Leisure & Wellness M&A Newsletter

KPMG Corporate Finance

Leisure & Wellness M&A NewsletterQ3’2015

© 2015 KPMG Corporate Finance LLC, a Delaware limited liability company. Member FINRA and SIPC. KPMG Corporate Finance LLC is a subsidiary of KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

• Interbike – Participants estimated that attendance was up atmore than 25% from the prior year. KPMG CF supported thisview as most booths were crowded with interestedparticipants wanting an opportunity to get a first look at theamazing new products on display for 2016.

• Vision Expo West – Participants stated that they feltattendance was up an estimated 20% from the prior year.KPMG CF felt that attendance was up, especially with activelifestyle brands. Exhibitors were happy to provide real-timeinsights in the latest trends in eyewear.

KPMG Corporate Finance LLCLeisure & Wellness Practice – An Introduction

The Leisure and Wellness sector remained strong both in terms of industry growth and M&A activity during the3Q’15. The remarkable performance in the Leisure & Wellness sector has primarily been attributable to theincreasing importance that healthy living has had with consumers coupled with attractive macro trends and societalfactors (aging population, healthcare spending, increased consumer spending, technological innovation, etc.).

The segment’s expansion within the consumer “wallet-share” is expected to drive sustainable growth, despitevolatility in the public markets. The aforementioned drivers are anticipated to create the strong tailwinds necessaryto attract cautious consumers that may seek to delay larger purchases, due to uncertainty in the public marketsalong with the potential for rising interest rates. Leisure & Wellness consumers are less likely to forgo purchasesduring periods of uncertainty, opting for more modest, but enjoyable products and experiences (i.e. the “lipstickeffect”) that enable them to still obtain a healthy active lifestyle.

The “lipstick” effect dates back to the Great Depression, when from 1929 to 1933 US industrial production droppedby 50%; however, sales of cosmetics increased by 25%. In 3Q’15 we observed volatile public markets , a decline incommodity prices and less-than-impressive earning reports from large industrial. Conversely during the sameperiod, consumer spending on Leisure & Wellness products showed remarkable strength and growth. Notably, Nikestated that future orders are expected to grow 17% and in the last twelve months, Nike has been up 40% vs. adecline of 7% for the Dow Industrial Index during that same period.

In the M&A market, growth in the sector has resulted in an uplift in multiples paid by acquirers to enter the sector.Recently, the Dalian Wanda Group, a Chinese Leisure & Wellness conglomerate, bought the World TriathlonCorporation, the organizers of the IronmanTM competitions, from Providence Equity for approximately $650 million,including the assumption of debt, which represented a rumored18x EBITDA multiple.

We are not suggesting that the U.S. is on a path towards a Depression, but merely making the point that the Leisure& Wellness space is uniquely positioned to continue expanding and outperforming other market sectors due to thedeep connection that these products and services have with the consumer.

The evolution, innovation and strong growth in the Leisure & Wellness sector was clearly on display at two of themost prominent industry events attended by KPMG CF, where the team had the opportunity to speak with over 50companies; ranging from bikes to performance eyewear and spray tans to custom socks. The over arching eventtheme was - how do companies best address the growing consumer demand.

Leisure & Wellness Investment Banking Sector Coverage

Cosmetic & Beauty

Products

Exercise Products &

Services

Fitness & Spa Facilities

Sporting Goods

Equipment

Wearable Technology

http://www.finra.org/

http://www.sipc.org/


KPMG Corporate Finance LLCTakeaways From Interbike 2015

Recently, members of the KPMGCF Leisure & Wellness team attended Interbike 2015 in Las Vegas, NV. TheAnnual Interbike International Bicycle Exposition is the largest annual gathering of the bicycle industry in NorthAmerica. With over 1,245 exhibitors from around the world, the convention represented a comprehensivesample of the fragmented global cycling market. After visiting with many exhibitors, we have identified someinteresting trends and growth opportunities below:

Metro and Retro – Approximately 1.9% of the populationacross major U.S. cities uses a bicycle to commute to work,far below the levels seen in major European centers, includingas high as 19% and 31% in Denmark and the Netherlands,respectively. The large variance suggests that the potential fora considerable increase in bicycle commuter adoption in theU.S. certainly exists. The KPMG CF team believes thatbicycles targeted at U.S. urban commuters represent an areaof considerable growth and will increasingly become a focusover the next 5 years (see electric bikes).

