Alper Cetingok Managing Director Co-Head of Security, Defense & Government Services John ...

14 Pages·2016·0.91 MB·English

MARKET INTEL REPORT JANUARY 2016
JANUARY 2016
Alper Cetingok
Managing Director
Co-Head of Security,
Defense & Government Services

John Hagan
Managing Director
Co-Head of Security,
Defense & Government Services

SECURITY, DEFENSE & GOVERNMENT SERVICES
MARKET INTEL REPORT JANUARY 2016
Introducing the Raymond James Security,
Defense & Government Services practice
We are excited to introduce you to our recently recon stituted Security, Defense & Government Services (SDGS)
Investment Banking team at Raymond James and present the Market Intel Report, our new monthly newsletter
highlighting the most relevant trends in our coverage markets.
Raymond James Investment Banking has expanded its Security, Defense & Government Services practice through
the hiring of several bankers and established a presence in the greater Washington, D.C. area. The reason behind
our expansion is twofold: to strengthen our team with experienced and highly regarded bankers and broaden our
coverage in the SDGS markets. We were able to accomplish this over the past year by welcoming Managing
Directors Sam Maness and Stephan Segouin, and Vice Presidents Andy McEnroe, Ellis Chaplin and Oliver Ardery.
These seasoned professionals bring an unparalleled level of industry expertise and substantial experience in a
range of strategic and financial advisory services, including mergers and acquisitions, capital market transactions,
recapitalization and restructuring advisory, and private placements. As part of the larger Raymond James platform,
we are committed to helping our clients make the best possible strategic decisions in order to achieve their desired
financial outcome.
Our coverage of the industry is among the broadest in the investment banking community, spanning commercial
security, cybersecurity, homeland security, defense technology and government services. As highlighted on the
following page and demonstrated through our tombstones below, we have worked with many of the most prestigious
firms across a number of disciplines in the SDGS sectors.
This newsletter is one more way we can provide you with valuable information regarding the news and trends in the
SDGS markets. Of course, this newsletter will never replace the personalized advice you get from our
knowledgeable, experienced team, so we invite you to contact us to see how we can be of assistance in the pursuit
of your strategic objectives.
Please feel free to provide us with feedback on the newsletter or contact us if you would like us to add any of your
colleagues to our distribution list.
Sincerely,
Alper Cetingok John Hagan
Managing Director Managing Director
Co-Head of Security, Defense & Government Services Co-Head of Security, Defense & Government Services
Illustrative M&A Transactions
PENDING
A business unit of A portfolio company of
Has been acquired by Has been acquired by
Is being acquired by Has been acquired by Has been acquired by
DEFENSE SECURITY SOFTWARE MONITORING RISK MITIGATION DEFENSE
COMMUNICATIONS / ISR TECHNOLOGY
A wholly owned subsidiary of
Has been acquired by Has acquired Has been acquired by Has been acquired by
Has been acquired by
IT & SPECIAL GUARDING ACCESS CONTROL BIG DATA / CLOUD CYBERSECURITY
COMMUNICATIONS
* Certain transactions displayed were advised by Raymond James principals while employed at a prior firm.
SECURITY, DEFENSE & GOVERNMENT SERVICES 2
MARKET INTEL REPORT JANUARY 2016
Security, Defense & Government Services Coverage Overview

The SDGS Investment banking team possesses deep domain knowledge and expertise across all major
segments of the security and defense landscape
Experienced and seasoned transaction team with over 95+ years of investment banking experience and over 220
M&A and financing transactions completed, totaling more than $30 billion in value
One of the largest investment banking teams fully dedicated to the SDGS market segment with unparalleled
domain expertise
Offices in Washington, D.C., New York, NY, and Memphis, TN
Two award-winning senior research analysts covering approximately 30 companies:
Brian Gesuale, Managing Director, Security & Services
Chris Quilty, Managing Director, Defense Electronics, Satellite & Space

SECURITY SECTOR COVERAGE:

Authentication Automation Critical Communications
Includes Access Control, Biometrics and Fully integrated solutions offering energy Hardware and software-based solutions that
Identification technologies used to identify and efficiency, quality control, and systems control enable management of field operations and
authenticate individuals for commercial and residential use incident response, including public safety
operations
Detection Technology Guarding Monitoring
Technologies that screen and detect for Security services including manned guarding, Intrusion, PERS, connected home and video
chemical, biological, radiological, nuclear and patrol, executive protection and armored system design, installation, and monitoring for
explosive threats transportation residential and commercial clients
Security & Safety Products Track & Trace Video Surveillance
Physical security and safety products for Hardware / software technologies enabling Hardware and software technologies that
people, vehicles and buildings, including armor asset tracking, field personnel communications capture, record and analyze real-time images
and blast protection technologies and supply-chain administration
DEFENSE & GOVERNMENT SERVICES SECTOR COVERAGE:
Big Data Analytics C4ISR Cybersecurity & Cloud Computing
Analytical services and solutions centered Products and services associated with the Services and solutions related to the protection
around the capture, organization and analysis global Command, Control, Communications, of information systems, the storage and
of large data sets Computers, Intelligence, Surveillance and processing of data, and the disruption and
Reconnaissance market misdirection of hostile cyber forces
Defense Communications Defense Technology IT & Engineering Services
Hardware and software-based solutions Specialty designed products designed to meet Technologies and services directed toward
designed for the unique demands facing widely the particular needs and requirements of both supporting the broad scope of information
distributed armed forces, often operating in the warfighter and the Department of technology and engineering services
austere environments Defense’s various warfare systems demanded across the federal government
Satellite Communications Simulation & Training Unmanned Systems
Includes offerings across the satellite services Products and services dedicated to both live Unmanned technologies and solutions
and manufacturing market, including the training and the development and including research and development,
ground equipment and launch industries implementation of simulation technologies manufacturing, and various ancillary support
designed to promote warfighter readiness services
SECURITY, DEFENSE & GOVERNMENT SERVICES 3
MARKET INTEL REPORT JANUARY 2016
Security Spotlight
Consolidation continued to be a key theme across the security industry in 2015, as evidenced by the significant volume of M&A activity during

the year. Included in this activity were a number of large, high-profile transactions involving some of the industry’s most noteworthy
participants, such as AlliedBarton, Axis and Protection 1. Among the factors driving the increase in consolidation is the impact of technology.
