William Blair - Investment Services Industry Insights · 2014. 2. 5. · William Blair Investment...

February 2014

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

William Blair’s investment banking group combines signi icant transaction experience, rich industry knowledge, and deep relationships to deliver successful advisory and inancing solutions to our global base of corporate clients. We serve both publicly traded

and privately held companies, executing mergers and acquisitions, growth inancing, special situations and 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. In 2012, the investment banking group completed 76 merger-and-acquisition transactions worth more than $13.8 billion in value, involving parties in 21 countries and ive continents, and was an underwriter on over 20% of all U.S. initial public offerings.

About William Blair Investment Banking

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 ...................................................................................................................................................................................................... 15 Public Valuation Update ................................................................................................................................................................................................................ 16 Public Valuation Update ..................................................................................................................................................................................................................... 18 Relative Performance ..................................................................................................................................................................................................................... 18 Long-Term Valuation Observations ......................................................................................................................................................................................... 19 Indexed Stock Price Performance ............................................................................................................................................................................................. 20 Other Information ................................................................................................................................................................................................................................. 21 Equity Offerings ................................................................................................................................................................................................................................ 21 Debt Offerings .................................................................................................................................................................................................................................... 22 Financial Services & Technology Analysts and Coverage .................................................................................................................................................... 23 Investment Banking Team Biographies ...................................................................................................................................................................................... 24 Select William Blair Transactions .................................................................................................................................................................................................. 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, 45.1% of all deals were completed at more than 3.00 times LTM revenue, and 69.6% 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 calendar 2013, we have identified a total of 103 transactions in the asset management sector, down 16% from 2012. In addition, the aggregate dollar volume of these transactions totals $6.1 billion, compared with $9.1 billion during 2012. During this period the aggregate assets under management (AUM) of the 80 acquired companies with disclosed AUM was about $558 billion, down 7% from 2012. Public company valuations have continued to increase from the third quarter 2011 low of 7.0 times LTM EBITDA and remain above the long-term average of 10.9 times from 2006 through December 31, 2013. The median LTM enterprise-value-to-EBITDA multiple for asset managers as of December 31, 2013, was 12.6 times, up from 9.4 times in fourth quarter 2012 and well above the third quarter 2011 low of 7.0 times. The 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 49.6% over the last 12 months, well above the S&P 500, which was up 29.6% over the same period. Broker-dealer Sector For calendar 2013, we have identified 47 transactions in the broker-dealer sector, down 53% from 2012. In addition, the broker-dealer sector experienced a low aggregate disclosed dollar volume of $851 million in 2013, down significantly from 2012. Public company valuations in the broker-dealer sector decreased in the most recent period. Price-to-LTM-EPS as of December 31, 2013, was 17.1 times, down from 23.1 times at the end of 2012 but above the 16.7 times long-term median. The price-to-forward-EPS multiple as of December 31, 2013, was 17.4 times, up considerably from 14.1 times at the end of 2012 and higher than the long-term median of 14.0 times. The broker-dealer indices we follow have underperformed the long-term market but strengthened during 2013. Over the last 12 months, the S&P 500 rose 29.6%, while the four broker-dealer segments showed an average return of 52.9%, ranging from a 30.8% gain by global investment banks to an 80.4% gain by online 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 into 2014, 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 + 312 364 8517 [email protected]

Matthew Zimmer+44 207 868 4502 [email protected] J.P. Young+1 312 364 8160 [email protected] Kegan Greene+1 312 364 8113 [email protected]

Asset Management Sector

William Blair

Investment Services Industry Insights 2 Asset Management Sector

Asset Management Sector

M&A Trends in Asset Management

• 2013 M&A transaction and total disclosed dollar volume ran behind those of 2012. • Aggregate AUM of $558 billion in 2013 demonstrates continued momentum from 2011. Historical Transaction Volume

Historical Transaction Dollar Volume

Historical Aggregate AUM

Note: Year-to-date as of December 31, 2013.Sources: SNL and William Blair’s Merger and Acquisitions market analysis.

97 88 94 84 98 112 111 107 115 109 123 103

0255075

100125150

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

Average: 103

$5,184 $8,127 $3,523 $7,238 $17,518 $15,439

$3,768 $23,996

$7,073 $3,542 $9,117 $6,076 $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

($ in millions) Average: $9,217

$307 $294 $366 $156 $786 $695 $1,340

$2,442

$455 $298 $600 $558 $0$500$1,000$1,500$2,000$2,500$3,000

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

($ in billions) Average: $691

William Blair

Investment Services Industry Insights Asset Management Sector 3

• As shown below, over 45% of the aggregate deals since 2000 have been completed at above 3.00 times LTM revenue, and over 69% have been completed at greater than 10.0 times LTM EBITDA. • Size matters: transactions less than $50 million were completed at 1.55 times LTM revenue and 7.7 times LTM EBITDA, substantially less than the valuations on larger deals. • AUM percentages are broadly dispersed, illustrating different investment approaches and fee structures (and therefore profitability) among the targets. LTM Revenue Multiple Breakdown LTM EBITDA Multiple Breakdown

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

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

45.1%26.8%

28.2% Greater than 3.00x1.50x to 3.00xLess than 1.50x 69.6%17.4%

13.0%Greater than 10.0x5.0x to 10.0xLess than 5.0x

1.55x3.40x 4.31x

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

$500mm

7.7x 10.5x 10.5x

0.0x3.0x6.0x9.0x

12.0x15.0x

$500mm

William Blair

Investment Services Industry Insights 4 Asset Management Sector

Recent Select Asset Management M&A Transactions

($ in millions) Transaction Value/

Announced Date Target Name Acquirer

Transaction Value

LTM Revenue

LTM EBITDA AUM 12/19/13 Girard Partners Univest Corporation of Pennsylvania $20.0 NA NA 4.00% 12/18/13 CMIL/Integrated retail asset management business CFS Retail Property Trust 460.0 NA NA NA 12/11/13 RidgeWorth Capital Management Investor group 265.0 NA NA 0.52% 11/26/13 Diversified Global Asset Management Corporation Carlyle Group 108.4 NA NA 4.53% 10/01/13 Hatteras Funds Group RCS Capital Corporation 40.0 NA NA 2.05% 09/25/13 Metropolitan Real Estate Equity Management Carlyle Group 62.0 NA NA 2.84% 09/24/13 Dexia Asset Management New York Life Investment Management 512.4 NA NA 0.51% 09/03/13 Wilkinson O'Grady & Co. Fiera Capital Corporation 31.3 NA 12.0x 1.50% 09/03/13 Bel Air Investment Advisors / Bel Air Securities Fiera Capital Corporation 125.0 NA 9.6 2.09% 08/15/13 W.P. Stewart & Co. AXA 78.4 NA NA 3.92% 07/22/13 Octavian Funds TPG Capital Management 500.0 NA NA NA 06/03/13 AlpInvest Partners Carlyle Group 87.7 NA NA 0.46% 05/31/13 China Asset Management Co. CITIC Securities Company 96.7 NA NA NA 04/11/13 Atlantic Trust Group Canadian Imperial Bank of Commerce 210.0 NA NA 0.97%

