GLOBAL TRANSACTIONS FORECAST The Impact of Macro Trends on Future M&A and IPO Activity . 2 . Contents Executive Summary . . . .

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. 18 3.1 Global M&A Outlook . . .

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. . . 19 20 North America Europe Asia Pacific Latin America Africa and the Middle East 3.3 Sector M&A Outlook .

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. 24 Pharmaceuticals Technology and Telecom Consumer Goods and Services Energy Industrial Manufacturing Finance 3.4 IPO Outlook . . .

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. . 27 North America Europe Asia Pacific Latin America Africa and the Middle East Potential Risks . .

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. . 30 Concluding Remarks . .

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. 32 Appendix A: Transaction Attractiveness Indicator: Country Rankings . . .

. . 35 Appendix B: Country Forecasts .

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36 Methodology . . .

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. . . 46 BAKER & MCKENZIE // GLOBAL TRANSACTIONS FORECAST 3 .

EXECUTIVE SUMMARY The fundamental drivers of global transactions are pointing to a continued strong upturn in M&A and IPOs over the next three years. Global economic growth is expected to accelerate, and low interest rates and easy credit conditions in key countries are likely to maintain upward momentum in equity markets. 4 . Many US and European companies have accumulated large cash balances available for acquiring new businesses. Financial sponsors also have the potential to boost global transactions, with private equity firms sitting on a record US$1.1 trillion in uninvested capital, according to Preqin. Against this backdrop, we project that global M&A and IPO activity will continue to rise, peaking in 2017 in developed markets and 2018 in emerging markets. Our forecasts, based on calculations from Oxford Economics, show completed global M&A transactions growing to US$2.7 trillion in 2015 and rising further to US$3 trillion in 2016 and US$3.4 trillion in 20171. In our forecast, we do not expect the transaction peaks in 2017 and 2018 to be as high as those before the global financial crisis, as we are not experiencing the same bubble-like conditions prior to 2007. As the global economic recovery continues, we expect central banks to begin raising interest rates in developed markets and equity markets to moderately decline.

We anticipate that these forces will soften the attractiveness of deal-making, leading to a slowing of global activity beginning in 2018. GLOBAL M&A Transactions GLOBAL IPO Transactions In forecasting global transactional activity, we used data on completed M&A deals rather than announced deals. From an analytical modeling perspective, it makes more sense to use completed deals for forecasting because it reflects actual outcomes. 1 BAKER & MCKENZIE // GLOBAL TRANSACTIONS FORECAST 5 . Our M&A forecasts by region include: n Strong levels of activity in North America for the next three years, particularly in the United States. Our projections show M&A transactions rising from US$1.2 trillion in 2014 to a peak of US$1.5 trillion in 2017. As interest rates normalize and the Federal Reserve starts reducing the size of its balance sheet, we expect credit conditions to tighten and equity valuations to weaken, precipitating a slowing of deal-making beginning in 2018. n A rise in M&A deals in Europe, driven by inbound transactions by US companies taking advantage of a strong US dollar2. We predict the total value of deals will rise from US$621 billion in 2014 to US$936 billion in 2017 as the region’s growth prospects brighten.

The UK, Germany and Spain are attractive investment destinations, with France and Italy less so, and Russia off limits for European and US firms because of imposed sanctions. n Re-emergence of Asia as one of the world’s most dynamic growth stories, beginning next year. Despite a slowing in China’s GDP growth, we expect the region’s strong economic fundamentals to spur a renewed upturn in transactions from 2016 to 2018. A resurgence in cross-border transactions, including outbound activity by the Chinese into neighboring Asian countries, will drive this projected increase. n Improved growth prospects in Latin America, despite subdued transaction forecasts for Brazil and Mexico that are dampening the region’s M&A outlook.

Mexico President Peña Nieto’s policy reforms should encourage a moderate pick up of M&A activity and enable Latin America to join the global upswing in the next three years. Those reforms include empowering regulators to tackle monopoly positions in the communications sector and opening the energy sector to private investment for the first time in 75 years. n More deal-making activity in Africa and the Middle East as oil prices rebound over the next few years. The decline in oil prices has restricted available funding for M&A, but a recovery in oil prices should increase deal-making activity in the region.

Key to improving M&A activity in Africa is pushing forward economic reforms and consolidating progress already made in countries like Egypt, where the government has introduced business-friendly investment policies. 2 6 European cross-border M&A includes both deals within Europe and deals originating from outside of Europe. BAKER & MCKENZIE // GLOBAL TRANSACTIONS FORECAST . Other key M&A forecasts include: n Cross-border M&A activity will outpace domestic activity this year as the share of cross- border deals3 rises to 38% in 2015, up from 36% in 2014. The pace of cross-border activity will slow in 2016 but rise back to a 38% share by the end of 2017. n Emerging market M&A activity will capture a larger share of total deals, rising to 21% of total transactions in 2018 through 2020, up from 18% in 2014. n Pharmaceuticals is the sector driving global M&A, and transactions in the more broadly defined healthcare sector should continue rising in the next three years. Consumer and technology & telecoms have good long-term prospects, while consolidation in the energy and financial sectors is also likely to drive deals. Our IPO activity forecasts by region include: n A potential recovery in domestic IPOs in North America, despite a dip last year. According to our projections, domestic IPOs will push toward a new record of US$82 billion by 2017 as stock markets rise, market volatility remains low and corporate confidence grows. n A slowing of IPOs in Europe this year amid uncertainty linked to parliamentary elections in the UK, Greece, Spain, Poland, Denmark, Finland and Portugal, as well as the recent pullback in stock prices across the major exchanges.

However, we expect the upswing in IPO activity to return next year, pushing the amount raised on stock markets to US$67 billion by 2017. n ACCELERATION OF IPO ACTIVITY IN ASIA PACIFIC over the next three years. Domestic IPO activity jumped by 36% from 2013 to 2014, led by strong gains in Australia, Hong Kong and Japan. It’s a trend we expect to continue through 2018, peaking at US$87.4 billion as the regional economy accelerates and companies seek to raise capital on domestic markets to appeal to the growing middle class. n Continued rise of emerging markets-based companies pursuing cross-border listings as they seek to raise capital in deeper, better capitalized markets in the US and UK.