This dovetails with the team’s view that Millennials (with apopulation of 75.3M), a majority living in urban settings, willcontinue to support green initiatives and use cycling as ameans of everyday transportation. The urban commuting trendis further evidenced by the higher levels of governmentfunding dedicated to a more bicycle-friendly infrastructure.Federal Funds budgeted for pedestrian and bicycle facilitiesand programs increased from approximately $400m in 2006 to$820m in 2014.

Rise of the Machines – The global e-bike market is growingrapidly and various options were on display at Interbike (theKPMG CF team took test rides and were thoroughlyimpressed). Although the U.S. market has been slow to adoptthis technology, due to car ownership and limiteddistribution/service options, we believe that this may be thesingle largest growth segment in the space.

This sector caters to both the baby boomers (who havediscovered that electric bikes allow them to do more, seemore, and get more exercise than traditional senior mobilityoptions) and Millennials (who live in urban areas, quickly adapttechnology, and are attracted to green alternatives). U.S. e-bike sales are projected to rise 54.6% per year from 2012 to2016.

Stromer’s ST2 was named Interbike e-bike of theYear, sporting a top speed of 30mph whileincorporating state-of-the-art technology whichincludes a built-in and long lasting lithium battery,built-in digital display and LED lighting, andremote connectivity for data tracking and securityfunctionalities.

Bianchi’s retro look that was popular at the show,especially with those looking to commute, withmany vendors, such as Retrospec, Virtue Cyclesand Brooklyn Bicycle Co. (to name just a few)having similar, but unique, classic designs.




KPMG Corporate Finance LLCTakeaways From Interbike 2015

Better Safe than Sorry – KPMG CF anticipates that security andsafety products will likely see rapid growth over the next severalyears. Motorized and/or highly stylized bikes are gaining marketshare, but typically come with higher price tag than traditionalbikes, which is driving the need for the consumer to protecthis/her investment and self. The days of a simple bike lock andriding with no helmet are behind us.

The new Stromer ST2 ($7,000) e-bike has connectivity to allowthe “mothership” to track the bike and shut it down if stolen.Bike owners without the retroactive security, are seeking full bikesecurity options, such as after market bolt locking systems.There was one vendor at the show that seemed to be poised tochallenge the large industry incumbent for security supremacy.

In addition to protecting the bike, consumers are recognizing theimportance of protecting themselves. According to JAMA,between 1998 and 2013, adult bicycling injuries rose sharply inthe U.S. A sign of the changing times was the large variety ofhelmet options at Interbike, with many moving to combine formand fashion. In October 2015, Investcorp purchased theinnovative Swedish helmet marker POC from Black Diamond for$65m; keep an eye out for more M&A in the safety segment.

One very unique safety play was Fox Head’s innovative use ofD30 in its line of protective gear, which provides flexibility toperform, but strength to reduce impact injuries.

The Good Type of Fat– Once discussed as a fad, it was clearfrom the show that fat tires are hot and still going strong.Besides looking cool and providing a fun ride, fat tires provideadditional comfort, stability, functionality and all-surfacepracticality (snow, sand and mountain are more easily mastered).

Like them or not, and they are polarizing, fat tires drive unit salesby enabling cycling year-round in many normally frozen locales.Unit sales are always good, especially for bike shops and theiremployees during a normally slow season. We expect the trendtowards year-round cycling will continue, especially in urbanlocations, and that fat tire bikes will be an extension of the corecycling segment, if they are not already.

D30 (the protective orange goo) Display atthe Fox Head Booth, was a hit (literally) asyou could wrap it around your phone andhammer it, with no damage to the phone.

We met with a vendor at the show that isbecoming the leader in whole bike securitysystem, the diagram above illustrates thedifference and highlights the need for betterlocking mechanisms on higher priced bikes.

The Origin 8 Crawler has come onto the fat-tire scene with massive tires and an alloyframe that are designed to carry riders oversnow, mud, sand or any other challengingterrain while providing more stability overall.




