Industrial & Manufacturing Industry M&A Update...
Transcript of Industrial & Manufacturing Industry M&A Update...
Industrial & Manufacturing Industry M&A Update
February 2017
www.peakstone.com
Industrial & ManufacturingM&A Update | February 2017
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Peakstone Industrial & Manufacturing M&A Market Overview
The following materials provide a market overview of the Industrial & Manufacturing industry sectors
Stock price performance and valuation trends have been strong across most sectors. The following is an overview ofthe selected industries and their respective stock price performance over the last three years and current valuationlevels [(Relative Stock Price) (Enterprise Value to EBITDA)]
- Aerospace & Defense (5.4%) (13.0x) - Engineering Services (19.6%) (11.1x)
- Automotive (41.9%) (8.6x) - Environmental Services (42.0%) (17.2x)
- Building Materials (21.6%) (10.2x) - Industrial Filtration (13.8%) (14.2x)
- Business Services (31.1%) (13.7x) - Machinery (42.1%) (13.2x)
- Distribution (-35.0%) (11.2x) - Packaging (10.9%) (10.5x)
- Electrical Equipment (-12.7%) (13.6x) - Paper & Forest Products (0.4%) (9.7x)
Industrial & ManufacturingM&A Update | February 2017
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Industrial & Manufacturing Industry Update
For year-to-date 2017, strategic buyers accounted for approximately 92% of industrial & manufacturing M&Atransactions
o During 2016, strategic buyers accounted for 91% of the transactions
For closed transactions, industrial & manufacturing transaction multiples decreased from 9.3x EBITDA and 1.0xrevenue in 2015 to 8.4x EBITDA and 1.0x revenue in 2016. 2017 year-to-date multiples are up, 11.3x EBITDA and1.6x revenue
Notable publicly announced 2016 and YTD 2017 M&A transactions:
o Rockwell Collins Inc. entered into a definitive agreement to acquire B/E Aerospace Inc. for approximately $6.3 billion
o Parker-Hannifin Corporation entered into a definitive agreement to acquire CLARCOR Inc. for approximately $4 billion
o Zoomlion Heavy Industry Science and Technology Co., Ltd. made a bid to acquire Terex Corporation for $3.2 billion
o Gartner, Inc. entered into a definitive agreement to acquire CEB Inc. for approximately $2.5 billion
o American Axle & Manufacturing Holdings Inc. entered into a definitive agreement to acquire Metaldyne Performance Group Inc. for $1.5 billion
Notable IPO’s include REV Group, Forterra, Milacron Holdings, JELD-WEN Holdings, Inc. and Atkore InternationalGroup, Inc.
Industrial & ManufacturingM&A Update | February 2017
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Industrial & Manufacturing Industry - M&A Market Overview
Source: Capital IQNotes: US Industrial Manufacturing Transactions by Buyer Type only includes categorized transactions US Industrial Manufacturing Multiple excludes data outliers
U.S. Industrial & Manufacturing Transactions by Buyer Type U.S. Industrial & Manufacturing Transaction Multiples
Industrial & Manufacturing transaction activity has been strong
1,478 1,5751,726
1,5731,797 1,843 1,716
231
203261
290
210
215 220174
21
0
500
1,000
1,500
2,000
2,500
2010 2011 2012 2013 2014 2015 2016 2017YTD
Financial Strategic
8.0x
9.2x8.8x 8.6x
8.0x
9.3x
8.4x
11.3x
1.0x 1.0x 0.9x 0.9x 0.9x 1.0x 1.0x1.6x
0.0x
2.0x
4.0x
6.0x
8.0x
10.0x
12.0x
2010 2011 2012 2013 2014 2015 2016 2017YTD
EV / EBITDA EV / Revenue
Industrial & ManufacturingM&A Update | February 2017
-70%
-50%
-30%
-10%
10%
30%
50%
70%
