Update on Farrell Advisory: Solid Momentum, New Pre-Sale Diagnostic Service Offering and Confidence for 2017

Dear Clients, Friends and Colleagues:

Update on Farrell Advisory: Solid Momentum, New Pre-Sale Diagnostic Service Offering and Confidence for 2017

Happy New Year!

Market Conditions

I thought I would provide you with a quick update on Farrell Advisory as we move into 2017 with greater optimism, even on the back of disappointing 2016 M&A volume of 18,344, a 23% reduction over 2015 in North America and Europe. However, 2016 deal value remains the highest we have seen it at $2.1 trillion, primarily due to dealmakers being bold in deal sizes as evidenced by more than 54% (2015: 45%; 2010: 33%) of 2016 M&A value coming from transactions valued at $5 billion or more and all-time M&A transaction multiples (Valuation to EBITDA) of 9.8 for quarter 4[i].

Our optimism for M&A, particularly for large transactions, in the next 2 years is driven by corporates requiring returns (via long-term strategic acquisitions) from excess cash[ii]. The expected gradual closing of the valuation expectations between buyers and sellers (for smaller deals), the requirement to look for acquisition growth and efficiencies/productivity growth as organic growth stills looks low[iii] due to stagnant global trade and subdued investment, more executives looking to retire and with some expectation in the U.S. that there will be beneficial tax, fiscal stimulus measures and regulation changes (albeit risk of protectionist measures) for business owners also point to expected increase in M&A.

Optimism and Service Offerings from Farrell Advisory

Optimism for Farrell Advisory is further enhanced by continuing to win work from recurring clients and new clients which have been kindly referred by friends of Farrell Advisory. Farrell Advisory’s continues to focus on helping small to medium sized companies and financial institutions deliver shareholder value (i) through M&A/refinancing transactions (e.g., via strategic, pre-sale diagnostic, project management and negotiation, due diligence, merger-integration/carve-outs and M&A dispute service offerings); and (ii) who are not operating optimally via my Office of the Chief Financial Officer and Restructuring & Business Reengineering solutions offerings.

New Pre-Sale Diagnostic Service Offering

A slight change in 2016 was the successful new Pre-Sale Diagnostic Service Offering where we have been proactively assessing all parts of businesses and helping business owners prepare their business for sale and maximize their potential sales valuation (and more importantly maximize net proceeds after tax) given the owners very individualized timescale and investment objectives. These Pre-Sale Diagnostic reviews, as performed by specialized senior executives with functional expertise, and the resulting vetted performance improvement implementations can quickly improve the structure of the company and the shareholders and the readiness of management which in turn can have a significant impact of valuation multiples and the risk of a company not selling well first time in a well-defined period.

I am very excited and pleased about the benefits of the Pre-Sale Diagnostic Service Offering, together with the dynamic valuation model, especially as the rigors of due diligence continue to increase which results in a higher number of dead transactions which could have been avoided by more careful project management and advance preparation.

For further information, I have attached an electronic copy of the Statement of Qualifications or please visit the recently updated website www.farrelladvisory.com.

Farrell Advisory: A Boutique Corporate Finance Firm Focusing on M&A and Restructuring & Business Reengineering

I very much appreciate that selecting a professional advisor, for either oneself or recommending to a third party, is a big (personnel) decision as the right advisor can bring experience, skill and resources but more importantly can add significant value and reduce the risks of a transaction failing and/or a bad deal being consummated; this selection process takes time but Farrell Advisory is here for the long-term to provide very high quality, cost effective professional advice.

I very much look forward to catching up; in the meantime, if we can be of any assistance, even on an informal basis, to you, your colleagues or your clients, please let me know.

Best regards,

David