As emerging capital markets mature and deepen over the medium term, however, we expect to see more domestic IPO activity, particularly in Asia. 3 Cross-border M&A is defined as inbound activity in a particular country. BAKER & MCKENZIE // GLOBAL TRANSACTIONS FORECAST 7 . INTRODUCTION The early months of 2015 suggest a continued rise in global transactions, led by M&A, with completed deals on track to increase to US$2.7 trillion this year. IPO activity also remains steady, poised to total nearly US$215 billion in 2015. 8 . This renewed momentum in deal-making activity leads to the following questions: n Which regions and sectors are driving the rise in transactional activity? n Is it sustainable? n What risks could derail the recovery? This report introduces Baker & McKenzie’s Global Transactions Forecast, which seeks to answer these questions by examining the latest trends in M&A and IPO activity and providing transaction forecasts by region, country and sector based on calculations from Oxford Economics. Like any prediction, known risks and unforeseen circumstances could disrupt the nascent global recovery and cause a drop in transactional activity, such as Greece exiting the Eurozone, the UK leaving the European Union, Chinese investment falling sharply, and the US Federal Reserve raising rates faster than expected. Absent events like these, however, our report outlines the six macroeconomic trends that will drive global economic growth over the next few years. Based on those cyclical trends, along with structural factors and business sentiment, we provide predictions for how much M&A and IPO activity will rise or fall in 37 countries from 2015 through 2020. By providing this outlook, we aim to provide corporate leaders and investors with a forward-looking overview of the economic and investment environment they are likely to face around the world. Armed with this knowledge, we hope they will be better prepared for the future. Our report outlines the six macroeconomic trends that will drive global economic growth over the next few years. BAKER & MCKENZIE // GLOBAL TRANSACTIONS FORECAST 9 . Key Macro Trends After a long and stuttering recovery from the global financial crisis, global economic activity should accelerate to an average of 2.9% per year over the next three years, from an annualized 2.5% since 2012. Developed economies will lead the growth, bolstered by easy monetary policy and lower oil prices. 10 . Although lower oil prices will give many emerging markets a boost, commodity exporters such as Russia, Saudi Arabia and the United Arab Emirates will suffer. Growth in many emerging economies is also constrained by regulatory barriers and trade restrictions, as well as the middle-income trap. As part of our forecast, we identified six global macroeconomic trends that are critical to determining the economic and financial outlook for different countries. That outlook, along with perceived risks, plays a major role in whether M&A and IPO activity in these regions will rise or fall in the near future. G7 AND EMERGING-MARKET GDP GROWTH Even with the Fed raising rates, monetary policy will remain accommodative through 2017. BAKER & MCKENZIE // GLOBAL TRANSACTIONS FORECAST 11 . #1 Trend Extremely accommodative monetary policy Although the US Federal Reserve is poised to raise interest rates later this year, it is expected to do so gradually, ensuring monetary conditions remain accommodative through 2017. Even as the Fed starts to engineer higher short-term interest rates, long-term US interest rates will be capped by the spillover effect of the European Central Bank’s quantitative easing. The ECB is in the early stages of its aggressive quantitative easing, slated to continue through September 2016. The ECB’s monthly €60 billion purchase of European sovereign bonds unleashes a large amount of liquidity into the European and global financial markets, placing downward pressure on European and global bond yields. The Bank of Japan’s monetary policies are also likely to continue supporting low interest rates and easy financial conditions. By 2018, however, we expect the Fed to raise interest rates toward their normal levels and begin significantly reducing the size of its balance sheet.

With the ECB also poised to end its aggressive quantitative easing by the end of 2016, we expect to see higher interest rates in Europe, the US, Canada and Australia. As interest rates in developed countries move closer to traditional levels, we expect to see moderate corrections in equity valuations in the developed economies in 2018. Three Drivers of M&A and IPO Activity Cyclical trends: Macroeconomic and financial variables such as GDP growth, equity prices, and interest rates that determine whether transactional activity is going to rise or decline in a given year. Structural factors: Issues such as the legal and regulatory environment within a country, property rights protection, connectedness with the global economy, political stability, and financial depth that help explain why transactional activity is higher in one country than another. If a country implements significant economic reforms, it can lead to a sustained increase in transactions. Business sentiment: Strategies and attitudes of CEOs that are hard to observe in economic and financial aggregates, but can have a significant impact on transactional activity.

We use information on announced deals and our own judgment to reflect these in our short-term forecasts, but medium-term projections are based more heavily on economic, political, and regulatory indicators. Using a weighted average of 10 of these cyclical and structural drivers, we created a ranking of 37 countries based on the attractiveness of their current environment for M&A and IPO activity. See page 35 for our Transaction Attractiveness Indicator. 12 BAKER & MCKENZIE // GLOBAL TRANSACTIONS FORECAST . #2 Trend Normalizing of business conditions Bolstered by supportive monetary policy and advances in repairing household, corporate, and government balance sheets, business conditions will start to normalize over the next two years. The uptick in economic growth will translate into increased consumer demand for the goods and services of companies, which should boost equity prices and business confidence. Concurrently, we expect a moderate rise in inflation in Europe, Japan, and the US. This rise in inflation should provide companies with pricing power that, along with increased demand, will boost revenue growth. Corporate operating costs should remain contained as productivity gains offset a moderate rise in labor costs.

Non-labor costs are poised to rise only moderately as commodity Increased demand and pricing power will boost corporate profit margins. prices increase gradually over the next several years. Profit margins will widen as revenue increases outstrip cost increases, boosting corporate earnings. #3 Trend Strong US dollar The strong US dollar is helping to balance global growth, particularly between the US and Europe and Japan. By 2017, however, the dollar’s ascent should end as the ECB curtails its quantitative easing operations by the end of 2016 and monetary support eases in Japan. In emerging markets, the impact of a strong US dollar is more mixed. Countries that align their currencies with the US dollar, such as China and oil exporters, are losing competitiveness.

Even in emerging markets with flexible exchange rate regimes, governments may need to tighten monetary conditions to manage exchange rate fluctuations, particularly in fragile economies like Turkey and Brazil. BAKER & MCKENZIE // GLOBAL TRANSACTIONS FORECAST 13 . #4 Trend CHINA’S ECONOMIC SLOWDOWN The slowing of China’s economic growth has significant implications for overall global growth and equity markets, but it looms even larger for its neighbors in Asia Pacific. With domestic demand slowing in China and heavy capital outflows continuing, the People’s Bank of China is loosening monetary policy more decisively. However, it seems inevitable that GDP growth will continue to slow in China, falling below 7%, although we expect this to be a controlled slowdown rather than a hard landing. Slower growth in China will affect Hong Kong via its re-export trade, trade-related services, and tourism. Hong Kong is likely to struggle as it reconfigures its service economy in response to rebalanced economic growth in China that is more dependent on domestic consumption and less dependent on exports. Trade linkages also mean a Chinese slowdown will continue to reverberate throughout the Asia-Pacific region. Commodity exporters like Brazil and Chile that have become dependent on demand from China will also feel ongoing repercussions. EXPORTS TO CHINA FROM KEY trading partnerS (% of total exports) Exports to China Argentina 7.4% 6.7% Brazil 19.0% 17.5% Chile 24.9% 12.5% Colombia 8.7% 8.0% India 4.6% 2.3% Indonesia 12.4% 10.0% Malaysia 13.4% 3.9% Singapore 11.8% 1.6% South Africa 12.7% 10.3% South Korea 26.1% 2.0% Thailand 11.9% 4.5% Turkey 2.4% 1.7% Vietnam 14 Commodity Exports to China 10.5% 6.0% BAKER & MCKENZIE // GLOBAL TRANSACTIONS FORECAST . #5 Trend LOW BUT RISING OIL PRICES At the beginning of 2015, oil prices plummeted to US$45 per barrel from US$115 per barrel in June 2014. Despite the modest rebound since then, lower oil prices are an important economic stimulus for oil importers such as the US, Japan, Europe, China, and India. However, the drop in oil and other commodity prices is a negative development for commodity exporters. The current oil price is below the budget breakeven price — the price needed to ensure that governments do not need to borrow — in most oil-exporting countries, including Saudi Arabia, the UAE, Nigeria, Russia and Venezuela. Although Saudi Arabia and the UAE have large foreign currency reserves and sovereign wealth funds that help mitigate the short-term impact on their economies, Nigeria, Russia and Venezuela are suffering serious repercussions. #6 Trend STRUCTURAL REFORMS Government policy that promotes economic growth is crucial for creating an M&A-friendly environment, and some major economies have taken positive steps in that direction. The most immediate impact of structural reform is that it can improve investor and business confidence, providing a boost to a country’s equity prices and M&A or IPO activity. In India, for example, Prime Minister Narendra Modi’s promise to implement comprehensive reforms after his election in May 2014 sparked investor optimism, encouraging foreign portfolio inflows that underpinned the equity market. In contrast, the second term for Brazil President Dilma Rousseff and political and economic developments in Russia have contributed to poor performance in those countries’ equity markets and low transactional activity levels this year. However, the larger and more lasting lift to transactional activity is registered over the long-run since it takes time to implement the reforms and realize their effects.

