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The BGL Industrials Insider is published by Brown Gibbons Lang & Company, a leading independent investment bank

serving middle market companies throughout the U.S. and internationally.

Insider

Industrials

Spotlight:Engineered Components and Systems Page 4

Key industrial end markets are experiencing growth as the

economy picks up steam. Renewed downstream demand is

benefi ting suppliers of engineered components, with engineering

and design-focused manufacturers expanding their role in the

value chain and attracting investor interest.

July 2013

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Environmental Services Insider

M&A Activity• M&A activity in the broader market continues to wane, with

H1 ‘13 volume, based on number of announced transactions, down

17 percent over the same period a year ago. Values are rising with

M&A spend up 29 percent on fewer deals. The middle market1 saw

a modest uptick in deal fl ow in the fi rst half, with acquisition activity

up 6 percent over the prior year and deal value up 4 percent.

• Valuation multiples have moderated, according to Standard &

Poors Leveraged Commentary & Data, which reported strategic and

fi nancial buyer multiples of 7.6x and 7.9x in June.

• Competition for scarce new deal fl ow remains fi erce across all layers

of the capital structure. Lender appetite for acquisition fi nancing

remains robust, with leverage creep on middle market buyouts

pushing senior debt to 4.4x EBITDA in June, surpassing the 2007

high. Aggressive structures and terms are expected to carry into

Q3 ’13 even with an uptick in deal fl ow given the supply/demand

imbalance in the marketplace. Non-bank lenders have a high

leverage tolerance, reported Thomson Reuters LPC in its

Q3 ’13 Middle Market Outlook with roughly 50 percent of

respondents surveyed reporting senior leverage of 3.5x-4.0x on

sponsored transactions and ano ther 40 percent at 4x or more. Bank

lenders are decidedly more conservative, with roughly 15 percent

of respondents reporting less than 3x senior leverage, another 40

percent at 3x-3.5x, and the remaining 45 percent at 3.5x to 4.5x.

• The industrials M&A market was active in the fi rst half of 2013,

with private equity taking the spotlight with Kohlberg Kravis

Roberts’ $3.9 billion take private of Gardner Denver announced

in March. Aerospace and Defense saw healthy fl ow, with an

acquisitive TransDigm Group spending about $475 million on

three acquisitions during the period with the purchase of the

Electromechanical Actuation Division from GE Aviation in June,

Arkwin Industries in May, and Aerosonic in April. Private equity

fi rm Greenbriar Equity Group completed the platform buy of EDAC

Technologies in March and in July, added on with the composites

business of Parkway Products. Dynamic Precision Group, backed

by The Carlyle Group, acquired Paradigm Precision Holdings from

American Capital in January. In Building Products, LIXIL Corporation

acquired AS America in a $542 million deal and North American

Pipe Corporation acquired the PVC Pipe Fittings and Foundations

Business of CertainTeed Corporation for $153 million.

1 Middle market defi ned as enterprise values between $25 million and $500 million.

For more information on how

BGL’s Global Industrials Practice can assist

your company, please contact:

Delivering Results to the Global Middle Market

Andrew K. Petryk Managing Director & PrincipalHead: Industrials216.920.6613

[email protected]

Kevin H. SargentDirector & Principal216.920.6639

[email protected]

Industry Valuations• Broader market indices have gained in recent weeks following a period

of volatility, with the S&P 500 and DJIA up 15.6 percent and 16.0 percent

through the year-to-date* period (Page 17).

• Industrial stocks have also gained, with the BGL composite indices for

Diversifi ed Industrials and Aerospace & Defense outperforming the market

during the same period (Page 17). EBITDA valuations expanded in Q1 ‘13.

*As of July 26, 2013.

Operating Highlights• The U.S. manufacturing sector is growing, according to data reported by

the Institute of Supply Management, which marked June as the fi fth month

of expansion in 2013, as measured by a PMI of 50.9 percent in its June 2013

Manufacturing ISM Report On Business. In the same report, ISM indicated

that the overall economy grew for the 49th consecutive month.

• Industrial OEMs are reporting healthy growth in the strengthening U.S.

economy, with producers of engineered components and systems

benefi ting from improving demand and expanding their role as supplier

partners in the value chain.

Engineered Components and Systems

Demand Outlook Favorable

Key industrial end markets are experiencing growth as the

economy picks up steam, with strong OEM demand pulling

through to su ppliers and equipment manufacturers:

Automotive OEMs continue to ramp up capacity with North

America light vehicle production projected to surpass 16

million units in 2013—more than in any year since 2002

according to IHS Automotive—primarily driven by pent-up

demand and more accessible fi nancing. The average age

of light vehicles on the road in the U.S. hit a record high

of 10.8 years at the end of 2011, up from 8.4 years in 1995.

North American production is expected to reach 17 million

units by 2015, a level last breached in 2000 and nearly

double the 8.6 million units built in 2009.1

Injection molders are among the

benefi ciaries in the supply chain of the

resurgence in the auto sector. Automotive

molders saw a 17 percent increase in sales

in 2012 according to Plastics News’ 2013

annual survey and ranking of injection

molding companies. “The North American

automotive plastics sector is benefi ting

from more than unit growth. It’s poised

to pick up business from OEMs desperate

to cut vehicle weight to improve fuel

economy,” commented Don Loepp, editor

of Plastics News. “Automakers also are

expected to introduce lots of new models

in the next few years as they battle for

consumers’ attention—and for market

share.”2

OEMs are using more lightweight

materials—plastics and polymer-based

components—to reduce vehicle weight

and optimize fuel effi ciency, observed

A.T. Kearney, which estimates plastics will

account for 18 percent of average vehicle

weight by 2020, up from 14 percent in

2000.3

Sales of specialty vehicles, trucks, and equipment are

benefi ting from residual pent up demand, restored civil

and corporate capital expenditure budgets, an aging civil

infrastructure, and increased environmental regulation and

compliance.

Aging fl eets are being replenished, with demand for

greater fuel effi ciency, versatility, and productivity for

new products and increased use of self-diagnostic and

monitoring tools driving equipment sales.

Municipal and industrial cleaning and hydro excavation

equipment continues to experience steady demand

growth, driven by:

• Aging municipal and utilities infrastructure that

require increasing levels of routine and emergency

maintenance.

• Increasingly stringent government

regulation of waste transportation and

disposal.

• A renewed focus on shale gas

exploration and production in

North America. Substantial investment in

heavy duty maintenance equipment will

be needed for the estimated 1.6 million

miles of new U.S. oil and gas pipeline.

The long-awaited rebound in the housing

market has materialized and is expected to

be a major driver of growth in construction

related machinery and equipment. Recovery

in the commercial construction market and

improving levels of industrial/commercial

investing will also boost sales.

Longer-term, fundamental changes arising

from the re-shoring of components and

systems previously sourced overseas and the

impact of low cost natural gas may stimulate

additional demand.

Insider Perspective

Industrials Insider

Engineered components and systems suppliers are experiencing upticks in demand as key industrial end markets

expand. Producers that can bring value-added engineering and design capabilities are expanding their role as supplier

partners in the value chain.

“The North American

automotive plastics

sector is benefi ting

from more than unit

growth. It’s poised

to pick up business

from OEMs desperate

to cut vehicle

weight to improve

fuel economy.

Automakers also

are expected to

introduce lots of new

models in the next

few years as they

battle for consumers’

attention—and for

market share.”

—Don Loepp Plastics News

1 IHS Automotive and Automotive News: “Output soars to 16M, with high-profi t twist,” Nick Bunkley. 17 Jun 2013. 2“Automotive market growth fuels injection molders,” Don Loepp. 21 Jun 2013. Plastics News.

3“Plastics. The Future for Automakers and Chemical Companies,” 2012. A.T. Kearney.

4

Engineered Components Manufacturers Seeing Uptick and Attracting Capital

Renewed downstream demand is benefi ting suppliers

of engineered products, with manufacturers of industrial

gears and transmissions, complex fabricated metal

parts, hydraulics, and precision plastic components and

assemblies reporting healthy growth. Turnkey producers

that can bring product development capabilities are

expanding their role as supplier partners in the value chain

as OEM customers have reduced engineering headcount

and are relying increasingly on their suppliers for

engineering and design support, technology and materials

innovation, and automation to reduce product cost,

increase functionality, and improve speed-to-market.

