<p>M&A Report 1Q 2018 Contents Key Takeaways 2 Overview 3 Spotlight: Healthcare 5 Deals by Region & Size 7 Spotlight: Divestitures 8 Credits & Contact PitchBook Data, Inc. John Gabbert Founder, CEO Adley Bowden Vice President, Market Development & Analysis Content Dylan Cox Senior Analyst, PE Darren Klees Data Analyst Contact PitchBook pitchbook.com Research reports@pitchbook.com Editorial editorial@pitchbook.com Sales sales@pitchbook.com Cover design by Caroline Suttie Click here for PitchBook's report methodologies. $616.7B total value across North America and Europe in 1Q Key takeaways from the analysts After a strong 2017, M&A activity got off to a sluggish start in the first quarter of this year. Across North America and Europe, 4,867 deals were completed in 1Q 2018, totaling $616.7 billion in value18% and 25% year- over-year decreases, respectively. Though the pace of completed corporate divestitures was rather slow in 1Q 2018, 463 divestitures totaling $149.0 billion have been announced but have yet to close. We expect divestiture activity to increase during the remainder of the year, as companies look to slim down after the recent buying binge. B2C transactions accounted for just 15.9% of deal flow in 1Q 2018. Interest in traditional B2C assets has dwindled as tech-focused firms continue to make their mark on consumer-facing businesses. Further, businesses that were once thought of as traditional B2C, such as retail, are now created as tech-focused ecommerce firms. $149.0B total value of announced divestitures 15.9% of total deal flow in B2C, a slow start relative to prior full- year tallies PITCHBOOK 1Q 2018 M&A REPORT 2 4,867 0 5,000 10,000 15,000 20,000 25,000 30,000 $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 $4,000 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018* Deal value ($B) Es mated deal value ($B) Deal count Es mated # of deals closed 21, 119 After a strong 2017, M&A activity got off to a sluggish start in the first quarter of this year. Across North America and Europe, 4,867 deals were completed in 1Q 2018, totaling $616.7 billion in value18% and 25% YoY decreases, respectively. Though completed deal count slid substantially, an additional 973 deals totaling an estimated $451.3 billion have been announced but have yet to close. On that account, combined with the knock-on effects of corporate tax cuts in the US and a relatively stable European economy, we expect completed deal flow to increase through the remainder of the year. Notable transactions announced in the first quarter include Keurig Green Mountain's $23 billion take-private of Dr Pepper Snapple Group and Blackstone's $17 billion carveout of Overview Completed deals stall, but announced transactions point to uptick Deal count continued to slide in 1Q M&A activity in North America & Europe 3 Source: PitchBook *As of March 31, 2018 PITCHBOOK 1Q 2018 M&A REPORT OVERVIEW Thomson Reuters' financial and risk business. Both transactions reflect two prominent themes in today's M&A landscape the growing influence of private equity and the interplay between public and private markets. The IT and B2B sectors saw their shares of M&A activity increase in 1Q, accounting for 19.5% and 38.6% of completed transactions, respectively. The IT sector continues to play a more prominent role for strategic and financial acquirers alike, commanding a greater share of both deal flow and capital invested. Fast-changing technology continues to pose a threat to existing business models, forcing incumbents to either ramp up R&D or to acquire more nimble competitors. In addition, IT companies are increasingly being acquired by businesses in non- tech sectors, accounting for 45.4% of deal flow. Meanwhile, B2C transactions accounted for just 15.9% of deal flow in 1Q 2018. Interest in traditional B2C assets has dwindled as tech-focused firms continue making inroads into consumer-facing segments. Further, businesses that were once thought of as being traditional B2C, such as retail, are now created as tech- focused ecommerce firms. The number of intercontinental M&A deals has also trended upward in the last decade, particularly in Europe. In 1Q 2018, 13.6% of European M&A transactions involved a non-European buyerhaving increased from last decade's nadir of 9.0% in 2009. By contrast, the proportion of North American transactions with an acquirer from another continent has grown more slowly, from 6.4% in 2009 to 8.2% in 1Q 2018. Intercontinental activity in Europe is higher due in part to the prevalence of North American buyers, particularly US-based PE firms and Canadian LPs executing direct investments, with substantial operations across the Atlantic. On the other hand, European investors have traditionally exhibited a propensity to invest close to home. Nonetheless, both regions have seen an increase in activity from foreign buyers, partially driven by the fact that such acquisitions serve as an efficient way to expand a company's footprint in today's global economy. 