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M&A Capital Market Update Q1 2021

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Positive signs of a continued recovery were prevalent in Q1 2021, with vaccinations gaining critical mass, GDP showing growth, and the country opening back up for business. Additionally, M&A continues to be a tidal wave of activity, preparing to make landfall in Q4 2021.

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M&A Capital Market Update Q1 2021

  1. 1. M & A a n d C a p i t a l M a r k e t s U p d a t e – 1 Q 2 0 2 1 M & A a n d C a p i t a l M a r k e t s U p d a t e – 1 Q 2 0 2 1 1 M&A and Capital Markets Update 1 Q 2 0 2 1
  2. 2. M & A a n d C a p i t a l M a r k e t s U p d a t e – 1 Q 2 0 2 1 ClicktoeditMastertitlestyle M & A a n d C a p i t a l M a r k e t s U p d a t e – 1 Q 2 0 2 1 Agenda II Forbes M+A Overview 2 I Capital Markets Overview
  3. 3. M & A a n d C a p i t a l M a r k e t s U p d a t e – 1 Q 2 0 2 1 I. Capital Markets Overview 3
  4. 4. M & A a n d C a p i t a l M a r k e t s U p d a t e – 1 Q 2 0 2 1 Q1 MarketRecap “Heading into 2021, questions and uncertainty abounded regarding the new administration taking office, the vaccine rollout, and how the post-COVID recovery would continue. With a full quarter in the books, it appears that the U.S. economy is off to a great start with both the public markets and GDP showing positive growth, and we remain cautiously optimistic heading into Q2. For the first time in a year, the world began to open as the vaccine gained critical mass, with ~25% of Americans getting vaccinated through Q1. Additionally, the American Rescue Plan (ARP) was signed into law on March 12, providing for $503 billion of relief funding and helping to add 600,000 jobs. Unfortunately, it was not all positive news in Q1, with the labor market still being the largest strain on the economy. According to S&P, the labor market is 9.5 million jobs short of pre-COVID levels and nearly 10 million remain unemployed. The big economic challenge for Q2 will be to see a material improvement in the jobs reports and as more of the country opens, hopefully the demand for labor intensifies. M&A is a different animal, with tidal wave of record deal volume surging towards year end 2021. This is driven by several factors, including 2020 deals coming back to market, continued record levels of private equity dry powder, and impending capital gains tax hikes looming in 2022. As we march through 2021, we will be keeping a close eye on the deal volume, value, and multiples.” JJ Lane – Vice President CAPITAL MARKETS OVERVIEW 4 “Heading into 2021, questions and uncertainty abounded regarding the new administration taking office, the vaccine rollout, and how the post-COVID recovery would continue. With a full quarter in the books, it appears that the U.S. economy is off to a great start with both the public markets and GDP showing positive growth, and we remain cautiously optimistic heading into Q2. For the first time in a year, the world began to open as the vaccine gained critical mass, with ~25% of Americans getting vaccinated through Q1. Additionally, the American Rescue Plan (ARP) was signed into law on March 12, providing for $503 billion of relief funding and helping to add 600,000 jobs. Unfortunately, it was not all positive news in Q1, with the labor market still being the largest strain on the economy. According to S&P, the labor market is 9.5 million jobs short of pre-COVID levels and nearly 10 million remain unemployed. The big economic challenge for Q2 will be to see a material improvement in the jobs reports and as more of the country opens, hopefully the demand for labor intensifies. M&A is a different animal, with tidal wave of record deal volume surging towards year end 2021. This is driven by several factors, including 2020 deals coming back to market, continued record levels of private equity dry powder, and impending capital gains tax hikes looming in 2022. As we march through 2021, we will be keeping a close eye on the deal volume, value, and multiples.” JJ Lane – Vice President
