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US Europe Asia-Pacific
S&P 500
mPME
US buyout funds MSCI Europe
mPME
Developed Europe
buyout funds
MSCI AC Asia-
Pacific mPME
Asia-Pacific buyout
and growth funds
End-to-end pooled net IRR(as of June 2017)
Investment horizon (in years)
End-to-end pooled net IRR(as of June 2017)
Investment horizon (in years) Investment horizon (in years)
End-to-end pooled net IRR(as of June 2017)
0
5
10
15
20
25%
1
17 18
5
16 15
10
10
8
20
12
7
0
5
10
15
20
25%
1
22
18
5
16
13
10
9
4
20
15
5
0
5
10
15
20
25%
1
13
23
5
12
9
10
10
5
20
11
5
Notes: Data for US and Asia-Pacific calculated in US dollars; data for Europe calculated in euros; Europe includes developed economies only; Cambridge Associates’ mPME is a
proprietary private-to-public comparison methodology that evaluates what performance would have been had the dollars invested in private equity been invested in public markets
instead; the public index’s shares are purchased and sold according to the PE fund cash flow schedule; discrepancies in bar heights displaying the same value are due to rounding
Source: Cambridge Associates Private Investments Database
Buyout funds have outperformed public markets in all major regions over
the long term
Figure 1.20
US Developed Europe
10-year horizon pooled net IRR, US buyout funds 10-year horizon pooled net IRR, developed Europe buyout funds
S&P500 mPME All Top quartile MSCI Europe mPME All Top quartile
0
–10
10
20
30
40
50%
2006 07 08 09 10 11 12 13 14 15 16 17
As of June of year
–10
0
10
20
30
40
50%
2006 07 08 09 10 11 12 13 14 15 16 17
As of June of year
Note: Data in dollars for US funds and in euros for European funds
Source: Cambridge Associates Private Investments Database
The case for investing in private equity rides on the superior returns
of top-performing funds
Figure 1.21
Percentage of wholly
unrealized deals
Write-off Less than 1X 1–2X 2–3X 3–5X Greater than 5X
Distribution of deal MOIC for US and developed Europe buyouts (by deal count)
0
20
40
60
80
100%
97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 151996
11 20 24 33 47 63
Notes: Based on a sample of more than 12,000 buyout fund deals; includes fully realized, partially realized and unrealized deals; data as of June 30, 2017; MOIC–multiple
of invested capital
Source: Cambridge Associates Private Investments Database
While capital impairment and write-offs are at an all-time low,
the challenge is to create more winning deals
Figure 1.22
Dermatology Dental Vision Physical therapy Veterinary Urgent care Fertility
North American retail health buyout deal count
0
50
100
150
200
2012 13 14 15 16 17
Source: Bain retail health deal database
The number of North American retail health buyout deals has been
growing rapidly
Figure 1.23
US retail health market Total=$268B
0
20
40
60
80
100%
Dental
Top 10
Other chains
Individual facilities
$129B
Vision
$40B
Veterinary
$38B
Physical
therapy
$30B
Urgent
care
$15B $14B
Dermatology
Fertility
$2B
Notes: Market sizes based primarily on 2017 revenues; 2016 revenues used when 2017 data was unavailable
Sources: Bain retail health deal database; S&P Capital IQ; Vision Monday; Dun & Bradstreet; Orb Intelligence; IBISWorld; Harris Williams & Co.; Bain analysis of company
financial statements
Retail health companies are consolidating steadily, but subsectors
remain highly fragmented
Figure 1.24
0
20
40
60
80
100%
Strong
Medium
Weak
Ratings of management teams prior to closing, for deals that ultimately had capital impairment
Source: Bain & Company analysis
Pre-close management assessments are frequently too positive
Figure 2.1
50
100
150
Salesforce headcount (indexed)
2013 14 15 16 Target Competitor
Target’s
subsector
Other industrial goods
and services subsector
Other industry
Background of 10 most recent salespeople hired
Growth of competitor’s salesforce significantly outpaced target
Target prioritized industry expertise while competitor
hired individuals with sales aptitude
Target Competitor
Source: Bain & Company analysis of select websites
A comparative salesforce analysis helped explain why a target company
