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Bellevue Boston Houston London Mexico City Munich Oslo Paris Philadelphia Phoenix Portland Santa Clara Toronto Zurich
www.corumgroup.com
Software M&A YearSoftware M&A Year--end Review andend Review and
Forecast for 2008Forecast for 2008January 29, 2008
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Corum Group Presentation 2
Middle Market Software M&A Specialists
M&A specialists since 1985
Software and IT experts mostly former CEOs
Dominant North American and European presence
200+ transactions completed
$6 billion in wealth created
58% cross-border transactions
Host of Selling Up Selling Outconferences
Sponsor of World Financial Symposiums conferences
Publisher of industry-leading M&A research
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Corum Group Presentation 3
Broad Exposure to Software M&A
Corums information is drawn from
Global M&A engagements Research in the U.S. and Europe
Buyer / client feedback
Education and activities
The last 90 days
Selling Up Selling Out conference series:Boston, Houston, Philadelphia, Toronto, Ottawa, Helsinki, Prague, London, Santa Clara
Merge BriefingBuenos Aires, Montevideo, Santiago, Oslo, Paris
Software Business Conference Santa Clara
Banff Venture Forum Banff, Alberta
Security CEO Roundtable with Milestone Group
World Financial Symposiums October 30, London
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Corum Group Presentation 4
Agenda
1Market Insights
2International Activity & Valuations
3Sector Analysis
4Discussion
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Corum Group Presentation 5
Headlines Tell the Story
Can M&As Best Times Get Better?Wall Street Journal, January 2007
Money is Everywhere But for How Long?Wall Street Journal, January 2007
Stock Surge + Bond Boom = M&A MagicWall Street Journal, April 2007
As Deal Barriers Fall, Takeover Bids MultiplyWall Street Journal, May 2007
M&A The Best Investment Game in TownMoneyextra.com UK, May 2007
Market Pressures Test Resilience of Buyout BoomWall Street Journal, June 2007
Dry-Up in Debt Wont Deter Tech DealsBarrons, September 2007
Dollar Declines on its RivalsWall Street Journal, September 2007
Time to Celebrate; 2007 Breaks M&A RecordWall Street Journal, October 2007
M&A Seen on the Brink After Record 2007Reuters, December 2007
Tech Cos Seen Going M&A Route, Not IPO in2008
Reuters, December 2007
IT Spending Growth Expected to Slow in 08
InformationWeek, December, 2007
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Corum Group Presentation 6
Economic Climate Weakens
Credit crunch tip of the iceberg?
Energy prices drag on economy
Consumer spending down
Corporate earnings down
Recession odds increase
More sellers
Corum Software Peer Group valuations down
But IT sector still strong
In spite of problems, M&A activity for 2008 may exceed 2007
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Corum Group Presentation 7
ACG/Thomson Dealmakers SurveyYear-end 2007
Dealmakers optimistic, but less bullish than six months ago
Expect fewer buyouts in next six months and more distressed sales
Increased likelihood of doing a cross-border deal
Credit issues will be a factor, but private equity to remain viable
Greater balance of buyers and sellers predicted
Optimism that debt markets will improve in 08
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Corum Group Presentation 8
Public Markets Reaching New Heights, then Oops
Dow Jones NASDAQ AIM S&P
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Corum Group Presentation 9
M&A is the Primary Source of Liquidity
In Dollar Volume U.S. dollar volume all industries
Source: Dealogic, IPO Central
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Corum Group Presentation 10
Current M&A Market
Broad Market
2007 M&A up 22% to $4.7 trillionworldwide (all industries)
Europe outpaced U.S. in dealvolume for first time in 5 years
2007 finished strong, although dealvolume and deal size dipped in thesecond half of the year
Technology Market
High tech deals for 2007 totaled $268 billion
Private equity deal volume fell 65%, whileportfolio company activity increased
Strategic buyers remain very active
Consolidation continues across mostsectors
Companies of all sizes continue to beaggressive buyers
Global buyer community expanding Europe, Asia
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Corum Group Presentation 11
Private Equity Credit Impact
Deal volumes by PE down dramatically from 1H07
Funding issues slow deal closings
Uncommitted funds still high $200+ Billion
Pressure to invest strong
Many PE have broad technology portfolios to build on leading to PE-backed
strategic acquisitions by portfolio companies
Sovereign wealth role in supporting large tech investors and banks
Most tech lenders not impacted by mortgage mess
Even with the slowdown, 2008 is poised for another stellar year.