03/27/13 AssetMark Holdings Aquiline Capital Partners; Genstar Capital Partners 412.5 1.07x NA NA 03/04/13 Liongate Capital Management Principal Financial Group 44.0 NA NA 3.81% 02/28/13 Gletir Agente De Valores Gletir Financial Corp. 15.3 NA NA NA 02/27/13 Newton's private client business Standard Life 126.4 NA NA 2.32% 02/21/13 Victory Capital Management / Victory Capital Advisers Crestview Partners 246.0 2.20 NA 1.11% 02/14/13 Artio Global Investors Aberdeen Asset Management 182.0 0.67 1.1 1.27% 02/01/13 Administradora de Fondos de Pensiones Provida MetLife 2,025.0 5.20 7.6 2.12% 01/17/13 Exchange traded funds business BlackRock 273.0 NA NA 1.55% Mean $269.1 2.29x 7.6x 2.09%

Median $125.7 1.64x 8.6x 2.05% Note: Transaction values and multiples calculated in local currencies.Sources: Dealogic, Capital IQ, and FactSet Research Systems.

William Blair

Investment Services Industry Insights Asset Management Sector 5

Recent Notable Transactions

Target:

Description: Dexia Asset Management Luxembourg S.A. and New York Life Investment Management LLC are privately owned investment managers. The firms manage separate client-focused portfolios and also manage equity, fixed income, and balanced mutual funds for their clients. The firms invest in public equity and fixed-income markets around the globe and employ fundamental and quantitative analysis as well as a bottom-up approach to make their investments. Dexia Asset Management Luxembourg S.A operates as a subsidiary of Dexia Banque Internationale à Luxembourg, S.A, while New York Life Investment Management operates as a subsidiary of New York Life Insurance Co. Luxembourg, Luxembourg Observations/Rationale:

• Dexia Asset Management oversees about $100 billion, and the transaction will boost assets under management at New York Life Investments to more than $480 billion, likely propellingits rankings into the top 25 global institutional money managers. • New York Life is paying the same price that Dexia was set to receive in its previous agreement with Hong Kong–based GCS Capital, a transaction that fell through in July 2013because GCS was not able to meet its payment obligations. • Ted Mathas, New York Life CEO, stated, “The deal demonstrates our commitment to the global asset management business, which provides important earnings diversification…we have superb execution of our multi-boutique model, where clients can avail themselves of a range of quality firms to fit their precise needs. Dexia Asset Management brings even more diversification to us with its excellent footprints in Europe and Australia.”

Buyer:

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

09/24/13 $512.4 Majority NA NA 0.51% Target:

Description: Bel Air Investment Advisors LLC and Wilkinson O'Grady & Co., Inc. are privately owned investment managers with an aggregate of approximately $7.6 billion in assets under management, with Bel Air providing about 75% of that. The firms primarily provide their services to high-net-worth individuals, but also cater to pension and profit-sharing plans, pooled investment vehicles, charitable organizations, and corporations. Fiera Capital Corporation is an employee-owned investment manager that provides its services to primarily institutional investors, mutual funds, charitable organizations, and private clients. Los Angeles & New York Observations/Rationale:

• Fiera Capital Corporation acquired Los Angeles–based Bel Air Investment Advisors, LLC as well as New York–based investment manager Wilkinson O’Grady & Co., Inc. • These acquisitions add C$8.5 billion in AUM to Fiera’s private wealth segment, increasingtotal AUM to about C$74 billion. • Fiera expects the acquisitions to contribute low-double-digit accretion to its 2014 adjustednet earnings per share. • The Bel Air brand now operates under Fiera Capital Private Wealth’s North American division, with Todd Morgan, senior managing partner of Bel Air, leading the unit. • Jean-Guy Desjardins, chairman and CEO of Fiera, stated, “We are very proud to join forces with these two experienced and highly credible teams. We see tremendous growth potentialin the U.S. private wealth market and these transactions fit perfectly with our plan to create value by becoming a leading North American investment management firm within the next five years.”

Buyer:

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

09/03/13 $156.3 Majority NA NA 2.09%

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 /

2013 EBITDA

Price/Earnings

LT EPS % Company LTM Revenue

LTM EBITDA 2013 2014P Affiliated Managers Group Inc. Prides Crossing, MA $11,490.1 $781.6 $13,856.1 1.0x 2.7% 6.64x 18.5x 15.1x 22.4x 19.2x 15.0% BlackRock, Inc. New York, NY 53,614.1 2,478.0 56,279.1 0.6 1.4% 5.53 13.6 11.9 17.7 15.2 14.1% Calamos Asset Management Inc. Naperville, IL 243.1 (442.6) 93.5 (5.0) 0.3% 0.35 NMF NMF 21.7 19.3 10.0% Cohen & Steers Inc. New York, NY 1,772.7 (160.4) 1,612.5 (1.4) 3.5% 5.42 14.4 13.0 21.6 18.1 13.0% Diamond Hill Investment Group Inc. Columbus, OH 386.3 (26.4) 359.9 (0.9) 3.3% 4.74 12.8 NA NA NA NA Eaton Vance Corp. Boston, MA 5,205.1 431.3 5,713.0 0.9 2.1% 4.21 11.8 11.4 19.9 16.7 13.2% Federated Investors, Inc. Pittsburgh, PA 3,014.1 (93.8) 3,047.2 (0.3) 0.8% 3.47 11.6 10.6 17.2 14.7 2.0% Fortress Investment Group LLC New York, NY 2,050.7 (332.1) 2,352.6 (1.4) 4.1% 2.58 10.1 13.7 11.1 10.6 52.0% Franklin Resources Inc. San Mateo, CA 36,418.2 (5,468.8) 31,683.6 (1.8) 3.8% 3.87 10.2 10.0 16.6 14.9 15.4% GAMCO Investors, Inc. Rye, NY 2,262.2 (322.6) 1,949.4 (2.5) 4.5% 5.21 15.3 11.9 19.0 18.1 15.0% Invesco Ltd. Atlanta, GA 16,135.4 3,499.1 20,223.1 3.0 2.7% 4.35 16.7 14.6 17.3 14.9 16.9% Janus Capital Group, Inc. Denver, CO 2,339.3 (285.4) 2,134.9 (1.1) 1.3% 2.44 8.0 7.2 16.9 14.9 12.4% Legg Mason Inc. Baltimore, MD 5,245.1 19.9 5,283.7 0.0 0.8% 1.97 11.4 18.3 NMF 16.9 17.5% Och-Ziff Capital Management Group LLC New York, NY 2,364.7 403.7 4,804.1 0.5 12.7% 3.29 5.4 5.2 9.9 10.7 16.5% Pzena Investment Management, Inc New York, NY 142.9 (35.0) 141.4 (0.8) 0.6% 1.64 NMF NMF 28.0 22.0 NA T. Rowe Price Group, Inc. Baltimore, MD 21,856.3 (1,398.0) 20,116.7 (0.8) 3.1% 5.77 11.6 10.0 19.6 17.6 13.3% The Blackstone Group L.P. New York, NY 17,790.5 9,858.6 34,238.1 5.8 13.8% 6.83 20.1 13.4 13.3 10.7 28.4% Virtus Investment Partners, Inc. Hartford, CT 1,820.7 (354.3) 1,485.2 (3.3) 2.7% 3.82 12.3 9.4 18.7 15.2 NA Waddell & Reed Financial, Inc. Overland Park, KS 5,562.3 (432.7) 5,129.6 (1.1) 4.5% 3.95 13.6 12.8 22.9 18.4 19.2% Westwood Holdings Group Inc. Dallas, TX 454.8 (67.3) 387.5 (2.6) 2.3% 4.44 15.0 NA NA NA NA

