CATHERINE'S CONFECTIONERY

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Catherine's Confectionery, founded in 1990 by the Taylor family, manufactures, markets
and distributes gourmet sweets. Catherine's Confectionery sells its products in its own
luxury boutiques and in high-end department stores in Europe, competing with such well-
known global brands as Godiva and La Maison du Chocolat. As a result of several small
acquisitions, Catherine's Confectionery has enjoyed top-line growth as well as improving
margins.

Catherine's Confectionery is a privately-held company with the family holding 25% of

the equity. ECH Capital, a private equity firm, owns 35% after investing €20 mln in the
company five years ago (2017) to help fund the company's growth, organically and
potentially through additional acquisitions. The remaining shares are held by an
employee pension fund.

Theresa Taylor, CEO of Catherine's Confectionery, approached a global investment bank

for help in determining strategic options for the company as ECH Capital would like to
monetize its investment.

Theresa Taylor sends the attached financial statements from the company’s internal
model (Exhibits A and B) to you, and she mentions in her email that “the depreciation
expense for 2019 may need to be increased substantially. Our accountants are evaluating
this and we will revert shortly.”

As the investment bank Associate on the account, you begin collecting and analyzing
information in preparation for an upcoming meeting with ECH Capital.

Your team prepares a comparable transactions analysis, which evaluates M&A in the
sector, and a trading comparables analysis, as shown in Exhibits C and D.

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 CATHERINE'S CONFECTIONERY
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EXHIBIT A. SUMMARY INCOME STATEMENT AND PROJECTIONS

(€ in millions) Years Ending December 31,
2016 2017 2018 2019 2020 2021 2022E

Revenues €375.0 €395.0 €415.0 €435.0 €455.0 €475.5 €496.9

% Growth 7.1% 5.3% 5.1% 4.8% 4.6% 4.5% 4.5%

COGS 245.0 255.0 265.0 275.0 280.0 292.6 305.8

Gross Profit 130.0 140.0 150.0 160.0 175.0 182.9 191.1
% Margin 34.7% 35.4% 36.1% 36.8% 38.5% 38.5% 38.5%

SG&A (excl Depr and Amort) 105.0 110.0 115.0 120.0 130.0 133.4 136.9
Depreciation 9.5 10.0 10.5 11.0 11.5 12.0 12.6
% of Sales 2.5% 2.5% 2.5% 2.5% 2.5% 2.5% 2.5%
Amortization 3.3 1.5 1.5 1.5 1.5 1.5 1.5
% of Sales 0.9% 0.4% 0.4% 0.3% 0.3% 0.3% 0.3%

EBIT 25.0 30.0 35.0 40.0 45.0 49.5 54.2

% Margin 6.7% 7.6% 8.4% 9.2% 9.9% 10.4% 10.9%

Interest Expense
Revolving Credit Facility @ 4.50% 2.3 2.0 1.4 0.8 0.2 0.0 0.0
Bank Term Loan @ 6.00% 6.6 6.3 6.0 6.0 5.6 4.4 2.8
Total Interest Expense 8.9 8.3 7.4 6.8 5.8 4.4 2.8
Interest Income @ 2.00% 0.5 0.4 0.4 0.4 0.4 0.4 0.4
Net Interest Expense/(Income) 8.4 7.9 7.0 6.4 5.4 4.0 2.4

Earnings Before Taxes 16.7 22.1 28.0 33.6 39.6 45.4 51.8
Provision for Income Taxes 6.3 8.4 10.6 12.8 15.0 17.3 19.7
Net Income €10.3 €13.7 €17.3 €20.8 €24.5 €28.2 €32.1
% Margin 2.8% 3.5% 4.2% 4.8% 5.4% 5.9% 6.5%

EBITDA 37.8 41.5 47.0 52.5 58.0 63.0 68.3

% Margin 10.1% 10.5% 11.3% 12.1% 12.7% 13.2% 13.7%
CapEx 15.0 16.0 18.0 22.0 18.0 18.8 19.7
% of Sales 4.0% 4.1% 4.3% 5.1% 4.0% 4.0% 4.0%

EXHIBIT B. SUMMARY BALANCE SHEET AND PROJECTIONS

(€ in millions) Years Ending December 31,
2016 2017 2018 2019 2020 2021 2022E

Cash €25.0 €20.0 €20.0 €20.0 €20.0 €20.0 €20.0

Accounts Receivable 60.0 55.8 56.3 56.6 56.8 56.7 59.3
Inventory 42.0 42.3 42.5 42.6 41.9 42.1 44.0
Total Current Assets 127.0 118.1 118.8 119.3 118.6 118.9 123.3