  5. 5. M & A a n d C a p i t a l M a r k e t s U p d a t e – 1 Q 2 0 2 1 Jan-21 Feb-21 Mar-21 At Least One Dose Fully Vaccinated RecoveryDrivenbyVaccinationsbutLimitedbyWeak Unemployment Note: (1) Middle market defined as transactions with values at or below $250 million. Sources: GF Data, Capital IQ 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Unemployment Continued to Decline but is Still Above YoY Levels Due to COVID Mar 20: 4.4% Mar 21: 6.0% ↑36% Apr 20: 14.7% 6.8x Average Middle Market EV/EBITDA Multiple $3.8 T Current Cash Balance of S&P 500 Companies 84% Of Deals Closed Had an EV Below $250 Million CAPITAL MARKETS OVERVIEW 5 7.7% 1.7% First Quarter COVID-19 Vaccinations in the United States 15.2% 7.6% 29.8% 16.6% 6.0% U.S. Unemployment rate as of March 31, 2021
  6. 6. M & A a n d C a p i t a l M a r k e t s U p d a t e – 1 Q 2 0 2 1 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 0.0% 1.0% 2.0% 3.0% 4.0% 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 10 Year 20 Year 30 Year 1,000 1,500 2,000 2,500 3,000 3,500 4,000 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Sources: Capital IQ, St. Louis Fed, European Central Bank, U.S. Department of the Treasury as of 3/31/2021 0.07% 2.4% 2.3% 1.7% PublicMarketStrengthandGDPGrowthLeadingtheWay 3Q 2020: 3,363 4Q 2020: 3,756 ↑5.8% S&P 500 Maintained Steady Growth and Began the Year Strong… …While U.S. Real GDP Grew for First Time Since 1Q 2020 Fed Funds Rate Held Flat… …As Treasury Yields Began to Climb Q2: -9.5% Q3: -2.9% 1Q 2021: 3,973 Q4: -2.9% CAPITAL MARKETS OVERVIEW 6 Q1: 0.4%
  7. 7. M & A a n d C a p i t a l M a r k e t s U p d a t e – 1 Q 2 0 2 1 Note: (1) Middle market defined as transactions with values at or below $250 million. Sources: GF Data, Capital IQ CAPITAL MARKETS OVERVIEW 7 ($ in billions) $717 $908 $1,081 $667 $877 $548 $257 $747 $1,035 $989 11,802 11,093 10,611 10,682 11,243 10,209 6,913 9,276 11,902 11,394 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2018 2019 2020 2021 Deal Value Deal Count $322 $413 $501 $288 $306 $159 $60 $316 $452 $308 1,464 1,348 1,318 1,430 1,489 1,297 664 1,022 1,328 1,128 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2018 2019 2020 2021 Deal Value Deal Count …With the U.S. M&A Market Following the Global Trend Global M&A Activity Off Dipped Slightly… U.S. Middle Market Deal Volume Started Strong in 1Q(1) Cash Reserves Rose as Corporates Slowed Spending ($ in billions) ($ in billions) 1,098 1,050 997 1,109 1,109 1,019 559 781 940 802 263 221 221 229 252 221 78 154 263 213 103 77 100 92 128 57 27 87 125 113 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2018 2019 2020 2021 Under $100M $100M-$500M +$500M $2,121 $2,093 $2,155 $2,176 $2,287 $2,958 $3,353 $3,330 $3,538 $3,811 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2018 2019 2020 2021 S&P 500 Cash Balance M&AActivitySaw SlightDeclinein Q1…
  8. 8. M & A a n d C a p i t a l M a r k e t s U p d a t e – 1 Q 2 0 2 1 Note(s): YTD 2021 as of 3/31/2021; (1) Middle market defined as transactions with values at or below $250 million. Sources: Pitchbook, GF Data, Capital IQ …WhileM&AValuationsFollowedSuit CAPITAL MARKETS OVERVIEW 8 $30.9 $30.1 $31.0 $32.2 $35.0 $37.5 $40.0 $37.0 $38.0 $30.0 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021* Median Deal Value Average 6.7x 7.1x 7.9x 6.9x 7.7x 8.3x 7.6x 6.9x 6.8x 6.4x 7.0x 6.3x 8.9x Manufacturing Business Services Health Care Consumer Distribution Media & Telecom Technology 2020 2021 7.2x 7.2x 7.1x 7.1x 6.8x 2017 2018 2019 2020 2021* EV/EBITDA Multiples $34.2M Historical Average Median Middle Market M&A Deal Values Decreased Slightly(1)… ($ in millions) …As Well As U.S. Middle Market EV / EBITDA Multiples Middle Market EV / EBITDA Multiples Stayed Strong with Technology Deals Experiencing the Largest Increase No Publicly Available Transaction Details
