market turbulence - june software/it m&a flash report

8/8/2019 Market Turbulence - June Software/IT M&A Flash Report

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M&A Flash Re ortM&A Flash Re ort June 2009June 2009Software and IT Industry Market Update

Market Turbulence

Thursday, June 4, 2009

www.corumgroup.com

10:00 am PT


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Mark ReedExecutive Vice President

Bruce MilneCEO & Chairman

Corum 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

Ryan Blakely

, ,

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.

Corum Group Presentation 2

>> For todays presentation or more information, contact Jessica Eastman

([email protected], +1 425-455-8281)

,Corum Group Ltd.


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Relay For Life



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Agenda

Overview of current market

Headlines

May trend IPOs

Cisco field update

Market and valuation analysis

Report from WFS & conference profiles

Closing comments - Q&A



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Headlines

. .

stability

. .

Korea completes nuclear test

GM files for bankruptcy



6/46

Currencies

Euro rises to 7 month high

Yen drops to 7 month low

Rupee climbs to 7 months high



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Consumer Confidence up!

. .

U.K. consumer confidence at 11 month high

Europe confidence at 6 month high

French consumer confidence hits 13 month high



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Commodities Up!

Oil trades near 7 month high

Silver rises most since 87

Copper soaring



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Stock Markets Up!

. .

Brazil stocks jump to 8 month high

India stocks rise best month in 17 years

China stocks rise to 10 month high



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Business Conditions U.S.?

Home refinancing in U.S. tumbles as rate window closes

U.S. automakers fall 35%

U.S housing hasnt found bottom yet

Schiller says U.S. confidence a puzzle



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Business Conditions International?

Europe price outlook slumps

Europe May retail sales fall

German, Italy economies shrank at record pace

Japan Companies Cut Spending by Record; Profits Slump



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Equity Concerns?

Russian stocks a leap of faith

U.S. stock values outpace earnings



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Other Concerns / Opportunities



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Valuations Up!

Company Stock Price 03/03/2009 Stock Price 05/06/2009 % Change

Sun $4.54

$9.11

100.66%

Nokia $9.25 $15.18 64.11% . . .

Cisco $14.50 $19.61 35.24%

Symantec $13.15 $17.59 33.76%

HP $28.30 $36.33 28.37%Oracle $15.06 $19.06 26.56%

EMC $10.13 $12.78 26.16%

Google $326.67 $403.47 23.51%

Microsoft $16.03

$19.79

23.46%

IBM $88.01 $104.62 18.87%SAP $32.28 $38.23 18.43%


Yahoo $12.58 $14.85 18.04%


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Cash Up!

Company Year Ago Cash Current Period Cash

SAP $3,151 n/a

, ,

Microsoft $10,339 $23,900

Oracle $8,409 $11,290

Nokia $3,130 n/aGoogle $6,081 $17,780

Apple $9,352 $25,010IBM $10,786 $12,300

, ,

Sun $2,363 $2,700

Cisco $5,191 $33,550

HP $11,591 $12,920


Symantec $1,890 $1,990


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IPOs Volume - Last 18 Months

11

12NumberofIPOs

NumberofTechnology IPOs

5

2

3

2

3

1

27% 17% 20% 0%50% 50%

1

0

1

Q1:08 Q2:08 Q3:08 Q4:08 Q1:09 Q2:09(May)



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IPO Encouraging Signs

Offering Date: April 2

Offering Date: May 20

Network Management


Internet restaurant reservation site


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IPO Rumors



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Field Update Cisco Review

Dougan MilneResearch Analyst Intl,Switzerland



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Buyer Profile: Cisco

Current Vitals:

evenue: 37.95 on EBITDA: $10 billion Cash: $33.5 billion Market Ca : 112.5 billion Broad product portfolio

a s: 137 acquisitions to date Averaging almost a deal a month in previous years S ent nearl 20B on M&A transactions since 2002