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2014 2015 2016 2017 2018 Materials & resources Healthcare Financial services Energy B2C B2B IT $47.9 $38.5 $0 $10 $20 $30 $40 $50 $60 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018* 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2014 2015 2016 2017 2018 Materials & resources Healthcare Financial services Energy B2C B2B IT Source: PitchBook *As of March 31, 2018 Source: PitchBook Source: PitchBook Median deal size remains historically high Median M&A deal size ($M) in North America & Europe B2C clout continues to shrink M&A (#) by sector in North America & Europe B2B commands a growing share of capital M&A ($) by sector in North America & Europe PITCHBOOK 1Q 2018 M&A REPORT 4 Source: PitchBook *As of March 31, 2018 Spotlight: Healthcare Set for a slower 2018 Following a record-setting year in 2015, healthcare M&A dwindled for two consecutive years and is on pace for a slower 2018. 368 deals were completed, accounting for 9.4% of M&A deals, pacing behind last year's tally of 9.7%, and totaling $53.5 billion in 1Q 2018. Deals have historically been larger in this space than in the broader market. The median healthcare deal size was $54.6 million in 2017, compared to $38.5 million across all sectors, though this trend reversed in the first quarter of this year. A year ago, healthcare dealmakers were consumed by the possibility of changes to, or the elimination of, the US Affordable Care Acta prospect that seems less likely for the time being. 9.7% 9.4% 6% 7% 8% 9% 10% 11% 12% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018* 2,041 368 $0 $100 $200 $300 $400 $500 $600 $700 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018* 0 500 1,000 1,500 2,000 2,500 3,000 Healthcare deal value ($B) Healthcare deal count Source: PitchBook *As of March 31, 2018 Healthcare has accounted for a higher proportion of M&A volume in recent years Healthcare (#) as % of total M&A activity Healthcare M&A activity PITCHBOOK 1Q 2018 M&A REPORT 5 Today, dealmakers are less focused on public policy and more attuned to the shifting competitive landscape, including the recently announced partnership among Amazon, Berkshire Hathaway and JP Morgan Chase. According to their recent press release, the trio will attempt to provide healthcare benefits to their own employees through "an independent healthcare company that is free from profit-making incentives and constraints." Though few details are known about the partnership, it will certainly influence other firms in the spacefrom insurers and pharmacy benefit managers to biotech and pharmaceutical companiesand could be a harbinger of more strategic jockeying in the coming years as firms look to hedge their bets or forge partnerships of their own. Even without large partnerships threatening to take intermediaries out of the healthcare supply chain, industry players have plenty of obstacles to overcome. Regulatory changes in major markets remain possible, which could change anything from drug approval timelines to reimbursement processes. In addition, gene therapy, robotics and machine learning could permanently $54.6 $37.0 $582.7 $512.8 $0 $100 $200 $300 $400 $500 $600 $700 $800 2010 2011 2012 2013 2014 2015 2016 2017 2018* Median Average Source: PitchBook *As of March 31, 2018 Healthcare transaction sizes have grown in tandem with overall deal metrics Median & average healthcare M&A deal size ($M) Acquired company Date Deal size ($M) Industry American Medical Response March 14, 2018 $2,400 Other healthcare services U.S. HealthWorks February 1, 2018 $753 Clinics/outpatient services Oklahoma University Medical Center February 1, 2018 $750 Hospitals/Inpatient services RxCrossroads January 3, 2018 $735 Other healthcare services The Medicines Company Infectious Disease Care Group January 8, 2018 $270 Drug discovery Top 5 healthcare deals of 2018 Source: PitchBook *As of March 31, 2018 challenge the competitive landscape. Another factor that could upend the healthcare supply chain is the strong demand shown by financial sponsors. Healthcare companiesparticularly fragmented retail healthcare, such as dental offices and urgent-care clinics are the most common add-on targets for PE firms. SPOTLIGHT: HEALTHCARE PITCHBOOK 1Q 2018 M&A REPORT 6 Source: PitchBook Source: PitchBook Deals by Region & Size 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q 1Q 2013 2014 2015 2016 2017 2018 $5B+ $1B-$5B $500M-$1B $250M- $500M $100M- $250M Under $100M 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q 1Q 2013 2014 2015 2016 2017 2018 $5B+ $1B-$5B $500M-$1B $250M- $500M $100M- $250M Under $100M The trend toward larger deals continues M&A (#) by size The lower & middle ranges of the market see