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Mergers & Acquisitions Update:

The Middle Market
Q3 2024
Size Range U.S. Announced M&A Transactions
$50-100mm 2020 2021 2022 2023 LTM Q3 '24
$0-25mm 6.8x 7.3x 7.1x 6.2x 6.2x
$25-50mm 7.7x 8.6x 6.3x 7.6x 7.6x
$50-100mm 8.1x 9.1x 7.5x 8.6x 8.7x
$100-250mm 9.6x 9.1x 8.4x 8.3x 9.0x
$250-500mm 8.3x 9.6x 8.3x 8.7x 9.4x
$500mm-$1B 10.2x 9.2x 10.4x 9.9x 9.6x
Source: Capital IQ, Mufson Howe Hunter

U.S. Lower Middle Market M&A Activity – Transactions Below $250mm

600 $25,000

500
$20,000

Transaction Value ($mm)

Number of Transactions

400
$15,000

300

$10,000
Primary Contacts 200

Andrew Apfelbaum, Director $5,000

100
267.254.0047
[email protected]
- $-
Q4-2022 Q1-2023 Q2-2023 Q3-2023 Q4-2023 Q1-2024 Q2-2024 Q3-2024
Anthony Lopez-Ona, Managing Director $0 - 25mm 289 268 225 169 153 165 176 165
215.399.5405 $25 - 50mm 67 73 52 36 44 29 48 36
[email protected] $50 - 100mm 58 68 48 38 43 44 30 34
$100 - 250mm 66 64 43 45 55 42 42 65
Brandon K. Eck, Managing Director Total Transaction Value $19,284 $19,510 $14,166 $12,249 $15,125 $12,400 $12,329 $15,421
215.399.5411 Source: Capital IQ, Mufson Howe Hunter
[email protected]

Gary Veloric, Managing Director Historical Total Debt Limit (x EBITDA)

215.817.1255
[email protected] 8.00x
7.00x
Joe Golden, Managing Director
703.785.5525 6.00x
[email protected] 5.00x

Jonathan M. Schor, Director 4.00x

215.399.5403 3.00x
[email protected]
2.00x
Michael J. Howe, Managing Director 1.00x
215.399.5413
[email protected] 0.00x

Michael J. Mufson, Managing Director

215.399.5410
[email protected] < $5.0MM EBITDA > $10MM EBITDA > $40MM EBITDA

Scott Kendrick, Director Source: SPP Capital Partners – “Capital Market Update September 2024”
215.370.6128
[email protected] Broker/Dealer services offered through Mufson Howe Hunter & Partners LLC, Member SIPC | FINRA
 Mergers & Acquisitions Update
U.S. - All Reported Annual M&A Activity

20,000 $1,600,000

18,000
$1,400,000
16,000
$1,200,000

Transaction Value ($mm)

Number of Transactions

14,000
$1,000,000
12,000

10,000 $800,000

8,000
$600,000
6,000
$400,000
4,000
$200,000
2,000

- $-
2020 2021 2022 2023 YTD Sep-23 YTD Sep-24
Middle Market 2,263 2,788 1,918 1,424 1,129 876
$250 - $500mm 166 291 170 108 74 92
$500mm - $1B 107 178 115 87 55 68
Trans Value > $1B 136 251 155 158 115 144
Undisclosed 10,800 14,692 12,483 10,235 7,900 7,535
Total Transaction Value $912,695 $1,426,147 $1,025,409 $982,016 $611,008 $732,980

U.S. - All Reported Quarterly M&A Activity

4,000 $400,000

3,500 $350,000
Number of Transactions

3,000 $300,000

Transaction Value ($mm)

2,500 $250,000

2,000 $200,000

1,500 $150,000

1,000 $100,000

500 $50,000

- $-
Q4-2022 Q1-2023 Q2-2023 Q3-2023 Q4-2023 Q1-2024 Q2-2024 Q3-2024
Middle Market 480 473 368 288 295 280 296 300
$250 - $500mm 35 29 20 25 34 29 31 32
$500mm - $1B 27 14 21 20 32 17 24 27
Trans Value > $1B 34 38 40 37 43 51 38 55
Undisclosed 3,025 3,055 2,564 2,281 2,335 2,410 2,573 2,552
Total Transaction Value $212,408 $204,705 $184,998 $221,305 $371,008 $258,060 $208,002 $266,918