Industrial growth companies remain a focus of strategic

and fi nancial buyers, underscored by recent M&A activity

involving engineered products manufacturers, suggesting

an optimistic outlook on growth prospects for the U.S.

manufacturing sector:

Metal Fabrication

Wynnchurch Capital acquired Detroit Tool Metal Products

(DTMP) in June 2013, in partnership with management,

calling the acquisition the fi rst in a series of planned

investments to build one of the largest Tier 1 metal

fabrication businesses in North America. Missouri-based

DTMP manufactures precision metal stampings, fabricated

components and value-added assemblies for the heavy

truck, construction, industrial, and agricultural end markets.

Wynnchurch is backing DTMP’s management team led

by CEO Terry Wogan. Wynnchurch and Wogan intend

to leverage the team’s operating track record to make

strategic acquisitions and build a unique fabrication

platform the likes of which does not currently exist in a

space dominated by smaller operators, according to a

press release announcing the transaction. Senior debt

fi nancing for the transaction was provided by Bank of the

West. Bank of Montreal provided mezzanine fi nancing and

an equity co-investment.

American Securities completed the acquisitions of

automotive parts suppliers Metaldyne for $820 million

in December 2012 and HHI Group Holdings (HHI) in

October 2012 for $750 million. HHI is the largest North

American manufacturer of highly engineered, safety-

critical forged components for automotive customers,

principally in the light vehicle market, and a leading

manufacturer of complex, highly engineered powdered

metal powertrain components and wheel bearings. HHI

was a former portfolio company of KPS Capital Partners

which had owned the company since 2005. KPS grew

the company through a series of acquisitions including

Jernberg Industries in 2005, Impact Forge in 2006, and

FormTech Industries in 2009. Metaldyne is a leading

global manufacturer of highly engineered metal-based

components for light vehicle engine, transmission, and

driveline applications.

Engineered Plastic Components

In February 2013, Jabil Circuit (NYSE:JBL) acquired Nypro.

Nypro engages in the design, development, mold making,

and injection molding of precision plastic products, as

well as contract manufacturing and assembly of fi nished

products. The company serves primarily healthcare

markets, including diagnostics, drug delivery, and medical/

surgical devices. Additional industries served include

consumer and electronics, wireless, and packaging. Nypro

operates 20 manufacturing sites throughout the United

States, Europe, China, and India. The custom injection

molder has estimated revenues of $1.2 billion.

The Nypro acquisition is expected to bolster Jabil’s

position in key markets, such as healthcare, and expand

the market in packaging for customers in the food and

beverage, household, and personal care industries. The

consumer electronics portion of Nypro operates as part of

Jabil’s Materials Technology Services.

The Watermill Group acquired Tenere in December 2012.

Tenere designs and manufactures advanced, customized

components from metal and plastic for companies in the

aerospace, agricultural, data management, information

technology, medical, and industrial markets. The company

fabricates sheet metal, injection molded products, and

machined products, as well as provides integration and

system-level assembly services. Tenere operates three

facilities in Wisconsin and one in Colorado. The transaction

represents an exit for Stonehenge Partners, which

provided development capital to the company in 2010.

Industrials Insider

SOURCE: S&P Capital IQ, PitchBook, Equity Research, Company Filings, and public data. 5

Norwest Equity Partners acquired precision injection

molder Quadion (dba Minnesota Rubber & Plastics)

(MR&P) in September 2012. Founded in 1945, MR&P is full-

service provider of high-value rubber and plastic molded

components and assembly solutions serving diverse

end markets including automotive, medical, plumbing,

industrial, off-road, distribution, food and beverage, and

fl uid management. The company employs over 1,100

people in nine facilities worldwide with six U.S. locations as

well as plants in China, Mexico, and Europe.

In September 2012, Dickten Masch Plastics (DMP) acquired

Indiana-based Nyloncraft, a manufacturer of engineered

plastic components for the automotive industry. The

company’s products include multishot over molding

products, door lock housings, steering column components,

brake system components, window regulator components,

exhaust hangers, suspension components, vacuum and

fuel distribution systems, interior trim components, and

injection-compression molding of long-glass fi ber resins.

Nyloncraft was a former portfolio company of Hammond,

Kennedy, Whitney & Company which owned the business

since 2002.

Dickten Masch has manufacturing facilities in Nashotah,

Wisconsin; Ankeny, Iowa; and Monterrey, Mexico. The

company acquired the Monterrey plant in 2011 from United

Plastics Grop. Dickten Masch is backed by private equity

fi rm Patmian LLC which acquired the company in 2010 with

plans to build the company through regional expansions.

Nyloncraft has production in Mishawaka, Indiana and

Jonesville, Michigan. The two companies will look to build

on their combined engineering-plastics experience to

replace metal components in the transportation industry.

Commenting on the partnership, Doreen Lettau, DMP vice

president of market and business development said, “There

is still a lot of stamping and die-casting parts in automotive

and there is a lot that we can still convert and identify both

under the hood and in structural parts.” Combined the

two companies will have more than 800 employees and

generate annual sales of about $175 million.

In June 2013, DMP affi liate Nyloncraft acquired the

Fort Wayne facility of NYX, a leading manufacturer of

highly engineered, pressurized fl uid handling vessels and

components for under-the-hood vehicle applications.

Commenting on the transaction, Nyloncraft CEO Jim

Krzyzewski said, “Under-the-hood components are

critical areas of focus when looking toward the future

of fuel-effi cient vehicles.” The Fort Wayne site will also

supplement Nyloncraft’s capabilities in providing parts for

small engines and sealed plastic welded products.

Private equity-backed MedPlast acquired United Plastics

Group (UPG) in April 2012, gaining entry to China and

boosting its growing medical business. UPG is a full-

service contract manufacturer of precision plastic

products and value-added services for the medical,

industrial, and datacenter markets. China accounts for

approximately one-third of UPG’s overall sales and

50 percent of its medical business. In November 2012,

UPG was rebranded as the industrial business company

of MedPlast serving four primary markets: consumer,

automotive, energy, and datacenter products for the

electronics and telecommunications industries. MedPlast

operates as the medical business.

MedPlast employs about 1,700 people from 14 facilities in

the United States, China, and Mexico. The company invests

about $5 million a year in plants and equipment, according

to CEO Harold Faig. The company projects 2013 sales to

exceed $250 million after recording $222 million last year,

according to Faig.

MedPlast was formed in 2008 by the merger of ATP’s

Engineered Rubber and Plastics Group and K&W Medical

Specialties with backing from fi nancial sponsors Baird

Capital Partners and River Cities Capital Funds. The

transaction represents an exit for private equity fi rm

Aurora Capital Group, which acquired UPG in 1999.

Industrials Insider

Engineered Components and SystemsInsider Perspective

6 SOURCE: S&P Capital IQ, PitchBook, Equity Research, Company Filings, and public data.

Industrial Gears and Transmissions

In March 2013, GenNx360 Capital Partners acquired

custom industrial gear and gear drive manufacturer

The Horsburgh & Scott Co. (H&S) from Bolder Capital.

H&S provides various gear types and engineering

services for new or replacement installations as well

as custom industrial gears. Diverse end markets and

applications served include steel, wind energy, plastics,

mining, paper, food processing, coal, and pollution

control. The company also provides heat treating,

reverse engineering, gear reconditioning, and metric

gearing services. H&S employs over 200 people and

is headquartered in Cleveland, Ohio, with additional

facilities in Ohio and Canada. Bolder Capital acquired

H&S in a leveraged buyout in November 2007 for $43.5

million. JZ Equity Partners and the Edgewater Funds

co-invested in the transaction.

In February 2012, Regal Beloit (NYSE:RBC) acquired

custom precision gear and drive manufacturer

Milwaukee Gear in an $80 million all-cash transaction.

