investment services industry insights€¦ · 05/27/15 minsheng wealth management minsheng holdings...

June 2015

Investment Services Industry Insights A Review of M&A Activity and Public Market Valuation in the Asset Management and Broker-Dealer Sectors

William Blair

Investment Services Industry Insights Table of Contents

Table of Contents

Introduction ...................................................................................................................................................................................................................................................... 1

Asset Management Sector........................................................................................................................................................................................................................... 2

M&A Trends in Asset Management ................................................................................................................................................................................................... 2

Recent Select Asset Management M&A Transactions .............................................................................................................................................................. 4

Recent Notable Transactions ............................................................................................................................................................................................................... 5

Public Valuation Update .............................................................................................................................................................................................................................. 6

Relative Performance .............................................................................................................................................................................................................................. 8

Long-Term Valuation Observations .................................................................................................................................................................................................. 9

Indexed Stock Price Performance ................................................................................................................................................................................................... 10

Broker-Dealer Sector ................................................................................................................................................................................................................................. 11

M&A Trends Among Broker-dealers ............................................................................................................................................................................................. 11

Recent Select Broker-Dealer M&A Transactions ..................................................................................................................................................................... 13

Recent Notable Transactions ............................................................................................................................................................................................................ 14

Public Valuation Update ...................................................................................................................................................................................................................... 15

Public Valuation Update ........................................................................................................................................................................................................................... 17

Relative Performance ........................................................................................................................................................................................................................... 17

Long-Term Valuation Observations ............................................................................................................................................................................................... 18

Indexed Stock Price Performance ................................................................................................................................................................................................... 19

Other Information ....................................................................................................................................................................................................................................... 20

Equity Offerings ....................................................................................................................................................................................................................................... 20

Debt Offerings ........................................................................................................................................................................................................................................... 21

Financial Services & Technology Analysts and Coverage ........................................................................................................................................................ 22

Investment Banking Team Biographies ............................................................................................................................................................................................ 23

Select William Blair Transactions ........................................................................................................................................................................................................ 24

Notes .................................................................................................................................................................................................................................................................. 25

Disclosures ...................................................................................................................................................................................................................................................... 26

William Blair

Investment Services Industry Insights Introduction 1

Introduction

Welcome to William Blair’s Investment Services Industry Insights. This report covers trends in M&A activity, transaction multiples, and public company valuations for both the asset management and broker-dealer sectors. We believe that the two sectors have significant overlap and that long-term trends favor consolidation between the two sectors. We hope you enjoy this report and we welcome any feedback.

Market Overview

Asset Management Sector

Asset management firms generate high margins and recurring cash flows. In addition, these companies have meaningful operating leverage. As a result, M&A transactions in the sector are generally completed at attractive multiples. Since 2000, approximately 43% of all deals were completed at more than 3.00 times LTM revenue, and approximately 48% of M&A transactions in the sector were completed at greater than 10.0 times LTM EBITDA. Acquirers in the sector are most often strategic parties that are able to pay more because of the significant revenue synergies generated by pushing new or stronger investment products through an established distribution platform.

For the year-to-date period through May 31, 2015, we have identified a total of 57 transactions in the asset management sector, up approximately 8% from 2014. However, the aggregate disclosed dollar volume of these transactions totals $951 million, down from $1.9 billion in the comparable period last year. During this period, the aggregate assets under management (AUM) of the 37 acquired companies with disclosed AUM were approximately $127 billion, down meaningfully from 2014.

Public company valuations have continued to increase from the fourth quarter 2008 low of 5.9 times LTM EBITDA and remain near the long-term average of 10.8 times from 2006 through May 31, 2015. The median LTM enterprise-value-to-EBITDA multiple for asset managers as of May 31, 2015, was 9.9 times, down from 10.1 times in fourth quarter 2014 but well above the third quarter 2011 low of 7.0 times. Recent market momentum has helped drive stock price performance for the asset management sector over the last 12 months compared with the broader market. The index of asset management companies tracked by William Blair increased 13.9% over the last 12 months, above the S&P 500, which was up 9.6% over the same period.

Broker-Dealer Sector

For the year-to-date period through May 31, 2015, we have identified 27 transactions in the broker-dealer sector, up approximately 4% from 2014. In addition, the broker-dealer sector experienced a decreased aggregate disclosed dollar volume of $845 million in 2015, down meaningfully from 2014. Since 2000, approximately 25% of all deals were completed at more than 3.00 times LTM revenue, and approximately 85% of M&A transactions in the sector were completed at greater than 10.0 times LTM net income.

Public company valuations in the broker-dealer sector decreased in the most recent period. Price-to-LTM EPS as of May 31, 2015, was 18.2 times, down from 19.6 times at the end of 2014 but above the 17.2 times long-term median. The price-to-forward EPS multiple as of May 31, 2015, was 15.2 times, down from 17.3 times at the end of 2014 but higher than the long-term median of 14.2 times. The broker-dealer indices we follow have generally outperformed the broader market over the long term. Over the last 12 months, the S&P 500 rose 9.6%, while the four broker-dealer segments showed an average return of 17.1%, ranging from a 7.6% gain by boutique broker-dealers to a 27.0% gain by online broker-dealers.

Summary of M&A Activity

M&A activity in both the asset management and broker-dealer industries remains relatively healthy, and we expect this trend to continue through the rest of the year, driven by an accelerating U.S. economy and healthy market environment. We anticipate M&A activity in these sectors will be driven by acquirers seeking to 1) broaden their investment platforms by strengthening or adding expertise in various asset classes or distribution channels, 2) expand their geographic reach by establishing on-the-ground expertise in foreign locations or buying (versus building) established relationships in core geographic regions, and 3) enhance or expand the services they offer to clients. We believe that these favorable dynamics position the industry for growth and that M&A activity will remain strong in the near future.

Robert Metzger +1 312 364 8517 [email protected]

J.P. Young +1 312 364 8160 [email protected]

Matthew Zimmer +44 207 868 4502 [email protected]

mailto:[email protected]

William Blair

Investment Services Industry Insights 2 Asset Management Sector


M&A Trends in Asset Management

Year-to-date aggregate M&A transaction volume is running slightly ahead the comparable period in 2014, though disclosed dollar volume is meaningfully lower over the same period.

Year‐to‐date aggregate AUM of $127 billion is below year-to-date 2014 levels and below average AUM levels.

Historical Transaction Volume

Historical Transaction Dollar Volume

Historical Aggregate AUM

Note: Year-to-date as of May 31, 2015. Sources: SNL Financial and William Blair’s Merger and Acquisitions market analysis.

97

88

94 84 98 112 111 107

115 109 123

103

124

53 57

0

25

50

75

100

125

150

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2014YTD

2015YTD

Average: 105 7.5%

$5,184

$8,127

$3,523

$7,238

$17,518 $15,439

$3,768

$23,996

$7,073

$3,542

$9,117 $7,486 $13,246

$1,893 $951

$0

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2014YTD

2015YTD

($ in millions) Average: $9,635 (49.7%)

$307 $294

$366

$156

$786 $695

$1,340

$2,442

$455

$298

$600 $558 $819

$318 $127

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2014YTD

2015YTD

($ in billions)Average: $701 (60.0%)

William Blair

Investment Services Industry Insights Asset Management Sector 3

As shown below, approximately 43% of aggregate deals since 2000 have been completed at above 3.00 times LTM revenue and 48% have been completed at greater than 10.0 times LTM EBITDA.

Size matters: transactions less than $50 million were completed at 1.59 times LTM revenue and 8.4 times LTM EBITDA, substantially less than the valuations on larger deals.

LTM Revenue Multiple Breakdown LTM EBITDA Multiple Breakdown

LTM Revenue Multiple by Transaction Size LTM EBITDA Multiple by Transaction Size

Sources: SNL Financial and William Blair’s Merger and Acquisitions market analysis.

