W O R K P L A C E F U T U R E S THE CRYSTAL February 12 th, 2012 With thanks to our sponsors

Richard Holden Facilities Management - Global M&A overview 12 February 2013 Strictly Private and Confidential

Overview – 2 – 1Overview 2The impact of M&A on the evolution of FM models 3FM development worldwide 4Top ten global FMs 5Industry trends 6Accessing emerging markets 7Valuing FM 8Recent M&A activity 9Prospects for M&A and the industry

The impact of M&A on the evolution of FM models – 3 –

FM development worldwide – 4 – Further consolidation to come

Top ten global FMs – 5 – Source: Catalyst Corporate Finance, Capital IQ

Industry trends – 6 – TrendImplication  Delivery models continue to evolve  bundling of services  increased self-delivery  proportion of TFM growing  Investment in skilled management  Investment in systems and processes  Acquire capability/delivery  FMs seek to move up value chain  adding specialist services  delivering solutions  Protect margins and retain customers  Acquire technical/specialist capabilities  Costs are less transparent  Resilient end verticals targeted  e.g. healthcare, pharma, defence  Focus on quality of service  More entrenched relationships  Higher risk?  Polarisation of market participants  where have the mid-tier gone?  Difficult to exceed £100 million revenues

Accessing emerging markets DriversMarket entry strategiesChallenges  Low growth domestic markets  Follow customer  Immature service cultures  Multinational customer demand  White collar/managed service  Lack of sophistication of clients  Maintain growth trajectory  Joint venture with local partner  CSR/corruption  City/shareholder pressure  Acquire  Language, distance, culture – 7 –

 Global composite index of listed companies  Different valuation metrics for SMEs  technical/specialised services  commoditised lowest price services – 8 – Valuing FM Property Management Support Services Construction Source: Capital IQ

 Global deal volumes increasing  Domestic consolidation underpinning volumes  Cross-border deals proportion growing  Increased focus on ‘4 th Wave’  Private equity – time for exits? – 9 – Recent M&A activity Source: Capital IQ

Prospects for M&A and the industry – 10 – +-  Continuing outsourcing trend  Low core organic growth rates  Stable economy?  Basic services more commoditised  SME consolidation in less developed markets  Lack of good quality acquisition targets  Rising valuations in emerging markets – scarcity value  Large PE exits on horizon Deals expected to continue, but it is firmly a buyer’s market

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