Technology adoption has accelerated across the industry, resulting in a significant degree of disruption and the emergence of “next-
generation” business models in many of the sub-segments covered by Raymond James. Among the notable examples are smart home and
DIY in residential security and managed services in commercial security.
Financial sponsors have been the most active acquirers in the security industry over the last five years, and 2015 saw a continuation of this
trend. During the year, the industry saw several landmark transactions involving new private equity entrants, such as Apollo’s acquisition of
Protection 1 and the acquisition of NICE Systems’ Physical Security Business Unit (PBSU) by Battery Ventures. Raymond James served as
financial advisor to Protection 1 and NICE Systems, respectively, in those transactions. Going forward, it is anticipated that private equity
interest in the space will remain strong.
Security IPO activity in 2015 was scarce, with the majority of investment exits aimed towards sales to financial sponsors or strategic
acquirers. The June IPO of Alarm.com (ALRM), a cloud-based home security platform, served as a landmark transaction given the company’s
leadership position within the smart home and Internet of Things sectors. ALRM priced its IPO at $14 per share and currently trades above its
IPO price, highlighting investors’ confidence in the prospects of the company’s target markets as well as its business model and competitive
position.
De fense & Government Services Spotlight
The end of 2015 showcased a number of transformational deals in the Government Services & Defense Technology markets. One such
transaction was Cubic Corporation’s announced agreement to acquire Huntsville, Alabama-based GATR Technologies, Inc. (GATR), a
manufacturer of next-generation deployable communication and ISR products. GATR bolsters Cubic’s C4ISR offering while significantly
increasing its scale and ability to compete for Program of Record level opportunities with the synergistic fit between GATR, the recently
acquired TeraLogics, and its 2014 acquisition of DTECH Labs. Raymond James served as the exclusive financial advisor to GATR in its sale
to Cubic.
2015 marked the return of the mega-deal to the Defense & Government Services market. Notable transactions included Computer Sciences
Corporation’s acquisition of SRA International and subsequent spin-off of CSRA, Harris Corporation’s acquisition of Exelis, Inc., and CACI’s
acquisition of L-3’s National Security Solutions business, to name a few.
On the contract front, the move toward the use of large scale Multiple Award Contracts (MAC) and Government Wide Acquisition Contracts
(GWAC) continued. In 2015, Responsive Strategic Sourcing for Services (RS3), Energy Savings Performance Contract (ESPC), and Human
Capital and Training Solutions (HCaTS) were three major RFPs released. With ten RFPs worth an estimated $268 billion expected to be
released in early 2016, companies should be mindful of this peak buying cycle over the next several months. This peak buying cycle occurs
every ten years and is not expected to recur until 2025/2026.
Last Twelve Months Public Equity Index Chart

115.0% 115.0%
110.0% 110.0%
105.0% 105.0%
100.0% 100.0%
95.0% 95.0%
90.0% 90.0%
85.0% 85.0%
80.0% 80.0%
Dec-14 Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15
Multi-Platform Large Contractors Index Defense Technology Index Security Composite Index Government Services Index
Source: Capital IQ, DACIS / Infobase, Bloomberg Government, Washington Technology; Data as of 12/31/2015
Note: Companies included are those tracked internally by Raymond James – Individual assets disclosed on pages 7, 8, and 11
SECURITY, DEFENSE & GOVERNMENT SERVICES 4
MARKET INTEL REPORT JANUARY 2016
Security Overview & Key Trends
2015 was a record year for M&A activity in the security sector with respect to not only transaction volume but also valuation levels.
