Expert Webcast Roundtable: Middle Market M&A and Private Equity Update 2017. •Overview of macroeconomic trends •Trends in M&A and private equity transactions •Deal types and structures •Domestic v. international deal space •Role of M&A insurance

1. Moderator: Alexander B. Kasdan, Senior Managing Director, DelMorgan & Co.
Panel:
• Matthew Wells, Director, Strategy and Product Marketing, Intralinks
• C. Craig Lilly, Partner, Baker & McKenzie LLP
• Chris Stanton, Partner and Chief Investment Officer, Sunrise Capital Partners
• Patrick Q. Stroth, CEO, Rubicon M&A Insurance Services, Inc.
© Copyright 2017 Expert Webcast – All Rights Reserved
MIDDLE MARKET M&AAND PRIVATE EQUITY
UPDATE 2017
September 14, 2017

2. 1
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3. 2
MODERATOR: Alexander B. Kasdan, Senior Managing Director,
DelMorgan & Co., brings more than twenty years of senior-level Wall Street
advice to middle market companies, entrepreneurs and institutional investors.
He has extensive experience in investment banking, corporate law and
restructuring at world’s leading firms, including Credit Suisse First Boston,
O’Sullivan Graev & Karabell LLP (now O'Melveny & Myers LLP), Battle
Fowler LLP (now Paul Hastings LLP) and Schlumberger Ltd., and as a
founding partner of Convergence Capital Partners. Alex has worked on more
than 100 domestic and cross-border transactions in North America, Europe and
Africa.
Alex is a Senior Advisor to Governance and Transactions LLC, an advisory firm
established in 2003 by Mr. James L. Gunderson, former Secretary and General
Counsel of Schlumberger Limited, to assist boards, management and owners
with corporate governance, compliance, structuring and strategic transactions.
Alex is a frequent moderator and an interviewer at Expert Webcast roundtable
discussions attracting business leaders and leading professionals from around
the world.
Alex graduated magna cum laude from Middlebury College with a B.A. degree
in Economics and Italian and was elected to Phi Beta Kappa during his junior
year. In addition, he holds a J.D. degree from Columbia University Law School
and has studied at the University of Florence in Italy.
100 Wilshire Blvd.
Suite 750
Santa Monica, CA 90401
+1 310 980 1718 mobile
+1 310 935 3826 office
ak@delmorganco.com
www.delmorganco.com

4. 3
Panelist: Matthew Wells is a Director of Strategy and
Product Marketing at Intralinks. An investment banker by
training, Matt turned entrepreneur in 2010 with the founding
of PE-Nexus, a cloud-based platform designed to facilitate the
sourcing and marketing of deal flow for the M&A industry.
PE-Nexus was acquired by Intralinks, Inc. in 2013 signaling a
validation of the "deal marketplace" concept.
Intralinks is a leading, global technology provider of inter-
enterprise content management and collaboration solutions.
Our innovative Software-as-a-Service solutions are designed
to enable the exchange, management, and control of
documents and content between organizations securely and
compliantly when working through the firewall.
Matt was educated at the University of Wisconsin – Madison.
150 East 42nd Street, 8th Floor
New York, NY 10017
United States
M +1-305-968-2952
mwells@intralinks.com
www.intralinks.com

5. 4
Panelist: Craig Lilly is a M&A partner in Baker
McKenzie’s Palo Alto and San Francisco offices. His
practice focuses on complex cross-border and domestic
acquisitions, divestitures and joint ventures. Mr. Lilly has
wide ranging experience in advising strategic and private
equity clients on a wide variety of transactions including stock
and asset acquisitions, divestitures, recapitalizations, auctions,
leveraged buyouts and equity/venture financings. Mr. Lilly
also represents fund sponsors in connection with the
structuring and private placement of investment funds.
Mr. Lilly is a frequent author and lecturer on legal and
business issues regarding mergers and acquisitions, private
equity investments and corporate finance. He has been quoted
in, or contributed to, articles and features in Bloomberg, The
Wall Street Journal, Dow Jones events, The Deal Magazine
and CFO.com. He is the former California reporter for the
American Bar Association Committee on State Regulation of
Securities (2006 to 2010).
660 Hansen Way
Palo Alto, CA 94304-1044
USA
Tel: +1 650 251 5947
Fax: +1 650 856 9299
craig.lilly@bakermckenzie.com