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Relative Stock Performance – Group 1
Peakstone Industrial & Manufacturing Index - Trading Statistics
S&P 500: +27.5%
Distribution: -35.0%
Building Materials: +21.6%
Packaging: +10.9%
Automotive: +41.9%
Business Services: +31.1%
Engineering Services: +19.6%
Source: Capital IQNotes: Peakstone Industrial & Manufacturing Indexes represent middle market companies with revenue between $10 million and $2 billion
Industrial & ManufacturingM&A Update | February 2017
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Comparable Valuation Trends – Enterprise Value/EBITDA – Group 1
Peakstone Industrial & Manufacturing Index - Trading Statistics (continued)
S&P 500: 12.0x
Distribution: 11.2x
Building Materials: 10.2x
Packaging: 10.5x
Automotive: 8.6x
Business Services: 13.7x
Engineering Services: 11.1x
Source: Capital IQNotes: Peakstone Industrial & Manufacturing Indexes represent middle market companies with revenue between $10 million and $2 billion
0.0x
5.0x
10.0x
15.0x
20.0x
25.0x
30.0x
35.0x
40.0x
45.0x
Industrial & ManufacturingM&A Update | February 2017
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Relative Stock Performance – Group 2
S&P 500: +27.5%
Industrial Filtration: 13.8%
Environmental Services: +42.0%
Electrical Equipment: -12.7%
Aerospace & Defense: +5.4%
Machinery: +42.1%
Paper & Forest Products: +0.4%
Peakstone Industrial & Manufacturing Index - Trading Statistics (continued)
Source: Capital IQNotes: Peakstone Industrial & Manufacturing Indexes represent middle market companies with revenue between $10 million and $2 billion
-50%
-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%
50%
Industrial & ManufacturingM&A Update | February 2017
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Comparable Valuation Trends – Enterprise Value/EBITDA – Group 2
S&P 500: 12.0x
Industrial Filtration: 14.2x
Environmental Services: 17.2x
Electrical Equipment: 13.6x
Aerospace & Defense: 13.0x
Machinery: 13.2x
Paper & Forest Products: 9.7x
Peakstone Industrial & Manufacturing Index - Trading Statistics (continued)
Source: Capital IQNotes: Peakstone Industrial & Manufacturing Indexes represent middle market companies with revenue between $10 million and $2 billion
5.0x
7.0x
9.0x
11.0x
13.0x
15.0x
17.0x
19.0x
Industrial & ManufacturingM&A Update | February 2017
Forward Gross EBITDA
Revenue EBITDA EBIT P/E Ratio Margin % Margin %
1.1x 12.2x 20.6x 24.8x 28.0% 8.8%
1.0x 9.4x 12.9x 0.1x 9.6% 14.9%
1.3x 11.1x 15.8x 19.8x 25.3% 11.4%
1.0x 10.9x 16.2x 20.7x 44.0% 9.4%
0.8x 10.3x 20.6x 23.6x 14.7% 6.7%
1.0x 8.6x 12.6x 22.5x 18.8% 11.2%
0.8x 18.1x 18.5x 23.9x 22.6% 6.6%
0.9x 11.1x 15.0x 18.3x 24.1% 1.8%
1.1x 12.6x 19.7x 23.5x 28.4% 6.9%
1.9x 12.7x 17.3x 23.1x 29.7% 16.1%
1.5x 11.9x 17.5x 21.7x 25.1% 11.9%
1.0x 12.6x 35.2x 14.7x 19.9% 11.5%
1.0x 11.5x 17.4x 22.1x 25% 10%
As of February 17, 2017 Source: Capital IQ
Industrial Filtration Systems
Machinery
Paper & Forest Products
Industrial & Manufacturing Sectors Median:
Enterprise Value /
Industrial & Manufacturing Sectors
Aerospace & Defense
Automotive
Electrical Equipment
Environmental Services
Building Materials
Business Services
Engineering Services
Packaging
Distribution
8
Public Trading Comparables by Sector
Industrial & ManufacturingM&A Update | February 2017
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Selected Industrial & Manufacturing Industry Transactions
Source: Capital IQ
Date Target / Issuer
Transaction
Size ($mm) Buyers / Investors EV / EBITDA Transaction Comments
02/17/2017LMI Aerospace, Inc.
