M&A MARKET UPDATE · Like the tales American politicians told us about Vietnam, it was lies. Now,...

December 2018

M&AM A R L I N & A S S O C I A T E S

M A R K E TU P D A T E

INVESTMENT BANKING AND STRATEGIC ADVISORY TO THE TECHNOLOGYAND INFORMATION INDUSTRIES

www.MarlinLLC.com © Marlin & Associates Holdings LLC, All Right Reserved

Toronto

Washington, D.C.

New York

Dear Clients and Friends,

Our latest report on the values and trends in the dozen+ segments of the information technology industry that we follow, and sometimes lead, is below.

On Tuesday (December 11th), the UK parliament will vote on a draft Brexit agreement with the EU – choosing between “Leave softly” or “Leave hard”. No matter which way they vote, the British population loses. It’s like the US in Vietnam. Too many politicians would rather let people suffer than risk losing an election.

We have advised on transactions in 27 countries. The market remains strong – except in the UK. We have one UK client that some investors won’t touch because they fear Brexit will greatly increase its costs. Another is aggressively moving personnel out of the UK to the EU. The CEO of a third client says that the capital markets are closed for smaller firms like his - until Brexit fears moderate. My daughter worries that she may not have her London-based job next year.

Brexit was approved by UK voters after politicians told economically stretched Britons that by “Leaving” the EU – the economic and political partnership that, for 40 years, has guaranteed free movement of goods, currencies and people across the borders of 28 member countries - the UK would regain its “sovereignty” (no more kowtowing to Brussels bureaucrats); get more jobs (fewer immigrants plus a business environment without EU interference); suffer less crime; improve healthcare (stop sending GBP 350m toBrussels every week); and put a chicken in every pot. Like the tales American politicians told us about Vietnam, it was lies.

Now, they press forward knowing that Brexit may force skilled workers to leave the UK; limit Britons’ ability to work in the EU; and probably reduce jobs - if manufacturers cut back production in the UK because their products will no longer be exported tax-free to Europe. Tax revenues will likely decrease if banks or other UK-based companies doing business with Europe relocate their headquarters to the EU; and that means there won’t be “extra” money for healthcare. Meanwhile, the rules on products won’t change much - since half of UK exports go to the EU, which sets those rules – only now without any input from the UK. Oh, and also, tariffs probably will mean an increase in costs for chickens, pots and other imported goods.

We hope all politicians wake up to the benefits of intelligent globalism - including reduced poverty, improved health, increasing standards of living and growing economies. Meanwhile we’ll keep doing our best to advise owners and managers of information technology companies looking to buy, sell, or raise capital around the world. Even in the UK. Some of the more interesting recent transactions include:

Marlin & Associates is one of the most active firms advising buyers and sellers of U.S. and international middle-market firms that provide software, data, and related services. The firm is based in New YorkCity, with offices in Washington, D.C., and Toronto, Canada. It has been the recipient of numerous awards including “Boutique Investment Bank of the Year,” “Middle-Market Investment Bank of the Year,”"Middle-Market Financing Agent of the Year – Equity," and “TMT Advisory Bank of the Year.” Marlin & Associates' team of professionals has advised over 200 information-technology transactions.

DEAR CLIENTS AND FRIENDS,

• SAP (NYSE:SAP) acquired Qualtrics International for $8bn, • BlackBerry agreed to acquire Cylance (Irvine, CA) for $1.4bn

in cash,• Virtu (NASDAQ:VIRT) agreed to acquire ITG for $1.1bn,• Edenred (ENX:EDEN) agreed to acquire CSI Enterprises for

$600mm,• Forrester (NASDAQ: FORR) acquired SiriusDecisions for

$245mm in cash,

• Wave Computing (Campbell, CA) raised $200mm in an equity funding round led by Oakmont Corporation with participation from existing investors,

• Information Resources (IRI) (Chicago, IL) raised a new undisclosed sum of capital led by Vestar Capital Partners with participation from existing investor, New Mountain Capital.

