March 2016 ® Moderately weakened fundraising climate A fundamentally important trend in the last few years is the fact that money has been flowing out of, rather than into, PE. Since 2013, the amount distributed to investors has exceeded capital calls and has reached record levels as fund managers have taken advantage of favorable market conditions to exit many positions. This marks the third consecutive year in a row.15 Canadian dry powder in terms of funds raised in 2015 is on pace for C$8.3 bn16 which is C$3.68 bn below the funds raised in 2014.17 Given the current market conditions and strapped with a healthy supply of funds to invest, PE firms are much less interested in financial engineering and much more interested in finding growing companies to provide smart capital to by supporting management and providing highly sought after expertise.18 Similarly, a few years ago, 80% of the market was PE-backed: now that number is closer to 45%, which is a big drop.19 Focusing just on the first half of 2015, Canadian buyout-PE fundraising has declined to C$4.4 bn, a level comparable to 2011 (C$3.8 bn) and down 70% from 2014. 20 Outlook for 2016 Looking forward, with the dollar maintaining its weak purchasing power and oil prices trending downwards, the Canadian M&A market will most likely experience another stellar year considering fiscal and monetary stimulus leaning in its favor along with a healthy supply of dry powder to go along with. Given Alberta’s economic reliance on the oil, gas and mining sectors and an unlikely oil recovery in the short run, we foresee consolidations in these industries due to the relative difficulty of realizing returns on invested capital greater than the cost of capital. In terms of activity, Québec and Ontario should be poised for a strong 2016 given their strong manufacturing and construction industries and their highly diversified economies. Likewise, the demand for smart capital will be essential to be deployed to rapidly growing firms in healthier sectors of the economy, paving the way for prudent uses of committed capital. “Mega Deals awash with cash.” M&A Outlook 2016.

Dec. 8, 2015. #0351.

Raconteur.net. p.7 C$6.239 billion for 3 quarters = C$2.08 billion per quarter. “Canadian Private Equity Market Overview - 2014.” Canadian Venture Capital & Private Equity Association.

Slide 13. 17 “Canadian Private Equity Market Overview - 2014.” Canadian Venture Capital & Private Equity Association. Slide 9. 18 “Mega Deals awash with cash.” M&A Outlook 2016. Dec.

8, 2015. #0351. Raconteur.net.

p.7 19 “Mid- Market: North American M&A 2016 Outlook.” Firmex. December 2015, p.3. 20 “Canadian Private Equity Buyout Review: First Half of 2015”. Thomson Reuters.

July 20, 2015. P.17. 15 16 For more information: Moses Bendayan is a CFA, Senior VP and Partner at Crowe BGK Corporate Finance Inc., Montréal, Canada. He can be reached at 514 231 1577 or M.Bendayan@crowebgk.com Regional GCA Leadership China Antony Lam antony.lam@horwathcapital.com.cn Vijay Thacker vijay.thacker@crowehorwath.in Indian Subcontinent / Middle East Southeast Asia East Asia Latin America USA / Canada Mok Yuen Lok yuenlok.mok@crowehorwath.net Central and Eastern Europe Igor Mesenský igor.mesensky@tpa-horwath.cz Francisco D’Orto Neto francisco.dorto@crowehorwath.com.br Oceania Andrew Fressl andrew.fressl@crowehorwath.com.au Alfred Cheong alfred.cheong@crowehorwath.com.sg Marc Shaffer marc.shaffer@crowehorwath.com Western Europe Peter Varley peter.varley@crowecw.co.uk Crowe Horwath International is a leading international network of separate and independent accounting and consulting firms that may be licensed to use “Crowe Horwath” or “Horwath” in connection with the provision of accounting, auditing, tax, consulting or other professional services to their clients. Crowe Horwath International itself is a nonpracticing entity and does not provide professional services in its own right.

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