m&a activity in the nordic software sector · 2017. 3. 17. · 2014 2015 2016 quarterly...

M&A ACTIVITY IN THE NORDIC SOFTWARE SECTOR

Quarterly report

Q4 2016

19 TRANSACTIONS IDENTIFIED IN Q4/16 (17 IN Q4/15) – TOTAL OF 82 TRANSACTIONS IN 2016 (77 IN 2015)

n There were 19 transactions in the software space in the Nordics in Q4/16 vs. 18 in theprevious quarter. Thus, we met our expectation of an increase qtr/qtr, although only by 1transaction. As in the previous two years, we believe Q1 will be slightly higher.

n Although we did issue a caveat regarding the the US as a buying territory in the event Mr.Trump won the election*, we actually do not believe that this accounts for the significantdrop in US buyers in Q4. The observation that Nordic buyers are now in majority isinteresting, but should not be expected to be permanent.

n The OMX Nordic 40 index ended the year on a sad note, and the index is now back to thelevel of January 2014. The good news is that this is not impacting the softwarecompanies. Our analysis shows that the drop in Q4 is mainly due to Ericsson and Hexagon,who both had a dramatic drop during Q4, although for different reasons. In general,Ericssons impact on the tech index during the 3-year period is a big contributor to thepoor performance of the index.

n Denmark was by far the most active country in Q4 with 8 transactions, while Norway andSweden were both at 4. Finland had 3 transactions in the quarter. In Q3/16, thegeographic distribution of the deals was very even with Sweden and Finland at 5 dealseach, and Denmark and Norway both at 4.

n During the quarter, Clairfield in Denmark (Nordic M&A) advised the owners of Keepfocusin the sale to private investors.

n As we predicted in the last newsletter, the PE add-on acquisitions returned with a total of6 transactions during the quarter. As a result, PE again outnumbered the industrials.

n CHANGE IN METHODOLOGY: To better reflect the emergence of SaaS/cloud models asthe prominent platform for any modern software company, and given that many of theseare high growth companies, we have decided to stop comparing EBITDA multiples. Inaddition, we have revised the list of Nordic companies and divided the list of internationallisted companies into traditional and SaaS/cloud companies for the comparison of revenuemultiples. We apologize to those who are enamoured with earnings multiples…

n DISCOUNT GAP: As announced in our last edition, The EV/Revenue multiple gap betweenthe Nordic and Traditional International listed players is now at 13 %. The gap betweenTraditional International players and SaaS/cloud players is at 32 %, while the same gaptowards Nordic players is at a full 41 %. It should be noted that most of the listed Nordicplayers are traditional or hybrid players.

n Please do not hesitate to provide us with feedback on this report and interestingperspectives on the Nordic software players.

n We wish all of you a happy 2017!

QUARTERLY SOFTWARE REPORT – Q4 2016

EXECUTIVE SUMMARY

Source: MergerMarket, Factset and Steinvender

NASDAQ OMX TECHNOLOGY INDEX: Jan 14 – Dec 16

1,100

1,000

1,700

1,600

1,500

1,400

1,300

1,200

900Jan. 14 Jun. 14 Dec. 14

DEVELOPMENT IN NUMBER OF IDENTIFIED TRANSACTIONS

2125

21 2118 20 22

1721

241918

Q3 16Q2 16Q2 15Q1 15Q4 14 Q4 16Q3 14Q2 14Q1 14 Q1 16Q4 15Q3 15

Jun. 15

-0.1%

Dec. 15 Sep. 16 Dec. 16

* As far as we know, the results in this report have not been influenced by Russian hackers…

OVERVIEW OF Q4 2016 NORDIC SOFTWARE TRANSACTIONS

n Steinvender has identified 19 Nordic software transactions in Q4 2016

n Approximately 40% of the companies were acquired by industrials which isin line with the historical average

n Private equity add-on’s represented 1/3 of the deals which is the highestquarterly shares of transactions since we started recording in 2015. Weexpect this to continue to be a significant factor in Nordic software M&A.

n More than 40% of the targets were based in Denmark, whereas Norway,Sweden and Finland experienced more modest activity

n Nearly 60% of the companies are sold to entities in the Nordics, only 2companies sold to US / Canada

COMMENTS

Source: MergerMarket, Factset and Steinvender. Only included deals exceeding MergerMarket size criteria.

