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8/8/2019 I'll Buy! Is Private Equity Coming Back? - September M&A Flash Report
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USA Switzerland Germany France United Kingdom Canada Norway Brazil
M&A Flash Re ortM&A Flash Re ort Se t. 2009Se t. 2009Software and IT Industry Market Update:Ill Bu ! Is Private E uit Comin Back?
www.corumgroup.com
, ,10:00 am PT
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Mark ReedExecutive Vice President
orum roup .
Bruce MilneCEO & Chairman
Corum Group Ltd.
Nat BurgessExecutive Vice PresidentCorum Group Ltd.
Bruce Milne, the founder of Corum, is one of the true leaders in the software industry. He built the largest vertical market
software company in the world before founding Corum, where he has overseen more mergers than anyone in history,
generating over $6 Billion in wealth for the owners of privately held firms. Along the way, in addition to publishing
extensively, he has owned three other software companies (Rosesoft, Dataword, Insider Edition) and been a seed investor
in some of the leaders in our industry (Blue Coat, Bright Star, Sabaki). He founded the largest regional tech association
Washin ton Software Association and as a reco nized leader has served on numerous advisor boards includin
, , ,
Comdex, DEC, Apple, IBM, and personally advised Bill Gates at Microsoft. He has been a tech cabinet advisor to two
Governors, a Congressman and U.S. Senator on issues related to the future of the software industry. For his expertise, he
was commissioned by the U.S. government to write the definitive high tech business guide for the SBA. The Canadian
Government had him conduct research which led to the establishment of SoftWorld, and he was recently voted one of the
most influential people in the European software community for his work during the last market decline.
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>> For todays presentation or more information, contact Pat Sultan
(pats@corumgroup.com, +1 425-455-8281 ext. 248)
Ryan BlakelyVice President, ResearchCorum Group Ltd.
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Agenda
Langara!
Overview of Current Market
Market and Valuation Analysis
r va e qu y ane
Closing Comments - Q&A
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Corums Annual Client Celebration
Aug. 29 Sept. 1A tradition for 22 years
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What Wall of Worry?
IMF Set to Raise Global Growth to 3.3%
World Bank Sees True Global Recovery
n ex p wo ont s tra g t to .
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Much Good News
South Korea Economy Grew Faster Than Expected
. . .
.
Stron Ex ort Growth Lifts German Market
European Spending Rose - First Time in a Year
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Real Estate Seems to be Recovering
Pending Sales of Existing Homes Rise in July
.
. .
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But, Still Real Concerns
Back to School Sales Auger Retail Woes
Majority See No Benefit from Stimulus Program
ous ng overty ect ou s . . e oun
Factor Orders Rose Less Than Ex ected
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So Many Mixed Messages
The Gloom in Chinas Growth Stats
Cash for Clunkers Real Boost to Auto Salesor
Cash for Clunkers Is a Sugar High!
Worst Over for Commercial Real Estate or
Commercial Real Estate Ticking Time Bomb
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But, Deals Are Up!
v v
Including Disney and Baker Hughes
Buyout Firms Return to Basics
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Corum Transactions Are Up
ve ea s n wee s
Four more with new offers Mobile Applications
Risk / Compliance
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Ryan BlakelyVice President, ResearchCorum Group Ltd.
analysis in the software and technology space. With over ten years experience in thesoftware M&A environment, Ryan has an intimate understanding of the software industry asa whole, especially as it relates to mergers and acquisitions. As the Vice President ofResearch, Ryan directs Corums research group in both North America and Europe, andhas played a direct role in developing buyer relationships during his tenure with Corum. Healso is a major contributor to Corums research reports. Ryan graduated from WashingtonState University with a B.A. in Business Management, with a focus on EntrepreneurialStudies.