KPMG Corporate Finance LLCTakeaways From Vision Expo West 2015

The KPMG CF Leisure & Wellness team also attended the Vision Expo West in Las Vegas, NV. Vision ExpoWest is the bi-annual meeting for anyone in the eye care industry. The conference aims to display the latesteyewear trends to the most innovative optical technology and the best ophthalmic business solutions underone roof. The show was well attended, from the very first day, and it looked like orders were being placed at arapid pace.

Future’s So Bright, Gotta Wear Shades – According toTechnavio, the U.S. market for sunglasses is growing, sales ofplano sunglasses in the U.S. is expected to grow at a CAGR of6.4% over 2014 – 2019, compared to the 5.0% CAGR for theoverall eyewear market during the same period.

The market is dominated by a few players such as Luxottica,Safilo, Marchon Eyewear, and Charmant. However, given thescale of profit opportunity in the luxury eyewear market, a numberof new challengers are emerging, both on the brand anddistribution side of the industry.

One of the major developments in recent years has been theaggressive shift in Essilor’s strategy, which has repositioned theFrench group from a manufacturer of lenses to a much moreubiquitous eyewear player. Essilor’s acquisition of Costa, Inc. inlate 2013 for $317m underlines its scale of ambition in sunglassesand brand ownership.

One niche area that has remained somewhat unaddressed is thehigh-end action sport market, where smaller firms try to competewith Luxottica’s Oakley brand. Ryder (recently purchased byEssilor) is an example of a firm that had some success. Essilorplans to ramp up the Canadian firm’s presence in the U.S.

The KPMG CF team believes that independent action sports nicheplayers will come to market and more openly challenge Oakley’sposition in the industry among hard core enthusiasts (liketriathletes or marathoners), who demand high performancealternatives.

Ray-Ban is a holding of Luxottica andrepresents the very consolidated sunglasssegment. As a fun fact, somewhere inthe world a pair of Ray-Bans is sold every7 seconds!

The KPMG CF team believes that thehigh-end, performance segment of thesunglass market represents anopportunity for independent sunglassmakers to gain market share.




KPMG Corporate Finance LLCTakeaways From Vision Expo West 2015

Blue Light Special – This year at the show there was a lot oftalk about Blue Light. Blue Light from your computer screen anddigital displays (i.e. phone, gaming devices) is believed to haveharmful effects on your eyes.

The use of digital devices and modern lighting — such as LEDlights and compact fluorescent lamps (CFLs) — expose us to ahigh level of Blue Light. According to the Review of Optometry,by 2020, 90% of all light sources are estimated to be LEDlighting, resulting in increasing levels of constituent exposure toBlue Light.

In addition, according to the 2014 Vision Watch survey, 29.8%adults spend more than nine hours each day, 60.8% spend fiveor more hours each day and 93.3% spend more than two hourseach day on digital devices. The survey also stated that morethan 90% of adults using digital devices exceeding two hours aday, report experiencing digital eye strain.

An innovative glasses technology was demonstrated at theshow that help protect against harmful Blue Light. KPMG CFanticipates this technology to be a hot new market niche, due tothe increasing amount of digital exposure, especially fromgreater amount of time that consumers are spending on phones,office computers, binge watching T.V., and professional gaming.

On a similar note, Spy has launched Happy Lenstm , which isdesigned to maximize the transmission of the sun’s “good”rays, while blocking out the ”bad” rays, to enhance the moodand energy level of the consumer.

Thanks Uncle Sam- The coming decades will see more babyboomers entering the Medicare program, and will result inaccelerating demand for medical eye care services. By 2032, thebulk of the baby-boomers will be 68 – 88 years old, an age groupassociated with a very high prevalence of eye disorders (PreventBlindness.org).

In addition, the Affordable Care Act (ACA) includes provisionrequiring health insurers to include some vision care benefits forchildren in all PPACA-compliant individual and small-groupmedical coverage, which should help fuel growth.

UV light affects the front of the eye (cataractformation), while blue light causes damageto the back of the eye. The growingexposure to blue-violet light is expected toaccumulate over time and has the potentialto cause damage to the retinal cells, whichslowly leads to retinal cell death.

