MAINTENANCE, REPAIR & OVERHAUL Q BOSTON CHICAGO LONDON LOS ANGELES PHILADELPHIA SAN DIEGO SILICON VALLEY TAMPA CONTACTS

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1 MAINTENANCE, REPAIR & OVERHAUL CONTACTS David Bench (949) Tracy Patch Vice President (949) Daniel Schultz Director of Business Development (617) M&A UPDATE Mergers and acquisitions in the maintenance, repair and overhaul (MRO) industry are accelerating as the economy continues to improve. Last year, market trends showed sellers remained reluctant to enter into M&A agreements, largely due to a tepid economy and budget and spending constraints in the government market. But just one year later, M&A activity is increasing and this pace is expected to continue through the rest of the year. Capstone s research shows that the number of transactions recorded for the year, through August 15, 2014, totaled 68 deals. At that figure, the number of transactions for the year is on track to outpace 2012 and 2013 activity levels. Analysts attribute the rise in M&A activity to improved economic conditions, and the continuation of positive economic indicators. These include mid year reports that GDP, employment figures, the manufacturing index and consumer confidence are all improving thus far in M&A Activity: MRO Industry 100 Number of Transactions BOSTON CHICAGO LONDON LOS ANGELES PHILADELPHIA SAN DIEGO SILICON VALLEY TAMPA YTD 2014 # Transactions Average Source: Capital IQ, Capstone Partners LLC research YTD through August 15, 2014 As the U.S. and global economy shows signs of sustained improvement, interest from potential sellers is expected to rise and the M&A landscape should remain encouraging. Buyers are expected to continue to seek acquisitions to close gaps in their product portfolios and geographic coverage, as well as to access technology that improves their online and mobile offerings as well as their inventory management capabilities.

2 SELECTED TRANSACTIONS A review of recent transactions shows a variety of businesses sold in the maintenance, repair & overhaul industry in recent months. Selected transactions are outlined below, followed by a more comprehensive list of transactions in the following table. Wanzl Metallwartenfabrik GmbH acquired The French Company (July 2014) In an example of foreign buyer interest in this space, Wanzl Metallwartenfabrik GmbH, the largest global shopping cart manufacturer, acquired 100% of The French Company, the leading retail equipment service provider in the U.S. The French Company provides customized maintenance, repair and cleaning service programs for rolling stock equipment, material handling equipment and shopping carts. Its FacilityConnect division provides unique facility solutions for retailers, restaurant chains, property management/development companies and other multi facility organizations and their maintenance service providers, vendors and contractors. Wanzl, based in Leipheim, Germany, continues to strengthen its position in the North American market through a number of strategic acquisitions and continues to expand its customer base and further enhance its North American market leadership position. The acquisition of The French Company will enable Wanzl to provide all aspects of the shopping cart experience: OEM, remanufacturing and in field service. Additionally, The French Company's FacilityConnect division will provide additional diversification into facility services. Scott Dahl, CEO of Wanzl North American companies, commented, "Their high quality services and innovative products, along with their excellent management team, will allow us to provide more comprehensive and effective solutions for our customers, both now and in the future. We look forward to the future growth and success that can be achieved through the many synergies of both companies." SGS acquires Galson Laboratories Inc. (July 2014) In another foreign buyer transaction, SGS acquired Galson Laboratories, a leader in industrial hygiene analysis and monitoring solutions. Galson provides analytical air testing services and monitoring solutions designed to detect the presence of hazardous contaminants to protect the health and safety of employees in the workplace and emergency response personnel. The company has long standing relationships with customers in a wide variety of industries including the petroleum, gas, chemical, mining, manufacturing, construction, and remediation sectors. A privately owned company founded in 1970, Galson employs over 115 people and generated revenues in excess of $17 million in Switzerland based SGS provides inspection, verification, testing, certification, and quality assurance services in Europe, Africa, the Middle East, the Americas and Asia Pacific. It offers compliance certification services, inspection and audit and outsourcing services. The company is very acquisitive; this is its 20 th acquisition since January The Galson acquisition will further establish SGS as a global leader in the industrial hygiene sector, reinforcing its position in the U.S. market while strengthening its capabilities to serve global customers in the growing industrial hygiene, health and safety markets. Capstone Partners LLC 2