increased portion of deal value M&A ($) by size $1,785$1,136$692$1,034$1,139$1,299$1,271$1,823$2,130$2,156$1,919$32310,134 8,763 6,903 8,719 10,006 11,023 10,553 13,193 14,198 12,705 11,688 2,402 Deal value ($B) Deal count $1,218$806$409$648$887$859$960$1,165$1,315$1,280$1,162$2038,416 7,323 5,773 7,855 9,960 9,483 9,717 10,682 12,209 11,200 9,431 1,494 Deal value ($B) Deal count Off to a slower pace than in past years M&A activity in North America European volume at a slow start to 2018 M&A activity in Europe Source: PitchBook *As of March 31, 2018 Source: PitchBook *As of March 31, 2018 PITCHBOOK 1Q 2018 M&A REPORT 7 Spotlight: Divestitures Uptick in announced deals signals cyclicality $512$334$234$459$483$483$562$851$902$755$672$923,161 2,932 3,094 3,844 4,757 4,695 4,651 5,501 6,154 5,169 3,829 618 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018* Deal value ($B) # of deals closed Even after the recent decline, other factors indicate divestitures are primed to accelerate M&A divestitures Source: PitchBook *As of March 31, 2018 M&A activity has historically exhibited a high degree of cyclicality. With dealmaking steadily increasing over the last decade and hovering near all- time highs, speculation has intensified that we're nearing the end of the cycle despite the flurry of announced deals seen early in 2018. Several signs suggest that the cycle may be ready to turn, including elevated pricing and relatively high levels of debt usage. Another key indicator is an uptick in the number of carveouts and divestitures, as many companies are looking to slim down after the recent buying binge. While some companies are using these deals to refocus on their core business, other divestitures are being pursued in an effort to placate regulatory bodies, which have been exhibiting more scrutiny of many large-scale deals. Carved-out business Announced date Deal size ($M) Industry Innogy March 11, 2018 $53,006 Energy production Thomson Reuters (Financial and Risk business) January 30, 2018 $17,000 Financial software AccorInvest February 27, 2018 $5,438 Hotels & resorts Federal-Mogul Holdings April 10, 2018 $5,400 Automotive Westinghouse Electric Company January 4, 2018 $4,800 Alternative energy equipment Top 5 announced carveouts of 2018 Source: PitchBook *As of March 31, 2018 PITCHBOOK 1Q 2018 M&A REPORT 8 $308.6 $373.4 $0 $50 $100 $150 $200 $250 $300 $350 $400 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018* This development has yet to materialize in our completed transaction data, with just 618 completed deals and $91.6 billion invested in 1Q; however, we recently have seen robust activity in announced deals of this nature, with 463 transactions totaling $149.0 billion that have yet to close. We expect this trend to accelerate in the coming quarters; according to a recent EY report, 87% of companies plan to initiate their next divestment within the next two years, compared to just 43% in 2017. Since many of these assets will be sold following failed integrations or due to regulatory pressure, we anticipate that potential acquirers may be able to find discounts relative to the elevated prices being paid for other M&A transactions. $308.6M average size of divestitures closed in 1Q 2018 is below that of last year's tally, but persists at a historically high level Divestitures have persisted at high levels in recent years Average divestiture size ($M) Source: PitchBook *As of March 31, 2018 But that does not mean that divestiture deals will necessarily be small. Indeed, the sizes of recent carveouts and divestitures have been particularly noteworthy; the median divestiture completed in 1Q 2018 was $308.6 million, compared to a median of $257.4 million over the last decade. The median grows to $583.0 million for deals that are announced but not yet closed, including Unilever's $13.9 billion divestiture of its spreads business and Blackstone's announced $17.0 billion buyout of Thomson Reuters' financial and risk business. SPOTLIGHT: DIVESTITURES PITCHBOOK 1Q 2018 M&A REPORT 9 COPYRIGHT 2018 by PitchBook Data, Inc. All rights reserved. No part of this publication may be reproduced in any form or by any meansgraphic, electronic, or mechanical, including photocopying, recording, taping, and information storage and retrieval systemswithout the express written permission of PitchBook Data, Inc. Contents are based on information from sources believed to be reliable, but accuracy and completeness cannot be guaranteed. Nothing herein should be construed as any past, current or future recommendation to buy or sell any security or an offer to sell, or a solicitation of an offer to buy any security. This material does not purport to contain all of the information that a prospective investor may wish to consider and is not to be relied upon as such or used in substitution for the exercise of independent judgment. </p>