RubinBrown Food & Beverage Update 2015

M&A Activity Overview: Valuation Levels

Valuation Multiples Trending Down As depicted in the chart to the right, valuation multiples in the food and beverage industry (on a trailing four-quarter basis) exhibited a steady increase throughout 2014, before pulling back some through the first half of 2015. When comparing the first half of 2015 (12 transactions with multiples disclosed) to the first half of 2014 (9 transactions with multiples disclosed), the median enterprise value to revenue (or “EV/Revenue”) multiple actually increased slightly from 1.3x to 1.4x; however, if you exclude the highest EV/Revenue multiples from both periods, the median EV/Revenue multiple declined from 1.2x during the first half of 2014 to 0.7x during the first half of 2015. Enterprise value to earnings before interest, taxes, depreciation, and amortization (or “EV/EBITDA”) multiples told a similar story – with the median multiple declining from 9.6x during the first half of 2014 to 8.1x during the first half of 2015. It is unclear what led to lower valuation multiples during the first half of 2015, but it is likely due to a combination of factors including a greater supply of companies being marketed for sale, less demand from buyers (i.e., buyer fatigue), and/or a lower appetite for risk for investors (which would translate to less competitive bids and thus lower valuation multiples). While these factors are all at play, a strong rebound during the second half of 2015 (similar to what we saw in 2013 and 2014) could make the apparent downward trend in valuations short-lived.

TTM Food & Beverage Valuation Multiples

16.0x

1.8x

1.6x

14.0x

1.4x

12.0x

1.2x

10.0x

1.0x

8.0x

0.8x

6.0x

EV / EBITDA

EV/ Revenue

0.6x

4.0x

0.4x

2.0x

0.2x

0.0x

0.0x

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2013 2014 2015

TTM Median EV/Revenue

TTM Median EV/EBITDA

Source: S&P Capital IQ Reflects all closed Food & Beverage transactions, regardless of size. Valuation multiples are based on transactions where this information was available, regardless of size.

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Food & Beverage Industry Sector: 2015 Mid-Year Update

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