This document discusses private equity activity in the commercial aviation industry in 2017. It finds that while M&A deal volume has remained relatively constant, transactions are getting larger on average. Most private equity investment has been concentrated in the United States and in consolidating fragmented industry segments like aerospace and engine components. Leading private equity firms have executed roll-up strategies, and successful exits have often been to strategic corporate buyers. However, with lower new aircraft orders in recent years, private equity multiples may start to moderate from historic highs as the order super cycle ends.

1. 55 Cambridge Parkway, Riverfront 2, Cambridge, MA 02142
Andrei Grskovic
Private Equity Activity In
Commercial Aviation
2017

2. 2CSP Associates – Private Equity Activity In Commercial Aviation2017
Private Equity Activity In Commercial Aviation
CSP: Leading Provider Of Strategic & Transaction Advisory Services
0
20
40
60
2010 2011 2012 2013 2014 2015 2016
#ofTransactions
Government Services
Defense
Aerospace
CSP Is Engaged In ~40-50 AD&G Transactions Each Year
CSP Associates has been engaged in more than 1,000 Aerospace, Defense & Government
Services (AD&G) transactions supporting more than 200 private equity sponsors, strategic
buyers, and institutional financing sources since 1990
CSP Exclusively Serves The AD&G Market
Buy-Side Commercial
Due Diligence
Sell-Side Vendor
Diligence Assessments
Strategic Advisory
Services
CSP Advises Leading Global Private Equity Investors and AD&G Contractors

3. 3CSP Associates – Private Equity Activity In Commercial Aviation2017
Private Equity Activity In Commercial Aviation
Recent Transactions Illustrate CSP Leadership Position
Representative Recent Announced Transactions
CSP is relied upon by the leading corporate and private equity players in our served markets to support
strategically important transactions in the United States and Europe
 Recent announced transactions illustrate that CSP is engaged by the largest and most discerning private equity and corporate
players to advise on the most important transactions in our served markets
1st Commercial Aero
Acquisition By Largest Private
Equity Firm
Roll-Up Strategy Supporting
Most Active PE Investor in
Aerospace Since 2012
Largest European Acquisition
In 2015 By A Corporate Buyer
Largest European Aerospace
Transaction in 2015
25-Year Track Record Advising
The Leading Aerospace
Private Equity Investor
Acquisition Of The Leading
Provider Of Aviation
Materials Testing Services
Acquisition of Leading
Aeroengine Machined
Components Supplier
Largest Aerostructures
Acquisition in 2017 By A
Strategic Buyer
Acquisition of A Leading
Distributor of Military & Civil
Spare Parts

4. 4CSP Associates – Private Equity Activity In Commercial Aviation2017
48%
29%
52%
71%
Commercial
Aero
Defense &
Gov't Svs.
Services the focus of Defense/Government Services activity; hardware focus in Commercial Aero
Private Equity Activity In Commercial Aviation
AD&G M&A Activity Has Remained Relatively Constant
57
69 76 72 80
65
74
77 63 67
102
94
89
119
65 79
78
78
220
265
204 218
260
237
0.0X
4.0X
8.0X
12.0X
16.0X
0
50
100
150
200
250
300
2011 2012 2013 2014 2015 2016
TEV/EBITDA(Public)
M&AVolume
Gov't Service Defense Commercial Aero
AD&G M&A Volume: 2011-2016 (Completed Transactions)
Source: DACIS, CSP M&A database, CapitalIQ, Janes Capital Partners, Aronson Capital Partners
Public TEV/EBITDA
By Buyer Type
2016 M&A Volume
Strategic
PE
By Segment
Airframe
26%
Engines
20%
Distri-
butor
6%
Interiors
6%
Electrical
6%
Flight
Control
5%
Other
31%
Cyber /
Intel
31%
IT
Services
30%
Tech.
Services
19%
C4ISR
11%
Cloud /
Data
Analytics
3%
Other
6%