Plant, Property and Equipment (Net) 215.0 221.0 228.5 239.5 246.0 252.8 259.9
Goodwill 57.0 55.5 54.0 52.5 51.0 49.5 48.0
Total Assets 399.0 394.6 401.3 411.3 415.6 421.1 431.2

Accounts Payable 47.0 50.3 53.7 57.3 59.9 64.1 67.0

Current Portion of Bank Term Loan 10.0 0.0 0.0 0.0 0.0 0.0 0.0
Total Current Liabilities 57.0 50.3 53.7 57.3 59.9 64.1 67.0

Other Liabilities 30.0 30.0 30.0 30.0 30.0 30.0 30.0

Revolving Credit Facility 50.0 38.6 24.5 10.1 0.0 0.0 0.0
Bank Term Loan 100.0 100.0 100.0 100.0 87.4 60.4 34.5
Total Long-Term Debt 150.0 138.6 124.5 110.1 87.4 60.4 34.5

Shareholders' Equity 162.0 175.7 193.1 213.9 238.4 266.6 298.7

Total Liabilities and Equity 399.0 394.6 401.3 411.3 415.6 421.1 431.2

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EXHIBIT C. COMPARABLE TRANSACTIONS ANALYSIS

(€ in millions) Equity Value
as a Multiple of:
Equity Enterprise Enterprise Value as a Multiple of: Net Book
Acquirer Target Value Value Sales EBITDA EBIT Income Value

Company A Company V €142.9 €155.2 1.06x 10.2x 16.2x 25.8x 4.57x

Company B Company U 765.0 765.0 2.30x 12.0x NA NA NA
Company C Company T 131.6 145.0 0.80x 8.2x 15.0x 14.1x 3.49x
Company D Company S 119.0 167.1 1.60x 8.0x 10.4x 14.8x 1.23x
Company E Company R 1,747.4 1,797.3 2.90x 15.0x 19.0x 27.0x 5.24x
Company F Company Q 58.8 78.3 2.85x 12.0x 17.4x NM NA
Company G Company P 610.0 610.0 0.98x 10.9x NA NA NA
Company H Company O 26.0 26.5 1.15x 9.1x 11.7x 19.7x 2.87x
Company I Company N 121.1 144.3 1.49x 11.3x 14.3x 24.3x 7.52x
Company J Company M 640.4 640.4 1.49x 11.0x NA NA 5.83x
Company K Company L 253.4 306.5 1.64x 11.8x 15.4x NA 2.05x

Mean 1.66x 10.9x 14.9x 21.0x 4.10x

Median 1.49x 11.0x 15.2x 22.0x 4.03x
High 2.90x 15.0x 19.0x 27.0x 7.52x
Low 0.80x 8.0x 10.4x 14.1x 1.23x

EXHIBIT D. TRADING COMPARABLES ANALYSIS

(€ in millions)
Equity Enterprise Enterprise Value to LTM Price to Price to Net Debt/
Company Value Value Sales EBITDA EBIT LTM EPS 2022E EPS Book Value EBITDA

Company 1 €70.7 €87.3 0.54x 6.3x 13.2x 16.7x 20.8x 1.3x 1.2x
Company 2 629.4 868.9 0.53x 7.0x 17.7x 41.4x 17.4x 1.2x 2.0x
Company 3 86.4 140.1 0.40x 5.2x 7.7x 10.6x 9.3x 0.9x 2.0x
Company 4 328.7 314.7 0.89x 5.4x 11.1x 18.1x 15.1x 2.7x 0.0x
Company 5 1,023.6 1,608.9 0.45x 6.0x 9.3x 13.2x 10.9x NM 2.2x
Company 6 324.2 365.8 0.67x 5.3x 9.1x 14.0x 16.6x 2.4x 0.6x
Company 7 732.7 894.2 0.70x 7.1x 10.0x 14.0x NA 4.0x 1.3x

Mean 0.60x 6.0x 11.1x 18.3x 15.0x 2.1x 1.3x

Median 0.54x 6.0x 10.0x 14.0x 15.8x 1.9x 1.3x
High 0.89x 7.1x 17.7x 41.4x 20.8x 4.0x 2.2x
Low 0.40x 5.2x 7.7x 10.6x 9.3x 0.9x 0.0x