Milwaukee Gear manufactures large custom, precision

spur and helical gears utilized in energy, industrial

compressors, HVAC, and other general industrial

applications. Commenting on the acquisition, Regal

Beloit CEO Mark Gliebe said, “Milwaukee Gear is a very

well managed business with an excellent reputation

resulting from its application engineering excellence

and its high precision manufacturing processes.” The

transaction represents an exit for Charter Oak Private

Equity and High Road Capital Partners, which acquired

the company in 2008. The sale generated a 2.6x ROI and

a 31.6 percent IRR, according to PitchBook.

Hydraulics

Ligon Industries, LLC acquired Energy Manufacturing

Company (EMC) in April 2013. Iowa-based EMC

designs and manufactures hydraulic cylinders and fl uid

power components and systems. EMC is Ligon’s sixth

acquisition since 2006 including, most recently, Stahl

Specialty Company in 2010.

Promus Equity Partners acquired Quality Control

Corporation, renaming it QCC, in April 2012. The

company specializes in the manufacture, assembly, and

testing of complete products and precision machined

components, with expertise in valves, pumps, motors,

mechanical seals, and other fl uid power products. With

its focus on precision machining and assembly, QCC supports

companies worldwide in industries with long product

lifecycles and with precision manufacturing requirements

such as aerospace, construction, and agriculture. Grace

Equity partnered with Promus on the deal, while Aldine

Capital and First Capital Partners provided mezzanine debt

and made equity co-investments. A senior credit facility was

supplied by Cole Taylor.

Private equity fi rm Pfi ngsten Partners acquired Tennessee-

based Bailey International LLC in April 2012. Bailey is

a manufacturer and distributor of mobile fl uid power

components including hydraulic cylinders, power units,

pumps, valves, motors, hoses and fi ttings, bearings and

bushings used primarily in mobile equipment applications.

With Pfi ngsten’s backing, the company intends to broaden

its product portfolio, expand sales and marketing efforts, and

evaluate strategic acquisitions.

7SOURCE: S&P Capital IQ, PitchBook, Equity Research, Company Filings, and public data.

Economy picking up steam

Visible rebound in housing market

New housing starts reached

a fi ve-year high of 914,000

units* in May 2013, reported

the National Association of

Home Builders, representing

a 28.6 percent increase over the same period a year ago,

and by 2014, are forecasted to top one million new units

(1,174,000), a number that has not been breached since

2007. Helping to support the revitalization are growth

in real disposable income, low interest rates, housing

affordability, uptick in household formation, and tight

inventories. Diane Swonk, chief economist at Mesirow

Financial, calls rising home prices a “game changer” for

the broader economy. The ripple effects on the economy

are far reaching, as rising home prices stimulate spending

on everything from remodeling and construction activity

to vehicle purchases, said Swonk, with the resurgence in

home building spurring more manufacturing activity. “The

housing market will be a major driver of growth in 2013,”

observed Swonk, “contributing more than one percent to

real GDP including spillover effects for consumer spending

and manufacturing activity.”4

*seasonally adjusted annual rate

Cheap natural gas

Lower energy costs from shale gas

are benefi ting U.S. manufacturers

and are driving product demand,

according to a recent study by

PwC5 on shale gas development

activity in the United States. The PwC study found

“...that full-scale and robust shale gas development

through 2025 would likely have a number of knock-on

effects for other industries, particularly the manufacturing

and chemical sectors…,” with an estimated $11 billion in

annual cost savings potential available to manufacturers.

Contributing to the report, Kathryn Z. Klaber, President

of the Marcellus Shale Coalition (MSC), stated, “The

safe production of shale gas has been a game-changer

in a variety of regions and among a variety of sectors

throughout our economy—notably manufacturers.”

According to IHS Global Insight6, increased shale gas

activity will contribute to increased capital investment and

job opportunities. In 2010, the shale gas industry supported

600,000 jobs. That number is expected to grow to nearly

870,000 in 2015 and to over 1.6 million by 2035. Growth

in the shale gas industry has already made a signifi cant

impact on the economy, contributing $76 billion to GDP in

2010, reported IHS, and projects increasing to $118 billion by

2015 and tripling to $231 billion in 2035.

Industrials Insider

The housing market will be a major driver of growth in 2013, contributing more than one percent to real GDP including spillover effects for consumer spending and manufacturing activity.

Diane Swonk, Chief Economist at Mesirow Financial

The impact of increased shale gas development will ripple through our economy, with manufacturers, in particular, seeing great benefi ts. Shale gas development has the potential to boost manufacturing employment by one million jobs by the middle of the next decade.

Jay Timmons, President and CEO National Association of Manufacturers

Macroeconomic indicators evidence improving trend lines and hint at a sustainable recovery, with longer-term, fundamental changes that could present a turning point for the U.S. manufacturing economy and opportunity for domestic producers.

4 “Themes on the Economy.” 12 Mar 13. Diane Swonk, Mesirow Financial.5 “Shale Gas. A renaissance in US manufacturing, “ Dec 2011. PwC.

6 “The Economic and Employment Contributions of Shale Gas in the United States.” Dec 2011. IHS Global Insight.

Engineered Components and SystemsInsider Perspective

8

Industrials Insider

The cost advantage of manufacturing overseas is narrowing, and concerns over quality, protection of intellectual property, manufacturing fl exibility, and supply chain disruption are leading some U.S. manufacturers to reexamine their global footprints and bring production operations back to the states, which could means billions to the economy.

During the last two years announced 15 new manufacturing plants or existing facility expansions, including a new locomotive manufacturing plant in Texas, an aircraft engine composites factory in Mississippi, and appliance and lighting facilities in Kentucky, Alabama, and Ohio.

Announced in December 2012 plans to invest $100 million in manufacturing a line of Mac computers in the United States.

Invested $120 million in a new hydraulic excavator manufacturing plant in Victoria, Texas—machines formerly made at a Caterpillar plant in Japan. Opened in August 2012, the new factory, expected to employ about 800 people once fully operational, is the most recent expansion for Caterpillar in the United States and will more than triple the current domestic capacity of hydraulic excavators produced by the company.

Announced in August 2010 plans to bring back approximately 2,200 parts production jobs

Findings from a December 2012 survey conducted by the MIT Forum for Supply Chain Innovation in partnership with Supply Chain Digest7 indicate a signifi cant shift in manufacturing footprint, with 33.6 percent of the 340 companies surveyed actively “considering” bringing manufacturing back to the U.S., while 15.3 percent of U.S. companies “defi nitively” planning to re-shore to the U.S.

Manufacturers cited in the report that are either involved in re-shoring or expanding their U.S. manufacturing footprint include:

Findings from an April 2012 survey8 conducted by the Boston Consulting Group (BCG) evidence that re-shoring is building momentum. Executives from 106 U.S.-based manufacturers representing diverse industries were surveyed, with 37 percent of companies with annual sales above $1 billion planning or considering to re-shore production to the United States from China. The response rate rose to 48 percent for companies with sales of $10 billion or more.

BCG, in a March 2012 report series titled “U.S. Manufacturing Nears the Tipping Point”,9 identifi ed industries as nearing the “tipping point” (defi ned as those where the clear cost advantage of using China as an export base for the U.S. no longer applies), which include transportation goods, computers and electronics, fabricated metals, machinery, plastics and rubber, appliances and electrical equipment, and furniture. BCG estimates that 10 to 30 percent of production of the $200 billion in goods now imported from China for those industries could shift back to the U.S. before the end of the decade, adding $20 billion to $55 billion in output annually to the domestic economy. The combination of re-shoring overseas production and increased exports due to improved U.S. competitiveness will create 2 million to 3 million jobs, serving to reduce unemployment by 1.5 to 2 percentage points, estimates which BCG calls conservative.

Re-shoring taking hold

7 “U.S. Reshoring: A Turning Point.” 2012, MIT Forum for Supply Chain Innovation and Supply Chain Digest.8 “More Than a Third of Large Manufacturers Are Considering Reshoring from China to the U.S.” 20 Apr 2012. Boston Consulting Group.9 “U.S. Manufacturing Nears the Tipping Point.” Harold Sirkin. 22 Mar 2012. Boston Consulting Group.

