I'll Buy! Is Private Equity Coming Back? - September M&A Flash Report

8/8/2019 I'll Buy! Is Private Equity Coming Back? - September M&A Flash Report

1/36

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


2/36

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.

Corum Group Presentation 2

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

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

Ryan BlakelyVice President, ResearchCorum Group Ltd.


3/36

Agenda

Langara!

Overview of Current Market

Market and Valuation Analysis

r va e qu y ane

Closing Comments - Q&A



4/36

Corums Annual Client Celebration

Aug. 29 Sept. 1A tradition for 22 years



5/36



6/36



7/36



8/36



9/36



10/36



11/36



12/36



13/36

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 .



14/36

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



15/36

Real Estate Seems to be Recovering

Pending Sales of Existing Homes Rise in July

.

. .



16/36

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



17/36

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



18/36

But, Deals Are Up!

v v

Including Disney and Baker Hughes

Buyout Firms Return to Basics



19/36

Corum Transactions Are Up

ve ea s n wee s

Four more with new offers Mobile Applications

Risk / Compliance



20/36

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.



21/36


22/36

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



23/36

Corum Index M&A Statistics

# of Transactions# of Mega Deals >$1B

ug-

2210

ug-

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%


$ values in millions


24/36

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



25/36

Vertical Application Software Market


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/S 1.01x 1.14x 1.31x 1.40x 1.51x 1.51x 1.66x

Complementary solutionsPublic target



26/36

Consumer Application Software Market


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 S 0.58x 0.64x 0.69x 0.50x 0.53x 0.53x 0.59x



27/36

Infrastructure Market


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



EV/S 1.31x 1.43x 1.55x 1.52x 1.72x 1.95x 2.02x

PaaSExtend current offerings



28/36

Internet Market


Sector: Social NetworkingTarget: iLike

Date: August 2009Transaction Value: UndisclosedInternet

ommen s:Social experiencesUser baseTraffic



EV/S 1.36x 1.60x 2.11x 2.26x 2.30x 2.48x 2.60x



29/36

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



Drive future growth

EV/S 0.55x 0.56x 0.60x 0.61x 0.63x 0.68x 0.68x



30/36

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



31/36

Market and Valuation Summary

valuations

Transaction volumes slowed typical August

Private equity putting dollars to work



32/36

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


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.


33/36

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

33

Management buyouts


34/36

Alpine Investors is a private equity firm focused on making investments in domestic

-

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

-

Example Portfolio Companies:

SaaS Loan Origination Provider High-end Online Lighting Retailer Turn-key ATM operator Online Continuing Education Provider


35/36

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

--

October 6: Boston -- MB

October 8: L on -- MB

--

October 23: Munich -- MB

October 27: Frankfurt -- MB

Mer e Briefin MB


Selling Up Selling Out (SUSO)


36/36

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


www.corumgroup.com

I'll Buy! Is Private Equity Coming Back? - September M&A Flash Report

Documents

Transcript of I'll Buy! Is Private Equity Coming Back? - September M&A Flash Report