was lagging its competitor
Figure 2.2
HigherLower
Higher
Lower
Importance to overall business value
Mission-critical roles
Repeatable roles
Training-ground roles
Execution roles
Importance
of superior
individual
performance
Roles in which superior performance can
generate significant value for the business
Mission-
critical
roles
Roles in which superior performance
determines job success but impact on
business is limited; proving ground for
talent prior to mission-critical roles
Training-
ground
roles
Roles that generate significant value
but can be supported by technology,
processes or repeatable playbooks
Execution
roles
Lower-impact roles that can be sustained
primarily by technology, processes or
repeatable playbooks
Repeatable
roles
Source: Bain & Company
Mission-critical roles are highly valuable to the business and require
superior performance
Figure 2.3
0
25
50
75
100%
Percentage of A-level talent across roles
Non-mission-critical roles
A-level talent
Mission-
critical roles
Mission-
critical roles
The best
95% of mission-critical roles
filled by A-level talent
0
25
50
75
100%
Percentage of A-level talent across roles
Non-mission-critical roles
A-level talent
The rest
A-level talent spread
evenly across all roles
Source: Bain & Company/ Economist Intelligence Unit survey, 2015 (n=310)
The best companies put their top talent in mission-critical roles
Figure 2.4
Discrete and focused initiatives Benefits
Refocus channel programs and incentives
Identify the most profitable segments and stop overserving laggards
Exploit attractive adjacency markets
Increase share of wallet with priority clients to reach full potential
Adjust pricing relative to perceived value and “true” profitability
Analytically derive and reinforce winning sales rep behaviors
Implement controls to limit price leakage
Top-line
acceleration
Margin
expansion
Exit multiple
growth
10%–20%
top-line improvement
10%–15%
EBITDA uptick
20%–30%
deal ROI improvement
Source: Bain & Company
A combination of commercial acceleration initiatives can produce
significant value
Figure 2.5
Sales
model
Sales complexity
Transactional sales Handshake sales
Technical
solutions sales
Indirect
Direct
Simple Complex
Typical sales archetypes
Sales-driven indirect trading
Marketing-driven
indirect trading
Complex sales partnerships
Multichannel sales of simple product/ portfolio Multichannel sales of complex product/ portfolio
Source: Bain & Company
The right commercial acceleration approach depends on sales process
complexity and the degree of indirect selling
Figure 2.6
Best in class:
Analytics used
to define segments
and keep them current
Customer
segmentation
and value
proposition
Sales
coverage
Sales
behaviors
Category
management and
adjacencies
Pricing
Best in class:
Coverage model tied
to customer requirements;
right talent in place
Best in class:
Analytics used
to pinpoint winning
sales behaviors
Best in class:
Assortment tailored
to maximize profitability
Best in class:
Prices set to capture
value delivered;
pricing discipline
maximizes margin
potential
Source: Bain & Company
Commercial excellence programs usually focus on a few initiatives within
five key themes
Figure 2.7
–4
–2
0
$2B
–80
–60
–40
–20
0
20
40%
Net income
2004 05 06 07 08 09 10 11 12 13 14 15
Net margin
PE-led transformation
Consortium of PE firms
buys semiconductor
unit from Philips
NXPreturns to public
ownership through IPO
PE investors sell their
remaining stake
8X
increase
in stock price
from IPO
to 2015
Source: Bain & Company analysis of company reports
A PE-led transformation changed the trajectory of NXPSemiconductors
Figure 2.8
Speed
to value
Effort/ difficulty
HighLow
Make concerted
efforts
Assess based
on value
Deprioritize
Fast
Slow
Score
quick wins
Repeatability
Strategic positioning
Game
changers
Defense Short-term offense
Build a
killer capability
Evaluate
further
Dominate
a sector
Catch up
where critical
High
Low
Today forward: Short-term wins Future back: Strategic moves
Opportunity size ($M)
Source: Bain & Company