9

Industrials Insider

Overall M&A Activity

Middle Market M&A Activity Private Equity Transaction Activity

Mergers & Acquisitions Activity

Trends in Valuation

Acquisition Financing Trends

Leverage Equity Contribution

Source: Standard & Poors LCD.

Source: Standard & Poors LCD.*NOTE: Data not reported due to limited number of observations for period.*NOTE: Data not reported due to limited number of observations for period. Source: Standard & Poors LCD.

Source: PitchBook.

Source: Standard & Poors LCD.

Transactions with Strategic Buyers Transactions with Financial Buyers

Transaction Count by Deal Size

Middle market enterprise values between $25 million and $500 million. Middle market enterprise values between $25 million and $500 million.

EBIT

DA

Mul

tiple

EBIT

DA

Mul

tiple

Num

ber o

f Tra

nsac

tions

Source: S&P Capital IQ.

3.6 4.0 3.1

2.6 3.2

3.9 3.9 4.4

1.2 1.5

1.0 1.0

0.8 0.4 0.6

0.4

0.0x

1.0x

2.0x

3.0x

4.0x

5.0x

6.0x

2006 2007 2008 2009 2010 2011 2012 Jun-13

Sen ior Debt/EBITDA Sub D ebt/EBITDA

38%

35%

46%

51%

47%

43%41% 40%

25%

30%

35%

40%

45%

50%

55%

2006 2007 2008 2009 2010 2011 2012 Jun-13

119

148

125

151

106

141

156

145

107

132

148

114

58 97 96 131

100

122

141

134

120 16

6

163

154

137

160

164 23

5

147

161

207 21

9

214 24

0

207 22

2

211

268

191 20

7 233

113

91

120

111

197

145 16

1 234

204

168

230

226

214

176 21

1

188

307

208 22

7

65

66

59

63

62

67 63

63

36

58

43

19

19

26 35

40

32

42

58

61

55

63 68

53

42

54 50

69

39

46

$0

$10

$20

$30

$40

$50

$60

$70

0

100

200

300

400

500

600

700

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

2006 2007 2008 2009 2010 2011 2012 2013

Transaction Value ($ in billions)

Num

ber

of T

rans

actio

ns

$25M-$50M $50M-$250M $250M-$500M Trans Value

7.2x

8.3x

6.5x 6.6x

6.3x

8.1x 8.

5x

8.2x

8.0x

8.0x

7.4x

6.7x

8.5x

9.9x

9.4x

7.5x

8.5x

9.1x

8.7x

7.8x

5.0x

6.0x

7.0x

8.0x

9.0x

10.0x

11.0x

12.0x

2006 2007 2008 2009 2010 2011 2012 Jun-13

<$250 mill ion $250-$499 million $500 mi llion +

8.2x

6.8x 7.

1x

9.8x

8.0x

7.6x

7.7x 8.

0x

8.7x

9.4x

8.4x

7.6x

9.2x 9.

5x10.0

x

9.1x

10.2

x

8.2x

9.5x 9.7x

9.7x

10.5

x

5.0x

6.0x

7.0x

8.0x

9.0x

10.0x

11.0x

12.0x

2006 2007 2008 2009 2010 2011 2012 Jun-13

<$250 mill ion $250-$499 million $500 mi llion +

NA*NA*NA*NA*NA*NA* NA*

Based on announced deals, where the primary location of the target is in the United States.Middle market enterprise values between $25 million and $500 million.

-

500

1,000

1,500

2,000

2,500

3,000

2006 2007 2008 2009 2010 2011 2012 H1 '13

Under $25M $25M-$100M $100M-$500M

$500M-$1B $1B-$2.5B $2.5B+

10

Industrials M&A Activity

DIVERSIFIED INDUSTRIALSTyco International (NYSE:TYC) announced in June 2013

it was acquiring Exacq Technologies, Inc., a developer

of open architecture video management systems

(VMS) for security and surveillance applications,

in a $150 million all-cash transaction. Exacq’s VMS

solutions scale from small single camera applications to

large, integrated systems with thousands of cameras.

The acquisition is expected to complement Tyco

Security Products’ video technology portfolio while

strengthening its presence in the video security market.

Exacq is projecting revenues of approximately $75

million in fi scal 2014.

Transaction Multiple: Revenue 2.7x

In January 2013, Danaher Corp. (NYSE:DHR) acquired

Navman Wireless North America, LLC, a provider of

GPS-based fl eet optimization products and services,

including real-time vehicle tracking and analytics that

enable companies to monitor, measure, and improve

fl eet-related costs and effi ciencies.

AEROSPACE & DEFENSEIn June 2013, TransDigm Group Incorporated (NYSE:TDG) acquired the Electromechanical Actuation Division from GE Aviation in a $150 million all-cash

transaction. The business manufactures aerospace

electromechanical motion control subsystems for both

civilian and military uses, including control electronics,

motors, high power mechanical transmissions, and

actuators.

Also in June, TransDigm acquired Long Island-based

Arkwin Industries, Inc., in an all-cash deal valued at

$286 million. Arkwin designs and produces hydraulic

and fuel system components for civil and military fi xed-

wing aircraft, helicopters, spacecraft, turbine engines,

and other special applications. With the acquisition, as

TransDigm will be able to expand content offerings for

various platforms and applications.


In May 2013, Pacifi c Architects and Engineers Incorporated announced it was acquiring the Base Operations, Aviation, and Range Services Unit of CSC Applied Technologies for $175 million. The business

offers managed engineering, aviation maintenance,

base operations and maintenance, testing and training,

and space range services primarily to U.S. government

clients. The deal is the latest step in CSC’s non-core

asset divestiture strategy, representing the sixth deal of

this type in the last seven months.

In May 2013, Astronics Corporation announced it was

acquiring PECO, Inc. for $136 million in cash. PECO

manufactures aerospace systems, including various parts,

confi gurations, assemblies, and injection molded products

for commercial aircraft OEMs, defense contractors, and

MRO centers.


In May 2013, Erickson Air-Crane Incorporated acquired

Evergreen Helicopters, Inc. from Evergreen International Aviation, Inc. for $288 million. Evergreen Helicopter

provides air transportation services for search and rescue,

emergency medevac, peacekeeping and disaster relief,

executive travel, marine service, cargo and personal

shuttle, and fi refi ghting purposes. With the acquisition,

Erickson will expand its global fl eet and capabilities

and diversify its revenue sources, which was previously

dependent upon fi refi ghting services. Consideration

consisted of $185 million in cash, a $17.5 million unsecured

promissory note, and four million convertible preferred

shares with an approximate value of $47.5 million.

Included in the consideration are performance-based

earnout incentives estimated at $30 million.

Transaction Multiples: Revenue 1.4x; EBITDA 5.6x

In May 2013, Greenbriar Equity Group LLC completed

the acquisition of EDAC Technologies Corp., previously

announced in March. EDAC designs, manufactures, and

services tooling, fi xtures, molds, jet engine components,

and machine spindles primarily for the aerospace,

industrial, semiconductor, and electronic medical device

industries. The $141 million purchase price consisted of $95

million in cash, approximately $10 million in warrants and

options, and $36.5 million in assumed liabilities.


In January of 2013, Dynamic Precision Group, Inc., backed

by private equity fi rm The Carlyle Group, completed

the add-on acquisition of Paradigm Precision Holdings LLC, a former portfolio company of American Capital, in a transaction valued at $129 million. The company

manufactures turbine engines and various machine

products that are used in aerospace, industrial, land-

based power generation, and marine applications. The

acquisition is expected to expand Dynamic’s technical and

client service abilities.

Industrials Insider

- H1 2013

SOURCE: S&P Capital IQ, PitchBook, Equity Research, Company Filings, and public data.

11

In May 2013, Snap-On Inc. (NYSE:SNA) closed its purchase

of Challenger Lifts, Inc. for $38 million in cash, marking

an exit for Gen Cap America. Challenger Lifts designs,

manufactures, and distributes car lifts, jacks, and auto life

accessories that are used in various applications for cars,

SUVs, vans, trucks, and commercial vehicles. Snap-On now

seeks to expand relationships with repair shop owners and

managers as part of its business development strategy.