42.9%

30.0%

27.1%

Greater than 3.00x

1.50x to 3.00x

Less than 1.50x

48.0%

44.0%

8.0%

Greater than 10.0x

5.0x to 10.0x

Less than 5.0x

1.59x

2.81x

4.89x

0.00x0.50x1.00x1.50x2.00x2.50x3.00x3.50x4.00x4.50x5.00x5.50x

<$50mm $50mm - $500mm >$500mm

8.4x9.2x

12.0x

0.0x

3.0x

6.0x

9.0x

12.0x

15.0x

<$50mm $50mm - $500mm >$500mm

William Blair

Investment Services Industry Insights 4 Asset Management Sector

Recent Select Asset Management M&A Transactions

Recent Select Asset Management M&A Transactions

($ in millions)

Transaction Value/

Announced Date Target Name Acquirer

Transaction Value

LTM Revenue

LTM EBITDA AUM

05/27/15 Minsheng Wealth Management Minsheng Holdings $57.5 2.00x NA NA

05/08/15 Quest Investimentos Azimut Holding 24.0 NA NA NA

05/04/15 MCG Capital HC2 Holdings 196.5 4.20 6.1x NA

04/30/15 MARFIN Diversified Strategy Fund Dorchester Capital 59.5 NA NA NA

04/29/15 Ozark Trust & Investment Corporation Simmons First National Corporation 20.0 3.52 NA 1.88%

04/07/15 Red Rocks Capital DST Systems 65.0 NA NA 4.92%

03/30/15 Jamison, Eaton & Wood Silvercrest Asset Management Group 13.9 NA NA 1.20%

03/19/15 SEB Asset Management Savills 21.5 0.50 NA 0.22%

02/11/15 Samson Capital Advisors Fiera Capital Corporation 45.5 NA NA 0.51%

01/27/15 Valad Europe Cromwell Property Group 145.0 NA 6.4 3.08%

01/15/15 Woodway Financial Advisors Westwood Holdings Group 47.0 4.52 9.0 2.94%

01/05/15 Dorsey, Wright & Associates NASDAQ OMX Group 225.0 NA NA NA

12/17/14 Silvermine Capital Management Man Group 70.0 NA NA 1.84%

11/12/14 Conning Holdings Corp. Cathay Financial Holding Co. 240.0 2.40 NA 0.32%

11/07/14 AXA China Region Insurance Co. /Hong Kong Pension Business Principal Financial Group 2,597.1 NA NA NA

10/17/14 Quilter Cheviot Old Mutual 585.0 4.70 15.0 3.61%

09/17/14 ZAIS Group HF2 Financial Management 175.0 NA NA NA

09/03/14 Standard Life Investments / Standard Life Financials Manulife Financial Corporation 4,000.0 5.28 NA NA

08/13/14 Corpus Sireo Swiss Life Holding Limited 210.0 1.30 8.8 1.31%

08/07/14 Banca Intermobiliare Investor group 289.0 NA NA 7.75%

08/04/14 Northern Lights Capital Group Treasury Group 193.0 NA NA NA

07/16/14 Banyan Partners Boston Private Financial Holdings 80.0 1.60 NA 2.15%

07/14/14 BSI Banco BTG Pactual 1,500.0 2.10 NA 1.68%

07/01/14 Placemark Holdings Envestnet 66.0 NA NA 0.47%

06/30/14 Geneva Capital Management Henderson Group 200.0 NA NA 3.17%

06/19/14 Numeric Holdings Man Group 494.0 5.50 10.5 3.36%

05/05/14 Reliance Financial Corporation Fidelity National Information Services 110.0 NA NA NA

Mean $434.4 3.37x 9.3x 2.51%

Median 145.0 3.52 8.9 2.02%

Note: Transaction values and multiples calculated in local currencies. Sources: SNL Financial, Capital IQ, and FactSet Research Systems.

William Blair

Investment Services Industry Insights Asset Management Sector 5

Recent Notable Transactions

Target:

Description:

Samson Capital Advisors LLC is an employee owned investment manager, primarily investing in broadly diversified issuers, including municipals, treasuries, agencies, corporate, and mortgage-backed securities. The firm provides its services to high net worth individuals, investment companies, pooled investment vehicles, charitable organizations, and corporations. Fiera Capital Corporation is an independent asset management firm primarily investing in growth and value stocks of small-cap companies. It also makes investments in income trusts and preferred shares. The firm primarily provides its services to institutional investors, mutual funds, charitable organizations, and private clients.

New York, NY Observations/Rationale:

The acquisition will bring Fiera Capital's total assets under management to over CAD$96 billion while bolstering its U.S. presence in the global asset management space.

Following the acquisition, Benjamin Thompson, current Chief Executive Officer of Samson, will assume the role of President and Chief Executive Officer of Fiera Capital's U.S. asset management subsidiary. This entity will bring the combined U.S. presence of Samson and existing Fiera Capital U.S. affiliates to $17.2 billion in assets under management.

Jean-Guy Desjardins, chairman and CEO of Fiera Capital, stated, “With this acquisition, we are creating a full-fledged global asset manager in the U.S, adding strong leadership and investment talent in order to further expand our presence in this dynamic and sophisticated market.”

Buyer:

Montreal, Canada

Key Metrics: Announced Date: Transaction Value ($M): Majority/Minority: TV/LTM Revenue: TV/LTM EBITDA: TV/AUM %:

02/11/15

$45.5 Majority

NA NA

0.51%

Target:

Description:

Wealth Enhancement Group is an independent wealth management firm. Its services include financial planning, investment management, tax strategies, risk management, estate planning, and workplace education. The company also provides insurance, mortgage, securities, and investment advisory services. Lightyear Capital LLC is a private equity firm specializing in middle market, growth capital, recapitalizations, and leveraged buyout investments. The firm focuses on companies in the financial services including asset management, banking, brokerage, financial technology, insurance, specialty finance, leasing, and related business services.

Plymouth, MN Observations/Rationale:

The transaction was attractive to Lightyear because of Wealth Enhancement Groups investment advisory capabilities, strength in the wealth management business, and penetration into new markets.

Following the acquisition, the employee-owners of Wealth Enhancement Group will continue to hold a stake in the company.

Donald Marron, Chairman and Founder of Lightyear Capital, stated, “Wealth Enhancement Group has an outstanding track record of growth and success in the wealth management business. The firm works with its clients to provide family office-quality financial planning and advice. We think this is a compelling business proposition that can be extended into markets across the country.”

Buyer:

New York, NY

Key Metrics: Announced Date: Transaction Value ($M): Majority/Minority: TV/LTM Revenue: TV/LTM EBITDA: TV/AUM %:

04/21/15

NA Majority

NA NA NA

LIGHTYEAR CAPITAL

William Blair

Investment Services Industry Insights 6 Public Valuation Update

Public Valuation Update

Public Asset Managers

($ in millions)