The most effective value-creation plans work from both a today-forward
and future-back perspective
Figure 2.9
Static, untargeted marketing presented an opportunity to improve trial conversion rate
Test-and-learn approach Results
Identify why customers don’t convert during trial and isolate
major pain points
Generate and test new ideas through an iterative, collaborative,
immersive approach
Scale successful tests across business
Point of departure After test-and-learn approach
+70%
Full impact: 3%–7% annual EBITDA uptick
Trial conversion
rate (indexed)
Source: Bain & Company
A test-and-learn approach to marketing led to dramatic results for one
software company
Figure 2.10
Customer
segment 1
Customer
segment 2
Customer
segment n
Product
1
Occasion 1
Occasion 1
Occasion 1
Occasion 2
Product
2 Occasion 2
Product
3 Occasion 2
Appetite for online offerings:
Lower Higher
B2B retail business faced threats from online platforms and specialists
Step 1: Find out which segment is most at risk Step 2: Link findings to target company’s profit
Step 3: Run scenario analysis; estimated potential exposure of 5%–15% EBITDA
0
20
40
60
80
100%
Customer
segment 1
Customer
segment 2
Customer
segment n
Target gross profit by customer segment
(for each product and occasion)
Risk: Lower Higher
Source: Bain & Company
A fact-based analysis allowed a PE fund to evaluate the risk from
digital disruption
Figure 2.11
Digital
destination
The “ what”
Operations
New products
and services
New business
models
Platforms
and partners
Data and
analytics
IT
Operating
model and
people
The “ who” and the “ how”
Digital
departure
Customer
and channel
engagement
Source: Bain & Company
During ownership, stepping-stone initiatives should lead incrementally
toward a digital destination
Figure 2.12
Industry: Five degrees of digital disruption Company: Five degrees of digital readiness
DRS
1
DRS
2
DRS
3
DRS
4
DRS
5
Isolated Clustered Connected Inter-
connected
No digital
activity
Digital is
100%
embedded
in everything
the company
does
Digital is
50%
embedded
in everything
the company
does
Developing
digital
strategy and
prioritization
of activities;
central/
cross-unit
coordination
Digital exists
in areasof
the company,
with limited
visibility,
oversight or
strategy
DDI
1
DDI
2
DDI
3
DDI
4
DDI
5
Digital
disruptions
have
virtually
no impact
Value chain
revolution;
incumbent
players
replaced or
required to
adapt
business
model
Transformation
becomes
inevitable;
new
competitors
enter the
market
Change
takes hold;
new channels
and customer
experience,
new products
and services
Digital drives
modifications/
optimization
of existing
processes
Notes: DDI–Digital Disruption Index; DRS–Digital Readiness Score
Source: Bain & Company
A digital portfolio scan assesses each industry’s level of disruption and
each company’s level of readiness
Figure 2.13
Notes: Estimates based on purchases paid for online, regardless of whether delivered or picked up in store; select categories shown
Sources: Forrester; Bain & Company analysis
E-commerce penetration varies widely by category and time frame
Figure 2.14
0
20
40
60
80
100%
E-commerce penetration
2000 2005 2010 2015 2020 2025
Office products
Sports equipment
Toys
Food and drinkClothing
Videos and DVDs Consumer electronics
Note: Includes top retailers in each category
Source: Bain’s 2017 Advocacy in US Retail study (n=25,927), in collaboration with ROI Consultancy Services
Among top retailers, Amazon has successfully differentiated its customer
experience in many categories
Figure 2.15
–40
–20
0
20
40
60%
Overall NPS ranges for retail categories, 2017
Home
products
Groceries Consumer
electronics
Beauty
products
Sports
equipment
and athletic
wear
Women’s
clothing
Home
furniture
Pet food
and supplies
7%
–15%
4%
–15%
–26%
–14%
–2%
–7%
57%
56% 55%
55%
51% 45%
41%
38%
Amazon
Amazon
Amazon
Amazon
Amazon
Amazon
Amazon
Amazon
Top NPS in retail category Average NPS in retail category Lowest NPS in retail category
Global buyout dry powder (by fund size)
(12–17)
CAGR
0
200
400
600
$800B
2005 06 07 08 09 10 11 12 13 14 15 16 17
19%
10%
5%
7%
12%
Mega
(greater
than $5B)