The chart on page 16 illustrates the impact of recent reforms in emerging markets. BAKER & MCKENZIE // GLOBAL TRANSACTIONS FORECAST 15 . IMPACt OF RECENT reformS IN EMERGING MARKETS (2005-2015)* * Based on average change in ease of doing business; legal structure and property rights; freedom to trade; regulation of credit, labor and business; sovereign credit rating; and political stability risk. While economic difficulties in Venezuela and Argentina are hampering growth, other emerging countries are setting important reform agendas that could boost economic activity and increase M&A and IPO activity. Those reforms include: The Modi government in India has reduced fuel subsidies and lifted caps on foreign investment in key sectors such as insurance, defense, and railways. It has also lowered corporate taxes and encouraged private participation in the coal sector. Mr. Modi’s “Make in India” campaign is aimed at attracting foreign investors to manufacture goods in India. President Peña Nieto in Mexico has implemented changes to the education system that introduce standardized evaluation of public school teachers, reformed labor laws to increase hiring of young people and women, and empowered regulators to tackle monopolies in the communications sector.

He has also achieved a significant reform in the energy sector by opening the state-run industry to private investors. In Nigeria, peaceful elections have smoothed a transition to growing political maturity, although the economic policy implications remain unclear. The new government has announced plans to remove fuel subsidies and reform state-owned firms, although privatization remains slow and investment in infrastructure is sorely needed to attract more interest from the private sector. What is clearer is that president-elect Muhammadu Buhari will likely take a tougher line on Boko Haram than his predecessor, which should lead to a rebound in business confidence and foreign direct investment as concerns about terrorist attacks diminish. 16 BAKER & MCKENZIE // GLOBAL TRANSACTIONS FORECAST .

In South Africa, the implementation of some of the National Development Plan reforms following elections in May 2014, even if they are watered down, should provide a moderate boost to the country’s growth and attract investment. These include improving the efficiency of the public sector by decentralizing government, recognizing public-private partnership as a viable way to fund infrastructure development, enhancing tax compliance and improving access to capital. In Egypt, the military-backed government led by former army chief Al-Sisihas reduced political instability and made progress in turning around the economy. The government seems committed to a reform program that has already helped increase economic growth by slashing fuel subsidies, raising the tax on tobacco and alcohol, and pledging to control the public wage bill. Another key component of the government’s reforms is to attract investment by improving the business environment.

This is also paying dividends, albeit with a focus on megaprojects such as doubling the capacity of the Suez Canal and building a new capital city outside of Cairo. At Egypt’s Economic Development Conference in March 2015, foreign investors pledged US$130 billion. The table below summarizes the degree of positive or negative impact the six macroeconomic trends have across different countries. The last column represents the overall positive/negative impact across all trends. Impact of Key Macro Themes by Region Monetary policy Normalizing of business conditions Strong US$ Low but recovering oil prices China’s economic slowdown Structural reforms Overall outlook Europe UK Eurozone North America US Latin America Mexico Brazil Asia Pacific Japan China Africa and Middle East South Africa SCALE Negative Impact Neutral Positive Impact BAKER & MCKENZIE // GLOBAL TRANSACTIONS FORECAST 17 . TRANSACTIONS FORECAST 18 . Global M&A outlook At a global level, the value of completed M&A transactions involving both acquisitions of majority shares and partial interests4 rose to US$2.5 trillion in 2014, up from US$2.2 trillion in 2013. This increase reflected robust activity in both domestic and cross-border deal-making. The first half of 2015 suggests that M&A deals will continue rising, with companies announcing a flurry of large cross-border buyouts. Our forecasts show completed global M&A transactions rising to US$2.7 trillion in 2015 before accelerating to US$3 trillion in 2016 and US$3.4 trillion in 2017. In 2015, cross-border transactions will rise to 38% of total deal activity (or US$1.03 trillion), up from 36% in 2014, before dropping slightly to 37% in 2016. In emerging markets, M&A activity will also grow, rising to 21% of total transactions in 2018 (or US$678 billion), up from 18% in 2014 (US$435 billion). As interest rates in developed countries normalize and equity valuations moderately ease, we expect global M&A activity to slow from 2018 through 2020.

But we do not expect the downturn to be as sharp as those in 2001-2002 or 2008-2009 as transactional activity is expected to remain above the strong levels established in 2014. In the current upturn, investors remain cautious about committing capital in the wake of the financial crisis, and companies find it more difficult to conduct highly leveraged deals in today’s regulatory environment, which should help avoid bubble-induced peaks and troughs. GLOBAL M&A TRANSACTIONS 4 The value of M&A transactions is defined as the total value of consideration paid by the acquirer, excluding fees and expenses. BAKER & MCKENZIE // GLOBAL TRANSACTIONS FORECAST 19 . Regional M&A outlook North America: Strong levels of activity ahead Our global M&A projections are underpinned EUROPE by strong levels of activity in North America, in particular the US, which hosted 45% of global M&A transactions in 2014. Although we expect the Federal Reserve to start raising interest rates this year, this is unlikely to constrain deal-making in the near future. Available financing and optimism about the US economic recovery should continue to support equity prices and encourage higher levels of domestic and cross-border M&A over the next few years. Our Europe: Rising M&A deals projections show M&A transactions in North America The strength of the US dollar will also drive picking up from US$1.2 trillion in 2014 to a peak cross-border deals in the coming year. With the of US$1.5 trillion in 2017, followed by an eventual US exchange rate near a 12-year high relative to slowdown in 2018 with the expected moderate the euro, US companies are likely to pursue more pullback in equity prices. inbound transactions in Europe, particularly in the UK, Germany, and Spain.

M&A activity in several major Eurozone economies has already picked up NORTH AMERICA this year, flows we expect to accelerate as the region’s economic recovery gains traction and bond yields remain relatively low. Despite a pullback in the early months of 2015, we expect equity prices to rise over the next three years, as valuations appear less stretched than in other major developed economies, such as the US. Our projections for European M&A transactions show total deal values rising from US$621 billion in 2014 to US$698 billion in 2015. Beyond 2015, we predict that M&A transactions will continue to accelerate in Europe, hitting US$936 billion by 2017.

Although transactions are forecast to moderate from 2018 to 2020 as the ECB starts to raise interest rates and equity markets fall back, deal flow should remain 20 BAKER & MCKENZIE // GLOBAL TRANSACTIONS FORECAST above 2014 levels. . Asia PACIFIC: Resurgence of growth In the Asia-Pacific region, M&A transactions rose to US$492 billion in 2014, up from US$388 billion ASIA PACIFIC in 2013. With China’s neighbors struggling to adjust to its slowing growth, investor confidence in the region is likely to remain subdued as domestic activity and cross-border inflows are diverted to developed markets where growth prospects have brightened. Despite a slowdown in China, we expect M&A transactions to pick up further this year to US$605 billion and that the strong economic fundamentals of the emerging Asia economies will help the region reassert itself as one of the world’s most dynamic growth stories next year. This will help regain investor confidence, boost stock prices and drive strong rises in transactions from 2016 to 2018. Our forecast shows M&A activity in Asia Pacific peaking at US$755 billion in 2018, as investors shift toward this fast-growing region following the peak of activity in developed markets in 2017. But because of the global interconnectedness of stock markets, we don’t expect this shift to last.

We predict that moderate corrections in developed stock markets will soften interest in deal-making worldwide by 2019. BAKER & MCKENZIE // GLOBAL TRANSACTIONS FORECAST 21 . Latin America: Gradual recovery LATIN AMERICA While the outlook for Asia suggests a strong upturn in activity over the next three years, deal activity in Latin America will be more subdued. In 2015, we forecast that the total value of M&A transactions will fall to US$75 billion, a 61% drop from their peak in 2010, as the region struggles with structural challenges and lower commodity prices. In particular, subdued prospects for Brazil and Mexico are dampening the outlook for M&A activity, as these countries host the bulk of the region’s transactions. Still, the economic outlook for these economies should gradually improve, with M&A activity accelerating from 2017 to 2018, reaching US$147 billion by 2019. This would represent a recovery, as it is above the average annual deal flows of US$128 billion the region had sustained from 2007 to 2014. 22 BAKER & MCKENZIE // GLOBAL TRANSACTIONS FORECAST .

