software and it industry market update - february m&a flash report

8/8/2019 Software and IT Industry Market Update - February 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 Februar 2010Februar 2010Software and IT Industry Market Update

Thursday, February 4th, 201010:00 am PT

www.corumgroup.com


2/29

Presenters

Bruce MilneCEOCorum Group Ltd.

Mark ReedExecutive Vice PresidentCorum Group Ltd.

Bruce Milne, CEO and founder of Corum, has overseen more M&A transactions than anyone in the world

over the past 25 years, generating over $6 Billion in wealth for clients in 24 countries.

He has founded or owned four software com anies includin AMI the worlds lar est vertical market Dou an Milne

, ,software firm, and was a founding investor in some of the most innovative firms in their field, includingBlue Coat, Bright Star and Sabaki.

A recognized industry expert, he has served as a personal advisor to Bill Gates on operating systems,Apple on the development of the Mac, and as one of top 10 industry advisors to IBM. He has served onthe board of Washington Technology Center at the University of Washington, and is the founder of theWTIA, the nations leading regional technology trade association.

Director of ResearchCorum Group Ltd.

Outside the U.S. he worked with the Canadian government to found SoftWorld, and he was recentlychosen as one of the 200 most influential individuals in the IT community in Europe. He is also the only

juror from North America for the Tornado 100 Awards in Europes.

A Deans List graduate in International Business from the UW, and a graduate With Distinction fromHarvard Business School, Mr. Milne has written three book, including Power Planning, How To Structure

Rob AdamsSr. DirectorCorporate Development

Corum Group Presentation 2

>> For todays presentation or more information, contact Pat Sultan

([email protected], +1 425-455-8281 ext. 248)

Your Software Company For Success.


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Agenda

Overview of Current Global Market

Market and Valuation Analysis

Rob Adams - Cisco

os ng ommen s -



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5/29

Euro Zone

Possibility of Greece Defaulting on Debt

Euro zone Issues Record 110 Billion Euros in Bonds

Spains Official Jobless Tops 4 Million

ees ow ecovery er ss ng um ers

Euro Proving No Reserve Alternative



6/29

U.S. Deficits and Taxes

Record $1.6 Trillion Deficit This Year

Geitner Long Term Deficits Pose Corrosive Threat

Obama Has $1.9 Trillion Tax Rise For Rich

ama r es ou a ore gn ax ar ors

Obama Plans $30bn Small Business Aid



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U.S. Economic Expansion

U.S. Manufacturing Expands More Than Expected

Corporate Spending Rises Most Since 2006

Ford U.S. Sales Rise 25%

en ng a es . . omes ncrease

US Cut 22,000 Jobs in January Lowest in Two Years

(ADP)



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Commodities

Commodities Rally Real, Rand Strengthen

Rubber Prices Reach 56 Year High

Oil Holds Steady

o ac o unce



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Growth, But

Roubini sees very Dismal U.S. Growth

El Arian says Retreat in Stocks will Worsen US,

Worst yet to come for Commercial Real Estate

Service Industry Grows at Slower Pace thanExpected

ummers a s o uman ecess on



10/29

Technology

of Google Phone

Cisco Profits Exceed Estimates

Microsoft Bing Gains Ground

Comcast Beats Estimates

Cisco to hire 3000



11/29

Corum Deals - 3 Closings in Last 45 Days

SaaS medical staffing space

er ca uca on

Software focused on secondary educational

Infrastructure Network Management

technology



12/29

Corum - LOI and Offers

-

Vertical Financial Services

Corum - Offers being negotiated

Horizontal Content Management

Horizontal Business Intelli ence



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Market Valuation Analysis

Dougan MilneDirector of Research

Corum Group Ltd.

.his time with Corum, Dougan spent three years working with Corum's international groupheadquartered in Zrich, Switzerland. Prior to joining Corum's team in 2005, Dougan spentthree years working in the banking industry with Bank of America, and Citigroup's PrivateWealth business unit. Before entering finance and investment banking, Dougan founded the

successful garment distribution business, Billions Apparel and the advertising firm, ModoMarketing. Dougan has a Bachelors degree in Business Economics from the University ofSan Diego.



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Public Markets

Nasda S&PTech Dow

110.00

120.00

90.00

100.00

70.00

80.00

50.00

60.00


.

Jan09 Feb09 Mar09 Apr09 May09 Jun09 Jul09 Aug09 Sep09 Oct09 Nov09 Dec09 Jan10


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M&A Activity January

Number of Software and IT M&A Transactions

296

373

333

209

January

321

0 50 100 150 200 250 300 350 400


2010 2009 2008 2007 2006 2005 2004


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Corum Index M&A Statistics

#ofTransactions

Jan09

214Jan

08

333Jan

10

296

LargestDeal

AverageDealSize

MedianSeller

Size

$775

$62

$15

$8,500

$134

$29

$2,000

$73

$25

#VCbackedExits

%TermsUndisclosed

AllCash(announced)

23

84%

56%

40

60%

45%

37

79%

55%

%Public

Buyers 43%61% 48%


$ values in millions


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Horizontal Application Software Market

Public Valuations

Horizontal

Application

Software

Jan0 9 Fe b

09 Mar

09 Apr

09 May

09 Jun

09 Jul

09 Aug

09 Sep

09 Oc t

09 Nov

09 Dec

09 Jan

10

EV/EBITDA 7.69x 5.85x 6.82x 9.23x 9.39x 9.99x 11.06x 11.06x 12.67x 12.26x 11.66x 11.67x 10.76x