  9. 9. M & A a n d C a p i t a l M a r k e t s U p d a t e – 1 Q 2 0 2 1 Note: YTD 2021 data as of 3/31/2021. Sources: Pitchbook, GF Data, Capital IQ CAPITAL MARKETS OVERVIEW U.SPrivateEquityM&AEnvironment 9 1,614 1,543 2,027 2,120 2,238 2,465 3,023 3,128 3,050 710 1,289 1,082 1,332 1,447 1,368 1,500 1,611 1,488 1,245 242 56% 59% 60% 59% 62% 62% 65% 68% 71% 75% 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021* Add-On Non Add-On Add-On % $106 $160 $178 $159 $224 $272 $206 $322 $213 $88 218 304 399 394 420 482 413 448 289 97 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021* Capital Raised Number of Funds 4.7x 6.0x 6.7x 5.6x 6.6x 6.1x 6.3x 6.9x 5.9x 7.5x 4.1x 4.3x 5.9x 4.9x 6.7x 5.9x 5.9x 8.0x 7.3x 3.6x 8.7x 10.2x 12.6x 10.5x 13.3x 11.9x 12.3x 14.9x 13.2x 11.1x 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021* Debt/EBITDA Equity/EBITDA PE Buyout Multiples Start Out Below 4Q 2020 PE Fundraising Began Year on a Strong Note PE Add-On Deals Continued to Increase as a % of Total Deals  PE buyout multiples remained at high levels as IT deals are on pace to surpass 2020 levels, keeping overall multiples at a high level  Fundraising saw 2021 begin on a promising note, raising just under $90 billion across 97 new funds, signaling a rebound from a low 2020  Add-on deals remained strong in 1Q 2021 at 75%, continuing the trend seen in 4Q 2020 $106 $160 $178 $159 $224 $272 $206 $322 $213 $88 218 304 399 394 420 482 413 448 289 97 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021* Capital Raised Number of Funds
  10. 10. M & A a n d C a p i t a l M a r k e t s U p d a t e – 1 Q 2 0 2 1 Sources: GF Data, Capital IQ LCD, SPP Capital CAPITAL MARKETS OVERVIEW LeverageMultiples& Pricing 10 45.9% 33.9% 39.7% 35.7% 9.7% 7.7% 8.6% 32.2% 42.8% 39.6% 40.6% 21.9% 13.5% 13.1% 15.1% $10-$25mm $25-$50mm $50-$100mm $100-$250mm Senior Debt Sub Debt Equity Rollover Equity 3.3x 3.0x 3.2x 3.1x 3.7x 0.8x 0.8x 0.7x 0.6x 0.3x 4.1x 3.8x 3.9x 3.7x 4.0x 2017 2018 2019 2020 2021 Senior Debt / EBITDA Sub Debt / EBITDA Debt Multiples Debt Pricing(1) Debt & Equity Contribution
  11. 11. M & A a n d C a p i t a l M a r k e t s U p d a t e – 1 Q 2 0 2 1 II. The Forbes M+A Overview 11
  12. 12. M & A a n d C a p i t a l M a r k e t s U p d a t e – 1 Q 2 0 2 1 M & A a n d C a p i t a l M a r k e t s U p d a t e – 1 Q 2 0 2 1 12 The Forbes M+A Group is a market-leading boutique investment bank. We are hyper-focused on businesses that have strong growth outlooks and solid foundations of market leadership, compelling and enduring business models, and attractive sectors. We’ve built a different model to create extraordinary results for these elite companies. We work with a select few clients each year, swarm them with deep senior experience and expertise, and engineer customized processes using unconventional techniques to move quickly and deliver maximum value. Our typical clients range in size from $20-500 million in enterprise value. ADVISORY SERVICES EXPERIENCE + RESULTS LOCAL + GLOBAL REACH  Business sales  Business acquisitions  Senior debt raises  Mezzanine debt raises  Private equity raises  ESOP corporate finance  Exit Optimization™  Founded in 2004  $85 billion and 285 years of combined deal experience  100+ years of industry and entrepreneurial experience  Fierce client advocate that consistently achieves outlier results and raving fans  20+ industry awards over past 5 years  Offices in Denver, Salt Lake and Nashville provide local access and accountability  AM&AA affiliation leverages over 600 transaction advisors worldwide  Deep connectivity with 1000’s of strategic acquirers, private equity groups, and non-traditional lenders across the globe TheForbesM+AOverview
