Fluid Handling Industry - Hydraulic Institute - M and A... · Fluid Handling Industry ... 2015...

HydraulicIns.tuteAnnualMee.ng2017 1

March9,2017

Fluid Handling Industry

©2017GlobalEquityConsul.ng,LLC.AllRightsReserved


OVERVIEW

Reviewof2016

! OverallM&AAc.vity! FluidHandlingIndustryM&A

! IndustryPerformance

ALookAheadto2017

! M&AOutlook! IndustryOutlook

3HydraulicIns.tuteAnnualMee.ng2017

aboutThomasHaan

FINRARegisteredInvestmentBankingRepresenta.ve

Opera8ngDirector,CityCapitalAdvisors,LLCPrincipal,GlobalEquityConsul.ng,LLC

PreviousExperience:PresidentEagleBurgmannIndustries;PresidentFlowserveCorpora.onFlowSolu.ons(MechanicalSeal)Division,COODurametallicCorp.

Educa2on:SchoolofBusiness-WesternMichiganUniversity

Tom's40yearcareerhasbeenintheFluidHandlingIndustryasaseniorexecu.veandadvisorforbothpublicandprivatelyheldcompanies.Hehasextensive

interna.onalexperiencehelpingbusinessesachieveenhanced

profitablegrowth.TomhasservedontheBoardof

DirectorsoftheHydraulicIns.tuteandaschairmanofits

AssociateMemberCouncil.HeisapastpresidentoftheFluid

SealingAssocia.on.


aboutGlobalEquityConsul.ng

BusinessDevelopment• StrategicAc2on®Planning–teambasedstrategydevelopmentandexecu.on

• BusinessValua.ons-• Execu.onsupportfororganicgrowthini.a.vesandenhancingvalue

o Marke.ngandMarketCoverageDevelopment

! SalesChannelDevelopment

! SalesForceEffec.venessPAWNFAB

o TeamEffec.veness–

! KepnerTregoeProblemSolving

•  Buy-side–inorganicgrowththroughacquisi.ons•  Sell-side–planandexecutethesaleofabusiness

•  Capitalraise-forgrowthorownerliquidity


aboutCityCapitalAdvisors

Mission:toprovideseniorlevelcorporatefinanceadviceandunparalleledexecu.onservicestoleadingmiddlemarketcompaniesandtheirowners.

MemberofFINRAandSIPC

•  EachManagingDirectorhas20+yearsexperience;collec.velytheyhavecompleted500+transac.onstotaling$60+billioninvalue.

•  ProvidesM&Aadvisoryandotherinvestmentbankingservicestoprivateandpublicallyheldmiddlemarketcompaniesvaluedbetween$50and$500million.


aboutCityCapitalAdvisors

Mission:toprovideseniorlevelcorporatefinanceadviceandunparalleledexecu.onservicestoleadingmiddlemarketcompaniesandtheirowners.

MemberofFINRAandSIPC

GeneralM&AReview

IndustryM&AReview

ReviewM&AAc.vity2016


GlobalM&AAc.vityDeals

HydraulicIns.tuteAnnualMee.ng2017

Value(inbillions)

Source:Ins.tuteforMergers,Acquisi.ons&Alliances.

8

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

-

10,000

20,000

30,000

40,000

50,000

60,000

NumberofDeals DealValue

U.S.M&AAc.vityDeals


Value(inbillions)

Source:DealogicandFactSet.

9

$-

$500

$1,000

$1,500

$2,000

$2,500

-2,0004,0006,0008,00010,00012,00014,00016,000

NumberofDeals DealValue


U.S.EV/EBITDAMedianValua.onMul.ples8.2x 9.3x 10

.8x

10.2x

11.4x

9.1x

8.0x 9.5x

9.8x

8.9x

8.5x 10

.1x

9.8x

9.9x

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Source:S&PCapitalIQ.


MiddleMarketPrivateEquityValua.ons

Source:GFData.

TEV 2003–2011 2012 2013 2014 2015 2016 TotalNumberofTransac8ons

$10M-$25M 5.6x 5.8x 6.0x 5.6x 5.9x 6.0x 5.7x 1015

$25M-$50M 6.2x 6.2x 6.8x 6.6x 6.7x 6.4x 6.3x 764

$50M-$100M 6.8x 6.7x 6.8x 8.4x 7.8x 7.3x 7.0x 525

$100M-$250M 7.3x 7.4x 7.5x 7.8x 9.0x 9.0x 7.6x 248

Total 6.2x 6.3x 6.5x 6.7x 6.7x 6.9x 6.4x

NumberofTransac.ons

1,484 247 162 215 235 209 2,552


MiddleMarketQualityPremium

Source:GFData.

TEV 2003–2011 2012 2013 2014 2015 2016 Total

AboveAverageFinancials

6.1 6.3 6.8 6.9 7.3 7.3 6.4

OtherBuyouts 6.0 6.1 6.0 6.2 5.9 6.1 6.0

Premium/(Discount)

102% 103% 114% 111% 124% 119% 106%

Incidence 55% 66% 59% 53% 55% 59% 57%

IndustryM&AReview2016



4945

7667

48

2012 2013 2014 2015 2016

PumpIndustryM&AAc.vity

Transac.onac.vityreturnedtomorenormallevelsin2016.However,thereiss.llstrongbuy-sideinterest.