Transaction range from market convergence to vertical expansion


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Transaction History

Announced Target Total Deal Amount

20090409 TidalSoftwareInc. $105,000,000

200903

19 Pure

Digital

Technologies

Inc. $590,000,000

20090127 RichardsZetaBuildingIntelligenceInc

20080919 Jabber,Inc.

20080827 PostPath,Inc. $215,000,000

20080723 PureNetworks $120,000,000

2008

06

10 DiviTech

A/S . , ,

20071023 NaviniNetworks,Inc. $330,000,000

20070927 LatigentLLC.

20070918 Cognio,Inc.

20070723 GlooLabs

20070521 BroadWareTechnologies,Inc.

20070328 SpansLogicInc

20070315 WebExCommunications $3,200,000,000


20070313 NeoPathNetworks,Inc. $60,000,000


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Transaction History


20070305 UtahStreetNetworks,Inc

20070226 Qovia,Inc.

20070221 Reactivity,Inc. $135,000,000

ve cross nc

20070104 IronPortSystems $830,000,000

20061215 Tivella,Inc

20061113 GreenfieldNetworks,Inc

20061025 OrativeCorporation $31,000,000

20061010 AshleyLaurent(selectedassets)

20060822 ArroyoVideoSolutions,Inc $92,000,000

, ,

20060706 MeetinghouseDataInc. $43,700,000

20060609 Metreos $28,000,000

20060609 Audium $19,800,000


20060307 SyPixxNetworks,Inc. $51,000,000

20051129 Cybertrust $14,000,000


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Transaction History


20051121 DigitalFairway $15,250,000

200511

18 Scientific

Atlanta,

Inc. $6,900,000,000

20050930 NemoSystems,Inc. $12,500,000

20050726 SheerNetworks $97,000,000

20050722 KiSSTechnologyA/S $61,000,000

20050627 NetSiftInc. $30,000,000

20050614 M.I.SecureCorporation $1,000,000

, . , ,

20050426 SipuraTechnology,Inc. $68,000,000

20050414 TopspinCommunicationsInc. $250,000,000

20050222 Vihana,Inc. $30,000,000

. , ,

20041220 ProtegoNetworksInc. $65,000,000

20041209 BCNSystemsInc. $34,000,000

20041117 JahiNetworks $16,000,000


20041021 Per igoInc. 74,000,000

20040913 dynamicSoft,Inc. $55,000,000


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Transaction History


20040909 NetSolveInc. $128,500,000

200408

24 P

Cube

Inc. $200,000,000

20040708 ParcTechnologiesLtd. $9,000,000

c ona ec no og es nc. , ,

20040616 ProcketNetworks $89,000,000

20040322 RiverheadNetworks $39,000,000

200403

12 Twingo

Systems $5,000,000

20031112 LatitudeCommunications,Inc. $80,000,000

20030320 LinksysGroupInc. $500,000,000

20030319 SignalWorks,Inc. $13,500,000

20030127 Okena,Inc. $154,000,000

200210

22 Psionic

Software,

Inc. $12,000,000

20020820 AndiamoSystems,Inc. $750,000,000

20020725 AYRNetworks,Inc. $113,000,000


ammer ea e wor s, nc. , ,

20020501 NavarroNetworks $85,000,000


25/46

Acquisition Strategies

Joined Dow on Monday

IBM, Microsoft, HP

Previous acquisition strategy focused on Enterprise Communications

e x, os a , a er - o ware an erv ces

New strategy focuses on Unified Computing and Application Management

Tidal Software - Yes, more Software and Services

Moving to the Cloud

Directly competing with HP and IBM



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Valuation & Transaction Update

Ryan BlakelyVice President, ResearchCorum Group Ltd.

and technology space. With over ten years experience in the software M&A environment, Ryan has an intimate

understanding of the software industry as a whole, especially as it relates to mergers and acquisitions. As the Vice

President of Research, Ryan directs Corums research group in both North America and Europe, and has played a

rec ro e n eve op ng uyer re a ons ps ur ng s enure w orum. e a so s a ma or con r u or o orum s

research reports. Ryan graduated from Washington State University with a B.A. in Business Management, with a

focus on Entrepreneurial Studies.



