January 2016 - June 2016 Summary Report Prepared by Brady Cary and Robert Regis, ASA of Columbia Financial Advisors, Inc. 12/31/16 A Publication of the AM&AA Market Research Committee Market Research Committee Report No. 2016-01 Deal Stats Survey Sponsors Business ValueXpress ACT Capital Advisors, LLC Columbia Financial Advisors, Inc. AM&AA AM&AA info@amaaonline.org 877-844-2535
Alliance of Merger & Acquisition Advisors January 2016 - June 2016 Summary Report December 2016 Executive Summary The (Survey) is designed to provide insight into transactions completed in the first half of 2016 by middle market companies. The Survey is conducted by the Alliance of Merger & Acquisition Advisors (AM&AA) organization through its members. The AM&AA members represent sellers and buyers of businesses ranging from $5 to over $500 million in transaction value. With over 1,000 members, typical services of AM&AA members include seller representation, buyer representation, due diligence, accounting, financing, business valuation, tax planning, legal, strategic advisory, and other transaction services. Average Multiples and Total Transaction Volume Down The average and median multiples for completed deals during the first half of 2016 (June 2016 Survey) were 5.81x and 4.00x EBITDA respectively. This compares to average and median multiples of 4.93x and 4.62x EBITDA during the first six months of 2015 (June 2015 Survey). AM&AA defines deal makers in two categories: M&A Brokers and M&A Advisors. M&A Brokers are primarily compensated on a success-fee basis while M&A Advisors are primarily paid a consulting or advisory fee irrespective of a transaction closing. The annual closing rates per individual varied between these categories. Annualized deals closed per respondent were up slightly for both M&A Brokers and M&A Advisors at 3.6 and 2.4, respectively. The total number of completed deals was down in the June 2016 Survey. Transaction dollar volume declined to $2.1 billion, down from $2.4 billion in the June 2015 Survey. Average deal size is variable from period to period but sometimes helpful in identifying trends. Average deal size for M&A Brokers declined compared with the June 2015 Survey while the average deal size for M&A Advisors increased over the same span. The deal size for M&A Advisors tends to vary in a wider range than the deal size for M&A Brokers. Manufacturing Continues to be the Top Industry in Completed Deals Members provided services related to transactions in most industries defined by the twodigit North American Industry Classification System (NAICS). Manufacturing transactions were once again the most frequent in the recent survey as in prior survey periods while the Information services industry provided the highest dollar volume. The top industries for the number of completed deals were: 1) Manufacturing Copyright Alliance of Merger & Acquisition Advisors 1
2) Information 3) Retail Trade 4) Wholesale Trade 5) Healthcare & Social Assistance (tie) The top industries for dollar volume of completed deals were: 1) Information 2) Manufacturing 3) Professional, Scientific and Technical Services 4) Finance and Insurance 5) Other Services (except public administration) Copyright Alliance of Merger & Acquisition Advisors 2