Transaction Multiple: Revenue .84x

In May 2013, Douglas Dynamics, Inc. acquired TrynEx Inc. in a $33 million all-cash transaction. TrynEx manufactures

salt spreaders, sand spreaders, de-icing sprayers, and

accessories for snow and ice control. The acquisition

is expected to strengthen Douglas’ market position

through product portfolio enhancement and geographic

expansion.

In April 2013, IPEG Inc. acquired Thermal Care, Inc. from MFRI Inc. for $15.9 million in cash. IPEG designs,

manufactures, installs, and services process cooling

equipment and systems used for heat removal in industrial

applications, primarily serving the aerospace, chemicals,

food processing, die casting, and welding industries.

The acquisition is expected to bring technological

development potential and more robust product offerings.

In April 2013, CECO Environmental Corp. (NasdaqGM:CECE) acquired Met-Pro Corp. (NYSE:MPR)

in a $210 million cash and stock transaction. Met-Pro

manufactures fl uid handling equipment, product recovery

and pollution control equipment, and fi ltration products.

The acquisition is expected to bring cost synergies, cross-

selling opportunities which will lift revenue and margins,

increased product portfolio depth, and increased global

reach.


In April 2013, Worthington Industries, Inc. (NYSE:WOR)

acquired Palmer Manufacturing and Tank Inc. for $114

million in an all-cash transaction. Kansas City-based

Palmer is a designer and manufacturer of fi berglass and

steel tanks serving the drilling, agricultural, chemical, and

diversifi ed industrials end markets. The transaction follows

on Worthington’s 2012 purchase of Westerman Cos.,

allowing the company to better compete in the alternative

energy space, involving compressed natural gas, liquefi ed

natural gas, autogas, and hydrogen.


In March 2013, Triumph Aerospace Systems Group LLC

completed the $209 million acquisition of Goodrich Pump & Engine Control Systems, previously announced

in January, renaming the business Triumph Engine Control Systems, LLC. The company designs, develops,

manufactures, and markets fuel pumps and controls to

both civilian and military helicopter OEMs in the United

States. The acquisition will bring Triumph customer

diversifi cation and additional technical capabilities in new

markets. The incumbent Goodrich management team and

employees will remain with the company post-acquisition.

ELECTRONIC COMPONENTS AND EQUIPMENTIn April 2013, Measurement Specialties Inc. (NasdaqGS:MEAS) purchased the Sensors Products business from API Technologies Corp. for $31.4 million in

cash. Spectrum is a manufacturer and marketer of plastic

potentiometers and contact-less position sensors and

transducers. The business contributed approximately $26

million to API Technologies’ revenue in fi scal 2012. The

divestiture will allow API to pay down debt and re-aim its

focus toward its core businesses.

In February 2013, Regal Beloit Corporation (NYSE:RBC)

acquired the RAM Motor Business from Schneider Electric S.A. (ENXTPA:SU), a producer of motors used in HVAC

systems. The acquisition brings Beloit a specialization in

hermetic motors and the capacity to better serve existing

and potential customers.

INDUSTRIAL MACHINERYIn June 2013, New Flyer Industries Inc. (TSX:NFI) acquired

North American Bus Industries, Inc. in $80 million all-cash

transaction. The company designs and manufactures clean

diesel, hybrid, heavy-duty, and compressed natural gas

urban transit buses. The transaction represents an exit for

Cerberus Capital Management. The acquisition will bring

access to new customers and manufacturing platforms.

Transaction Multiple: EBITDA 4.0x

In June 2013, Stratasys Ltd. (NYSE:NasdaqGS:SSYS)

announced it was acquiring MakerBot Industries, LLC, a

manufacturer and distributor of 3D printers used to print

various plastic objects. The all-stock deal is valued at $410

million, with the potential for $615 million when factoring

in earn-out provisions. The purchase will likely spur 3D

printing adoption in multiple industries and strengthen

Stratasys’ position in the consumer segment of the

market, which is growing rapidly.


Industrials Insider

Industrials M&A Activity - H1 2013

SOURCE: S&P Capital IQ, PitchBook, Equity Research, Company Filings, and public data.

12

for both residential and commercial kitchen and baths. The

acquisition furthers LIXIL’s global acquisition strategy and

is expected to bring further opportunities in North America,

including brand enhancement and manufacturing and

technological capability improvements.

Transaction Multiples: Revenue .65x; EBITDA 18.3x

In July 2013, Tyman plc (LSE:TYMN) completed the

acquisitions of Atlas Holdings Company Limited and

Truth Hardware Corporation from Fki Engineering Ltd for

$200 million. Both companies design and manufacture

door and window hardware products including operators,

hinges, locks, skylights, latches, lifts, and rollers and home

safety products. The acquisitions are expected to enhance

Tyman’s market position in North America and broaden

its casement hardware product portfolio, customer

relationships, and manufacturing footprint.


In May 2013, North American Pipe Corporation, a subsidiary

of Westlake Chemical Corp. (NYSE:WLK), completed

the acquisition of the PVC Pipe Fittings and Foundations Business of CertainTeed Corporation (nka North American

Specialty Products LLC) for $153 million in cash. The

company manufactures and distributes PVC piping, fi tting s,

and foundations to companies in the building products,

agricultural, mining, and other industrial sectors. Assets

acquired include facilities in Lodi, California and McPherson,

Kansas with production capacity of approximately 150

million pounds per year. Westlake also has acquired

technologies and intellectual properties for the production

of a number of specialized products, including Certa-Lok(R)

restrained joint pipe and Yelomine(TM) branded products

for a variety of end market applications.

DISTRIBUTIONIn April 2013, MSC Industrial Direct Co. Inc. (NYSE:MSM)

acquired the North American Distribution Business

of Barnes Group Inc. (NYSE:B) for $550 million. The

business, which generated sales of approximately $300

million in 2012, is a leading distributor of fasteners and

other consumables with a broad distribution footprint

throughout the U.S. and Canada, serving customers across

manufacturing, government, transportation, and natural

resources end-markets.

With the acquisition, MSC extends its inventory

management solutions and product offering in fasteners

and other high gross margin consumable products and

establishes a signifi cant presence in the Canadian market.


In March 2013, Moog Inc. (NYSE:MOG.A) acquired Aspen Motion Technologies from Pentair (NYSE:PNR) in a $34.0

million all-cash transaction. Aspen Motion designs and

manufactures high-performance DC motors, integrated

digital controls, and motorized impellers that are used in

motors. The acquisition will provide Moog with product and

technology enhancements and access to Aspen’s customer

base and manufacturing knowledge.


In March 2013, private equity fi rm Kohlberg Kravis Roberts (NYSE:KKR) announced the take private of Gardner Denver Inc. (NYSE:GDI) in a $3.9 billion transaction including

debt assumption. Gardner Denver manufactures industrial

compressors, blowers, pumps, loading arms, and fuel

systems serving diverse industries.


In March 2013, Riverstone Holdings LLC announced the

acquisition of UTEX Industries, Inc. from Rhone Capital, LLC. UTEX manufactures sealing products that are

used in oil drilling, water treatment, and other industrial

applications. The transaction was valued at $825 million.

In January 2013, Bilfi nger SE (DB:GBF) acquired Johnson Screens, Inc. from Weatherford International Ltd. in a $133

million transaction. Johnson Screens produces components

used in fi ltration capacities for drinking water extraction,

wastewater treatment, and resource reclamation primarily

in North America, Europe, and Asia. The acquisition is

expected to double Bilfi nger’s water and wastewater

volume, building on its 2011 purchase of Italian-based

Diemme. Bilfi nger will also gain access to additional

markets and synergies arising from manufacturing

technology improvements.


BUILDING PRODUCTSIn July 2013, Gentex signed a defi nitive agreement to

acquire the HomeLink product line from Johnson Controls, Inc. (NYSE:JCI) for approximately $700 million in cash. The

HomeLink Product Line comprises a vehicle-based radio

frequency device that communicates with other devices

including garage door openers, estate gates, and home

lighting. The acquisition is expected to contribute $125 to

$150 million in annual revenue.

