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Testing inspection and certification industry

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nice article where the author details on how the TIC industry is growing by the means of Mergers & Acquisitions

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Testing inspection and certification industry

  1. 1. Industrial Services INDUSTRIAL CAPITAL STRATEGIES Testing, Inspection and Certification Industry: Merger & Acquisition Activity Remains High Meet us at NDTMA Las Vegas or the 18”’ World Conference on NDT in Durban Chris Weyers President (949) 701-2426 chris. weersindustrialcaitalstrateies. com Industrial Capital Strategies LLC. Mergers & Acquisitions for Testing, Inspection & Certification Period Following a brief slowdown in transaction activity in 2009, M&A activity in the TIC industry has accelerated. Market sentiment and spending remained strong throughout the year, maintaining the momentum for growth in 2011 that started in 2010. This bodes well for the selling shareholders of privately owned companies participating in industry consolidation. As an example, five industry majors alone, Bureau Veritas, Dekra, Eurofins, lntertek and SGS spent a combined $3.6 billion completing more than 195 bolt-on acquisitions from 2006 through 2010.‘ In 2011 they closed an additional 33 add-on acquisitions. So important are these add-on acquisitions that they added over $2.2 billion in revenues, constituting between one-fifth and one-half of annual top line revenue growth for these companies.2 In its four-year strategic plan unveiled in September 2010, SGS calls for about $700 million in additional revenues as a result of acquisitions by 2014 and a capital expenditure program totaling over $500 million. In its strategic plan for 2015 Bureau Veritas plans to have global revenue of around €5 billion and 80,000 employees (from €3 billion and 50,000 today): this includes extending its services offering in attractive market segments such as food safety, upstream inspection for the oil industry (drilling, offshore, LNG) and in renewable energies. Bureau Veritas plans to remain a major consolidating player by pursuing a strategy of targeted acquisitions, with a third of its growth being non-organic, i. e. via acquisition. Testing, Inspection and Certification (“TIC”) companies provide services to a diverse range of end markets, including agriculture, automotive, commodities, consumer, environmental, food, life sciences, industrial, maritime, medical, oil & gas, petrochemical, systems compliance and trade assurance. Services include quality and safety services such as product performance evaluations, certification and valuation of shipments, ensuring imports comply with relevant standards, industrial inspections including maintenance turnarounds, systems certification, supplier evaluation and laboratory outsourcing. The recent oil pipeline leak in the Yellowstone River, the rupture of a gas pipeline in California, food safety scares, toy safety issues and international trade security concerns all underscore the importance of the TIC industry. The global TIC industry is estimated to be worth $200 billion annually; half in the global supply chain, and half of a regional statutory nature. Robust demand growth: Following the recent slowdown and dramatic recovery in international trade, several other factors support the continued growth of the TIC industry: - Continual introduction of new regulations, for example energy efficiency in construction Globalization of international standards Increased outsourcing of inspection and verification services Improved risk awareness and focus on risk prevention Manufacturing migration and shorter product life cycles End user demand seeking third-party assurance Improved safety legislation and standards Page | 1