Large
($1.5B–$5B)
Mid
($0.5B–$1.5B)
Small
($0–$0.5B)
Source: Preqin
Dry powder held by buyout funds has been growing steadily for the last
five years, hitting an all-time high in 2017
Figure 3.1
Less than 7X 7–9X 9–11X Greater than 11X
Number of
companies
Distribution of companies (by EBITDA purchase price multiple)
480 213311 161 372 379 358 261 315 251
0
20
40
60
80
100%
2007 08 09 10 11 12 13 14 15 16
Acquisition year
Note: Data as reported by investment managers for more than 3,000 US, European and Asian buyout deals
Source: Cambridge Associates Private Investments Database
High-priced dealshave risen asa percentage of the total for the last four years
Figure 3.2
Deal value Deal count
Buyout (including add-ons) Corporate Buyout (including add-ons) Corporate
Global M&A deal value
Buyout
percentage
Global M&A deal count
0
1
2
3
4
$5T
2005
2.7
13
14
3.1
13
15
4.1
14
16
3.4
11
17
3.3
13
06
3.7
20
07
4.3
18
08
2.8
8
09
1.9
5
10
2.4
10
11
2.5
12
12
2.4
11
13
2.5
12
Buyout
percentage
0
10
20
30
40
50K
2005
30
10
14
40
10
15
39
9
16
37
8
17
38
8
06
36
11
07
42
10
08
41
9
09
36
6
10
40
7
11
43
8
12
42
9
13
36
9
Notes: Corporate M&A excludes transactions for which the acquirer is a government entity; based on announcement date; includes announced deals that are completed or
pending, with data subject to change; discrepancies in bar heights displaying the same value are due to rounding
Source: Dealogic
Private equity’s share of the global M&A market is tiny in terms of both
deal value and count
Figure 3.3
www.bain.com
Shared Amb ion, Tr sults

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Buyout funds have outperformed public markets in all major regions over the long term

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  • 31. US Europe Asia-Pacific S&P 500 mPME US buyout funds MSCI Europe mPME Developed Europe buyout funds MSCI AC Asia- Pacific mPME Asia-Pacific buyout and growth funds End-to-end pooled net IRR(as of June 2017) Investment horizon (in years) End-to-end pooled net IRR(as of June 2017) Investment horizon (in years) Investment horizon (in years) End-to-end pooled net IRR(as of June 2017) 0 5 10 15 20 25% 1 17 18 5 16 15 10 10 8 20 12 7 0 5 10 15 20 25% 1 22 18 5 16 13 10 9 4 20 15 5 0 5 10 15 20 25% 1 13 23 5 12 9 10 10 5 20 11 5 Notes: Data for US and Asia-Pacific calculated in US dollars; data for Europe calculated in euros; Europe includes developed economies only; Cambridge Associates’ mPME is a proprietary private-to-public comparison methodology that evaluates what performance would have been had the dollars invested in private equity been invested in public markets instead; the public index’s shares are purchased and sold according to the PE fund cash flow schedule; discrepancies in bar heights displaying the same value are due to rounding Source: Cambridge Associates Private Investments Database Buyout funds have outperformed public markets in all major regions over the long term Figure 1.20 US Developed Europe 10-year horizon pooled net IRR, US buyout funds 10-year horizon pooled net IRR, developed Europe buyout funds S&P500 mPME All Top quartile MSCI Europe mPME All Top quartile 0 –10 10 20 30 40 50% 2006 07 08 09 10 11 12 13 14 15 16 17 As of June of year –10 0 10 20 30 40 50% 2006 07 08 09 10 11 12 13 14 15 16 17 As of June of year Note: Data in dollars for US funds and in euros for European funds Source: Cambridge Associates Private Investments Database The case for investing in private equity rides on the superior returns of top-performing funds Figure 1.21
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  • 34. Percentage of wholly unrealized deals Write-off Less than 1X 1–2X 2–3X 3–5X Greater than 5X Distribution of deal MOIC for US and developed Europe buyouts (by deal count) 0 20 40 60 80 100% 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 151996 11 20 24 33 47 63 Notes: Based on a sample of more than 12,000 buyout fund deals; includes fully realized, partially realized and unrealized deals; data as of June 30, 2017; MOIC–multiple of invested capital Source: Cambridge Associates Private Investments Database While capital impairment and write-offs are at an all-time low, the challenge is to create more winning deals Figure 1.22
