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Test, Measurement, and Control Industry Update

Q2 2014


Q2 2014

1

OUR PRACTICE Harris Williams & Co. is a leading advisor to the test, measurement, and control markets. Our significant experience covers a broad range of end markets, industries, and business models. This particular report focuses on trends and metrics in the following areas:

Test and Measurement • Instrumentation

• Sensors

• Technology and Software

• Life Sciences and Laboratory

Flow Control • Pumps and Filtration

• Valves and Fittings

Process / Motion Control • Motion and Drives

• Actuators and Positioners

• Condition Monitoring

Test Services • Testing

• Inspection

• Certification

• Engineering

• Consulting

Julien Darmon Managing Director

[email protected] +44 (0)20 7518 8905

Bill Roman Managing Director

[email protected] +1 (617) 654-2101

Matt Volinsky Vice President


Jay Hernandez Director


Lars Friemann Vice President

[email protected] +49 (69) 3650638 12

Jeff Perkins Managing Director

[email protected] +49 (69) 3650638 00

CONTENTS WHAT WE’RE READING

ECONOMIC UPDATE

M&A MARKET TRENDS

PUBLIC MARKETS

PUBLIC COMPARABLES

NOTABLE M&A ACTIVITY

Harris Williams & Co. is pleased to present our global test, measurement, and control

industry update for Q2 2014. This report provides commentary and analysis on

current capital market trends and merger and acquisition dynamics within the global

test, measurement, and control sector. As set forth in our report, the global test,

measurement, and control sector is comprised of companies that provide highly

engineered devices, instruments, systems, and services to test, monitor, measure,

protect, control, and validate processes and applications across numerous end

markets.

We hope you enjoy reviewing this edition and please continue to email and call us

with your thoughts and opinions. We want to ensure that this newsletter is informative

and helpful as you continue to focus on the test, measurement, and control sector.

mailto:[email protected]






2

Harris Williams & Co. announces that Humanetics Innovative Solutions, a portfolio company of Wynnchurch Capital, has been acquired by Golden Gate Capital. Harris Williams & Co. acted as the exclusive financial advisor to Humanetics. The transaction was led by Bill Roman, Jay Hernandez, Matt Volinsky, and Chris Zeien from Harris Williams & Co.’s Boston office, along with Julien Darmon from the firm’s London office. Humanetics, headquartered in Plymouth, Michigan, is a leading global provider of mission-critical safety test and measurement instrumentation solutions that are utilized to establish safety standards and improve product designs across numerous end markets. Humanetics has achieved worldwide recognition as a leading provider of anthropomorphic test devices, which are informally referred to as “crash test dummies.”

Harris Williams & Co. Advises Humanetics in its Sale to Golden Gate Capital

HW&Co. Test, Measurement, and Control Deal Spotlight


Q2 2014

Harris Williams & Co. announces that Maxcess International Corporation, a portfolio company of Merifin Capital and Windjammer Capital Investors, has been acquired by Webex, Inc., a portfolio company of Bertram Capital Management. Harris Williams & Co. acted as the exclusive financial advisor to Maxcess. The transaction was led by Bill Roman, Jay Hernandez, and Scott Reinig from Harris Williams & Co.’s Boston office. Maxcess International Holding Corporation is the leading global provider of mission-critical sensored automation instrumentation solutions and systems that improve the safety, efficiency, accuracy, and productivity of complex continuously web-fed production and converting lines.

Harris Williams & Co. Advises Maxcess in its Sale to Webex, Inc.

and

a portfolio company of

has merged with



has been acquired by

Harris Williams & Co. is a leading advisor to test, measurement, and control solution providers. The firm's Test, Measurement, and Control team has completed ten transactions over the last 18 months, including four in the last three months.

Harris Williams & Co. announces that Enardo has been acquired by Emerson Electric Co. (NYSE:EMR), a leading diversified technology company that designs and manufactures products and technology for the industrial, commercial, and consumer markets worldwide. Harris Williams & Co. acted as the exclusive sell-side advisor. The transaction was led by Drew Spitzer and Brian Lucas from Harris Williams & Co.’s Richmond office and Bill Roman from the firm’s Boston office. Enardo, headquartered in Tulsa, Oklahoma, is a leading provider of safety and environmental control solutions for storage tanks and vapor control systems used in upstream oil production and other industrial end markets, including refining, chemical and petrochemical, terminals, landfill and wastewater, pharmaceutical, and biofuel.

Harris Williams & Co. Advises Enardo in its Sale to Emerson Electric Co.

Harris Williams & Co. announces that Finder S.p.A., a portfolio company of FA Capital, has been acquired by Pump Solutions Group, an operating company within Dover Corporation (NYSE:DOV). Harris Williams & Co. acted as the exclusive advisor to the seller. The transaction was led by Julien Darmon and Alex Murrill from Harris Williams & Co.’s London office and Bill Roman from the firm’s Boston office. Finder, headquartered in Merate, Italy, is a leading provider of engineered pumps, spare parts and related services for critical applications in oil & gas, power generation and general industrial processes. The company employs approximately 200 people and has fully owned subsidiaries in Italy, France, the People’s Republic of China as well as a joint venture in Saudi Arabia.

Harris Williams & Co. Advises Finder in its Sale to Dover Corporation




a division of

3

“As a company that began in the gas detection business in the mid-1990s, we are often asked how things are different now than two decades ago... So while it is true that systems have greatly improved, the core part of a gas detection system is still essentially intact… Yet there is one improvement on the horizon that will be a game-changer for everyone from facilities managers to Department of Public Works (DPW) workers, firefighters to wastewater management professionals--and that's wireless detection.” Read the full article here.

Trends in Gas Detection Equipment

Occupational Health & Safety 02/01/2014

This article analyzes the major trends currently affecting the gas detection equipment market, specifically highlighting wireless gas detection as a “game-changing” technology.

What We’re Reading

“Against the backdrop of an era of intelligent mobility and unrelenting pursuit of vehicle safety, poised to gain are intelligent automotive technologies that revolve around safety, comfort and convenience. Primary among them is Tire Pressure Monitoring Systems (TPMS) which possess the potential to avert accidents caused by over-inflated and under-inflated tires… Governments around the world are focusing on legislating active road safety measures, given the rise in the number of road accidents worldwide.” Read the full article here.