Introduction AM&AA is the premiere international organization serving the educational and resource needs of the middle-market M&A profession. Formed in 1998 to bring together CPAs, attorneys, intermediaries and other experienced corporate financial advisors, AM&AA s professional services firms, including some of the most highly recognized leaders in the industry, draw upon their combined transactional expertise to better serve the needs of their middle market clients worldwide. AM&AA members were solicited to answer questions about themselves and their services, as well as about the transactions they had closed during the period January 2016 through June 2016. Approximately 5.5% of members responded to the survey. Results from the June 2016 Survey were analyzed and compared to prior surveys. Results Transaction Multiples. In the Survey, members provided transaction data that included general transaction price (Price) and EBITDA (earnings before interest, taxes, interest, depreciation and amortization) for 43 individual transactions that closed in the six-month period in June 2016. The analysis of the Survey provided the following observations. The average EBITDA multiple reported in the June 2016 Survey for all transactions was 5.81x, compared to 4.93x in the June 2015 Survey. The median EBITDA multiple reported in the June 2016 Survey for all transactions was 4.00x, compared to 4.62x in the June 2015 Survey. Average and median EBITDA multiples over the past five years are plotted in the subsequent graph. The median multiple reported in the June 2016 Survey was at the low end of the range of prior Survey results. Average and Median EBITDA Multiples 7.00 6.00 5.00 5.77 5.50 5.38 4.75 5.35 5.06 5.25 5.25 4.82 5.40 5.52 5.64 5.12 5.12 5.37 4.12 4.93 4.62 5.81 4.00 4.00 3.00 2.00 1.00 0.00 End June 2011 End Dec 2011 End June 2012 End Dec 2012 End June 2013 End Dec 2013 End June 2014 End Dec 2014 End June 2015 End June 2016 Average Median Copyright Alliance of Merger & Acquisition Advisors 3
Note: Prior to 2013, multiples were reported in half point increments. Beginning in 2013, multiples were collected in quarter point increments with minimal impact on observed multiples. In the June 2016 Survey, most respondents answered the EBITDA and consideration dollar range questions but did not answer the range of multiples question. Therefore, the multiples in the June 2016 Survey, were inferred based on the dollar ranges provided. There was no survey conducted for the six months December 2015. Transaction Multiples by Industry Average multiples were also calculated by industry. In many instances, sample sizes are small and the data may represent a broad based industry classification. Deal size and company size are observed to be factors that influence multiples. The June 2016 Survey provided data to calculate the inferred EBITDA multiples for 43 transactions. The average EBITDA multiples, by industry, are detailed in the table below. Average EBITDA Multiple by Industry 1st Half 2015 Completed Deals 1st Half 2016 Completed Deals 11 Agriculture, Forestry, Fishing, Hunting NA 0 NA 0 21 Mining, Quarrying, Oil and Gas Extration NA 0 3.75 1 22 Utilities 3.87 0 4.38 1 23 Construction 4.15 2 4.00 1 31-33 Manufacturing 6.25 15 5.54 7 42 Wholesale Trade 6.50 2 10.00 1 44-45 Retail Trade 4.62 2 4.02 10 48-49 Transportation and Warehousing 3.12 1 2.50 1 51 Information 7.87 1 8.53 4 52 Finance and insurance 5.12 1 4.00 1 53 Real Estate and Rental and Leasing 5.21 1 10.50 1 54 Professional, Scientific and Technical Services 5.12 6 6.50 3 55 Management of Companies and Enterprises NA 1 NA 0 56 Administrative, Support, Waste Management & Remediation Services NA 0 NA 0 61 Educational Services 5.56 0 NA 0 62 Health Care and Social Assistance 4.12 8 6.00 3 71 Arts, Entertainment and Recreation NA 1 NA 0 72 Accomodation and Food Services 5.19 0 6.69 4 81 Other Services (except public administration) 4.93 4 6.70 5 All Industries 4.93 45 5.81 43 Multiple Frequency Distribution. The following chart details the EBITDA multiple