Not all Blue Light is bad. The blue-turquoiselight range, is essential to our vision, and ingeneral to our health. It also helps to regulateour Circadian sleep/wake cycle and has animpact on our mood. So blue light in generalcan have healthy affects on vision as well asthe body, hence Spy’s Happy Lens technologywhich blocks harmful blue light and allows thegood blue light into the eye.




The Cosmetics & Beauty Products sub-sector saw 15announced deals in Q3’15. The sub-sector dominated the L&W M&A landscape during the quarter, driven by the $16b Coty-P&G deal. On July 9, P&G announced the sale of 43 fine fragrance, color cosmetics and hair color brands to Coty. The deal would make Coty the number three player in the global personal care market, up from its number five position.

The Fitness and Spa sub-sector witnessed 30announced deals in Q3’15, up from 28 deals in the second quarter. The sector continues to attract significant private equity interest. The largest deal announced during the quarter was Catterton Partners’ acquisition of spa services provider Steiner Leisure, for $896m. Catterton also made a significant investment in fitness studio chain Pure Barre during the second quarter of the year.

KPMG Corporate Finance LLCLeisure & Wellness M&A Newsletter

The global Leisure & Wellness industry has seen strong growth over the last several years. The market has beenbenefitting from an aging population in developed markets and growing income levels in emerging. Consumerscontinue to become more and more health conscious, and have begun to focus on living a healthy lifestyle,including eating better, exercising regularly and adopting stress relieving habits. The fact that the majority ofconsumers are not yet participating in the market, offers significant growth opportunities to incumbents as wellas new players in the space.

Leisure & Wellness M&A QUARTERLY

The Recreational Goodssub-sector, including sporting goods, gym equipment, and other recreation products, had 22 announced deals in Q3’15, as compared to 19 in Q2’15. The outdoor sports and recreational products market remains highly fragmented, representing significant opportunity for strategic buyers to increase market share. One such example is Vista Outdoor, which acquired Jimmy Styks ($40m) and CamelBak ($413m) during the quarter.

Source: Capital IQ and Other publicly available information.

Wearable technology is expected to be the next generation of devices to transform how individuals consume and use information. The market is witnessing high interest from sportswear companies that are betting that apps will inspire enthusiasm for their products. Adidas is the latest company to jump into the fray, when in August it agreed to buy Runtastic, an Austrian fitness app maker for $247m (€220m). A few months earlier Under Armour invested $710m in its Connected Fitness platform.

Globally, the Leisure &Wellness industrywitnessed 163 announcedtransactions in Q3’15, up6% from 154 transactionsrecorded in Q2’15.

.

Q3’15163

Q2’15154

Deal activity in the U.S. fell 4%to reach 68 deals in Q3’15, ascompared to 71 deals in Q2’15.The U.S. represented 42% ofglobal deal volume in Q3’15, ascompared to 46% in Q2’15.

42%




$2,010$519 $608

$3,123$1,710

$307

$4,334

$1,352

$18,651

78

40

73 74

102

31

6471 68

0

30

60

90

120

$0

$5,000

$10,000

$15,000

$20,000

Q3'13 Q4'13 Q1'14 Q2'14 Q3'14 Q4'14 Q1'15 Q2'15 Q3'15

Deal V

olume (#)D

eal V

alue

($M

)

Deal Value Deal Volume

$5,720$3,484 $3,525 $4,616

$2,937$709

$6,047$4,014

$23,050188

107

146130

174

71

136154

163

0

30

60

90

120

150

180

210

$0

$5,000

$10,000

$15,000

$20,000

$25,000

Q3'13 Q4'13 Q1'14 Q2'14 Q3'14 Q4'14 Q1'15 Q2'15 Q3'15

Deal V

olume (#)D

eal V

alue

($M

)