3 SELECTED TRANSACTIONS (CONTINUED) Babcock & Wilcox Company acquires MEGTEC Systems, Inc. (June 2014) The Babcock & Wilcox Company (B&W) acquired industrial processes solutions provider MEGTEC based on an enterprise value of $155 million. MEGTEC, which employs approximately 600 people in 10 countries, designs, engineers, manufactures and services sophisticated air pollution control systems and coating/drying equipment. MEGTEC s technologies provide a range of sustainability focused benefits, including pollution abatement, carbon management, energy storage and recovery, and environmental compliance. The acquisition enhances B&W s role as a leading environmental products and solutions provider, beyond its historical focus on utility markets, to include a variety of industrial applications for customers that B&W has not traditionally served. The acquisition also offers opportunities to leverage each company s technology, distribution channels and other capabilities to serve new and existing customers globally. Comfort Systems acquires Dyna Ten Corporation (May 2014) In a transaction valued at $41.5 million, Comfort Systems USA, Inc., a leading provider of commercial, industrial and institutional heating, ventilation and air conditioning services, acquired Dyna Ten Corporation, headquartered in Fort Worth, Texas. Dyna Ten is a regional mechanical contractor that engages in a broad range of mechanical contracting projects, HVAC service and controls. Initially Dyna Ten is expected to contribute annualized revenues of approximately $70 million to $80 million at profitability levels that are generally equal to or above those currently experienced by Comfort Systems USA operations. Comfort Systems USA is a premier provider of business solutions addressing workplace comfort, with 89 locations in 80 cities around the nation. Brian Lane, Comfort Systems USA s Chief Executive Officer, commented, We are extremely happy to announce that Dyna Ten is joining Comfort Systems USA. Dyna Ten has a long history of providing extraordinary outcomes for its customers in medical, industrial and commercial markets. This partnership with Dyna Ten brings excellent capabilities, resources and leadership at every level, together with a tremendous reputation and solid customer relationships, and we expect that Dyna Ten will continue to grow and improve for years to come. We also believe interaction between our existing companies and Dyna Ten will strengthen and improve our existing operations in Texas, and across all of Comfort Systems USA. Capstone Partners LLC 3

4 SELECTED PRIVATE EQUITY TRANSACTIONS Private equity firms are also very active in the maintenance, repair & overhaul sector and continue to make acquisitions in the space, often times adding on to their existing portfolio holdings in the industry. The following profiles outline several recent private equity transactions. Harvey Tools The Riverside Company (March 2014) As an example of the private equity community s interest in the MRO space, The Riverside Company acquired Harvey Tool Company, a provider of specialized cutting tools used in precision machining applications. Founded in 1985 and based in Rowley, Massachusetts, Harvey Tool sells products through a diverse distribution network to a wide array of end markets. The company is a differentiated, niche provider of more than 9,000 cutting tools with unique sizes, geometric characteristics, reaches and coatings that are used by machine shops and other production facilities across North America and internationally. Harvey Tool has recorded impressive growth due to its customer service, strong new product development capabilities, commitment to high quality and best in class stock levels. The Riverside Company is a global private equity firm focused on acquiring and investing in growing businesses valued at up to $250 million. Since its founding in 1988, Riverside has invested in more than 330 transactions and its international portfolio includes more than 70 companies. Riverside was attracted to Harvey Tool s record for growing both its product lines and gaining share in the specialty cutting tool market, as well as the company s strong brand awareness. Riverside will support Harvey Tool s growth plans to expand into adjacent product categories, and will be active in seeking strategic add ons for the company. Harvey Tool s President and CEO and the rest of the management team will remain active in the business. The Halifax Group acquires United States Environmental (March 2014) The Halifax Group, in partnership with management, acquired United States Environmental Services (USES), a leading provider of non discretionary environmental and industrial services, including emergency response services, industrial cleaning and other recurring maintenance services to refineries, petrochemical plants, owners of bulk storage terminals and marine and rail transportation companies. Terms of the acquisition were not disclosed. USES will merge with K2 Industrial Services, an outsourced plant maintenance services company that Halifax acquired in late With a larger, national footprint and an impressive range of services, the company is positioned with the size and strength to handle any project for customers, who operate in diverse end markets. Halifax is a private equity firm that partners with managers and entrepreneurs to recapitalize and grow lower middle market businesses. We re building a leader in a rapidly consolidating market sector and are supportive of (the) vision to build the premier player in an $8 billion market and provide a single source solution to a demanding, sophisticated set of customers, said David Dupree, co founder, CEO and at Halifax. We are proponents of infrastructure investing; this is our firm s fifth investment predicated on delivering needed services, products and expertise to our country s critical energy, power, transportation and manufacturing infrastructure. Capstone Partners LLC 4