frequency distribution for the 43 reported transactions in the June 2016 Survey. Approximately 12% had multiples less than 3.00x EBITDA, 58% had multiples less than 5.00x EBITDA, and 18% of transactions had multiples equal to or higher than 10.00x EBITDA. The frequency distribution of EBITDA multiples in the June 2016 Survey compared to the June 2015 Survey in that the majority of multiples are between 3.00x and 6.00x EBITDA. Note: percentage totals in this report may not foot due to rounding. Copyright Alliance of Merger & Acquisition Advisors 4
AM&AA EBITDA Multiples for All Industry Deals 35% 35% 30% 25% 20% 15% 10% 5% 0% 13% Less than 3x 20% 12% 12% 20% 27% 7% 7% 3.0 to 3.9x 4.0 to 4.9x 5.0 to 5.9x 6.0 to 6.9x 7.0 to 7.9x 8.0 to 8.9x 9.0 to 9.9x Greater than 10x 4% 0% 0% 2% 14% 0% 7% 7% 14% First Half 2015 First Half 2016 Factors Influencing EBITDA Multiple. The relationship between the EBITDA multiples in the last three Surveys to: 1) transaction size, 2) EBITDA, and 3) revenue is examined and detailed in the following charts. Average EBITDA Multiple vs Total Consideration 10.0 9.0 8.0 7.0 6.0 5.0 4.0 4.0 3.2 3.8 5.7 4.4 4.9 6.0 4.6 6.2 5.6 4.7 7.6 7.4 6.6 NA 7.0 8.3 8.8 3.0 2.0 1.0 0.0 < $1 Million $1 $5 Million $5 $10 Million $10 $25 Million $25 $50 Million > $50 Million 1st Half 2014 1st Half 2015 1st Half 2016 Copyright Alliance of Merger & Acquisition Advisors 5
Average EBITDA Multiple vs Revenue Dollars 8.0 7.0 6.0 5.0 4.0 3.0 2.8 1.3 4.8 5.5 4.1 5.0 5.8 4.2 6.3 5.5 4.8 7.2 3.6 6.9 6.7 6.3 6.1 6.2 2.0 1.0 0.0 < $1 Million $1 $5 Million $5 $10 Million $10 $25 Million $25 $50 Million > $50 Million 1st Half 2014 1st Half 2015 1st Half 2016 Average EBITDA Multiple vs EBITDA Dollars 14.0 12.4 12.0 10.0 8.3 8.0 6.0 4.1 2.9 6.9 6.2 6.1 5.3 5.7 5.3 6.6 5.7 5.0 5.6 5.3 5.2 4.4 4.7 6.8 7.0 4.0 2.0 NA 0.0 < $250K $250K $500K $500K $1MM $1 $3 MM $3 $5MM $5 $10MM > $10MM 1st Half 2014 1st Half 2015 1st Half 2016 A positive relationship between transaction size (total consideration) and the size of EBITDA multiples has been observed in previous Surveys conducted. The June 2016 Survey results are consistent with this observation. A positive relationship between EBITDA multiples and the size of revenue dollars has been observed in previous Surveys conducted, although not as strong as the relationship between EBITDA multiples and total consideration. The June 2016 Survey results are consistent with this observation. Copyright Alliance of Merger & Acquisition Advisors 6
A weak relationship between EBITDA multiples and the size of EBITDA dollars has been observed in previous Surveys conducted. The June 2016 Survey results consistent with this observation indicating that little or no observable relationship exists. Principal Reasons for EBITDA Multiples Greater than 10x. Of the five transactions with reported multiples greater than 10.00x EBITDA in the June 2016 Survey, two respondents cited high synergy for the buyer, one cited high a high growth opportunity, one cited high multiples for the industry in general (scientific and technical services), and one indicated that the deal included non-operating real estate. Member Composition. The following table shows the composition of the respondents. The M&A Advisor category includes individuals who self-identify as accountants, appraisers, attorneys, management consultants, or others. Typically, M&A Advisors obtain most of their compensation as fees for service, whereas M&A Brokers receive most of their compensation as success fees for completed transactions. Business Buyers are typically private equity and corporate development professionals. Respondents who