Q JUVENILE PRODUCTS CONTACT M&A OVERVIEW. Sophea Chau Director (617)

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1 JUVENILE PRODUCTS CONTACT Sophea Chau Director (617) M&A OVERVIEW Merger and acquisition (M&A) activity in the Juvenile Products industry remained healthy through year-to-date (YTD) 2017 despite a moderate decline in deal volume. Activity is still feeling the repercussions of the US election as deal makers are, until only recently, gaining a clearer picture of federal policies. Acquisitions and inorganic growth strategies that were put on hold are now being restarted, resulting in an uptick in processes that will be completed in late-2017/early Favorable market dynamics such as cheap debt financing, record amounts of available investment capital (dry powder) and increased foreign buyer interest have also jumpstarted M&A activity within the overall middle market and Juvenile Products industry. Overall, Juvenile Products deal activity resembles current macroeconomic M&A trends, which are covered on the following page. Trends include a decline in total deal volume, strong private equity activity and rising valuations in the middle market, especially in the consumer discretionary segment. One major development specific to the Juvenile Products industry is the bankruptcy of Toys R Us. After the news surfaced, shares of top toy manufacturers took a hit including those of Hasbro, Mattel and JAKKS Pacific. These three companies rely on Toys R Us for 11%, 9% and 15% of their revenue, respectively. Capstone expects that Juvenile Products companies with diverse distribution channels, especially ones that have a strong e- commerce presence, will be stronger targets for M&A activity. M&A Activity: Juvenile Products BOSTON CHICAGO LONDON LOS ANGELES NEW YORK ORANGE COUNTY PHILADELPHIA SAN DIEGO SILICON VALLEY TAMPA Number of Transactions YTD 2016 YTD YTD ended September 10 Sources: Capital IQ and Capstone Partners LLC Research

2 KEY MACROECONOMIC TRENDS AND DRIVERS There are a number of macroeconomic trends that have impacted M&A activity within the Juvenile Products industry. Below are a few of these factors: Overall middle market transactions see a dip in volume M&A volume has decreased by 12.3% through the first two quarters of 2017 compared to the same time period last year, similar to the decline Juvenile Products deal volume. Importantly, the market remains healthy and is expected to grow over the next 6-12 months. One reassuring factor is that deal activity in the consumer discretionary space remains strong, accounting for the largest share of volume (2,034 transactions) in the middle market over the last twelve months. Valuations are also at a premium in this industry at 10.6x EBITDA, also the highest of any industry. This bodes well for future activity in the Juvenile Products industry as buyers remain highly active in this space. Middle Market Transactions 18,000 15,000 12,000 9,000 6,000 3,000 0 Middle Market Deal Volume Q2 '16 Q2 '17 Transactions (Undisclosed Value) Transactions (Disclosed Value) $140 $120 $100 $80 $60 $40 $20 $0 $ in millions Sources: Capital IQ and Capstone Partners LLC Research Private equity interest in deal making remains strong Private equity buyers have more than half a trillion dollars of dry powder, making them well positioned as potential buyers. Combined with low interest rates and increased competition for deals, valuations for deals done by these buyers have reach a record 7.4x EBITDA. The Juvenile Products industry has benefitted similarly as 31.6% of buyers in this industry have been either private equity platform or add-on investments. Transactions Transactions Closed by Private Equity Firms 2,500 2,155 2,159 1,876 1,908 2,000 1,704 1,500 1, , Enterprise Value / EBITDA EBITDA Multiples Paid by Financial Buyers 8.0x 7.4x 7.5x 6.9x 7.0x 6.7x 6.7x 6.5x 6.5x 6.3x 6.0x 5.5x 5.0x 4.5x Q2 '16Q2 '17 4.0x Q2 '17 Sources: Capital IQ and Capstone Partners LLC Research Capstone Partners LLC 2