  2. 2. industrial Services INDUSTRIAL CAPITAL STRATEGIES Testing, Inspection and Certification Industry: Merger & Acquisition Activity Accelerates (continued) What’s behind the M&A activity? Globalization continues to fuel the industry’s M&A activity. The global TIC industry is dominated by European- based multinational companies. The top 10 companies each have annual revenues in excess of $1 billion, and the next 10 biggest companies have annual revenues over $200 million? These companies operate globally; SGS has 67,000 employees in 140 countries (1,250 offices), Bureau Veritas has 50,000 employees in 140 countries (900 offices), lntertek has 30,000 employees in over 100 countries (1,000 offices), Dekra has 25,000 employees in 50 countries, and TUV SUD has 16,000 employees in 50 countries (600 offices)? Their global networks assist these operators in supporting global clients on a uniform basis and they continue to seek acquisitions that contribute to greater geographic coverage. In addition to the majors listed previously, most other large TIC companies are pursuing a greater degree of internationalization and operational diversification. These players include Applus+, Bodycote Testing (now Exova), DNV, Germanischer Lloyd, Lloyd's Register, Stork, TUV Nord and TUV Rheinland. Tuv Nord had plans to exceed €1 billion in revenues in 2011 and grow aggressively via acquisition in future. Like the majors, their expansion is often achieved through platform, and subsequent add-on acquisitions. Houston based marine classification society ABS is looking to expand its AIM unit, while offshore giant Oceaneering intends to further expand its inspection operations (onshore and offshore). The rise of private equity: Private equity firms are also claiming a stake in the industry. Almost half of the industry's top 25 companies are now majority or minority-owned by private equity. Several recent private equity led transactions have transformed ownership of the TIC industry: Industrial Capital Strategies LLC. Mergers & Acquisitions for Testing, Inspection & Certificationo Period Publicly owned UK private equity group 3i acquired Stork Materials Technology B. V. (now Element Materials Technology BV) in December 2010 for 10.2x EBITDA (£130 million). - LGC was acquired in February 2010 by Bridgepoint for 14x EBIT (£257 million). - The inspection division of Bodycote was acquired in October 2008 by Clayton, Dubilier & Rice for 25.4x fiscal 2007 EBIT (£417 million). - Socotec was acquired by CDC Capital lnvestissement in July 2008 for 10.8x fiscal 2007 Operating Income (€430 million). - lnspicio was acquired by 3i in December 2007 for 13.8x fiscal 2007 EBITDA (£288 million EV), and 3i subsequently sold the Inspectorate division to Bureau Veritas (£288 million) - Applus+ was acquired by Carlyle in July 2007 for 19.2x fiscal 2006 EBITDA (€1,480 million). A core part of the private equity investment thesis is to pursue smaller bolt-on acquisitions to increase the critical mass of their platform investments, funding acquisitions out of credit facilities or free cash flow. Middle-market companies provide bolt-on acquisitions: Growth through bolt-on acquisitions is a core strategy adopted by many sector peers. More recent industry transactions have occurred in the middle market, including the following: - Pine Tree Equity made a platform investment in Texas based Hi-Tech Testing Service, Inc. (February 2011). They subsequently announced the add-on acquisition of Corpus Christi-based Wilson Inspection X-Ray Services, Inc. (September 2011). Principals state they are seeking additional add-ons. - Platte River Ventures (“PRV”) made an entree into the sector with the acquisition of Global X-Ray & Testing Corporation, located in Morgan City, Louisiana (August 2010). PRV subsequently added Canada-based Car-Ber Testing Services, Inc. PRV is actively evaluating further add-on opportunities. Chicago-based Sterling Partners, renowned for service sector investments, is actively evaluating platform NDT investment opportunities. River Associates Investments is seeking to acquire a US based platform metals and related inorganic materials testing lab principally focused on mechanical, metallurgical and chemical analysis. The ideal acquisition should have $3-10 million in annualized EBITDA. Applus+ of Spain, which owns Netherlands-headquartered RTD, embarked on a string of international acquisitions before returning to North America with a vengeance in 2010 and 2011. In June 2011 Applus RTD acquired Qualitec Engenharia adding to its NDT offerings. In March 2011, Applus acquired Velosi, a provider of inspection, quality assurance, certification and testing services to the oil and gas industries for £93 million. After acquiring Staveley Services Canada and Quality Inspection Services (NY), Applus+ acquired Valley Industrial X-Ray & Inspection Services (CA) in May 2010. These deals follow the company’s $50 million acquisition of JanX in June 2008. Following Clearview Capital's acquisition of Al| Tech Inspection, an NDT company located in Corpus Christi, TX (October 2008), Clearview closed a transaction with IESCO of Los Angeles, CA, an NDT provider to the energy industry (October 2009). In April 2011 Clearview acquired California-based TC Inspection and Hawk Rope Access Services, offering NDT Page j 2