identified themselves as Other fall outside of these categories, such as other types of financial service providers or executives. In the Survey, persons who responded as Other are included with M&A Advisors. The rationale behind this categorization is that M&A Brokers and Buyers have opposing motivations with M&A Brokers seeking to maximize price and Buyers seeking to minimize price. M&A Advisors, whose compensation is not likely to be tied directly to deal size, may not have the same motivations. The effect of such motivational differences among these groups, if any, would most likely be found in deal multiples; however, other patterns may be discerned. The mix of respondents in recent Survey s shifted with M&A Brokers representing a lower segment of total respondents. Survey Composition (may not total 100% due to rounding) June 2013 Dec 2013 June 2014 Dec 2014 June 2015 June 2016 M&A Broker 51.0 53.7 52.2 55.2 47.1 43.4 M&A Advisor 35.7 32.8 32.8 35.8 45.9 49.1 Business Buyer 13.3 13.4 14.9 9.0 7.1 7.5 Member Clients. M&A Brokers and Advisors were asked to indicate whether their clients were sellers, buyers or both. Of the 53 M&A Brokers and Advisors who responded to the June 2016 Survey, those Brokers and Advisors who work exclusively or mostly for sellers represented 46.5% of the survey responses, which is similar the prior period (June 2015 Survey, 51.4%), and similar to levels reported in prior surveys. The proportion of M&A Brokers and Advisors who split their time equally between working for buyers and sellers was 25.6% in the June 2016 Survey, down from 40.0% in the June 2015 Survey. Number of Completed Transactions. A total of 83 closed deals were reported by members in the June 2016 Survey, with 57 reported by M&A Brokers and Advisors, 3 reported by Copyright Alliance of Merger & Acquisition Advisors 7
Buyers and 23 reported by others. There was a decrease in the number of completed transactions by M&A Brokers and M&A Advisors in the June 2016 Survey compared to the June 2015 Survey (excluding respondents with unusually high level of closed deals). Number of completed transactions (excluding Buyers) June 2013 Dec 2013 June 2014 Dec 2014 June 2015 June 2016 M&A Broker [a] 62 57 56 85 69 36 M&A Advisor [b] 43 29 17 44 40 21 Total Transactions 113 86 73 129 109 57 [a] Excludes respondent reporting 50 closed transactions in June 2014. [b]excludes respondents reporting 48 and 26 closed transactions in December 2014, 15 closed transactions in June 2015, and 25 and 11 closed transactions in June 2016. Transactions outside North America. In the June 2016 Survey, 8 of the 83 transactions (9.6%) had targets outside North America compared to 12.9% and 14.8%, respectively, in the prior two Surveys. In the June 2016 Survey, the total U.S. dollar value of the reported transactions outside of North America was $790 million compared to $267 million (June 2015) and $542 million (Dec 14) in the prior two Surveys. Transactions per Individual. The average and median number of closed transactions reported per respondent was 1.8 and 1.0, respectively in the June 2016 Survey. The number of transactions per respondent increased for both M&A Advisors and M&A Brokers. Average Number of Transactions per Respondent June 2013 Dec 2013 June 2014 Dec 2014 June 2015 June 2016 M&A Broker [a] 1.0 1.6 1.6 2.1 1.7 1.8 M&A Advisor [b] 1.3 0.9 1.2 1.6 1.0 1.2 [a] Excludes respondent reporting 50 closed transactions in June 2014. [b] Excludes respondents reporting 48 and 26 closed transactions, respectively, in December 2014, respondent reporting 15 transactions in June 2015, and respondents reporting 25 and 11 transactions closed