3 JUVENILE PRODUCTS: SELECT M&A TRANSACTIONS Enterprise EV / LTM Ann. Date Target Acquirer Target Business Description Value (mm) Revenue EBITDA 08/07/17 Carousel Designs Crown Crafts Manufactures and retails infant, toddler/kids bedding and nursery decor. $ x - 07/27/17 Lifefactory Thermos Designs infant products and playthings. 07/11/17 LILLEbaby The Riverside Company Provides baby carriers that comfortably support the bond between parent and child. 06/29/17 Funnybone Toys FoxMind Canada Enterprises Manufactures toys. 06/08/17 Stephan Baby Creative Brands Manufactures baby apparel and accessories. 06/06/17 Puj Bébé au Lait 04/25/17 04/19/17 04/07/17 Treehouse's Infant Bus. Kissy Kissy of Tatiana & Co. Marbles, Certain Assets Riverbend Foods Mamiye Brothers Spin Master Offers baby tubs, bath sets, treads, kneelers, toilet trainers, hooded towels and other bath accessories. Produces private label baby food. Manufactures apparel for infants. Comprises retail assets of games, toys and gift products. 03/20/17 GoGo Baby Omega Commercial Finance Develops toys for small children that can be attached to car seats. 03/14/17 Vivid Toy Privet Capital Offers independently branded toys and games. 03/06/17 StrollerTraffic Macaroni Kid 02/23/17 Skip Hop Carter's 02/17/17 3D Pioneer, Apps Adaiah &Other Assets Distribution Operates an online portal to update mothers on developments in the world of babies and toddlers. Manufactures child care products for parents, babies and toddlers. Offers smartphone apps designed to educate young children about the environment. $ x - 02/17/17 Tech 4 Kids The Bridge Direct Manufactures toys and games for children. 02/10/17 01/09/17 12/29/16 11/30/16 11/09/16 Mead Johnson Nutrition Robeez Footwear Maple Tree Kids Halo Innovations FiLIP Technologies 10/19/16 The Step2 Reckitt Benckiser Group McCubbin Hosiery Aircom Pacific aden + Anais Smartcom Mobility Backyard Discovery Manufactures infant formula, children s nutrition and other nutritional products. Offers shoes and booties for babies, infants and toddlers. Operates as a Web-based retailer of clothing, accessories and other personalized gifts for children. Develops safe sleeping products for children such as swaddles, wearable blankets and bassinets. Develops a wearable smart locator and voice watch that enables children to easily reach their parents. $17, x 17.7x CF CF CF Manufactures and sells preschool and toddler toys. 10/05/16 Dream Big Toy 1067 Studios Produces dolls and books for girls. 10/04/16 FAO Schwarz 09/28/16 Lafayette Puzzle ThreeSixty Group Engages in toys retailing. Cra-z-Art Manufactures and sells toy puzzles online. Note: Transactions highlighted in blue have been completed by Capstone Partners Source: Capital IQ, company press releases and public filings; LTM = last twelve months; EV = Enterprise Value Capstone Partners LLC 3

4 PUBLIC COMPANY TRADING & OPERATING DATA Price % 52 Wk Market Enterprise LTM 3-Yr An. Rev EV / LTM Company 09/26/17 High Cap Value Revenue EBITDA Margin Growth Revenue EBITDA Crown Crafts, Inc. $ % $62.9 $51.0 $64.0 $ % (7.3)% 0.8x 5.5x Dorel Industries Inc. $ % $774.1 $1,251.0 $2,578.0 $ % 0.4% 0.5x 8.5x Hasbro Inc. $ % $12,082.8 $12,361.3 $5,131.9 $1, % 7.2% 2.4x 12.2x Mattel, Inc. $ % $5,041.5 $7,408.6 $5,340.1 $ % (5.5)% 1.4x 10.8x JAKKS Pacific, Inc. $ % $66.0 $155.9 $683.9 $ % 1.4% 0.2x 5.8x Newell Brands Inc. $ % $20,074.5 $30,721.9 $15,411.4 $2, % 39.7% 2.0x 11.7x Spin Master Corp. $ % $3,606.4 $3,666.1 $1,317.8 $ % 0.0% 2.8x 18.9x Summer Infant, Inc. $ % $34.8 $80.7 $194.0 $ % (0.8)% 0.4x 17.2x TOMY Company $ % $1,240.4 $1,368.6 $1,537.1 $ % 4.7% 0.9x 8.2x LTM = Last Twelve Months EV = Enterprise Value $ in millions, except per share data Mean 11.3% 4.4% 1.3x 11.0x Median 12.9% 0.4% 0.9x 10.8x Harmonic Mean 7.1% NA 0.7x 9.5x Last Twelve Month Margin Performance 60% 50% 40% 30% 20% 10% 29.2% 14.4% 23.8% 14.6% 52.9% 19.8% 45.1% 12.9% 30.8% 3.9% 36.0% 17.1% 51.2% 14.7% 32.2% 2.4% 38.4% 10.9% 0% Crown Crafts Dorel Industries Hasbro Mattel JAKKS Pacific Newell Brands Spin Master Summer Infant TOMY Company LTM Gross margin LTM EBITDA margin Last Twelve Month Revenue Growth 100% 86.5% 80% 60% 40% 33.6% 20% 10.4% 5.3% 0% -20% -40% -22.0% Crown Crafts -2.0% Dorel Industries -5.0% -7.2% -3.6% Hasbro Mattel JAKKS Pacific Newell Brands Spin Master Summer Infant TOMY Company Source: Capital IQ as of September 26, 2017 Capstone Partners LLC 4