  3. 3. lndustrial Services INDUSTRIAL CAPITAL STRATEGIES inspection and consulting services. C| earview’s stated intent is to grow the platform via further acquisitions in 2012. - Acuren, a major US inspection company owned by Rockwood Services Corporation, in turn part owned by Boston based private equity group Weston Presidio, kicked off 2010 with two Canadian acquisitions: New Brunswick-based Bretech Inspection and Nova Scotia headquartered Remote Access Technology. These were followed in by the acquisition of Connecticut- based Extech (August 2010), a specialist tank inspector and another Canadian NDT acquisition, Sasktech Inspection (December 2011). - Following the acquisition of twenty NDT companies the last four fiscal years, Mistras estimates that average annual revenue growth as a result of acquisitions over a five- year period was approximately 11%, or one third of its total growth, Mistras is looking for more acquisitions in the $5 million to $10 million range. 5 - Moody International, since acquired itself by lntertek, acquired Houston- based Petrospect Inspection Services in October 2009, and Pro- lnspect Inspection in March 2010, supporting the dramatic growth of Moody's in-service Technical Inspection Services Business Unit. - Team Industrial Services, providing inspection and assessment for high pressure piping industries, acquired Quest Integrity Group in November 2010 for $45 million and is currently evaluating additional add-on opportunities. As a testament to the realization of synergies, on its recent earnings call TEAM management stated that Quest trailing twelve month revenues increased from $22 million pre- acquisition to $32 million at presents Private equity groups are interested in acquiring control from shareholders who are willing to receive a partial payout up- front, roll their retained equity into platform companies and remain involved for the medium term, assisting in Industrial Capital Strategies LLC. Mergers & Acquisitions for Testing, Inspection & Certificationo Period growing the enlarged business and delivering synergies. Other transactions supported by private equity groups could include full management buyouts or corporate divestitures. Private equity’s exit: The investment thesis in the TIC industry has rewarded several private equity groups handsomely. Close Brothers Private Equity LLP sold Stewart Group, a provider of inspection services to the mining and mineral exploration industry across the globe, to ALS Laboratories of Australia in July 2011 (£146 million). The industry deal of 2011 undoubtedly belongs to Bahrain based lnvestcorp, owners of Moody International (“M| "), along with Ml management. Continuing its strategy to grow its industrial division, lntertek acquired MI in March 2011 for £450 million cash. ’ For the year ended December 31, 2010, Ml reported revenues of $476 million and EBITA of $54 million. The consideration of approximately US$730 million represents a multiple of 13.4x 2010 EBITA. Following this acquisition, lntertek will employ 30,000 people in more than 100 countries, with annual revenues approaching £1.5 billion. The industry deal of 2010 belonged to 3i, the British private equity group [LSE: Ill]. Continuing its strategy to become the global leader in the inspection field, Bureau Veritas completed the acquisition of the Inspectorate division of lnspicio from 3i in September 2010. The purchase consideration of £450 million represents a 10.9 fonrvard EBITDA multiple based on lnspectorate‘s expected £41.2 million in 2010 EBITDA. Another private equity exit occurred in October 2009 when Mistras (part-owned by Altus