5 SELECTED M&A TRANSACTIONS Enterprise Value EV / LTM Date Target Target Business Description Acquiror ($mm) Revenue EBITDA Aug 14 Aug 14 Aug 14 May 14 May 14 May 14 Feldman Lumber Co., Inc. Airco Commercial I.T. Landes & Son, Inc. French Company, LLC Galson Laboratories Inc. COIT Cleaning and Restoration Chempace, Portable Sanitation Division Airy Technology, Inc. AMFIL Technologies Inc. Covino Environmental Associates, Inc. Impact Products, LLC J.M. Waller Associates, Inc. Unisource Worldwide, Inc. Intelligent Cleaning Systems, Inc. JMM Management Group, LLC Abbott Welding Supply Co. Inc. MEGTEC Systems, Inc. Triad Group, Inc. Redding Linden Burr Inc. RGA Environmental, Inc. DynaTen Corporation NASDI, LLC and Yankee Environmental Services Contract Services Limited StartKleen, LLC Action Pest Control, Inc. Provides building and maintenance supplies to contractors and manufacturing/industrial companies. Provides heating, ventilation and air conditioning (HVAC) services and preventive maintenance programs. Provides commercial plumbing, heating, fuel oil and air conditioning services. Provides maintenance, repair and cleaning programs for rolling stock and material handling equipment. Provides industrial hygiene analysis and monitoring solutions. US LBM Holdings, LLC ABM Building & Energy Solutions, Inc. H. B. Mcclure Company Wanzl Metallwarenfabrik SGS SA (SWX:SGSN) Provides commercial cleaning services. COIT Manufactures specialty deodorizing and sanitation chemicals. Supplies testing and measuring instruments and solutions for ISO clean room testing & certification. Manufactures cold water ozone cleaning & antimicrobial systems for food/food processing equipment. Provides industrial hygiene, indoor air quality, occupational health and related consulting services. Manufactures and supplies non chemical commercial cleaning, maintenance and related products. Provides environmental, facilities, occupational safety and logistics consulting and management services. Provides commercial and business supplies, including cleaning and facility maintenance products. Distributes commercial cleaning products for food service, hospitals, office, retail and schools Provides environmental asset management services for storage tanks and other facilities maintenance. Distributes industrial gases, specialty gases, medical gases and welding/industrial supplies. Services industrial equipment including rebuild, modification, installation and energy optimization. Manufactures disinfectants, patient care and janitorialsanitary products. Provides mechanical, electrical and plumbing engineering services, renovations and commissioning. Provides industrial hygiene, hazardous materials and other consulting services. Provides engineering, mechanical contracting and maintenance services for industrial sites. Provides demolition and site redevelopment contracting services. Provides contract sanitation services to food processing plants. Provides food safety consulting and detergents and sanitizers. Provides pest control services for pharmaceutical, food processing, healthcare and restaurant markets. FGL Group, LLC Particles Plus, Inc. Easton Pharmaceuticals Inc. TRC Companies Inc. (NYSE:TRR) S.P. Richards Company Versar Inc. (AMEX:VSR) $ x Xpedx Flex Pac, Inc. BSM Wireless Inc. $4.5 Airgas, Inc. (NYSE:ARG) Babcock & Wilcox Power Generation $155.0 Medline Industries, Inc. $7.1 KCI Technologies Inc. Terracon Consultants, Inc. Comfort Systems USA (NYSE:FIX) $41.5 Dore & Associates $5.3 Packers Sanitation Packers Sanitation Arrow Exterminators, Inc. Capstone Partners LLC 5