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M&A Activity July
Number of Software and IT M&A Transactions
2009
2007
2008
August
2004
2005
0 50 100 150 200 250 300 350
2009 2008 2007 2006 2005 2004
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Corum Index M&A Statistics
# of Transactions# of Mega Deals >$1B
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2210
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2150
Average Deal Value
Median Seller Revenue
# VC backed Exits
$82
$42
26
$78
$27
18
% Terms Undisclosed
All Cash (announced)
% Targets Public
76%
43%
19%
55%
54%
17%
% Buyers Public 46%53%
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$ values in millions
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Horizontal Application Software Market
Public Valuations Deal Spotlight:
Sector: Supply ChainTarget: Advanced Information
Buyer: PSI AGDate: August 2009
Transaction Value: $18 million
Horizontal
Application
Software
ruc ure: asRevenue Multiple: 1.1x
Feb09 Mar09 Apr09 May0 9 Jun09 Jul09 Aug09
EV/EBITDA 5.85x 6.82x 9.23x 9.39x 9.99x 11.06x 11.06x
EV/S 1.12x 1.12x 1.16x 1.35x 1.50x 1.58x 1.93x
Comments:Regional consolidationVertical expansion
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Vertical Application Software Market
Public Valuations Deal Spotlight:
Sector: TransportationTarget: Grey Island Systems
Date: August 2009Transaction Value: $35.4 million
Structure: Stock
Vertical
Application
Software
evenue u p e: . x
Comments:Niche market ex ansion
Feb09 Mar09 Apr09 May09 Jun09 Jul09 Aug09
EV/EBITDA 6.19x 6.53x 7.26x 7.99x 8.17x 8.91x 9.01x
EV/S 1.01x 1.14x 1.31x 1.40x 1.51x 1.51x 1.66x
Complementary solutionsPublic target
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Consumer Application Software Market
Public Valuations Deal Spotlight:
Sector: Hyper Local ContentTarget: EveryBlock
Date: August 2009Transaction Value: UndisclosedConsumer
ApplicationSoftware
ommen s:Extending market reachUser generated content
Feb09 Mar09 Apr09 May09 Jun0 9 Jul09 Aug09
EV/EBITDA 2.40x 2.74x 3.81x 2.83x 4.47x 4.57x 4.27x
EV S 0.58x 0.64x 0.69x 0.50x 0.53x 0.53x 0.59x
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Infrastructure Market
Public Valuations Deal Spotlight:
Sector: Application DevelopmentTarget: SpringSource Inc.
Date: August 2009Transaction Value: $420 million
Structure: Cash and stock
Infrastructure
Software
evenue u p e: . x
Comments:Stron valuation
Feb09 Mar09 Apr09 May09 Jun09 Jul09 Aug09
EV/EBITDA 6.32x 6.98x 8.46x 8.29x 8.74x 9.59x 10.92x
EV/S 1.31x 1.43x 1.55x 1.52x 1.72x 1.95x 2.02x
PaaSExtend current offerings
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Internet Market
Public Valuations Deal Spotlight:
Sector: Social NetworkingTarget: iLike
Date: August 2009Transaction Value: UndisclosedInternet
ommen s:Social experiencesUser baseTraffic
Feb09 Mar09 Apr09 May09 Jun09 Jul09 Aug09
EV/EBITDA 6.05x 7.54x 9.80x 11.78x 11.81x 13.32x 13.02x
EV/S 1.36x 1.60x 2.11x 2.26x 2.30x 2.48x 2.60x
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IT Services Market
Public Valuations
Sector: ServicesTarget: TRS Consulting Inc.
uyer: n orma on ys emsDate: August 2009Transaction Value: $18 million
Structure: Cash + earn-out
ITServices
Comments:Consolidation
Feb09 Mar09 Apr09 May09 Jun09 Jul09 Aug09
EV/EBITDA 5.27x 5.32x 5.76x 5.51x 5.24x 5.56x 5.67x
Drive future growth
EV/S 0.55x 0.56x 0.60x 0.61x 0.63x 0.68x 0.68x
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Private Equity Data Points
400 billion in available ca ital
% of deals 2007 36%
2008 6%
2009 19%
Data su ests PE deal volumes have bottomed
Technology remains area of focus for PE community
See more PE activity in emerging markets in the next
year Skype - $2 billion for majority stake
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Market and Valuation Summary
valuations
Transaction volumes slowed typical August
Private equity putting dollars to work
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Private Equity Panel
Greg S. Goldfarb, Principal, Summit PartnersGreg joined the Palo Alto office of Summit Partners in 2002 and focuses on growth equitynves men s an recap a za ons n oo s rappe , pro a e grow compan es. s oardirectorships and investments include IntelliChem, LiveOffice, ProClarity Corporation, The
Mutual Fund Store, Tiny Prints, and Web Reservations International Limited. Previously, Gregwas Director of the Innovation Lab at Starwood Hotels & Resorts Worldwide, responsible fordeveloping new technology-based businesses for Starwood. He is a graduate of Harvard
.