in the June 2016 period. Dollar Volume of Transactions. In total, all respondents reported a total of $2.1 billion in closed transactions in the June 2016 Survey, down from the total value of $2.4 billion in the June 2015 Survey. The June 2016 Survey had fewer respondents so the decline in dollar value is consistent with expectations. In the June 2016 Survey, M&A Brokers reported $0.6 billion in closed transactions compared to $1.5 billion for M&A Advisors. Volume ($ millions) of Reported Transaction (excl. Business Buyers) June 2013 Dec 2013 June 2014 Dec 2014 June 2015 June 2016 M&A Broker $410 $525 $3,650 $1,122 $1,537 $589 M&A Advisor $2,253 $1,281 $2,490 $4,176 $608 $1,454 Total $2,663 $1,806 $6,140 $5,308 $2,145 $2,043 Note: Totals exclude business buyers. Copyright Alliance of Merger & Acquisition Advisors 8
Average Transaction Size. In the June 2016 Survey, the average transaction size for all respondents was $25.4 million compared to $19.0 million in the June 2015 Survey. In the June 2016 Survey, M&A Brokers reported $16.4 million in closed transactions compared to $33.3 million for M&A Advisors. M&A Broker transaction size decreased by 26.6% while M&A Advisors increased by 170.5%. Average Transaction Size ($ millions) June 2013 Dec 2013 June 2014 Dec 2014 June 2015 June 2016 M&A Broker [a] $6.6 $9.2 $7.9 $13.2 $22.3 $16.4 M&A Advisor [b] $47.9 $51.2 $89.3 $37.8 $12.2 $33.3 *Not all reported transactions had associated size information. [a] Excludes one large transaction with a value over $1 billion and one respondent reporting 50 transactions with an average value of $3 million from the June 2014 data. [b] One M&A Advisor reported 6 transactions in the December 2013 period that totaled over $1 billion, contributing to the large increase in average transaction size for M&A Advisors. Had this individual s transactions been excluded the average for M&A Advisors would have been $38.7 million per M&A Advisor. AM&AA Members Transaction Size 90.0 89.3 80.0 70.0 60.0 50.0 40.0 30.0 29.9 26.7 47.9 51.2 37.8 22.3 16.4 33.0 20.0 10.0 6.6 9.2 7.9 13.2 12.2 0.0 Dec 12 Jun 13 Dec 13 Jun 14 Dec 14 Jun 15 Jun 16 M&A Broker M&A Advisor The following chart presents the frequency distribution of the transactions by total consideration. Some, but not all, of the reported transactions reported transaction size. Therefore, only those transactions with transaction size data were included in the chart. In the June 2016 Survey, over half (53%) of the transactions were in the range of $1 to $10 million with 8.8% over $50 million. By comparison, in the June 2015 Survey, less than half (45.9%) of the transactions were in the range of $1 to $10 million with 18.9% over $50 million. Copyright Alliance of Merger & Acquisition Advisors 9
Transaction Distribution 30 26 25 20 17 15 13 13 13 10 7 8 10 7 5 3 2 3 4 1 1 3 0 < $1 million $1 < $5 million $5 < $10 million $10 < $25 million $25 < $50 million $50 < $75 million $75 < $100 million > $100 million First Half 2015 First Half 2016 Frequency of Transactions by Industry. Respondent were asked to provided detail regarding the specific industry in which the transaction company operated by the two-digit North American Industry Classification System (NAICS). Some respondents reported multiple or secondary classifications for each transaction. The secondary NAICS classifications were excluded from the analysis. In the June 2016 Survey, industry data was reported for 70 of the 83 qualifying transactions. Transactions in the manufacturing industry were once again most prevalent in terms of frequency of occurrence. The top five industries in the June 2016 Survey were as follows: 1) Manufacturing 2) Retail Trade 3) Health Care and Social Assistance Wholesale Trade 4) Information 5) Finance and Insurance (tie) Copyright Alliance of Merger & Acquisition Advisors 10
