2012
www.bdocap.com
Q2 2012 Transaction Review and Outlook
Contents
Key Points. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
STATISTICALLY SPEAKING . . . . . . . . . . . . . . . 2
Activity Level. . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Valuations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Sector Performance Continues
to be Upbeat
Up and Away, Despite Economic Drag
MARKET ANALYSIS . . . . . . . . . . . . . . . . . . . . . 3
ECONOMIC INDICATORS. . . . . . . . . . . . . . . . 3
u Key Points
IN SUMMARY. . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Transaction Volumes and Valuations Rise for Another Quarter
APPENDIX A:
Public Comps. . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Overall deal volume in the lower middle market (defined herein as transactions with less than
$250 million in enterprise value) was up another 8 percent during Q1 2012. The Industrial
Markets sector was a shining component of the overall growth, up an estimated 13 percent (see
page 6 of this report for a profile of recent sector transactions). The rise in industrial deals was
in large part driven by strategic investment in the sector, up an estimated 15 percent over 2011
levels.
APPENDIX B:
Recent Transactions . . . . . . . . . . . . . . . . . . . . . 6
BDO CAPITAL RECENT Transaction. . . . 7
BDO Capital Advisors, LLC provides
counsel in the areas of:
• Mergers & Acquisitions
• Corporate Finance
•Special Situations
•Business Valuations/Fairness
Opinions
• Quality of Earnings
• Board Advisory
Please direct inquiries to:
Dan Shea | Managing Director
BDO Capital Advisors, LLC
1888 Century Park East, 4th Floor
Los Angeles, CA 90067
310-557-8205 (Direct)
dshea@bdocap.com
Sector valuation multiples for lower middle market companies rose, too, up from a 2009
recessionary low of 5.5x EBITDA on average to reach 6.1x EBITDA during Q1 of 2012.
Some Softness in the Deal Pipeline Likely to Be Short-lived
Despite the upward trend in transaction volume beginning in 2010 and continuing through Q1
2012, expected activity going forward is somewhat unclear. The lack of clarity stems from the
shortage of new deals that came to market during Q1. It was reported within the PE community
that the volume of offering books in circulation was down materially during the quarter. January
2012 was a particularly slow month, when some PE firms reported book receipts down a notable
50 percent vis-à-vis January 2011. This dip in action will surely impact the number of closings
later in the year (Q2-Q4) as these deals get processed to conclusion.
We believe that this softness will be short-lived given the amount of PE, strategic and debt
capital available to invest (conservatively in excess of $1 trillion). We also think that the potential
hike in tax rates following the November election will spur owners into action. In 2010 when
the same threat loomed, we saw transaction announcements jump by 33 percent in the fourth
quarter.
Worries Breed Caution while Relevant Economic Data Is Generally Positive
Concerns about the economy and the associated dampening of prospective business
performance have been a drag on the deal market. The business press has been replete with
negative news such as the persistently high unemployment rate, GM’s Q1 losses in Europe, and
California’s looming budget deficit. This news is breeding caution among deal makers although
indicators such as the Conference Board’s indexes (Leading, Coincident and Lagging), the
manufacture and wholesale of durable goods and consumer confidence (as measured by Reuters
and the University of Michigan) all point to an improving economy, particularly for the Industrial
Markets. We hope and expect these favorable trends will continue, barring potential exogenous
economic events beyond our prediction and control.
 Read details
2
INDUSTRIAL MARKETS SECTOR – Q2 2012 Transaction Review and Outlook
u STATISTICALLY SPEAKING
Activity Level
Transaction activity in the lower middle market, defined herein as
companies with valuations up to $250 million, continued to expand
in Q1 of 2012. The volume of announced transactions was up an
estimated 8 percent versus Q1 2011 (sources: BDO Research, Dealogic and
PitchBook). The largest share of the volume increase occurred in the
<$50 million transaction size (or “enterprise value”) range, up about
17 percent during the quarter. On a latest-12-month (LTM) basis
through March 2012, the number of announced transactions was
up approximately 5 percent versus the comparable 2011 data. Given
that the quarterly growth rate for Q1 2012 was greater than the LTM
rate through March 2012, the data suggests that announcements are
currently accelerating in the lower middle market.
The Industrial Markets sector, which represents 10 percent-17
percent of overall transaction volume (depending on how broadly the
segment is defined), fared better than the overall middle market, up
an estimated 13 percent on an annualized basis during Q1 2012 (see
Figure I). While both strategic and private equity (PE) buying activity
in the sector is currently on the rise, most of the recent growth
has been attributable to strategic acquisitions, which were up an
annualized 15 percent in Q1 (versus up 2 percent for PE buyers). These
results followed significant overall increases (both strategic and PE)
in 2010 and 2011 and indicate a return to pre-recession transaction
levels for the Industrial Markets sector.
Figure I
Transaction Volumes – Industrial Markets
2009A – Q1 2012 (Annualized)
1,200
Valuations have risen in recent periods as well. As illustrated in
Figure II, the average EBITDA multiple achieved for manufacturing
companies bottomed in 2009 and has since expanded to reach 6.1x in
Q1 2012.
Figure II
Average Enterprise Value/EBITDA Multiples – Manufacturing
2008A – Q1 2012A
7.0x
6.5x
900
750
Strategic
PE Backed
600
6.1x
5.9x
5.8x
6.0x
5.8x
5.5x
5.5x
5.0x
4.5x
4.0x
2007A
2008A
2009A
2010A
2011A Q1 2012A
Source: GF Data Resources
As reported in an earlier edition of this report, the direct correlation
between enterprise value and the EBITDA multiple paid is notable.