6 SELECTED M&A TRANSACTIONS (CONTINUED) Enterprise Value EV / LTM Date Target Target Business Description Acquiror ($mm) Revenue EBITDA Feb 14 Feb 14 BGI, Incorporated and BGI Instruments, Inc. CompuVend, Inc. Archway Sales, Inc. and Jacaab LLC Axberg Heating Company, Inc. Commercial Power Cleaning et al Harvey Tool Company, LLC United States Environmental Services United Fastener Inc. Delta Rigging & Tools, Inc. Specialized Response Solutions, LP Enviro Master Inland Empire Franchise Swish White River Ltd. Wood City Laundry, Inc. PeroxyChem LLC Vanguard National Alliance, Inc. Air Quality Consulting, Inc. Walsh Environmental Scientists & Engineers Industrial Air Tool LLP General Chemical Holding Company Citadel Restoration and Repair, Inc. Cost Containment International, LLC Livingston Laboratories Inc. Duncan Co., Industrial Division Keeping It Kleen Provides particulate sampling, industrial hygiene and air flow calibrations and manufactures calibration devices. Provides management and control software to vending, office coffee, distribution and food service industries. Operate as chemical distribution companies and providers of specialty chemicals. Provides plumbing, sewer, electric, HVAC and duct cleaning services for commercial customers. Offers cleaning and leasing of trucks and trailers. Provides specialty carbide end mills and cutting tools to the metalworking industry. Offers industrial services, such as tank cleaning, chemical cleaning, hydro blasting and waste management. Offers cutting tools and abrasives, core bits and fasteners. Sells lifting and rigging products and wire rope products and provides testing, inspection and field services. Provides emergency response services for hazardous materials incidents for industry and government sectors. Provides commercial hygiene/cleaning services and products for public restrooms. Operates as a supplier of janitorial supplies, foodservice disposables and industrial packaging solutions. Provides commercial laundry services. Manufactures and distributes hydrogen peroxide and solutions for cleaning and sanitization. Services electrical and factory automation needs of industrial concerns, including MRO support services. Mesa Laboratories Inc. (NasdaqGS:MLAB) Cantaloupe Systems, Inc. Nexeo Solutions, LLC $ x 9.9x Black Diamond Plumbing & Mech. Miller Transportation The Riverside Company The Halifax Group Succession Capital Inc. Bishop Lifting Products, Inc. National Response Corporation Individual Investor Swish Maintenance Limited AmeriPride One Equity Partners LLC Operates as an indoor air quality consulting, maintenance, NV5 Holdings, Inc. repair and remediation firm in the United States. (NasdaqCM:NVEE) Provides environmental services including asbestos abatement and industrial hygiene/safety consulting. Operates as an industrial distributor of abrasives, cutting tools, chemicals, MRO and contractor supplies. Manufactures and supplies inorganic chemicals for use in water treatment and industrial production. Manufactures and supplies floor coatings and offers cleaning solutions for commercial and industrial use. An energy and sustainability consulting company, provides energy management and procurement services. Provides janitorial supply services. Distributes industrial supplies, including cutting tools, abrasives and metal removal products. A Web based food safety and sanitation training program for the food service industry, homes and schools. $199.1 supplyforce.com, LLC Ecology & Environment, Inc. Pipeline Supply & Service, LLC Chemtrade Logistics Income Fund Rust Oleum Corporation Alternative Utility Clark Restaurant Service, Inc. Industrial Distribution Group, Inc. $11.1 $ x 7.8x Restaurant Results Inc. LTM = last twelve months; EV = enterprise value Sources: Capstone Partners LLC research; Capital IQ; public filings and press releases Capstone Partners LLC 6

7 CAPSTONE PARTNERS: SELECTED MRO TRANSACTIONS Capstone Partners maintains an active MRO practice in the middle market, having represented clients across various specialties including HVAC, electrical, cabling & connectivity, energy efficiency, safety, janitorial supplies and industrial tools and supplies. This focus allows Capstone to provide MRO companies with real time transaction feedback and immediate access to key decision makers among the industry s most active acquirers and investors. Portsmouth Paper Company has recapitalized with a division of a division of HUNT CAPITAL. Hyde Park Holdings LLC has secured $9,500,000 valuation & financial advisory SERIES B CONVERTIBLE PREFERRED STOCK BOSTON IRRIGATION SUPPLY COMPANY has recapitalized with a portfolio company of CASTLE ISLAND PARTNERS, LLC INDUSTRIAL GROWTH PARTNERS Capstone Partners LLC 7