Africa and Middle East: Rebound dependent on rising oil prices The Africa and Middle East region represents a small share of global transactions, amounting to just 2% in africa & middle east 2014. Deal activity has fallen sharply over the past few years, a drop that could continue amid low oil prices. Despite these dampened prospects, Saudi Arabia is off to a strong start this year, driven by an increase in domestic M&A deals. The opening of the Saudi stock exchange to foreign investors could also increase cross-border activity. The decline in oil prices has made companies with significant exposure to oil and energy prices more attractive to potential acquirers, generating an upturn in transactions now that oil prices have stopped falling. Moreover, a recovery in oil prices should stimulate deal-making in the Middle East by increasing revenues for oil-exporting countries.

With countries such as Egypt experiencing greater political stability and introducing business-friendly policies, investor confidence should improve. We expect M&A transactions to peak at US$77 billion in 2018 before slowing as part of our predicted downturn in global financial markets. BAKER & MCKENZIE // GLOBAL TRANSACTIONS FORECAST 23 . SECTOR M&A outlook Within global M&A, sectors that tend to be more cyclical, such as industrials, basic materials and consumer goods, often experience strong growth during upswings in deal-making. Others, such as healthcare and telecommunications, have better long-term prospects that contribute to M&A growth. Our projected growth prospects for the major sectors are illustrated in the chart below. Strong Long-Term Prospects n Healthcare n Telecommunications n Financials Cyclical and Secular Gains n Consumer Goods & Services n Technology n Pharmaceuticals M&A Laggards n Governmental Services n Non-Profit/Private Organizations/ Services Cyclical Boost Despite Weaker Underlying Trend n n n Basic Materials Industrials Energy Pharmaceuticals: Driving global M&A Pharmaceuticals is the primary sector driving global M&A, with an estimated US$511.7 billion in completed deals in 2015, up from $115.8 billion in 2014. Strong activity is expected to continue in 2016 as pharmaceutical companies use M&A as a key growth strategy to acquire new drugs and expand into new markets. More broadly, M&A prospects in the healthcare sector remain strong.

In the US, uncertainty about the Affordable Care Act is likely to propel healthcare companies, particularly managed-care companies, to seek acquisitions to offset potential losses. Increased demand for healthcare services from aging populations in Europe, Asia, and the US is also likely to put pressure on prices and continue fueling M&A activity within the sector. 24 BAKER & MCKENZIE // GLOBAL TRANSACTIONS FORECAST . Technology and telecom: Good long-term prospects Companies in the technology and telecommunications sector have become increasingly active players in global M&A as they are capital intensive and seek acquisitions to achieve economies of scale. The financial benefits of scaling up lead big companies to acquire new start-ups as well as merge with large competitors. The rapid convergence of mobile and fixed-line phone services with cable and other television providers, along with increased regulation and intense competition, are also driving M&A in this sector. Innovations in mobile payments system, data analytics, and cloud computing create the need for new intellectual property and talent that many companies can access quickest and easiest through acquisitions. In telecom, machine-to-machine operations are increasingly used to drive the rapid rise in connectivity across different devices, prompting telecom companies to merge with and acquire companies in other sectors. As data protection and cyber security become even greater corporate concerns, the need for better IT systems should also boost M&A activity. Consumer goods and services: Strong growth ahead Macro fundamentals for the consumer goods and services sector are strengthening in key countries like the US where consumer confidence is on the upswing, corporate balance sheets have improved since the recession, and wages are rising. These stronger consumer fundamentals should drive increased spending, which bodes well for M&A.

Cross-border deals should also rise as consumer goods companies look to tap growing middle classes in emerging markets. At the same time, US brands and the country’s large consumer base will remain attractive to foreign multinational consumer companies. Other factors, such as a global acceleration of urbanization and demographic shifts, should also fuel M&A in this sector, as well as consolidation within the food and beverage industry. Energy: A wave of consolidation Although the drop in oil prices has helped fuel the global economic recovery, it will also lead to negative implications for energy producers, prompting a wave of consolidation in the energy sector. Consolidations should unfold over the next three years as high-cost oil producers, especially US-based hydraulic frackers that face illiquidity in rolling over their high-yield debt, are ripe for takeover. Globally, we expect less efficient and high-cost oil producers to become vulnerable to acquisition as they strive to compete in an industry in which innovation is keeping oil prices low.

The quest for geographic expansion and the need for new technologies and services will also drive M&A activity. BAKER & MCKENZIE // GLOBAL TRANSACTIONS FORECAST 25 . Industrial manufacturing: M&A activity in China and emerging markets M&A activity in the industrial manufacturing sector should rise over the next three years as commodity prices rebound and the US dollar remains strong. Ongoing regional consolidation among smaller, specialized companies is also likely to drive transactions. Much of the deal activity in this sector will occur in China and other emerging economies as local manufacturers seek to reduce excess capacity as economic growth slows. The restructuring and rebalancing of the Chinese economy should also generate a rise in transactions as the government continues to privatize state-owned enterprises, offsetting the negative impact of China’s slower economy. We anticipate that large manufacturing companies will continue shedding non-core operations, freeing up capital to acquire other high-quality manufacturers to expand their consumer bases.

The next wave of innovation, including advancements in automation, robotics and nanotechnology, should also spur acquisitions aimed at cost cutting and market entry. Finance: Gradual recovery In the five years leading up to the global economic crisis in 2007, M&A in the financial sector accounted for over 25% of total M&A, or US$600 billion annually. Since then, that share has dropped to 20%, to US$480 billion per year from 2009 to 2014. In the next three years, we expect M&A activity in the global banking sector to rebound, driven by increased regulation and capital requirements that will force banks to sell off their non-core businesses. As central banks gradually tighten monetary policy, short-term interest rates will rise faster than long-term rates, creating a flatter yield curve.

The flatter yield curve will compress banks’ interest rate margins, as they tend to borrow short and lend long. The downward pressure on profit margins should spur additional M&A activity as banks seek other avenues for revenue growth. Banks will also likely pursue acquisitions to expand their customer bases.

For similar reasons, insurance companies also appear ripe for consolidation. GLOBAL M&A BY SECTOR 26 BAKER & MCKENZIE // GLOBAL TRANSACTIONS FORECAST . IPO outlook The outlook for domestic IPO transactions follows a similar pattern to M&A transactions, reflecting their shared fundamental drivers. Regulatory changes, particularly pension reforms that encourage funds to diversify out of bonds into equities, should continue to encourage firms to raise capital on equity markets. DOMESTIC IPO TRANSACTIONS NORTH AMERICA In North America, domestic IPO activity dipped to US$60.5 billion last year, which was expected following the record US$73.6 billion raised in 2013. We predict that IPO activity will recover this year as market volatility remains low, corporate confidence grows and stock markets rise, pushing toward a new record of US$82 billion by 2017. EUROPE In Europe, domestic IPOs bounced back in 2014 for the first time since the global economic crisis, raising a total of US$46.9 billion, partly because of pent-up demand in the UK. Although the upward trajectory of IPOs may slow this year because of the recent pullback in stock prices and uncertainty surrounding parliamentary elections in several European countries, we expect IPO activity in Europe to rebound next year, pushing the amount raised on stock markets to US$67 billion by 2017. BAKER & MCKENZIE // GLOBAL TRANSACTIONS FORECAST 27 . ASIA PACIFIC In Asia Pacific, domestic IPO activity rose to US$50.8 billion in 2014 from US$37.5 billion in 2013. This was led by strong gains in Australia, Hong Kong and Japan, as activity in other markets within the region remained subdued. IPO activity is likely to remain at similar levels in 2015 before picking up as the regional economy accelerates and companies seek to raise captial on domestic markets to appeal to the local middle class. Driven by these factors, we expect IPO activity to peak at US$87.4 billion in 2018. Domestic IPO activity in Latin America fell sharply LATIN AMERICA last year amid a downturn in the region’s main economies and a drop in commodity prices.