Brexit and Stupid Politicians: Our December Report on M&A Values in Information Technology

Kenneth B. Marlin | Managing PartnerMarlin & Associates | www.marlinllc.com

Sincerely,

See below for our December Infotech M&A Update.

http://www.marlinllc.com/

Sources: Marlin & Associates, Capital IQ and Public sources. All market and operating data is sourced as of 11/30/18. These companies are asample of firms in the sector as M&A defines it, and do not comprise a comprehensive list of all firms in the sector. M&A calculates mean andmedian multiples for the sector using data from a set of firms that it believes to be reasonable and which may not be identical to the set reflectedabove.

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Sector Comparison Snapshot

Sector Analyses

Application Software

B2B E-commerce & Marketing Technologies

Banking Software & Processors

Business Intelligence Software

Capital Markets Software & Services

Data & Analytics – Financial Services

Information & Market Research

Insurance Technology

Payment Technology

Securities Exchanges

Security Software

Technology-Enabled Financial Institutions

Merger-and-Acquisition Activity Trends

MARLIN & ASSOCIATES MARKET UPDATE

DECEMBER 2018

02


03

SECTOR COMPARISON SNAPSHOT:CURRENT REVENUE & EBITDA MULTIPLESEnterprise Value / 2018 Revenue

Enterprise Value / 2018 EBITDA

*Tech-enabled Financial Institutions multiples calculated using Market Cap / Revenue and Market Cap / EBT

DECEMBER 2018

0x 2x 4x 6x 8x 10x

Tech-enabled Financial Institutions *





Payment Technology


Security Software

Data & Analytics - Financial Services




0x 6x 12x 18x 24x 30x

Tech-enabled Financial Institutions *

Payment Technology






Data & Analytics - Financial Services




Security Software



Public Market Data

04

DECEMBER 2018

Recent Activity

[1] Cloudera (NYSE:CLDR) added to the index as of IPO 4/27/17

DateAnnounced Acquirer(s) / Investor(s) Target / Issuer Description

11/29/18

Asana (San Francisco, CA) raised $50mm in a Series E funding round led by Generation Investment Management, with participation from existing investors 8VC, Benchmark Capital and Founders Fund, and new investors Lead Edge Capital and World Innovation Lab.

11/18/18

Oracle (NYSE:ORCL) agreed to acquire Talari Networks for an undisclosed sum. Talari Networks developed proprietary technology that enhances SD-WAN by adding reliability and predictability while maintaining security for site-to-site and site-to-cloud connectivity and application access over any IP network.

11/12/18SAP (NYSE:SAP) acquired Qualtrics International for $8bn. Following the closing of the transaction, Qualtrics is expected to maintain its leadership, personnel, branding and culture, operating as an entity within SAP’s Cloud Business Group.

Company Market Enterprise EV / Revenue EV / EBITDA Revenue Growth EBITDA Margin(USD millions) Cap Value CY2017A CY2018E CY2017A CY2018E CY2017A CY2018E CY2017A CY2018E

Oracle 194,991 193,693 5.0x 4.9x 12.3x 10.4x 4% 2% 41% 47%SAP 124,172 127,552 4.8x 4.6x 18.7x 13.9x 6% 5% 26% 33%salesforce 112,067 113,008 10.8x 8.5x nm 35.6x 25% 26% 9% 24%Intuit 56,636 55,729 10.2x 8.7x 33.6x 22.8x 12% 17% 30% 38%Workday 35,702 35,311 16.5x 12.6x na nm 36% 31% na 17%Constellation 14,635 14,578 5.9x 4.8x 30.7x 19.1x 17% 22% 19% 25%Amdocs 9,209 8,733 2.2x 2.2x 12.1x 10.9x 4% 3% 19% 20%Paycom Softw are 7,773 7,723 17.8x 13.8x nm 33.0x 32% 29% 21% 42%NICE 6,584 6,589 4.9x 4.5x 21.4x 14.9x 31% 10% 23% 30%Zendesk 6,308 6,309 14.7x 10.7x na nm 38% 38% na 6%Xero 3,991 4,245 16.3x 11.8x na nm 38% 38% na 13%Paylocity 3,722 3,637 10.9x 8.8x nm 36.7x 26% 24% 7% 24%Manhattan Associates 3,264 3,170 5.3x 5.7x 16.0x 20.4x (2%) (7%) 33% 28%Softw are AG 3,027 2,916 2.9x 2.9x 9.9x 9.7x 1% (1%) 30% 30%