The data in Figure III indicate a low-end average multiple of 5.4x for
manufacturing companies in the $10 million-$25 million enterprise
value range and a 7.0x average multiple for manufacturing companies
in the $100 million-$250 million range. This “size premium” is also
evident in the revenue multiples published by GF Data Resources.
7.5x
6.5x
300
6.0x
150
5.5x
2009A
Source: BDO Research
2010A
2011A
Q1 2012
Annualized
7.0x
7.0x
450
0
6.2x
Figure III
Average Enterprise Value/EBITDA Multiples – Manufacturing
Q1 2012A
1,050
(Number of Transactions)
Valuations
6.4x
5.9x
5.4x
5.0x
4.5x
4.0x
$10M-$25M
Source: GF Data Resources
$25M-$50M
$50M-$100M $100M-$250M
INDUSTRIAL MARKETS SECTOR – Q2 2012 Transaction Review and Outlook
Public company share prices in the Industrial Markets sector have
continued to expand, up almost 16 percent on average during the most
recent quarter (see Appendix A, page 5). Their average revenue and
EBITDA multiples have also expanded, up 0.16x and 0.96x, respectively,
during Q1 2012. The average revenue multiple at quarter-end March
2012 was 1.67x and the average EBITDA multiple at the same point in
time was 10.00x. Incorporating valuation discounts for lower average
revenues, lack of marketability and systemic risk, these multiples are
consistent with the private company data provided in Figures II and III.
A list of recent transactions in the Industrial Markets sector is provided
in Appendix B (page 6). The associated average multiple for these
transactions supports the overall valuation narrative. It indicates an
average revenue multiple of 1.3x (for the 38-transaction sampling) and
an average enterprise value of $102 million.
u MARKET ANALYSIS
Despite the upward trend in transaction volume beginning in 2010
and continuing through Q1 2012, expected activity going forward is
somewhat unclear. The lack of clarity stems for the most part from the
shortage of new deals that came to market during Q1. It was widely
reported within the PE community that the volume of offering books in
circulation was down materially during the quarter. January 2012 was
a particularly slow month, when some PE firms reported book receipts
down a notable 50 percent vis-à-vis January 2011. This dip in action will
surely impact the number of closings later in the year (Q2-Q4) as these
deals get processed to conclusion.
As we have recently reported, deal makers need not fear too much
because there are several significant reasons to be cautiously optimistic.
Indeed, the marketplace is awash with cash and much of it will be put
to use in transactions. PE firms have $425 billion in committed yet uninvested capital presently, U.S. public corporations have accumulated
an estimated $400 billion in excess cash, and U.S. banks have $1.6
trillion in cash assets on their books, up an astonishing 5x+ over the
pre-recession average of approximately $300 billion. It is easy to see
that the “demand side” of the transaction equation is very high right
now.
The story behind the “supply side” is a bit more complicated and
perhaps more confusing. To be sure, there is a pent-up desire among
business owners/operators to sell as the delaying effects of the
recession have largely been worked through the system. In addition,
PE firm portfolios on average are much older now as compared to the
historical norm (4.8 years now versus 3.6 years in 2007) so PE firms
are feeling the pressure to sell as well. Lastly, the possibility of tax rates
shifting up post-election in November should be enough to spur a
meaningful jump to action. In fact, some evidence of this can be found
in transaction data from 2010. As many will recall, there was wide
concern at the time that rates would be reset higher at the beginning of
2011. While this ultimately did not happen, transaction volume jumped
by almost 33 percent in Q4 of 2010 over the Q1-Q3 2010 quarterly
average. As an interesting aside, this jump would likely have been
3
higher as many transactions in process were pushed into 2011 when it
became clear late in the year that tax rates would not be changing.
So why the dip in new potential deals during Q1 2012 and the lack
of clarity about the future? Simply put, we believe that concern over
the economy and the associated impact on prospective business
performance, as well as the caution it breeds in deal makers, are the
primary inhibitors. The business news has provided and continues to
provide a steady stream of concern, from reports of persistent high
unemployment to GM losing $300 million in Europe during Q1, and it
has, in our view, constrained the level of transaction activity materially.
Additionally, the most recent reports from economists indicate that
Europe is now in recession and that California, at 13 percent of U.S.
GDP, has a large and expanding budget deficit problem. There is enough
troubling news to caution even the most aggressive deal makers.
Despite these persistent economic headwinds, we believe that the deal
market will continue to rise and, indeed, accelerate as 2012 progresses.
The potential near-term tax incentive, the high level of capital
availability, the effectiveness of M&A as a strategic tool, the aging of
the business owner population, and the time-tested returns of the
PE industry, will ensure this growth. Economic realities will, however,
continue to make the ride a bit bumpy.
u ECONOMIC INDICATORS
Certain economic indicators shed direct light on the performance
and health of the Industrial Markets. Some of these indicators are
highlighted herein and point to a relatively healthy, growing market.
Conference Board Indexes
While the Conference Board’s indexes (Leading, Coincident and
Lagging) generated mixed results in the most recent month with the
Leading Index down modestly by 0.1 percent, the other two indexes,
Coincident and Lagging, were up by 0.2 percent and 0.5 percent,
respectively, and all three indexes were up meaningfully over the last six
months. These results signify that economic activity is likely to continue
expanding at a moderate pace in the near-term (see Table 1).