Capital Partners and Thayer | Hidden Creek), went public in a $108.75 million offering [NYSE: MG] Mistras’ stated intention was to use the proceeds from the initial public offering for general corporate purposes, including working capital and possible additional acquisitions. In December 2011 Mistras entered a new credit agreement that provides the company with a $125million revolving line of credit which will help support future growth and acquisitions. Engineering or inspection? Or Both? Industry borders continue to blur as several companies reached up and down the value chain in order to expand engineering services, which in turn could support the growth of their inspection and certification business. Such examples include: - Applus+ RTD acquired Kiefner and Associates, a provider of engineering services to pipeline operators (November 2011). - Clearview Capital acquired EN Engineering, a provider of engineering and consulting services for natural gas transmission, distribution, and liquid pipeline companies around the globe (May 2011). - TUV SUD AG acquired Global Nuclear Engineering Co. , based in South Korea, a provider of specialized engineering services for planning, licensing, construction, and operation of nuclear power plants (November 2009) and continued this expansion with the acquisition of Wallace Whittle Holdings, a UK based engineering and sustainability consulting service company (July 2011). - Germanisher Lloyd added over 1,000 employees with the acquisitions of Noble Denton, a marine consultancy and provider of ocean engineering services (March 2009) and Garrad Hassan, a renewable energy consultancy (August 2009). - lntertek acquired APTECH Engineering Services, an engineering consulting company which provides services in the life management of infrastructure, facilities, and equipment, focusing on equipment failure analysis and prevention (February 2009). Certain sector attractions are also part of the rationale for these acquisitions. Continuing the theme of the power industry, France-based CTE Nordtest SA, a provider of NDE services in the Page | 3
  4. 4. Industrial Services nuclear and industrial environments was acquired by Socotec from Areva SA (July 2010). What are buyers looking for? One of the primary attractions of the TIC industry is the annuity-like nature of its revenue streams. This is especially beneficial in industries typified by long- term client relationships and where deep integration with the client business exists. Other important factors for buyers when they evaluate a specific acquisition target include: - the quality and economic resilience of the target's customer base - well diversified customer base - historical levels of repeat business - mix between in-service inspection work and turnaround work - mix between work of a capital expenditure nature, and maintenance expenditure nature - safety record - ability to maintain margins - ability to charge premium prices for value added services - ability to staff major projects with qualified personnel on short notice historical and future growth trends strength of management team cultural fit capital expenditures required to maintain equipment base - level of technology used ie. highly skilled visual inspectors (equipment light), older X-ray, or newer advanced NDE methodologies - global need for the service Size requirement: Given the robust growth characteristics of the industry and the increasing trend towards outsourcing of TIC activities, sector valuations have remained resilient. Most strategic buyers and private equity groups with existing industry platforms would look at smaller transactions, down to say $1 million Enterprise Value for add-on acquisitions. Meanwhile, companies with $5 million in earnings and higher, or a minimum of approximately $30 million Enterprise Value, can serve as platforms for investment by certain private equity groups. Industrial Capital Strategies LLC. Mergers & Acquisitions for Testing, Inspection & Certificationo Period INDUSTRIAL CAPITAL STRATEGIES Valuation in the mid-market: Small targets with Enterprise Values in the range between $3 million and $10 million are typically valued at between 3.5 and 5 times trailing EBITDA. Our current estimate is that companies with $2 million to $5 million in earnings can still expect to be valued in the 4.5x to 6.5x trailing EBITDA range. Companies with $5 million to $10 million in earnings can expect valuations between 5x and 7.5x trailing EBITDA. Larger companies with strong growth characteristics, or those serving attractive niches, may command a premium valuation. Transaction structure: Private company business owners always want to know two things. How much is their company worth? And how will they be paid? To answer the latter question, we studied 42 publicly announced transactions consummated by lntertek since 2005. 