Matthew Picciano, Alpine InvestorsMatthew joined Alpine Investors in 2007 from The University of Cincinnati where hegraduated cum laude with a Bachelor of Business Administration in Finance and RealEstate. Matthews previous work experience includes an internship in capital management atThe Kroger Co. He also worked as a real estate analyst intern in The Kroger Co.s AtlantaDivision and as a mutual fund accountant intern at Integrated Investment Services. Since
joining Alpine, Matthew has spent most of his time in the software sector including sourcingand helping close the WebEquity Solutions transaction.
Alex Rolfe, Alpine InvestorsAlex Rolfe joined Alpine in 2008. Previously, Mr. Rolfe worked at Golden Gate Capital, a privateequity firm in San Francisco, where he completed transactions in technology, retail, andhealthcare. Prior to Golden Gate, Mr. Rolfe was a strategy consultant with Bain & Company
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where he worked with private equity as well as corporate clients. Mr. Rolfe holds a BA fromDartmouth College where he graduated Phi Beta Kappa, and an MBA from Stanford University'sGraduate School of Business where he was an Arjay Miller Scholar.
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Summit Partners at a Glance
Summit Partners is a private equity and venture capital firm. We workwith owners and mana ement teams to maximize lon -term value.
Overview
Founded in 1984
Investment profile
History of profitable growth
Raised more than $11 billion in capital
Offices in Boston, Palo Alto and London
More than 90 investment professionals
Mana in directors avera e 14 ears at Summit
Strong leadership team
Proven business model
Minimal previous outside capital
In a market with rowth otential
Broad industry and geographic coverage
Minority or majority interest
Usually lead and often sole investor
Investment options for capital
$5 million to more than $500 million per company inequity, with the ability to invest more than $800 million
nternat ona nst tut ona nvestor ase
More than 300 portfolio companies
Nearly 125 public offerings
More than 115 mergers or sales
in combined equity and subordinated debt
Uses of capital
Growth equity
Recapitalizations
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Management buyouts
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Alpine Investors is a private equity firm focused on making investments in domestic
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Funds under Management: $250m across three funds (recently had a first close on Fund IV)
Industries of Interest: i) Software ii) Business Services, iii) Education and iv) Gaming
Target Size: $2-$10m of EBITDA; $5 50m of revenue
Flexible Deal Structures:
Majority buy-outs or minority growth equity investments
We can back current management or bring in our own industry specific Executive in the event management is
lookin to retire transition out or wants to brin on more ex ertise
Value-add Investment Partner: We take an active role in our portfolio companies including: i)
strategic planning, ii) key hiring, iii) add-ons (sourcing and transaction) and iv) other operational
projects
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Example Portfolio Companies:
SaaS Loan Origination Provider High-end Online Lighting Retailer Turn-key ATM operator Online Continuing Education Provider
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Upcoming Corum Events
September 15: Pittsburgh -- MB October 8: Washington DC -- MB
September 17: Chicago -- MB
September 22: Reading, U.K. -- MB
October 13: Scotland -- MB
October 13: Austin -- SUSO
September 23: Salt Lake City -- MB
September 24: Denver -- MB
October 14: Ireland -- MB
October 20: Stockholm -- MB/SUSO
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October 6: Boston -- MB
October 8: L on -- MB
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October 23: Munich -- MB
October 27: Frankfurt -- MB
Mer e Briefin MB
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Selling Up Selling Out (SUSO)
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Contact Information
Corum Group Ltd.
Bruce Milne, CEO
Ryan Blakely, VP Researchryan corumgroup.com
10500 NE 8th Street, Suite 1500
Bellevue, WA 98004
Corum Group International S..r.l.
Beim Paradeplatz
+1 425-455-8281
Basteiplatz 78001 ZrichSwitzerland
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www.corumgroup.com