Source: Capital IQ, Mufson Howe Hunter

As of 09/30/2024

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 Mergers & Acquisitions Update
U.S. Lower Middle Market Annual M&A Activity – Transactions Below $250mm

3,000 $140,000

$120,000
2,500

Transaction Value ($mm)

Number of Trasnactions

$100,000
2,000

$80,000
1,500
$60,000

1,000
$40,000

500
$20,000

- $-
2020 2021 2022 2023 YTD Sep-23 YTD Sep-24
$0 - 25mm 1,429 1,570 1,103 815 662 506
$25 - 50mm 325 412 293 205 161 113
$50 - 100mm 223 396 254 197 154 108
$100 - 250mm 286 410 268 207 152 149
Total Transaction Value $84,497 $122,729 $81,570 $61,050 $45,925 $40,149

U.S. Lower Middle Market M&A Quarterly Activity – Transactions Below $250mm

600 $25,000

500
$20,000

Transaction Value ($mm)

Number of Transactions

400
$15,000

300

$10,000
200

$5,000
100

- $-
Q4-2022 Q1-2023 Q2-2023 Q3-2023 Q4-2023 Q1-2024 Q2-2024 Q3-2024
$0 - 25mm 289 268 225 169 153 165 176 165
$25 - 50mm 67 73 52 36 44 29 48 36
$50 - 100mm 58 68 48 38 43 44 30 34
$100 - 250mm 66 64 43 45 55 42 42 65
Total Transaction Value $19,284 $19,510 $14,166 $12,249 $15,125 $12,400 $12,329 $15,421

Source: Capital IQ, Mufson Howe Hunter

As of 09/30/2024

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 Mergers & Acquisitions Update
U.S. Middle Market M&A Transactions Valuation Multiples

60.0x

50.0x
9.2x
10.2x 9.6x
9.9x
10.4x
40.0x 9.6x
8.3x 9.4x
8.7x
8.3x
30.0x 9.1x
9.6x 8.3x 9.0x
8.4x
20.0x 9.1x
8.1x 8.6x 8.7x
7.5x

7.7x 8.6x
10.0x 6.3x 7.6x 7.6x

6.8x 7.3x 7.1x 6.2x 6.2x

0.0x
2020 2021 2022 2023 LTM Q3 '24
U.S. Announced M&A Transactions
n= 81 106 64 37 56
*Avg = 8.2x 8.7x 8.1x 8.1x 8.4x
$0-25mm $25-50mm $50-100mm $100-250mm $250-500mm $500mm-$1B

* Average weighted by number of transactions

Source: Capital IQ, Mufson Howe Hunter
As of 09/30/2024

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 Mergers & Acquisitions Update
U.S. Middle Market Private Equity Sponsor Activity

U.S. PE Deal Activity

9,967
9,073

7,676

6,446
6,131 6,379 6,375

5,277
4,748
4,382 4,604
3,674 3,404
3,147
2,787

$577.9
$1,218.7
$279.1

$311.2

$370.0

$384.6

$484.0

$531.4

$462.2

$575.6

$662.7

$583.3

$947.6
$643.7

$700.6
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Deal value ($B) Deal count Total Deal count

U.S. PE Exit Activity

1,904 1,422

1,444
1,300 1,335 1,278 1,341 1,335 1,281
1,223
1,066 1,027 1,034
873
806
$250.1
$218.1

$281.0

$271.6
$311.3

$380.7

$346.3

$320.7

$361.5

$294.4

$426.0

$836.2

$295.3
$385.2
$174.7

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Exit value ($B) Exit count Estimated total exit count

Source: PitchBook, Mufson Howe Hunter

*YTD as of 09/30/2024

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 Mergers & Acquisitions Update
Multiples on BSL-Funded Deals

11.5x 11.9x
11.4x 11.4x 11.2x
10.6x 10.6x 10.8x
10.3x 10.0x
9.7x

3.9x 4.7x 4.9x 4.8x 5.7x 5.7x 5.5x 6.0x

4.6x 6.1x
6.0x

5.7x 5.6x 5.4x 5.7x 5.8x 5.8x 5.7x 5.8x 5.9x 4.8x 5.1x

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

Debt/EBITDA Equity/EBITDA EV/EBITDA

Source: PitchBook, Mufson Howe Hunter

*YTD as of 09/30/2024
**BSL: Broadly-Syndicated LoanUS PE middle-market buyout value as a Share of all PE value