8 The majority of transactions in the sample were structured as all-cash deals. Fourteen of the acquisitions included performance- based earnouts. It is notable that the median cash payment for the earnout subset was still 75%, which is positive news for sellers concerned about the likelihood of receiving their earnout when they are no longer fully in control of operations. In our recent experience, most acquirers of mid-sized inspection companies indicate a preference for mostly (typically 65% - 80%) cash transactions, with a limited earn-out period of say one to two years or sometimes longer. Very small transactions are sometimes partly financed via seller retained notes. One strategic acquirer indicated that earnouts are hampering their ability to fully integrate targets immediately post acquisition, and they are instead now leaning towards all-cash transactions for future mid-sized buyouts. Our recent successes: The principals of Industrial Capital Strategies, focusing on transactions with Enterprise Values between $10 million and $100 million, have a track record of advising selling shareholders or managers in this sector. We advised the shareholders of PfiNDE, |nc. , a premier pipeline NDE company in the US, in its successful sale to SGS. PfiNDE has approximately 100 employees and $22 million in revenues.9 In 2011 Industrial Capital Strategies also advised on the sale of Pro-Tec (Pty) Ltd, the premier provider of NDT services to the power industry in South Africa, to Tuv Sud. Pro-Tec has 160 employees and revenues of €8 million. ‘° Prior to the formation of Industrial Capital Strategies, the principals advised the owners of Houston-based Pro-Inspect (2010) and Petrospect Inspection Services (2009) in their respective sales to Moody International. We also previously advised on the sale of Oilind Safety to Airgas (2008). In addition to these pipeline, power, petrochemical and HSE transactions, we advised ballistics lab H. P. White in its $43 million sale to lntertek in late 2008. In all of these transactions we were the M&A advisors to the owners of the companies sold. We are currently working on active sell- side and corporate divestiture engagements in North America, the Middle East and Africa. We are actively tracking M&A trends in the TIC space and we see continued interest from both strategic and private equity buyers in the lower middle market (companies with 20 to 500 employees). We assist business owners with strategic planning, and integrating our merger and acquisition knowledge and experience with your specific circumstances. We welcome your questions regarding business valuation, value creation strategies and current market conditions in the sector. Our expanding team: We are pleased to announce the addition of Mrs. Amy Skallerud to our team. She has over 11 years of investment banking experience, and also worked for the middle market investment banking platform of Citigroup until 2008. She provided marketing, research and valuation assistance for more than 100 successful sell-side transactions, including the recent sale of PfiNDE to SGS. Mrs. Skallerud holds a BA and an MA in Marketing Communications from San Diego State University. She is a Series 7, 63 and 79 Registered Securities Representative. Page j 4