In June 2013, LIXIL Corporation announced it was acquiring

ASD Americas Holding Corp, the parent company of

American Standard Brands, in a $542 million all-cash

transaction. The company manufactures various products

Industrials Insider

Industrials M&A Activity - H1 2013

SOURCE: S&P Capital IQ, PitchBook, Equity Research, Company Filings, and public data. 13

Industrials Insider

Industry Valuations

Relative Valuation Trends

SOURCE: S&P Capital IQ.

*Figures include latest reported earnings for index constituents. Q2 2013 earnings had not been released for all companies by publish date.

Q109 Q209 Q309 Q409 Q110 Q210 Q310 Q410 Q111 Q211 Q311 Q411 Q112 Q212 Q312 Q412 Q113 Q213EV/EBITDA 5.3x 6.9x 8.6x 10.4x 10.5x 9.0x 9.3x 10.0x 10.5x 9.8x 7.2x 8.1x 8.6x 8.1x 8.6x 9.0x 9.9x 10.1x

EV/Revenue 0.7x 0.8x 1.0x 1.1x 1.3x 1.1x 1.3x 1.4x 1.5x 1.5x 1.1x 1.2x 1.4x 1.3x 1.3x 1.4x 1.6x 1.7x

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Industrial Machinery

Aerospace & Defense

Building Products

Electrical Components and Equipment

Distribution

Construction and Farm Equipment

14

Industrials Insider

Industry Valuations


NOTE: Figures in bold and italic type were excluded from median and mean calculation.

(1) As of 7/26/2013

(2) Market Capitalization is the aggregate value of a firm's outstanding common stock.

(3) Enterprise Value is the total value of a firm (including all debt and equity).


($ in millions, except per share data) Current % of Market Enterprise Total Debt/ TTM

Company Name Ticker Stock Price (1) 52W High Capitalization (2) Value (3) Revenue EBITDA EBITDA Revenue Gross EBITDA

DIVERSIFIED INDUSTRIALSGeneral Electric Company NYSE:GE $24.65 98.8% $251,030.2 $512,130.2 3.5x 17.7x 13.4x $145,441.0 37.0% 19.9%United Technologies Corp. NYSE:UTX 104.97 99.3% 96,310.9 114,613.9 1.9x 10.8x 2.0x 61,890.0 27.3% 17.2%3M Company NYSE:MMM 116.91 99.7% 79,904.2 81,598.2 2.7x 10.5x 0.8x 30,270.0 47.4% 25.8%Honeywell International Inc. NYSE:HON 82.88 97.7% 65,047.8 67,799.8 1.8x 12.6x 1.4x 37,944.0 25.4% 14.1%Danaher Corp. NYSE:DHR 66.72 96.7% 46,408.4 48,306.8 2.6x 11.5x 1.0x 18,572.9 52.1% 22.3%Eaton Corporation plc NYSE:ETN 68.03 97.3% 32,185.0 41,317.0 2.3x 17.8x 4.4x 17,661.0 29.6% 13.1%Ingersoll-Rand Plc NYSE:IR 61.15 96.5% 17,798.5 20,461.9 1.5x 10.8x 2.5x 14,108.0 31.1% 13.5%Tyco International Ltd. NYSE:TYC 34.59 59.5% 16,049.8 17,102.8 1.6x 13.5x 1.1x 10,614.0 36.3% 12.2%Parker-Hannifin Corporation NYSE:PH 102.12 98.4% 15,241.5 16,591.3 1.3x 9.4x 1.7x 12,999.1 22.8% 13.6%Dover Corporation NYSE:DOV 84.67 97.3% 14,450.8 16,700.4 2.0x 9.7x 1.7x 8,379.8 38.5% 20.6%Textron Inc. NYSE:TXT 27.59 88.1% 7,739.1 10,895.1 0.9x 8.5x 2.8x 12,056.0 16.7% 10.6%Carlisle Companies Incorporated NYSE:CSL 67.53 95.7% 4,289.3 4,873.7 1.4x 9.2x 1.4x 3,608.6 23.9% 14.7%ITT Corporation NYSE:ITT 30.97 96.1% 2,784.2 2,293.6 1.0x 7.2x 0.1x 2,267.9 30.9% 14.1%Median $67.53 97.3% $17,798.5 $20,461.9 1.8x 10.5x 1.5x $14,108.0 30.9% 14.1%

Mean $67.14 93.9% $49,941.5 $73,437.3 1.9x 10.7x 1.7x $28,908.6 32.2% 16.3%

AEROSPACE AND DEFENSEUnited Technologies Corp. NYSE:UTX $104.97 99.3% $96,310.9 $114,613.9 1.9x 10.8x 2.0x $61,890.0 27.3% 17.2%The Boeing Company NYSE:BA 105.60 96.4% 79,669.3 75,074.3 0.9x 9.4x 1.2x 83,018.0 15.6% 9.6%Lockheed Martin Corporation NYSE:LMT 120.00 99.7% 38,296.4 41,591.4 0.9x 7.3x 1.1x 46,446.0 9.4% 11.5%Precision Castparts Corp. NYSE:PCP 225.00 83.3% 32,868.0 36,416.0 4.1x 14.4x 1.5x 8,778.8 32.6% 28.7%General Dynamics Corp. NYSE:GD 85.86 99.1% 30,039.7 30,189.7 1.0x 8.2x 1.1x 31,327.0 16.7% 11.8%Raytheon Co. NYSE:RTN 70.01 99.0% 22,577.6 24,016.6 1.0x 7.1x 1.4x 24,478.0 21.8% 13.7%Northrop Grumman Corporation NYSE:NOC 90.56 97.4% 20,843.7 21,872.7 0.9x 6.0x 1.6x 25,144.0 22.2% 14.4%Rockwell Collins Inc. NYSE:COL 70.78 99.0% 9,555.9 10,369.9 2.2x 9.6x 1.1x 4,624.0 30.7% 23.1%L-3 Communications Holdings Inc. NYSE:LLL 92.15 98.3% 8,293.1 11,669.1 0.9x 7.4x 2.3x 13,220.0 10.2% 11.9%TransDigm Group Incorporated NYSE:TDG 142.64 86.6% 7,474.2 11,147.7 6.1x 13.6x 5.3x 1,820.3 56.1% 45.1%Spirit AeroSystems Holdings, Inc. NYSE:SPR 25.99 97.3% 3,734.1 4,599.5 0.8x 29.7x 7.6x 5,574.1 3.6% 2.8%Moog Inc. NYSE:MOG.A 56.82 97.9% 2,573.1 3,196.1 1.2x 9.1x 2.2x 2,567.2 30.4% 13.7%Median $91.36 98.1% $21,710.7 $22,944.7 1.0x 9.1x 1.5x $18,849.0 22.0% 13.7%

Mean $99.20 96.1% $29,353.0 $32,063.1 1.8x 9.4x 1.9x $25,740.6 23.1% 17.0%

ELECTRICAL COMPONENTS AND EQUIPMENTEmerson Electric Co. NYSE:EMR $59.80 98.1% $42,988.0 $46,059.0 1.9x 9.3x 1.1x $24,697.0 40.3% 20.1%Johnson Controls Inc. NYSE:JCI 40.96 98.7% 28,016.6 34,097.6 0.8x 11.2x 2.3x 42,075.0 14.9% 6.3%Roper Industries Inc. NYSE:ROP 131.21 98.9% 12,992.2 14,478.5 4.7x 15.2x 2.9x 3,078.7 56.8% 31.0%Rockwell Automation Inc. NYSE:ROK 90.81 97.2% 12,682.5 12,492.8 2.0x 11.0x 1.0x 6,236.4 40.2% 18.3%Ametek Inc. NYSE:AME 45.76 98.8% 11,144.1 12,290.5 3.6x 14.1x 1.5x 3,389.9 35.3% 25.7%Hubbell Inc. NYSE:HUB.B 106.88 98.7% 6,265.0 6,276.1 2.0x 11.5x 1.1x 3,083.6 33.4% 17.8%Acuity Brands, Inc. NYSE:AYI 86.96 98.1% 3,676.7 3,728.3 1.8x 13.9x 1.3x 2,023.5 40.3% 13.2%Regal Beloit Corporation NYSE:RBC 71.10 80.6% 3,198.6 3,684.8 1.2x 8.2x 1.9x 3,137.2 24.9% 14.3%Median $79.03 98.4% $11,913.3 $12,391.6 1.9x 11.3x 1.4x $3,263.6 37.8% 18.0%

Mean $79.19 96.1% $15,120.5 $16,638.4 2.3x 11.8x 1.6x $10,965.2 35.8% 18.3%

TTM MarginsTTM Enterprise Value /

15

Industrials Insider

Industry Valuations


NOTE: Figures in bold and italic type were excluded from median and mean calculation.