Frequency of Transactions by Industry (percent) June Dec Industry 11 Agriculture, Forestry, Fishing, Hunting 2013 1.0% 2013 2.4% 2014 2.3% 2014 0.8% 2015 3.2% 2016 0.0% 21 Mining, Quarrying, Oil and Gas Extraction 8.6% 4.7% 1.5% 1.6% 0.8% 1.4% 22 Utilities 0.0% 0.0% 0.8% 1.6% 0.0% 4.3% 23 Construction 6.7% 4.7% 9.1% 4.8% 2.4% 0.0% 31-33 Manufacturing 23.8% 25.9% 15.9% 19.8% 37.1% 24.0% 42 Wholesale Trade 11.4% 9.4% 6.8% 8.7% 7.3% 4.3% 44-45 Retail Trade 10.5% 9.4% 6.1% 14.3% 4.8% 14.3% 48-49 Transportation and Warehousing 3.8% 0.0% 5.3% 1.6% 3.2% 1.4% 51 Information 3.8% 14.1% 6.1% 4.8% 5.6% 8.6% 52 Finance and insurance 6.7% 8.2% 3.8% 2.4% 3.2% 8.6% 53 Real Estate and Rental and Leasing 1.9% 1.2% 4.5% 4.0% 2.4% 7.1% 54 Prof., Scientific and Technical Services 12.9% 3.5% 9.8% 11.1% 14.5% 4.3% 55 Management of Companies and Enterprises 1.0% 0.0% 0.8% 0.0% 0.0% 0.0% 56 Admin, Support, Waste Man. & Rem. Services 4.8% 0.0% 4.5% 1.6% 0.8% 0.0% 61 Educational Services 0.0% 1.2% 4.5% 0.8% 0.0% 0.0% 62 Health Care and Social Assistance 4.8% 5.9% 6.1% 7.9% 8.1% 11.4% 71 Arts, Entertainment and Recreation 1.9% 1.2% 3.8% 0.8% 0.0% 0.0% 72 Accommodation and Food Services 1.9% 2.4% 5.3% 0.0% 0.0% 4.3% 81 Other Services (except public administration) 4.8% 5.9% 3.0% 13.5% 6.5% 5.7% Dollar Volume by Industry. The top five industries in terms of dollar volume of transactions in the June 2016 Survey were as follows: 1) Information 2) Manufacturing 3) Professional, Scientific and Technical Services 4) Finance and Insurance 5) Other Services (except public administration) June Dec June June Total Dollar Volume by Industry (U.S. Dollars) Total Value Transactions Reported 11 Agriculture, Forestry, Fishing, Hunting $ 0 21 Mining, Quarrying, Oil and Gas Extration $ 2,500,000 1 22 Utilities $ 35,000,000 2 23 Construction $ 0 31-33 Manufacturing $ 211,000,000 14 42 Wholesale Trade $ 10,000,000 2 44-45 Retail Trade $ 47,000,000 8 48-49 Transportation and Warehousing $ 2,500,000 1 51 Information $ 215,000,000 5 52 Finance and insurance $ 103,500,000 3 53 Real Estate and Rental and Leasing $ 30,000,000 4 54 Professional, Scientific and Technical Services $ 110,000,000 4 55 Management of Companies and Enterprises $ 0 56 Administrative, Support, Waste Management & Remediation Services $ 0 61 Educational Services $ 0 62 Health Care and Social Assistance $ 46,000,000 5 71 Arts, Entertainment and Recreation $ 0 72 Accomodation and Food Services $ 27,000,000 4 81 Other Services (except public administration) $ 60,000,000 4 All Industries $ 899,500,000 57 [1] For the six months June 2016. Copyright Alliance of Merger & Acquisition Advisors 11
In the June 2015 Survey, the top five industries were: Transportation and Warehousing; Retail Trade; Health Care and Social Services; Administrative, Support, Waste Management & Remediation Services; and Mining, Quarrying, Oil and Gas Extraction (tie). Average Transaction Size by Industry. The top five industries in terms of average transaction size in the June 2016 Survey were as follows: 1) Information 2) Finance and Insurance 3) Professional, Scientific and Technical Services 4) Utilities 5) Manufacturing Average Transactions Size (Millions) June Dec June Dec June June Industry 11 Agriculture, Forestry, Fishing, Hunting $ 2013 1.3 $ 2013 26.7 $ 2014 53.8 $ 2014 93.8 $ 2015 10.0 2016 NA 21 Mining, Quarrying, Oil and Gas Extraction $ 6.7 $ 34.5 $ 7.5 $ 55.0 $ 37.5 $ 2.5 22 Utilities $ 3.8 NA $ 2.5 $ 47.5 NA $ 17.5 23 