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Corum Group Presentation 12
Strategic Buyers Still Very Active
Fill void left by private equity
Not impacted by credit
Strong cash reserves
Confident in stock market outlook
Actively looking for strategic investments
Business as usual
Strength of non-U.S. buyers (dollar devaluation / public multiples)
Converging markets / new models spur M&A
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Corum Group Presentation 13
Buyer Activity High
Current Examples
Sector Interested Parties
Wireless 14Compliance 13Enterprise Infrastructure 12Storage 12Supply Chain 12Visualization 11
Interested parties range from billion dollar household names to
companies never heard of
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Corum Group Presentation 14
Interest Translating into Deals
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Corum Group Presentation 15
Agenda
1Market Insights
2International Activity & Valuations
3Sector Analysis
4Discussion
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Corum Group Presentation 16
Global M&A Activity
Cross-border transaction
levels remain strong
Cross-border M&A activity
contributed to 47% of the
announced deals for 2007
Europe and Asia both set
records for deal volume in
2007
U.S. sellers continue to look overseas for buyers
Weak dollar attracting non-U.S. buyers
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Corum Group Presentation 17
International Scope
An increasing number of buyers are not in your backyard
Emerging countries remain active buyers
Need to look at international companies as both competitors and potential acquirers
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Corum Group Presentation 18
Corum Transactions 2007Provider of paymentprocessing software andservice
Purepay U.S.Creditron Canada
Leading MRP and processautomation vendor for theglass industry.
Glaston FinlandAlbat+ Wirsam Germany
Leading provider of event-driven business applicationautomation and batchintegration technologies
UC4 Austria backed byCarlyle U.K.AppWorx U.S.
Developer of 3D digital
designs in the building, plantand marine markets
Autodesk U.S.NavisWorks U.K.
Provider of estimatingand earth measuringsoftware for contractors
Maxwell U.S.Quest U.S.
Value-added distributor of voice,data and converged communicationssolutions
Datatec South Africaon behalf of Westcon U.S.
CRANE U.K.
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Corum Group Presentation 19
Corum Transactions 2007
Electronic invoicing andlegal spend managementsolutions
DataCert U.S.CorpraSoft U.S.
IT services providerto government andcommercial organizations
TechTeam U.S.RL Phillips U.S.
Networking and lobby
services for gamepublishers &developers
Activision U.S.DemonWare Ireland
Human capital managementsolutions
StepStone NorwayExecuTRACK Germany
HR information systems formiddle market enterprises
BPO U.S.HR Microsystems U.S.