5. 5CSP Associates – Private Equity Activity In Commercial Aviation2017
0 10 20 30 40 50
# of Transactions
Private Equity Activity In Commercial Aviation
Only Several Major Private Equity Firms Focused On AD&G
Most M&A activity in the market driven by firms that have made <5 AD&G acquisitions
Most Active PE Firms (AD&G Closed Transactions, 2000-2016) # of PE Firms Active In AD&G (2000-2016)
Commercial Def. & Gov’t
Kanders & Co
Rest
Source: DACIS, CSP M&A database
~340 Firms 4 6 26
313
>20 10-20 5-9 <5
# of Firms By # Transactions
~350 Private Equity firms have
been active in the Commercial
Aerospace, Defense and
Government Services market
since 2000
Only 10 Private Equity firms
have acquired more than 10
AD&G companies

6. 6CSP Associates – Private Equity Activity In Commercial Aviation2017
56
41 42
33
37
41
47
39
43
33
28
35
46 45 45 44
34
3
7 4
7
12
11
15
21 15
8
14
22
23
31
27
36
31
59
48
46
40
49
52
62
60
58
41 42
57
69
76
72
80
65
0
300
600
900
1,200
1,500
0
20
40
60
80
100
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Airbus&BoeingProduction
M&AVolume(CommercialAero)
Increased activity since 2011 driven by attractive growth dynamics and long-term visibility
Strategic
Financial
Private Equity Activity In Commercial Aviation
Commercial Aero Ramp-Up Has Supported Elevated Levels Of M&A
Source: DACIS, Ascend, Boeing & Airbus, CSP M&A database
Commercial Aero M&A Volume & Production (2000-2016)
Production
M&A Volume

7. 7CSP Associates – Private Equity Activity In Commercial Aviation2017
0.0x
3.0x
6.0x
9.0x
12.0x
15.0x
18.0x
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
EV/EBITDA(LTM)
Airbus&BoeingOrdersPrivate Equity Activity In Commercial Aviation
Commercial Aviation Multiples Historically Correlated To Orders
Private valuations are well above historic peaks but likely to moderate as order cycle softens
Commercial Aviation Orders v. Transaction Multiples (EV/EBITDA)
Orders
Avg. Multiple
(Private): 9.9x
EV/EBITDA
Source: CapitalIQ, DACIS, Ascend, public filings, CSP estimates *transaction multiples not exhaustive
Public Valuations (TEV/EBITDA LTM)
Average Private Valuation
Private Valuations (TEV/EBITDA LTM)
Public valuations
Private valuations
Avg. Multiple
(Private): 8.9x
Avg. Multiple
(Private): 11.2x

8. 8CSP Associates – Private Equity Activity In Commercial Aviation2017
>250
>250
<50
<50
<100
<90
<75
<50
NA NA$1
$5
$8
$8
$9
$10
$15
$56
$64
Systems/Other
ECS
Electrical Power
Flight Controls
Landing Gear
Interiors
Avionics
Engine
Airframe
Recent deal activity concentrated in the largest and most fragmented aviation segments
Commercial Aviation Market Segments ($B, Estimates)
Source: DACIS, CSP M&A database, Airframer, Counterpoint, Bank Of America/Merrill Lynch 1 Excludes OEMs 2Aftermarket excludes Line Maintenance *# of suppliers derived from Airframer directory
OE Segment Characteristics
# of
Suppliers
45%
1
26%
1
58%
70%
62%
58%
OE Aftermarket2
90%
70%
Private Equity Activity In Commercial Aviation
Aerostructures & Engine Segments Have Seen Most M&A Activity
Top 5 Suppliers Share
(%)
M&A Volume (2006-16)
17
2
5
12
1
8
4
47
80
39
5
13
24
3
27
27
68
129
1
1
2
2
3
3
4
4
5
5
6
6
7
7
8
8
PE Strategic
Includes applications that
cross segments e.g.,
fittings, tubes/pipes, pumps,
valves, ducting etc.

9. 9CSP Associates – Private Equity Activity In Commercial Aviation2017
<50
>150
>200
NA NA
<50$6
$13
$14
$21
Distribution/Logistics*
Other
Aftermarket Services
Engine & Systems
Component Repair
Airframe MRO
Engine MRO
Consolidation of distributors has been a key focus of Private Equity recently
Commercial Aviation Market Segments ($B, Estimates)
Source: DACIS, CSP M&A database, TeamSAI 1Aftermarket excludes Line Maintenance; services not exhaustive 2Airframe/Engine MRO exclude repairs *Not included in commercial aviation market sizing (C-Class)
Segment Characteristics
# of
Suppliers
55%
70%
23%
OE Aftermarket1
50%
Private Equity Activity In Commercial Aviation
Most Fragmented Service Segments Also Seeing Elevated Activity
Top 5 Suppliers Share
(%)
M&A Volume (2006-16)
23
6
11
13
8
26
15
31
22
16
1
2
3
4
5
PE
Strategic
Includes miscellaneous aftermarket services
including modifications, paint, USMs, asset
managers, etc.
2
2