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  • 37. Dermatology Dental Vision Physical therapy Veterinary Urgent care Fertility North American retail health buyout deal count 0 50 100 150 200 2012 13 14 15 16 17 Source: Bain retail health deal database The number of North American retail health buyout deals has been growing rapidly Figure 1.23
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  • 39. US retail health market Total=$268B 0 20 40 60 80 100% Dental Top 10 Other chains Individual facilities $129B Vision $40B Veterinary $38B Physical therapy $30B Urgent care $15B $14B Dermatology Fertility $2B Notes: Market sizes based primarily on 2017 revenues; 2016 revenues used when 2017 data was unavailable Sources: Bain retail health deal database; S&P Capital IQ; Vision Monday; Dun & Bradstreet; Orb Intelligence; IBISWorld; Harris Williams & Co.; Bain analysis of company financial statements Retail health companies are consolidating steadily, but subsectors remain highly fragmented Figure 1.24
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  • 44. 0 20 40 60 80 100% Strong Medium Weak Ratings of management teams prior to closing, for deals that ultimately had capital impairment Source: Bain & Company analysis Pre-close management assessments are frequently too positive Figure 2.1
  • 45. 50 100 150 Salesforce headcount (indexed) 2013 14 15 16 Target Competitor Target’s subsector Other industrial goods and services subsector Other industry Background of 10 most recent salespeople hired Growth of competitor’s salesforce significantly outpaced target Target prioritized industry expertise while competitor hired individuals with sales aptitude Target Competitor Source: Bain & Company analysis of select websites A comparative salesforce analysis helped explain why a target company was lagging its competitor Figure 2.2
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  • 48. HigherLower Higher Lower Importance to overall business value Mission-critical roles Repeatable roles Training-ground roles Execution roles Importance of superior individual performance Roles in which superior performance can generate significant value for the business Mission- critical roles Roles in which superior performance determines job success but impact on business is limited; proving ground for talent prior to mission-critical roles Training- ground roles Roles that generate significant value but can be supported by technology, processes or repeatable playbooks Execution roles Lower-impact roles that can be sustained primarily by technology, processes or repeatable playbooks Repeatable roles Source: Bain & Company Mission-critical roles are highly valuable to the business and require superior performance Figure 2.3
  • 49. 0 25 50 75 100% Percentage of A-level talent across roles Non-mission-critical roles A-level talent Mission- critical roles Mission- critical roles The best 95% of mission-critical roles filled by A-level talent 0 25 50 75 100% Percentage of A-level talent across roles Non-mission-critical roles A-level talent The rest A-level talent spread evenly across all roles Source: Bain & Company/ Economist Intelligence Unit survey, 2015 (n=310) The best companies put their top talent in mission-critical roles Figure 2.4
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  • 53. Discrete and focused initiatives Benefits Refocus channel programs and incentives Identify the most profitable segments and stop overserving laggards Exploit attractive adjacency markets Increase share of wallet with priority clients to reach full potential Adjust pricing relative to perceived value and “true” profitability Analytically derive and reinforce winning sales rep behaviors Implement controls to limit price leakage Top-line acceleration Margin expansion Exit multiple growth 10%–20% top-line improvement 10%–15% EBITDA uptick 20%–30% deal ROI improvement Source: Bain & Company A combination of commercial acceleration initiatives can produce significant value Figure 2.5