Provider of applicationssupport maintenanceservices (ASM)
Sierra Systems CanadaRIS Canada
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Corum Group Presentation 20
International Private Equity
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Corum Group Presentation 21
International Strategic Buyers
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Corum Group Presentation 22
International Buyers Remain Active
Need to Look Internationally
International Buyer U.S. Seller
Vivendi Activision
Nokia Navteq, Enpocket, Avvenu
Grisoft Exploit Prevention Labs
nCipher NeoScale SystemsPhilips Visicu
Cognos Applix, Celequest
Wipro Infocrossing
Trend Micro Provilla
Fast Search & Transfer RetrievalWare, AgentArtsSAP Yasu Technologies, OutlookSoft,
Pilot Software
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Corum Group Presentation 23
Global Marketplace
Almost 60% of Corums recent transactions are cross-border
A trend which is holding steady and one seen throughout the industry
Cross-border
58%
Intra-country
42%
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Corum Group Presentation 24
Looking Back Valuation Multiples
M&A Transaction Multiples Software Industry
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Corum Group Presentation 25
Public Valuation MultiplesSector Q4:06 Q1:07 Q2:07 Q3:07 Q4:07 Y on Y
Digital Media 2.59 x 1.92 x 2.07 x 2.12 x 1.61 x
Enterprise Applications 4.43 x 3.87 x 3.98 x 4.14 x 3.67 x
Business Intelligence 3.03 x 3.13 x 3.25 x 2.98 x 4.12 x
Enterprise Content Management 2.15 x 2.07 x 2.37 x 2.40 x 2.08 x
Supply Chain Management 1.89 x 2.10 x 2.29 x 2.23 x 2.25 x
Enterprise Infrastructure 2.77 x 2.86 x 2.88 x 2.51 x 3.04 x
Legacy Extension / SOA 1.70 x 2.18 x 2.56 x 2.47 x 2.42 x
Software Development Tools 1.71 x 2.00 x 2.22 x 1.66 x 1.83 x
Storage 2.98 x 3.68 x 3.29 x 2.68 x 2.49 x
Gaming 2.47 x 2.54 x 2.24 x 2.20 x 1.75 x
Internet Infrastructure 3.63 x 3.83 x 3.91 x 4.60 x 4.04x
Internet Pure Play 3.78 x 3.41 x 3.23 x 2.99 x 2.93 x
IT Services 0.80 x 0.80 x 0.89 x 0.96 x 0.83 x
Security 3.36 x 3.15 x 3.69 x 3.43 x 3.62x
Wireless 2.34 x 1.46 x 1.75 x 1.55 x 0.99x
Vert Market - Energy & Environment N/A N/A N/A 4.94 x 4.46 x
Vert Market - Engineering 3.06 x 3.40 x 3.29 x 3.73 x 2.73x
Vert Market - Financial Services 3.17 x 3.28 x 3.12 x 3.05 x 2.73 x
Vert Market - Government 1.13 x 1.16 x 1.15 x 1.21 x 1.24 x
Vert Market - Healthcare 2.36 x 2.28 x 2.53 x 3.16 x 2.62 x
Vert Market - Other 2.02 x 1.19 x 2.71 x 2.81 x 2.14 x
Vert Market - Telecom 2.10 x 1.33 x 1.52 x 1.50 x 1.44 x
TTM EV/S Multiples
N/A
Decreased
Increased
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Corum Group Presentation 26
Sector Consolidation & Evolution
Legacy Extension / EAI Past and Present
PastFocus: Legacy extension, applicationintegration, mainframe connectivity
Players:
Attachmate
BEA
Candle Iona
Jacada
NEON
NetManage
Seagull Software
SeeBeyond Tarantella
Tibco
Vitra
WRQ
EV/S Multiple Q2:05 1.40 x
Present:Focus: Software Oriented Architecture,Web services
Players:
Attachmate
BEA
Candle Iona
Jacada
NEON
NetManage
RocketSoftware
Seagull Software
SeeBeyond
Software AG
Tarantella
Tibco
Vitra
Webmethods
WRQ
EV/S Multiple Q4:07 2.42 x
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Corum Group Presentation 27
Agenda
1Market Insights
2International Activity & Valuations
3Sector Analysis
4Discussion
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Corum Group Presentation 28
Software and IT M&A Activity
Number of Transactions by Sector
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Corum Group Presentation 30
Sectors to Watch Trending Down
Deals are happening in these sectors, but slowing
Buyers are digesting previous acquisitions
Sectors are maturing
Decrease in the number of material acquisition targets
Broaden exposure and sector presence
Q
1:05
Q
2:05
Q
3:05
Q
4:05
Q
1:06
Q
2:06
Q
3:06
Q
4:06
Q
1:07
Q
2:07
Q
3:07
Q
4:07
Enterprise Applications
Storage
Gaming
Internet InfrastructureIT Services
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Corum Group Presentation 31
Top Buyers 2007
Strategic BuyersActive Private Equity FirmsCompany # of Deals
Google 12
Microsoft 11
Oracle 10
Cisco 9
IBM 9
HP 7
Nuance 7
Sungard 7
Accenture 6
Dell 6
SAP 6
Yahoo! 6
AOL 5
Autodesk 5
BT Group 5
CDC Software 5
PE Firm (partial list)
Kohlberg Kravis Roberts & Co.