25

117

5

2016

In2016therewasareturntoamoretypicalmix

ofendusemarketsserviced

bytargetcompanies.

PumpIndustryM&AAc.vityBreakdownbyTargetIndustry

Diversified Oil&Gas Water Other


56%

40%

4%

NorthAmerica

Europe/MiddleEast/Africa

RestoftheWorld

DealAc.vitybyTargetedGeographies

20162015


49%

45%

6%

StrategicVs.FinancialBuyers

Buyersareoverwhelminglystrategic

Financialbuyersaredownfrom10%in2016.

StrategicBuyers

48Transac.ons2016


AtlasCopco(7)

AxFlow(3)

2016MostAc.ve

2016


Pentair(2)

Sulzer(2)

Trelleborg(2)

Timken(2)

$.2 $1 $2 $3

GEmergerwithBakerHughescreates$32billionrevenuecompany

XylemacquiresSensus$1.7billion

BilfingerSEdivestsitswatertechnologiesdivision-$213million

Pentairdivestsvalves&controlsbusinesstoEmerson-$3.15billion

2016LargestDeals$BillionsDealValue

AkastorASAdivestsFjordsProcessing$146million


$6 $7 $8 $4 $5

PumpIndustryValua.ons-2016


ExpectedDealEnvironment

DrivingForces

Outlook

LookingForwardM&AOutlook-2017


LookingForwardGeneralM&AOutlook


Ourthoughtsabout2017:

• Marketislikelytobemorebalancedwithmoresellerswillingtoconsideratransac.on.

• Valua.onsarelikelytoremainstrongasbothstrategicandprivateequitybuyerscompeteforqualitybusinesses.Interestrateincreasesarelikelytobemodestandnothaveamajorimpactonvalua.ons.

• OutlookfortheU.S.businessclimateismostlyposi.ve–reducedtaxesandregula.onswithanincreaseininfrastructurespending.

LookingForwardDrivingForces


PrimarySellerMo.va.ons

• Provideliquiditytoowners• Takeadvantageofcurrentstrongvalua.ons• Alleviateownerfa.gue• Strategicrealignment

LookingForwardDrivingForces


PrimaryBuyerMo.va.ons

• Acquiringgrowthopportuni.es:technology,products,geography

• Strategicrealignments–drivenbyopportunityormarketreali.es


LookingForwardM&AOutlook2017–FHI

• TheforcingthataredrivingthegeneralM&Aac.vitywillalsobemo.va.ngbuyersandsellersinthefluidhandlingindustrysoweseethecurrentlevelofac.vitycon.nuingin2017.

• Whetherornotweseeacon.nua.oninstrengtheningofvalua.onsoraflapeningismorelikelytobedrivenbytheoutlookforgrowththanbyinterestrates.

• Consolida.onofdistribu.onandservicecompaniesislikelytocon.nuetoincrease.

• Targetcompanieswillnotonlybeonesservingend-usemarketnicheswithaboveaveragegrowthoutlooksbutalsocompaniesthathavetechnologiesand/orservicecapabili.esthatarefocusedonenhancingcustomerefficienciesbyimprovingequipmentreliabilityandenergyefficiency,whichmayincludesomever.calintegra.onofsupplychains.

IndustryPerformanceandOutlook2017



IndustryProfitabilityMetrics(MedianLTM)

GrossProfit%ofSales

EBITDA%ofSales

EBIT%ofSales

31.5% 12.7% 8.7%


IndustryGrowthMetrics(Median3-YearCAGR)

Revenue EBITDA EPS

0.4% 0.2% -2.2%


IndustryOutlook2017

Company RevenueOutlook EPSOutlook

AppliedIndustrialTechnologies 0% 7.6%

Colfax -1.0% 7.0%

Dover 11% 7.7%

Flowserve -8.5% -21.6%

IDEX 1.5% 10.8%

Xylem 23% 12%

Representa.veCompanies-2017Outlook


U.S.PumpandCompressorIndustryOutlookNACISCode33391

IndustryOutlook2016

Source:IBISWorld

AnnualRevenueGrowth(CAGRrealgrowth)2016–20212.8%(upfrom1.7%)

• Industrialproduc.onindex(outputofmining,manufacturing,electricandgasu.li.esexpectedtorisefrom104.0in2016to112.6in2021

• Expectedrecoveryintheworldpriceofcrudeoil• Thevalueofu.li.esconstruc.onexpectedtoincreaseatanannualrateof11.2%overtheperiod

• Increaseinhousingstartsisexpectedtoincreaseatanannualrateof2.9%overthenextfiveyears


IndustryOutlook2017

TheOpportuni2es• Superiorinsightstoevolvingneedsandwants• Superiorexecu.on• Innova.ontogainshare–buyitorbuildit• Changethescopeoftheindustry

• Systemsvs.products• Servicefleetsandsystemsvs.products

Ques.ons&AnswerSession


©2015GlobalEquityConsul.ng,LLC.AllRightsReserved

[email protected]

(269)385-5186Globalequityconsul.ng.net

Date post:	23-Jun-2018
Category:	Documents
Upload:	lekien
View:	218 times
Download:	0 times

Fluid Handling Industry - Hydraulic Institute - M and A... · Fluid Handling Industry ... 2015...

Documents