EV/S 1.04x 1.12x 1.12x 1.16x 1.35x 1.50x 1.58x 1.93x 2.41x 2.21x 2.29x 2.41x 2.48x



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Vertical Application Software Market

Public Valuations

Vertical

Application

Jan09 Fe b09 Mar09 Apr09 May09 Jun09 Jul09 Aug09 Sep09 Oc t09 Nov09 Dec09 Jan10





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Consumer Application Software Market

Public Valuations

ConsumerA lication

Software

Jan09 Feb09 Mar0 9 A pr09 May09 Jun09 Jul09 Aug0 9 Se p09 Oct09 Nov0 9 De c0 9 Jan10





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Infrastructure Market

Public Valuations

Infrastructure

Software

Jan09 Feb09 Mar09 Apr09 May09 Jun09 Jul09 Aug09 Se p09 Oct09 Nov09 De c09 Jan10





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Internet Market

Public Valuations

Internet

Feb09 Mar09 Apr09 May09 Jun09 Jul09 Aug09 Sep09 Oct09 Nov09 Dec09 Jan10

EV/EBITDA 6.05x 7.54x 9.80x 11.78x 1 1.8 1x 1 3.32x 13 .02x 15.80x 1 1.81x 1 3.0 3x 15 .13x 14.40x

EV/S 1.36x 1.60x 2.11x 2.26x 2.30x 2.48x 2.60x 2.70x 2.19x 2.45x 2.55x 2.34x



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IT Services Market

Public Valuations

IT Services

Jan09 Feb09 Mar09 A pr09 May0 9 Jun09 Jul09 Aug0 9 Sep09 Oct0 9 Nov0 9 Dec0 9 Jan10





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Deal Spotlight January 2010

Deal Spotlight:Deal Spotlight:Deal Spotlight:

or zonta ert ca onsumer

ector: am ngTarget: nedplayBuyer: 32Red Plc

Date: January 2010Transaction Value: N/A

ector: ea t careTarget: Unisys HIM DivisionBuyer: Molina Healthcare

Date: January 2010Transaction Value: $135m

Sector: ERPTarget: Jiama Info SystemsBuyer: Kingdee Software Group

Date: January 2010

Comments: Market Consolidation

Metrics: 1.2x, cash

Comments: Unisys Sell-Off

.

Comments: Verticalization Real Estate

New Revenue Stream on nue onso a on Hot Buyer!

Others:

Others:

Others:


Orc Software Neonet AB Educomp StudyPlace.com

Time Inc. Stylefeeder Lace Group Mamba Games

Authoria PeopleClick.com ATG InstantService, Inc.


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Deal Spotlight January 2010

Deal Spotlight:Deal Spotlight:Deal Spotlight:

n rastructure nternet erv ces

Sector: Integration ServicesTarget: CimacBuyer: Schneider Electric

Date: January 2010

Sector: SEO / MarketingTarget: Innovation InteractiveBuyer: Dentsu

Date: January 2010

Sector: BPMTarget: SavvionBuyer: Progress Software

Date: January 2010

Comments: Geographic expansion

Comments: Traditional Advertising

Metrics: 2.3x TTM Revenues

Comments: BPM expertise

oma n expert seMulti-National

150+ employees 300+ enterprise clients

Others: LivePerson Nuconomy

Others: Emdeon FutureVision

Others: Good Technology CloudSync


StockTwits Abnormal Return Mobixell 724 Solutions

Cicero SOAdesk

Aonix Artisan Software Tools


25/29

The Cisco Perspective

Rob AdamsSr. Director, Corporate Development

Rob Adams is the Senior Director of Corporate Development at Cisco Systems. He joined, , ,Technology Strategist, and Director of Strategic Alliances. Prior to joining Cisco, Rob was aSoftware Engineer for TGV, Inc., Progress Software, and Digital Equipment Corporation.

Rob has an undergraduate degree in Computer Science from Penn State University and anxecu ve rom arvar us ness c oo .



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Upcoming Corum Events

February 18: Bothell SUSO

March 2: Houston MB

March 16: Lyon MB

March 16: Denver SUSO

March 3: PE Breakfast Stockholm

March 4: Flash Webinar (Intl)

March 9: Dallas SUSO

March 18: SLC MB

March 23: Dublin SUSO

March 25: Santa Rosa MB

Merge Briefing (MB)Selling Up Selling Out (SUSO)World Financial Symposium (WFS)



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SUSO Agenda

Selling Up / Selling Out: Overview

Preparation: Internal Due Diligence

Valuations: Methodologies

ruc ure: e er o n en

Negotiation: LOI to Closing



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February 18 SUSO in Bothell, WA

- .

members. (Complimentary to past attendees of Corum'sWebinars or Conferences).

,will be hosting an Open House event at our new facility inBothell, WA. Whether you attend the conference or not, plan to

other local technology executives.

Time: SUSO Conference 1-5 PM, Open House 5-7 PM

., ,

300, Bothell, WA 98011

Registration: Go to http://www.corumgroup.com/Events.aspx



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Contact Information

Corum Group Ltd.

Bruce Milne, [email protected]

,[email protected]

19805 North Creek Parkway

Suite 300 Corum Group International S..r.l.Bothell, WA 98011USA

+1 425-455-8281

Buechenstr. 9CH-8185 WinkelSwitzerland

+41 43 888 7590


www.corumgroup.com

software and it industry market update - february m&a flash report

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