Deal Value Deal Volume

10.9x 10.9x

7.1x 8.4x 8.9x 8.6x 9.3x 10.4x 11.5x 10.1x

1.5x 1.6x

1.0x1.3x 1.6x 1.6x 1.4x

1.8x1.7x

1.7x

0.0x

3.5x

7.0x

10.5x

14.0x

2006 2007 2008 2009 2010 2011 2012 2013 2014 Q3'15EV / EBITDA EV / REVENUE

60.0%

100.0%

140.0%

180.0%

220.0%

260.0%

300.0%

Oct-12 Apr-13 Sep-13 Mar-14 Sep-14 Mar-15 Sep-15Cosmetic & Beauty Products Exercise Products & Services Sporting Goods EquipmentFitness & Spa Facilities Wearable Technology S&P 500 Index

Leisure & Wellness Sector Relative Stock Price Performance Trend (2)

U.S. Leisure & Wellness Sector M&A Trend Q3’13 – Q3’15 (1)

Leisure & Wellness Sector Trading Multiple Valuation Trend (2)

Global Leisure & Wellness Sector M&A Trend Q3’13 – Q3’15 (1)

Source: Capital IQ as of September 30, 2015.Notes:(1) M&A analysis based on deals announced during the respective periods. Deal value represents aggregate deal value for disclosed transactions for the time periods noted on the above graphs.(2) The Leisure & Wellness stock price performance and valuation trend are based on internally originated lists of representative public companies within the sub-sectors. The list of public companies

selected in each sub-sector can be found on pages 9-10.

11.3%

128.9%

69.5%

34.0%32.9%

50.5%




Ann. Date Target Buyer Sub-sector Implied Enterprise

Value (TEV)

TEV /Revenue

TEV /EBITDA

9/10/2015 BAM Labs, Inc. (nka:SleepIQ Labs Inc.) Select Comfort Corporation Wearable Technology

$70.7 - -

9/9/2015 Back Bay Yoga LLC and Sweat and Soul Yoga

Yoga Works Inc. Fitness & Spa Facilities

- - -

8/21/2015 Steiner Leisure Ltd. Nemo Parent, Inc. Fitness & Spa Facilities

$896.4 1.0x 12.3x

8/17/2015 WR Group, Inc. DS Healthcare Group, Inc. Cosmetic & Beauty Products

$41.3 0.8x 4.1x

8/5/2015 runtastic GmbH Adidas AG Wearable Technology

$246.7 - -

7/29/2015 Onix Sports, Inc. Escalade Sports, Inc. Recreational Products

- - -

7/27/2015 CamelBak Acquisition Corp. Vista Outdoor Inc. Recreational Products

$412.5 2.6x 11.0x

7/20/2015 Jimmy Styks, LLC Vista Outdoor Inc. Recreational Products

$40.0 - -

7/9/2015 The Procter & Gamble Company, 43 Beauty Brands

Coty Inc. Cosmetic & Beauty Products

$15,854.7 - -

7/8/2015 SCIFIT Systems, Inc. Brunswick Corporation Recreational Products

- - -

7/3 /2015 Santa Cruz Bicycles, Inc. Pon Holdings B.V. Recreational Products

- - -

7/3 /2015 Maryland Athletic Club & Wellness Center, Harbor East Health Club

Wellbridge, Inc. Fitness & Spa Facilities

- - -

7/1/2015 Advanced Beauty Systems, Inc. PDC Brands Cosmetic & Beauty Products

- - -

Selected Recent Leisure & Wellness M&A Transactions

(US$ in millions)

Selected Q3’15 Transaction SummariesAugust 5, 2015: Adidas acquired fitness tracking app maker Runtastic from majority owner Axel Springer,along with the Company's founders and an "angel" investor, in a deal valuing the company at $247m (€220 m).Of late, the fitness market has been witnessing significant technological innovations, offering newopportunities and insights that allow athletes of all levels to control the achievement of their performancegoals. Founded in 2009, Runtastic boasts more than 70 million registered users worldwide.

July 27, 2015: Vista Outdoor reached an agreement to purchase CamelBak Products from CompassDiversified Holdings for $413m, adding water bottles to its portfolio of shooting-sports brands. Thetransaction strengthens and expands Vista's presence in outdoor sports and recreation. CamelBak offerspersonal hydration solutions for outdoor, recreation and military use. The Company's products includehydration packs, reusable bottles and individual purification and filtration systems.