Mean $9,508.4 $402.6 $10,544.6 (0.6x) 3.5% 4.03x 12.9x 11.8x 18.5x 16.0x 17.1%

Median $2,689.4 $(80.6) $3,925.7 (0.9x) 2.7% 4.08x 12.6x 11.9x 18.7x 16.0x 15.0% (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 December 31, 2013.

William Blair

Investment Services Industry Insights Public Valuation Update 7

Public Asset Managers Key Metrics

Assets Under Management ($B) Revenues ($M) Diluted EPS Company Q3 2012 Q3 2013 % Q3 2012 Q3 2013 % Q3 2012 Q3 2013 % Affiliated Managers Group Inc. Prides Crossing, MA $416.1 $508.4 22.2% $467.3 $551.6 18.0% $1.04 $1.37 31.5% BlackRock, Inc. New York, NY 3,673.3 4,096.4 11.5% 2,320.0 2,472.0 6.6% 3.65 4.21 15.3% Calamos Asset Management Inc. Naperville, IL 34.3 27.5 (19.9%) 81.8 65.0 (20.6%) 0.23 0.13 (43.5%) Cohen & Steers Inc. New York, NY 44.9 46.3 3.1% 71.3 74.0 3.8% 0.23 0.41 78.3% Diamond Hill Investment Group Inc. Columbus, OH 9.7 11.0 14.0% 16.9 20.8 23.3% 1.32 1.67 26.5% Eaton Vance Corp. Boston, MA 192.9 268.8 39.4% 309.9 356.9 15.2% 0.45 0.46 2.1% Federated Investors, Inc. Pittsburgh, PA 364.1 366.7 0.7% 238.5 211.9 (11.2%) 0.54 0.36 (32.8%) Fortress Investment Group LLC New York, NY 51.5 58.0 12.6% 131.3 180.8 37.7% (0.04) 0.12 NMF Franklin Resources Inc. San Mateo, CA 749.9 844.7 12.6% 1,816.2 1,984.8 9.3% 0.76 0.80 5.2% GAMCO Investors, Inc. Rye, NY 36.9 43.5 17.8% 82.2 96.4 17.2% 0.72 1.29 79.2% Invesco Ltd. Atlanta, GA 683.0 745.5 9.2% 1,013.9 1,171.8 15.6% 0.38 0.51 34.4% Janus Capital Group, Inc. Denver, CO 158.2 166.7 5.4% 209.0 217.7 4.2% 0.14 0.17 24.2% Legg Mason Inc. Baltimore, MD 650.7 656.0 0.8% 640.3 669.9 4.6% 0.60 0.70 16.7% Och-Ziff Capital Management Group LLC New York, NY 31.3 37.8 20.9% 168.0 256.9 52.9% (0.89) 0.14 NMF Pzena Investment Management, Inc New York, NY 16.8 22.3 32.7% 18.9 24.0 27.5% 0.09 0.12 38.7% T. Rowe Price Group, Inc. Baltimore, MD 574.4 647.2 12.7% 769.7 884.4 14.9% 0.94 1.00 6.4% The Blackstone Group L.P. New York, NY 204.6 248.1 21.3% 1,204.0 1,190.6 (1.1%) 0.24 0.29 22.6% Virtus Investment Partners, Inc. Hartford, CT 41.8 55.0 31.6% 72.0 100.4 39.6% 1.43 2.56 79.0% Waddell & Reed Financial, Inc. Overland Park, KS 94.8 113.7 20.0% 293.4 347.1 18.3% 0.10 0.80 703.8% Westwood Holdings Group Inc. Dallas, TX 14.1 17.1 21.7% 18.9 23.0 21.4% 0.34 0.57 67.6% Mean $402.2 $449.0 14.5% $497.2 $545.0 14.9% $0.61 $0.88 64.2%

Median $126.5 $140.2 13.4% $223.7 $237.3 15.4% $0.41 $0.54 25.4% Sources: Company filings as of September 30, 2013.

William Blair


Relative Performance

• On average, three-year revenue growth has been 11.9%, higher compared with past quarters. • Forward revenue growth is estimated to be 12.6%. • Margins are generally in a tight band, averaging 35.2% for LTM EBITDA and 17.6% 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 December 31, 2013.

38% 23% 22% 21% 20% 18% 17% 14% 13% 12% 11% 11% 9% 9% 7% 5%(0%) (2%) (4%) (5%) (25%)

(0%)25%50%

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

Average: 11.9%

40% 23% 23% 20% 17% 17% 16% 13% 13% 13% 11% 11% 9% 7% 7% 6% 5% 3% (0%) (2%) (15%) (0%)15%30%45%

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

Average: 12.6%

61% 51% 49% 42% 39% 37% 37% 36% 35% 34% 34% 32% 31% 30% 30% 30% 29% 26% 25% 17% (0%)25%50%75%

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

Average: 35.2%

30% 28% 27% 27% 27% 24% 19% 18% 18% 18% 17% 17% 14% 13% 13% 12% 7% 6% NMF NMF (0%)10%20%30%40%

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

Average: 17.6%

William Blair


Long-Term Valuation Observations

• Current valuation levels have ticked up from third quarter 2011 and are well above the longer-term median of 10.9 times. • Forward multiples continued to experience upward momentum through 2013. 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 2006 2007 2008 2009 2010 2011 2012 2013 Enterprise Value/Forward 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 2006 2007 2008 2009 2010 2011 2012 2013 Sources: Capital IQ and company filings as of December 31, 2013.