TABLE 1 – Composite Economic Indexes
Mar
2012
Apr
2012
Leading Index
95.6
95.5
% Change month-over-month (“MoM”)
0.3%
-0.1%
Coincident Index
104.1
104.3
% Change MoM
0.2%
0.2%
Lagging Index
114.3
114.9
% Change MoM
0.3%
0.5%
Source: The Conference Board
6-Month
Change
Nov - Apr
1.8%
1.8%
1.6%
4
INDUSTRIAL MARKETS SECTOR – Q2 2012 Transaction Review and Outlook
Manufacturing – Durable Goods
Consumer Confidence
U.S. manufacturing of durable goods has been a particularly bright
spot (source: U.S. Department of Commerce). New Orders, Shipments and
Inventory Investment have each expanded in 2012, up by 9.1 percent,
9.1 percent and 7.7 percent, respectively, versus the comparable 2011
data (see Table 2). New Orders have softened a bit recently, down
two of the last three months; however, Shipments have been up three
of the last four months. Most notable, though, is that Inventories
continue to expand as business owners invest in order to stock shelves
in preparation for future sales and growth. Indeed, Inventories of
durable goods have grown for 27 consecutive months.
Consumer confidence is highly delicate at present and particularly
sensitive to the ebbs and flows of global economic news. That said,
it is edging upward as more favorable income and job trends are
offsetting high gas prices, according to Reuters/University of Michigan
(UofM). More households have reported an improved financial
situation than at any time in the past four years. Overall, the data
indicate that inflation-adjusted personal consumption expenditures
should rise by 2.3 percent in 2012.
TABLE 4 – Reuters/UofM Index of Consumer Sentiment
TABLE 2 – Manufacturing of Durable Goods
Feb 2012
Feb 2012
Mar 2012
$211B
$203B
1.9%
-4.2%
Shipments
$207B
$209B
% Change MoM
-0.3%
1.0%
Inventories
$373B
$375B
0.3%
0.4%
New Orders
% Change MoM
% Change MoM
YTD Change
Mar 12 v 11
9.1%
7.7%
Complementing the generally positive movements in durable goods,
the Purchasing Manager Index (PMI) issued by the Institute for Supply
Management, which is a broader measure of manufacturing health as
it takes into consideration factors beyond just durable goods, was up
1.4 percent from March. In fact, 16 of the 18 manufacturing sectors
tracked in the PMI grew in April. As such, manufacturing has been
“one of the most reliable sources of growth in the U.S. economy since
the Great Recession ended,” according to TD Economics.
Wholesale Trade – Durable Goods
While wholesale trade of durable goods has receded modestly in the
most recent month reported, the expansion of Sales and Inventories
(see Table 3) since early 2011 mirrors the expansion of durable goods
manufacturing noted above.
TABLE 3 – Wholesale Trade of Durable Goods
% Change MoM
Inventories
% Change MoM
Inventory/Sales Ratio
YTD Change
Mar 12 v 11
Feb 2012
Mar 2012
$186B
$185B
0.4%
-0.6%
$278B
$281B
0.6%
1.0%
Feb 2012
Mar 2012
Mar 2011
1.50
1.52
1.48
Source: U.S. Department of Commerce
% Change MoM
75.3
76.2
1.2%
YoY Change
Mar 12/11
12.9%
9.1%
Source: U.S. Department of Commerce
Sales
Reading
Mar 2012
7.8%
10.8%
u IN SUMMARY
Transaction activities and private company valuations in the Industrial
Markets sector have been on the rise in recent quarters, now reaching
pre-recession levels. These trends are being driven by several factors
including the increasing willingness of strategic and PE investors
to buy, fueled by an abundance of equity and debt capital, and the