July 20, 2015: Vista Outdoor acquired Jimmy Stakes, a leading designer and marketer of stand-up paddleboards, for $40m. The idea is to capture revenue from an estimated 40 million outdoor-loving Americans, whotypically go on five multi-day camping trips each year using a wide variety of gears that are sold in nationalchain sporting goods stores that already carry Vista's shooting products. The acquisition expands Vista’sportfolio into water sports with products that support activities many of its existing customers engage in.

July 3, 2015: The Netherlands-based Pon Holdings acquired Santa Cruz Bicycles, the CA-based market leaderin high-end mountain bikes. The company’s product range currently includes 16 models, and are sold in 70countries under the brand names of Santa Cruz and Juliana. With its existing network of brands, workingwithin the Pon Holdings is expected to allow Santa Cruz to improve internal logistics as well as expand furtherinternationally.

July 1, 2015: TSG Consumer Partners acquired Backcountry.com from Liberty Interactive. Backcountry.comfounder Jim Holland would continue to own a stake in the Company following the transaction. The Companyhas established a loyal customer base through its strong portfolio of websites. TSG was attracted by theexpanding outdoor market, and the Company’s proven, execution-oriented management team, robustecommerce platform and deep merchandising and marketing expertise.

Source: Capital IQ and Other publicly available information.

Selected Q3’15 M&A Transactions




Selected Public Leisure & Wellness Companies(US$ in millions, except per share amounts)

Last Twelve Months (LTM)

Company NameMarket

CapEnterprise

Value (1) Share

Price (2)% of 52-Wk High Revenue

Revenue Growth EBITDA (3)

EBITDAMargin

NTMRevenue

NTMEBITDA

Cosmetic & Beauty ProductsThe Estée Lauder Companies Inc. $29,906 $30,018 $80.68 88.0% $10,780 (1.7%) $2,011 18.7% 2.7x 13.6x

Coty Inc. 10,047 12,009 27.06 82.7% 4,395 (3.4%) 718 16.3% 2.7x 14.6x

Herbalife Ltd. 5,467 5,974 54.50 88.0% 4,658 (7.8%) 590 12.7% 1.3x 8.0x

Edgewell Personal Care Company 5,263 6,520 81.60 56.3% 4,235 (3.1%) 861 20.3% 2.9x 14.3x

Sally Beauty Holdings Inc. 3,726 5,306 23.75 67.3% 3,814 2.7% 594 15.6% 1.3x 8.6x

Nu Skin Enterprises Inc. 2,649 2,333 41.28 65.7% 2,352 (28.4%) 401 17.0% 0.9x 5.6x

Revlon, Inc. 1,621 3,193 29.45 70.7% 1,894 5.7% 307 16.2% NA NA

Avon Products Inc. 1,671 3,270 3.25 25.8% 8,097 (13.5%) 688 8.5% 0.5x 5.4x

Inter Parfums Inc. 833 652 24.81 70.4% 471 (0.3%) 54 11.5% 1.6x 10.2x

Natural Health Trends Corp. 456 331 32.68 73.0% 178 96.0% 31 17.4% NA NA

Elizabeth Arden, Inc. 388 703 11.69 53.9% 971 (16.6%) (27) NM 0.7x 13.6x

Nature's Sunshine Products Inc. 232 176 11.98 76.0% 345 (5.7%) 21 6.1% 0.5x 6.3x

Lifevantage Corporation 77 86 0.81 56.6% 190 (11.0%) 16 8.5% 0.5x 4.7x

Mannatech, Incorporated 52 22 18.96 59.3% 192 6.5% 20 10.2% NA NA

DS Healthcare Group, Inc. 45 41 2.44 49.2% 13 6.0% 0 1.8% NA NA

CCA Industries Inc. 20 24 2.90 79.7% 27 (8.8%) (2) NM NA NA

Reliv' International, Inc. 9 9 0.74 43.3% 56 (11.4%) 1 1.9% NA NA

Cosmetic & Beauty Products M ean 65.1% 0.3% 12.2% 1.4x 9.5x

Cosmetic & Beauty Products M edian 67.3% (3.4%) 12.7% 1.3x 8.6x

Exercise Products & ServicesBrunswick Corporation $4,403 $4,244 $47.89 84.6% $3,998 10.5% $468 11.7% 1.0x 7.5x