  • 54. Sales model Sales complexity Transactional sales Handshake sales Technical solutions sales Indirect Direct Simple Complex Typical sales archetypes Sales-driven indirect trading Marketing-driven indirect trading Complex sales partnerships Multichannel sales of simple product/ portfolio Multichannel sales of complex product/ portfolio Source: Bain & Company The right commercial acceleration approach depends on sales process complexity and the degree of indirect selling Figure 2.6
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  • 56. Best in class: Analytics used to define segments and keep them current Customer segmentation and value proposition Sales coverage Sales behaviors Category management and adjacencies Pricing Best in class: Coverage model tied to customer requirements; right talent in place Best in class: Analytics used to pinpoint winning sales behaviors Best in class: Assortment tailored to maximize profitability Best in class: Prices set to capture value delivered; pricing discipline maximizes margin potential Source: Bain & Company Commercial excellence programs usually focus on a few initiatives within five key themes Figure 2.7
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  • 58. –4 –2 0 $2B –80 –60 –40 –20 0 20 40% Net income 2004 05 06 07 08 09 10 11 12 13 14 15 Net margin PE-led transformation Consortium of PE firms buys semiconductor unit from Philips NXPreturns to public ownership through IPO PE investors sell their remaining stake 8X increase in stock price from IPO to 2015 Source: Bain & Company analysis of company reports A PE-led transformation changed the trajectory of NXPSemiconductors Figure 2.8
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  • 60. Speed to value Effort/ difficulty HighLow Make concerted efforts Assess based on value Deprioritize Fast Slow Score quick wins Repeatability Strategic positioning Game changers Defense Short-term offense Build a killer capability Evaluate further Dominate a sector Catch up where critical High Low Today forward: Short-term wins Future back: Strategic moves Opportunity size ($M) Source: Bain & Company The most effective value-creation plans work from both a today-forward and future-back perspective Figure 2.9
  • 61. Static, untargeted marketing presented an opportunity to improve trial conversion rate Test-and-learn approach Results Identify why customers don’t convert during trial and isolate major pain points Generate and test new ideas through an iterative, collaborative, immersive approach Scale successful tests across business Point of departure After test-and-learn approach +70% Full impact: 3%–7% annual EBITDA uptick Trial conversion rate (indexed) Source: Bain & Company A test-and-learn approach to marketing led to dramatic results for one software company Figure 2.10
  • 62. Customer segment 1 Customer segment 2 Customer segment n Product 1 Occasion 1 Occasion 1 Occasion 1 Occasion 2 Product 2 Occasion 2 Product 3 Occasion 2 Appetite for online offerings: Lower Higher B2B retail business faced threats from online platforms and specialists Step 1: Find out which segment is most at risk Step 2: Link findings to target company’s profit Step 3: Run scenario analysis; estimated potential exposure of 5%–15% EBITDA 0 20 40 60 80 100% Customer segment 1 Customer segment 2 Customer segment n Target gross profit by customer segment (for each product and occasion) Risk: Lower Higher Source: Bain & Company A fact-based analysis allowed a PE fund to evaluate the risk from digital disruption Figure 2.11
  • 63. Digital destination The “ what” Operations New products and services New business models Platforms and partners Data and analytics IT Operating model and people The “ who” and the “ how” Digital departure Customer and channel engagement Source: Bain & Company During ownership, stepping-stone initiatives should lead incrementally toward a digital destination Figure 2.12