BREAKDOWN OF DEALS BY EXIT TYPE

BREAKDOWN OF DEALS BY TARGET’S COUNTRY BREAKDOWN OF DEALS BY ACQUIROR’S REGION

6PE - add-on

PE - platform

5

Industrial8

4

Finland

Sweden

Denmark

4

8

3

Norway

US / Canada

Nordics

2

4Rest of Europe

11

Rest of world

2


QUARTER-BY-QUARTER DEVELOPMENT IN NORDIC SOFTWARE TRANSACTIONS



BREAKDOWN OF DEALS BY TARGET’S COUNTRY

BREAKDOWN OF DEALS BY ACQUIROR’S REGION

45%

35%

20%

Q1 2015

67%

17%

17%

Q4 2016

42%

26%

32%

Q3 2016

72%

22%

6%

Q2 2015

58%

17%

25%

Q1 2016

29%

38%

33%

Q4 2015

65%

24%

12%

Q3 2015

64%

23%

14%

Q2 2016

IndustrialPE - platformPE - add-on

33%

24%

Q4 2015

12%

29%

24%

35%

Q3 2015

5%

27%

36%

32%

Q2 2015

25%

15%

40%

20%

Q1 2015

17%

24%

17%

33%

Q4 2016Q3 2016

28%

22%

22%

28%

Q2 2016

17%4%

38%

42%

Q1 2016

19% 16%

21%

42%

21%

33%

FinlandNorwayDenmarkSweden

55%

20%

20%6%17%

28%

50%

24%0%

Q4 2015

35%

0%

41%

Q3 2015

8%

11%

Q2 2016

22%

Q3 2016

6%

61%

21%

58%

14%

Q1 2016

46%

24%

57%

25%

5%

50%

32%

18%

Q2 2015

5%

Q1 2015

11%

Q4 2016

11%

21%

Nordics US / Canada Rest of Europe Rest of World

NUMBER OF TRANSACTIONS

18 20 2217

2124

18 19

Q4 2016Q3 2015 Q4 2015 Q3 2016Q1 2016 Q2 2016Q2 2015Q1 2015


ANNUAL DEVELOPMENT IN NORDIC SOFTWARE TRANSACTIONS



BREAKDOWN OF DEALS BY TARGET’S COUNTRY

BREAKDOWN OF DEALS BY ACQUIROR’S REGION

2016

51%

24%

25%

2015

60%

25%

16%

2014

67%

24%

9%

IndustrialPE - platformPE - add-on

2016

20%

18%

33%

30%

2015

3%14%

26%

30%

30%

2014

17%

23%

27%

30%

FinlandNorwayDenmarkSweden Iceland

2016

8%

23%

14%

54%

2015

3%

29%

49%

2014

6%

24%

30%

41%

19%

Rest of WorldRest of EuropeUS / CanadaNordics

NUMBER OF TRANSACTIONS

8877 80

201620152014


NOTABLE NORDIC SOFTWARE TRANSACTIONS ANNOUNCED DURING Q4 2016

TARGET ACQUIROR DEAL VALUE EV / SALES EV / EBITDA

N/A N/A N/A

N/A N/A N/A

€58m 3.3x 7.0x

€25m 5.4x 21.8x

€110m 3.7x N/A

€64m 8.5x N/A

N/A N/A N/A

N/A N/A N/A

N/A N/A N/A

Source: MergerMarket and Steinvender


(TV Business)

Private Investors

OBSERVED TRADING MULTIPLES- CLOUDBASED SOFTWARE CONTINUES TO TRADE AT A SIGNIFICANT PREMIUM

Source: Factset and Steinvender

MEDIAN EV / SALES (CURRENT FINANCIAL YEAR)

NORDICS

6,3x 5,9x4,7x 4,4x 4,3x 4,2x 3,8x 3,5x

2,5x2,9x3,0x

F-SecureCLXBaswareVitecSoftware

HMS NetworkCxenseHexagonMicro Systemation

TobiiSimCorp Comptel


8,7x 7,9x 7,7x6,4x 5,6x 4,7x 4,7x 4,7x 4,2x 4,1x 4,0x

SymantecSAP Sage Group Citrix SystemsOracleMicrosoftDassaultIntuitCheck PointAutodeskAdobe

10,4x8,8x 7,9x 7,7x 7,1x 6,9x 6,0x 5,5x 4,9x 4,1x 3,5x

LogMeInAtlassianGuideWireWorkdayServiceNowUltimate Software

PegaSystemsAthenaHealthJ2 GlobalCornerStonesalesforce.com

INTERNATIONAL – «TRADITIONAL SOFTWARE»

INTERNATIONAL – CLOUDBASED/SAAS

Median: 6.9x

Median: 4.7x

Median: 4.1x

SELECTED SOFTWARE TRANSACTION MULTIPLES – LAST 12 MONTHS

Source: Factset and Steinvender

8,5x

6,7x

5,4x

5,0x

5,0x

4,4x

4,3x

3,3x

2,4x

2,2x

2,0x

1,6x


Q4 2016 User interface software for car infotainment

Secure access and identity managementQ3 2016

Q4 2016 Software for planning and BIM collaboration tool

Q4 2016 Advanced analytics, machine learning and IOT

SaaS ERP Solutions

Q1 2016

Q2 2016

Q2 2016

Q2 2016

Q2 2016

Q3 2016

Q1 2016

Q1 2016

Design and management of public tenders (SaaS)