In 2014, only US$1.1 billion in capital was raised on the region’s stock markets, the lowest annual listing value since 2003. We expect IPO activity to remain at depressed levels this year, with a modest acceleration to US$5.5 billion by 2018 as economic prospects brighten. In Africa and the Middle East, domestic IPO activity AFRICA & MIDDLE EAST surged to an all-time high of US$12.4 billion in 2014. This jump was driven by National Commercial Bank’s listing in Saudi Arabia, which raised US$6.4 billion in capital. Because of the one-off nature of this event, we expect IPO activity in Saudi Arabia to return to normal levels this year, although the Saudi stock exchange just opened to foreign investors, which could generate more cross-border flows. In the overall region, we expect domestic listings to generate US$3.5 billion in capital in 2015, climbing to US$6.2 billion by 2018. 28 BAKER & MCKENZIE // GLOBAL TRANSACTIONS FORECAST .

Companies from emerging markets have been major drivers of cross-border IPO activity on the major exchanges. The US market, for example, had a strong year in 2014 led by Chinese retail group Alibaba’s listing on the NY Stock Exchange, which raised US$25 billion, becoming the largest IPO in history. Hong Kong, now the world’s second most popular venue for IPOs, has also hosted large cross-border listings from Chinese companies. Those include Huatai Securities Co.

for US$4.5 billion and GF Securities for US$4.1 billion — the world’s second- and third-largest IPOs in 2015 so far. Our forecasts for cross-border M&A suggest that IPO growth in the US and UK will peak in 2017, while the upswing in IPOs will extend into 2018 for the Hong Kong and Singapore markets. The launch of the Shanghai-Hong Kong Connect in November 2014 should boost that upswing. CROSS-BORDER IPO TRANSACTIONS (US$BN) 2014 2015 2016 2017 2018 2019 2020 Hong Kong* 24.3 12.1 20.1 28.3 37.1 24.4 17.0 Singapore 0.6 0.6 1.8 2.2 2.8 1.9 0.9 United Kingdom 8.6 9.6 12.0 14.3 10.4 7.9 6.1 United States 44.7 14.4 20.1 25.5 19.5 11.3 8.3 Total 78.2 36.7 54.1 70.4 69.7 45.5 32.2 *Data includes listings by companies based in mainland China. IPO growth in the US and UK will peak in 2017, extending into 2018 for the Hong Kong and Singapore markets. BAKER & MCKENZIE // GLOBAL TRANSACTIONS FORECAST 29 . POTENTIAL RISKS The recovery in global transactions is expected to continue over the next few years as global economic growth strengthens, commodity prices rebound, and monetary conditions tighten gradually. 30 . However, it’s important to note the economic and geopolitical risks that could threaten our forecast by disrupting the nascent global recovery and causing a drop in transactional activity, such as investor fatigue as we get further into the IPO cycle and increasing unrest in the Middle East. Other potential risks include: Greek exit from the Eurozone The rising probability of a GRexit presents a substantial risk to our positive M&A and IPO outlook for the Eurozone. A Eurozone recession and the uncertainty that a Greek exit creates would likely lower European equity prices, place upward pressure on bond yields for the periphery countries, dampen business confidence and investment, and depress M&A and IPO transactions in Europe. China investment standstill The Chinese authorities are engaged in a tricky balancing act of trying to maintain strong growth while dealing with financial imbalances and an overheated property market. The increase in total debt from 176% of GDP in 2007 to 264% of GDP by 2014 illustrates the government’s challenge in maneuvering the economy onto a more sustainable path.

Investment could quickly collapse if financial stress erupts, resulting in GDP growth falling below 4%. In such a scenario, Chinese outbound transactions activity would fall sharply, hitting financial activity throughout the Asia-Pacific region, particularly in Hong Kong. Federal Reserve raises rates faster and higher than expected Economic growth could accelerate much faster than forecast if the US housing market finally rebounds and consumer spending accelerates. As a result, inflation would rise faster than the Federal Reserve currently predicts and it could engineer a quicker, stronger monetary tightening than expected.

This would produce a sharp rise in US bond yields, and significant volatility and disruptions in US equity markets that would ripple across the globe. The financial stresses would be particularly acute in emerging markets, especially those with weak external positions such as Turkey and Brazil, where interest rates would rise sharply to prevent the currency from collapsing, dampening domestic economic and transactional activity. UK exit from the European Union Following the Conservative’s election victory in May, a referendum on EU membership will likely take place in the UK by 2017. The uncertainty surrounding a possible exit from the EU could cap M&A and IPO activity in the build up to the referendum in sectors closely tied to the rest of the European market.

That said, to the extent that the UK government can negotiate more favorable arrangements for the UK’s EU membership, the outcome could be a net positive for the local economy. And although UK withdrawal from the EU poses obvious risks, if Brexit was followed by the establishment of London as a deregulated, free-trade hub, it could enhance the UK’s position as a center for corporate activity. BAKER & MCKENZIE // GLOBAL TRANSACTIONS FORECAST 31 . CONCLUDING REMARKS In the next three years, we expect the recovery in global transactions to continue as global economic growth strengthens, monetary policy remains accommodative and commodity prices rebound. . During that time frame, we predict that transactional activity will continue to rise, peaking in 2017 in developed countries and 2018 in emerging markets before a moderate slowdown. Within the mix, global M&A deals will account for the bulk of transactional activity, rising to US$2.7 trillion in 2015 and peaking at US$3.4 trillion in 2017. After equity markets in developed economies peak in 2017, the M&A spigot is likely to tighten, leading to a slowdown in the flow of deals from 2018 onward. Global IPO activity will follow a similar pattern, totaling US$214 billion in 2015 and climbing to US$322 billion in 2017 before trending lower beginning in 2018. Global M&A activity will continue to be powered by strong levels of activity in North America, particularly in the US, which should continue accounting for 45% of global M&A deals by value over the next three years. In Europe, we expect significant growth in equity prices despite a weak start to 2015 as the economy stabilizes and the weaker euro makes European equities attractive to overseas investors. The re-emergence of dynamic economic growth in Asia should spur an upturn in M&A and IPO activity in 2016 through 2018.

Cross-border transactions will play a significant role as companies look to gain market presence in these rapidly expanding markets. Deal activity in Latin America will be much slower to recover, weighed down by structural economic challenges in Brazil. Mexico offers a brighter outlook as the government has implemented key reforms to its education system, labor markets, and energy sector. Rising oil prices should revitalize M&A and IPO activity in Africa and the Middle East. In Africa, rising transactional activity will also depend on whether governments continue implementing economic reforms such as those in Egypt, which has become more business friendly. As for business sectors, pharmaceuticals and healthcare should remain leading drivers of global transactions as aging demographics in major countries and the demand for new drugs fuel deal-making. We expect transactional activity in the consumer goods and technology & telecoms to also remain strong in the next three years, along with ongoing consolidation in the energy and financial sectors. In general, cross-border M&A activity will outpace domestic deals, rising to 38% of total transactions in 2015, up from 36% last year.