increasing willingness of business owners to sell, given that the illeffects of the recession are now further back in the “rearview mirror.”
Certain economic indicators suggest that a healthy environment
now exists for transaction activity and they also provide a reason
for cautious optimism. Positive views of the current environment
are highly sensitive to the volatility of national and global economic
forces which will likely cause continuing volatility in the transaction
marketplace, at least in the near term.
INDUSTRIAL MARKETS SECTOR – Q2 2012 Transaction Review and Outlook
5
APPENDIX A:
Publicly-Traded Companies in the Industrial Markets Sector (North America)
&'(#3-4#
!"#$%&&%'()*#
>64-.76/6-H#
!"#$%#&'(#
!2$-.5.67-#"189-#
:!";#
#
3-4#
#
!<='>?#
#
#
@#A.#3-4#
B.%C$D#
&'(#B.%77#
(1.E62#
#
#
&'(#
!<='>?#
(1.E62#
)$%*+#,-./%.012*-#
F17D#$%#'%$18#
?77-$7#
#
#
G$.#
&'(#
#
#
+,#-'.#
"/01233##
"2+1452##
/.346#
7.526#
33.38#
49.:8#
/5.:8#
33.28#
7./8#
<=(=>?@#-'@A.#
#321:03##
#4/19/9##
/.226#
3/./96#
/7./8#
5/.:8#
/3.28#
3.78#
32.48#
2.+8#
#9105:##
#3/1/07##
3.556#
7.:06#
30.98#
+7.48#
30.38#
3/.98#
2.38#
;4.98#
C'(?DE?&&#F(G?@(=G%'(=&#F(H.#
#+215/0##
#5:1200##
3.+06#
34.+26#
3/.08#
/3.78#
0.98#
3:.+8#
33.78#
4./8#
F&&%('%)#I''&#J'@K)#F(H.#
#391979##
#+:1325##
3.9:6#
0.:76#
35.48#
+5./8#
37.98#
2.58#
/3.58#
4.28#
IDH'#F(G?@(=G%'(=&#LGM.#
#391374##
#/71072##
3.206#
7.5+6#
;:.+8#
+7.98#
30.78#
+.78#
30.58#
/5.28#
<'B?@#-'@A.#
#####NB?@=O?#
#
#
"/:1750##
F%05%2-2$7#12H#(1*D62-.I#
#
"+71:55##
#
3.756#
#
#
3:.356#
#
#
34.58#
#
#
+7.08#
#
#
30.:8#
#
#
9.78#
#
#
3+.08#
#
#
;4.:8#
5.+8#
#
#
#
NHGP=(G#-'@A'@=G%'(#
"31529##
"/1494##
3.576#
7.706#
/+.48#
+7.58#
39.78#
/.78#
/0.78#
5.58#
-=G?@A%&&=@#F(H.#
#2:13+7##
#3::17:3##
3.276#
3:.4:6#
43./8#
/2./8#
32.38#
/./8#
35.38#
;4.98#
-LNQ-RQ#F(H.#
#313+7##
#/1+29##
/.:76#
3:.036#
0./8#
+4./8#
30.38#
3/.28#
;:.08#
3+.48#
-@=(?#-'.##
#/1542##
#/10+0##
3.356#
9.906#
34.78#
++.08#
34.78#
7.28#
/.+8#
;:./8#
<'(=&M)'(#-'$A=(D1#F(H.#
#/14:0##
#51+7/##
/./+6#
3+.5:6#
35.48#
+5.48#
32.58#
32./8#
5.28#
/:./8#
S=G'(#-'@A'@=G%'(#
#321:40##
#301/94##
3./:6#
7.7:6#
39.:8#
/0.78#
3+.28#
2.38#
3+.+8#
;7.98#
S(T@'#F(MP)G@%?)1#F(H.#
#313:2##
#31309##
3.:76#
9.756#
/9.78#
+4.+8#
3+.78#
/.58#
//.+8#
3:.08#
U&'E)?@B?#-'@A.#
#4153:##
#2142:##
3.4+6#
0.396#
33.08#
++.28#
35.28#
9.+8#
32.38#
;7.:8#
V=@M(?@#<?(B?@#F(H.#
#/1+93##
#+142:##
3.426#
9.+36#
/5.38#
+4.38#
/:.:8#
2.28#
;39.08#
;32.38#
W?((=$?G=&#F(H.#
#/12:0##
#+195:##
3.446#
9.436#
//.98#
+9.28#
30.48#
4.08#
/3.38#
34.+8#
L%(H'&(#S&?HG@%H#C'&M%(O)#F(H.#
#/1205##
#+155+##
3.+/6#
0.0:6#
+:./8#
/9.+8#
3+.+8#
37.+8#
35.58#
/+.38#
,P?&&?@#F(MP)G@%?)#F(H.#
#/1437##
#31452##
:.2:6#
7.926#
39.48#
3/.58#
2.08#
+7./8#
37.28#
/7.58#
X'@M)'(#-'@A'@=G%'(#
#31/+7##
#+177:##
+.3+6#
33.436#
3+.48#
2:.98#
/9.58#
+.78#
++.38#
;/.48#
T=&&#-'@A.#
#/1704##
#21074##
/.436#
3:.706#
3+.98#
5:.:8#
//./8#
32.58#
+.08#
5.08#
#3/1003##
#341:77##
3.:76#
9./+6#
39.38#
/4.+8#
35.:8#
4.98#
3:.98#
;0.28#
T?(G=%@1#F(H.#
#+1459##
#51043##
3.9/6#
33.0/6#
34.38#
+3.38#
34.48#
3.38#
+0.38#
/4.38#
ZT[#-'@A'@=G%'(#
#5142/##
#51++3##
:.076#
3:./76#
33.78#
/7.:8#
0.58#
9.58#
/5.48#
;4.38#
I?&?MD(?#I?H>('&'O%?)#F(H.#
#3104/##
#/1597##
3.++6#
7.756#
37.38#
++.58#
35.:8#
/.98#
34.98#
/4.48#
I%$K?(#-'.#
#5139:##
#51:42##
:.076#
5.426#
/9.58#
/2.98#
39.08#
33.48#
+/.58#
/.48#
I@%,=)#-'@A'@=G%'(#