Among the most active sub-segments during the year were guarding, monitoring and video surveillance, which collectively
experienced over $10 billion in transactions. Valuations paid on many transactions were at cyclical highs, boosted largely by the
availability of low-cost debt financing, scarcity of assets with scale and solid business fundamentals. Examples of notable
transactions in these segments include: FLIR Systems’ acquisition of DVTEL; Universal Services of America’s acquisitions of
Guardsmark and the guarding business of ABM Industries; and Imperial Capital’s acquisition of Ackerman Security Systems.
In terms of key trends, 2015 reinforced the importance of technology as a differentiator in the marketplace and core component of
market participants’ strategies to improve their competitive positioning. The smart home segment serves as a prime example of
this trend with numerous new market entrants leveraging technology to provide security solutions directly to consumers (e.g.,
Canary and Ring) or via partnerships (e.g., Arrayent). There were several M&A transactions completed that also underscored this
trend, notably Securitas AB’s $350 million acquisition of Diebold’s North America Electronic Security Business, a provider of
commercial electronic security solutions, and Canon’s $2.8 billion acquisition of Axis AB, the industry pioneer in network video
solutions.
Another key trend in 2015 was the entry of private equity mega-funds into the security sector. Two of the more significant
examples were Apollo Global Management’s entry into the security monitoring industry through the simultaneous acquisitions of
Protection 1 and ASG for an aggregate purchase price of approximately $2.0 billion, and Warburg Pincus’ acquisition of two of the
guarding industry’s largest participants, Universal Services of America and Guardsmark, for a total of $1.6 billion. The security
sector has drawn significant attention from financial acquirers due to a number of highly attractive characteristics, including stable
cash flows, strong growth prospects and consolidation opportunities. With substantial levels of “dry powder” available, private
equity interest remains high and will continue to serve as a major catalyst of industry M&A.

Change in Stock Prices
35.0% 3311..77%%
30.0% 2277..11%% 2266..33%%
25.0%
20.0%
15.0%
10.0% 55..77%%
5.0%
0.0%
(1(05..00%%)) ((44..22%%)) ((55..33%%)) ((44..66%%)) (1(1..88%%)) ((33..11%%)) (2(2..11%%))
Critical Detection
Authentication Automation Guarding
Communications Technology
60.0% 5533..22%%
50.0%
40.0%
30.0%
20.0%
10.0% 11..88%%
0.0%
(10.0%) ((77..33%%)) ((44..33%%)) ((00..99%%)) ((55..33%%))
(20.0%) (1(111..11%%))
((1177..33%%) )
(30.0%)
Security & Safety
Monitoring Track & Trace Video Surveillance
Products
One-Year Change  One-Month Change 
Source: Capital IQ; Data as of 12/31/2015
Note: Sector returns are weighted by market capitalization as of 12/31/2015
SECURITY, DEFENSE & GOVERNMENT SERVICES 5
MARKET INTEL REPORT JANUARY 2016
Security EBITDA Valuation Multiples1
30.0x
25.0x 2244..22xx
2211..33xx
20.0x 1199..22xx
1155..88xx 1155..99xx
15.0x 1133..66xx
1111..33xx 1111..55xx 1111..33xx 1111..00xx 1122..44xx 1111..99xx 1100..88xx
99..77xx
10.0x 88..88xx
5.0x
0.0x
Authentication Automation Critical Communications Detection Technology Guarding
12/31/2013 12/31/2014 12/31/2015
35.0x
30.0x 2299..44x x
25.0x
2222..11x x
1199..88xx
20.0x
1155..22x x
15.0x 1122..22xx 1111..77xx 1111..44x x 1122..99x x 1122..66xx
10.0x 88..66xx
77..22xx 66..44xx
5.0x
0.0x
Monitoring Security & Safety Products Track & Trace Video Surveillance
12/31/2013 12/31/2014 12/31/2015
Source: Capital IQ; Data as of 12/31/2015
(1)Total enterprise value is defined as equity value plus total debt less cash. Past performance is no guarantee of future results.
Note: Companies included are those tracked internally by Raymond James – Individual assets disclosed on pages 7 and 8. Sector EBITDA multiples are weighted by market
capitalization as of 12/31/2015
SECURITY, DEFENSE & GOVERNMENT SERVICES 6
MARKET INTEL REPORT JANUARY 2016
Publicly Traded Security Companies
$ in millions (except for stock price)
Market Data Financial Performance Valuation Multiples Valuation Multiples
LTM TEV / LTM TEV / CY 2016 (P)
Stock Price at % of Equity Enterprise Total EBITDA Total Total
Company Name Ticker 12/31/2015 52-Week High Value Value Sales EBITDA Margin Sales EBITDA Sales EBITDA
n ASSA ABLOY AB OM:ASSA B $21.09 94.2% $23,422 $26,063 $7,824 $1,422 18.2% 3.3x 18.3x 3.1x 16.8x
o
ati Avery Dennison Corporation NYSE:AVY $62.66 94.0% $5,708 $6,573 $6,117 $692 11.3% 1.1x 9.5x 1.1x 8.7x
c
nti Brady Corp. NYSE:BRC $22.98 79.3% $1,162 $1,302 $1,145 $136 11.9% 1.1x 9.6x 1.2x 8.9x
he De La Rue plc LSE:DLAR $6.54 73.1% $659 $821 $701 $126 17.9% 1.2x 6.5x 1.2x 6.6x
ut
A Digimarc Corporation NasdaqGS:DMRC $36.51 74.1% $309 $266 $23 ($14.8) (64.1%) 11.5x N.M. 9.9x N.M.