Cross-border M&A will dip slightly in 2016, but rebound to 38% by 2017. In emerging markets, M&A activity will also pick up in the next few years, rising to 21% of total transactions by 2018, up from 18% in 2014. BAKER & MCKENZIE // GLOBAL TRANSACTIONS FORECAST 33 . APPENDIX 34 BAKER & MCKENZIE // GLOBAL TRANSACTIONS FORECAST . APPENDIX A: Transaction Attractiveness Indicator In addition to our M&A and IPO forecast, we created a Transaction Attractiveness Indicator that rates the attractiveness of a country’s current environment for M&A and IPO activity on a scale from 0 to 10. That score is based on a weighted average of 10 key economic, financial and regulatory factors that are typically associated with higher M&A and IPO activity. Those key factors include the country’s economic growth, stock market size, size of the economy, openness to trade, sovereign credit risk, political stability, ease of doing business, legal structure, freedom to trade, and business regulation. Because many of these factors change slowly over time, a country’s current score is a strong indicator of whether it will have the right features to attract transactional activity in the future. The chart below ranks 37 countries based on their Transaction Attractiveness Indicator scores. RANK COUNTRY SCORE RANK COUNTRY SCORE 1 Hong Kong 9.3 20 Saudi Arabia 4.4 2 Singapore 8.9 21 Poland 4.3 3 Switzerland 7.7 22 South Africa 4.1 4 Netherlands 7.3 23 Italy 4.0 5 Sweden 7.1 23 Thailand 4.0 6 United Kingdom 6.8 25 Peru 3.9 7 Belgium 6.5 26 China 3.4 7 Canada 6.5 27 Mexico 3.2 9 United Arab Emirates 6.2 28 Colombia 3.1 10 Australia 6.0 29 Turkey 2.9 10 United States 6.0 30 Vietnam 2.8 10 Japan 6.0 31 Russia 2.4 13 Germany 5.9 31 India 2.4 13 Malaysia 5.9 33 Brazil 2.3 15 Austria 5.8 34 Indonesia 2.1 16 France 5.7 35 Egypt 1.5 17 Chile 5.2 36 Nigeria 1.3 18 South Korea 5.1 37 Argentina 1.0 19 Spain 4.6 BAKER & MCKENZIE // GLOBAL TRANSACTIONS FORECAST 35 . Appendix B: Country Forecasts NORTH AMERICA: M&A TRANSACTIONS (US$BN) 2014 2015 2016 2017 2018 2019 2020 United States Domestic Cross-Border 903.2 209.8 950.1 265.5 1,054.3 274.1 1,169.0 291.1 1,048.4 251.8 1,007.0 232.4 969.8 190.4 Canada Domestic Cross-Border 56.4 43.7 40.4 31.2 40.9 36.0 43.3 38.9 40.1 37.0 39.3 35.0 38.7 33.1 Regional Total Domestic Cross-Border 959.6 253.5 990.5 296.7 1,095.1 310.1 1,212.3 330.0 1,088.5 288.8 1,046.4 267.3 1,008.5 223.5 EUROPE: M&A TRANSACTIONS (US$BN) 2014 2015 2016 2017 2018 2019 2020 Austria 1.5 4.1 0.9 4.1 1.2 5.2 1.4 6.9 1.5 6.3 1.4 6.0 1.4 5.1 Belgium Domestic Cross-Border 0.7 2.8 0.4 13.3 1.1 15.0 1.5 17.2 1.2 14.6 0.9 11.4 0.7 7.5 France Domestic Cross-Border 49.8 44.3 27.5 37.9 36.4 38.3 44.9 45.5 39.7 44.2 34.7 39.7 30.8 35.6 Germany Domestic Cross-Border 13.5 62.8 15.2 52.0 27.0 70.4 34.0 85.3 33.8 82.9 31.8 75.9 29.6 64.8 Italy Domestic Cross-Border 6.0 23.2 3.4 8.6 10.1 10.3 14.8 13.6 14.3 13.1 13.8 12.2 12.5 11.5 Netherlands Domestic Cross-Border 1.5 20.4 10.0 43.1 13.4 54.9 14.2 67.6 11.3 62.0 10.7 43.0 9.8 38.3 Poland Domestic Cross-Border 2.5 8.9 1.3 2.1 1.8 2.9 2.2 4.4 2.5 4.7 2.3 4.1 2.1 3.7 Russia Domestic Cross-Border 21.3 5.2 5.1 0.1 8.6 0.9 19.2 2.1 26.0 5.3 26.5 4.4 23.1 4.1 Spain Domestic Cross-Border 12.9 29.5 9.6 20.6 14.9 23.2 17.8 27.3 17.2 27.4 15.7 24.1 12.7 22.9 Sweden Domestic Cross-Border 2.8 13.0 0.6 14.7 1.7 16.5 2.2 19.7 2.2 18.1 1.8 15.0 1.1 13.8 Switzerland Domestic Cross-Border 24.0 22.9 2.4 42.4 12.2 22.9 16.5 26.6 16.2 25.0 15.8 22.4 15.7 21.2 Turkey Domestic Cross-Border 7.6 3.7 5.4 4.4 6.0 5.8 6.8 6.7 7.8 8.3 4.2 7.2 3.7 6.7 United Kingdom Domestic Cross-Border 61.9 65.0 50.1 119.9 68.2 149.3 84.9 180.5 81.9 170.6 73.8 155.8 70.9 130.7 Regional Total 36 Domestic Cross-Border Domestic Cross-Border 240.0 381.4 155.2 542.4 231.6 543.7 295.1 641.2 288.4 597.6 262.1 517.5 237.5 442.2 BAKER & MCKENZIE // GLOBAL TRANSACTIONS FORECAST . ASIA PACIFIC: M&A TRANSACTIONS (US$BN) 2014 2015 2016 2017 2018 2019 2020 Australia Domestic Cross-Border 38.4 35.3 52.4 21.7 61.8 34.1 72.8 42.0 81.7 44.5 74.2 44.0 59.6 37.0 China Domestic Cross-Border 156.4 26.8 217.6 33.8 215.9 40.8 222.4 46.1 234.8 55.5 228.9 43.2 227.0 27.6 India Domestic Cross-Border 6.1 11.6 18.8 11.4 21.2 15.9 23.4 19.8 24.6 23.5 18.7 20.7 16.0 18.1 Indonesia Domestic Cross-Border 2.6 2.7 0.6 7.6 2.2 8.2 3.4 9.0 4.3 10.4 2.8 9.6 1.8 8.7 Japan Domestic Cross-Border 52.7 12.3 48.3 6.0 67.1 10.5 78.3 12.7 77.9 13.0 68.4 11.5 60.1 10.7 Hong Kong Domestic Cross-Border 9.6 28.5 75.0 23.5 12.3 26.3 16.7 30.6 19.7 32.1 14.4 25.4 8.5 23.0 Korea Domestic Cross-Border 39.6 16.7 29.4 7.9 32.6 8.2 37.1 9.2 43.1 10.5 38.2 9.6 36.1 8.2 Malaysia Domestic Cross-Border 3.9 3.0 5.7 4.3 8.8 4.9 10.8 5.6 13.7 6.2 10.6 5.0 6.9 3.7 Singapore Domestic Cross-Border 15.9 9.3 14.8 6.2 15.6 7.4 15.8 8.4 15.9 9.6 11.5 7.5 10.6 6.9 Thailand Domestic Cross-Border 2.1 1.8 5.8 2.0 6.5 2.9 7.0 3.2 7.0 3.4 5.0 2.5 3.6 2.2 Vietnam Domestic Cross-Border 0.6 0.1 1.0 0.3 1.2 0.4 1.3 0.5 1.5 0.5 1.1 0.5 0.8 0.4 Regional Total Domestic Cross-Border 334.3 158.0 473.3 131.7 451.5 169.1 498.0 198.3 533.9 221.5 481.5 190.0 436.4 155.3 BAKER & MCKENZIE // GLOBAL TRANSACTIONS FORECAST 37 . Latin America: M&A TRANSACTIONS (US$M) 2014 2015 2016 2017 2018 2019 2020 Argentina Domestic Cross-Border 5,498 2,478 320 223 426 882 538 1,319 664 1,832 682 1,901 637 1,890 Brazil Domestic Cross-Border 24,013 20,428 26,122 7,069 31,543 10,721 36,658 14,747 45,401 17,215 53,826 20,008 52,540 19,734 Chile Domestic Cross-Border 555 12,902 605 3,559 1,156 4,075 1,446 4,832 1,684 5,676 1,666 5,772 1,505 5,577 Colombia Domestic