  5. 5. Select Recent NDT & Inspection Transactions Transaction Value (million) Date Jan 2012 Dec 2012 Dec 2011 Dec 2011 Nov 2011 Nov 2011 Oct 2011 Oct 2011 Sept 201 1 Sept 2011 Aug 2011 Aug 2011 Aug 2011 Aug 2011 Jul 2011 Jun 2011 J-M 2011 Apr 2011 Mar 2011 Mar 2011 Feb 2011 Feb 2011 Feb 2011 Jan 2011 Dec 2010 Dec 2010 Nov 2010 Nov 2010 Nov 2010 Sep 2010 Sep 2010 Aug 2010 Aug 2010 July 2010 J-M 2010 Industrial Services INDUSTRIAL CAPITAL STRATEGIES Merger & Acquisition Activity Buyer Bureau Veritas Acuren X-Ray Industries Stork Materials Testing Mistras Applus RTD SGS Applus Pine Tree Equity TUV SUD Bureau Veritas TUV SUD Bureau Veritas SGS Mistras Applus Mistras Clearview Capital Applus RTD lntertek Spitzer Industries Pinetree Equity Bureau Veritas SGS Platte River Ventures SGS SGS Team, Inc. 3i Group SGS Bureau Veritas Platte River Ventures Acuren TUV Rheinland Mistras Seller Pockrandt GmbH Sasktech Inspection (Canada) Arcadia Aerospace Industries Detroit Testing Laboratory Engineering Test Services (U. K.) Kiefner and Associates PfiNDE BKW (Germany) Vlfllson Inspection X-Ray Services National Vtfind Assessments Civil-Aid Technoclinic (Pty) Ltd Pro-Tec Boiler Inspection Services Toplis Marine Inspection and Testing Acumax Q. Pro Technical Services Qualitec Engenharia Ambiental Controle Qualidade Ltda (Brazil) 5 NDT Businesses TC Inspection and Hawk Rope Access Services Velosi Moody International Advanced Inspection Technologies Hi-Tech Testing Service Atomic Technologies Tianjin Tianbao (China) Car-Ber Testing Services Inc. Atest S. A. M-Scan Ltd. Quest Integrity Group Stork Materials Technology BV Yan Tai HuaJian Inspection Engineering Co. , Ltd (China) 3i sold Inspectorate Global X-Ray & Testing Corporation Extech Rail Sciences 3 NDT Businesses Seller Line Of Business NDT services (power) NDT services E NDT & Inspection Automotive & Industrial testing NDT & inspection services Pipeline Integrity Management NDE services NDT (aeronautical) NDT services Inspection & analysis NDT services NDT services Inspection & testing services NDT Inspection NDT services NDT 8. inspection services NDT services NDT inspection & consulting NDT testing Inspection and testing NDT services NDT services NDT services Construction materials testing NDT services NDT services Materials testing Test & inspection services NDT & materials testing NDT & heat treatment Commodities testing & inspection NDT services Water tank & corrosion consulting Testing & consulting for railroads NDT services Industrial Capital Strategies LLC. Mergers & Acquisitions for Testing, Inspection & Certificationo Period ND ND ND ND ND ND ND ND ND ND ND ND ND ND ND ND $26 ND £93 £450 ND ND ND ND ND ND ND $45 ND ND £450 ND ND ND $15 Page | 5
  6. 6. Industrial Services INDUSTRIAL CAPITAL STRATEGIES May 2010 Apr 2010 Apr 2010 Mar 2010 Mar 2010 Mar 2010 Feb 2010 Oct 2009 Oct 2009 Oct 2009 Jul 2009 May 2009 J-M 2009 Feb 2009 Feb 2009 J-M 2008 Dec 2008 Oct 2008 Sep 2008 Sep 2008 Aug 2008 Jun 2008 Jun 2008 Jan 2008 Dec 2007 Dec 2007 Nov 2007 Jul 2007 Jan 2007 Jan 2007 Dec 2006 ND indicates transaction value not disclosed. Applus Acuren TUV SUD / PetroChem Acuren Applus Applus Moody ALS Clearview Capital Moody Applus SNC Lavalin Mistras lntertek lntertek Mistras TUV Rheinland Clearview Capital lntertek Germanischer Lloyd CD&R TUV Rheinland Applus RTD Team Inc SGS 3i Germanischer Lloyd Carlyle Team Inc lnvestcorp TUV SUD Valley Industrial X-Ray 8. Inspection Bretech Inspection Mechanical Integrity Remote Access Technologies Staveley Services Canada Quality Inspection Services Pro-Inspect Pearlstreet Limited IESCO PetroSpect Inspection Services Technicio Spectrol Energy Group 5 NDT Businesses WlSco Aptech Engineering Services 7 NDT Businesses NDT Group All Tech Inspection HP White Laboratories Material Consulting Services Bodycote Testing Unified Testing Services JanX Leak Repairs Specam FTS lnspicio I Inspectorate PV Inspection Applus Aitec Moody International PetroChem Inspection Services J-M: June through May; Mistras has a May Year-end. Source: CaplQ, Company Announcements and public filings Industrial Capital Strategies LLC. Mergers & Acquisitions for Testing, Inspection & Certificationo Period NDT services NDT, plant reliability engineering NDE & NDT services NDT for high access structures NDE services In-service NDT services In-service visual NDT services_ Inspection NDT services I NDT Inspection In-service visual NDT services NDT & heat treatment Inspection, AIM NDT services Inspection & project management Failure analysis consulting NDT services NDT NDT Ballistic resistance testing Quality control services Materials testing NDE & NDT services NDT Industrial fluid loss management Inspection services Testing 8. inspection Inspection Testing & inspection NDT Inspection, staffing, training NDT & NDE services ND ND ND ND ND ND ND AUD$102 ND ND ND ND $11 $26.5 $13 $15 ND ND $43 ND £417 ND $50 $18 $41 £288 ND €1,480 CAD37 $311 ND Page | 6