Gemalto NV ENXTAM:GTO $60.03 64.8% $5,284 $5,823 $3,154 $515 16.3% 1.8x 11.3x 1.6x 8.7x
Median: 76.7% $3,223 $3,563 $2,149 $325 14.1% 1.5x 9.6x 1.4x 8.7x
Average: 79.9% $6,091 $6,808 $3,160 $479 1.9% 3.3x 11.0x 3.0x 9.9x
ABB Ltd. SWX:ABBN $17.94 81.0% $39,748 $42,482 $36,585 $5,385 14.7% 1.2x 7.9x 1.2x 8.6x
Alarm.Com Holdings, Inc. NasdaqGS:ALRM $16.68 82.4% $760 $640 $198 $30 15.1% 3.2x 21.5x 2.8x 28.5x
n
o Cognex Corporation NasdaqGS:CGNX $33.77 64.3% $2,865 $2,513 $511 $157 30.7% 4.9x 16.0x 5.4x 16.4x
ati
m Honeywell International Inc. NYSE:HON $103.57 96.4% $79,821 $80,463 $38,865 $7,222 18.6% 2.1x 11.1x 2.0x 9.6x
o
ut Numerex Corp. NasdaqGS:NMRX $6.42 52.2% $124 $131 $96 $6 6.5% 1.4x 21.1x 1.5x 13.1x
A
Sensata Technologies Holding NV NYSE:ST $46.06 78.0% $7,839 $10,248 $2,954 $691 23.4% 3.5x 14.8x 3.1x 11.9x
Schneider Electric SE ENXTPA:SU $57.08 69.8% $32,783 $40,238 $29,058 $4,297 14.8% 1.4x 9.4x 1.4x 9.0x
Telit Communications PLC AIM:TCM $3.15 59.7% $361 $362 $312 $25 8.0% 1.2x 14.4x 0.9x 6.2x
Median: 73.9% $5,352 $6,381 $1,732 $424 14.9% 1.7x 14.6x 1.8x 10.7x
Average: 73.0% $20,538 $22,135 $13,572 $2,227 16.5% 2.3x 14.5x 2.3x 12.9x
CalAmp Corp. NasdaqGS:CAMP $19.93 91.3% $729 $643 $279 $41 14.6% 2.3x 15.8x 2.1x 11.6x
s Constellation Software Inc. TSX:CSU $415.78 96.5% $8,811 $9,024 $1,767 $314 17.8% 5.1x 28.7x 4.2x 16.6x
n
o
Critical municati HMNaIoCrtor iIrsno cCla.o Srpoolurtaiotinosn, Inc. NasNNdYaYSqSGEE:SH:M:RESGSIOV $$$861689...946058 999634...882%%% $$$11101,,,289911114 $$$11154,,,151671933 $$$552,,78833796 $$11$,,72243621 222115...568%%% 224...741xxx 111215...627xxx 223...057xxx 1993...899xxx
m
o NICE Systems Ltd. TASE:NICE $57.62 85.5% $3,493 $3,059 $1,052 $219 20.8% 2.9x 13.9x 3.1x 11.4x
C
Tyler Technologies, Inc. NYSE:TYL $174.32 94.7% $5,916 $5,669 $560 $127 22.6% 10.1x 44.8x 7.4x 27.2x
Verint Systems Inc. NasdaqGS:VRNT $40.56 61.0% $2,525 $2,912 $1,161 $165 14.2% 2.5x 17.7x 2.4x 9.4x
Median: 94.0% $4,705 $4,364 $1,107 $192 21.2% 2.8x 15.8x 2.8x 11.5x
Average: 89.2% $5,686 $6,520 $2,085 $429 19.9% 4.0x 20.1x 3.4x 13.7x
American Science & Engineering Inc. NasdaqGS:ASEI $41.38 71.7% $297 $210 $125 $8 6.7% 1.7x 24.9x 1.6x 16.9x
Bruker Corporation NasdaqGS:BRKR $24.27 96.2% $4,074 $3,921 $1,654 $218 13.2% 2.4x 18.0x 2.4x 16.9x
n gy Chemring Group plc LSE:CHG $2.79 78.6% $540 $759 $547 $54 9.9% 1.4x 14.0x 1.3x 8.0x
oo
Detectiechnol FLaLnIRd aSuyesrt eInmc.s, Inc. NaNsdYaSqEG:LSD:FRLIR $$2382..0972 8716..57%% $$33,81757 $$34,73145 $$11,55514 $$33571 2224..65%% 22..49xx 1101..67xx 22..49xx 1101..20xx
T
OSI Systems, Inc. NasdaqGS:OSIS $88.66 91.6% $1,749 $1,723 $940 $156 16.6% 1.8x 11.1x 1.9x 10.6x
QinetiQ Group Plc LSE:QQ. $3.99 98.3% $2,327 $2,058 $1,164 $201 17.3% 1.8x 10.2x 1.8x 10.6x
Smiths Group plc LSE:SMIN $13.85 75.6% $5,474 $6,694 $4,531 $774 17.1% 1.5x 8.6x 1.6x 8.0x
Median: 80.0% $2,038 $1,890 $1,052 $178 16.8% 1.8x 11.4x 1.9x 10.6x
Average: 83.8% $2,332 $2,439 $1,333 $225 16.0% 2.0x 13.6x 2.0x 11.5x