Legislation of Safety Mandates Drives the Global Tire Pressure Monitoring Systems Market

Global Industry Analysts 11/25/2013

This article highlights the expected growth in demand within the global tire pressure monitoring systems market, which is projected to reach $2.6 billion by 2018, driven primarily by increased safety regulations.

“Shikany [AIA Director of Market Analysis] points to two application areas that contributed to growth in 2013 and will likely drive some of the market activity in 2014: life sciences and traffic applications… What this means for the bottom line remains to be seen. But Shikany expects growth to continue in the first and second quarters of the year, and possibly above historic rates: ‘probably about 6 percent total, if I had to put a number to it.’”

Read the full article here.

The Machine Vision Market: What to Expect in 2014

Automated Imaging Association 01/07/2014

This article discusses the higher than expected growth that occurred in the machine vision market during 2013, and provides an industry outlook for 2014.

Global Industrial Valves Market Expected to Grow Flow Control Network 02/07/2014 “Global demand for industrial valves is forecasted to rise 5.1% a year through 2017 to $82.5 billion, according to The Freedonia Group Inc. Although growth is expected to be healthy across the globe, the drivers of growth will vary by region. ‘Advances in developing areas, such as China and India, will result from ongoing industrialization, as investment in water infrastructure and electricity generation grows,’ says Michael Deneen, Freedonia analyst. In developed areas, continued advances in manufacturing output are expected to provide growth in the process manufacturing market.”

“Pump sales in China will reach $8.5 billion in 2014, according to the Pumps World Market report by McIlvaine Company. Over $3 billion will be spent by municipalities for wastewater and drinking water plants. The continuing population shift to the cities, the higher standard of living, and increased expectations are driving infrastructure expansion. Pump expenditures by power plants will exceed $1.2 billion, driven by an addition of more than 50,000 MW of new power plants this year. In addition, there will be some retrofits of flue gas desulfurization (FGD) systems. These systems have large pump requirements. A big effort to reduce NOx is resulting in a market for ammonia pumps.”

Positive Outlook for China’s Pumps Market Flow Control Network 01/31/2014

http://ohsonline.com/articles/2014/02/01/trends-in-gas-detection-equipment.aspx

http://www.prweb.com/releases/TPMS_market/direct_TPMS_market/prweb11366571.htm

http://www.visiononline.org/vision-resources-details.cfm/vision-resources/The-Machine-Vision-Market-What-to-Expect-in-2014/content_id/4574

Economic Update

GDP

EU – 27 Economic

Environment

• GDP grew by 0.4% during the fourth quarter of 2013, compared with the previous quarter, according to the latest figures available from Eurostat.

• GDP is forecast to expand by 1.4% in 2014, according to the latest estimates from the European Commission, as growth is set to become gradually more oriented towards domestic demand and more robust throughout the year.

• The unemployment rate for December 2013 was recorded at 12.0%, a slight increase y-o-y from 11.9% in December 2012.

• In January 2014, the Economic Sentiment Indicator increased by 0.9 points in the EU. While the upward trend observed since May 2013 has been continued, the magnitude and sectoral scope of the improvement in confidence has moderated to some extent.

• In December, the Markit PMI Composite Index rose to 52.1, its second-highest level during the past two-and-a-half years.

EU – 27 Economic

Observations

Industrial Production

Index

Economic Sentiment Indicators

Industrial Confidence Indicators

New Orders

Last 6 Months 0.7% 0.9% 7.3 16.5 6.4%

Last 12 Months 1.0% 2.9% 10.1 20.7 15.2%

0.9% 1.7 7.6 2.2% 0.4% Last 3 Months

As of Dec-13 As of Jan-14 As of Jan-14 As of Dec-13 As of Jan-14

GDP

U.S. Economic

Environment

• GDP grew at an annual rate of 3.2% in 4Q 2013. That was less than the third quarter’s 4.1% pace, but overall the final six months of the year delivered the strongest second half since 2003.

• Stuart Hoffman (Chief Economist at PNC) is forecasting U.S. real GDP growth of 2.9% in 2014, as fiscal policy becomes more neutral for the economy, recovery takes hold in Europe, and growth in Asia reaccelerates as the Chinese government reduces some of its austerity measures.

• Although the unemployment rate declined to 6.6% in January 2014, the lowest level since October 2008, only 113,000 net new jobs were added which was significantly below expectations.

• The Conference Board’s Consumer Confidence Index increased for the second consecutive month from 77.5 in December to 80.7 in January, as consumers are viewing both business and job market conditions more favorably.

• The manufacturing sector continues to expand with a PMI reading of 51.3 in January, but at a decidedly measured pace as this represents the index’s lowest level since May 2013.

U.S. Economic

Observations

PMI Index ISM Index Durable Goods New Orders

Conference Board Leading Indicators

Last 6 Months 1.8% (7.4)% (12.2)% 5.2% 3.0%

Last 12 Months 2.7% (3.4)% (3.9)% 6.9% 4.4%

(9.4)% 4.3% 1.2% 0.8% Last 3 Months

As of Dec-13 As of Jan-14 As of Jan-14 As of Dec-13 As of Dec-13

(15.5)%

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0

50

100

150

200

250

Q1 2010

Q2 2010

Q3 2010

Q4 2010

Q1 2011

Q2 2011

Q3 2011

Q4 2011

Q1 2012

Q2 2012

Q3 2012

Q4 2012

Q1 2013

Q2 2013

Q3 2013

Q4 2013

Num

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of M

&A

Dea

ls

Global M&A Trends

5

• North American deal volume for 2013 increased to 10,005 transactions versus 9,969 transactions during 2012.

• North American large-cap and middle market deal volume increased by 28.2% and 9.6%, respectively, from 3Q 2013, indicating strong and consistent activity for all deal sizes.

• Corporate cash reserves built up since the economic downturn are below previous highs, but a substantial amount is still available for acquisitions. U.S. corporate cash balances as a percentage of total enterprise value remain near record levels and are driving interest in strategic M&A.

• European middle market M&A activity contracted 18% q-o-q during Q4 2013, contributing to an overall decline in volume for the full year of approximately 28% relative to 2012.