U.S. PE Middle Market and Overall PE Dry Powder ($B)

$1,200
2023
$1,038.1
2022
$1,000 $914.5
2021
$897.4
$834.9 2020
$772.3 2019
$800
2018
$656.6
$596.6 2017
$600 2016
$474.4
$427.3
$400 $356.1
Overhang by
vintage
Cumulative
overhang
$200

$0
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Source: PitchBook, Mufson Howe Hunter

*As of 12/31/2023

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 Mergers & Acquisitions Update
Leverage Market at a Glance
SPP Capital Partners
www.sppcapital.com

Changes from Previous Month Noted in Red.

Cash Flow Senior Debt/EBITDA
< $5.0MM EBITDA > $10MM EBITDA > $40MM EBITDA
September 2024 1.50x - 2.50x 2.00x - 3.50x 4.00x - 5.00x
August 2024 1.50x - 2.50x 2.00x - 3.50x 4.00x - 5.00x
September 2023 1.50x - 2.00x 2.00x - 3.00x 2.50x - 4.00x
Commentary: Liquidity Conditions In Private Market Remain Strong – Investors Under Deployed and Eager to Attract Assets

Total Debt/EBITDA
< $5.0MM EBITDA > $10MM EBITDA > $40MM EBITDA
September 2024 2.50x – 4.00x 3.50x – 5.50x 5.00x - 6.00x
August 2024 2.50x - 4.00x 3.50x - 5.50x 5.00x - 6.00x
September 2023 2.50x - 3.50x 3.50x - 4.50x 4.00x - 5.00x
Commentary: Liquidity Conditions In Private Market Remain Strong – Investors Under Deployed and Eager to Attract
Assets

Senior Cash Flow Pricing

Bank Non-Bank < $10MM EBITDA Non-Bank > $40MM
EBITDA
September 2024 S+ 3.50% - 4.00% S+ 5.50% - 7.50% S+ 5.00% - 5.75%
August 2024 S+ 3.50% - 4.00% S+ 5.50% - 7.50% S+ 5.00% - 5.75%
September 2023 S+ 3.75% - 5.00% S+ 6.50% - 8.50% S+ 5.50% - 6.50%
Commentary: Liquidity Conditions In Private Market Remain Strong – Investors Under Deployed and Eager to Attract
Assets

Unitranche and Second Lien Pricing

< $5.0MM EBITDA > $10MM EBITDA > $40MM EBITDA
September 2024 S+ 7.50% - 9.50% S+ 5.25% - 7.50% S+ 5.00% - 6.50%
August 2024 S+ 7.50% - 9.50% S+ 5.25% - 7.50% S+ 5.00% - 6.50%
September 2023 S+ 8.00% - 10.00% S+ 6.50% - 8.00% S+ 6.25% - 7.50%
Commentary: Liquidity Conditions In Private Market Remain Strong – Investors Under Deployed and Eager to Attract
Assets

Sub Debt Pricing (Total Coupon: Cash + PIK)

< $5.0MM EBITDA > $10MM EBITDA > $40MM EBITDA
September 2024 13.50% - 16.00% 12.00% - 14.00% 11.00% - 12.50%
August 2024 13.50% - 16.00% 12.00% - 14.00% 11.00% - 12.50%
September 2023 14.00% - 16.00% 13.00% - 15.00% 12.00% - 14.00%
Commentary: Liquidity Conditions In Private Market Remain Strong – Investors Under Deployed and Eager to Attract
Assets

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 Mergers & Acquisitions Update

Source: SPP Capital Partners – “Capital Market Update September 2024”

SPP Capital Partners - Middle Market Investment Banking and Asset Management Home

Historical Leverage Metrics

By SPP Capital Partners

Historical Senior Debt Cash Flow Limit (x EBITDA) Historical Total Debt Limit (x EBITDA)
7.00x
8.00x
6.00x
7.00x
5.00x 6.00x
4.00x 5.00x