#31:74##
#3132/##
3.:96#
2.256#
/:.38#
/0.48#
32.38#
0.:8#
/5.28#
2.28#
J=GG)#J=G?@#I?H>('&'O%?)1#F(H.#
#314+9##
#319::##
3.376#
0.:06#
3/.98#
+5.08#
3+.:8#
35.:8#
/+.78#
3/./8#
T=@K?@#C=((%Y%(#-'@A'@=G%'(#
#####NB?@=O?#
#
"214+0##
#
"01535##
#
!8-*$.6*18J!8-*$.%26*J=27$.90-2$7# #
3.476#
#
#
0.396#
#
#
30.+8#
#
#
++./8#
#
#
32.38#
#
#
0.48#
#
#
32.98#
#
#
2.28#
#
#
#
N$?G?K#F(H.#
"/100:##
"717+7##
/.026#
3/./+6#
/3.:8#
+4.28#
/4./8#
4.38#
34.58#
S$?@)'(#S&?HG@%H#-'.#
#/+1002##
#43120+##
3.946#
7.426#
3:.+8#
+0.48#
/:.58#
7.08#
33.38#
;0.58#
V@=YI?H>#F(G?@(=G%'(=&#LGM.#
#31+/:##
#/13/+##
3.236#
7.506#
+3.38#
/4.28#
37.98#
:.28#
;3+.:8#
;43.48#
CP\\?&&#F(H.#
#/179/##
#41232##
3.236#
0.+76#
3+.:8#
+/./8#
39.38#
/:.58#
35.98#
33.08#
,'&?6#F(H.#
#+157/##
#41/2:##
3.306#
2./26#
5.+8#
+:.28#
30.:8#
39.+8#
39.38#
33.08#
Q?O=&#]?&'%G#-'@A'@=G%'(#
#/17:7##
#+1509##
3./76#
7.096#
/5.58#
/4.28#
34.+8#
4.48#
/0.38#
;9.08#
Q'HKE?&&#NPG'$=G%'(#F(H.#
#213:0##
#3315+:##
3.706#
3:.456#
37.58#
4:.48#
37.38#
30.28#
7./8#
;3+.08#
/2.28#
I>'$=)#^#]?GG)#-'@A.#
#/1/07##
#+1995##
3.246#
3:.:56#
34.28#
+3.58#
32.+8#
30.28#
+3.48#
#####NB?@=O?#
#
"51949##
"3:1:54##
3.946#
0.+:6#
39.48#
+/./8#
37.58#
33.78#
34.+8#
>67$.6K9$6%2#
NAA&%?M#F(MP)G@%=&#I?H>('&'O%?)1#
F(H.#
34.:8#
;3.:8#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
"/1+:2##
"31273##
:.9+6#
0.:36#
33.28#
/9.78#
7.38#
9.08#
37.28#
/0.+8#
#/1929##
#351752##
5.9+6#
/5.2:6#
/3.08#
53.78#
//.48#
7.28#
/4.+8#
93.28#
#3/1450##
#01734##
:.906#
0.7+6#
33./8#
/7.08#
7.:8#
7.08#
/.98#
30.78#
,Z-#F(MP)G@%=&#<%@?HG#-'.#F(H.#
#/1:05##
#5130+##
/.476#
3+.:36#
39.98#
42.28#
30.38#
0.08#
39.78#
/0.28#
J.J.#V@=%(O?@1#F(H.#
#71:97##
#351495##
3.0/6#
3+.::6#
3/.58#
4+.58#
34.98#
9.38#
35.58#
57.58#
J=G)H'#F(H.#
#/1097##
#/1422##
:.7+6#
33.2+6#
4.98#
/4.58#
9.38#
3./8#
3/.38#
2.08#
####NB?@=O?#
#
"51334##
"71434##
/.:76#
3+.276#
3+.+8#
+9./8#
3+./8#
9.+8#
35./8#
+2.:8#
U=)G?(=&#-'$A=(D#
V?(P%(?#T=@G)#-'$A=(D#
?4-.1E-#!=&&#)?O$?(G)*#
#
#
#
#
#
#
#
#
#
#
LMNOOP##
L@QNRQR##
@SRTU#
@PSPPU#
@TSQV#
QWSWV#
@RSRV#
XSQV#
@YSRV#
XSOV#
#
#
#
#
#
#
#
#
#
#
#
Z'P@H?_#-=A%G=&#F`#
#
#
#
#
#
#
#
#
#
#
Source: S&P Capital IQ
6
INDUSTRIAL MARKETS SECTOR – Q2 2012 Transaction Review and Outlook
APPENDIX B:
Recent Transactions in the Industrial Markets Sector – Q1 2012
!"#$%&'
8"#=@'
!
"#$%&'!()*+,!-./0!
12&/*23!4)5%+)&!()*+.'*,!
<;+*#.!=#)8>).?!-./0!
6*%&&+'/!K'/J.#&#:%',!-./0!C,'&&%.:!%.;',+#*!D!L)./#/?!
()*?!<,,#/%)+',I!!
F+).*)%&!4#*5#*)+%#.!
1-&%#2#3/%'
4"5)%''
67'8359'
()*%#+,-.%/&0#'
:%.%-)%'
8)5&325%'
!
@3'*,#.!A'+B#*?!(#B'*!C@3'*,#.!
@&'/+*%/!4#0!D!AEF@G!@"HI!
=2$)*!M!4#0!N!(#2,/J%.'!4##?!4)5%+)&!
").):'3'.+!
H#&&!1#*3!P*#25!-./0!C,2$!#7!F)32'&!
").2DK'/J!-./0I!
'
!
!"#$%&;/'<0=)/>'?0&%/'
!
!
.)!
.)!
!
6%,+*%$2+#*!#7!5)*+,!).8!'92%53'.+!7#*!2.8'*:*#2.8!3%.%.:!'.;%*#.3'.+,!
.)!
.)!
!
").27)/+2*'*!#7!8';%/',!+J)+!5*#;%8'!'&'/+*%/)&!&#)8,!7#*!+',+%.:!5#B'*!,#2*/',!
.)!
.)!
!
").27)/+2*'*!#7!+2$2&)*!+J*')8!5*#+'/+#*,!).8!5%5'!5)/?):%.:!,O,+'3,!
.)!
.)!
!
").27)/+2*'*!#7!*)%&*#)8!5*#82/+,!,2/J!),!8##*,Q!J)+/J!/#;'*!,O,+'3,Q!&';'*,!
).8!*##7,!
(*%#*%+O!4)+)&O,+!F'*;%/',!==4!
RS!-.82,+*%)&!4#35).%',!=+80!
.)!
.)!
!
(*#;%8'*!#7!/)+)&O,+!J).8&%.:!).8!/J'3%/)&!/&').%.:!,'*;%/',!
(%#.''*!(235!L#&8%.:,!-./0!
1*).?&%.!@&'/+*%/!4#0!-./0!
.)!
.)!
!
").27)/+2*'*!#7!'.:%.'D8*%;'.!/'.+*%72:)&!5235,!D!*';'.2',!#7!TUVW!3%&&%#.!
4)*,).!@.:%.''*%.:!-./0!
