RubinBrown Food & Beverage Mid-Year Review 2014

M&A Activity Overview: Middle Market Deals

Middle Market Multiples on Par with 2013 While the larger deals have dominated much of the industry press of late, the relative familiarity of the food industry is also attractive to many smaller buyers looking to put capital to work after a nearly half-decade lull brought on by the financial crisis. Given the industry’s stability and relatively constant demand, food and beverage assets provide financial buyers (i.e., private equity firms) with less volatile investment opportunities to nurture, grow, and eventually exit. In addition, the familiarity that food and beverage companies offer, the industry is still fragmented enough to offer ample acquisition opportunities. Further, the smaller price tags of small-to-middle market food and beverage companies tend to attract a more diverse group of buyers and present a wider array of acquisition options. As illustrated in the chart to the left, valuation multiples (where this information was available) – i.e., EV/Revenue and EV/EBITDA – for middle market food and beverage companies peaked in the 4 th quarter of 2012, as deal activity ik d d t f f i d it l i t t sp e ue o a ear o ncrease cap a ga ns ax ra es. Since then, valuation multiples remained relatively steady and through the first half of 2014, median valuation multiples are generally on par with 2013 multiples.

Middle Market Transaction Activity

14.0x 15.0x 16.0x 17.0x 18.0x 10.0x 11.0x 12.0x 13.0x

$400.0

$350.0

$300 0 .

$250.0

8.0x 9.0x 0 2.0x 3.0x 4.0x 5.0x 6.0x 7.0x 0.0x 1. x

$200.0

$150.0

$100.0

$50.0

$-

Q1 2012

Q2 2012

Q3 2012

Q4 2012

Q1 2013

Q2 2013

Q3 2013

Q4 2013

Q1 2014

Q2 2014

Median EV/Revenue

Median EV/EBITDA

Source: S&P Capital IQ Reflects closed transactions with implied enterprise values between $10 million and $1 billion. Median Revenue (millions) Median EV (millions)

Food & Beverage Sector: 2014 Mid-Year Update

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