Market Cap Net Debt Enterprise Value

Net Debt (Cash) / EBITDA

AUM% of Enterprise Value

Enterprise Value(1)/ Price/Earnings

LT EPS % Company LTM Revenue

LTM EBITDA

2015E EBITDA 2015E 2016P

Affiliated Managers Group Inc. Prides Crossing, MA

$12,239.6 $1,292.9 $15,262.7 1.3x 2.4% 5.98x 15.5x 14.6x 16.3x 14.3x 15.0%

BlackRock, Inc. New York, NY

61,116.2 3,527.0 64,924.2 0.7 1.4% 5.83 13.2 13.0 18.0 15.8 13.4%

Calamos Asset Management Inc. Naperville, IL

251.5 (432.7) 98.3 (8.6) 0.4% 0.40 1.5 1.8 28.3 20.8 10.0%

Cohen & Steers Inc. New York, NY

1,703.1 (108.3) 1,595.6 (0.8) 2.9% 4.91 11.9 10.6 18.1 13.3 21.2%

Diamond Hill Investment Group Inc. Columbus, OH

647.1 (31.5) 615.6 (0.6) 3.8% 5.56 11.2 11.2 NA NA NA

Eaton Vance Corp. Boston, MA

4,788.3 311.4 5,236.3 0.7 1.7% 3.63 9.3 9.6 16.4 16.3 11.4%

Federated Investors, Inc. Pittsburgh, PA

3,654.0 (43.8) 3,619.1 (0.2) 1.0% 4.17 14.1 12.7 21.0 16.1 3.0%

Fortress Investment Group LLC New York, NY

1,633.0 (70.2) 2,146.5 (0.2) 3.1% 1.36 15.9 11.8 10.0 8.1 52.0%

Franklin Resources Inc. San Mateo, CA

31,518.4 (7,104.0) 25,076.8 (2.2) 2.8% 3.00 7.9 7.3 13.5 13.6 6.0%

GAMCO Investors, Inc. Rye, NY

1,728.5 (375.9) 1,362.1 (2.4) 2.9% 3.10 10.5 7.7 15.8 14.1 15.0%

Invesco Ltd. Atlanta, GA

17,155.0 5,295.0 23,413.4 3.6 2.9% 4.53 16.5 14.0 15.0 12.8 13.0%

Janus Capital Group, Inc. Denver, CO

3,399.3 (238.5) 3,191.1 (0.7) 1.7% 3.24 9.8 8.8 17.9 14.2 22.7%

Legg Mason Inc. Baltimore, MD

5,915.1 (110.6) 5,850.0 (0.2) 0.8% 2.08 10.7 9.5 17.8 14.1 15.6%

Och-Ziff Capital Management Group LLC New York, NY

2,209.5 6,209.5 11,053.6 6.5 22.9% 6.95 11.0 12.1 8.5 7.5 19.9%

Pzena Investment Management, Inc. New York, NY

114.8 (51.5) 121.1 (0.9) 0.4% 1.05 2.6 1.9 15.0 11.1 18.0%

Silvercrest Asset Management Group Inc. New York, NY

101.4 (14.5) 98.4 (0.8) 0.5% 1.40 5.8 4.4 15.1 13.8 16.0%

T. Rowe Price Group, Inc. Baltimore, MD

21,026.6 (1,895.4) 19,131.2 (0.9) 2.5% 4.72 9.5 8.7 16.6 15.1 11.9%

The Blackstone Group L.P. New York, NY

26,603.5 7,981.3 41,864.4 NA 13.5% 5.03 NA 8.8 10.8 11.3 10.1%

Virtus Investment Partners, Inc. Hartford, CT

1,108.7 (211.8) 931.7 (1.6) 1.7% 2.09 7.1 7.2 13.1 12.4 3.8%

Waddell & Reed Financial, Inc. Overland Park, KS

4,026.8 (666.2) 3,360.5 (1.3) 2.7% 2.11 7.1 7.2 14.2 13.3 12.4%

Westwood Holdings Group Inc. Dallas, TX

486.8 (83.6) 403.1 (1.9) 1.9% 3.45 9.6 9.3 NA NA NA

Mean $9,591.8 $627.6 $10,921.7 (0.5x) 3.5% 3.55x 10.0x 9.2x 15.9x 13.6x 14.5%

Median 3,399.3 (70.2) 3,360.5 (0.8) 2.4% 3.45 10.1 9.5 15.8 13.8 13.2%

(1) Enterprise Value = Market Capitalization + Preferred Equity + Total Debt + Minority Interest - Cash and Equivalents. Assumes cash and equivalents for these companies represent excess cash.

Sources: Capital IQ, FactSet Research Systems, and company filings as of May 31, 2015.

William Blair

Investment Services Industry Insights Public Valuation Update 7

Public Asset Managers Key Metrics

Assets Under Management ($B) Revenues ($M) Diluted EPS

Company Q1 2014 Q1 2015 % Q1 2014 Q1 2015 % Q1 2014 Q1 2015 %

Affiliated Managers Group Inc. Prides Crossing, MA

$556.8 $632.2 13.5% $593.1 $635.0 7.1% $1.40 $2.28 62.9%

BlackRock, Inc. New York, NY

4,400.9 4,774.2 8.5% 2,670.0 2,723.0 2.0% 4.40 4.84 10.0%

Calamos Asset Management Inc. Naperville, IL

26.1 24.5 (6.4%) 63.9 57.4 (10.2%) 0.11 0.01 (94.9%)

Cohen & Steers Inc. New York, NY

49.0 54.7 11.5% 72.8 83.8 15.1% 0.43 0.45 4.7%

Diamond Hill Investment Group Inc. Columbus, OH

13.0 16.1 24.0% 23.2 29.3 26.4% 1.78 2.89 62.4%

Eaton Vance Corp. Boston, MA

278.6 295.7 6.1% 354.1 354.9 0.2% 0.59 0.24 (59.3%)

Federated Investors, Inc. Pittsburgh, PA

366.2 355.8 (2.9%) 211.5 220.5 4.3% 0.34 0.35 3.1%

Fortress Investment Group LLC New York, NY

62.5 69.9 11.8% 183.5 168.9 (8.0%) 0.01 0.15 NMF

Franklin Resources Inc. San Mateo, CA

886.9 880.6 (0.7%) 2,095.9 2,009.8 (4.1%) 0.89 0.98 9.6%

GAMCO Investors, Inc. Rye, NY

47.6 46.5 (2.1%) 104.5 103.8 (0.6%) 1.09 0.97 (11.0%)

Invesco Ltd. Atlanta, GA

787.3 798.3 1.4% 1,269.5 1,291.6 1.7% 0.43 0.60 41.1%

Janus Capital Group, Inc. Denver, CO

174.1 192.4 10.5% 230.2 262.7 14.1% 0.16 0.23 43.8%

Legg Mason Inc. Baltimore, MD

701.8 709.1 1.0% 681.4 702.3 3.1% 0.58 0.73 NMF

Och-Ziff Capital Management Group LLC New York, NY

42.6 48.3 13.3% 285.5 332.9 16.6% 0.14 0.14 0.9%

Pzena Investment Management, Inc. New York, NY

25.4 27.9 9.8% 26.4 28.7 8.5% 0.11 0.12 4.5%

Silvercrest Asset Management Group Inc. New York, NY

16.2 18.2 12.3% 16.7 17.4 4.2% 0.13 0.18 43.4%

T. Rowe Price Group, Inc. Baltimore, MD

711.4 772.7 8.6% 954.6 1,027.0 7.6% 1.12 1.13 0.9%

The Blackstone Group L.P. New York, NY

271.7 310.5 14.2% 1,502.0 2,462.2 63.9% 0.44 1.00 127.3%

Virtus Investment Partners, Inc. Hartford, CT

58.0 54.8 (5.6%) 107.9 103.8 (3.7%) 2.34 2.11 (9.8%)

Waddell & Reed Financial, Inc. Overland Park, KS

131.4 122.9 (6.5%) 390.4 385.5 (1.3%) 0.88 0.80 (8.8%)

Westwood Holdings Group Inc. Dallas, TX

19.1 21.7 13.8% 25.9 29.6 14.1% 0.72 0.71 (1.4%)

Mean $458.4 $487.0 6.5% $564.9 $620.5 7.7% $0.86 $1.00 12.1%

Median 131.4 122.9 8.6% 230.2 262.7 4.2% 0.58 0.71 4.5%


William Blair


Relative Performance

Revenue growth has averaged 13.5% over the prior three years, slightly ahead the comparable average last year.

Average forward revenue growth is estimated to be 4.9%.

Margins are generally in a tight band, averaging 35.9% for LTM EBITDA and 18.8% for LTM net income.

Three-Year Revenue Growth

Forward Revenue Growth

LTM EBITDA Margin

LTM Net Income Margin

=

Sources: FactSet Research Systems, Capital IQ, and SNL Financial as of May 31, 2015.