<*.#&8!"):.'+%/!K'/J.#&#:%',!4#*5#*)+%#.!C,'&&%.:!
%.;',+#*!D!<28)X!P*#25I!
`')*+'/J!-.+'*.)+%#.)&!-./0!
@X/'&%+),!K'/J.#&#:%',!4#*50!C-.;',+#*!D!
S'*%+),!4)5%+)&I!
4#35),,!6%;'*,%7%'8!L#&8%.:,!CAEF@G!
4Y6-I!
=%./#&.!@&'/+*%/!L#&8%.:,!-./0!CA<F6<aG!
=@4YI!
.)!
.)!
!
").27)/+2*'*!#7!/2,+#3!).8!,+).8)*8!)*/D&)35!5#B'*!,255&%',!
UZ[[0V\!!
W0]X!
!
").27)/+2*'*!#7!3):.'+,!).8!3):.'+%/!),,'3$&%',!D!*';'.2',!#7!TUZ^_!3%&&%#.!
.)!
.)!
!
").27)/+2*'*!#7!/#$)&+!).8!.%/?'&!$),'8!J)*8!7)/%.:!).8!B')*!*',%,+).+!)&&#O,!D!
*';'.2',!#7!TUbW!3%&&%#.!
").27)/+2*'*!#7!3)+'*%)&!J).8&%.:!'92%53'.+!+#!:*%5Q!&%7+Q!).8!+*).,5#*+!
5*#82/+,!
>2,J3).!<;#.K'/!-./0!
c+'?!-./0!
.)!
.)!
!
FJ'&&!M!K2$'!==4!
L'.*O!K'/J.#&#:%',!-./0!
.)!
.)!
!
").27)/+2*'*!#7!J')+!'X/J).:'*,!).8!#+J'*!*'&)+'8!5*#82/+,N/#35#.'.+,!
<%A#)"#*'
!
!
!
!
!
`)?'7%'&8!KJ'*3)&!F#&2+%#.,!-./0!C,'&&%.:!%.;',+#*!D!
=#.:*#)8!<,,'+!").):'3'.+!==4I!
KJ'!L'%/#!4#35).%',!==4!
.)!
.)!
!
").27)/+2*'*!#7!7)$*%/)+'8!3'+)&,Q!+J'*3#,'+!5&),+%/,Q!).8!)&23%.23!
'X+*2,%#.,!
-.82,+*%)&!"):.'+%/,!-./0!
H%;'*!<,,#/%)+',!-.;',+3'.+,!==4!
.)!
.)!
!
").27)/+2*'*!#7!3):.'+%/!),,'3$&%',!).8!3):.'+%/!,'5)*)+%#.!8';%/',!
4)$&'7#*3!-./0!C,'&&'*!D!L)&&3)*?!-.82,+*%',!=+80I!
L2$$'&&!-./0!CAEF@G!Ld>0>I!
.)!
.)!
!
").27)/+2*'*!#7!64!3#+#*!/#.+*#&,!
(#&O+'/J!4#*5#*)+%#.!
>*'.+B##8!-.82,+*%',!-./0!
.)!
.)!
!
").27)/+2*'*!#7!J'&%/)&!,?%33'*,!).8!,/23!5%5',!
4#$&'!K*'./J!F)7'+O!-./0!
d.%+'8!H'.+)&,!-./0!CAEF@G!dH-I!
.)!
.)!
!
H'.+)&!).8!,)&',!#7!+*'./J!,)7'+O!'92%53'.+!7#*!2.8'*:*#2.8!/#.,+*2/+%#.!
1&'XL')8!-.82,+*%',!-./0!
<+?#*'!-.+'*.)+%#.)&!CASI!-./0!
U^V0Ve!!
.)!
!
").27)/+2*'*!#7!7%*'!,5*%.?&'*!/#..'/+%#.,!).8!7%++%.:,!7#*!%.82,+*%)&!).8!
/&').*##3!)55&%/)+%#.,!
><F1!4#*5#*)+%#.!
U\e0WW!!
.)!
!
6';'&#5'*!#7!A%"L!$)++'*%',!
U[V\0WW!!
Z0WX!
!
").27)/+2*'*!#7!'&'/+*%/)&!5#B'*Q!/#.+*#&Q!).8!%.,+*23'.+)+%#.!/)$&',!D!
*';'.2',!#7!TU[VW!3%&&%#.!
Y;#.%/!>)++'*O!4#35).O!-./0!C,'&&'*!D!@.'*:O!
4#.;'*,%#.!6';%/',!-./0!D!A<F6<aG!@A@HI!
<3'*4)$&'!-./0!C,'&&%.:!%.;',+#*!D!a2%.+).)!4)5%+)&!
P*#25I!
"%&B)2?''!P')*!4#35).O!C,'&&%.:!%.;',+#*,!D!L%:J!
H#)8!4)5%+)&!).8!4J)*+'*!Y)?I!
A'X).,!F<!C@AcK(<G!A@cI!
UeW0WW!!
.)!
!
").27)/+2*'*!#7!:')*,!).8!8*%;',!
4)37%&!<>Q!H)%&*#)8!1%&+*)+%#.!>2,%.',,!
()*?'*!L)..%7%.!4#*5#*)+%#.!
.)!
.)!
!
").27)/+2*'*!#7!7%&+*)+%#.!8';%/',!7#*!+J'!*)%&*#)8!%.82,+*O!D!*';'.2',!#7!TU[[!
3%&&%#.!
=%+'/#!-./!
H'X'&!F<!C@AcK(<G!Hc=I!
.)!
.)!
!
6%,+*%$2+#*!#7!'&'/+*%/)&!5*#82/+,!!