• Senior loan volume for European LBOs in Q4 2013 increased to approximately €9.1 billion, up from €6.4 billion during the same period in 2012.

• Global test, measurement, and control deal volume increased by approximately 19% from Q3 2013 to Q4 2013, making Q4 2013 the most active quarter for TMC deal activity this past year.

• Strategic buyers prevailed in 87% of all TMC deals in 2013 as they looked to access new products, technologies, customers, and end markets via M&A activity.

Market Observations Market Observations

Source: CapitalIQ, S&P Leveraged Commentary & Data.

Test, Measurement, and Control M&A Volume Quarterly Activity Market Activity

Trading Values

Stock Prices

EBITDA Multiples

6

Trailing Twelve Months Stock Price Performance

Current Valuations Versus Historical Five-Year Median

Test and Measurement Flow Control Process / Motion Control

Key Trading Statistics

Key Trading Statistics

As of February 10, 2014


As of February 10, 2014 Test Services

Stock Price % Change TEV / LTM EBITDA TEV / EBITDA LTM Margins

Sub-Sector Median 1 Month 12 Month Feb-13 Aug-13 LTM 2014E Gross EBITDA

Test and Measurement

Instrumentation (4.6%) 5.4% 13.4x 12.4x 14.1x 12.3x 39.6% 14.9%Sensors (1.0%) 23.8% 10.6x 12.2x 12.3x 10.2x 41.4% 17.4%Technology and Software (6.5%) 12.4% 11.1x 11.6x 14.5x 12.2x 43.1% 13.4%Life Sciences and Laboratory 4.8% 29.0% 12.0x 14.4x 15.9x 13.4x 49.8% 20.5%

Flow Control

Pumps and Filtration (3.7%) 28.4% 11.4x 12.7x 13.6x 12.3x 34.4% 14.9%Valves and Fittings (5.4%) 21.5% 9.4x 10.7x 10.9x 9.8x 31.4% 14.0%

Process / Motion Control

Motion and Drives (3.4%) 23.3% 11.1x 11.3x 12.1x 10.3x 36.0% 17.4%Actuators and Positioners (9.0%) 34.2% 8.8x 10.4x 10.6x 9.9x 30.1% 14.2%Condition Monitoring (3.4%) 19.2% 9.4x 11.5x 13.1x 8.4x 48.3% 16.3%

Test Services

Testing, Inspection, and Certification (4.6%) (6.2%) 12.8x 12.4x 13.1x 11.9x 31.8% 18.6%Engineering and Consulting 1.4% 32.6% 9.0x 10.0x 11.1x 9.0x 20.5% 7.5%

124% 122%112%

138% 138% 139%

120%

132%

155%

115%

133%

40%

60%

80%

100%

120%

140%

160%

180%

Instrumentation Sensors Technology & Software

Life Sciences&Laboratory

Pumps &Filtration

Valves &Fittings

Motion & Drives Actuators & Positioners

Condition Monitoring

Testing, Inspection & Certification

Engineering & Consulting

80

90

100

110

120

130

140

150

Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14

S&P 500 Test & Measurement Flow Control Process / Motion Control Test Services

Test and Measurement Public Comparables

Key Trading Stats

7

($ in millions, except per share amounts)


Test and Measurement Public Comparables Stock Performance

LTM Margins Current 1-Month 1-Year % of R&D / Sales TEV / EBITDAEBITDA Gross TEV Price Change Change LTM High LTM LTM 2014E

InstrumentationRoper Industries Inc. 32.1% 58.1% $15,213 $133.00 (4.6%) 11.4% 93.3% 3.8% 14.6x 13.1xAMETEK, Inc. 25.9% 35.3% $13,220 $49.44 (5.9%) 19.2% 79.7% 3.9% 14.2x 13.1xDanaher Corp. 21.8% 52.1% $52,856 $75.07 (3.4%) 23.5% 95.3% 6.5% 12.7x 11.7xSpectris plc 19.4% 57.8% $4,796 $38.24 (6.3%) 4.8% 90.6% 7.0% 13.5x 12.3xBadger Meter Inc. 15.8% 35.0% $800 $51.27 (3.4%) 5.4% 91.0% 2.4% 15.2x 13.0xESCO Technologies Inc. 14.9% 39.6% $1,029 $33.95 2.8% (16.2%) 80.2% 6.1% 14.1x 11.7xNational Instruments Corporation 14.3% 74.0% $3,098 $27.90 (12.6%) (6.7%) 84.7% 19.9% 18.5x 12.6xTeledyne Technologies Inc. 14.1% 35.9% $3,883 $90.53 (2.0%) 29.6% 93.8% 13.5% 11.8x 10.1xOxford Instruments plc 13.1% 44.8% $1,417 $25.77 (12.0%) (6.0%) 86.0% 7.0% 19.2x 14.4xJenoptik AG 12.6% 34.6% $1,066 $16.67 (0.9%) 57.2% 88.3% 6.6% 10.5x 10.1xItron, Inc. 8.7% 31.5% $1,832 $39.14 (4.8%) (17.7%) 80.8% 8.9% 10.9x 11.6x

Median 14.9% 39.6% (4.6%) 5.4% 88.3% 6.6% 14.1x 12.3x

Mean 17.5% 45.3% (4.8%) 9.5% 87.6% 7.8% 14.1x 12.1x

SensorsSensata Technologies Holding NV 27.1% 35.8% $8,289 $40.17 5.4% 18.0% 97.8% 2.9% 15.4x 14.0xMeggitt PLC 26.1% 42.4% $8,011 $8.60 (2.2%) 23.8% 91.1% 7.0% 12.3x 10.2xFLIR Systems, Inc. 22.0% 49.3% $4,163 $30.48 (5.6%) 15.0% 89.1% 9.9% 12.6x 11.4xMeasurement Specialties Inc. 17.4% 41.4% $1,001 $57.77 (0.3%) 57.0% 94.5% 5.1% 14.5x 11.8xHoneywell International Inc. 16.6% 27.4% $73,760 $92.85 3.0% 31.6% 99.5% 4.6% 11.4x 9.8xMTS Systems Corporation 16.4% 41.1% $1,073 $71.40 (1.0%) 28.4% 96.8% 4.2% 11.6x 9.9xFirst Sensor AG 11.6% 52.6% $160 $11.24 (1.5%) 4.1% 86.7% 14.3% 9.2x 8.8x