10. 10CSP Associates – Private Equity Activity In Commercial Aviation2017
$0
$200
$400
$600
EstimatedAcquiredRevenue($M)Private Equity Activity In Commercial Aviation
Activity Since 2012 Partially Driven By Roll-Up Strategies
Most active PE firms executing on roll-up strategies, consolidating fragmented segments
Volume
Top 10 Most Active PE Firms By Volume (2012-2016)
Norbert
Carlyle has
acquired over
$1B since 2012
8 6 5 4 4 4 3 3 3 3
Source: DACIS, CSP M&A database, CSP analysis, CapitalIQ
Concentration of M&A Activity:
Roll-Up v. Stand-Alone (2012-16)
Roll-
Up
41%
Stand-
Alone
59%

11. 11CSP Associates – Private Equity Activity In Commercial Aviation2017
Private Equity Activity In Commercial Aviation
Successful PE Exits To Strategic Buyers Supports Further PE Interest
Increased volume of PE exits to strategic buyers since 2011; strategic interest driving premium multiples
PE-Backed Exits To Strategic Buyers (2006-16, Est. Value $M)
21
15
13
10 9 9
7 6
PCC Triumph Transdigm AMETEK HEICO Senior Zodiac B/E
A.M. Castle/
Transtar
Cooper/
G&H
GKN/
Stellex
UTC/Page
Meggitt/
K&F
PCC/
Cherry
Eaton/
Argo-Tech
Chemring/
Scot
Goodrich/
TEAC
DCO/
DynaBil
Zodiac/
Driessen
Boeing/
Vought
Praxair/
Sermatech
B/E /
TSI
TDG/
McKechnie
Triumph/
Vought
Beacon/
TECT
ESL/
Souriau
Zodiac/
Heath Tecna
PCC/
Primus
TDG/
Schneller
Airbus/
PFW
L&P/
W. Pneumatic
LMI/
Valent
PCC/
Centra
PCC/
Synchronous
PCC/
Klune
RTI/
Remmele
Senior/
GAMFG
TDG/
AmSafe
ESL/
CMC
Heico/
Reinhold
Collins/
Arinc
GE/
Avio
Senior/
Thermal
Alcoa/
Firth Rixson
Cobham/
Aeroflex
HAECO/
TIMCO
LISI/
Manoir
PCC/
ADI
PCC/
Permaswage
Standex/
Enginetics
Sumitomo/
Vaupell
Triumph/
NAAS
PCC/
CHI
Aemetek/
Fine Tubes
Auctus/
Shimtech
Kaman/
Gebr.
Meggitt/
EDAC Comp.
PCC/
Noranco
SIFCO/
C*Blade
Solvay/
Cytec
AVIC/
Align
GKN/
Fokker
TDG/
Pexco
VSE/
Killick
AVIC/
AIM
Figeac/
Auvergne
KLX/
Herndon
Mercury/
CESAstronics/
Aerosat$-
$100
$200
$300
$400
$500
$600
$700
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Est.TransactionValue($M)
Key Strategic
Consolidators
Structures
Engines
Interiors
Actuation
Systems
Aftermarket
Elec. Power
+
Size of bubble represents Price:Sales Ratio1.5x
Source: DACIS, CSP M&A Database *Closed transactions
PE
Strategic

12. 12CSP Associates – Private Equity Activity In Commercial Aviation2017
Private Equity Activity In Commercial Aviation
Varying Strategies Across Largest Consolidators
Leading PE consolidators building segment-specific platforms; structures & engines garnering most interest
StrategicPrivateEquity
2011 2012 2013 2014 2015 2016
Leading Consolidators
Aerostructures Platform
Composites Platform
NorbertEngine Machining/
Fabrications (Exited)
Fluid Conveyance
Engine Machining/
Fabrications
Distribution (Wesco)
PMA / Component
Repairs
Engine Castings Platform
Aerostructures Platform
Source: DACIS, CSP M&A database