13.5x11.4x12.6x12.9x13.0x13.6x11.8x11.1x10.8x11.3x10.1x5.9x 6.9x

11.8x14.8x14.6x13.0x

9.1x 9.9x10.6x11.3x10.0x7.0x 8.2x 8.8x 8.8x 9.4x 9.4x10.4x10.2x

12.6x12.1x

0.0x5.0x

10.0x15.0x20.0x Median: 10.9x

12.0x10.8x11.6x12.3x10.6x11.7x10.3x9.8x 8.6x 9.9x 8.9x5.3x

10.2x12.9x13.8x12.1x10.1x

7.2x 8.8x 9.1x 8.6x 8.4x 6.4x 7.1x 8.1x 6.9x 7.9x 8.1x 8.8x11.0x11.6x 11.6x

0.0x5.0x

10.0x15.0x Median: 9.9x

William Blair


Indexed Stock Price Performance

• Over the longer term, publicly traded asset management companies have outperformed the S&P 500 and S&P 500 Financial Sector Indices. • The public universe of asset managers experienced a dramatic drop in valuations in early 2009 but has since rebounded. • Over the last 12 months, the index of asset management companies tracked by William Blair has increased 49.6%, outperforming the S&P 500 and the S&P Financial Sector Index. Five-Year Stock Price Performance

CY 2013 Indexed Stock Price Performance

Sources: FactSet Research Systems and company filings as of December 31, 2013.

050100150200250300

Dec-08 Apr-09 Aug-09 Dec-09 Apr-10 Aug-10 Dec-10 Apr-11 Aug-11 Dec-11 Apr-12 Aug-12 Dec-12 Apr-13 Aug-13 Dec-13

Asset Managers (+167.9%) S&P 500 (+104.6%) S&P 500 - Financials (+74.6%)+104.6%

+167.9%

+74.6%

90100110120130140150160

Dec-12 Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13

Asset Managers (+49.6%) S&P 500 (+29.6%) S&P 500 - Financials (+33.2%)

+29.6%

+49.6%

+33.2%

Broker-dealer Sector

William Blair

Investment Services Industry Insights 11 Broker-dealer Sector

Broker-dealer Sector

M&A Trends Among Broker-dealers

• The number of transactions announced in 2013 is down 53% from the year-ago period. • Low transaction volume in 2013 contributed to disclosed transaction value of $851 million, unlike the robust value of $17.5 billion disclosed in 2012. Historical Transaction Volume

Historical Transaction Dollar Volume

Note: Year-to-date as of December 31, 2013.Sources: SNL and William Blair’s Merger and Acquisitions market analysis.

73 46 44 71 78 106 89 87 73 77

100 47

020406080100

120

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

Average: 74

$3,134 $4,368 $2,896 $13,433 $28,999 $33,246

$62,487

$15,730 $4,011 $6,190 $17,498

$851 $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

($ in millions) Average: $16,070

William Blair

Investment Services Industry Insights Broker-dealer Sector 12

• As shown below, over 27% of the aggregate deals since 2000 have been completed at above 3.00 times LTM revenue, and over 83% have been completed at greater than 10.0 times LTM Net Income. • Size matters: transactions less than $50 million were completed at 0.83 times LTM revenue and 9.3 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 and William Blair’s Merger and Acquisitions market analysis.

52.1%20.7%

27.1% Less than 1.50x1.50x to 3.00xGreater than 3.00x 83.7%

11.1% 5.2% Greater than 10.0x5.0x to 10.0xLess than 5.0x

0.83x 1.55x2.38x

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

$500mm

9.3x 13.1x22.9x

0.0x5.0x10.0x15.0x20.0x25.0x

$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 01/17/14 J.P. Turner & Company RCS Capital Corporation $27.0 NA NA 01/16/14 Cetera Financial Group RCS Capital Corporation 1,150.0 NA NA 12/06/13 RiverStone Wealth Management Cary Street Partners Holdings NA NA NA 11/18/13 Summit Financial Services Group RCS Capital Corporation 48.6 0.57x 16.8x 10/02/13 Investors Capital Holdings RCS Capital Corporation 52.4 0.60 NMF 09/30/13 Ranieri Real Estate Advisors Kimberlite Group NA NA NA 09/25/13 Upromise Investments Ascensus NA NA NA 09/20/13 Faros Trading FXCM 15.6 NA NA 09/14/13 HDFC Securities HDFC Bank NA NA NA 06/27/13 SDM Advisors PFM Group NA NA NA 06/12/13 First Allied Holdings RCAP Holdings NA NA NA 06/10/13 McColl Partners Deloitte NA NA NA 04/30/13 Crowell, Weedon & Co. Davidson Companies NA NA NA 04/24/13 Global Futures & Forex GAIN Capital Holdings 106.9 0.82 NMF 04/05/13 Tower Square Securities / Walnut Street Securities Cetera Financial Holdings NA NA NA

Mean $233.4 0.66x 16.8x

Median $50.5 0.60x 16.8x Note: Transaction values and multiples calculated in local currencies.Sources: Dealogic, Capital IQ, and FactSet Research Systems.

William Blair


Institutional Broker-dealers

($ in millions) Transaction Value/ Date Effective Target Acquirer Equity Value LTM Revenue

