Global announced M&A volume, US$ in trillions · Strategic M&A and Europe: 3 Catalysts Could...

#MIGlobal

Current M&A cycle in historical perspectiveGlobal announced M&A volume, US$ in trillions

Source: Citi, Dealogic

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North America remains primary driver of M&A activityGlobal announced M&A volume, year-over-year, US$ billions

Source: Citi, Dealogic

Note: Data as of April 12, 2015 , based on target nation/region.

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Today’s activity is driven by strategic considerations to satisfy

growth agenda

Source: Citi GEOS and FactSet

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Activist focus remains more strategic

Source: FactSet

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Activist funds outperformance continues to spur activity

Source: Citi, Hedge Fund Research, Hedge Fund Intelligence, eVestment, SharkWatch

Note: All return and AUM data as of August 11, 2014. Activist fund managers included in return series are Barington,

Crescendo, Elliott, Greenlight, Highland, JANA, Loeb, Marcato, Millennium,

Pershing Square, Raging, Red Mountain, Sandell, Southeastern, TCI, Third Point, and Trian.

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Corporates are being rewarded for M&A

Source: SDC, FactSet

Note: (1) All deals announced from 2010 to October 2014; excess returns are market- and risk-adjusted

returns on acquiror’s stock from ten days before deal announcement. (2) Acquiror and target growth defined

by prior year’s revenue growth.

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Value is being created from corporate restructurings

Source: Citi, Dealogic, SDC, Worldscope and FactSet

Note: (1) All non-financial companies in Worldscope; discount calculated based on median firm value-to-sales multiple of

single-segment firms. (2) Excess returns are market- and risk-adjusted returns from ten days before spinoff

announcement until ten days after. (3) Stock appreciation based on a May 2014 “Time to Transform” publication by

Citi’s Financial Strategy and Solutions Group. Spin-off sample includes all deals since 2011.

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Positive catalysts for the M&A market

Source: Citi Deal Intelligence, Citi Yieldbook, Thomson Reuters, YPO Note: Acquiror outperformance based on

global M&A deals where acquiror is seeking to buy 50%+ of a public target. CEO confidence – an index reading

above 50% indicates a positive outlook; the higher

the number, the more positive the outlook.

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North America & Western Europe driving activity but Western

Europe still half its pre-crisis sizeGlobal announced M&A volume, US$ billions

Source: Dealogic, Citi

Note: Based on target’s region. Asia/Emerging Markets includes all countries outside of North America and

Western Europe.

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After 2014 gains, M&A intentions step up as market growth

stabilizes

The vast majority of executives see the global M&A market remaining strong in 2015,

with increased positive sentiment towards dealmaking being driven by the high M&A

activity in 2014.

Source: EY’s 12th Capital Confidence Barometer

#MIGlobal Source: EY’s 12th Capital Confidence Barometer

Strong uptick in deal intentions driven by longer-term growth

strategies

Executives report a strong increase in expectations to pursue an acquisition in 2015;

likelihood of closing deals remains subdued – pointing to a disciplined approach to

M&A.


Deal pipelines remain healthy and future deal intentions are

solid...

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…as growth in larger pipelines is set to continue…


Note: Respondents were polled on their top five investment destinations; this chart reflects the top

preference for each region.

*Respondents were polled on their top five investment destinations; this chart reflects the top preference for each region.


…and executives expect to complete more acquisitions than

last year

The increase in deal completions is driven by companies returning to the M&A market. M&A.

Positive M&A volumes in 2014 encourage confidence to transact.


Valuations support continued dealmaking, potential upside

pressures in asset pricing

While currently high valuations may deter some dealmaking, the overall view of stability should

offset any downside risks.

Outside risk of rising valuations in the Eurozone may affect M&A.




Companies are making bolder moves to shift the scope of their business.




The majority of investments are expected in the lower middle market,

continuing the upward trend seen in 2H14.

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Western Europe to lead cross-border deal flow and Asia-

Pacific to remain attractive


Note: Respondents were polled on their top five investment destinations; this chart reflects the top preference

for each region.

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M&A market volumeBig deals represent a record proportion of activity

Source: Thomson Reuters; 2015 annualized as of April 15, 2015, cited by Investment Banking Division,

Goldman Sachs

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Average weekly M&A12 week rolling average - # of deals announced and announced $ volume

Source: Thomson Reuters. 2Q 2015 volume is calculated based on April 17, 2015 run rate, cited by

Investment Banking Division, Goldman Sachs

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Quarterly M&A volumes2015 YTD as of April 17

Source: Thomson Reuters. 2Q 2015 volume and percentage change is calculated based on April 17, 2015 run

rate, cited by Investment Banking Division, Goldman Sachs

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Quarterly M&A volumes2015 YTD as of April 17



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Quarterly number of deals2015 YTD as of April 17



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Quarterly M&A activity by industry2Q 2015 as of April 17

Source: Thomson Reuters, cited by Investment Banking Division, Goldman Sachs

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Current activism environment

Source: Thomson, public sources, cited by Investment Banking Division, Goldman Sachs

Note: 1. Includes reported equity assets under management of activists included in the FactSet “SharkWatch 50”; 2.

Includes public campaigns at U.S. companies over $0.5bn market cap as of 31 March 2015.

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Activism is responsible for much of recent divestiture and

spin-off activity

Source: Thomson Reuters, cited by Investment Banking Division, Goldman Sachs

Note: Divestiture volume includes spin-offs

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Activism

Source: Activist Insight, Morgan Stanley Research

Note: 1. US Asset Managers: Activists, Strategic M&A and Europe: 3 Catalysts Could Accelerate Alts’ Deployment Activity (Morgan

Stanley, April 2015); 2. Activist Success rate includes activist demands that were either fully or partially satisfied by the target.

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Activist demands1

In 44% of 13Ds filed since January 2008, the target company ultimately was sold or broken-up2

Source: Activist Insight, Morgan Stanley Research

Note: 1. SPIN-OFFS, POST-BANKRUPTCY EQUITY & VALUE OPPORTUNITIES (Wolfe Research, April

2015); 2. Global M&A Deal-making: Will All the Activity Continue? 27th Annual Tulane Corporate Law Institute

(Credit Suisse, March 2015)

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Spin-Offs & Divestures

Source: Credit Suisse & Thompson Reuters

Note: SPIN-OFFS, POST-BANKRUPTCY EQUITY & VALUE OPPORTUNITIES (Wolfe Research, April 2015). Note: Relative return

statistics are based on the total return of the company vs. its S&P 1500 sector (equal-weighted); 2. US Asset Managers: Activists,

Strategic M&A and Europe: 3 Catalysts Could Accelerate Alts’ Deployment Activity (Morgan Stanley, April 2015); 3. Global M&A Deal-

making: Will All the Activity Continue? 27th Annual Tulane Corporate Law Institute (Credit Suisse, March 2105)

U.S. volumes include transactions where the target is located in the U.S

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Global announced M&A volume, US$ in trillions · Strategic M&A and Europe: 3 Catalysts Could...

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