g Command Security Corp. AMEX:MOC $2.31 65.1% $23 $28 $135 $1 0.9% 0.2x 24.5x NA NA
n
di G4S plc LSE:GFS $3.33 72.8% $5,138 $7,645 $10,821 $797 7.4% 0.7x 9.6x 0.7x 8.8x
ar
Gu Prosegur Compañía de Seguridad, S.A. CATS:PSG $4.62 75.5% $2,762 $3,574 $4,407 $534 12.1% 0.8x 6.7x 0.8x 7.1x
Securitas AB OM:SECU B $15.40 96.3% $5,622 $6,968 $9,394 $588 6.3% 0.7x 11.9x 0.7x 10.5x
Median: 74.2% $3,950 $5,271 $6,900 $561 6.8% 0.7x 10.7x 0.7x 8.8x
Average: 77.4% $3,386 $4,554 $6,189 $480 6.7% 0.6x 13.1x 0.8x 8.8x
Source: Capital IQ; Data as of 12/31/2015
Financial projections are sourced from Capital IQ consensus estimates; foreign traded companies are listed in U.S. dollars at 12/31/2015 spot exchange rate

SECURITY, DEFENSE & GOVERNMENT SERVICES 7
MARKET INTEL REPORT JANUARY 2016
Publicly Traded Security Companies (Cont.)
$ in millions (except for stock price)
Market Data Financial Performance Valuation Multiples Valuation Multiples
LTM TEV / LTM TEV / CY 2016 (P)
Stock Price at % of Equity Enterprise Total EBITDA Total Total
Company Name Ticker 12/31/2015 52-Week High Value Value Sales EBITDA Margin Sales EBITDA Sales EBITDA
g
n
ori AlarmForce Industries Inc. TSX:AF $7.50 86.9% $87 $81 $42 $11 25.3% 1.9x 7.6x NA NA
nit Ascent Capital Group, Inc. NasdaqGS:ASCM.A $16.72 31.5% $209 $1,839 $558 $339 60.8% 3.3x 5.4x 3.1x 5.2x
o
M The ADT Corporation NYSE:ADT $32.98 76.9% $5,440 $10,756 $3,574 $1,382 38.7% 3.0x 7.8x 2.9x 5.6x
Median: 76.9% $209 $1,839 $558 $339 38.7% 3.0x 7.6x 3.0x 5.4x
Average: 65.1% $1,912 $4,225 $1,391 $577 41.6% 2.7x 6.9x 3.0x 5.4x
Allegion Plc NYSE:ALLE $65.92 96.8% $6,323 $7,799 $2,096 $453 21.6% 3.7x 17.2x 3.5x 15.1x
y dorma+kaba Holding AG SWX:DOKA $682.67 98.8% $2,856 $2,738 $1,159 $181 15.6% 2.4x 15.1x 1.6x 11.2x
& Safetucts DForartguenrew Berrka nAdGs &H oCmoe. K&G SaeAcurity, Inc. NDYBS:ED:RFBWH3S $$7575..0560 5977..54%% $$18,,285613 $$19,,480527 $$24,,834994 $$159617 162..79%% 02..52xx 177..34xx 02..51xx 185..14xx
curity Prod HMoSnAe ySwaefellt yIn Itnecrnoarptioornaatel Idnc. NNYYSSEE::HMOSNA $$14033..4577 9769..47%% $$719,,682231 $$810,,843653 $$318,,182695 $$71,28212 1186..60%% 21..16xx 1110..11xx 21..16xx 1100..25xx
e
S Stanley Black & Decker, Inc. NYSE:SWK $106.73 96.0% $15,980 $20,103 $11,309 $1,876 16.6% 1.8x 10.7x 1.8x 10.8x
Tyco International plc NYSE:TYC $31.89 72.1% $13,482 $15,203 $9,902 $1,530 15.5% 1.5x 9.9x 1.6x 10.0x
United Technologies Corporation NYSE:UTX $96.07 77.2% $85,216 $104,064 $63,978 $11,574 18.1% 1.6x 9.0x 1.8x 9.4x
Median: 96.0% $8,863 $9,857 $4,394 $567 16.0% 1.8x 10.7x 1.8x 10.5x
Average: 85.8% $23,935 $27,051 $15,076 $2,642 15.7% 1.9x 12.0x 1.9x 11.2x
Cubic Corporation NYSE:CUB $47.25 87.0% $1,274 $1,212 $1,431 $117 8.2% 0.8x 10.3x 0.8x 9.4x
ce Garmin Ltd. NasdaqGS:GRMN $37.17 65.0% $7,075 $5,948 $2,842 $660 23.2% 2.1x 9.0x 2.1x 10.0x
a
Tr ID Systems Inc. NasdaqGM:IDSY $4.60 61.5% $62 $58 $44 ($13) (28.5%) 1.3x N.M. 1.4x N.M.