6. 5
Panelist: Chris Stanton is a Partner, Chief Investment Officer, and
Portfolio Manager, as well as a member of the Management
Committee at Sunrise Capital Partners. In his role, Chris oversees
the implementation of all Sunrise investment programs and has co-
developed many aspects of those programs with Sunrise’s research and
development team.
Sunrise Capital Partners is a pioneering investment solutions provider
that is in its 37th year of business and that currently manages over
$700M of capital for institutional and individual investors. Founded in
1980, Sunrise offers a range of compelling alpha-generating and tactical
beta macro solutions aimed at providing compelling risk-adjusted
returns and true portfolio diversification.
Prior to joining Sunrise, Chris traded extensively in a wide range of
global commodity and currency markets as Vice President and Portfolio
Manager for Deerhurst Capital Management and as Capital Markets
Officer for JP Morgan.
Chris holds a J.D. cum laude from the Northwestern University School
of Law, has engaged in graduate studies at Northwestern’s Kellogg
School of Management, and earned a Bachelor of Science in
Engineering and Applied Mathematics from Lehigh University.
1000 Aviara Parkway, Suite 205
Carlsbad CA 92011
1-877-456-8911
cstanton@sunrisecapital.com
www.sunrisecapital.com

7. 6
Panelist: Patrick Q. Stroth is the CEO of Rubicon M&A
Insurance Services, LLC.
His practice involves harnessing niche insurance tools to empower
Sellers of companies to secure a clean exit from their M&A
transactions faster, and with significantly more cash at closing. This
keen focus in the M&A space has earned Patrick the title
“Champion of the Clean Exit”.
Patrick has been an Executive Liability specialist for the past
21years with an emphasis on transaction related insurance solutions,
including Directors & Officers Liability, Accounts Receivable
Insurance (Trade Credit Liability), and Cyber Security and Privacy
Liability. Patrick is also a developer and Industry leading provider
of Medical Professional Liability, HIPAA, and Medical Billing
Regulatory policies for the Healthcare Industry.
Patrick is a graduate of Loyola Marymount University and holds an
Associate in Risk Management designation.
101 Jefferson Drive
Menlo Park, CA 94025
(650) 931-2321 office
(415) 806-2356 mob
pstroth@rubiconins.com
www.rubiconins.com

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MAJOR TOPICS:
• Overview of macroeconomic trends
• Trends in M&A and private equity transactions
• Deal types and structures
• Domestic v. international deal space
• Role of M&A insurance

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©2017 Baker & McKenzie
Middle Market M&A and Private
Equity Update
September 14, 2017
C. Craig Lilly, Partner, Baker & McKenzie LLP

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2BAKER & MCKENZIE |
Leaders in
Cross-Border M&A
*2016 Thomson Reuters data
77 offices 47 countries 4,200+ lawyers
K E Y F A C T S A N D F I G U R E S
Baker & McKenzie has done more cross-border deals than any other law firm in the world*. (2012 - 2016)
M&A
in Cross-Border
#1
by volume in
US$100M-1BN CROSS-BORDER DEALS*
by volume
FOR ALL CROSS-BORDER DEALS*
by volume in
M&A INVOLVING EMERGING MARKETS*
Also #1…

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3BAKER & MCKENZIE |
State Of M&A Market: Multiples Are Still High

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4BAKER & MCKENZIE |
Debt portions have notched an increase

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5BAKER & MCKENZIE |
Debt usage has scaled right back up

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Add-ons still show no sign of stopping

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Exit volume has bounced back somewhat even as
value remains quite low

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EBITDA Multiples Increase: Will Pricing Pressures Take
Toll On Market?