Carlyle Group
Francisco Partners
Platinum Equity
Thoma Cressy Bravo
Golden Gate Capital
Silver Lake Partners
Apax Partners
170+ buyers with 2-4 transactions
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Corum Group Presentation 32
Buyer Profile
2007 Trends
Active international buyer communities U.K., France, Germany and the Nordics
Active North American buyer communities
California, New York, Massachusetts, Ontario
Increased presence of buyers from secondary markets
Approx 63% of the deals tracked were all cash
Remaining 37% were a mix of cash, stock, debt and earnout
Strategic buyers more active PE-backed portfolio companies more active
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Corum Group Presentation 33
Transaction Highlights Largest
Observations
Appetite for mega deals has slowed
Convergence and consolidation driving forces
Stronger presence from the strategic community
Prevalent international mix
Buyer Seller Value (Millions $) Sector
Vivendi Activision $18,900.00 Gaming
Nokia NAVTEQ Corporation $8,100.00 Wireless
SAP AG Business Objects $6,800.00 Business Intelligence
IBM Cognos Incorporated $5,000.00 Business Intelligence
Kohlberg KravisRoberts
NorthGate InformationSolutions plc
$1,190.00 Enterprise Applications
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Corum Group Presentation 34
Transaction Highlights Private Equity
Observations
Current debt market has slowed pure acquisitions PE portfolios picking up the slack
Fundraising at record highs
Strong focus on technology
PE firms looking at smaller opportunities, which may not require leverage
Buyer Seller Value (Millions $) Sector
Kohlberg Kravis
Roberts
NorthGate Information
Solutions plc
$1,190.00 Enterprise Applications
Platinum Equity, LLC Covad Communications $304.00 Telecom
Silver Lake Partners(Sumeru)
Mobile Messenger Undisclosed Wireless
Accel-KKR LLC iTradeNetwork Undisclosed Vertical Market
Genstar Capital TravelClick Undisclosed Vertical Market
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Corum Group Presentation 35
Transaction Highlights Strategic
Observations
Deals have to make strategic sense Willing to pay higher valuations, for the right deal
Product expansion through complementary technology acquisitions
Market convergence
Buyer Seller Value (Millions $) Sector
Macrovision Gemstar-TV Guide
International
$2,800.00 Digital Media
McAfee, Inc. SafeBoot $350.00 Security
Hypercom Thales SA $120.00 Financial Services
Kronos, Inc. Deploy Solutions, Inc. Undisclosed Enterprise Applications
Dell Inc. Everdream Corporation Undisclosed Enterprise Infrastructure
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Corum Group Presentation 36
Transaction Highlights International
Observations
Global expansion and local domain expertise
Desire to enter U.S. markets
Sector consolidation
Buyer Seller Value (Millions $) Sector
Dolby Laboratories,
Inc.
Coding Technologies
GmbH
$250.00 Wireless/Internet
Parametric TechnologyCorporation
CoCreate Software $250.00 Engineering
Software AG Jacada $26.00 Legacy Modernization
Ness Technologies FMC Consulting andInformatics
Undisclosed IT Services
Securitas Systems Installerende Partners Undisclosed Security
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Corum Group Presentation 39
Agenda
1Market Insights
2International Activity & Valuations
3Sector Analysis
4Discussion
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