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Public Markets

Nasdaq S&PTech Dow

110.00

120.00

80.00

90.00

100.00

60.00

70.00

40.00

50.00

Au 08 Se 08 Oct08 Nov08 Dec08 Jan09 Feb09 Mar09 A r09 Ma 09



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M&A Activity

Number of Software and IT M&A Transactions

May

0 50 100 150 200 250 300 350 400

2009 2008 2007 2006 2005 2004



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Corum Index M&A Statistics

May-08 May-09

# of Transactions

# of Mega DealsLargest Deal

204

5$14,500

232

4$8,500

Median Seller Size

# VC backed Exits

% Terms Undisclosed

$20

25

63%

$37

31

72%All Cash (announced)

% Targets were Public

% Public Buyers

16%

50%

19%

45%

Public markets, IPOs, PE all drivers

Private buyers remain active

$ values in millions


Cash still dominant form of consideration

International expansion


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Horizontal Application Software Market

Public Valuations

HorizontalApplication

Software

Q2:08 Q3:08 Q4:08 Q1:09 Apr09 May09

EV/EBITDA 10.12x 11.01x 7.69x 6.82x 9.23x 9.39x


EV/S 1.81x 1.71x 1.04x 1.12x 1.16x 1.35x


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Horizontal Application Software Market

Spotlight:Target Buyer

Sector: Content ManagementTarget: VignetteBuyer: Open TextDate: Ma 2009

o e e n a o

Vignette Corp OpenText

Highdeal SA SAP Transaction Value: $310 millionStructure: Cash & stockTransaction Multiple: 1.3x

Search Intelligence Domain7

Comments: Market leader bulking up Sector consolidation


Market expansion


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Vertical Application Software Market

Public Valuations

Vertical

Software

Q2:08 Q3:08 Q4:08 Q1:09 Apr09 May

09

EV/EBITDA 11.07x 9.37x 6.92x 6.53x 7.26x 7.99x

EV/S 2.19x 1.71x 1.26x 1.14x 1.31x 1.40x



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Vertical Application Software Market


Sector: Financial ServicesTarget: Access Data CorpBuyer: Broadridge FinancialDate: Ma 2009

ccess a a orp roa r geFinancial Solutions

Tisya SA Ultra ElectronicsTransaction Value: $45 millionStructure: Cash

Techsia Schlumberger

Informance CDC Software

ommen s: Buyer a BPO All cash Sector la



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Consumer Application Software Market

Public Valuations

Application

Software

Q2:08 Q3:08 Q4:08 Q1:09 Apr09 May09

EV/EBITDA 10.99x 11.45x 5.41x 2.74x 3.81x 2.83x


EV/S 1.70x 0.99x 0.61x 0.64x 0.69x 0.50x


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Consumer Application Software Market


Sector: GamingTarget: Big Huge GamesBuyer: 38 Studios LLCDate: Ma 2009

way ames arner ros

Big Huge Games 38 Studios LLC

ProTech K Alliance Transaction Value: Undisclosed

Comments:

Diagnostics

ves ure Private buyer Buyer expanding presence



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Infrastructure Market

Public Valuations

Infrastructure

Software

Q2:08 Q3:08 Q4:08 Q1:09 Apr09 May09

EV/EBITDA 11.39x 8.98x 6.47x 6.98x 8.46x 8.29x


EV S 1.98x 1.67x 1.47x 1.43x 1.55x 1.52x


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Infrastructure Market


Sector: StorageTarget: Data DomainBuyer: ( )

Date: Ma 2009

on gureso

O3SIS AG Gemalto NV

Data Domain ( ) Transaction Value Range*:$1.75B to $2.10B millionStructure: Cash and stock

Cyveillance QinetiQ

ransac on u p e: . x o7.2x

Comments:


Auction Strategic acquisitions worth

more than cash* Includes Data Domains cash


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Internet Market

Public Valuations

Internet

Q2:08 Q3:08 Q4:08 Q1:09 Apr09 May09

EV/EBITDA 11.94x 9.60x 8.11x 7.54x 9.80x 11.78x


EV/S 2.71x 2.34x 1.10x 1.60x 2.11x 2.26x


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Internet Market


Sector: AdvertisingTarget: KiptronicBuyer: Limelight Networks

Date: Ma 2009

er gn ecure or s

Avinity Systems

BV

Active Video

Networks Transaction Value: $10 million est.Structure: Cash & stock

Kiptronic Limelight Networks

ommen s: Hot sector Seller monetizes complex

roblem



40/46

IT Services Market

Public Valuations

ITServices

Q2:08 Q3:08 Q4:08 Q1:09 Apr09 May09

EV/EBITDA 6.92x 6.50x 5.36x 5.32x 5.76x 5.51x


EV/S 0.89x 0.80x 0.70x 0.56x 0.60x 0.61x


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IT Services Market


Sector: ServiesTarget: Shanghai CovicsBuyer: Atos Origin

Date: Ma 2009

ang a ov cs os r g n

SBO Medasys

Repton plc Kelway Transaction Value: Undisclosed

Comments:

Metrolico SA T-Systems

xpans on eas SAP Consulting



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Nat BurgessExecutive Vice PresidentCorum Group Ltd.

ChairmanWorld Financial Symposiums

.

the U.S. Securities and Exchange Commission, Nat helped identify and build cases against securities fraud schemes. With the

Strategic Development Division of Morgan Stanley's M&A group, Nat worked on cross-border acquisitions of U.S. and European

companies by Japanese firms, and on financings by large Japanese public companies. Nat moved to Morgan Stanley's Tokyo

office, where he reported directly to the President of Morgan Stanley, Japan Ltd. and focused exclusively on cross-border M&A.

After Morgan Stanley, Nat co-founded Postcard Software, a creator of advertiser-driven bilingual (English and Japanese) Internet

content. At Activision, Nat lead the company's on-line business development.


Nat earned an undergraduate degree in Japanese literature from Yale College and a law degree from UCLA. While in law school,

Nat wrote articles for the International Forum at Yale, Tokyo Journal. Nat is frequently quoted in industry publications, a highly

sought speaker at industry conferences, and Chairman of the World Financial Symposiums.


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UPDATE

May 14, San Jose email [email protected]

Peter Coffee, Paul Kwan, Roman Ormandy, Marc Chiang, Brenon Daly,sa es orce.com Morgan Stanley Microsoft Grant Thornton 451 Group


Vivian Wu,

TA Associates

Matt Picciano,

Alpine Investors

Kevin Werner,

VeriSignDale Quick, IdentipriseDon Helt, HRMS


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Corum Conferences

The definitive one-day executive conference on how to prepare,position, value, structure and negotiate the sale or merger of a.

Merge BriefingA 90-minute M&A market update with a brief overview of theelements of a sale or merger.



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Conference Schedule

June

4 Web M&A Flash Report11 San Francisco Selling Up Selling Out17 Web Merge Briefing - German18 Web Merge Briefing - Nordic23 Paris Selling Up Selling Out24 Los Angeles Merge Briefing

24 Salt Lake City Merge Briefing24 Salt Lake City Selling Up Selling Out25 Denver Merge Briefing25 Denver Selling Up Selling Out

>> Visit www.corumgroup.com to register



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Contact Information

Corum Group Ltd.

Bruce Milne, CEO and Chairman

Ryan Blakely, VP Researchryan corumgroup.com

10500 NE 8th Street, Suite 1500Bellevue, WA 98004

Corum Group International S..r.l.

Dou an Milne, International Anal st

+1 425-455-8281

[email protected]

Beim ParadeplatzBasteiplatz 78001 Zrich

Switzerland

+41 44 251 82 65


www.corumgroup.com

market turbulence - june software/it m&a flash report

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