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Q2 2017: Deal Value Up 49% from Q2 2016

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Cross-Border Technology M&A Remains Strong

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11BAKER & MCKENZIE |
Global M&A Transactions From 1990 Projected Through
2020 (Domestic And Inbound)1
1 Source:Baker McKenzie-Oxford Economics Global Transaction Forecast, January 2017.

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Current Economic Trends Favor M&A
• LOW INTEREST RATES - Even after modest increases by the Fed, U.S. interest rates
will remain historically low, alongside cheap financing in the Eurozone, UK, and Japan.
• SOLID U.S. CONSUMER SPENDING - Low unemployment, growing wages, a stronger
dollar and low energy prices are boosting household spending power in the U.S.
• A RELATIVELY SMOOTH ECONOMIC TRANSITION IN CHINA - With service
sectors leading growth, growth should gradually slow to 6% - 6.5% per year, avoiding a
sharp decline in industrial activity.
• A EUROZONE RECOVERY DESPITE BREXIT - Business investment and job
creation in the Eurozone have remained steady despite the Brexit vote in June. Euro zone
growth in 2016 outpaces the US for the first time since the 2008 crash!

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Current Economic Trends Favor M&A
• THE STABILIZATION OF OIL PRICES - But since the rate of price increases will be
steady (PPB to remain below US$60 until 2019), households will not experience a sharp rise
in the cost of energy and fuel, which should help protect global consumer spending power.
• U.S. GOVERNMENT POLICIES - Increased infrastructure spending, tax reform and
repatriation of offshore cash will help U.S. economy and provide a further boost to domestic
M&A
• HISTORICALLY HIGH CORPORATE CASH BALANCES - Assuming that attitudes
do not harden against free global trade and investment, corporate leaders in advanced
economies are likely to regain confidence in the market and start investing their reserves.
• CAVEAT – Any political turmoil or trade war will provide a material roadblock to M&A.

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Key Trends in M&A
Seller friendly deal terms – liquidity, a limited supply of quality targets and an
increasing number of buyers supports a seller-favorable environment. According to
FactSet, S&P 500 businesses held more than $1.5 trillion in cash, surpassing the
previous record of $1.487 trillion, set in Q3 2016.
Larger sums in fewer deals - 3,554 deals worth US$ 678.5B announced in the first
quarter representing an 8.9% increase in value compared to the same period last
year (4,326 deals, US$ 622.9B).
Increased prevalence of representation and warranty policies with better terms
due to the number of insurers on the rise
Consumer, Tech and Energy M&A is on the rise - Internet, tech-enabled services,
financial technology and healthcare IT will all experience more consolidation
M&A EBITDA multiples are still high: After clocking in at 10.7x in 2016, US
M&A EBITDA multiples have regressed slightly in the first half of the year, to
10.5x.

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Key Trends in M&A
Cybersecurity remains a key concern – companies are still not feeling more
prepared for cybersecurity diligence and issues than they were a year ago. Fortune
100 companies are spending millions on security but are still vulnerable to attacks.
Differentiation is paramount: the rising amount of capital has pushed buyers to
differentiate themselves on how quickly they can close (especially in the technology
and software sectors).
Anti-bribery / corruption compliance is main concern for cross-border deals.
Buyers focusing on better verification/ vetting of information in diligence
process. Buyers seek more time on process but cannot due to increased
competition.
Primary objective for corporate/ strategic acquisitions is still integrating the
acquired company fully into buyer.

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Key Trends in Private Equity
PE Firms continue to expend into growth equity space as a result of increased
competition.
More focus on buy and build strategies. Add-ons are majority of PE deals (more
later on this).
Increased competition from non-U.S. buyers and multinational strategics
More co-investment deals which reduce fees, provide more deal powder and
diversification
More preemptive bids to avoid lengthy, costly and time consuming auctions, and
avoids disclosing sensitive information to competitors
SPACs are becoming more frequent which allows sponsors more flexibility – no
fund prohibitions, specific IRR pressures, and using stock as acquisition currency
IPO is a viable exit - IPO activity has increased, and we are seeing signs that this
trend will continue.