13. 13CSP Associates – Private Equity Activity In Commercial Aviation2017
7 2 6 6
Trend towards larger transactions though <$50M transactions comprise majority of activity
Private Equity Activity In Commercial Aviation
Size Of Commercial Aviation Transactions Increasing
Acquisitions By Transaction Size (Volume)
Strategic
Private
Equity
2000-2004 2005-2010 2011-2016
Source: DACIS, CSP M&A Database *Closed transactions; only transactions with reported transaction price
12 3 6 10 8 4 11 8
80 15 15 10
<$50M $50-100M
$100-$500M >$500M
64 27 28 14 55 15 43 27
50%32%
21%
57% 52%
61%

14. 14CSP Associates – Private Equity Activity In Commercial Aviation2017
Private Equity Activity In Commercial Aviation
PE Activity In The Segment Has Historically Been US-Centric
Activity in the US likely to continue to be focal point for PE; emerging players in China gaining interest
Source: DACIS *Closed transactions 1Pending
PE Exits To Mostly US Buyers Historically (Buyer Domicile)*
2012-16:
61
2007-11:
23
2
8
32007-11
2012-16
3
2
2007-11
2012-16
1
2012-16
42012-16
2
2012-16
12012-16
1 2012-16
1
2012-16
Non-US Activity (2012-16)
1
1
1 1
2012-16

15. 15CSP Associates – Private Equity Activity In Commercial Aviation2017
OEM
Influence
Supplier
Disruptions
Scale
Cost Reduction
Assignability
Clauses
Private Equity Activity In Commercial Aviation
OEMs Increasingly Have More Say In PE Consolidation Activity
‘Assignability’ clauses increasingly being leveraged by OEMs to reduce risk
1
2
3
4
1
2000 2004 2008 2012 2016
US Tier 1
Structures Supplier
(Bankruptcy)
European Tier 2
Engine/Structures
Supplier
(Investment By RR)
European Tier 2
Structures Supplier
(Covenant Breach)
US Super Tier 1
Structures Supplier
(Facility Acquired By
Boeing)
European Tier 1 Fluid
Conveyance Supplier
(Acquired by Airbus)
European Tier 1
Structures
Supplier
(Investment by Airbus)
200
90
A380 (2007) A350 (2015)
250
140
75
Trent 500
(1999)
Trent 900
(2007)
Trent 1000
(2011)
Estimated # of Suppliers (EIS)
2
3
4

16. 16CSP Associates – Private Equity Activity In Commercial Aviation2017
Private Equity Activity In Commercial Aviation
Lowest Book:Bill Since 2010; Likely End To Order Super Cycle
Downturn in orders likely to pressure multiples and activity over next few years
557
301 250 247 264
908 747 835
468
215 375
773
1,269
1,514 1,487
863 787
326
262 296 244 344
696
595
767
438
266
599
1,522
734
1,519
1,807
1,258
673
1.2x
0.7x
0.8x 0.9x
1.0x
2.4x
1.6x
1.8x
1.1x
0.5x
1.0x
2.3x
1.7x
2.4x 2.4x
1.5x
1.1x
0
500
1,000
1,500
2,000
2,500
3,000
3,500
2000 2002 2004 2006 2008 2010 2012 2014 2016
NetOrders
Historical Ordering Trends (Net Orders)1
Book:Bill
Re-engined
A320/B737
introduced
B787 &
A350
introduced
B787-10 & B777X
introduced
59
48 46
40
49 52
62 60 58
41 42
57
69
76
72
80
65
0
20
40
60
80
100
2000 2002 2004 2006 2008 2010 2012 2014 2016
M&AVolume
Commercial Aero M&A Volume (2000-2016)
Source: DACIS, CSP M&A database, Ascend, Boeing, Airbus
 Subsiding replacement
demand and large fleet orders
already in backlog resulting in
softening ordering trends
 Airbus sees ~30% fewer orders
in 2017 (~1,000 net orders or
~0.6x book:bill)
 Softness most pronounced in
the widebody segment,
specifically for mature
platforms (e.g., A330, B777)
 Boeing CEO doesn’t see a
recovery in widebody orders
until the start of the next decade
 Lower ordering trends
combined with OEM planned
production rate hikes reducing
backlog cushion
 Transaction volume has also
begun to decline, with deal flow
in Q1 2017 showing signs of
slowing further