41% 37% 34%26%

20% 19% 16% 15% 13% 13% 12% 10% 10% 8% 7% 5% 5% 2% 2%

(1%)(11%) (15%)

(5%)

5%

15%

25%

35%

45%

BX OZM FIG VRTS DHIL WHG SAMG AMG TROW WDR PZN GBL CNS IVZ BLK EV BEN LM JNS FII CLMS

Average: 13.5%

17% 15% 12% 11% 11% 10% 10% 9% 8% 7% 5% 4% 2% 1% 0% (0%)

(1%) (2%) (2%) (5%) (10%)

(45%)

(30%)

(15%)

(0%)

15%

30%

DHIL JNS PZN BX CNS WHG FII SAMG TROW AMG BLK LM FIG OZM EV GBL IVZ WDR BEN CLMS VRTS

Average: 4.9%

60%53% 50% 47%

43% 41% 39% 38% 37% 37% 36% 32% 31% 30% 29% 28% 26% 20% 20% 20%

(NMF) (0%)

25%

50%

75%

OZM PZN TROW DHIL BLK CNS AMG BEN EV WHG GBL JNS WDR VRTS FII IVZ SAMG CLMS LM FIG BX

Average: 35.9%

32% 30% 30% 29%24% 24% 23% 23% 21% 21% 20% 19% 18% 17% 17%

9% 8% 8% 7% 7% 5%

(0%)

10%

20%

30%

40%

DHIL TROW BLK BEN GBL CNS BX WHG VRTS IVZ AMG WDR EV FII JNS OZM LM FIG SAMG PZN CLMS

Average: 18.8%

William Blair


Long-Term Valuation Observations

Current valuation levels have increased significantly from third quarter 2011, though they are still slightly below the longer-term median of 10.8 times.

Valuation levels remain in line with long-term historical levels.

Enterprise Value/LTM EBITDA

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Enterprise Value/Forward EBITDA


2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Sources: Capital IQ and company filings as of May 31, 2015.

13.5x

11.4x12.6x

12.9x

13.0x13.6x

11.8x11.1x

10.8x

11.3x10.1x

5.9x6.9x

11.8x

14.8x

14.6x

13.0x

9.1x

9.9x10.6x

11.3x

10.0x

7.0x8.2x

8.8x 8.8x

9.4x 9.4x

10.4x

10.2x

12.6x

12.1x10.8x 11.0x

10.2x10.1x

9.9x

0.0x

5.0x

10.0x

15.0x

20.0x Median: 10.8x

12.0x

10.8x11.6x

12.3x

10.6x

11.7x

10.3x9.8x

8.6x

9.9x8.9x

5.3x

10.2x

12.9x

13.8x

12.1x

10.1x

7.2x

8.8x

9.1x

8.6x 8.4x

6.4x7.1x

8.1x6.9x

7.9x 8.1x8.8x

11.0x11.6x 11.6x

10.1x10.0x

10.1x9.5x 9.5x

0.0x

5.0x

10.0x

15.0x Median: 9.9x

William Blair


Indexed Stock Price Performance

Over the last five years, publicly traded asset management companies have outperformed the S&P 500 and S&P 500 Financial Sector Index.

The public universe of asset managers experienced a moderate drop in valuations in late 2011 but has since rebounded.

Over the last 12 months, the index of asset management companies tracked by William Blair has increased 13.9%, outperforming the S&P 500 and the S&P Financial Sector Index.

Five-Year Stock Price Performance

LTM Indexed Stock Price Performance

Sources: FactSet Research Systems and company filings as of May 31, 2015.

0

50

100

150

200

250

May-10 Sep-10 Jan-11 May-11 Sep-11 Jan-12 May-12 Sep-12 Jan-13 May-13 Sep-13 Jan-14 May-14 Sep-14 Jan-15 May-15

Asset Managers (+131.3%) S&P 500 (+93.4%) S&P 500 - Financials (+67.4%)

+131.3%

+93.4%

+67.4%

80

90

100

110

120

130

May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Mar-15 Apr-15 May-15

Asset Managers (+13.9%) S&P 500 (+9.6%) S&P 500 - Financials (+10.3%)

+13.9%

+10.3%

+9.6%

William Blair

Investment Services Industry Insights 11 Broker-Dealer Sector


M&A Trends Among Broker-dealers

The year-to-date number of transactions is up approximately 4% from the year-ago period.

Year-to-date aggregate disclosed transaction value of $845 million is significantly below year-to-date 2014 levels, but above the $804 million disclosed in 2013.

Historical Transaction Volume

Historical Transaction Dollar Volume

Note: Year-to-date as of May 31, 2015 Sources: SNL Financial and William Blair’s Merger and Acquisitions market analysis.

73

46 44

71 78

106

89 87

73 77

100

46

63

26 27

0

20

40

60

80

100

120

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2014YTD

2015YTD

3.8%Average: 73

$3,134 $4,368 $2,896

$13,433

$28,999 $33,246

$62,487

$15,730

$4,011 $6,190

$17,498

$804 $3,095 $1,510 $845

$0

$10,000

$20,000

$30,000

$40,000

$50,000

$60,000

$70,000

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2014YTD

2015YTD

($ in millions) (44.0%)Average: $15,069

William Blair

Investment Services Industry Insights Broker-Dealer Sector 12

As shown below, approximately 25% of the aggregate deals since 2000 have been completed at above 3.00 times LTM revenue, and approximately 85% have been completed at greater than 10.0 times LTM net income.

Size matters: transactions less than $50 million were completed at 0.74 times LTM revenue and 9.0 times LTM net income, substantially less than the valuations on larger deals.

LTM Revenue Multiple Breakdown LTM Net Income Multiple Breakdown

LTM Revenue Multiple by Transaction Size LTM Net Income Multiple by Transaction Size

Sources: SNL Financial and William Blair’s Merger and Acquisitions market analysis.

53.8%

20.8%

25.4%

Less than 1.50x

1.50x to 3.00x

Greater than 3.00x

85.0%

9.4%

5.6%

Greater than 10.0x

5.0x to 10.0x

Less than 5.0x

0.74x

1.55x

2.38x

0.00x

1.00x

2.00x

3.00x

4.00x

5.00x

<$50mm $50mm - $500mm >$500mm

9.0x

15.0x

21.7x

0.0x

5.0x

10.0x

15.0x

20.0x

25.0x

<$50mm $50mm - $500mm >$500mm

William Blair


Recent Select Broker-Dealer M&A Transactions

Retail Broker-dealers

($ in millions) Deal Value/

Date Effective Target Acquirer Equity Value LTM Revenue LTM Net Income

05/19/15 Expander Advisors Aviva NA NA NA

05/19/15 Leonardo & Co. BPCE NA NA NA

04/28/15 JHS Capital Advisors Ameriprise Financial NA NA NA

03/23/15 First Midwest Securities American International Group NA NA NA

03/11/15 Kyte Group Limited R.J. O'Brien & Associates $7.1 NA NA

02/23/15 Sterne Agee Group Stifel Financial Corp. 150.0 NA NA

01/20/15 Capital Guardian Holding Northern Star Capital Holdings NA NA NA

12/18/14 Kades-Margolis Corporation U.S. Retirement Partners NA NA NA

11/24/14 Merchant Capital Stifel Financial Corp. NA NA NA

11/19/14 A. R. Schmeidler & Co. Artemis Investment Management Corporation 15.5 NA NA

10/31/14 City Index Holdings GAIN Capital Holdings 117.5 0.97x 11.0x

10/01/14 Dominick & Dominick Coil Investment Group NA NA NA

09/22/14 Securities Service Network Ladenburg Thalmann Financial Services 45.0 0.39 NA