Nautilus Inc. 473 386 15.00 65.4% 310 27.1% 44 14.3% 1.1x 7.9x

Escalade Inc. 223 233 15.80 79.0% 149 10.3% 21 14.3% 1.5x 10.2x

Exercise Products & Services M ean 76.3% 16.0% 13.4% 1.2x 8.5x

Exercise Products & Services M edian 79.0% 10.5% 14.3% 1.1x 7.9x

Sporting Goods EquipmentBrunswick Corporation $4,403 $4,244 $47.89 84.6% $3,998 10.5% $468 11.7% 1.0x 7.5x

Callaway Golf Co. 656 782 8.35 81.9% 818 (8.0%) 33 4.0% 0.9x 14.4x

Performance Sports Group Ltd. 608 1,002 13.35 68.8% 655 46.7% 83 12.7% 1.5x 11.7x

Marine Products Corp. 266 248 6.94 77.2% 186 4.5% 17 8.9% 1.2x 12.3x

Malibu Boats, Inc. 250 320 13.98 57.9% 229 19.7% 29 12.8% 1.3x 6.8x

Escalade Inc. 223 233 15.80 79.0% 149 10.3% 21 14.3% 1.5x 10.2x

Johnson Outdoors Inc. 210 164 21.10 59.8% 430 2.8% 25 5.8% 0.4x NA

Black Diamond, Inc. 206 183 6.28 58.4% 200 12.7% 5 2.5% 0.8x 17.4x

Sporting Goods Equipment M ean 70.9% 12.4% 9.1% 1.1x 11.5x

Sporting Goods Equipment M edian 73.0% 10.4% 10.3% 1.1x 11.7x

Fitness & Spa FacilitiesULTA Salon, Cosmetics & Fragrance, Inc. $10,444 $9,969 $15.65 8.9% $3,538 20.6% $604 17.1% 2.4x 14.0x

ClubCorp Holdings, Inc. 1,389 2,374 15.65 62.7% 973 15.6% 170 17.5% 2.2x 9.8x

Steiner Leisure Ltd. 811 871 15.65 24.1% 871 1.1% 73 8.4% 1.0x 10.7x

Regis Corp. 693 600 15.65 87.4% 1,837 (2.9%) 86 4.7% 0.3x 6.4x

Planet Fitness, Inc. 627 1,100 15.65 75.7% 315 0.0% 100 31.7% 3.4x 9.2x

Town Sports International Holdings Inc. 64 351 15.65 203.5% 442 (4.5%) 35 7.9% 0.8x 16.0x

Fitness & Spa Facilities M ean 8.9% 20.6% 17.1% 2.4x 14.0x

Fitness & Spa Facilities M edian 8.9% 20.6% 17.1% 2.4x 14.0x

Enterprise Value

Leisure & Wellness Performance Summary by Sub-sector ($M, except per share data)




Selected Public Leisure & Wellness Companies(US$ in millions, except per share amounts)

Last Twelve Months (LTM)

Company NameMarket

CapEnterprise

Value (1) Share

Price (2)% of 52-Wk High Revenue

Revenue Growth EBITDA (3)

EBITDAMargin

NTMRevenue

NTMEBITDA

Wearable TechnologyApple Inc. $629,010 $648,565 $15.65 11.6% $224,337 25.9% $77,879 34.7% 2.7x 8.0x

Alphabet Inc. 427,324 367,526 15.65 2.2% 69,611 14.4% 22,620 32.5% 4.6x 11.5x

Sony Corporation 30,530 25,107 15.65 47.2% 67,111 4.5% 5,108 7.6% 0.4x 4.4x

Under Armour, Inc. 20,872 21,417 15.65 14.8% 3,422 28.8% 442 12.9% 4.9x 36.2x

Fitbit Inc. 7,797 7,336 15.65 30.2% 1,260 0.0% 292 23.1% 3.8x 23.2x

Garmin Ltd. 6,851 5,714 15.65 26.0% 2,869 3.8% 708 24.7% 2.0x 8.5x

Harman International Industries, Inc. 6,832 7,266 15.65 10.5% 6,155 15.1% 703 11.4% 1.0x 8.1x

GoPro, Inc. 4,148 3,631 15.65 15.9% 1,697 64.1% 277 16.3% 1.8x 8.8x

Wearable Technology Mean 19.8% 19.6% 20.4% 2.7x 13.6x

Wearable Technology Median 15.3% 14.8% 19.7% 2.3x 8.7x

Source: Capital IQ.