Median 17.4% 41.4% (1.0%) 23.8% 94.5% 5.1% 12.3x 10.2x

Mean 19.6% 41.4% (0.3%) 25.4% 93.7% 6.9% 12.4x 10.8x

Technology and SoftwareHexagon AB 23.8% 55.4% $13,469 $32.48 0.3% 20.5% 92.8% NM 17.2x 15.6xMuehlbauer Holding AG & Co. KGaA 13.7% 28.5% $366 $25.87 (4.7%) (14.4%) 82.4% 10.4% 9.4x 6.3xFARO Technologies Inc. 13.1% 55.1% $662 $49.33 (11.7%) 39.0% 81.0% 7.3% 17.9x 17.4xMistras Group, Inc. 10.7% 31.2% $725 $22.71 (8.4%) 4.4% 90.0% 0.5% 11.9x 8.7x

Median 13.4% 43.1% (6.5%) 12.4% 86.2% 7.3% 14.5x 12.2x

Mean 15.3% 42.5% (6.1%) 12.4% 86.6% 6.1% 14.1x 12.0x

Life Sciences and LaboratoryWaters Corporation 31.7% 58.9% $8,815 $109.19 7.6% 18.0% 98.4% 5.3% 14.6x 13.5xMesa Laboratories Inc. 31.2% 60.8% $296 $81.73 4.8% 56.5% 98.8% 3.1% 19.0x NAThermo Fisher Scientific, Inc. 21.3% 44.2% $47,519 $118.61 3.6% 59.0% 100.0% 3.0% 17.0x 11.9xMettler-Toledo International Inc. 20.6% 53.9% $7,779 $254.44 1.8% 15.1% 98.5% 4.9% 15.9x 14.2xAgilent Technologies Inc. 20.5% 52.4% $19,696 $59.01 0.1% 30.9% 96.4% 10.2% 14.2x 13.2xFEI Company 20.1% 47.4% $3,664 $98.65 9.3% 59.6% 98.8% 11.3% 20.4x 15.8xSartorius Aktiengesellschaft 18.9% 49.8% $2,844 $135.62 10.1% 17.9% 94.3% 5.9% 12.9x 10.9xPerkinElmer Inc. 17.9% 45.1% $5,655 $43.54 0.8% 25.3% 94.9% 6.1% 14.6x 12.7xBruker Corporation 12.7% 45.1% $3,695 $21.74 8.9% 29.0% 100.0% 10.6% 16.1x 15.1x

Median 20.5% 49.8% 4.8% 29.0% 98.5% 5.9% 15.9x 13.4x

Mean 21.6% 50.8% 5.2% 34.6% 97.8% 6.7% 16.1x 13.4x

Overall Median 17.9% 45.1% (1.0%) 19.2% 93.3% 6.3% 14.2x 12.1x

Overall Mean 18.9% 45.7% (1.0%) 20.8% 91.8% 7.1% 14.3x 12.2x

$0

$5

$10

$15

$20

$25

$30

0

50

100

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2006 2007 2008 2009 2010 2011 2012 2013 YTD 2014

Agg

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te D

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alue

Tra

nsac

tion

Vol

ume

Transaction Volume Aggregate Deal Value

Company Number of Transactions Aggregate Transaction Value(1)

Danaher Corp. 34 10,977Thermo Fisher Scientific, Inc. 23 30,264Agilent Technologies Inc. 17 1,579AMETEK Inc. 16 960General Electric Company 15 3,204Measurement Specialties Inc. 15 253Emerson Electric Co. 13 1,087Spectris plc 12 660Illinois Tool Works Inc. 12 48Teledyne Technologies Inc. 11 488Bruker Corporation 10 431Roper Industries Inc. 8 1,896Schneider Electric S.A. 8 308Halma plc 8 109

Notable Recent Transactions

Test and Measurement M&A Overview

Announced M&A

Transactions

Number of Deals and Aggregate Deal Value Test and Measurement M&A Trends

Top Acquirers

8

($ in billions)

Median LTM EBITDA Multiple

($ in millions)

From 2006 – Present ($ in millions)

(1) Transaction values only for pending and closed transactions with disclosed terms.

12.5x11.4x

6.8x

11.8x10.9x

9.1x10.0x

9.3x

NM0.0x

2.0x

4.0x

6.0x

8.0x

10.0x

12.0x

14.0x

2006 2007 2008 2009 2010 2011 2012 2013 YTD 2014

EB

ITD

A M

ultip

le


Enterprise EV/EBITDADate Target Target Description Acquirer Value Multiple

Pending Invensys plc, Appliance Division Manufactures instrumentation for appliances. Sun Capital Partners, Inc. 244.5$ NAPending EADS North America Test Manufactures highly engineered automatic test systems. Astronics Corporation 53.0 NAPending Laser Design, Inc. Manufactures ultra-precise and 3D laser scanning systems and services worldwide. CyberOptics Corp. 2.7 NAPending Hitec Special Measuring Systems Manufactures high precision current measurement systems. Phoenix Mecano AG NA NAPending Wayne Engineering Manufactures instruments for testing and enhancing visual and sensory-motor skills. Nanton Nickel Corporation 0.1 NAPending Universtar Science & Technology

Develops environmental monitoring and pollution treatment technologies. Skyray Instrument Inc. 400.3 NA