(*)X)%*!-./0!CAEF@G!(cIQ!<8;)./'8!4#35#.'.+,!>2,%.',,!
1"!-.82,+*%',Q!-./0!
.)!
.)!
!
P*)J)3D`J%+'!").27)/+2*%.:!4#35).O!-./0!
1)%;'&'O!K*).,5#*+!F<!C@AcK(<G!=@EI!
.)!
.)!
!
H'33'&'!@.:%.''*%.:!-./0!C,'&&%.:!%.;',+#*!D!P#&8.'*!
L)B.!R#J.,#.!M!"#**%,#.I!
HK-!-.+'*.)+%#.)&!"'+)&,!-./0!CAEF@G!HK-I!
UZe[0\W!!
W0^X!
!
B"-)"#*'
!
!
!
!
KJ'*3)FO,!4#*5#*)+%#.!C,'&&%.:!%.;',+#*!D!F2.!4)5%+)&I!
`'&&,5*%.:!4)5%+)&!").):'3'.+!==4!
.)!
.)!
!
H)8%).!(*'/%,%#.!-./0!
K<P!L#&8%.:,!==4!
Y>4YH(!==4!C,'&&%.:!%.;',+#*!D!-.82,+*%)&!P*#B+J!
()*+.'*,I!
<3'+'?!-./0!CAEF@G!<"@I!
+'?3)*!4#.+*#&!FO,+'3,!=+80!
`)++,!`)+'*!K'/J.#&#:%',!-./0!CAEF@G!
`KFI!
('+*#4J#%/'!C,'&&%.:!%.;',+#*!D!gHP!4)5%+)&I!
P*''.$*%)*!@92%+O!P*#25!==4!
L%H'&!FO,+'3,!==4!C,'&&%.:!%.;',+#*,!D!4L>!4)5%+)&!).8!
A#*+J,+)*!4)5%+)&I!
>*%,+#&!4#35*',,#*,!-.+'*.)+%#.)&!-./0!C,'&&%.:!%.;',+#*!D!
g(F!4)5%+)&I!
"'+*#.!@&'8O.'!=%3%+'8!).8!"'+*#.!-./0!C,'&&'*!D!1'**%'!
1*).f3)..!M!4)*+'*!==4I!
H':)&!>'&#%+!4#*5#*)+%#.!CAEF@G!H>4I!
!
").27)/+2*'*!#7!'.:%.''*'8!/#55'*N$*),,!).8!)&23%.23!J')+!'X/J).:'*!
/#35#.'.+,!
").27)/+2*'*!#7!5*'/%,%#.!3)/J%.'8!5)*+,!7#*!)'*#,5)/'Q!8'7'.,'!).8!
+*).,5#*+)+%#.!%.82,+*%',!
").27)/+2*'*!#7!%.,+*23'.+)+%#.!&##5,!).8!).)&Of'*!,)35&'!+*).,5#*+!,O,+'3,!
D!*';'.2',!#7!TUeW!3%&&%#.!
.)!
.)!
!
UZV\0WW!!
[0[X!
!
U[_0[W!!
[0bX!
!
").27)/+2*'*!#7!LS<4!5*#82/+,!D!*';'.2',!#7!TUZZ!3%&&%#.!
F255&%'*!#7!&2$*%/).+,!+#!+J'!"%8D<+&).+%/!H':%#.!#7!+J'!d0F0!
.)!
.)!
!
Ue\0WW!!
.)!
!
P)**%,#.!-.;',+3'.+!P*#25!=0(0!
.)!
.)!
!
S%,J)O!-.+'*+'/J.#&#:O!-./0!CAEF@G!SFLI!
").27)/+2*'*!#7!'&'/+*#,+)+%/!/J2/?,!).8!#+J'*!/#35#.'.+,!7#*!
,'3%/#.82/+#*,!D!*';'.2',!#7!TU[e!3%&&%#.!
").27)/+2*'*!#7!J');OD82+O!5.'23)+%/!).8!'&'/+*#D5.'23)+%/!;)&;',!D!
*';'.2',!#7!TUVW!3%&&%#.!
@.:%.''*%.:!).8!5*'/%,%#.!3)/J%.%.:!7#*!<M6!).8!3'8%/)&!3)*?'+,!D!*';'.2',!
#7!TU\^\!3%&&%#.Q!e0^X![WZZ!@>-K6<!
").27)/+2*'*!#7!/2,+#3!'&'/+*#.%/!/#35#.'.+,!).8!5#B'*!),,'3$&%',!7#*!
J%:JD+'/J!)55&%/)+%#.,!
").27)/+2*'*!#7!J'*3'+%/!/#35*',,#*,!7#*!<4Q!J')+!5235Q!).8!*'7*%:'*)+%#.!
)55&%/)+%#.,!
").27)/+2*'*!#7!7%*'!5235!/#.+*#&&'*,Q!5)/?):'8!5235%.:!,O,+'3,Q!5#B'*!
8%,+*%$2+%#.!'92%53'.+Q!).8!/2,+#3!/#.+*#&,!
").27)/+2*'*!#7!/)&%$*)+#*,Q!5*#/',,!%.,+*23'.+,Q!5*#/',,!%.8%/)+#*,Q!).8!
5#B'*!,255&%',!
F255&%'*!#7!/2++%.:!+##&,Q!/##&).+,Q!).8!#+J'*!,255&%',!D!*';'.2',!#7!TU\V!
3%&&%#.Q!)8h2,+'8!@>-K6<!UV!3%&&%#.!
").27)/+2*'*!#7!3):.'+%/!$')*%.:,Q!/#.+*#&,Q!).8!5#B'*!,O,+'3,!7#*!*#+)+%.:!