8 THE MAINTENANCE, REPAIR & OVERHAUL TEAM David Bench, (949) David is a in charge of the Western Region, based out of Los Angeles. Prior to Capstone, David managed the Western region for Morgan Stanley Smith Barney s Capital Strategies Group and its predecessor, Citi Capital Strategies. David has focused on middle market investment banking for nearly 30 years and has been the lead banker in over 250 M&A transactions involving both domestic and foreign corporate buyers, as well as leveraged recaps with private equity sponsors. David s achievements in investment banking have gained national recognition by The M&A Advisor: one of his transactions was awarded the Private Equity Deal of the Year, while another was recognized as the Energy Deal of the Year. Mr. Bench has also been awarded Middle Market Financing Professional of the Year, an award recognizing M&A s most accomplished professionals. Mr. Bench holds a BS and an MBA in Finance from Brigham Young University. He is a Series 7 and 63 Registered Securities Representative and a Series 24 Registered Securities Principal. Tracy Patch, Vice President tpatch@capstonellc.com (949) Tracy is a Vice President in the Los Angeles office, supporting the management of the Western Region. Prior to Capstone, Tracy worked as a senior banking professional in Morgan Stanley Smith Barney s Capital Strategies Group and its predecessor, Citi Capital Strategies. She possesses over ten years of experience in middle market investment banking, working on both domestic and cross border transactions. Her previous finance experience includes working in the hedge fund industry with Collins/Bay Island Securities LLC and Talisman Capital Partners. Prior to that, Mrs. Patch worked with institutional fixed income sales at Vining Sparks IBG, LP and Robert Thomas Securities, Inc. She also was a manager at The Disney Company. Mrs. Patch holds an MBA from Pepperdine University and a BS in Finance from Miami University of Ohio. She is a Series 7 and 63 Registered Securities Representative. Daniel Schultz, Director of Business Development dschultz@capstonellc.com (617) Dan oversees Capstone s national business development and industry coverage activities, working closely with current and prospective clients of the firm on matters related to corporate sales, recapitalizations, mergers & acquisitions and growth financings. In his role, Dan is able to deliver specific market intelligence to clients regarding M&A, financing, strategic, industry and competitive trends. Prior to spearheading the firm s business development and market initiatives, he was a Vice President in Capstone s M&A group, managing numerous successful transactions across a variety of industries. Dan also gained hands on transaction experience as an investment banker at Headwaters MB. He started his career with Ernst & Young s National Professional AABS practice and later worked in Assurance and Advisory Business Services in the Denver office. Dan received a BE in Biomedical Engineering with a Business Minor from Vanderbilt University. He earned an MBA and a Master of Accountancy from the Daniels College of Business at the University of Denver. Capstone Partners LLC 8

9 CAPSTONE S LEADERSHIP TEAM NATIONAL John Ferrara Founder, President (617) jferrara@capstonellc.com BOSTON Jacob Voorhees (617) jvoorhees@capstonellc.com CHICAGO Ted Polk (312) tpolk@capstonellc.com LOS ANGELES David Bench (949) dbench@capstonellc.com LONDON John Snead jsnead@capstonellc.com PHILADELPHIA Eric Williams (215) ewilliams@capstonellc.com SAN DIEGO & SILICON VALLEY David Michaels (858) dmichaels@capstonellc.com TAMPA Tom Elliott (813) telliott@capstonellc.com CORPORATE RESTRUCTURING Brian Davies (617) bdavies@capstonellc.com ABOUT CAPSTONE PARTNERS Capstone Partners LLC is a premier investment banking firm dedicated to serving the corporate finance needs of middle market business owners, investors and creditors. The firm provides corporate sale & divestiture, merger & acquisition, private placement, corporate restructuring, valuation and financial advisory services. Capstone maintains various industry specialties including one in the Industrial & Manufacturing sector. The firm also has a merchant banking capability to actively co invest in transactions. Headquartered in Boston, Capstone has offices in Chicago, London, Los Angeles, Philadelphia, San Diego, Silicon Valley and Tampa. For more information about our expertise, please visit World Class Wall Street Expertise. Built for the Middle Market Capstone Partners LLC. All rights reserved.