(NasdaqGS:LMIA)$448 Sonaca S.A. 11.7x
Sonaca S.A. entered into a merger agreement to acquire LMI
Aerospace, Inc. (NasdaqGS : LMIA) from Adage Capita l
Management, L.P.
02/17/2017SiteOne Landscape
Supply, Inc. (NYSE:SITE)$114 - 6.7x
Deere & Company (NYSE:DE) sold 38% stake in Si teOne
Landscape Supply, Inc. (NYSE:SITE) for approximately $110
mi l l ion in December 2016.
02/16/2017 Peninsula Packaging, LLC $230Sonoco Products
Company (NYSE:SON)-
Sonoco Products Company (NYSE:SON) s igned a defini tive
agreement to acquire Peninsula Packaging, LLC from Odyssey
Investment Partners , LLC for approximately $230 mi l l ion in cash
on February 16, 2017.
02/16/2017 Innos ight LLC $135Huron Consulting Group
Inc. (NasdaqGS:HURN)-
Huron Consulting Group Inc. (NasdaqGS:HURN) s igned an
agreement to acquire Innos ight LLC for approximately $140
mi l l ion on February 16, 2017.
02/16/2017Westinghouse Electric
Company LLC$167
Toshiba Corporation
(TSE:6502)-
Toshiba Corporation (TSE:6502) agreed to acquire an additional
3% stake in Westinghouse Electric Company LLC from IHI
Corporation (TSE:7013) for approximately ¥18.9 bi l l ion on
February 17, 2017.
02/14/2017 Race Winning Brands $150
Dover Corporation
(NYSE:DOV); Kinderhook
Industries
-
Kinderhook Industries acquired Performance Motorsports , Inc.
from Dover Corporation (NYSE:DOV) for $150 mi l l ion on February
14, 2017.
02/13/2017
U.S. Manufacturing
Corporation, Michigan
Operations
$100Dana Incorporated
(NYSE:DAN)-
Dana Incorporated (NYSE:DAN) entered into a defini tive
agreement to acquire Michigan Operations from U.S.
Manufacturing Corporation for approximately $100 mi l l ion on
February 13, 2017.
Industrial & ManufacturingM&A Update | February 2017
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Selected Industrial & Manufacturing Industry Transactions
Source: Capital IQ
Date Target / Issuer
Transaction
Size ($mm) Buyers / Investors EV / EBITDA Transaction Comments
02/09/2017 Letica Corporation $640 RPC Group Plc (LSE:RPC) 11.2xRPC Group Plc (LSE:RPC) entered into an agreement to acquire
Letica Corporation for $640 mi l l ion on February 9, 2017.
02/07/2017 Media Link, LLC $207 Ascentia l plc (LSE:ASCL) -Ascentia l plc (LSE:ASCL) agreed to acquire Media Link, LLC for
approximately $210 mi l l ion on February 7, 2017.
02/05/2017 Newcor, Inc. $106Cie Automotive, S.A.
(BME:CIE)-
Cie Automotive, S.A. (BME:CIE) entered into a defini tive
agreement to acquire Newcor, Inc. from EXX Inc. for
approximately for $110 mi l l ion on February 5, 2017.
01/26/2017 Power Dis tribution, Inc. $204 Dunes Point Capita l , LLC -
Dunes Point Capita l , LLC acquired Power Dis tribution,
Incorporated from Smiths Interconnect, Inc. for an enterprise
va lue of approximately £160 mi l l ion on January 26, 2017.
01/24/2017
Multi Packaging
Solutions International
Limited (NYSE:MPSX)
$2,307WestRock Company
(NYSE:WRK)11.3x
WestRock Company (NYSE:WRK) s igned a defini tive agreement
to acquire Multi Packaging Solutions International Limited
(NYSE:MPSX) from Madison Dearborn Partners , LLC and Carlyle
European Capita l Partners II I , L.P.
01/23/2017Alpha Holding Company,
LLC$1,215 Pla ins Pipel ine L.P. -
Pla ins Pipel ine L.P. entered into agreement to acquire Alpha
Holding Company, LLC from COG Operating LLC and Frontier
Midstream, LLC for $1.2 bi l l ion on January 19, 2017.