&
k Init Innovation in Traffic Systems AG XTRA:IXX $17.92 58.9% $180 $194 $119 $21 17.4% 1.6x 9.3x 1.7x 10.0x
c
Tra Kapsch TrafficCom AG WBAG:KTCG $40.61 98.9% $528 $556 $518 $63 12.2% 1.1x 8.8x 1.0x 8.3x
Trimble Navigation Limited NasdaqGS:TRMB $21.45 77.7% $5,373 $6,010 $2,295 $372 16.2% 2.6x 16.2x 2.6x 12.4x
Zebra Technologies Corporation NasdaqGS:ZBRA $69.65 58.3% $3,629 $6,434 $3,490 $493 14.1% 1.8x 13.1x 1.8x 10.6x
Median: 65.0% $1,274 $1,212 $1,431 $117 14.1% 1.6x 9.8x 1.7x 10.0x
Average: 72.5% $2,589 $2,916 $1,534 $245 9.0% 1.6x 11.1x 1.6x 10.1x
Avigilon Corporation TSX:AVO $9.87 53.5% $427 $437 $254 $39 15.3% 1.7x 11.3x 1.4x 7.9x
e FLIR Systems, Inc. NasdaqGS:FLIR $28.07 81.5% $3,877 $3,715 $1,554 $351 22.6% 2.4x 10.6x 2.4x 10.2x
c
o an Hangzhou Hikvision Digital Technology Co., Ltd. SZSE:002415 $5.30 60.9% $21,552 $20,823 $3,656 $847 23.2% 5.7x 24.6x 5.3x 20.8x
Videveill IndigoVision Group plc AIM:IND $2.88 52.1% $21 $22 $49 $2 3.2% 0.4x 13.9x 0.5x 110.3x
Sur Mobotix AG DB:MBQ $15.77 93.1% $207 $224 $89 $9 9.8% 2.5x 25.5x 2.5x 21.4x
Shenzhen Infinova Limited SZSE:002528 $2.09 65.3% $1,489 $1,461 $239 $7 2.9% 6.1x N.M. NA NA
Vivotek Inc TSEC:3454 $2.34 76.5% $179 $159 $118 $17 14.5% 1.3x 9.3x 1.3x 9.1x
Median: 65.3% $427 $437 $239 $17 14.5% 2.4x 12.6x 1.9x 15.5x
Average: 69.0% $3,965 $3,834 $851 $182 13.1% 2.9x 15.9x 2.2x 29.9x
Source: Capital IQ; Data as of 12/31/2015
Financial projections are sourced from Capital IQ consensus estimates; foreign traded companies are listed in U.S. dollars at 12/31/2015 spot exchange rate
SECURITY, DEFENSE & GOVERNMENT SERVICES 8
MARKET INTEL REPORT JANUARY 2016
Select M&A Activity – Security
Closed Date Target Name and Location Target Description Sector Classification Acquirer(s) Seller(s)
Pending Diebold Electronic Security Diebold's electronic security business in North America includes a full Automation / Monitoring / Securitas AB Diebold Incorporated
portfolio of intrusion, fire, video, access control and systems Video Surveillance
HQ: North Canton, OH integration services, as well as monitoring, maintenance and other
security-related services for commercial and financial markets.
12/21/2015 OpSec Security Group plc OpSec Security Group combats brand, transaction card, government Authentication Investcorp Bank B.S.C. OpSec Security Group plc,
document and currency counterfeiting through advanced physical Employee Trust
HQ: Washington, United Kingdom security technologies, supply chain track and trace services and e-
commerce monitoring and analysis solutions.