Narrowband mesh network solutions (IoT)

Software for financial services

Golden Brick Web browser software for mobile handsets

Software for EAM and ESM

Customer experience management software

Game development company

LIST OF IDENTIFIED NORDIC SOFTWARE TRANSACTIONS IN Q4 2016



# Target Target Country Bidder Bidder Country Date Exit type

1 Frontmatec Denmark SAIC Holding Denmark Oct PE - add-on

2 Qualisys Sweden Vatterleden Invest Sweden Oct PE - platform

3 UVdata Denmark KMD Denmark Oct PE - add-on

4 GolfBox Denmark MSL Solutions Limited Australia Nov Industrial

5 Dinero Regnskap Denmark Visma Norway Nov PE - add-on

6 KK Group Denmark Solix Group Sweden Nov PE - platform

7 Consolidated Financial Holdings Denmark Playtech Isle of Man Nov Industrial

8 Greenbird Integration Technology Norway Statkraft Ventures / ETF UK / Germany Nov PE - platform

9 KeepFocus Denmark Private Investors Denmark Des PE - platform

10 Opera Software (TV Business) Norway Moore Freres US Dec Industrial

11 dRofus Norway Nemetschek Germany Dec Industrial

12 Rightware Corporation Finland Thunder Software Tech. China Dec Industrial

13 Movenium Finland Visma Norway Dec PE - add-on

14 Sinch Sweden CLX Communications Sweden Dec Industrial

15 The Eye Tribe Denmark Facebook US Dec Industrial

16 eSmart Systems Norway Kongsberg Gruppen Norway Dec Industrial

17 ILAB Sweden Cambio Healthcare Systems Sweden Dec PE - add-on

18 ValueFrame Finland Visma Norway Dec PE - add-on

19 Greenbyte AB Sweden Korys Belgium Dec PE - platform

OUR NORDIC PARTNERS ENSURE LOCAL COVERAGE AND MARKET ACCESS

§ Established in 1997

§ Oslo location

§ 9 professionals

§ More than 125 transactions since inception


§ Copenhagen location

§ 6 professionals



§ Stockholm location

§ 12 professionals



§ Helsinki location

§ 12 professionals


~40Nordic

Professionals

+400Completed transactions

Most experienced team in the

Nordics

Nordic members of Clairfield International


A SELECTION OF RECENT CLAIRFIELD NORDIC SOFTWARE AND IT SERVICES TRANSACTIONS

Advisor to

on the divestment of Lean Systems to

2015

ERP Solutions

Advisor to

on the sale to

2014

Insurance Software

Advisor to

on the sale to

2014

ERP Solutions

Advisor to

on the sale of

2014

ERP Solutions

to

Advisor to

on the sale to

2015

Wearable technology

Advisor to

on the sale to

2015

Hosting

Advisor to

on the minority investment by

2015

SaaS

Advisor to

On the sale to

2015

Baggage handling automation

Advisor to

on the sale to

2015

BIM Software

Advisor to

on the sale to

2014

IT solutions to the chemicals industry

Advisor to

on the sale to

2015

SaaS

Advisor to

on the acquisition of

2015

Data collection software

Note: Clearfield International


Advisor to

on the sale to

2016

ERP Solutions

Advisor to

on the sale to

2016

Mobile payment

Advisor to

on the sale to

2016

ERP Solutions

Private Investors

IMPORTANT NOTICE

This presentation has been prepared by Steinvender AS (referred to below as “Steinvender”).

The information in this presentation has been obtained from public sources, and is to the best of Steinvender’s knowledge reliable and accurate at the time of issuing the document. The information in the presentation should not be considered to be complete without the addition of the oral information provided by Steinvender when giving the presentation.

The information should not be regarded as containing any warranties or representations, expressed or implied, as to the present or future legal or financial positions of any of the companies or entities included in this presentation.

Steinvender reserves the right to update or replace the contents of this presentation without informing the recipient. Recipients should conduct their own investigations and analysis of the business, data and properties described in this document.

This presentation does not constitute an offer to purchase shares or to invest in any of the companies or entities mentioned in the presentation, and should not be interpreted as such.

The contact persons at Clairfield are as follow:

Norway: Finland: Denmark: Sweden:Jarle Mørk Juha Raunio Anders W. Eriknauer Victor [email protected] [email protected] [email protected] [email protected]+47 99 23 79 39 +358 40 570 5260 +45 20 10 39 99 +46 70 694 4766

DISCLAIMER


m&a activity in the nordic software sector · 2017. 3. 17. · 2014 2015 2016 quarterly...

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