  7. 7. industrial Services INDUSTRIAL CAPITAL STRATEGIES Last Four -Years Acquisition History by Testing, Inspection & Certification Majors Source: Company Annual Reports, 2006-2010; Industrial Capital Strategies analysis 0 r <11)/5) nunsnu VERIIAS - Avg Transaction value exc| |Tv: - Avg Transaction Value excl Amdel, ECA $123 mmion & Inspectorate: $8 million - 41 acquisitions in last 5 years ' 45 3°‘i“'5'"°"5 "‘ '35‘ 5 Veals 800 755 18 350 —— 323 16 700 15 ‘E 300 4 14 3 g 60,, 14 g 13 12 '9 .2 12 .9 3: 250 — 5 500 456 , -5 e 200 + 1° 3 «E» 400 1° 5 . ,. 8 0 ‘,7 314 a 8 I: 150 — < : 300 < P 6 '5 s 5 *5 -'5 100 —— 70 4 5 -5 200 4 ,6 50 + N 2 _g §. 100 724‘ 2 ‘E 2 - l I I . 0 3 E ‘ ' ’ ° 2 "5 2006 2007 2003 2009 2010 3 2°°° 2°°7 2°°3 2°09 2°‘° 5’ 2 _ IU g I —- v-moi: -uausnurs —0—iiWi| uwilI-'-ns I > I 11-.1.. =A. ... m —o—»mu. ... .., . . . . I_ -Avg Transaction Value: $19.8 million —i -Avg Transaction Value: $10.7 million _23 acquisitions in last syears - 47 acquisitions in last 5 years 199 200 18 150 —~ 10 16 E‘ 3 E‘ 3 2 . _g 150 14 .2 .2 .9 E 12 § 100 —— 3 V’ 10 8- on 6 3 v .1 U , , 100 u 9 E 8 5 3 4 “ as 6 3 5% 50 - S % 5° 4 3 '3 2 3 3 2 5 8 E < g < : I "6 - 0 Q. - -r » 0 Z an 2006 2007 2003 2oo9 2010 3 2005 2007 2008 2009 2010 % [ I . -1 > ‘Vn|4eIiAI: :.liiIi: rI —. —rI= =IA: =.. I.zr: u L> ‘V| |4|dAa1ulIlnrI -o—ra= =IAuqu-um Industrial Capital Strategies LLC. Mergers & Acquisitions for Testing, Inspection & Certification Period Page I 7
  8. 8. Industrial Services INDUSTRIAL CAPITAL STRATEGIES Our Mission Industrial Capital Strategies For more information, please contact: specializes in mergers and Chris Weyers acquisitions in the Testing, P'°si°'°"* +1 (949)701-2426 chris. we ers industrialca italstrate ies. com Inspection and Certification industry. We assist private middle-market companies, multinational corporations, and private equity groups alike with their business sales or corporate growth initiatives in the industry. Industrial Capital Strategies 555 Anton Boulevard Suite 1000 Costa Mesa, CA 92626 www. industrialcapitalstrategies. com In order to provide securities-related services, the President of Industrial Capital Strategies is a licensed securities agent, registered with Burch & Company, |nc. , member FINRA/ SiPC Sources: 1 Company Annual Financial Reports, 2007, 2008, 2009, 2010 and 2011 Company Announcements 2 Industrial Capital Strategies analysis and company information 3 Company Websites, www. bureauveritas. com, wwwrdekracom, www. intertek. com, www. sgs. com www. tuev-sued. com 4 Company information and result of private equity portfolio information search 5 Mistras 2”“ Quarter 2012 earnings call, January 9", 2011 5 TEAM 2"“ Quarter 2012 earnings call, January 4”‘, 2011 7 lntertek press release, March 7, 2011 8 lntertek Stock Exchange Announcements, filter Acquisition/ Disposal/ Merger, August 2005 - June 2010; September 1, 2010, www. intertekrcom 9 SGS press release, November 22, 2011 1° Tuv Sud press release, 2011 SGS Investor Days, Rouen 23 — 24 September 2010 Bureau Veritas presents its strategic plan for 2015, Neui| |y—sur-Seine, France, September 20, 2011 ris information has been obtained from and is based upon sources Industrial Capital Strategies believes to be reliable. We do not guarantee its accuracy completeness. All opinions and estimates constitute Industrial Capital Strategies‘ judgment as of the date of the document and are subject to change thout notice. Past performance is not a guarantee of future results. This literature is for informational purposes only and is not intended as an offer or »licitation for the purchase or sale of a security. Neither Industrial Capital Strategies nor any other person accepts liability whatsoever for any loss owsoever arising and whether direct or consequential) from any use of the information contained herein or otherwise arising in connection herewith. I 8 2012 Industrial Capital Strategies, LLC. All rights reserved.

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