Cross-Border 1,240 1,434 1,152 1,290 1,538 1,886 2,213 2,589 2,436 3,737 2,281 4,028 1,990 3,257 Mexico Domestic Cross-Border 4,853 6,828 6,454 12,271 8,256 13,618 11,578 14,594 12,949 16,786 11,025 14,099 8,017 11,132 Peru Domestic Cross-Border 593 16,695 476 1,384 683 1,598 966 1,958 1,116 2,330 1,007 1,945 795 1,864 Regional Total Domestic Cross-Border 39,031 70,035 36,767 38,655 45,706 49,333 56,092 60,250 67,695 71,588 74,455 72,370 69,145 65,728 africa & middle east: M&A TRANSACTIONS (US$M) 2014 2015 2016 2017 2018 2019 2020 Egypt 336 488 601 1,025 826 1,787 1,043 2,257 1,425 2,642 947 2,544 464 2,459 Nigeria Domestic Cross-Border 4,973 1,407 2,033 2,384 2,438 2,500 2,813 2,857 3,091 2,991 1,601 2,431 1,196 1,976 Saudi Arabia Domestic Cross-Border 279 468 1,745 1,155 1,345 1,330 940 1,082 867 892 769 691 664 535 South Africa Domestic Cross-Border 2,969 1,145 2,941 537 6,057 1,454 7,642 2,511 8,805 3,334 4,384 2,332 3,534 1,341 UAE Domestic Cross-Border 1,355 798 4,653 2,160 3,585 710 4,256 779 4,816 861 4,417 703 3,425 721 Regional Total 38 Domestic Cross-Border Domestic Cross-Border 19,160 23,994 21,040 24,716 25,764 28,149 30,790 36,081 35,240 41,361 23,784 34,546 18,972 29,022 BAKER & MCKENZIE // GLOBAL TRANSACTIONS FORECAST . GLOBAL: M&A TRANSACTIONS BY SECTOR (US$BN) 2014 2015 2016 2017 2018 2019 2020 Basic Materials 188.9 104.3 123.9 151.1 135.9 118.8 102.1 Cyclical Consumer Goods & Services 262.0 332.6 380.6 446.6 297.6 311.9 292.8 Energy 370.4 135.9 250.8 325.7 355.8 252.5 201.5 Financials 501.0 578.7 604.8 698.5 663.1 597.0 531.9 0.6 5.9 0.1 0.1 0.1 0.1 0.0 Healthcare 130.1 155.6 147.5 218.3 236.1 222.8 214.9 Pharmaceuticals 115.8 509.7 413.0 305.6 339.6 347.5 322.3 Industrials 277.2 324.0 356.9 416.3 407.4 338.5 287.3 Non-Cyclical Consumer Goods & Services 178.1 177.6 200.6 241.8 226.4 222.8 209.5 Non-Profit/Private Organizations/Services 0.1 0.0 0.0 0.1 0.1 0.0 0.0 Technology 180.9 231.3 227.2 278.7 258.8 243.5 228.3 Telecommunications Services 156.8 94.8 162.3 201.5 232.9 231.7 214.9 Utilities 117.1 60.7 82.6 73.9 80.9 83.2 80.6 Governmental Services Total 2,479.0 2,710.9 2,950.0 3,358.0 3,234.6 2,970.0 2,686.2 BAKER & MCKENZIE // GLOBAL TRANSACTIONS FORECAST 39 . NORTH AMERICA: M&A TRANSACTIONS (# OF DEALS) 2014 2015 2016 2017 2018 2019 2020 United States Domestic Cross-Border 7,253 1,427 7,967 1,446 7,841 1,492 8,694 1,585 7,797 1,371 7,489 1,265 7,213 1,037 Canada Domestic Cross-Border 860 491 663 467 671 540 711 584 658 555 646 524 635 497 Regional Total Domestic Cross-Border 8,113 1,918 8,630 1,913 8,512 2,032 9,404 2,168 8,455 1,926 8,135 1,790 7,848 1,533 EUROPE: M&A TRANSACTIONS (# OF DEALS) 2014 2015 2016 2017 2018 2019 2020 Austria 48 63 50 62 62 75 73 83 80 77 75 73 73 62 Belgium Domestic Cross-Border 70 125 64 137 99 145 113 156 95 132 74 104 52 68 France Domestic Cross-Border 1,578 410 1,554 465 1,757 470 2,065 559 1,827 543 1,595 487 1,417 437 Germany Domestic Cross-Border 745 586 635 595 747 685 838 770 784 748 737 685 687 585 Italy Domestic Cross-Border 272 249 263 253 396 263 476 286 463 275 445 256 403 242 Netherlands Domestic Cross-Border 202 222 211 249 284 297 299 316 238 289 227 201 207 179 Poland Domestic Cross-Border 214 149 307 152 322 175 330 200 337 208 270 164 208 136 Russia Domestic Cross-Border 1,236 279 773 176 920 270 1,250 374 1,489 531 1,419 448 1,136 415 Spain Domestic Cross-Border 451 402 368 225 494 254 587 299 568 300 520 263 420 250 Sweden Domestic Cross-Border 257 180 218 141 345 158 390 189 385 174 314 144 274 132 Switzerland Domestic Cross-Border 186 115 162 138 230 125 269 145 215 136 159 122 108 115 Turkey Domestic Cross-Border 167 97 175 81 186 106 192 122 199 151 107 132 95 123 United Kingdom Domestic Cross-Border 1,382 831 1,459 968 1,684 1,115 1,897 1,249 1,829 1,180 1,648 1,078 1,524 904 Regional Total 40 Domestic Cross-Border Domestic Cross-Border 7,512 4,658 6,945 4,589 8,621 5,238 11,060 5,985 11,652 5,910 10,553 5,176 9,207 4,515 BAKER & MCKENZIE // GLOBAL TRANSACTIONS FORECAST . ASIA PACIFIC: M&A TRANSACTIONS (# OF DEALS) 2014 2015 2016 2017 2018 2019 2020 Australia Domestic Cross-Border 580 343 401 285 473 372 557 459 625 486 568 480 456 404 China Domestic Cross-Border 1,457 313 1,495 210 1,533 254 1,579 287 1,668 345 1,626 269 1,612 172 India Domestic Cross-Border 417 267 411 270 464 315 512 322 537 343 408 301 351 264 Indonesia Domestic Cross-Border 26 66 6 66 21 72 32 79 40 90 26 84 17 76 Japan Domestic Cross-Border 1,372 167 1,281 126 1,778 172 2,076 207 2,065 212 1,815 188 1,642 173 Hong Kong Domestic Cross-Border 168 146 152 139 171 155 203 181 240 194 174 154 103 139 Korea Domestic Cross-Border 755 145 658 134 729 140 781 157 805 169 715 154 674 133 Malaysia Domestic Cross-Border 230 91 227 69 347 78 458 89 550 99 427 80 279 58 Singapore Domestic Cross-Border 162 145 153 120 162 134 164 141 165 156 119 121 110 113 Thailand Domestic Cross-Border 67 46 48 39 53 57 57 62 58 65 41 49 29 42 Vietnam Domestic Cross-Border 183 53 176 36 209 49 237 57 264 65 186 58 146 52 Regional Total Domestic Cross-Border 5,699 1,975 5,245 1,630 6,357 1,973 7,229 2,249 7,634 2,455 6,619 2,140 8,817 3,023 BAKER & MCKENZIE // GLOBAL TRANSACTIONS FORECAST 41 . Latin America: M&A TRANSACTIONS (# OF DEALS) 2014 2015 2016 2017 2018 2019 2020 Argentina Domestic Cross-Border 28 39 39 18 52 41 66 57 81 69 83 72 77 68 Brazil Domestic Cross-Border 207 233 150 231 191 310 222 387 275 422 326 450 318 394 Chile Domestic Cross-Border 36 51 43 47 52 54 55 64 64 70 64 72 57 69 Colombia Domestic Cross-Border 22 46 27 21 36 31 42 42 46 61 43 66 38 53 Mexico Domestic Cross-Border 