Trim Mean 32,005 32,215 9.0x 7.4x 18.5x 20.1x 19% 17% 23% 27%Median 8,491 8,228 8.0x 7.1x 17.4x 19.1x 21% 20% 23% 27%

15x

20x

25x

30x

35x

40x

45x

3.0x

4.0x

5.0x

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7.0x

8.0x

9.0x

Dec-13 Dec-14 Dec-15 Dec-16 Dec-17 Dec-18

EV /

EBIT

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EV /

Reve

nue

5 Year LTM Revenue & EBITDA Multiples

EV / LTM Revenue EV / LTM EBITDA

100

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250

300


5 Year M&A Application Software Index[1] vs. S&P 500, base = 100

M&A Application Software Index S&P 500



Public Market Data

05

[1] Shopify (SHOP) added to the index as of IPO 5/21/15

DECEMBER 2018

Recent Activity

Date Announced Acquirer(s) / Investor(s) Target / Issuer Description

11/27/18

Deskera (Singapore) raised $60mm in a Series A funding round led by Jungle Ventures and included new investors Susquehanna International Group, Cisco Investments, Tembusu Partners, InnoVen Capital and Pepri Ventures. Deskera provides cloud based ERP and CRM solutions for mid-market enterprises.

11/13/18

Sojern (San Francisco, CA) raised $120mm in a Series D funding round led by Technology Crossover Ventures and included return investor Focus Ventures. Sojern provides a data driven traveler engagement platform that delivers marketing, distribution, monetization and insight solutions.

11/2/18

Dynamic Yield (Tel Aviv, Israel) raised $38mm in a Series D funding round led by NAVER and included new investors Viola Growth and Union Tech Ventures. Dynamic Yield provides a machine learning engine that enables marketers to increase revenue via personalization, recommendations, and automatic optimization across web, mobile, and email.

18x

24x

30x

36x

42x

5.0x

6.0x

7.0x

8.0x

9.0x


EV /

EBIT

DA

EV /

Reve

nue

5 Year LTM Revenue & EBITDA Multiples[1]


80

120

160

200

240

280

320

360


5 Year M&A eCommerce Index[1] vs. S&P 500, base = 100

M&A eCommerce Index S&P 500

Company Market Enterprise(USD millions) Cap Value CY2017A CY2018E CY2017A CY2018E CY2017A CY2018E CY2017A CY2018E

Adobe 124,659 121,599 16.7x 13.5x 48.8x 30.3x 25% 23% 34% 45%Mercadolibre 16,330 14,752 21.9x 14.0x nm nm 73% 57% nm 4%Shopify 15,910 15,510 11.1x 10.9x nm nm 66% 2% 13% nmHubSpot 5,409 5,162 13.7x 10.2x nm nm 39% 35% nm 10%QuinStreet 846 776 2.3x 1.7x 68.7x 18.9x 12% 33% 3% 9%ChannelAdvisor 294 246 2.0x 1.9x nm 30.5x 8% 7% nm 6%Mediagrif Interactive 112 124 2.0x 2.0x 8.3x 6.9x 5% 3% 24% 29%


EV / Revenue EV / EBITDA Revenue Growth EBITDA Margin



Public Market Data

06

[1] Q2 Holdings (QTWO) added to the index as of IPO 3/20/14

Recent Activity

DECEMBER 2018


11/28/16

QuantGroup (Beijing, China) raised $72mm in a Series C round of funding led by new investor Sunshine Insurance Group, and including participation from GuosenHongsheng Investment Co., Fosun Capital, and other undisclosed investors. QuantGroup provides online financial services in China.