Pending Fogale-Nanotech, Biomass

Manufactures biotech sensors for measuring viable cell density. Hamilton Company NA NAPending CMOSIS nv Manufactures customized CMOS image sensors. TA Associates Management, L.P. NA NA02/10/14 Data Physics Corporation Manufactures noise and vibration test and measurement solutions. Battery Ventures NA NA02/10/14 VTI Instruments Manufactures precision instrumentation for electronic signal distribution test applications. AMETEK Inc. NA NA02/05/14 Unfors RaySafe AB Manufactures radiation measurement solutions. Danaher Corp. NA NA01/27/14 KYA Technologies Corporation Manufactures analytical devices for physical and chemical science fields. Techno Alpha Co. Ltd. 1.8 NA01/23/14 Solmetric Corporation Develops solar test and measurement equipment. APX Group Holdings, Inc. NA NA01/16/14 Picosecond Pulse Labs, Inc. Manufactures instruments, modules, and components for test and measurement applications. Danaher Corp. NA NA01/09/14 Delta T Engineering, LLC Provides nondestructive testing and temperature sensing solutions. IRISS, Inc. NA NA01/03/14 Teseq AG Manufactures instrumentation and systems for EMC emission and immunity testing. AMETEK Inc. 91.8 NA01/03/14 Wabash Technologies, Inc. Manufactures sensors, actuators, and assemblies for the automotive industry. Sensata Technologies Holding NV NA NA12/2013 BorgWarner BERU Product Line Manufactures temperature sensors for automotive applications. Sensata Technologies Holding NV NA NA12/18/13 APM Automation Solutions Ltd. Manufactures volume and level measurement instrumentation. Emerson Electric Co. NA NA12/18/13 HD Electric Company Manufactures electrical test, measurement, and safety products. Textron Inc. NA NA12/04/13 Humanetics Innovative Solutions Manufactures mission-critical safety test and measurement instrumentation solutions. Golden Gate Capital NA NAConfidential

Flow Control Public Comparables

9

Key Trading Stats


Flow Control Public Comparables

As of February 10, 2014 Stock Performance


Pumps and FiltrationGraco Inc. 28.7% 55.0% $4,364 $71.67 (8.1%) 22.7% 90.0% 4.7% 13.8x 12.2xIDEX Corporation 23.5% 43.1% $6,055 $70.52 (4.5%) 43.5% 89.0% 1.8% 12.7x 11.8xPall Corporation 21.6% 51.7% $8,872 $82.25 (2.7%) 20.5% 96.1% 3.6% 15.5x 15.3xIMI plc 19.6% 42.7% $7,922 $24.29 (5.7%) 28.2% 93.9% 1.2% 12.1x 11.1xEssentra plc 19.6% 60.6% $3,531 $13.64 (4.3%) 50.4% 93.6% NM 16.4x 13.8xDonaldson Company, Inc. 17.5% 35.4% $5,888 $41.48 (3.7%) 10.5% 94.8% 2.6% 13.7x 13.5xFlowserve Corp. 16.8% 34.0% $11,161 $72.85 (5.4%) 38.6% 92.3% 0.7% 13.6x 12.9xFranklin Electric Co., Inc. 16.5% 34.4% $1,916 $38.53 (12.6%) 17.5% 83.6% 0.9% 12.3x 12.3xESCO Technologies Inc. 14.9% 39.6% $1,029 $33.95 2.8% (16.2%) 80.2% 6.1% 14.1x 11.7xTrelleborg AB 14.7% 33.2% $6,493 $20.15 0.1% 54.5% 96.7% 1.4% 13.3x 12.9xXylem Inc. 14.6% 39.1% $7,512 $36.88 5.6% 36.1% 99.1% 2.7% 13.4x 11.3xPentair Ltd. 14.3% 33.1% $17,549 $76.55 (0.6%) 50.0% 97.9% 1.7% 16.4x 12.6xITT Corporation 14.2% 31.8% $3,093 $39.73 (10.7%) 52.2% 88.5% 2.7% 9.1x 8.7xGorman-Rupp Co. 14.2% 23.9% $765 $30.00 (8.6%) 26.6% 85.3% NM 13.8x 11.3xColfax Corporation 13.4% 31.0% $7,870 $63.45 0.4% 48.4% 96.7% 0.0% 13.9x 12.5xSulzer, Ltd. 12.7% 30.7% $5,479 $155.01 0.3% (6.1%) 81.3% 2.3% 10.2x 10.6xSPX Corporation 9.4% 28.1% $5,626 $97.36 (3.7%) 28.4% 92.0% 1.5% 11.9x 13.2x

Median 14.9% 34.4% (3.7%) 28.4% 92.3% 1.8% 13.6x 12.3x

Mean 16.8% 38.1% (3.6%) 29.8% 91.2% 2.3% 13.3x 12.2x

Valves and FittingsThe Weir Group PLC 20.5% 35.4% $9,276 $36.17 5.1% 7.7% 88.5% 0.8% 12.3x 10.7xCrane Co. 15.5% 34.0% $3,622 $63.48 (6.4%) 20.5% 91.7% 2.5% 9.0x 7.2xCameron International Corporation 14.8% 28.7% $16,047 $58.76 (1.2%) (10.2%) 87.2% 0.6% 11.0x 9.9xCurtiss-Wright Corporation 14.2% 32.5% $3,579 $58.91 (8.3%) 60.3% 88.8% 2.7% 10.5x 9.7xAalberts Industries NV 14.1% 59.5% $4,442 $31.80 (1.0%) 46.4% 97.2% NM 12.0x 10.8xMueller Water Products, Inc. 13.9% 27.9% $1,868 $8.63 (4.0%) 47.8% 91.4% 1.1% 12.0x 9.3xParker-Hannifin Corporation 13.5% 23.0% $17,824 $115.58 (9.1%) 22.5% 89.1% 1.1% 10.1x 9.0xWatts Water Technologies, Inc. 12.5% 35.9% $2,008 $54.59 (7.4%) 19.4% 87.1% 0.1% 10.9x 10.8xCIRCOR International, Inc. 10.8% 30.3% $1,221 $71.48 (9.7%) 70.9% 85.7% 0.7% 13.4x 12.0xMueller Industries Inc. 7.6% 13.6% $1,629 $59.18 (4.3%) 7.5% 92.4% NM 9.8x 8.0x

Median 14.0% 31.4% (5.4%) 21.5% 88.9% 0.9% 10.9x 9.8x

Mean 13.7% 32.1% (4.6%) 29.3% 89.9% 1.2% 11.1x 9.7x


Overall Mean 15.7% 35.9% (4.0%) 29.6% 90.7% 1.9% 12.5x 11.3x

$0

$2

$4

$6

$8

$10

$12

$14

$16

0

25

50

75

100

125

2006 2007 2008 2009 2010 2011 2012 2013 YTD 2014

Aggregate D

eal Value

Tra

nsac

tion

Vol

ume


Flow Control M&A Overview

Announced M&A

Transactions

Flow Control

M&A Trends

Top Acquirers

10

($ in billions)