  13. 13. M & A a n d C a p i t a l M a r k e t s U p d a t e – 1 Q 2 0 2 1 Our sector specialists have extensive relationships and knowledge of trends across the following subsectors Industryand Sector Experience BUSINESS SERVICES  Advertising  Commercial Services & Supplies  Construction  Consulting Services  Education  Facilities Services  Financial Services  Government Contractors  Green Industries  IT Services  Janitorial & Sanitation  Lawn Care, Pest Control, Grounds Maintenance, Irrigation & Landscaping  Professional & Technical Services  Real Estate  Security HEALTHCARE  Facilities & Alternate Sites  Healthcare IT  Home Health Care  Life Science Tools & Services  Medical Devices  Providers & Services  Telemedicine CONSUMER  Consumer Products  Consumer Services  Death Care  eCommerce  Family Entertainment Centers (FECs)  Fitness & Wellness  Food & Beverage  Franchise  Hotels, Restaurants, & Entertainment  Outdoor & Leisure  Pet Care & Products INDUSTRIALS  Aerospace & Defense  Agriculture  Automotive  Building Products  Cannabis  Construction & Specialty Trades  Distribution  Energy Equipment & Services  Environmental  Manufacturing  Transportation & Logistics TECHNOLOGY  AdTech / Digital Marketing  Data & Analytics  Digital Gaming  Hardware, Components & Storage  Media  Software & SaaS  UAV’s 13 THE FORBES M+A OVERVIEW
  14. 14. M & A a n d C a p i t a l M a r k e t s U p d a t e – 1 Q 2 0 2 1 ~ Tres Coors, CEO of Novelty Lights ~ Christine Crane, CEO of BoldLeads ~ Bob Roth, Partner at Kutak Rock “Their industry knowledge, relationships with buyers, extensive transaction experience, and adaptive and creative deal making were essential in achieving an outcome that met our goals.” “Forbes is like a bulldog with a rag in its mouth. If there is a deal that serves the interests of their client, those guys don’t let go until it crosses the finish line.” “They exceeded every expectation by taking the time to understand our objectives, delivering the best possible partner and terms.” “Their guidance was invaluable as we reviewed offers and negotiated a deal structure that was exactly what we needed.” ~ Doug Larson, President at Eldorado Artesian Springs “We wanted to entrust the business to an advisor with similar core values and high- quality standards.” ~ Tom Tolkacz, CEO of Swingle “PASCO selected The Forbes M+A Group amongst competing advisory firms because of their reputation for identifying excellent strategic partners.” ~ Ryan Zeiger, CEO of PASCO “From identifying the perfect buyer, to maximizing our value, and ultimately continuing our legacy, the Forbes M+A team was there from start to finish.” ~ Stephanie White, CEO of Top Gun “The Forbes M+A Group was recommended to us as a company that would truly partner with us to achieve our goals.” ~ Mike Franklin, President of TouchSource THE FORBES M+A OVERVIEW WhatClientsandAdvisorsSay 14
  15. 15. M & A a n d C a p i t a l M a r k e t s U p d a t e – 1 Q 2 0 2 1 15 THE FORBES M+A OVERVIEW 2020

Positive signs of a continued recovery were prevalent in Q1 2021, with vaccinations gaining critical mass, GDP showing growth, and the country opening back up for business. Additionally, M&A continues to be a tidal wave of activity, preparing to make landfall in Q4 2021.

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