All figures in US$; where applicable, converted at rates as of September 30, 2015.

(1) As shown, Enterprise Value defined as Market Capitalization plus Preferred Stock and Net Debt.

(2) Closing share prices as of September 30, 2015.

(3) EBITDA reduced to account for minority interest expense.

Enterprise Value

Leisure & Wellness Performance Summary by Sub-sector ($M, except per share data)




(1.2%)

(0.6%)

0.0%

0.6%

1.2%

Jan-06 Aug-07 Mar-09 Oct-10 May-12 Dec-13 Aug-15

20.0

40.0

60.0

80.0

100.0

120.0

Jan-06 Sep-07 Apr-09 Nov-10 Jul-12 Feb-14 Sep-15

1.4%

2.1%

2.7%

3.4%

4.0%

Mar-07 Jul-08 Dec-09 Jun-11 Oct-12 Apr-14 Sep-15

3.0%

5.0%

7.0%

9.0%

11.0%

Jan-06 Aug-07 Mar-09 Nov-10 Jun-12 Jan-14 Sep-15

U.S. Consumer Spending – Macro Indicators

Unemployment Rate

Average Hourly Wages (Y-o-Y % Change)

Conference Board Consumer Confidence Index

% Change in Real Personal Consumption Expenditure

Source: Federal Reserve Bank of St. Louis and Capital IQ.




Blake Shear

Vice President

T: 303-382-7973E: [email protected]

Rick Chance

Managing Director

T: 949-885-5680E: [email protected]

Leisure & Wellness Investment Banking Contacts

The information contained in this newsletter is of a general nature and is not intended to address the circumstances of any particular individual or entity including their investment objectives or financial needs. In preparing this newsletter, we have relied upon and assumed, without independent verification, the accuracy and completeness of all information available from public sources. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act or rely on the information in this newsletter without appropriate professional advice after a thorough examination of the particular situation. The information contained in this newsletter does not constitute a recommendation, offer, or solicitation to buy, sell or hold any security of any issuer. Past performance does not guarantee future results.

KPMG Corporate Finance LLCLeisure & Wellness Practice

2014 No. of deals

1. PWC 416

2. KPMG¹ 366

3. Deloitte 264

4. Ernst & Young 237

5. BDO 199

KPMG Corporate Finance¹ is a leading global M&A advisor in the Middle Market

YTD 2015 No. of deals

1. KPMG¹ 185

2. PWC 181

3. Rothschild 134


4. Houlihan Lokey 103

Source: Thomson Reuters SDC; Middle market is defined as transactions less than US$500 million.1. Represents the global Corporate Finance practices of KPMG International’s network of independent member firms.

2013 No. of deals

1. PWC 362

2. KPMG¹ 338


4. BDO 205

5. Rothschild 200

Global Coverage. Industry Knowledge.Middle-Market Focus.The Corporate Finance practices of KPMG International’s network of independent member firms (KPMG) have been ranked collectively as a leading global mid-market advisor based on total deal volume announced in 2014, according to Thomson Reuters SDC. KPMG firms operate in 155 countries with over 2,500 professionals who are able to meet the needs of clients across the globe.

KPMG Corporate Finance LLCKPMG Corporate Finance LLC (KPMG CF) provides a broad range of investment banking and advisory services to its domestic and international clients. Our professionals have the experience and depth of knowledge to advise clients on global mergers and acquisitions, sales and divestitures, buyouts, financings, debt restructurings, equity recapitalizations, infrastructure project finance, capital advisory, real estate, portfolio solutions, fairness opinions, and other advisory needs. For more information on KPMG CF, please visit www.kpmgcorporatefinance.com.



http://www.kpmgcorporatefinance.com/

Leisure & Wellness M&A Newsletter

Documents