 RECENT TRANSACTIONS HARRIS WILLIAMS & CO. SOLEBURY CAPITAL SELL-SIDE ADVISORY IPO/BLOCK TRADE ADVISORY Harris Williams & Co. advised IPS Corporation (IPS), a portfolio company of Nautic Partners, LLC, on its $700 million sale to Encapsys LLC, a portfolio company of Sherman Capital Holdings. IPS is a leading manufacturer of solvent cements, structural adhesives, and specialty plumbing and roofing products. Solebury Capital advised on an IPO of $575 million for Evoqua, a portfolio company of AEA Investors in the utility space, in November The deal priced at the midpoint of the valuation range, and went on to trade up 22% in its first 30 days after pricing. Harris Williams & Co. advised Aquilex Holdings, LLC, owner of HydroChem, on its sale to PSC, a portfolio company of Littlejohn & Co. HydroChem, a portfolio company of Centerbridge Partners, L.P., is a provider of industrial cleaning solutions to the petrochemical production, oil refining and other energy-related businesses. Harris Williams & Co. advised PlayCore Holdings, Inc. (PlayCore) on its sale to Court Square Capital Partners. PlayCore, a portfolio company of Sentinel Capital Partners, is a manufacturer and distributor of custom commercial playground systems, park and recreation site amenities, and performance and specialty recreation products. Harris Williams & Co. Ltd advised Netherlands-based BlueCielo ECM Solutions BV, a portfolio company of Gilde Equity Management Benelux BV (GEM), to Accruent, a portfolio company of Genstar Capital. BlueCielo is a provider of asset life cycle information management (ALIM) software solutions. Solebury Capital advised on a follow-on of $534 million for Venator, a spinout of Huntsman Corporation, in November This was the company s first followon since its August 2017 IPO, with the stock up by 16% and pricing at a 2.8% discount to filing. Solebury Capital advised on a block trade of $1,131 million for US Foods, a CD&R and KKR portfolio company in the food and beverage space, in November The block was bid at a -1.13% discount to last sale and cleaned up the sponsor holdings of the company. This represents Solebury s fifth advisory assignment for US Foods, having raised $5,500 million in proceeds. Solebury Capital advised on a block trade of $394 million for TransUnion, an Advent International and Goldman Sachs PIA portfolio company in the business services space, in October The block was bid at a 0.42% discount to last sale and cleaned up Advent s holdings of the company. This transaction represents Solebury s eighth advisory assignment for TransUnion, having raised $5,319 million in proceeds. PNC DEBT CAPITAL MARKETS ACTIVITY NiSource Served as an Active Bookrunner for NiSource Finance Corp. s $500 million senior notes offering. Proceeds from the issuance were used to repay NiSource s term loan due March Steel Partners Served as Lead Left, Administrative Agent and Joint Lead Arranger on Steel Partners Holdings L.P. s $600 million revolving credit facility. The new $600 million revolver was put in place to support the company s business simplification initiative, ONE Steel. Hudson Technologies Served as Administrative Agent, Sole Lead Arranger and Sole Bookrunner on Hudson Technologies, Inc. s $150 million ABL facility that backed the company s acquisition of Aspen Refrigerants, Inc. (formerly known as Airgas Refrigerants, Inc.). The revolver was raised alongside GSO Capital Partners $105 million term loan facility. Buckeye Partners Served as one of three Active Bookrunners advising Buckeye Partners L.P. during its $400 million offering of 10-year senior unsecured notes. Buckeye used the proceeds from the offering to fund the redemption of its $300 million 6.05% senior notes due January 2018 and repay borrowings under its revolving credit facility. PNC and PNC Bank are registered marks of The PNC Financial Services Group, Inc. ( PNC ). Banking products and services provided by PNC Bank, National Association, a wholly-owned subsidiary of PNC and Member FDIC. Products and services may also be provided by or conducted through other subsidiaries of PNC. Services such as public finance investment banking, securities underwriting, loan syndication, and securities sales and trading are provided by PNC Capital Markets LLC ( PNCCM ). PNCCM, member FINRA and SIPC, is a wholly-owned subsidiary of The PNC Financial Services Group, Inc. ( PNC ) and affiliate of PNC Bank, National Association ( PNC Bank ). Investment banking services are provided by Harris Williams LLC, a registered broker-dealer and member of FINRA and SIPC, and Harris Williams & Co. Ltd., which is a private limited company incorporated under English law with its registered office at 5th Floor, 6 St. Andrew Street, London EC4A 3AE, UK, registered with the Registrar of Companies for England and Wales (registration number ). Harris Williams & Co. Ltd. is authorized and regulated by the Financial Conduct Authority. Harris Williams & Co. is a trade name under which Harris Williams LLC and Harris Williams & Co. Ltd. conduct business. Harris Williams LLC is a subsidiary of The PNC Financial Services Group, Inc. Equity capital markets advisory and related services are provided by Solebury Capital LLC, a registered broker-dealer and member of FINRA and SIPC. Solebury Capital LLC is a subsidiary of The PNC Financial Services Group, Inc. Lending products and services, as well as certain banking products and services, may require credit approval The PNC Financial Services Group, Inc. All rights reserved. CIB ENT PDF