LTM Net Income 12/26/13 Taiwan Futures Exchange Corporation Deutsche Börse $47.0 5.57x 10.2x 11/27/13 Evans Capital Management Northwest Bancshares NA NA NA 11/25/13 Ong First Tradition China Development Financial Holding Corporation 1.7 NA NA 11/21/13 GreenCrest Capital Management Oppenheimer Holdings NA NA NA 11/19/13 Singapore Mercantile Exchange IntercontinentalExchange Group 150.0 NA NA 11/15/13 Link Administration Holdings Intermediate Capital Group; Macquarie Group 187.2 NA NA 11/12/13 Undisclosed Broker/Dealer Omega Commercial Finance Corp. NA NA NA 11/05/13 Washington Corporation Chessiecap NA NA NA 11/05/13 MidSpan Partners MHT Holdings NA NA NA 10/29/13 CONSULTIVA Securities Fairbridge Capital Partners NA NA NA 10/23/13 G1 Execution Services Philadelphia Trading 75.0 NA NA 10/10/13 Yorvik Partners Sterne Agee Group NA NA NA 10/01/13 Penact Associates Old Point Financial Corporation NA NA NA 09/30/13 Seaport Group Doc Investments NA NA NA 09/24/13 Maybank ATR Kim Eng Financial Corporation Mazy’s Capital 80.1 1.21 10.4 09/03/13 RenRe Energy Advisors Münchener Rückversicherungs-Gesellschaft 60.0 NA NA 08/26/13 Direct Edge Holdings BATS Global Markets NA NA NA 08/20/13 Maybank Kim Eng Securities Joint Stock Company Malayan Banking NA NA NA 08/09/13 eSecLending Parthenon Capital Partners NA NA NA 08/06/13 OTC Commodity Derivatives Business JPMorgan Chase & Co. NA NA NA 07/29/13 Rondelli Advisers Lincoln International NA NA NA 07/19/13 On Point Executions Dash Financial Holdings NA NA NA 06/17/13 Edgeview Partners Piper Jaffray Companies NA NA NA 06/14/13 Kumho Investment Bank Woori Finance Holdings NA NA NA 04/22/13 Saxis Group Weeden Investors NA NA NA 04/16/13 Seattle-Northwest Securities Corporation Piper Jaffray Companies 21.0 NA NA 03/14/13 U.S. institutional fixed income sales and trading business Stifel Financial Corp. 5.5 NA NA 03/04/13 Institutional Securities Corporation Existing Management NA NA NA 02/27/13 PlanMember Financial Corporation AXA NA NA NA 02/25/13 Sterling International Brokers Limited BGC Partners NA NA NA 02/11/13 Strategic Alliance Financial Advisors Capital Guardian NA NA NA 02/08/13 Seymour Pierce (certain assets) Cantor Fitzgerald NA NA NA 02/01/13 Dahlman Rose & Company Cowen Group NA NA NA 01/16/13 Ginalfi Finance BGC Partners NA NA NA

Mean $69.7 3.39x 10.3x

Median $60.0 3.39x 10.3x Note: Transaction values and multiples calculated in local currencies.Sources: Dealogic, Capital IQ, and FactSet Research Systems.

William Blair


Recent Notable Transactions Target:

Description: J. P. Turner & Company, L.L.C. is a boutique investment banking firm that offers financial advisory and brokerage services. The firm provides mergers and acquisitions advisory, divestitures, private placement, fairness opinion, reverse mergers, and initial public offering consulting services. RCS Capital Corporation, through its subsidiaries, engages in wholesale broker-dealer, investment banking, and capital markets activities. The company is involved in the wholesale distribution of publicly registered non-traded securities, including securities and exchange commission (SEC)-registered real estate investment trusts, and business development companies. Atlanta, GA Buyer:

New York, NY Observations/Rationale:• The transaction involved an initial consideration of $27 million in cash and stock, and potential earnout payments of up to an additional $7.55 million; the transaction is expected to close later in 2014. • Following the acquisition, J.P. Turner will become part of the independent financial advisornetwork at RCAP and will complement and help to further diversify RCAP's revenue base,which presently is derived from its wholesale distribution business, investment banking and capital markets services activities, investment management work, and transactionmanagement and transfer agency lines of business. • Nicholas Schorsch, Executive Chairman of RCAP, commented, "We believe that J.P. Turnerboth complements our existing wholesale distribution brokerage business and enhances the ability of RCAP to successfully meet the needs of our retail investors."

Key Metrics: Announced Date: Transaction Value ($M): Majority/Minority: TV/LTM Revenue: TV/LTM Net Income: 01/17/14 $27.0 Majority NA NA

Target:

Description: Cetera Financial Group, Inc. provides broker-dealer and advisory services to independent financial professionals and institutions in the United States. It offers wealth management services, such as advisory, research and compliance, due diligence, advanced planning, trust, and wealth management training and education services; and education and professional development, marketing and communications support, operations support, product management, retirement plans, business development support, transition and integration, and succession planning services, as well as life insurance solutions. RCS Capital Corporation, through its subsidiaries, engages in wholesale broker-dealer, investment banking, and capital markets activities. The company is involved in the wholesale distribution of publicly registered non-traded securities, including securities and exchange commission (SEC)-registered real estate investment trusts, and business development companies.

El Segundo, CA Buyer:

New York, NY Observations/Rationale:• With the new purchase of Cetera, RCS Capital will have under its control nearly 9,000advisers, second only to LPL Financial, the country's largest independent broker-dealer network with about 13,500 advisers. • The deal, which is expected to close later this year, will see Cetera and all its units becomepart of RCS Capital's retail advice arm. • RCS Capital said the acquisition will allow it to boost its hold on the retail distribution market; the merged company will oversee about $191 billion in client assets. • William Kahane, CEO of RCAP, commented, "This transaction immediately affords us the benefits of scale, while setting the quality standard in the industry. It enables us to diversifyour revenue streams and position our securities sales business to attract best-of-class third-party sponsors, thus mitigating concentration risk among our retail firms. It addssubstantially to our assets under administration, and makes our overall enterprise uniquelyattractive to other retail advice firms who believe they could benefit by aligning themselveswith a dominant, well capitalized, public firm with a complete understanding of the industryand a demonstrated commitment to excellence."

Key Metrics: Announced Date: Transaction Value ($M): Majority/Minority: TV/LTM Revenue: TV/LTM Net Income: 01/16/14 $1,150.0 Majority NA NA

William Blair



Public Broker-dealers

($ in millions) Stock Price

Market Capitalization

Price/Earnings Price/Revenue LTP EPS Growth % PEG Company LTM 2013 2014P LTM 2013 2014P