01/06/2017Firs t Manhattan
Consulting Group LLC$200
Deluxe Corporation
(NYSE:DLX)-
Deluxe Corporation (NYSE:DLX) acquired Fi rs t Manhattan
Consulting Group LLC for $200 mi l l ion on December 30, 2016. The
cons ideration is subject to customary adjustments .
Industrial & ManufacturingM&A Update | February 2017
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Selected Industrial & Manufacturing Industry Transactions
Source: Capital IQ
Date Target / Issuer
Transaction
Size ($mm) Buyers / Investors EV / EBITDA Transaction Comments
01/05/2017 CEB Inc. (NYSE:CEB) $3,448 Gartner, Inc. (NYSE:IT) 17.2x
Gartner, Inc. (NYSE:IT) entered into a defini tive agreement to
acquire CEB Inc. (NYSE:CEB) for $2.5 bi l l ion on January 5, 2017.
Gartner, Inc. wi l l acquire a l l of the outstanding shares of CEB
Inc. in a cash and s tock transaction.
12/29/2016Terex Corporation
(NYSE:TEX)$4,876
Zoomlion Heavy Industry
Science and Technology
Co., Ltd. (SZSE:000157)
12.3x
Zooml ion Heavy Industry Science and Technology Co., Ltd. made
a bid to acquire Terex Corporation (NYSE:TEX) from Marcato
Capita l Management, LLC, TIAA-CREF Investment Management,
LLC and others for $3.2 bi l l ion on December 29, 2016.
12/22/2016TriNet Group, Inc.
(NYSE:TNET)$442 Atairos Group, Inc. 14.1x
Ata iros Group, Inc. entered into an agreement to acquire an
additional 25.7% stake in TriNet Group, Inc. (NYSE:TNET) from
General Atlantic, LLC for approximately $440 mi l l ion on
December 21, 2016.
12/21/2016
H-E Parts International
LLC and HEP Austra l ia
Holdings Pty Ltd
$240
Hitachi Construction
Machinery Co., Ltd.
(TSE:6305)
-
Hitachi Construction Machinery Co., Ltd. (TSE:6305) acquired H-E
Parts International LLC and HEP Austra l ia Holdings Pty Ltd from
H-E Parts Investors LLC for an enterprise va lue of $240 mi l l ion on
December 21, 2016.
12/19/2016American Rai lcar Leas ing
LLC$2,778 SMBC Rai l Services , LLC -
SMBC Rai l Services , LLC s igned an equity and asset purchase
agreement to acquire American Rai lcar Leas ing LLC from AEP
Rai l Corp. and American Enterta inment Properties Corp. for an
enterprise va lue of $2.8 bi l l ion on December 16, 2016.
12/19/2016Pittsburgh Glass Works
LLC$310
Vitro, S.A.B. de C.V.
(BMV:VITRO A)-
Vitro, S.A.B. de C.V. (BMV:VITRO A) s igned a defini tive agreement
to acquire Pi ttsburgh Glass Works LLC from LKQ Corporation
(NasdaqGS:LKQ) for $310 mi l l ion on December 18, 2016.
12/15/2016 Republ ic Conduit, Inc. $335Nucor Corporation
(NYSE:NUE)-
Nucor Corp. (NYSE:NUE) s igned a defini tive agreement to acquire
Republ ic Conduit, Inc. from Tenaris S.A. for approximately $340
mi l l ion on December 15, 2016. The cons ideration wi l l be paid
through cash free and debt free bas is .
Industrial & ManufacturingM&A Update | February 2017
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Selected Industrial & Manufacturing Industry Transactions
Source: Capital IQ
Date Target / Issuer
Transaction
Size ($mm) Buyers / Investors EV / EBITDA Transaction Comments
12/07/2016Teletronics Technology
Corporation$233
Curtiss -Wright Controls
Defense Solutions-
Curtiss -Wright Controls Defense Solutions entered into a
defini tive s tock purchase agreement to acquire Teletronics
Technology Corporation for approximately $230 mi l l ion in cash
on December 7, 2016.