12/4/2015 HERE Holding Corporation HERE Holding Corporation provides maps and other location content Track & Trace Daimler AG; Bayerische Nokia Corporation
used in automotive navigation systems, portable and wireless Motoren Werke
HQ: Chicago, IL devices, mobile advertising, Internet-based mapping applications, and Aktiengesellschaft; AUDI
government and business solutions. AG
12/2/2015 AlliedBarton Security Services LLC AlliedBarton Security Services is a security officer services company Guarding Wendel The Blackstone Group L.P.
providing trained and responsive security personnel to Fortune 500
HQ: Conshohocken, PA companies and other organizations in the United States.
11/30/2015 DVTEL, Inc. DVTEL develops and distributes integrated video management Video Surveillance FLIR Systems, Inc. Selway Capital, SCP Partners,
system (VMS) software, advanced video analytics software, visible Torch Hill Investment Partners,
HQ: Ridgefield Park, NJ and thermal security cameras, and related servers and encoders. ORIX Ventures, Seacost
Capital, Egis Capital Partners
11/16/2015 New World Systems Corporation New World Systems designs, develops, markets, supports and Critical Communications Tyler Technologies, Inc. Private
implements software solutions, including computer aided dispatching,
HQ: Troy, MI records management, mobile computing and decision support for
public safety and public administration organizations.
10/26/2015 ABM Industries Inc., Security The Security Business of ABM Industries Incorporated offers a range Guarding Universal Services of ABM Industries Incorporated
Business of security services, including staffing, mobile patrol, investigation and America, Inc.
security consulting services for a range of government and
HQ: New York, NY commercial end markets.
9/21/2015 NICE Systems Ltd., Physical Qognify delivers enterprise class video management, video analytics Video Surveillance Battery Ventures NICE Systems Ltd.
Security Bus. (n/k/a Qognify Inc.) and situation management software which collectively allow clients to
maintain business continuity and optimize operations through the
HQ: Ra’anana, Israel capture and analysis of data sourced from a variety of sensors.
8/3/2015 Capital Safety Group S.à.r.l. Capital Safety Group manufactures fall protection wear such as safety Security Products 3M Company KKR & Co. L.P.
belts, bags and pouches for construction safety applications.
HQ: Luxembourg
7/28/2015 Universal Services of America, Inc. Universal Services of America provides fire safety and security Guarding Warburg Pincus LLC Princess Management Limited;
services through systems such as access control, CCTV, intrusion Partners Group Holding AG
HQ: Santa Ana, CA detection, fire alarm management and visitor management systems
and performs a range of customized cleaning and maintenance
services.
7/28/2015 Guardsmark, LLC Guardsmark delivers uniformed security officers and individualized Guarding Universal Services of Private
protection services, such as investigations, consulting, background America, Inc.
HQ: New York, NY screening, facility design and specialized services for commercial
clients.
7/1/2015 Protection 1, Inc. Protection 1 is a leading full-service, national provider of Monitoring Apollo Global GTCR, LLC
comprehensive security monitoring systems and services to 1.5 Management, LLC
HQ: Romeoville, IL million residential, commercial, national accounts and wholesale
customers.
7/1/2015 Alarm Security Group, LLC Alarm Security Group provides residential and commercial security Monitoring Apollo Global Parthenon Capital Partners
systems, including home automation, lighting and temperature Management, LLC
HQ: Beltsville, MD control, electronic locks, alarm monitoring, video surveillance, access
control and intrusion detection solutions.
6/11/2015 Fire & Life Safety America, Inc. Fire & Life Safety America designs, installs, inspects and services a Monitoring PNC Riverarch Capital KRG Capital Partners
broad range of commercial fire and life safety systems, including
HQ: Richmond, VA sprinklers, fire alarms, wet/dry suppression, backflow prevention and
special hazards systems.
5/29/2015 Exelis Inc. Exelis is a leader in Command, Control, Communications, Critical Communications Harris Corporation NA (Going-private transaction)
Computers, Intelligence, Surveillance and Reconnaissance (C4ISR)-
HQ: McLean, VA related products and systems and information solutions, supplying
military, government and commercial customers in the United States
and globally.
5/5/2015 Axis AB (publ) Axis is an information technology company providing network video Video Surveillance Canon Inc. Swedbank Robur Fonder AB;
surveillance, monitoring and data management solutions for Grenspecialisten AB; Inter
HQ: Lund, Sweden professional installations in Europe, the Middle East, Africa, the Indu (Luxembourg), SARL
Americas and Asia.
3/31/2015 Guardian of Georgia, Inc. (d/b/a Ackerman Security Systems delivers custom-built security systems, Monitoring Imperial Capital Group Bariston Partners, LLC;
Ackerman Security Systems) home automation solutions and alarm monitoring services to Ltd.; OPTrust Private Sverica International; Sverica
residential and small commercial customers in Georgia, Washington, Markets Group International Fund I, L.P.
HQ: Atlanta, GA D.C., Maryland and Virginia.
