RubinBrown Food & Beverage Update 2015

M&A Activity Overview: Middle Market Deals

Similar Start to 2015 for the Middle Market 1 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 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 – which also includes larger corporations pursuing new products and brands Consistent with the overall food and beverage transaction activity discussed previously, middle market deal volume during the first half of 2015 (20 transactions with implied enterprise values available) came in lower than the pace set for the same period in 2014 (29), and in line with the first six months of 2013 (19). However, the median enterprise values of the companies acquired during the first half of 2015 of approximately $78 million was nearly double what was seen in 2014 and 2013 ($41 million) during the first six months of each respective year. 1 Middle market is defined as companies with implied enterprise values between $10.0 million and $1.0 billion.

Middle Market Transaction Activity

20

$800.0

18

$700.0

Millions

16

$600.0

14

$500.0

12

10

$400.0

8

$300.0

No. of Transactions

6

$200.0

4

$100.0

2

0

$0.0

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2013 2014 2015 Median EBITDA Median Enterprise Value # of Transactions Median Revenue

Source: S&P Capital IQ Reflects all closed Food & Beverage transactions with implied enterprise values between $10.0 million and $1.0 billion.

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Food & Beverage Industry Sector: 2015 Mid-Year Update

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