(1) As of 7/26/2013

(2) Market Capitalization is the aggregate value of a firm's outstanding common stock.

(3) Enterprise Value is the total value of a firm (including all debt and equity).


($ in millions, except per share data) Current % of Market Enterprise Total Debt/ TTM

Company Name Ticker Stock Price (1) 52W High Capitalization (2) Value (3) Revenue EBITDA EBITDA Revenue Gross EBITDA

INDUSTRIAL MACHINERYIllinois Tool Works Inc. NYSE:ITW $71.97 97.2% $32,417.7 $34,727.7 2.0x 10.5x 1.5x $17,331.0 36.5% 19.3%Pentair Ltd. NYSE:PNR 60.63 98.2% 12,074.5 14,678.6 2.3x 27.1x 5.1x 6,354.6 29.4% 8.5%Flowserve Corp. NYSE:FLS 56.82 98.1% 7,989.6 9,018.7 1.9x 11.1x 1.5x 4,830.3 33.8% 16.0%Pall Corporation NYSE:PLL 70.37 96.1% 7,851.4 7,630.4 2.9x 11.9x 1.1x 2,653.6 51.8% 24.1%Timken Co. NYSE:TKR 56.65 92.4% 5,447.1 5,529.0 1.2x 7.8x 0.7x 4,439.2 26.2% 15.9%Donaldson Company, Inc. NYSE:DCI 36.46 92.6% 5,357.8 5,259.2 2.1x 12.7x 0.6x 2,461.2 34.5% 16.6%Lincoln Electric Holdings Inc. NasdaqGS:LECO 60.94 96.3% 5,062.4 4,848.5 1.7x 10.7x 0.0x 2,828.2 31.6% 15.8%IDEX Corporation NYSE:IEX 59.10 98.4% 4,859.9 5,300.9 2.7x 11.6x 1.8x 1,983.6 42.0% 22.9%Nordson Corporation NasdaqGS:NDSN 71.72 95.3% 4,605.5 5,165.2 3.3x 13.0x 1.6x 1,547.7 56.8% 25.6%Gardner Denver Inc. NYSE:GDI 75.95 99.2% 3,739.6 3,839.9 1.7x 9.0x 0.8x 2,264.7 34.3% 18.9%Crane Co. NYSE:CR 61.98 95.8% 3,584.7 3,577.4 1.4x 9.0x 1.0x 2,552.1 34.2% 15.6%SPX Corporation NYSE:SPW 75.01 87.4% 3,510.0 4,457.4 0.9x 9.3x 3.8x 5,080.4 27.1% 8.6%Trinity Industries Inc. NYSE:TRN 37.37 81.8% 2,959.9 5,604.7 1.5x 7.1x 3.8x 3,848.6 21.7% 20.5%CLARCOR Inc. NYSE:CLC 54.93 98.3% 2,740.9 2,569.9 2.3x 11.9x 0.1x 1,123.5 33.4% 19.2%Median $60.79 96.2% $4,961.2 $5,280.0 1.9x 10.7x 1.1x $2,740.9 34.0% 17.8%

Mean $60.71 94.8% $7,300.1 $8,014.8 2.0x 10.4x 1.4x $4,235.6 35.2% 17.7%

CONSTRUCTION, FARM, AND OTHER INDUSTRIAL EQUIPMENTCaterpillar Inc. NYSE:CAT $82.06 82.3% $53,970.9 $89,604.9 1.5x 9.4x 4.2x $60,351.0 25.9% 15.7%Deere & Company NYSE:DE 82.81 86.6% 32,133.9 62,061.7 1.6x 10.1x 5.5x 37,717.0 28.9% 16.3%Cummins Inc. NYSE:CMI 115.88 94.6% 21,987.0 21,501.0 1.3x 8.7x 0.4x 16,784.0 25.6% 12.5%PACCAR Inc. NasdaqGS:PCAR 56.10 93.5% 19,848.2 26,414.2 1.6x 12.1x 4.2x 16,042.0 13.5% 13.6%CNH Global NV NYSE:CNH 44.18 88.4% 10,762.6 24,451.6 1.2x 8.0x 6.4x 20,498.0 24.0% 14.3%AGCO Corporation NYSE:AGCO 54.34 95.6% 5,288.0 6,205.2 0.6x 6.1x 1.5x 10,091.6 21.4% 9.5%Joy Global, Inc. NYSE:JOY 48.83 70.6% 5,188.8 6,323.6 1.2x 4.9x 1.1x 5,493.9 33.9% 23.5%Oshkosh Corporation NYSE:OSK 40.39 94.7% 3,553.8 4,056.5 0.5x 7.4x 1.8x 7,984.3 13.4% 6.8%Terex Corp. NYSE:TEX 28.49 76.8% 3,170.9 4,745.9 0.7x 9.8x 3.8x 7,148.8 19.3% 6.8%Navistar International Corporation NYSE:NAV 34.41 88.7% 2,766.8 6,421.8 0.5x NM NM 11,841.0 8.4% -4.2%Federal Signal Corp. NYSE:FSS 9.76 93.8% 609.4 757.9 0.9x 11.3x 2.4x 806.9 23.7% 8.3%Median $48.83 88.7% $5,288.0 $6,421.8 1.2x 9.1x 3.1x $11,841.0 23.7% 12.5%

Mean $54.30 87.8% $14,480.0 $22,958.6 1.1x 8.8x 3.1x $17,705.3 21.6% 11.2%

BUILDING PRODUCTSMasco Corporation NYSE:MAS $19.84 86.9% $7,080.2 $9,888.2 1.3x 15.7x 5.8x $7,815.0 25.3% 8.0%Fortune Brands Home & Security, Inc. NYSE:FBHS 41.65 94.6% 6,872.9 7,138.3 1.9x 20.1x 1.1x 3,787.4 34.0% 9.4%Owens Corning NYSE:OC 39.42 86.5% 4,686.8 6,923.8 1.3x 10.4x 3.4x 5,132.0 18.0% 13.0%Lennox International, Inc. NYSE:LII 72.07 96.0% 3,598.4 4,090.2 1.3x 13.0x 1.8x 3,076.1 25.7% 9.9%Armstrong World Industries, Inc. NYSE:AWI 50.41 86.2% 2,981.5 3,796.8 1.4x 9.9x 0.0x 2,636.4 24.5% 12.4%USG Corporation NYSE:USG 25.27 81.6% 2,743.6 4,559.6 1.4x 14.3x 7.3x 3,373.0 13.8% 9.4%Simpson Manufacturing Co., Inc. NYSE:SSD 32.44 94.5% 1,575.2 1,411.1 2.2x 15.2x 0.0x 666.9 43.3% 14.3%Universal Forest Products Inc. NasdaqGS:UFPI 40.87 89.6% 812.0 957.9 0.4x 12.2x 1.9x 2,297.1 10.3% 3.4%Griffon Corporation NYSE:GFF 11.95 94.7% 716.2 1,297.6 0.7x 8.9x 4.8x 1,840.2 22.6% 7.9%Quanex Building Products Corporation NYSE:NX 16.15 72.5% 595.2 596.9 0.7x 28.6x 0.5x 891.1 15.2% 2.3%Median $35.93 88.3% $2,862.6 $3,943.5 1.3x 14.3x 2.6x $2,856.3 23.6% 9.4%