Online Broker-dealers Charles Schwab Corp. San Francisco, CA $26.0 $33,519.6 29.1x 28.6x 23.3x 5.20x 3.58x 3.30x 19.1% 180.3% E*TRADE Financial Corp. New York, NY 19.6 5,643.7 45.3 24.4 18.5 2.71 1.57 1.59 40.0% 73.1% FXCM Inc. New York, NY 17.8 776.2 23.8 22.9 18.8 1.54 0.73 0.67 26.9% 85.1% GAIN Capital Holdings Inc. Bedminster, NJ 7.5 297.5 19.2 9.5 8.2 2.37 0.88 1.06 17.5% 48.2% IG Group Holdings PLC London, United Kingdom 10.2 3,731.4 14.9 15.6 14.7 5.31 4.51 4.21 5.6% 275.9% Interactive Brokers Group Inc. Greenwich, CT 24.3 1,330.3 23.7 22.1 19.4 0.85 0.52 0.47 10.0% 300.5% Inter-Dealer Brokers BGC Partners Inc. New York, NY $6.1 $1,085.7 11.3x 12.9x 10.8x 0.55x 0.29x 0.27x 10.0% 128.7% Compagnie Financiere Tradition Lausanne, Switzerland 54.5 366.6 NA NA NA 0.04 NA NA NA NA GFI Group Inc. New York, NY 3.9 481.0 25.0 31.3 14.9 0.61 0.46 0.43 5.5% 384.7% ICAP PLC London, United Kingdom 7.5 4,844.9 11.3 13.6 12.6 1.63 1.28 1.27 (5.4)% 173.4% INTL FCStone Inc. New York, NY 18.5 355.9 12.9 NA NA 0.81 0.57 NA NA NA Investment Technology Group Inc. New York, NY 20.6 746.0 23.4 23.3 19.6 1.10 0.67 0.62 10.0% 232.6% Knight Capital Group Inc. Jersey City, NJ 12.0 1,360.4 16.8 23.7 14.3 0.99 NA NA 11.0% 215.6% MarketAxess Holdings Inc. New York, NY 66.9 2,518.2 35.2 32.4 27.8 9.66 5.63 5.00 16.0% 227.8% Tullett Prebon PLC London, United Kingdom 6.2 1,357.8 8.8 10.2 9.9 0.89 0.63 0.62 (3.2)% NMF Sources: Capital IQ, FactSet Research Systems, and company filings as of December 31, 2013.

William Blair


($ in millions) Stock Price

Market Capitalization

Price/Earnings Price/Revenue LTP EPS Growth % PEG Company LTM 2013 2014P LTM 2013 2014P

Midsize Broker-Dealer Evercore Partners Inc. New York, NY $59.8 $1,961.6 24.0x 21.4x 18.6x 2.18x 1.35x 1.22x 20.0% 114.5% Greenhill & Co. New York, NY 57.9 1,608.9 30.0 26.8 21.9 4.59 4.11 3.90 20.0% 185.0% LPL Investment Holdings Inc. Boston, MA 47.1 4,785.9 17.1 19.6 18.1 1.02 0.78 0.71 16.0% 122.6% Piper Jaffray Cos. Minneapolis, MN 39.6 629.0 17.7 13.4 11.9 1.20 1.34 3.20 NA NA Raymond James Financial Inc. St. Petersburg, FL 52.2 7,309.7 15.9 17.4 16.0 1.31 1.17 1.09 17.0% 97.7% Stifel Financial Corp. St Louis, MO 47.9 3,046.4 18.3 20.5 17.7 1.40 0.96 0.88 12.0% 170.7% Global Investment Banks Bank of America Corp. Charlotte, NC $15.6 $164,914.5 18.1x 11.8x 9.9x 1.67x 1.38x 1.35x 16.0% 108.1% Barclays PLC London, United Kingdom 4.5 72,570.7 9.7 11.7 9.2 1.55 1.09 1.05 2.5% 469.1% Citigroup Inc. New York, NY 52.1 157,841.2 10.6 9.7 8.7 1.93 1.48 1.44 10.7% 105.8% Credit Suisse Group AG Zurich, Switzerland 30.7 48,920.5 12.8 12.2 9.9 1.69 1.10 1.05 28.2% 43.3% Deutsche Bank AG Frankfurt am Main, Germany 47.8 48,712.1 10.5 11.6 8.4 1.04 0.91 0.88 22.4% 51.8% Goldman Sachs Group Inc. New York, NY 177.3 80,339.7 10.6 11.6 11.0 2.09 1.82 1.74 7.5% 158.1% JPMorgan Chase & Co. New York, NY 58.5 219,837.4 9.1 9.8 9.3 1.97 1.68 1.64 6.1% 209.6% Morgan Stanley New York, NY 31.4 61,194.0 14.6 12.6 10.7 1.72 1.18 1.11 9.3% 175.5% UBS AG Zurich, Switzerland 19.0 73,089.9 26.9 18.7 14.2 2.54 2.06 1.98 48.3% 38.8% Mean $34.8 $33,505.9 18.8x 17.8x 14.6x 2.07x 1.56x 1.58x 14.8% 168.3%

Median $25.2 $3,388.9 17.1x 16.5x 14.3x 1.59x 1.17x 1.11x 12.0% 164.4% Sources: Capital IQ, FactSet Research Systems, and company filings as of December 31, 2013.

William Blair



Relative Performance

• On average, three-year revenue has grown by approximately 4.3%. • One-year-forward revenue growth is estimated at 8.0%. • Margins vary widely but average 8.5% for LTM net income. Three-Year Revenue Growth

Forward Revenue Growth

LTM Net Income Margin

Sources: FactSet Research Systems, Capital IQ, and SNL Financial as of December 31, 2013.

27% 18% 15% 13% 12% 11% 10% 9% 9% 8% 6% 5% 5% 4% 4% 3% 2% 1% 1% 1% 1% (0%)(2%)(3%)(3%)(4%)(4%)(5%)(6%)(8%) (20%) (10%) (0%)10%20%30%40% Average: 4.3%

67%22% 19% 16% 14% 14% 13% 12% 11% 10% 10% 8% 7% 7% 5% 4% 4% 2% 2% 1% 0% (0%)(0%)(0%)(1%)(1%)(2%) (2%)(3%) (25%) (0%)

25%50%75% Average: 8.0%

37% 31% 25% 19% 19% 18% 16% 15% 12% 11% 11% 11% 8% 8% 7% 6% 5% 4% 4% 3% 3% 3% 0% 0% (2%)(7%)(11%) (25%) (0%)25%50% Average: 8.5%

William Blair


Long-Term Valuation Observations

• Valuations slipped from the last quarter and stand at 17.1 times LTM EPS, down from 18.2 times in third quarter 2013. • Forward EPS multiples increased meaningfully to 16.5 times, compared with 14.4 times in third quarter 2013. Price/LTM EPS

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 2006 2007 2008 2009 2010 2011 2012 2013 Price/Forward EPS

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 2006 2007 2008 2009 2010 2011 2012 2013 Sources: Capital IQ and company filings as of December 31, 2013.