08/13/14 Girard Securities RCS Capital Corporation NA NA NA

08/06/14 VSR Group RCS Capital Corporation NA NA NA

07/07/14 Octo CTVM Caixa Geral de Depositos NA NA NA

05/27/14 OM Securities General Atlantic Service Company NA NA NA

05/20/14 Validus/Strategic Capital Partners RCS Capital Corporation 174.1 NA NA

05/20/14 Southern Trust Securities AR Growth Finance Corporation NA NA NA

04/01/14 SWS Group Hilltop Holdings 260.5 1.05 NMF

03/12/14 Global Asset Advisors GAIN Capital Holdings NA NA NA

03/12/14 Top Third Ag Marketing GAIN Capital Holdings NA NA NA

01/17/14 J.P. Turner & Company RCS Capital Corporation 27.0 0.42 NA

01/16/14 Cetera Financial Group RCS Capital Corporation 1,150.0 0.88 NA

Mean $224.6 0.74x 11.0x

Median 81.3 0.88 11.0

Institutional Broker-dealers

($ in millions) Transaction Value/

Date Effective Target Acquirer Equity Value LTM Revenue LTM Net Income

05/27/15 Kuna & Co. Evercore Partners NA NA NA

05/22/15 Dimension Banque Cantonale de Genève NA NA NA

05/20/15 Essex National Securities Infinex Financial Group NA NA NA

05/13/15 NW Capital Markets/ NW Financial Group Stern Brothers & Co. NA NA NA

04/10/15 Bay Mutual Financial Knight Global NA NA NA

04/09/15 Futures activities business of Jefferies’ Bache Societe Generale NA NA NA

04/08/15 Blackstone Advisory Partners Asia Comprador Limited NA NA NA

04/01/15 Faros Trading Jefferies Group NA NA NA

03/25/15 FXCM Japan Securities Co. Rakuten $7.4 NA NA

03/18/15 Summer Street Research Partners Northland Capital Holdings NA NA NA

03/11/15 Kyte Group Limited R.J. O'Brien & Associates 7.1 NA NA

03/05/15 Ensco 1085 Management group 8.6 NA NA

02/18/15 Marketplace Holdings CenterGate Capital NA NA NA

01/30/15 Kunlun Financial Group CITIC Securities Company 167.6 NA NA

12/18/14 Midtown Partners & Co. India Globalization Capital NA NA NA

12/16/14 Ashton Stewart Capital Aldwych Capital Partners NA NA NA

12/15/14 R P Martin Group (certain assets) BGC Partners NA NA NA

12/08/14 Banco Espírito Santo de Investimento Haitong Securities Company 379.0 NA NA

11/12/14 G.X. Clarke & Company INTL FCStone 29.0 NA NA

10/20/14 Close Brothers Seydler Bank Oddo & Cie 46.0 NA 9.0x

10/15/14 Newport Group, Inc./ Newport Group Securities Verisight NA NA NA

10/13/14 VS Holdings Janus Capital Group 66.0 0.98x NA

10/09/14 National Stock Exchange OpenMatch Holdings NA NA NA

10/06/14 Cutwater Holdings Bank of New York Mellon Corporation NA NA NA

Mean $95.6 0.98x 9.0x

Median 46.0 0.98 9.0

Note: Transaction values and multiples calculated in local currencies. Sources: SNL Financial, Capital IQ, and FactSet Research Systems.

William Blair


Recent Notable Transactions

Target:

Description:

Sterne Agee Group, Inc. provides retail and institutional brokerage services, investment banking and underwriting services, secondary trading of securities, and market making in over-the-counter stocks. The company also provides financial services, including stocks, bonds, fixed income securities, and mutual funds, as well as asset management services including fixed income management, alternative investment strategies, and trust company products and services. Stifel Financial Corp. provides retail and institutional wealth management, and investment banking

services primarily in the United States. Founded in 1890 and headquartered in St. Louis, Missouri, the company serves individual investors, corporations, municipalities, and institutions.

Birmingham, AL

Buyer:

St. Louis, MO Observations/Rationale:

Sterne Agee bolsters Stifel’s Global Wealth Management segment with the addition of approximately 730 financial advisors and independent representatives nationwide managing over $20 billion in client assets.

The transaction closed in the second quarter of 2015 and is expected to be materially accretive to shareholders.

Ronald J. Kruszewski, chairman and CEO of Stifel, commented, "We have identified a great firm in Sterne Agee to bolster our Global Wealth Management group with the addition of more than 700 financial advisors and independent representatives increasing advisor professionals by 35%. This acquisition furthers our goal of creating a balanced, well-diversified business mix with wealth management and institutional exposure.”

Key Metrics: Announced Date: Transaction Value ($M): Majority/Minority: TV/LTM Revenue: TV/LTM Net Income:

02/23/15

$150.0 Majority

NA NA

Target:

Description:

Capital Guardian Holding, LLC provides investment brokerage services to clients in the eastern United States. It offers wealth management services, such as advisory, research, advanced planning, trust, and asset management services; and risk management, alternative investment advisory, and succession planning services, as well as lending and insurance solutions. Northern Star is a family investment office focused on hedge funds, private equity, and liquid alternative investments. Headquartered in New York, with branch offices in Europe and Miami, its investors include several prominent European, North, and South American families and institutions.

Charlotte, NC

Buyer:

New York, NY Observations/Rationale:

With the acquisition of Capital Guardian, Northern Star Capital’s AUM in commingled funds and managed accounts will exceed $3 billion.

Post transaction, Richard Moran will be appointed as the new president and chief operating officer of Capital Guardian.

Mr. Moran stated, "I am pleased to join our partners at Northern Star to lead the growth and expansion efforts of Capital Guardian… Rarely do you see such a unique opportunity and extraordinary value proposition: To be a leading financial services firm offering both company advisors and independent advisors full service wealth management capabilities including RIA, Asset Management, International, Family Office, Trust and Insurance Services. These capabilities have historically been the exclusive domain of the large global banks."

Key Metrics: Announced Date: Transaction Value ($M): Majority/Minority: TV/LTM Revenue: TV/LTM Net Income:

01/20/15

NA Majority

NA NA

William Blair



Public Broker-dealers

($ in millions)

Stock Price Market Capitalization

Price/Earnings Price/Revenue LTP EPS Growth % PEG Company LTM 2015E 2016P LTM 2015E 2016P

Online Broker-dealers

Charles Schwab Corp. San Francisco, CA

$31.65 $41,572.9 32.1x 30.4x 21.0x 6.71x 5.98x 5.11x 23.2% 131.1%

E*TRADE Financial Corp. New York, NY

29.46 8,540.9 25.9 25.4 19.9 4.68 4.45 4.12 18.5% 137.3%

FXCM Inc. New York, NY

1.44 73.0 16.3 16.3 27.2 1.71 1.46 1.36 21.9% 107.1%

GAIN Capital Holdings Inc. Bedminster, NJ

9.30 456.2 11.9 10.6 7.9 1.15 1.00 1.04 16.0% 74.3%

IG Group Holdings PLC London, United Kingdom

11.93 4,366.5 21.6 20.7 19.2 7.40 6.80 6.39 4.0% 500.1%

Interactive Brokers Group Inc. Greenwich, CT

35.70 2,087.7 38.2 23.4 24.5 13.15 10.99 9.56 10.0% 499.3%

Inter-Dealer Brokers

BGC Partners Inc. New York, NY

$9.45 $1,997.3 14.1x 12.7x 10.7x 1.09x 0.85x 0.81x 16.8% 75.3%

Compagnie Financiere Tradition Lausanne, Switzerland

68.90 463.2 NA NA NA NA NA NA NA NA

GFI Group Inc. New York, NY

5.85 999.3 NMF NMF 28.7 1.33 0.88 0.77 NA NA

ICAP PLC London, United Kingdom

8.44 5,484.7 34.8 20.4 16.2 2.81 2.76 2.67 3.9% 488.5%

INTL FCStone Inc. New York, NY

35.07 665.7 17.9 25.6 13.6 1.19 1.02 0.98 19.0% 96.7%

Investment Technology Group Inc. New York, NY

26.86 919.4 17.5 15.5 12.6 1.62 1.56 1.52 12.5% 103.3%

Knight Capital Group Inc. Jersey City, NJ

13.49 1,591.0 22.7 18.5 12.7 1.24 1.26 1.23 10.0% 185.0%

MarketAxess Holdings Inc. New York, NY

88.45 3,301.1 40.8 36.1 31.4 11.91 10.53 8.89 17.8% 203.2%

Tullett Prebon PLC London, United Kingdom

6.03 1,469.3 11.9 11.5 8.6 1.30 1.20 1.17 6.6% 174.3%


William Blair


Public Broker-dealers (cont’d)

($ in millions)