5 CAPSTONE PARTNERS: COMPLETED CONSUMER PRODUCTS & SERVICES TRANSACTIONS Capstone Partners has completed several transactions within the consumer products & services sector which span the manufacturing, retail, wholesale and services sectors including a variety of companies offering diverse products such as those related to juvenile, food, pet, drug and neutraceutical, and recreation products and services. Capstone s experience in the sector provides us with insight into the valuable attributes and likely valuation of a target company, the active buyers in the industry and the nuances of transactions in this space. TOPSPIN PARTNERS strategic joint venture A Premier Provider of Early Education & Childcare Services Senior Members of Doc s Drugs, Ltd. acquisition advisory Capstone Partners LLC 5

6 THE JUVENILE PRODUCTS TEAM Sophea Chau, Director, Head of Juvenile Products (617) Sophea specializes in mergers & acquisitions, private placements and financial advisory services. Her responsibilities include providing financial and valuation analysis, performing due diligence, asset positioning and strategy articulation. Prior to joining Capstone, Sophea was an analyst at FTN Midwest Securities, a full-service investment banking firm based in Cleveland. While working in their New York office, she focused on M&A advisory for middle-market companies in a variety of industries, including healthcare, pharmaceutical services and marketing & advertising. Sophea is Vice President of the Columbia Alumni Association of Boston and holds a Bachelor of Arts in Economics from Columbia University. Jacob Voorhees, Managing Director jvoorhees@capstonellc.com (617) Jacob is a founding member of Capstone Partners. He focuses on asset positioning, strategy articulation, due diligence and negotiations coordination. Formerly, Jacob was with Andersen Corporate Finance LLC, where he focused his efforts on the software and direct marketing industries. He started his career in New York City with Rabobank International, a multi-national Dutch investment bank headquartered in Utrecht, the Netherlands. While at Rabobank International, Jacob worked in the mergers and acquisitions group focusing on cross-border transactions in the consumer products, food and beverage industries US MIDDLE MARKET INVESTMENT BANK OF THE YEAR USA MID-MARKET INVESTMENT BANKING FIRM OF THE YEAR MIDDLE MARKET INVESTMENT BANKING FIRM OF THE YEAR Capstone Partners LLC 6

7 CAPSTONE S OFFICE LOCATIONS BOSTON 176 Federal Street 3rd Floor Boston, MA (617) CHICAGO 200 South Wacker Drive Suite 3100 Chicago, IL (312) LONDON 42 Brook Street London W1K 5DB United Kingdom +44 (0) LOS ANGELES 401 Wilshire Suite 1200 Santa Monica, CA (858) NEW YORK 340 Madison Avenue 10 th Floor New York, NY (212) ORANGE COUNTY Avenida de la Carlota Suite 600 Laguna Hills, CA (949) PHILADELPHIA 1515 Market Street 12th Floor Philadelphia, PA (215) SAN DIEGO High Bluff Drive Suite 200 San Diego, CA (858) SILICON VALLEY 228 Hamilton Avenue 3rd Floor Palo Alto, CA (650) TAMPA 1550 W Cleveland Street Suite 10 Tampa, FL (813) ABOUT CAPSTONE PARTNERS Capstone Partners LLC is an award-winning investment banking firm dedicated to serving the corporate finance needs of middle market business owners, investors and creditors. Over the past 15 years, Capstone has earned a reputation as one of the most innovative firms in the industry, offering corporate sale & divestiture, merger & acquisition, private placement, corporate restructuring, valuation and financial advisory services. The firm maintains seven industry practices, including: Business Services, Consumer Products, Education & Training, Government Services, Health & Medical, Manufacturing & Industrial, and Technology & Telecom. Headquartered in Boston, Capstone has offices in Chicago, London, Los Angeles, Philadelphia, San Diego, Silicon Valley and Tampa with an international presence that spans 450+ professionals in 70 offices across 31 countries. For more information about our expertise, please visit World Class Wall Street Expertise. Built for the Middle Market Capstone Partners LLC. All rights reserved.