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Key Trends in Private Equity
PE fundraising boom continues: June 2017 has mirrored that of the 2007 boom.
Capital commitments are on pace to surpass $220 billion, half of which are
committed to mega-funds with more than $5 billion in commitments.
Deal flow held steady in 2Q 2017: Deal flow is still slightly below last year’s pace.
Across the US, 866 deals were completed, totaling $151.1 billion in value.
PE exits continued their slowdown: $102.3 billion in exit value over 474 deals.
Debt portions have increased: 5.9x of EBIDTDA versus 5.4x in 2016.
Add-ons increase: add-ons are 64% of all PE deals.
VC exits are gradually declining from historic numbers - $10.5B of exit value in
Q2 from 156 deals versus $17.2B of exit value via 211 deals for Q2 2016. On the
positive side, the avg check size has almost tripled in 7 years.

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1. Build a deal team with industry specific and cross-border skills and sensitivities to
minimize disruption and maximize success.
2. Analyze all potential deal structures and jointly select best overall approach.
3. Identify key risk areas and scope diligence by issue/jurisdiction. Pre-scoping high risk
areas is key.
4. Make anti-corruption diligence a major component → take a pragmatic and multi-
faceted approach.
5. Develop a early plan for regulatory concerns (including antitrust and CFIUS if
applicable).
Best Practices for M&A

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6. Employee Transfer and Benefits → prioritize early in the process and analyze local
laws, disruption, structure, approvals/notices, data privacy, etc.
7. Negotiation – negotiate governing law early and account for cultural perspective in
process.
8. Identify and address (prior to closing) the most likely post-closing disputes. Purchase
price adjustments and post-closing consideration (earnouts, holdbacks, etc.) is the
number 1 area for post-closing disputes.
9. Carefully plan closing logistics.
10. Prioritize integration planning early in process and include all functional areas.
Integration is the number one post-closing matter for multi-national buyers.
Best Practices for M&A

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The following are available upon request:
See Baker & McKenzie’s Q2 2017 deal stats at
http://crossbordermaindex.bakermckenzie.com/
Baker & McKenzie LLP’s Customary Issues in Negotiating Cross-Border
Acquisition Agreements is a searchable microsite summarizing Key
acquisition terms across 44 countries.
Baker & McKenzie LLP’s Global M&A Handbook.
Baker & McKenzie LLP’s Cross-Border M&A Institute – a CLE-accredited,
in-house training program that draws upon our decades of experience
developing strategies, processes and precedents to facilitate successful
deals across multiple jurisdictions.
Best Practices – Resources

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Global
Transactions
Forecast – with
Oxford Economics
Global Private
M&A Handbook
International
Joint Ventures
Handbook
Global Public
M&A Handbook
Post-Acquisitions
Integration
Handbook
M&A By Design:
Timing and
Complexity of
Cross-Border
Acquisitions
Suite of Baker McKenzie - Resources

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22BAKER & MCKENZIE |
Thank you for attending our webinar!
C. Craig Lilly
Baker & McKenzie LLP
660 Hansen Way
Palo Alto, CA 94304
(650) 251-5947
craig.lilly@bakermckenzie.com
This presentation should not be considered or construed as legal advice on any individual matter or circumstance. The contents of this document are intended for general
information purposes only and may not be quoted or referred to in any other presentation, publication or proceeding without the prior written consent of Baker & McKenzie,
which may be given or withheld at the Firm’s discretion. The distribution of this presentation or its content is not intended to create, and receipt of it does not constitute, an
attorney-client relationship. The views set forth herein are the personal views of the author and do not necessarily reflect those of Baker & McKenzie.