Stock Price Market Capitalization

Price/Earnings Price/Revenue LTP EPS Growth % PEG Company LTM 2015E 2016P LTM 2015E 2016P

Midsize Broker-Dealer

Evercore Partners Inc. New York, NY

$50.97 $1,856.7 18.0x 16.1x 13.6x 2.07x 1.75x 1.61x 9.8% 163.9%

Greenhill & Co. New York, NY

38.94 1,140.4 24.0 20.5 16.7 3.84 3.28 3.03 17.5% 117.3%

LPL Investment Holdings Inc. Boston, MA

42.64 4,097.9 17.1 16.7 13.6 0.93 0.89 0.84 15.0% 111.2%

Piper Jaffray Cos. Minneapolis, MN

47.42 757.5 11.9 13.4 12.3 1.18 1.20 1.13 10.0% 118.7%

Raymond James Financial Inc. St. Petersburg, FL

58.12 8,360.2 16.7 17.2 15.7 1.64 1.51 1.40 12.7% 129.5%

Stifel Financial Corp. St Louis, MO

53.26 3,615.4 18.4 17.2 14.1 1.56 1.39 1.25 12.2% 141.2%

Global Investment Banks

Bank of America Corp. Charlotte, NC

$16.50 $173,284.6 21.6x 12.3x 10.3x 2.04x 1.98x 1.86x 8.5% 144.3%

Barclays PLC London, United Kingdom

4.12 68,998.3 13.7 11.6 9.5 1.76 1.75 1.70 31.9% 36.5%

Citigroup Inc. New York, NY

54.08 164,086.3 15.3 9.9 9.1 2.13 2.10 2.02 22.8% 43.4%

Credit Suisse Group AG Zurich, Switzerland

26.41 43,263.3 14.2 12.5 10.3 1.59 1.62 1.57 21.4% 58.5%

Deutsche Bank AG Frankfurt am Main, Germany

30.06 41,456.0 16.9 13.4 8.7 1.15 1.11 1.11 48.9% 27.4%

Goldman Sachs Group Inc. New York, NY

206.19 89,077.4 11.5 10.9 10.5 2.54 2.49 2.47 8.0% 135.7%

JPMorgan Chase & Co. New York, NY

65.78 244,115.3 11.9 11.3 10.1 2.55 2.43 2.31 6.3% 179.2%

Morgan Stanley New York, NY

38.20 75,255.0 15.0 12.7 11.4 2.14 2.02 1.93 14.6% 87.4%

UBS AG Zurich, Switzerland

21.36 82,120.0 16.7 14.4 12.2 2.67 2.51 2.41 15.3% 94.3%

Mean $37.87 $35,849.1 19.6x 17.0x 14.9x 3.00x 2.72x 2.49x 15.5% 155.9%

Median 30.85 3,856.6 17.0 15.8 12.7 1.76 1.75 1.61 14.8% 124.1%


William Blair



Relative Performance

Revenue growth has averaged 3.9% over the prior three years, slightly ahead of the comparable average last year.

One-year forward revenue growth varies widely, averaging 6.0%.

LTM net income margins vary widely, averaging 9.6%.

Three-Year Revenue Growth

Forward Revenue Growth

LTM Net Income Margin

Sources: FactSet Research Systems, Capital IQ, and SNL Financial as of May 31, 2015.

29% 25%

15% 15% 15% 14%10% 9% 8% 8%

4% 4% 3% 3% 3% 3% 2% 2% 2% 1% 1% (0%)

(1%)(4%)

(5%)(6%)

(8%)(8%)

(10%)

(17%) (25%)

(15%)

(5%)

5%

15%

25%

Average: 3.9%

45%31%

25% 23% 21%13% 13% 12% 12%

7% 7% 7% 6% 5% 4% 4% 3% 3% 2% 1% 1% 0% (0%) (0%)

(1%)(3%)

(5%)(9%)

(9%)

(40%) (45%) (35%) (25%) (15%)

(5%)5%

15%25%35%45%

Average: 6.0%

36%30%

26% 24% 23% 21%17% 15% 13% 12% 12% 10% 10% 10% 10% 9% 9% 8% 8% 8% 4% 4% 3% 3% 1% 1% 0%

(2%)(16%)

(24%) (30%)

(5%)

20%

45%Average: 9.6%

William Blair


Long-Term Valuation Observations

Valuations declined during the first quarter of 2015 to 18.2 times LTM EPS, down from 19.6 times in fourth quarter 2014.

Forward EPS multiples decreased meaningfully to 15.2 times, compared with 17.3 times in fourth quarter 2014.

Price/LTM EPS


2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Price/Forward EPS


2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Sources: Capital IQ and company filings as of May 31, 2015.

18.1x16.9x

16.2x15.0x

13.7x

14.2x

12.4x

17.2x15.7x

12.7x12.5x

9.9x11.4x

14.8x

18.6x

18.4x18.2x

15.3x

18.1x

17.7x

19.7x17.3x

15.9x

13.7x

16.5x15.2x

20.3x

23.1x20.3x

19.6x18.2x

17.1x18.8x

17.8x

18.4x19.6x

18.2x

0.0x

5.0x

10.0x

15.0x

20.0x

25.0x

30.0xMedian: 17.2x

17.6x

14.4x

15.7x

15.3x14.0x

14.3x

12.1x14.0x

11.4x

11.7x

11.2x9.7x

11.2x

14.3x

18.1x

14.5x

14.5x

12.1x12.2x

14.5x

12.9x

12.7x

11.4x

11.3x

12.5x13.6x

15.1x

14.1x13.3x

14.2x14.4x

16.5x

16.4x

16.8x

16.1x

17.3x

15.2x

0.0x

5.0x

10.0x

15.0x

20.0x

25.0x Median: 14.2x

William Blair


Indexed Stock Price Performance

Over the last five years, all indices of publicly traded broker-dealers tracked by William Blair have experienced positive performance, ranging from a 52.8% increase by boutique broker-dealers to a 114.3% increase by online brokers-dealers.

Over the last 12 months, more than half of these broker-dealer indices have outperformed the S&P 500.

Five-Year Stock Price Performance

LTM Indexed Stock Price Performance

Sources: FactSet Research Systems and company filings as of May 31, 2015.

0

50

100

150

200

250

May-10 Sep-10 Jan-11 May-11 Sep-11 Jan-12 May-12 Sep-12 Jan-13 May-13 Sep-13 Jan-14 May-14 Sep-14 Jan-15 May-15

S&P 500 (+93.4%) S&P 500 - Financial (+67.4%) Online (+114.3%)

Inter-Dealer Broker (+104.9%) Boutique (+52.8%) Global I-Banks (+98.3%)

+93.4%

+98.3%

+104.9%

+114.3%

+52.8%

+67.4%

70

90

110

130

May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Mar-15 Apr-15 May-15

S&P 500 (+9.6%) S&P 500 - Financial (+10.3%) Online (+27.0%)

Inter-Dealer Broker (+21.3%) Boutique (+7.6%) Global I-Banks (+12.6%)

+7.6%

+21.3%

+9.6%

+27.0%

+12.6%+10.3%

Other Information

William Blair

Investment Services Industry Insights 20 Other Information

Other Information

Equity Offerings

Initial Public Offerings

Completion Date Company Price Shares(1) Amount(1)

Market Capitalization at Pricing /

LTM Revenue

LTM Net Income

04/15/15 Virtu Financial $19.00 16.5 $314.1 1.01x 12.8x

10/29/14 Fifth Street Asset Management 17.00 6.9 117.3 0.84 NMF

10/08/14 OM Asset Management 14.00 22.0 308.0 1.60 NMF

09/23/14 Medley Management 18.00 6.0 108.0 1.69 NMF

04/15/14 Moelis & Co. 25.00 7.5 186.9 2.74 NMF

06/26/13 Silvercrest Asset Management Group 11.00 5.5 60.6 2.46 6.3

06/05/13 RCS Capital Corp. 20.00 2.5 50.0 2.15 NMF

03/06/13 Artisan Partners Asset Management 30.00 12.7 381.0 4.06 NMF

05/02/12 The Carlyle Group 25.00 35.1 876.9 NMF NMF

04/11/12 Oaktree Capital Group 42.39 11.3 476.9 3.06 NMF

02/08/12 FX Alliance 12.00 6.0 71.8 2.35 10.6

11/17/11 Manning & Napier 12.00 13.6 163.0 3.30 11.6

03/29/11 Apollo Global Management 19.00 29.8 565.4 1.38 17.5

12/14/10 GAIN Capital Holdings 9.00 9.0 81.0 1.50 9.5

12/01/10 FXCM 14.00 17.3 242.5 3.22 10.8

11/17/10 LPL Investment Holdings 30.00 17.2 516.7 1.08 NMF

11/09/10 Noah Holdings 12.00 9.7 115.9 4.88 17.3

(1) Amount in millions; includes overallotment. Sources: Dealogic and William Blair’s Merger and Acquisitions market analysis.