($ in millions)



Number of Deals and Aggregate Deal Value Median LTM EBITDA Multiple


12.0x 12.3x

6.9x

5.5x

8.5x

10.3x 10.2x9.3x

NM0.0x

2.0x

4.0x

6.0x

8.0x

10.0x

12.0x

14.0x

2006 2007 2008 2009 2010 2011 2012 2013 YTD 2014

EB

ITD

A M

ultip

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Parker Hannifin Corporation 14 $285Dover Corp. 10 $847Pentair, Inc. 9 $6,507The Weir Group plc 9 $1,335ITT Corporation 9 $863Curtiss-Wright Corp. 9 $537IDEX Corporation 8 $439Franklin Electric Co. Inc. 8 $318IMI plc 7 $730Rotork plc 7 $62SPX Corporation 6 $2,065Interpump Group SpA 6 $144Eaton Corporation 5 $872Flowserve Corp. 5 $348


Pending Saudi Pump Factory Manufactures fluid handling solutions. Sulzer, Ltd. 6.7$ NAPending PZP HEATING a.s. Manufactures heat pumps. AFG Arbonia-Forster-Group NA NAPending VAT Holding AG Manufactures vacuum valves for the semiconductor industry. Capvis Equity Partners AG NA NAPending Micro Pneumatics Private Limited Manufactures valves and valve automation systems. KITZ Corporation NA NA02/07/14 Superior Products, Inc. Manufactures compressed gas fittings and management systems. Engineered Controls International NA NA02/02/14 Veris, Inc. Manufactures flow measurement solutions. Armstrong International, Inc. NA NA01/16/14 Siemens Water Technologies, LLC Provides water and wastewater treatment products and systems. AEA Investors 865.4 NA01/06/14 Control Equipment Company, Inc. Provides instrumentation, valves, heat tracing products, and drives. The Eads Company NA NA01/02/14 Griffin Dewatering Corporation Provides construction dewatering solutions and portable pump equipment. The CapStreet Group, LLC NA NA01/02/14 B27, LLC Distributes pumps and integrated flow control solutions. DXP Enterprises, Inc. 316.4 12.0x12/31/13 Q.E.D. Environmental Systems, Inc. Manufactures environmental monitoring and remediation equipment. Graco Inc. NA NA12/20/13 Cumberland Valve, Inc. Manufactures industrial hose, valves, and fittings. R/W Connection, Inc. NA NA12/18/13 Automatic Bar Controls, Inc. Manufactures dispensing systems for the food & beverage industry. Middleby Corp. NA NA12/16/13 Air Filtration Business Manufactures industrial air filtration equipment. CLARCOR Inc. 265.0 NA12/13/13 DelStar Technologies, Inc. Manufactures plastic and metal components for filtration applications. SWM 231.5 NA12/10/13 Innovative Mag-Drive, LLC Manufactures magnetic drive centrifugal pumps. Flowserve Corp. NA NA12/03/13 Engineered Controls International Manufactures propane valves and regulators for the gas welding industry. Windjammer Capital Investors NA NA11/04/13 Finder S.p.A. Manufactures products in the field of fluid handling and filtration. Dover Corporation 145.0 10.5x11/01/13 Kerick Valve, Inc. Manufactures float valves and accessories. Control Devices, LLC NA NA10/04/13 Enardo, LLC Manufactures vapor control equipment. Emerson Electric Co. 205.0 7.5xConfidential

Confidential

Process / Motion Control Public Comparables

11

Key Trading Stats


Process / Motion Control Public Comparables



Motion and DrivesAMETEK Inc. 25.9% 35.3% $13,220 $49.44 (5.9%) 19.2% 79.7% 3.9% 14.2x 13.1xDanaher Corp. 21.8% 52.1% $52,856 $75.07 (3.4%) 23.5% 95.3% 6.5% 12.7x 11.7xRexnord Corporation 19.1% 36.7% $4,591 $27.77 0.4% 36.9% 94.8% 0.8% 11.7x 10.1xRockwell Automation Inc. 18.4% 40.8% $15,095 $112.04 (4.2%) 23.1% 92.6% 4.0% 12.7x 11.4xAeroflex Holding Corp. 18.4% 50.7% $1,223 $8.18 23.2% 4.9% 88.4% 13.9% 10.4x 10.1xSchneider Electric S.A. 16.4% 37.8% $54,652 $82.95 (3.5%) 13.1% 90.8% 2.2% 10.7x 10.3xABB Ltd. 13.8% 28.9% $62,015 $25.27 (3.3%) 20.2% 91.4% 3.5% 10.8x 10.3xSiemens Aktiengesellschaft 10.3% 27.7% $119,767 $127.29 (4.9%) 23.5% 92.2% 5.7% 11.3x 7.9xNidec Corporation 9.8% 20.7% $18,137 $118.83 16.2% 109.3% 100.0% 4.6% 23.3x 12.3xYaskawa Electric Corp. 9.2% 29.3% $3,873 $14.06 (8.5%) 52.4% 84.7% 3.6% 12.5x 9.4x

Median 17.4% 36.0% (3.4%) 23.3% 91.8% 3.9% 12.1x 10.3x

Mean 16.3% 36.0% 0.6% 32.6% 91.0% 4.9% 13.0x 10.6x

Actuators and PositionersEaton Corporation plc 15.0% 30.8% $40,909 $69.54 (8.9%) 18.0% 88.9% 2.9% 12.4x 11.1xAltra Industrial Motion Corp. 14.6% 30.3% $1,018 $33.11 (5.0%) 34.3% 92.7% 1.6% 9.7x 9.8xPentair Ltd. 14.3% 33.1% $17,549 $76.55 (0.6%) 50.0% 97.9% 1.7% 16.4x 12.6xMoog Inc. 14.0% 30.0% $3,234 $59.85 (11.2%) 34.2% 85.5% 5.2% 8.7x 8.3xParker-Hannifin Corporation 13.5% 23.0% $17,824 $115.58 (9.1%) 22.5% 89.1% 2.8% 10.1x 9.0xCTS Corporation 12.3% 29.6% $557 $18.01 (11.7%) 81.0% 86.2% 5.7% 11.0x 10.0x