Construction $ 28.8 $ 21.9 $ 40.4 $ 6.7 $ 35.8 NA 31-33 Manufacturing $ 12.6 $ 14.3 $ 16.2 $ 25.8 $ 26.1 $ 15.1 42 Wholesale Trade $ 6.0 $ 17.8 $ 11.4 $ 20.9 $ 14.5 $ 5.0 44-45 Retail Trade $ 6.0 $ 5.4 $ 13.1 $ 17.8 $ 53.1 $ 5.9 48-49 Transportation and Warehousing $ 17.0 $ 8.8 $ 13.8 $ 27.5 $ 53.8 $ 2.5 51 Information $ 12.9 $ 9.3 $ 15.0 $ 35.6 $ 16.5 $ 43.0 52 Finance and insurance $ 23.0 $ 7.5 $ 43.5 $ 55.0 $ 25.8 $ 34.5 53 Real Estate and Rental and Leasing $ 26.3 $ 8.3 $ 36.0 $ 27.5 $ 2.5 $ 7.5 54 Prof., Scientific and Technical Services $ 1.7 $ 6.0 $ 18.1 $ 20.8 $ 36.9 $ 27.5 55 Management of Companies and Enterprises $ 2.5 NA $ 2.5 NA NA NA 56 Admin, Support, Waste Man. & Rem. Services $ 6.5 NA $ 23.3 $ 47.5 $ 37.5 NA 61 Educational Services NA $ 1.3 $ 5.0 $ 52.5 NA NA 62 Health Care and Social Assistance $ 1.7 $ 24.0 $ 6.1 $ 19.3 $ 47.5 $ 9.2 71 Arts, Entertainment and Recreation $ 3.8 $ 3.8 $ 7.5 $ 20.0 $ 2.5 NA 72 Accommodation and Food Services $ 1.3 $ 21.7 $ 4.4 $ 33.8 NA $ 6.8 81 Other Services (except public administration) $ 6.9 $ 3.5 $ 16.3 $ 26.7 $ 7.5 $ 15.0 Summary and Descriptive Statistics for the prior three surveys. The following chart presents cumulative summary and descriptive statistics reagarding EBITDA multiples over the prior three Surveys. The chart incorporates 173 multiples with a mean and median of 5.50x and 5.12x EBITDA respecively. Copyright Alliance of Merger & Acquisition Advisors 12
Descriptive Statistics Last Three Surveys Descriptive Statistics June 2016 Survey Count 173.00 Count 43.00 High 10.50 High 10.50 Low 2.50 Low 2.50 Mean 5.50 Mean 5.81 75th Percentile 6.62 75th Percentile 8.75 Median 5.12 Median 4.00 25th Percentile 3.87 25th Percentile 4.00 Coeffcicient of Variation 0.43 Coeffcicient of Variation 0.49 Sandard Deviation 2.38 Sandard Deviation 2.85 Estimated Standard Error of the Mean 0.18 Estimated Standard Error of the Mean 0.43 t Cut off @ 95.00% 1.97 t Cut off @ 95.00% 2.02 Margin of Error 0.36 Margin of Error 0.88 Upper Bound 5.86 Upper Bound 6.69 Lower Bound 5.14 Lower Bound 4.94 Descriptive Statistics June 2015 Survey Descriptive Statistics Dec 2014 Survey Count 45.00 Count 85.00 High 10.50 High 10.50 Low 2.50 Low 2.50 Mean 4.93 Mean 5.64 75th Percentile 5.87 75th Percentile 6.62 Median 4.62 Median 5.37 25th Percentile 3.37 25th Percentile 3.87 Coeffcicient of Variation 0.42 Coeffcicient of Variation 0.40 Sandard Deviation 2.06 Sandard Deviation 2.26 Estimated Standard Error of the Mean 0.31 Estimated Standard Error of the Mean 0.25 t Cut off @ 95.00% 2.02 t Cut off @ 95.00% 1.99 Margin of Error 0.62 Margin of Error 0.49 Upper Bound 5.55 Upper Bound 6.13 Lower Bound 4.31 Lower Bound 5.15 12.00 EBITDA Multiple Scatter Chart 10.00X OR GREATER EBITDA Multiple Frequency 19.00 10.00 9.00X TO 9.49X 3.00 8.00 8.00X TO 8.99X 7.00X TO 7.99X 5.00 12.00 6.00 6.00X TO 6.99X 14.00 4.00 5.00X TO 5.99X 4.00X TO 4.99X 34.00 37.00 2.00 0.00 0 50 100 150 200 Count 3.00X TO 3.99X 36.00 LESS THAN 3.00X 13.00 5 5 15 25 35 45 Count Questions and Suggestions. If you have questions about the survey results and methodology, or if you have suggestions on additional research or surveys that would be of value to members, please contact Brady Cary or Robert Regis of Columbia Financial Advisors at 503-222-0562 or send an e-mail at bcary@cfai.com or rregis@cfai.com. To preserve confidentiality, no data on the individual transactions or the respondents will be released outside the AM&AA Market Research Committee. Market Research Committee Membership. Also, please contact Brady Cary if you would like to become a member of the AM&AA Market Research Committee and contribute to future research and survey projects. If you are a member of AM&AA, enjoy working with spreadsheets and statistical analysis of data and you can dedicate some of your time to efforts like this one, we would like to hear from you. Copyright Alliance of Merger & Acquisition Advisors 13