Follow-On Equity Offerings

Completion Date Company Price Shares(1) Amount(1)

Market Capitalization at Pricing /

LTM Revenue

LTM Net Income

06/01/15 Carlyle Group $30.07 7.0 $210.5 0.63x 20.1x

04/20/15 Brookfield Asset Management 56.00 17.9 1,000.2 2.21 13.5

03/03/15 Artisan Partners Asset Management 46.08 3.8 176.5 2.02 20.8

03/02/15 Oaktree Capital Group 54.24 4.0 217.0 NMF 18.7

11/18/14 Moelis & Co. 31.80 5.5 174.9 0.92 11.2


06/05/14 RCS Capital Corp. 20.25 27.6 558.9 1.68 NMF

03/13/14 Fortress Investment Group 8.04 32.5 261.3 3.43 18.0


03/05/14 Oaktree Capital Group 59.33 5.8 344.1 NMF NMF

03/04/14 Carlyle Group 33.50 13.8 462.3 0.48 20.4


09/11/13 Virtus Investment Partners 155.00 1.3 201.2 3.34 17.3

06/05/13 Carlyle Group 27.00 11.7 314.7 0.41 NMF

05/22/13 Oaktree Capital Group 53.50 8.1 430.7 NMF NMF

05/09/13 Apollo Global Management 25.00 24.3 606.9 1.07 7.8

03/13/13 E*Trade Financial Corp. 11.35 28.5 323.8 2.48 NMF

11/14/12 WisdomTree Investments 6.10 25.6 156.3 NMF NMF

08/06/12 Duff & Phelps Corp. 13.50 3.0 40.5 1.32 26.3

(1) Amount in millions; includes overallotment. Sources: Dealogic and William Blair’s Merger and Acquisitions market analysis.

William Blair

Investment Services Industry Insights Other Information 21

Debt Offerings

Date Company Offering Description Price Amount(1)

Redemption Date

05/12/15 Blackstone Holdings Finance Co. 2.000% Senior notes NA $300.0 05/19/25

04/28/15 BlackRock 1.250% Senior unsecured notes $99.7 700.0 05/06/25

03/25/15 Franklin Resources 2.850% Senior unsecured notes 99.8 400.0 03/30/25

03/10/15 KCG Holdings 6.875% Senior secured notes 96.7 500.0 03/15/20

03/04/15 CME Group 3.000% Senior unsecured notes 99.8 750.0 03/15/25

03/04/15 TD Ameritrade Holding Corporation 2.950% Senior unsecured notes 99.8 750.0 04/01/22

03/03/15 Charles Schwab Corporation 1.500% Senior unsecured notes 99.9 625.0 03/10/18

03/02/15 E*TRADE Financial Corporation 4.625% Senior unsecured notes 100.0 460.0 09/15/23

02/19/15 BGC Partners, Inc. 5.375% Senior unsecured notes NA 300.0 12/09/19

02/10/15 Affiliated Managers Group 3.500% Senior unsecured notes 99.2 350.0 08/01/25

02/10/15 Lazard Group 3.750% Senior unsecured notes 99.7 400.0 02/13/25

01/12/15 Brookfield Asset Management 4.000% Senior unsecured notes 100.0 500.0 01/15/25

12/04/14 BGC Partners, Inc. 5.375% Senior unsecured notes NA 300.0 12/09/19


10/17/14 TD Ameritrade Holding Corporation 3.625% Senior unsecured notes 100.0 500.0 04/01/25

10/03/14 Cowen Group 8.250% Senior unsecured notes 100.0 55.0 10/15/21

07/15/14 Stifel Financial Corp. 4.250% Senior unsecured notes 99.2 300.0 07/18/24

07/11/14 Oaktree Capital Management 3.910% Series A senior unsecured notes 100.0 50.0 09/03/24

07/11/14 Oaktree Capital Management 4.010% Series B senior unsecured notes 100.0 100.0 09/03/26

06/23/14 Legg Mason 5.625% Senior unsecured notes 106.5 150.0 01/15/44


06/02/14 Piper Jaffray Companies Floating rate class A senior unsecured notes 100.0 50.0 05/31/17

05/13/14 Jefferies Group 2.375% Senior unsecured notes 99.7 500.0 05/20/20

04/29/14 RCS Capital Corporation 5.000% Senior unsecured convertible notes 66.7 120.0 11/01/21

04/02/14 Blackstone Holdings Finance Co. 5.000% Senior unsecured notes NA 500.0 06/15/44

03/13/14 BlackRock 3.500% Senior unsecured notes NA 30.0 03/31/34

03/05/14 Carlyle Holdings II Finance 5.625% Senior unsecured notes 104.3 200.0 03/30/43

03/04/14 Cowen Group 3.000% Senior cash convertible unsecured notes NA 130.0 03/15/19


01/23/14 Brookfield Asset Management 4.820% Unsecured medium-term notes 100.0 500.0 01/28/26

01/22/14 JMP Group 7.250% Senior unsecured notes 100.0 42.0 01/15/21


11/06/13 Lazard Group 4.250% Senior unsecured notes 99.7 500.0 11/14/20

10/17/13 Brookfield Asset Management 5.040% Medium-term notes 100.5 200.0 03/08/24

10/01/13 IntercontinentalExchange Group 4.000% Senior unsecured notes 99.2 800.0 10/15/23

10/01/13 IntercontinentalExchange Group 2.500% Senior unsecured notes 99.9 600.0 10/15/18

09/30/13 TMX Group 3.253% Series A senior unsecured debentures NA 400.0 10/03/18

09/30/13 TMX Group Floating rate series C senior unsecured debentures NA 350.0 10/03/16

09/04/13 Brookfield Asset Management 5.950% Senior unsecured debentures 96.1 125.0 06/14/35

09/04/13 Brookfield Asset Management 5.040% Medium-term notes 100.0 300.0 03/08/24

09/04/13 CME Group 5.300% Senior unsecured notes 99.8 750.0 09/15/43

07/22/13 Charles Schwab Corporation 2.200% Senior unsecured notes 100.0 275.0 07/25/18

07/15/13 INTL FCStone 8.500% Senior unsecured notes 100.0 40.0 07/30/20

01/17/13 JMP Group 8.000% Senior unsecured notes 100.0 40.0 01/15/23




11/05/12 Invesco Finance 3.125% Senior unsecured notes 600.0 99.9 11/30/22


09/19/12 Franklin Resources 1.375% Senior unsecured notes 300.0 99.5 09/15/17

(1) Amount in millions. Sources: SNL Financial and William Blair’s Merger and Acquisitions market analysis.