Median 14.2% 30.1% (9.0%) 34.2% 89.0% 2.9% 10.6x 9.9x

Mean 13.9% 29.5% (7.8%) 40.0% 90.1% 3.3% 11.4x 10.1x

Condition MonitoringCognex Corporation 27.3% 75.8% $3,168 $38.78 4.7% 85.7% 97.0% 13.6% 34.0x 32.7xAMETEK Inc. 25.9% 35.3% $13,220 $49.44 (5.9%) 19.2% 79.7% 3.9% 14.2x 13.1xIsra Vision AG. 18.7% 54.5% $296 $57.57 (3.4%) 53.2% 95.9% 13.3% 13.1x 8.0xBasler AG 18.1% 50.8% $152 $40.93 (0.2%) 116.4% 93.2% 10.5% 9.8x 7.8xAugusta Technologie AG 16.3% 48.3% $200 $34.20 (5.6%) 11.7% 88.3% 8.2% 8.9x 7.1xNational Instruments Corporation 14.3% 74.0% $3,098 $27.90 (12.6%) (6.7%) 84.7% 19.9% 18.5x 12.6xTeledyne Technologies Inc. 14.1% 35.9% $3,883 $90.53 (2.0%) 29.6% 93.8% 13.5% 11.8x 10.1xMKS Instruments, Inc. 12.7% 40.8% $956 $29.04 (4.2%) 4.3% 89.4% 9.5% 11.3x 6.8xAB SKF 8.9% 24.6% $14,398 $26.14 (0.4%) 7.9% 91.3% 2.3% 16.4x 8.4x

Median 16.3% 48.3% (3.4%) 19.2% 91.3% 10.5% 13.1x 8.4x

Mean 17.4% 48.9% (3.3%) 35.7% 90.4% 10.5% 15.3x 11.8x


Overall Mean 16.1% 39.1% (2.8%) 35.5% 90.5% 6.5% 13.5x 11.0x

Notable Recent Transactions Enterprise EV/EBITDA

Date Target Target Description Acquirer Value Multiple

Pending Allen Gearing Solutions Limited Manufactures gears and gearboxes for energy and industrial applications. General Electric Company NA NAPending Superior Controls, Inc. Provides engineered solutions for process and motion control applications. RedViking Group, LLC NA NAPending Yokogawa Direct Drive & Motor Manufactures motion control products. Yaskawa Electric Corp. NA NAPending Reis Group Holding GmbH Manufactures robots, automation systems, trim presses, and trim tools. KUKA Aktiengesellschaft NA NAPending Adtech Technology Co., Ltd. Manufactures machine controllers to the CNC industry. Shanghai STEP Electric Corp. 99.2$ NAPending KP Komponenter A/S Manufactures components for process control and hydraulics applications. Segulah Advisor AB NA NAPending Cameron Compression Division Manufactures reciprocating compression equipment. General Electric Company 550.0 NA02/11/14 Coleman Cable, Inc. Manufactures electrical wire and cable products. Southwire Company, Inc. 781.4 8.6x02/04/14 HeiDrive GmbH & Co. KG Manufactures drive technologies for industrial, aviation, and medical applications. Palero Capital Gmbh NA NA01/30/14 SeaStar Solutions Manufactures controls and instrumentation for the recreational marine industry. American Securities Management L.P. 330.0 NA01/15/14 Unitherm Furnace Corporation Manufactures industrial electrical control panels for heat processing needs. Eberhart Capital, LLC NA NA01/10/14 Maxcess International Corporation Manufactures industrial automation instrumentation solutions for converting applications. Webex, Inc. NA NA01/07/14 EGS Electrical Group, LLC Manufactures industrial electrical products for explosion proof and hazardous applications. Emerson Electric Co. 1,283.1 NA01/07/14 Eitel Presses, Inc. Provides processing machinery and control system solutions. Gesco AG NA NA01/02/14 Cyclonaire Corporation Manufactures pneumatic conveying equipment. Prospect Partners NA NA12/30/13 TW Automation Inc. Manufactures robotic solutions. Pentrust Solutions LC NA NA12/16/13 Precision Gear Holdings, LLC Manufactures gears for aerospace applications. Rexnord Corporation 78.0 NA12/04/13 Powervar, Inc. Manufactures power protection equipment. AMETEK, Inc. 128.0 NA


Schneider Electric S.A. 16 $6,635Emerson Electric 13 $1,764Regal Beloit Corporation 12 $366Eaton Corporation 11 $14,739Parker-Hannifin Corporation 11 $545ABB Ltd. 10 $6,886Nidec Corporation 10 $1,885ESCO Technologies Inc. 10 $341AMETEK 9 $1,007Curtiss-Wright 8 $374Moog Inc. 8 $181Siemens Aktiengesellschaft 8 $19Robert Bosch Stiftung Gmbh 7 $743Andritz AG 7 $481Wabtec 7 $325

Process / Motion Control M&A Overview

Announced M&A

Transactions

Process / Motion Control

M&A Trends

Top Acquirers

12

($ in billions)

($ in millions)




8.9x

12.8x

10.8x

6.6x

10.2x9.1x 9.4x 9.0x

NM0.0x

2.0x

4.0x

6.0x

8.0x

10.0x

12.0x

14.0x

2006 2007 2008 2009 2010 2011 2012 2013 YTD 2014

EB

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$0

$5

$10

$15

$20

$25

$30

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150

200

250

300

350

2006 2007 2008 2009 2010 2011 2012 2013 YTD 2014

Aggregate D

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Confidential

Confidential

Test Services Public Comparables

13

Key Trading Stats


Test Services Public Comparables


LTM Margins Current 1-Month 1-Year % of TEV / EBITDAEBITDA Gross TEV Price Change Change LTM High LTM 2014E