75 75 76 66 97 93 136 110 152 142 129 120 94 104 Peru Domestic Cross-Border 26 38 35 39 41 45 47 55 51 66 45 55 36 53 Regional Total Domestic Cross-Border 423 616 385 531 494 733 606 913 723 1,058 755 1,076 681 952 africa & middle east: M&A TRANSACTIONS (# OF DEALS) 2014 2015 2016 2017 2018 2019 2020 Egypt 38 22 20 36 27 43 34 49 37 52 30 42 24 33 Nigeria Domestic Cross-Border 16 19 15 18 18 19 21 22 23 23 12 18 9 15 Saudi Arabia Domestic Cross-Border 23 16 34 27 26 31 18 25 17 21 15 16 13 13 South Africa Domestic Cross-Border 111 70 111 81 169 109 193 139 212 154 106 108 85 62 UAE Domestic Cross-Border 29 47 31 46 25 35 29 39 33 43 31 35 24 36 Regional Total 42 Domestic Cross-Border Domestic Cross-Border 395 451 298 437 397 523 460 631 507 689 304 538 246 413 BAKER & MCKENZIE // GLOBAL TRANSACTIONS FORECAST . North America: DOMESTIC IPOs (US$BN) 2014 2015 2016 2017 2018 2019 2020 United States 56.0 65.2 69.9 75.5 72.3 65.8 56.4 Canada 4.5 3.8 5.3 6.4 6.3 5.8 4.9 60.5 69.0 75.2 81.9 78.7 71.6 61.3 Regional Total EUROPE: DOMESTIC IPOs (US$BN) 2014 2015 2016 2017 2018 2019 2020 Austria 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Belgium 0.8 0.8 0.9 1.3 0.9 0.5 0.2 France 3.7 4.1 4.5 5.1 3.7 2.8 1.3 Germany 4.1 2.1 4.0 4.8 3.4 2.4 1.4 Italy 3.5 0.5 2.0 3.5 2.4 1.4 1.0 Netherlands 3.6 4.8 5.5 6.0 3.6 1.2 0.9 Poland 0.4 0.4 1.0 1.4 1.7 1.5 0.8 Russia 1.1 0.4 0.7 1.2 2.0 1.3 0.6 Spain 3.6 9.8 10.7 11.7 7.2 4.2 1.6 Sweden 2.6 2.7 3.1 3.6 2.1 1.3 0.9 Switzerland 1.7 0.5 0.7 1.0 0.6 0.4 0.2 Turkey 0.3 0.7 1.2 1.4 1.4 1.2 0.9 United Kingdom 17.5 17.1 18.5 20.0 17.2 15.9 14.8 Regional Total 46.9 47.7 57.5 66.7 51.2 37.2 26.7 BAKER & MCKENZIE // GLOBAL TRANSACTIONS FORECAST 43 . asia pacific: DOMESTIC IPOs (US$BN) 2014 2015 2016 2017 2018 2019 2020 Australia 12.1 2.4 4.8 5.7 6.6 5.2 3.7 China 12.7 25.8 27.6 30.4 36.2 29.1 22.1 India 0.3 1.1 3.0 3.9 4.7 3.7 2.5 Indonesia 0.6 0.9 1.7 2.0 2.4 1.7 1.0 Japan 10.2 3.6 9.3 12.0 12.7 11.2 9.5 Hong Kong* 4.6 2.5 5.4 6.1 6.8 5.2 3.0 Korea 1.0 0.6 0.9 1.0 1.0 0.9 0.7 Malaysia 1.3 1.6 1.9 2.5 3.0 1.9 0.9 Singapore 2.1 0.7 1.9 2.6 3.2 2.9 2.7 Thailand 2.7 3.9 4.0 4.3 4.8 2.8 2.7 Vietnam 0.4 0.0 0.3 0.7 1.3 0.5 0.1 50.8 46.0 64.5 75.3 87.4 69.2 52.2 Regional Total *Data reflects listings by Hong Kong-based companies only. Latin America: DOMESTIC IPOs (US$M) 2014 2015 2016 2017 2018 2019 2020 Argentina 15 81 159 287 437 340 162 Brazil 172 530 1,030 1,977 2,739 3,149 3,090 Chile 0 0 58 119 207 92 25 Colombia 0 0 101 209 256 114 31 942 874 1,220 1,504 1,841 1,747 1,709 0 0 0 0 0 0 0 1,128 1,485 2,568 4,096 5,481 5,441 5,016 Mexico Peru Regional Total 44 BAKER & MCKENZIE // GLOBAL TRANSACTIONS FORECAST . africa & Middle east: DOMESTIC IPOs (US$M) 2014 2015 2016 2017 2018 2019 2020 Egypt 126 257 364 405 648 531 322 Nigeria 651 153 204 304 424 169 39 Saudi Arabia 6,409 1,777 1,668 2,000 2,404 2,734 2,660 South Africa 823 346 415 478 736 530 238 2,909 582 698 803 1,236 433 65 12,409 3,527 3,793 4,517 6,169 4,978 3,763 UAE Regional Total CROSS-BORDER IPO TRANSACTIONS (US$BN) 2014 2015 2016 2017 2018 2019 2020 Hong Kong* 24.3 12.1 20.1 28.3 37.1 24.4 17.0 Singapore 0.6 0.6 1.8 2.2 2.8 1.9 0.9 United Kingdom 8.6 9.6 12.0 14.3 10.4 7.9 6.1 United States 44.7 14.4 20.1 25.5 19.5 11.3 8.3 Total 78.2 36.7 54.1 70.4 69.7 45.5 32.2 *Data includes listings by companies based in mainland China. BAKER & MCKENZIE // GLOBAL TRANSACTIONS FORECAST 45 . METHODOLOGY To arrive at our forecasts for M&A and IPO activity by region, country and sector, we commissioned Oxford Economics to develop modeling techniques that relate historic changes in transaction flows to key structural and cyclical drivers. As part of that modeling approach, we employed a “panel data” construct that allowed us to model the impact of nine cyclical and structural explanatory variables (listed below) on M&A and IPO activity over time. In estimating global transactional activity, we used data on completed deals rather than announced deal values, which are more typically reported in the media. From an analytical modeling perspective, it made more sense to use completed deals for forecasting as it reflects the actual outcome. Additionally, we employed one regression equation using data for all 37 countries in our sample, thus allowing us to use variations in the data across time and countries.

The panel data approach helped us account for many of the structural variables we wanted to include (such as business environment measures) that change slowly over time. This approach also allowed us to control for variables we cannot observe or measure, such as cultural factors. We found that estimating global transactional activity separately for emerging markets and developed economies yielded better results. This likely reflects the fact that investors give different weightings to the factors influencing their transaction decisions when investing in developed economies versus emerging markets.

When calculating our estimations, we grouped countries according to standard IMF classifications. We used the same approach for domestic and cross-border transactions. Explanatory variables Cyclical variables • Stock market capitalization – local stock market capitalization/GDP • Trade/GDP • M2 (money supply/GDP) • Equity prices • Spread • US between 10-year govt. bonds in domestic market versus the US 10-year govt. bond VIX Equity Index • Current Account Balance/GDP Structural variables • Legal Structure and Property Rights • Freedom 46 to trade BAKER & MCKENZIE // GLOBAL TRANSACTIONS FORECAST .

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