M&A outlook Modest shifts in perceived value gap Perceived valuation gap between buyers Q: How do you think seller value expectations compare to and sellers increases buyer expectations? The perceived difference in valuation between buyers and Apr 15 Oct 15 sellers has increased somewhat from six months ago. This 10% 3% may, in part, stem the recent equity market volatility for Ka_faÕ[Yfldq`a_`]j (25% or more) M&E companies. 9% 9% Somewhat higher 36% 39% (10%–25% gap) Overall, however, the gap remains manageable — as evidenced The gap is small by the robust level of deal activity in 2015 YTD — with 42% 45% 49% (<10%) seeing a gap of 10% or less between the two parties. No gap Increasing potential for a widening of the Q: Do you expect the valuation gap between buyers and value gap sellers in the next 12 months to: Two-thirds of M&E respondents see the valuation gap Apr 15 Oct 15 remaining stable or contracting over the next 12 months, a full 1% 3% 10 percentage points more than global respondents, who are more inclined to see values moving higher. 21% 33% However, compared to six months ago, a greater percentage Widen (33% vs. 21%) of M&E executives also expect the valuation gap 64% Stay the same to increase over the course of the next year, which may make 78% dealmaking more complicated for some players. Contract Asset value expectations are moving higher Q: What do you expect the price/valuation of assets to do over the next 12 months? Although two-thirds of M&E respondents see valuations staying constant over the next year, a healthy 30% see valuations Apr 15 Oct 15 increasing, a six percentage point increase from six months ago, 1% 4% as buyer competition may place upward pressure on prices. 75% 24% 66% 30% Increase Remain at current levels Decrease 10 | Capital Confi dence Barometer