Mean $35.01 88.3% $3,166.2 $4,066.1 1.3x 15.5x 3.3x $3,151.5 23.3% 9.0%

DISTRIBUTIONW.W. Grainger, Inc. NYSE:GWW $256.65 95.3% $17,836.4 $17,895.6 2.0x 12.9x 0.4x $9,169.3 44.1% 15.1%Fastenal Company NasdaqGS:FAST 46.68 87.4% 13,856.6 13,733.3 4.3x 18.1x 0.0x 3,213.7 52.0% 23.6%MSC Industrial Direct Co. Inc. NYSE:MSM 79.81 90.8% 5,059.1 5,294.0 2.2x 11.6x 0.6x 2,419.1 45.4% 18.9%WESCO International Inc. NYSE:WCC 74.47 94.0% 3,284.7 4,796.1 0.7x 11.7x 3.9x 7,002.6 20.7% 5.9%Watsco Inc. NYSE:WSO 92.94 97.2% 2,987.8 3,655.8 1.0x 13.4x 1.5x 3,620.5 24.0% 7.6%Anixter International Inc. NYSE:AXE 81.07 98.2% 2,638.0 3,433.1 0.6x 9.5x 2.4x 6,223.8 22.4% 5.8%Applied Industrial Technologies, Inc. NYSE:AIT 51.58 98.3% 2,173.6 2,130.5 0.9x 10.5x 0.0x 2,441.7 27.6% 8.3%Beacon Roofing Supply, Inc. NasdaqGS:BECN 40.91 95.8% 1,991.6 2,271.1 1.1x 14.0x 1.8x 2,088.6 24.7% 7.7%Median $77.14 95.6% $3,136.3 $4,225.9 1.0x 12.3x 1.5x $3,417.1 26.2% 8.0%

Mean $90.51 94.6% $6,228.5 $6,651.2 1.6x 12.7x 1.2x $4,522.4 32.6% 11.6%

TTM MarginsTTM Enterprise Value /

16

Industrials Insider

Industry Valuations

Sector Performance

Source: S&P Capital IQ.As of 7/26/2013.

By Sector

Overall Market

20%26%

15% 15%

-3%

10% 11%

27%

39% 39% 38%

14%

51%

24%

50%54% 50%

70%

23%

57%

96%

19%

49%

58%49%

21%

56%

118.4%

-20%

0%

20%

40%

60%

80%

100%

120%

140%

DiversifiedIndustrials

Aerospace &Defense

ElectricalComponents and

Equipment

IndustrialMachinery

Construc�on &Farm Equipment

Building Products Distribu�on

Retu

rns

YTD 1 Year 3 Year 5Y

16% 16%

24%21%

52%48%

37%40%

-20%

-10%

0%

10%

20%

30%

40%

50%

60%

S&P 500 DJIA

Retu

rns

YTD 1 Year 3 Year 5Y

17

Global Industrials Practice

For questions about content and circulation, please contact editor, Rebecca Dickenscheidt, at [email protected] or 312-513-7476.

• Metal Working

• Injection & Blow Molding

• Plastic, Rubber & Aluminum Extrusion

• Automation & Controls

• Motors & Drives

• Sensing & Imaging Equipment

Precision Manufacturing

Leading Independent Firm• Independent investment banking

advisory fi rm focused on the middle market

• Senior bankers with signifi cant experience and tenure; partners average over 20 years of experience

• Offi ces in Chicago, Cleveland, and Salt Lake City

Who We Are

• Founding member and the exclusive U.S. partner of Global M&A, the world’s leading partnership of investment banking fi rms focusing on middle market transactions

• Deep industry experience across core sectors of focus, including: Business and Environmental Services, Consumer Products, Healthcare and Life Sciences, Industrials, and Real Estate

Comprehensive Capabilities Private Placements Financial Advisory

M&A Advisory Private Placements

Sell-Side Advisory

General Financial& Strategic Advice

Acquisitions & Divestitures

Public & Private Mergers

Special Committee Advice

Strategic Partnerships& Joint Venture Formation

Fairness Opinions & Fair Value Opinions

All Tranches ofDebt & Equity Capital for:

Growth

Acquisitions

Recapitalizations

Dividends

General Financial& Strategic Advice

Balance SheetRestructurings

Sales of Non-CoreAssets or Businesses

§363 Auctions

Financial Advisory

• Power Generation &

Management

• Machine Tools

• Cranes, Material

Handling & Off Road

Equipment

Capital Goods

• Military &

Defense

• Aerospace

• Automotive &

Heavy Truck

• Oil & Gas

Industrial Services

• Test & Measurement Services

• Design & Engineering Services

• Preventative & Predictive Maintenance

• Rebuild & Remanufacturing

• Coatings Development & Application

• Infrastructure Installation, Repair & Maintenance

• Logistics & Distribution

• Sanitation & Hygiene

• Precision Metals

• Commodity Metals

• Resin

• Rubber

• Aluminum

• Coatings

• Lubricants

• Aggregates &

Minerals

• Concrete &

Concrete Products

• Building Products &

Materials

Materials & Inputs

The information contained in this publication was derived from proprietary research conducted by a division or owned or affi liated entity of Brown Gibbons Lang & Company LLC. Any projections, estimates or other forward-looking statements contained in this publication involve numerous and signifi cant subjective assumptions and are subject to risks, contingencies, and uncertainties that are outside of our control, which could and likely will cause actual results to differ materially. We do not expect to, and assume no obligation to update or otherwise revise this publication or any information contained herein. Neither Brown Gibbons Lang & Company LLC, nor any of its offi cers, directors, employees, affi liates, agents or representatives makes any representation or warranty, expressed or implied, as to the accuracy, completeness or fi tness of any information contained in this publication, and no legal liability is assumed or is to be implied against any of the aforementioned with respect thereto. This publication does not constitute the giving of investment advice, nor a part of any advice on investment decisions and nothing in this publica-tion is intended to be a recommendation of a specifi c security or company, nor is any of the information contained herein intended to constitute an analysis of any company or security reasonably suffi cient to form the basis for any investment decision. Brown Gibbons Lang & Company LLC, its affi liates and their offi cers, direc-tors, employees or affi liates, or members of their families, may have a benefi cial interest in the securities of a specifi c company mentioned in this publication and may purchase or sell such securities in the open market or otherwise. Nothing contained in this publication constitutes an offer to buy or sell or the solicitation of an offer to buy or sell any security.

For questions about content and circulation, please contact editor, Rebecca Dickenscheidt, at [email protected] or 312-513-7476.

Representative Transactions:

Andrew K. PetrykHead: [email protected]

Kevin H. SargentDirector & [email protected]

BGL Contacts:

www.bglco.com www.globalma.com

recapitalized by

ZS Fund L.P.

E C S R E F I N I N G

acquired byacquired by

Prospect Capital Corporation(NASDAQ: PSEC)

CCPI Inc. recapitalized in a change of control

transaction by

a wholly-ownedsubsidiary of

acquired by

Lauren International, Inc. acquired by

obtained financingprovided by

and

merged with

a portfolio company of

which has been acquired by

PVC Container Corporation

acquired by

The melting operations of

acquired by

The recycling operations of

divested

Motion Control Group

to

acquired by


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with interest held by


acquired by

acquired by

TAD Metals, Inc.

acquired by

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TINICUM CAPITALPARTNERS II, L.P.

divested substantially all of thebusiness and assets of

toacquired by

and its affiliate

Aerospace InternationalMaterials-OEM, LLC acquired

a subsidiary of

Castle HarlanPartners IV L.P.

(CHPIV)

sold the assetsof its subsidiary

Rohrback Cosasco Systemto

acquired by

acquired by

The Power ToolBusiness Unit of

acquired by

Aeroquip - Vickers S.p.A.

acquired by

Intermet Corporation

Industrial PowderCoatings, Inc.

MG Capital, L.L.C.

divested

through a sale to

acquired by

acquired by

sold the assetsof its subsidiary

Bass-Trigon Softwareto

in support of a strategic alternatives analysis

A valuation analysishas been completed for

Global Industrials Practice

acquired by

acquired by

KILL OOL & IE

acquired by

acquired by


acquired by

UndisclosedFamily Office

acquired by

a division of

(TSE: 6201)

MATERIAL HANDLING U.S.A.

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