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  • 66. Industry: Five degrees of digital disruption Company: Five degrees of digital readiness DRS 1 DRS 2 DRS 3 DRS 4 DRS 5 Isolated Clustered Connected Inter- connected No digital activity Digital is 100% embedded in everything the company does Digital is 50% embedded in everything the company does Developing digital strategy and prioritization of activities; central/ cross-unit coordination Digital exists in areasof the company, with limited visibility, oversight or strategy DDI 1 DDI 2 DDI 3 DDI 4 DDI 5 Digital disruptions have virtually no impact Value chain revolution; incumbent players replaced or required to adapt business model Transformation becomes inevitable; new competitors enter the market Change takes hold; new channels and customer experience, new products and services Digital drives modifications/ optimization of existing processes Notes: DDI–Digital Disruption Index; DRS–Digital Readiness Score Source: Bain & Company A digital portfolio scan assesses each industry’s level of disruption and each company’s level of readiness Figure 2.13
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  • 69. Notes: Estimates based on purchases paid for online, regardless of whether delivered or picked up in store; select categories shown Sources: Forrester; Bain & Company analysis E-commerce penetration varies widely by category and time frame Figure 2.14 0 20 40 60 80 100% E-commerce penetration 2000 2005 2010 2015 2020 2025 Office products Sports equipment Toys Food and drinkClothing Videos and DVDs Consumer electronics
  • 70. Note: Includes top retailers in each category Source: Bain’s 2017 Advocacy in US Retail study (n=25,927), in collaboration with ROI Consultancy Services Among top retailers, Amazon has successfully differentiated its customer experience in many categories Figure 2.15 –40 –20 0 20 40 60% Overall NPS ranges for retail categories, 2017 Home products Groceries Consumer electronics Beauty products Sports equipment and athletic wear Women’s clothing Home furniture Pet food and supplies 7% –15% 4% –15% –26% –14% –2% –7% 57% 56% 55% 55% 51% 45% 41% 38% Amazon Amazon Amazon Amazon Amazon Amazon Amazon Amazon Top NPS in retail category Average NPS in retail category Lowest NPS in retail category
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  • 73. Global buyout dry powder (by fund size) (12–17) CAGR 0 200 400 600 $800B 2005 06 07 08 09 10 11 12 13 14 15 16 17 19% 10% 5% 7% 12% Mega (greater than $5B) Large ($1.5B–$5B) Mid ($0.5B–$1.5B) Small ($0–$0.5B) Source: Preqin Dry powder held by buyout funds has been growing steadily for the last five years, hitting an all-time high in 2017 Figure 3.1
  • 74. Less than 7X 7–9X 9–11X Greater than 11X Number of companies Distribution of companies (by EBITDA purchase price multiple) 480 213311 161 372 379 358 261 315 251 0 20 40 60 80 100% 2007 08 09 10 11 12 13 14 15 16 Acquisition year Note: Data as reported by investment managers for more than 3,000 US, European and Asian buyout deals Source: Cambridge Associates Private Investments Database High-priced dealshave risen asa percentage of the total for the last four years Figure 3.2
  • 75. Deal value Deal count Buyout (including add-ons) Corporate Buyout (including add-ons) Corporate Global M&A deal value Buyout percentage Global M&A deal count 0 1 2 3 4 $5T 2005 2.7 13 14 3.1 13 15 4.1 14 16 3.4 11 17 3.3 13 06 3.7 20 07 4.3 18 08 2.8 8 09 1.9 5 10 2.4 10 11 2.5 12 12 2.4 11 13 2.5 12 Buyout percentage 0 10 20 30 40 50K 2005 30 10 14 40 10 15 39 9 16 37 8 17 38 8 06 36 11 07 42 10 08 41 9 09 36 6 10 40 7 11 43 8 12 42 9 13 36 9 Notes: Corporate M&A excludes transactions for which the acquirer is a government entity; based on announcement date; includes announced deals that are completed or pending, with data subject to change; discrepancies in bar heights displaying the same value are due to rounding Source: Dealogic Private equity’s share of the global M&A market is tiny in terms of both deal value and count Figure 3.3
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