3.00x 4.00x
3.00x
2.00x
2.00x
1.00x
1.00x
0.00x 0.00x

< $5.0MM EBITDA > $10MM EBITDA > $40MM EBITDA

< $5.0MM EBITDA > $10MM EBITDA > $40MM EBITDA

Source: SPP’s “MIDDLE MARKET LEVERAGE CASH FLOW MARKET AT A GLANCE” Source: SPP’s “MIDDLE MARKET LEVERAGE CASH FLOW MARKET AT A GLANCE”

Historical Senior Cash Flow Pricing (Bank) Historical Senior Cash Flow Pricing (Non-Bank)
7.0% 10.0%
6.0% 8.0%
5.0%
6.0%
4.0%
4.0%
3.0%
2.0% 2.0%

1.0% 0.0%
0.0%

NB Lower Bound (<$7.5) NB Upper Bound (<$10)

Bank Lower Bound Bank Upper Bound NB Lower Bound (>$15) NB Upper Bound (>$40)

Source: SPP’s “MIDDLE MARKET LEVERAGE CASH FLOW MARKET AT A GLANCE” Source: SPP’s “MIDDLE MARKET LEVERAGE CASH FLOW MARKET AT A GLANCE”

Historical Second Lien Pricing Historical Subordinated Debt Pricing

12.0% 15.0%

12.0%
9.0%

9.0%
6.0%
6.0%

3.0%
3.0%

0.0% 0.0%

< $5.0MM EBITDA > $10MM EBITDA > $40MM EBITDA < $5.0MM EBITDA >$10MM EBITDA > $40MM EBITDA

Source: SPP’s “MIDDLE MARKET LEVERAGE CASH FLOW MARKET AT A GLANCE” Source: SPP’s “MIDDLE MARKET LEVERAGE CASH FLOW MARKET AT A GLANCE”

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 Mergers & Acquisitions Update

Source: SPP Capital Partners – “Capital Market Update September 2024”

SPP Capital Partners - Middle Market Investment Banking and Asset Management Home

Historical Leverage Metrics (cont.)

By SPP Capital Partners

Historical Unitranche Pricing Historical Minimum Equity Contribution

14.0% 70.0%

12.0% 60.0%

10.0% 50.0%

8.0% 40.0%

6.0% 30.0%

4.0% 20.0%

2.0% 10.0%

0.0% 0.0%

< $7.5MM EBITDA > $10MM EBITDA > $40MM EBITDA Lower Bound Upper Bound Minimum New Cash Equity

Source: SPP’s “MIDDLE MARKET LEVERAGE CASH FLOW MARKET AT A GLANCE” Source: SPP’s “MIDDLE MARKET LEVERAGE CASH FLOW MARKET AT A GLANCE”

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 Mergers & Acquisitions Update
Source: SPP Capital Partners – “Capital Market Update September 2024”

SPP Capital Partners - Middle Market Investment Banking and Asset Management Home

Mufson Howe Hunter & Co. M&A Activity

Selected Recent Transactions

Interstate Auto Care, LLC d.b.a

has been acquired by

has been acquired by

A wholly-owned subsidiary of

The undersigned served as exclusive financial The undersigned served as exclusive financial
advisor to the seller in this transaction advisor to the seller in this transaction

has been acquired by

The undersigned served as a co-financial

advisor to the seller in this transaction
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 Mergers & Acquisitions Update
Mufson Howe Hunter is an independent investment bank for middle-market companies. We focus on selling businesses,
recapitalizations, buy-outs, acquisitions and raising capital. Unique to the middle market, our senior bankers have extensive
corporate finance experience and deep knowledge of the capital markets.

Mergers & Acquisitions

• Advise buyers and sellers (public and private companies)
• Sale of businesses, strategic acquisitions, recapitalizations, management buy-outs and industry build-ups
• Specific background in representing closely-held and family-owned businesses

Raise Capital
• Equity (control and non-control)
• Mezzanine financing
• Senior and junior debt
• Typically raise debt & equity capital from commercial banks, finance companies, investment funds and private
equity sponsors

Financial Advisory Services

• Analysis of business strategies and options
• Fairness opinions
• Complex valuations

Mufson Howe Hunter & Company LLC

1717 Arch Street
37th Floor
Philadelphia, PA 19103
215.399.5400
Visit us at: www.mhhco.com

Broker/Dealer services offered through Mufson Howe Hunter & Partners LLC, Member SIPC | FINRA

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