12/01/2016 CLARCOR Inc. (NYSE:CLC) $4,433Parker-Hannifin
Corporation (NYSE:PH)17.2x
Parker-Hannifin Corporation (NYSE:PH) entered into a defini tive
agreement to acquire CLARCOR Inc. (NYSE:CLC) for $4 bi l l ion in
cash on December 1, 2016.
11/15/2016
95,000 Acres of
Timberlands in Western
Oregon
$194 Campbel l Global -
Campbel l Global acquired 95,000 acres of timberlands in
Western Oregon from Rosboro LLC for $194 mi l l ion on
November 15, 2016.
11/14/2016Koroseal Interior
Products , LLC$134
Sangetsu Corporation
(TSE:8130)-
Sangetsu Corporation (TSE:8130) agreed to acquire Koroseal
Interior Products , LLC for approximately $130 mi l l ion on
November 14, 2016. The transaction wi l l have a clos ing date of
November 14 as per US loca l time. Robert W. Baird & Co.
11/08/2016 Mesker Openings Group $143dormakaba Holding AG
(SWX:DOKA)-
dormakaba Holding AG (SWX:DOKA) s igned an agreement to
acquire Mesker Openings Group for approximately $140 mi l l ion
on November 8, 2016. Mesker generated turnover of about $67
mi l l ion in 2015.
11/03/2016Metaldyne Performance
Group Inc. (NYSE:MPG)$3,418
American Axle &
Manufacturing Holdings ,
Inc. (NYSE:AXL)
6.9x
American Axle & Manufacturing Holdings Inc. (NYSE:AXL) entered
into a defini tive agreement to acquire Metaldyne Performance
Group Inc. (NYSE:MPG) from American Securi ties , Levin Capita l
Strategies , L.P. and others for $1.
11/02/2016Anchor Glass Container
Corporation$1,000
CVC Capita l Partners
Limited; BA Glass BV-
CVC Capita l Partners and BA Glass B.V. s igned a defini tive
agreement to acquire Anchor Glass Container Corporation from
KPS Capita l Partners , LP for $1 bi l l ion on November 2, 2016.
Industrial & ManufacturingM&A Update | February 2017
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Selected Industrial & Manufacturing Industry Transactions
Source: Capital IQ
Date Target / Issuer
Transaction
Size ($mm) Buyers / Investors EV / EBITDA Transaction Comments
11/02/2016 Camber Corporation $380Huntington Ingal ls
Industries , Inc. (NYSE:HII)8.6x
Huntington Ingal ls Industries , Inc. (NYSE:HII) entered into a
defini tive agreement to acquire Camber Corporation from New
Mountain Capita l , LLC and others for $380 mi l l ion on November
1, 2016.
11/01/2016
Consumer Health &
Spending Accounts And
Consol idated Omnibus
Reconci l iation Act
$235WageWorks , Inc.
(NYSE:WAGE)-
WageWorks , Inc. (NYSE:WAGE) entered into an asset purchase
agreement to acquire Consumer Health & Spending Accounts
And Consol idated Omnibus Reconci l iation Act bus inesses from
ADP, LLC and ADP Benefi t Services , KY, Inc.
10/24/2016 Contech Holdings , Inc $950 Quikrete Holdings , Inc. -
Quikrete Holdings , Inc. agreed to acquire Contech Holdings , Inc.
from Anchorage Capita l Group, L.L.C. and Li ttlejohn & Co. LLC for
$950 mi l l ion on October 24, 2016.
10/23/2016B/E Aerospace, Inc.
(NasdaqGS:BEAV)$8,354
Rockwel l Col l ins , Inc.
(NYSE:COL)13.6x
Rockwel l Col l ins Inc. (NYSE:COL) entered into a defini tive
agreement to acquire B/E Aerospace Inc. (NasdaqGS:BEAV) for
$6.3 bi l l ion in cash and s tock on October 23, 2016.