Testing, Inspection, and CertificationALS Limited 25.3% 88.1% $3,462 $6.98 (9.6%) (40.7%) 62.7% 10.3x 10.3xSAI Global Limited 21.4% 34.0% $906 $3.40 (0.3%) (24.1%) 82.6% 9.7x 9.6xSGS SA 20.3% 44.5% $18,373 $2,341.84 4.2% (5.1%) 85.7% 13.8x 12.2xIntertek Group plc 18.8% 16.0% $8,727 $47.35 (5.8%) (7.4%) 82.2% 14.2x 12.6xBureau Veritas SA 18.4% 32.4% $13,553 $26.51 (6.9%) (13.3%) 76.5% 14.2x 13.2xEurofins Scientific SA 17.0% 17.1% $4,627 $271.51 0.2% 42.2% 96.5% 18.5x 16.6xMistras Group, Inc. 10.7% 31.2% $725 $22.71 (8.4%) 4.4% 90.0% 11.9x 8.7xFurmanite Corporation 9.8% 30.6% $474 $11.74 (3.5%) 120.7% 92.4% 12.4x 11.6x

Median 18.6% 31.8% (4.6%) (6.2%) 84.2% 13.1x 11.9x

Mean 17.7% 36.8% (3.8%) 9.6% 83.6% 13.1x 11.9x

Engineering and ConsultingAMEC plc 8.3% 13.2% $5,205 $17.61 (0.9%) 1.1% 88.7% 10.0x 9.0xARCADIS NV 8.2% 21.1% $3,119 $37.20 1.4% 44.0% 97.6% 11.1x 10.8xWSP Global Inc. 7.5% 20.5% $1,788 $31.24 7.4% 32.6% 99.9% 12.3x 11.4xTetra Tech Inc. 6.8% 13.6% $1,920 $28.84 1.0% (1.3%) 91.6% 14.0x 7.7xJacobs Engineering Group Inc. 6.3% 15.3% $7,951 $59.36 (6.9%) 23.5% 88.8% 10.4x 8.5xFomento de Construcciones y Contratas, S.A. 3.9% 52.2% $12,451 $26.06 4.7% 117.0% 87.1% 21.5x 11.9x

Median 7.5% 20.5% 1.4% 32.6% 91.6% 11.1x 9.0x

Mean 7.8% 24.5% 4.5% 38.7% 93.2% 12.8x 9.7x

Overall Median 10.7% 30.6% (0.3%) 4.4% 88.8% 12.3x 10.8x

Overall Mean 13.1% 31.0% 0.1% 23.2% 88.1% 13.0x 10.9x

Test Services M&A Overview

Announced M&A

Transactions

Test Services M&A Trends

Top Acquirers

14

($ in billions)

($ in millions)






SGS SA 36 $85Intertek Group plc 31 $446Bureau Veritas SA 28 $1,793ALS Limited 25 $675Eurofins Scientific SA 21 $211UL LLC 11 $24DEKRA e.V. 10 $192Pace Analytical Services, Inc. 8 --TÜV SÜD AG 8 --Element Materials Technology B.V. 7 --National Technical Systems Inc. 6 $53EAG Inc. 5 $7TÜV Rheinland Holding AG 5 --

NM

13.5x

7.8x9.2x

11.1x

NM

10.0x 10.2x

NM0.0x

2.0x

4.0x

6.0x

8.0x

10.0x

12.0x

14.0x

16.0x

2006 2007 2008 2009 2010 2011 2012 2013 YTD 2014

EB

ITD

A M

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$0

$1

$2

$3

$4

$5

$6

0

20

40

60

80

100

120

140

160

2006 2007 2008 2009 2010 2011 2012 2013 YTD 2014

Aggregate D

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Pending YTO Group Corporation Provides research, development, and testing services for the agriculture industry. First Tractor Co. Ltd. 6.1$ NAPending Vestas Wind Systems A/S Provides calibration services. Exova Group Limited NA NAPending Samsung Material Research Provides electronics material research services. Corning Inc. 137.3 NAPending Assystem SA Provides engineering and consultancy services. Dominique Louis 697.1 7.4xPending Central Laboratories Friedrichsdorf Provides laboratory analytical services for food safety. Eurofins Scientific SA NA NA01/31/14 Maxxam Analytics International Corp. Provides analytical services and solutions. Bureau Veritas SA 609.0 NA01/22/14 Laboratório São Camilo de Análise Provides chemistry, microbiology, and microscopy testing services. Institut Mérieux SA NA NA01/17/14 ATS - Assistance Technique Service Provides inspection services. Socotec S.A. NA NA01/17/14 E-Contech Management Pte. Ltd. Provides research and testing services for the engineering industry. International Engineering Public Co. 0.1 NA01/14/14 Safety Engineering Associates Inc. Provides accident reconstruction, product testing, and design evaluation services. Crane Engineering, Inc. NA NA01/08/14 IntierraRMG Provides analytical services for the metals and mining industries. SNL Financial LC NA NA01/06/14 Catalyst Environmental Limited Provides stack emissions testing services. Exova Group Limited NA NA01/06/14 Hitex S.A. Provides services in the area of supercritical CO2 technology. Robertet SA NA NA01/03/14 UT Quality Inc. Provides non-destructive testing and inspection services. RAE Energy UK Limited NA NA12/24/13 Architectural Testing, Inc. Provides architectural testing services. Intertek Group plc 95.0 NA12/10/13 Sci-Tech Laboratories Ltd Provides food microbiology laboratory services. Cawood Scientific Ltd. NA NA11/25/13 Bioensaios Analysis and Environmental Provides analytical laboratory services for the agriculture industry. NSF International Inc. NA NA11/22/13 National Technical Systems Inc. Provides testing and engineering services primarily for the aerospace & defense industry. Aurora Capital Group 314.0 13.8x11/19/13 GSMobile Calibration, s.r.o. Provides calibration, test, and measurement services. Exova Group Limited NA NA11/08/13 Air Compliance Testing, Inc. Provides stack testing and air emission monitoring services. Montrose Environmental Corporation NA NA

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Test, Measurement, and Control

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Sources:

• The Wall Street Journal

• Occupational Health & Safety

• Flow Control Magazine

• The Financial Times

• IHS Electronics & Media

• Research and Markets

• PNC Economic Outlook

• S&P Capital IQ

• Thomson Financial – SDC Database

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• U.S. Census Bureau

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