3)/J%.'*O!
L2$$'&&!-./0!CAEF@G!Ld>0>I!
.)!
.)!
!
")*+'&!@&'/+*#.%/,!4#*5#*)+%#.!
1&2?'!4#*5#*)+%#.!C,2$!#7!6).)J'*!4#*50I!
.)!
.)!
!
40!`0!H#8!K##&!4#0Q!-./0!
6c(!@.+'*5*%,',!-./0!CA<F6<aG!6c(@I!
.)!
.)!
!
FO./J*#.O!-./0!C,'&&%.:!%.;',+#*!D!KJ%*8!F'/2*%+O!==4I!
6*',,'*DH).8!P*#25!-./0!CAEF@G!6H4I!
U_W0WW!!
.)!
!
@&8*'!4#*5#*)+%#.!
"'*,'.!F<!C@AcK(<G!"HAI!
.)!
.)!
!
").27)/+2*'*!#7!&)3%.)+'8!).8!32&+%D&)O'*!$2,!$)*,!D!*';'.2',!#7!TUbW!3%&&%#.!
S)&5'O!1%,J'*!4#*50!CA<F6<aG!S(1I!
4KF!4#*5#*)+%#.!CAEF@G!4KFI!
UZ\0]W!!
Z0ZX!
!
").27)/+2*'*!#7!7*'92'./O!/#.+*#&!5*#82/+,Q!H1!3%/*#B);'!/#35#.'.+,Q!).8!
2&+*),#2.8!+*).,82/'*,!D!*';!#7!TUZ\!3%&&%#.!
!
!
!
!
!
!
'''''C41:CD1'
'
EGJK'
!
!
'
'
'
'
'
'
F#2*/'G!4)5%+)&!-a!
!
!
!
!
!
Source: S&P Capital IQ
7EFEGHI''
INDUSTRIAL MARKETS SECTOR – Q2 2012 Transaction Review and Outlook
u BDO CAPITAL RECENT Transaction
BDO Capital Advisors, LLC is pleased to announce that Geocel Holdings Corporation (Geocel)
has been acquired by The Sherwin-Williams Company (NYSE:SHW) (Sherwin-Williams).
As the exclusive financial advisor to Geocel, BDO Capital prepared a confidential offering
memorandum, identified and contacted a targeted group of potential buyers, and assisted
management in structuring and negotiating the transaction.
Geocel, with operations in the U.S. and the U.K., is a leading developer and provider of sealants
and adhesives to a variety of industrial and consumer end markets worldwide. Geocel’s acquirer,
Sherwin-Williams, was founded in 1866 and is a global leader in the manufacture, development,
distribution and sale of coatings and related products to professional, industrial, commercial
and retail customers. This transaction was overseen by Valentina Midura from BDO Capital
Advisors’ Boston office.
About BDO CAPITAL ADVISORS
BDO Capital Advisors, LLC is a middle market boutique investment bank that focuses on four
product areas: mergers and acquisitions advisory, corporate finance capital raising, special
situations advisory and board advisory. Through its highly experienced investment bankers,
the firm has raised hundreds of millions of dollars in capital, been involved in the financial
restructuring of hundreds of companies and generated approximately $7 billion of shareholder
transaction value in industries such as healthcare services, specialty manufacturing, software
and information technology, specialty chemicals, and retail and consumer products. BDO
Capital is a FINRA member firm.
BDO Capital Advisors, LLC is a separate legal entity and is an affiliated company of BDO USA,
LLP, a Delaware limited liability partnership and national professional services firm. Through
its affiliation with BDO’s international network, BDO Capital has access to more than 300
corporate finance professionals domiciled in over 40 countries. For more information please
visit: www.bdocap.com.
About BDO
BDO is the brand name for BDO USA, LLP, a U.S. professional services firm providing assurance,
tax, financial advisory and consulting services to a wide range of publicly traded and privately
held companies. For more than 100 years, BDO has provided quality service through the active
involvement of experienced and committed professionals. The firm serves clients through
more than 40 offices and more than 400 independent alliance firm locations nationwide. As
an independent Member Firm of BDO International Limited, BDO serves multinational clients
through a global network of 1,118 offices in 135 countries. BDO USA, LLP, a Delaware limited liability partnership, is the U.S. member of BDO International
Limited, a UK company limited by guarantee, and forms part of the international BDO network
of independent member firms. BDO is the brand name for the BDO network and for each of the
BDO Member Firms. For more information, please visit: www.bdo.com. This publication has been carefully prepared, but should be seen as general guidance only. You should not act upon the
information contained in this publication without obtaining specific professional advice. Please contact BDO Capital Advisors, LLC
to discuss these matters in the context of your particular circumstances. BDO accepts no responsibility for any loss incurred as a
result of acting on information in this publication.
© 2012 BDO Capital Advisors, LLC. All rights reserved. www.bdocap.com
BDO CAPITAL ADVISORS
M&A Contacts:
Robert Snape
President
617-239-4177 (Direct)
339-236-1050 (Mobile)
bsnape@bdocap.com
John (Jack ) Kearney, Sr.
Managing Director
214-665-0718 (Direct)
214-274-9189 (Mobile)
jkearney@bdocap.com
Valentina Midura
Managing Director
617-422-7593 (Direct)
978-873-1314 (Mobile)
vmidura@bdocap.com
Dan Shea
Managing Director
310-557-8205 (Direct)
310-903-2163 (Mobile)
dshea@bdocap.com
Kevin Sendlenski
Director
617-422-7536 (Direct)
617-970-7033 (Mobile)
ksendlenski@bdocap.com
7