10/23/2016 Mactac Americas , LLC $375LINTEC Corporation
(TSE:7966)-
Lintec Corp. s igned defini tive agreement to acquire Mactac
Americas , LLC from Platinum Equity, LLC for approximately $380
mi l l ion on October 23, 2016. On November 28, 2016, the
transaction received early termination notice from FTC.
10/17/2016Enviva Pel lets Sampson,
LLC$174
Enviva Partners , LP
(NYSE:EVA)-
Enviva Partners , LP (NYSE:EVA) agreed to acquire Enviva Pel lets
Sampson, LLC from Enviva Wi lmington Holdings , LLC for
approximately $180 mi l l ion recently.
10/16/2016 AC Propuls ion, Inc. $100
Chongqing Sokon
Industry Group Co., Ltd.
(SHSE:601127)
-
Chongqing Sokon Industry Group Co., Ltd. (SHSE:601127) s igned
letter of intent to acquire AC Propuls ion, Inc. for $100 mi l l ion
October 16, 2016.
Industrial & ManufacturingM&A Update | February 2017
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Selected Industrial & Manufacturing Industry Transactions
Source: Capital IQ
Date Target / Issuer
Transaction
Size ($mm) Buyers / Investors EV / EBITDA Transaction Comments
10/12/2016TAP Automotive Holdings ,
LLC$665
Polaris Industries Inc.
(Delaware)9.0x
Polaris Industries Inc. entered into an agreement to acquire
Transamerican Auto Parts Company from group of shareholders
for approximately $670 mi l l ion on October 11, 2016.
Cons ideration is subject to customary clos ing adjustments .
10/11/2016 The Radiant Group, Inc. $140Digi ta lGlobe, Inc.
(NYSE:DGI)-
Digi ta lGlobe, Inc. (NYSE:DGI) entered into a defini tive
agreement to acquire The Radiant Group, Inc. from Aston
Capita l , LLC for $140 mi l l ion in cash on October 7, 2016.
10/11/2016 Columbus Container Inc. $100Packaging Corporation of
America (NYSE:PKG)3.3x
Packaging Corporation of America (NYSE:PKG) entered into a
defini tive agreement to acquire substantia l ly a l l of the assets
of Columbus Container, Inc. for $100 mi l l ion on October 11, 2016.
10/03/2016 Grand Des ign RV $503 Octavius Corporation 8.4x
Octavius entered into a defini tive agreement to acquire Grand
Des ign RV from Summit Partners for $503 mi l l ion on October 2,
2016. Under the terms of the agreement, Octavius wi l l pay $395
mi l l ion in cash and issue 4.6 mi l l ion shares of Winnebago.
10/03/2016 TIPPER TIE, Inc. $160John Bean Technologies
Corporation (NYSE:JBT)-
John Bean Technologies Corp. (NYSE:JBT) s igned a defini tive
agreement to acquire Tipper Tie from Dover Corporation
(NYSE:DOV) for $160 mi l l ion on October 3, 2016. The purchase
price i s before customary post-clos ing adjustments .
09/28/2016Irvin Automotive
Products , Inc.$175 Piston Automotive, LLC -
Pis ton Automotive, LLC acquired Irvin Automotive Products , Inc.
from Takata Corporation (TSE:7312) for approximately $180
mi l l ion on September 28, 2016. Irvin Automotive had annual
sa les of $500 mi l l ion.
09/22/2016 Kurt Sa lmon US Inc. $166 Accenture plc (NYSE:ACN) -
Accenture plc (NYSE:ACN) entered into an agreement to acquire
Kurt Sa lmon US Inc. from Management Consulting Group PLC
(LSE:MMC) for approximately £130 mi l l ion in cash on September
21, 2016.
Industrial & ManufacturingM&A Update | February 2017
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Peakstone Selected Industrial & Manufacturing Transactions
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Peakstone is an investment bank that specializes in mergers and acquisitions advisory and capital raising for middle market clients. Our team is comprised of senior investment banking professionals who have decades of experience and have executed hundreds of transactions totaling billions of dollars. For additional information, visit www.peakstone.com or contact Jessica Sanchez at [email protected] or 312-204-7300.