18.1x16.9x16.2x15.0x13.7x14.2x12.4x17.2x15.7x12.7x12.5x9.9x11.4x

14.8x18.6x18.4x18.2x15.3x18.1x17.7x19.7x17.3x15.9x13.7x16.5x15.2x20.3x23.1x20.3x19.6x18.2x17.1x

0.0x5.0x10.0x15.0x20.0x25.0x30.0x Median: 16.7x

17.6x14.4x15.7x15.3x14.0x14.3x12.1x14.0x11.4x11.7x11.2x9.7x11.2x14.3x18.1x14.5x14.5x12.1x12.2x14.5x12.9x12.7x11.4x11.3x12.5x13.6x

15.1x14.1x13.3x14.2x14.4x16.5x

0.0x5.0x10.0x15.0x20.0x25.0x Median: 14.0x

William Blair


Indexed Stock Price Performance

• Over the longer term, all indices of publicly traded broker-dealers tracked by William Blair have underperformed the overall market (as measured by the S&P 500), ranging from a 31.6% increase by global investment banks to a 100.7% increase by inter-dealer brokers. • Over the last 12 months, the same indices have outperformed the S&P 500, with online dealers experiencing an 80.4% increase. Five-Year Stock Price Performance

CY 2013 Indexed Stock Price Performance

Sources: FactSet Research Systems and company filings as of December 31, 2013.

255075100

125150175200225

Dec-08 Jun-09 Dec-09 Jun-10 Dec-10 Jun-11 Dec-11 Jun-12 Dec-12 Jun-13 Dec-13

S&P 500 (+104.6%) S&P 500 - Financial (+74.6%) Online (+65.5%)Inter-Dealer Broker (+100.7%) Boutique (+99.6%) Global I-Banks (+31.6%)+65.5%+74.6%

+104.6%

+31.6%

+100.7%+99.6%

80100120140160180

Dec-12 Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13

S&P 500 (+29.6%) S&P 500 - Financial (+33.2%) Online (+80.4%)Inter-Dealer Broker (+54.2%) Boutique (+46.1%) Global I-Banks (+30.8%)+54.2%

+33.2%

+29.6%

+80.4%

+30.8%

+46.1%

Other Information

William Blair

Investment Services Industry Insights 21 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 10/30/13 Marcus & Millichap $12.00 6.0 $82.8 1.00x 14.5x 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 2.16 NMF 03/06/13 Artisan Partners Asset Management 30.00 12.7 381.0 4.06 60.9 05/02/12 The Carlyle Group 25.00 35.1 876.9 0.25 1.5 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 41.1 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 10/31/13 Artisan Partners Asset Management $56.00 5.52 $309.1 6.71x NMF 09/11/13 Virtus Investment Partners 155.00 1.30 201.2 3.34 17.28x 06/05/13 Carlyle Group 27.00 11.66 314.7 0.41 NMF 05/22/13 Oaktree Capital Group 53.50 8.05 430.7 NMF NMF 05/09/13 Apollo Global Management 25.00 24.28 606.9 1.07 7.81 03/13/13 E*Trade Financial Corp. 11.35 28.53 323.8 2.48 NMF 11/14/12 WisdomTree Investments 6.10 25.62 156.3 9.96 NMF 08/06/12 Duff & Phelps Corp 13.50 3.00 40.5 1.32 26.33 (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 22

Debt Offerings

Date Company Offering Description Price Amount(1) Redemption Date 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 01/16/14 Legg Mason 5.625% Senior unsecured notes 98.4 400.0 01/15/44 11/22/13 GAIN Capital Holdings 4.125% Convertible senior unsecured notes NA 70.0 12/01/18 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 4.461% Series B senior unsecured debentures NA 250.0 10/03/23 09/30/13 TMX Group Floating rate series C senior unsecured debentures NA 350.0 10/03/16 09/25/13 Institutional Financial Markets 8.000% Convertible senior promissory notes NA 8.2 09/25/18 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 07/01/13 KCG Holdings 8.250% Senior secured notes NA 305.0 06/15/18 05/28/13 FXCM 2.250% Convertible senior notes NA 150.0 06/15/18 01/17/13 JMP Group 8.000% Senior unsecured notes 100.0 40.0 01/15/23 01/15/13 Jefferies Group 5.125% Senior unsecured notes 99.7 600.0 01/20/23 01/15/13 Jefferies Group 6.500% Senior unsecured notes 98.8 400.0 01/20/43 11/06/12 E*TRADE Financial Corporation 6.375% Senior unsecured notes 800.0 100.0 11/15/19 11/05/12 Invesco Finance 3.125% Senior unsecured notes 600.0 99.9 11/30/22 10/03/12 Affiliated Managers Group 5.250% Senior unsecured notes 125.0 100.0 10/15/22 09/19/12 Franklin Resources 1.375% Senior unsecured notes 300.0 99.5 09/15/17 09/12/12 Nuveen Investments 9.125% Senior unsecured notes 500.0 100.0 10/15/17 09/12/12 Nuveen Investments 9.500% Senior unsecured notes 645.0 100.0 10/15/20 09/07/12 Brookfield Asset Management 4.540% Unsecured medium term notes 425.0 99.9 05/20/23 09/05/12 National Holdings Corporation 6.000% Series E subordinated convertible promissory unsecured notes 1.0 NA 03/31/15 09/05/12 National Holdings Corporation 10.000% Senior subordinated convertible promissory unsecured notes 1.0 NA 03/31/15 08/01/12 Affiliated Managers Group 6.375% Senior unsecured notes 200.0 100.0 08/15/42 07/13/12 Jefferies Group 2.250% Unsecured medium-term notes 4.0 NA 07/13/22 04/19/12 Jefferies Group 6.875% Senior unsecured notes 98.9 200.0 04/15/21 03/21/12 Raymond James Financial 5.625% Senior unsecured notes 99.6 250.0 04/01/24 02/29/12 Raymond James Financial 6.900% Senior unsecured notes 100.0 350.0 03/15/42 01/18/12 Stifel Financial Corp. 6.700% Senior unsecured notes 100.0 175.0 01/15/22 01/10/12 Nuveen Investments 7.875% Senior notes 99.2 250.0 04/15/22 (1) Amount in millions. Sources: SNL and William Blair’s Merger and Acquisitions market analysis.