William Blair

Investment Services Industry Insights 22 Financial Services & Technology Analysts and Coverage

Financial Services & Technology Analysts and Coverage

Insurance Brokers and Property and Casualty Insurance

Adam Klauber, CFA

Financial Technology and Specialty Finance

Robert Napoli

Asset Management and Financial Technology

Chris Shutler, CFA

Allstate Corporation (The) (ALL)

American International Group, Inc. (AIG)

AmTrust Financial Services, Inc. (AFSI)

Aon plc (AON)

Argo Group International Holdings, Ltd. (AGII)

Arthur J. Gallagher & Co. (AJG)

Benefitfocus, Inc. (BNFT)

Brown & Brown, Inc. (BRO)

Chubb Corporation (The) (CB)

CNA Financial Corporation (CNA)

Connecture, Inc. (CNXR)

Crawford & Company (CRD.A)

Crawford & Company (CRD.B)

eHealth, Inc. (EHTH)

Erie Indemnity Company (ERIE)

Federated National Holding Company (FNHC)

HCC Insurance Holdings, Inc. (HCC)

Kemper Corporation (KMPR)

Markel Corporation (MKL)

Marsh & McLennan Companies, Inc. (MMC)

National General Holdings Corp. (NGHC)

National Interstate Corporation (NATL)

Navigators Group, Inc. (The) (NAVG)

Patriot National, Inc. (PN)

Progressive Corporation (The) (PGR)

RLI Corp. (RLI)

Travelers Companies, Inc. (The) (TRV)

WebMD Health Corp. (WBMD)

Willis Group Holdings Public Limited Company (WSH)

Alliance Data Systems Corporation (ADS)

American Express Company (AXP)

Bottomline Technologies, Inc. (EPAY)

CAI International, Inc. (CAP)

Capital One Financial Corporation (COF)

Cardtronics, Inc. (CATM)

Compass Diversified Holdings (CODI)

Discover Financial Services (DFS)

Encore Capital Group, Inc. (ECPG)

EVERTEC, Inc. (EVTC)

Financial Engines, Inc. (FNGN)

Garrison Capital Inc. (GARS)

Green Dot Corporation (GDOT)

Harvest Capital Credit Corporation (HCAP)

Independence Realty Trust, Inc. (IRT)

Marlin Business Services Corp. (MRLN)

MasterCard Incorporated (MA)

MoneyGram International, Inc. (MGI)

Monroe Capital Corporation (MRCC)

Performant Financial Corporation (PFMT)

PRA Group (PRAA)

QIWI plc (QIWI)

Visa Inc. (V)

WageWorks, Inc. (WAGE)

Western Union Company (The) (WU)

WEX Inc. (WEX)

Affiliated Managers Group, Inc. (AMG)

Artisan Partners Asset Management Inc. (APAM)

Charles Schwab Corporation (The) (SCHW)

Eaton Vance Corp. (EV)

Envestnet, Inc. (ENV)

Euronet Worldwide, Inc. (EEFT)

Fiserv, Inc. (FISV)

Global Payments, Inc. (GPN)

Heartland Payment Systems, Inc. (HPY)

Invesco Ltd. (IVZ)

LPL Financial Holdings Inc. (LPLA)

MSCI Inc. (MSCI)

SEI Investments Company (SEIC)

SS&C Technologies Holdings, Inc. (SSNC)

T. Rowe Price Group, Inc. (TROW)

TD Ameritrade Holding Corporation (AMTD)

Vantiv, Inc. (VNTV)

Waddell & Reed Financial, Inc. (WDR)

WisdomTree Investments, Inc. (WETF)

William Blair

Investment Services Industry Insights Investment Banking Team Biographies 23

Investment Banking Team Biographies

William Blair Financial Services Investment Banking

Robert Metzger, Managing Director, joined William Blair in 1999. While at William Blair and in his prior position at ABN AMRO, he focuses on the corporate finance needs of insurance, financial technology, and specialty finance companies. Mr. Metzger graduated in 1989 with highest honors from the University of Illinois, receiving a B.S. in accountancy. In 1995, he graduated with distinction from Northwestern University’s J.L. Kellogg Graduate School of Management, receiving an M.B.A. in finance and strategy. He is a Certified Public Accountant.

[email protected]

+1 312 364 8517

J.P. Young, Managing Director, is a member of the financial services industry group, where he focuses on the corporate finance needs of asset managers, broker-dealers, and specialty finance companies. Mr. Young joined William Blair’s investment banking group in 2009 from Macquarie Capital and began his investment banking career in 2000 at Piper Jaffray. He has extensive experience providing M&A advisory services and raising public and private equity capital for clients. Mr. Young received a B.S. from Lehigh University and an M.S. from the University of Chicago.

[email protected]

+1 312 364 8160

Matthew Zimmer, Managing Director, is a member of William Blair’s investment banking group. Before joining the firm, he worked with Robert W. Baird & Co. in the investment banking group for five years, where he specialized in M&A and equity underwriting. Mr. Zimmer has 11 years of experience advising public and private companies and has been involved in sell-side and buy-side transactions, strategic option studies, fairness opinions, and special committee situations. He graduated from the University of Notre Dame. In 2005, he graduated from Columbia Business School, receiving an M.B.A. with a concentration in finance and economics. He is a Certified Public Accountant.

[email protected]

+44 207 868 4502

William Blair

Investment Services Industry Insights 24 Select William Blair Transactions

Select William Blair Transactions

Not Disclosed

has been acquired by

Lightyear Capital

June 2015

$41,839,875

Follow-on Offering

April 2015

$165,000,000

Preferred Stock

March 2015

$27,500,000

Direct Unsecured Notes

January 2015

$172,500,000

Convertible Bond Offering

December 2014

A$193,000,000

has merged with

Treasury Group

November 2014

$47,000,000

Senior Debt

November 2014

$80,000,000

Preferred Stock

September 2014

$76,475,000

Follow-on Offering

July 2014

$100,000,000

Senior Unsecured Notes

July 2014

$100,000,000

Senior Secured Debt

June 2014

$60,000,000

Debt Placement

April 2014

$575,628,894

Follow-on Offering

March 2014

$66,815,000

Follow-on Offering

January 2014

$309,120,000

Follow-on Offering

November 2013

$82,800,000

Initial Public Offering

October 2013

$169,708,412

Follow-on Offering

October 2013

$34,000,000


August 2013

$59,361,250

Follow-on Offering

July 2013

Not Disclosed


Encore Capital Group

June 2013

Not Disclosed

Valuation ofClass A Equity Units

June 2013

£525,000,000


J.C. Flowers & Co. LLC

May 2013

Not Disclosed

Valuation ofClass A Equity Units

December 2012

$86,250,000


October 2012

William Blair

William Blair is a trade name for William Blair & Company, L.L.C. and William Blair International, Limited. William Blair & Company, L.L.C., is a Delaware company and is regulated by the Securities and Exchange Commission, The Financial Industry Regulatory Authority, and other principal exchanges. William Blair International Limited is authorised and regulated by the Financial Conduct Authority ("FCA") in the United Kingdom. William Blair & Company® only offers products and services where it is permitted to do so. Some of these products and services are only offered to persons or institutions situated within the United States and are not offered to persons or institutions outside of the United States.

This material has been approved for distribution in the United Kingdom by William Blair International Limited, Regulated by the Financial Conduct Authority (FCA), and is directed only at, and is only made available to, persons falling within COB 3.5 and 3.6 of the FCA Handbook (being “Eligible Counterparties” and Professional Clients). This Document is not to be distributed or passed on to any “Retail Clients.” No persons other than persons to whom this document is directed should rely on it or its contents or use it as the basis to make an investment decision.

William Blair & Company | 222 West Adams Street | Chicago, Illinois 60606 | +1 312 236 1600 | williamblair.com June 4, 2015

Investment Services Industry Insights Notes 25

Notes

William Blair

Investment Services Industry Insights 26 Disclosures

Disclosures

William Blair’s investment banking group combines significant transaction experience, rich industry knowledge, and deep relationships to deliver successful advisory and financing solutions to our global base of corporate clients. We serve both publicly traded and privately held companies, executing mergers and acquisitions, growth financing, financial restructuring, and general advisory projects. This comprehensive suite of services allows us to be a long-term partner to our clients as they grow and evolve. From 2010-2014, the investment banking group completed more than 330 merger-and-acquisition transactions worth $73 billion in value, involving parties in 36 countries and five continents, was an underwriter on more than 20% of all U.S. initial public offerings, and raised nearly $100 billion in public and private financing.

About William Blair Investment Banking

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