3/24/2015 Mirion Technologies, Inc. Mirion Technologies provides radiation detection and protection Detection Charterhouse Capital American Capital, Ltd.;
instruments, in-plant and safety monitoring systems, cameras for Partners LLP American Capital Equity
HQ: San Ramon, CA extreme environments, radiation monitoring services and nuclear Management LLC; American
reactor sensing systems in partnership with customers in nuclear Capital Equity III, LP
power plants, military and civil defense agencies, hospitals,
universities and other specialized industries.
2/27/2015 Industrial Safety Technologies, LLC Industrial Safety Technologies offers wireless technology products; Detection Scott Technologies, Inc. Battery Ventures; Battery
fixed and portable gas detection solutions; gas and flame detection Ventures IX, L.P.
HQ: Woodlands, TX systems; control systems; and pipeline analyzers in addition to
designing and manufacturing consumables for brands of explosives
and narcotics trace detectors.
2/6/2015 CompuDyne - Public Safety & CompuDyne - Public Safety & Justice provides computer aided Critical Communications TriTech Software Systems The Gores Group LLC;
Justice, Inc. dispatch, mobility, records management and corrections management Inc. CompuDyne Corporation;
solutions to law enforcement and corrections agencies. Gores Capital Partners II, L.P.
HQ: Pleasanton, CA
Source: Capital IQ, Company Materials and Raymond James Research; Data as of 12/31/2015

SECURITY, DEFENSE & GOVERNMENT SERVICES 9
MARKET INTEL REPORT JANUARY 2016
Defense & Government Services Overview and Key Trends
Last year marked the return of the mega-deal to the Defense & Government Services market. There were six deals of over $1
billion in transaction value in 2015, which was greater than the previous three years (2012-2014) combined. Notable transactions
included Lockheed Martin’s purchase of Sikorsky Aircraft, Computer Sciences Corporation’s (CSC) acquisition of SRA
International and follow-up spin-off of CSRA, Harris Corporation’s acquisition of Exelis, Inc., and Engility’s acquisition of TASC,
Inc., to name a few.
Transaction activity is expected to continue to accelerate in 2016 as both acquirers and targets look to capitalize on the visibility of
a two-year federal budget and the prospect of a new administration in the White House following the upcoming election, which
most believe can only be more supportive of the government contracting community. This year is already off to a strong start with
a few major deal announcements. Most notably, CACI’s $550 million announced acquisition of L-3 Communications’ National
Security Solutions (NSS) business unit and Cubic Corporation’s $232.5 million acquisition of GATR. CACI’s acquisition of the $1.2
billion revenue L-3 NSS unit adds additional capability and scale in the intelligence and cyber security markets, building upon the
beachhead it established through the Six3 Systems acquisition in 2013. Cubic’s acquisition of GATR and TeraLogics adds
additional capabilities to the Company’s C4ISR business unit that was stood up last year through the acquisition of DTECH Labs.
GATR and TeraLogics will enhance Cubic’s secure and expeditionary communications, and ISR processing capabilities. Raymond
James served as the exclusive financial advisor to GATR and DTECH in their respective sale processes.
Portfolio shaping continues to be a major theme for the Defense & Government Services market as we enter the New Year.
Rumors continue to swirl around the potential divestitures coming out of BAE Systems and Lockheed Martin following the
successful completion of the L-3 NSS transaction. Additionally, CSRA’s successful separation from CSC through a tax-free spinoff
has market participants engaging advisors possessing a full suite of capabilities when evaluating strategic alternatives. We expect
that government contractors will continue to focus on core business units while looking to exit ancillary businesses through
divestitures or tax-free spinoffs in 2016. Opportunities abound for informed private equity firms to secure new platform portfolio
companies as we enter the next growth cycle in government contracting.

Change in Stock Prices
10.0% 99..33%%
8.0%
6.0% 55..33%%
4.0%
11..66%%
2.0% 00..88%%
0.0%
(2.0%) ((00..99%%)) ((11..22%%))
(4.0%) ((22..55%%))
((33..99%%))
(6.0%)
Government Services Multi-Platform Large Contractors Defense Technology Commercial IT
One-Year Change  One-Month Change 
Note: Sector returns are weighted by market capitalization as of 12/31/2015. Source: Capital IQ; Data as of 12/31/2015.

EBITDA Valuation Multiples1
12.0x
1111..11xx
1100..11xx 1100..33xx 1100..55xx 1100..77xx 1100..22xx 1100..33xx 1100..66xx
10.0x
88..99xx 99..22xx
88..11xx
8.0x 77..33xx
6.0x
4.0x
2.0x
0.0x
Government Services Multi-Platform Large Contractors Defense Technology Commercial IT
12/31/2013 12/31/2014 12/31/2015
(1)Total enterprise value is defined as equity value plus total debt less cash. Past performance is no guarantee of future results.
Note: Companies included are those tracked internally by Raymond James – Individual assets disclosed on page 11. Sector EBITDA multiples are weighted by market
capitalization as of 12/31/2015. Source: Capital IQ; Data as of 12/31/2015
SECURITY, DEFENSE & GOVERNMENT SERVICES 10