William Blair

Investment Services Industry Insights 23 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) • Brown & Brown, Inc. (BRO) • Chubb Corporation (The) (CB) • CNA Financial Corporation (CAN) • Crawford & Company (CRD.B) • eHealth, Inc. (EHTH) • Erie Indemnity Company (ERIE) • Fortegra Financial Corporation (FRF) • HCC Insurance Holdings, Inc. (HCC) • Kemper Corporation (KMPR) • Markel Corporation (MKL) • Marsh & McLennan Companies, Inc. (MMC) • National Interstate Corporation (NATL) • Navigators Group, Inc. (The) (NAVG) • Progressive Corporation (The) (PGR) • RLI Corp. (RLI) • Tower Group, Inc. (TWGP) • Travelers Companies, Inc. (The) (TRV) • Willis Group Holdings Public Limited Company (WSH)

• Alliance Data Systems Corporation (ADS) • American Express Company (AXP) • CAI International, Inc. (CAP) • Capital One Financial Corporation (COF) • Cardtronics, Inc. (CATM) • DFC Global Corp. (DLLR) • 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) • Portfolio Recovery Associates, Inc. (PRAA) • QIWI plc (QIWI) • Visa Inc. (V) • WageWorks, Inc. (WAGE) • Western Union Company (The) (WU) RAA) • WEX Inc. (WXS)

• Affiliated Managers Group, Inc. (AMG) • Artisan Partners Asset Management Inc. (APAM) • Cardtronics, Inc. (CATM) • Eaton Vance Corp. (EV) • Envestnet, Inc. (ENV) • Euronet Worldwide, Inc. (EEFT) • Fiserv, Inc. (FISV) • Global Payments, Inc. (GPN) • Heartland Payment Systems, Inc. (HPY)• Higher One Holdings, Inc. (ONE) • Invesco Ltd. (IVZ) • LPL Financial (LPLA) • MSCI Inc. (MSCI) • Schwab (The Charles Schwab Corporation) (SCHW) • T. Rowe Price Group, Inc. (TROW) • TD Ameritrade Holding Corporation (AMTD) • Vantiv, Inc. (VNTV) • WisdomTree Investments, Inc. (WETF)

William Blair

Investment Services Industry Insights Investment Banking Team Biographies 24

Investment Banking Team Biographies

William Blair Financial Services Investment Banking

Robert Metzger, Managing Director and head of financial services investment banking, joined William Blair in 1999. While at William Blair and in his prior position at ABN AMRO, he focused 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

Matthew Zimmer is a Managing Director in 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

J.P. Young, 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

Kegan E. Greene, Vice President, is a member of the financial services industry group, where he focuses on the corporate finance needs of asset managers, insurance businesses, and specialty finance companies. Before joining William Blair in 2010, Mr. Greene worked at Babcock & Brown and Goldman Sachs. Mr. Greene holds an M.B.A. in finance and entrepreneurship from the University of Chicago, a J.D. from DePaul University, and a B.A. in English from DePauw University. [email protected] +1 312 364 8113

William Blair

Investment Services Industry Insights 25 Select William Blair Transactions

Select William Blair Transactions

$66,815,000Follow-on OfferingJanuary 2014

$309,120,000Follow-on OfferingNovember 2013

$82,800,000Initial Public OfferingOctober 2013

$169,708,412Follow-on OfferingOctober 2013

$34,000,000Initial Public OfferingAugust 2013

$59,361,250Follow-on OfferingJuly 2013

Not Disclosedhas been acquired by

Encore Capital GroupJune 2013

Not DisclosedValuation ofClass A Equity UnitsJune 2013

£525,000,000has been acquired by

J.C. Flowers & Co. LLCMay 2013

Not DisclosedValuation ofClass A Equity UnitsDecember 2012

$86,250,000Initial Public OfferingOctober 2012

Not DisclosedValuation of Class A Equity UnitsJune 2012

$500,250,000Follow-on OfferingMay 2012

Not DisclosedInvestment Managementhas acquired Guidance Capital LLCApril 2011

$516,696,000Initial Public OfferingNovember 2010

$83,524,000Follow-on OfferingSeptember 2010

$72,450,000Initial Public OfferingJuly 2010

®

$93,718,000Follow-on Offering August 2007

$11,900,000,000has merged with

Chicago Board of TradeJuly 2007

$55,000,000has been acquired by

Informa plcApril 2007

$6,500,000PIPEMarch 2007

$140,760,000Initial Public OfferingMarch 2007

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 Services Authority ("FSA") 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, and is directed only at, professional clients and eligible counterparties (as defined in COBS 3.5 and 3.6 of the FSA Handbook). This advertisement is not intended to be investment advice. William Blair & Company | 222 West Adams Street | Chicago, Illinois 60606 | +1 312 236 1600 | williamblair.com August 27, 2013 Investment Services Industry Insights Disclosures 26

Disclosures

International

FrankfurtWilliam Blair International, Limited An der Hauptwache 760313 Frankfurt am MainGermany+49 69 509527 600

LondonWilliam Blair International, LimitedThe Broadgate Tower20 Primrose Street17th FloorLondon EC2A 2EWUnited KingdomEquity Sales: +44 20 7868 4400Corporate Finance: +44 20 7868 4444

William Blair International, Limited40 Bruton StreetLondon W1J 6QZUnited KingdomInvestment Management: +44 20 7297 4700

São PauloWilliam Blair do Brasil Assessoria Financeira Ltda.Av. Brigadeiro Faria Lima 3729, room 511São Paulo, SPBrazil04538-905+55 11 3443 6472

ShanghaiWilliam Blair & Company, L.L.C. Shanghai Representative Of�iceUnit 16-18, 11th FloorBuilding One, Corporate Avenue222 Hubin RoadShanghai 200021P.R. China+86 21 2327 2222

ZurichWilliam Blair & Company, L.L.C. Stockerstrasse 46CH-8002 ZurichSwitzerlandInstitutional Sales: +41 44 287 9020Investment Management: +41 44 287 90 30

HeadquartersChicago222 West Adams StreetChicago, IL 60606+1 312 236 1600+1 800 621 [email protected]

United States

Boston125 High StreetOliver Street TowerSuite 1901Boston, MA 02110+1 617 235 7500

HartfordPutnam Place100 Great Meadow RoadSuite 606Wethers�ield, CT 06109+1 800 596 2028

New York666 Fifth Avenue14th FloorNew York, NY 10103+1 212 237 2700

San Francisco343 Sansome Street12th FloorSan Francisco, CA 94104+1 415 986 5596

Wilmington500 Delaware AvenueSuite 720Wilmington, DE 19801+1 302 573 5000

Specialty FinanceIndustry InsightsA review of M&A activity and public market valuation in the consumer and commercial specialty finance sectors

June 2013

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, special situations and 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. In 2012, the investment banking group completed 76 merger-and-acquisition transactions worth more than $13.8 billion in value, involving parties in 21 countries and five continents, and was an underwriter on over 20% of all U.S. initial public offerings.

About William Blair Investment Banking

2013-06-24_Specialty Finance Mailing.indd 1-22013-06-24_Specialty Finance Mailing.indd 1-2 7/17/2013 9:35:35 AM7/17/2013 9:35:35 AM

William Blair - Investment Services Industry Insights · 2014. 2. 5. · William Blair Investment...

Documents

Transcript of William Blair - Investment Services Industry Insights · 2014. 2. 5. · William Blair Investment...