Press Inquiries. To learn more about the AM&AA s Market Research Committee or this survey, please call Brady Cary at 503-222-0562 or send an e-mail to bcary@cfai.com. To learn more about AM&AA please contact AM&AA at 877-844-2535 or info@amaaonline.org. Sponsor Information: Information is provided below on the sponsors who have made contributions to support since the second half 2012 Deal Stats survey. Sponsors assume no liability for the accuracy of any of the data or analyses provided by the Deal Stats report. Business ValueXpress Business ValueXpress is a valuation software program. It helps develop financing options to make a deal work. Due to its non-subjective method, BVX is used in front of clients for what-if analysis. BVX users are M&A intermediaries, buyers, owners, consultants, bankers, accountants and attorneys. BVX combines discounted cash flow and ROI with debt-service, debt availability, equity availability, financing terms, and value maximization. For further information about Business ValueXpress please contact Mike Adhikari at 866-BVX-VALUE or info@businessvaluexpress.com. ACT Capital Advisors, LLC ACT Capital Advisors is a leading merger & acquisition consulting firm representing middle market businesses seeking a transaction to either acquire another business or be acquired. ACT provides clients with exit planning, valuation, sell-side and buy-side representation. ACT has provided buy-side services to the private equity community for many years. ACT s deal makers have handled transactions totaling over $1 billion in value. ACT is headquartered in the Seattle area, and maintains offices in several other cities. For further information about ACT please contact Perry Campbell at pcampbell@actcapitaladvisors.com or 800-240-4609. Columbia Financial Advisors, Inc. Columbia Financial Advisors, Inc. is one of the nation s leading business appraisal and financial advisory firms. Headquartered in Portland, Oregon, the Firm s business appraisal services include estate and gift tax valuations, appraisal and financial advisory services for Employee Stock Ownership Plan (ESOP) purposes, stock based incentive plan purposes, financially-related litigation support services, appraisals for mergers & acquisitions, corporate planning purposes, buy/sell agreements, initial public offerings, financial reporting purposes, and quantification of appropriate appraisal discounts and premiums. Columbia Financial Advisors, Inc. services clients of all sizes and in virtually every industry. For additional information please contact Brady Cary at bcary@cfai.com or 503-222-0562 ext. 166. AM&AA The AM&AA is the leading association and credentialing body for middle market M&A professionals. Our leadership and people have unrivalled multidisciplinary expertise in the Copyright Alliance of Merger & Acquisition Advisors 14
financial services industry. AM&AA members represent sellers and buyers of small and middle-sized businesses ranging up to $500 million in transaction value. Their services are seller representation, buyer representation, due diligence, accounting financing, business valuation, tax planning, legal, strategic, and other advisory and transaction services. The AM&AA offers members a solid platform for professional collaboration. Contact AM&AA at info@amaaonline.org or 877-844-2535. Copyright Alliance of Merger & Acquisition Advisors 15