11/16/16

LendingTree (NASDAQ:TREE) acquired Iron Horse Holdings (dba: CompareCards) for $130mm. CompareCards is an online platform enabling consumer credit card comparisons, and providing credit education and credit health management solutions. The transaction consideration consists of $85mm cash at closing and up to $45mm of earn-out payments paid during 2017 and 2018.

11/10/16

Meta Financial Group (NASDAQ:CASH) acquired Specialty Consumer Services (SCS) for $54mm. SCS offers a loan management platform and a proprietary underwriting model that are primarily used to deliver consumer tax advances and other consumer credit services. The transaction consideration consists of approximately $15mm at closing, with potential for additional contingent payments.


11/8/18

TBI agrees to acquire a 9% stake in Monobank for €6mm (~$7mm), implying an enterprise value of €67mm (~$76mm). Monobank is a Norwegian digital bank that focuses on consumer finance. TBI expects the acquisition to expand its digital banking presence in Scandinavia.

11/7/18

Lloyds Banking Group acquired a 10% stake in ThoughtMachine for ₤11mm (~$14mm), implying an enterprise value of ₤110mm (~$140mm). ThoughtMachine is a developer of a block-chain-based core banking operating system called Vault OS. The investment represents a strategic partnership between the companies, designed to accelerate Lloyd’s digital transformation plan.

11/1/18

Davies agrees to acquire Veriphy for an undisclosed sum. Veriphy is a compliance solutions SaaS business, focusing on Know Your Customer (“KYC”) and Anti-Money Laundering (“AML”) solutions for banks. Davies expects the acquisition to add to its existing Digital Customer Management business.

13x

17x

21x

25x

29x

33x

37x

41x

3.0x

3.5x

4.0x

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5.0x

5.5x

6.0x

6.5x


EV /

EBIT

DA

EV /

Reve

nue



90

120

150

180

210

240

270

300

330


5 Year M&A Banking Software Index[1] vs. S&P 500, base = 100

M&A Banking Software Index S&P 500


FIS 35,731 44,066 4.8x 5.2x 17.6x 13.9x (1%) (7%) 27% 37%Fiserv 32,602 37,139 6.5x 6.4x 20.8x 17.2x 3% 2% 31% 37%Jack Henry & Associates 10,832 10,717 7.3x 6.8x 23.2x 19.5x 6% 7% 31% 35%Temenos 8,933 9,372 12.7x 11.1x 47.0x 29.5x 16% 15% 27% 37%Oracle Financial Services 4,205 3,829 6.0x 5.3x 14.7x 12.7x 1% 12% 41% 42%ACI Worldw ide 3,393 4,005 3.9x 3.8x 22.5x 14.4x 2% 4% 17% 26%Bottomline Technologies 2,410 2,138 5.1x 4.5x 30.4x 16.7x 16% 15% 17% 27%Ellie Mae 2,334 2,216 11.4x 9.2x na nm 29% 24% na 8%Q2 Holdings 2,186 2,209 6.0x 5.3x 59.4x 22.2x 6% 13% 10% 24%Virtusa 1,358 1,583 1.6x 1.3x 25.0x 16.9x 20% 24% 7% 8%Sw ord Group 335 337 4.2x 3.8x 19.0x 16.1x 46% 10% 22% 24%Microgen 314 309 1.6x 1.4x 11.2x 9.5x 8% 9% 14% 15%Gresham Technologies 130 122 4.4x 3.9x 25.7x 16.9x 26% 13% 17% 23%





Public Market Data

07

[1] Hortonworks (HDP) added to the index as of IPO 12/12/14, Talend (TLND) added to the index as of IPO 7/29/16, Alteryx (AYX) added to the index as of IPO 2/24/17

Recent Activity

DECEMBER 2018


11/15/18

Primer (San Francisco, US) raised $40mm in a Series B funding round led by Lux Capital. Primer provides business intelligence solutions to government agencies and Fortune 50 companies by offering an automatic AI-powered text summarization and contextualization software tool.

11/7/18Quantexa (London, United Kingdom) raised $23mm in a venture funding round led by Accenture Ventures. Quantexa provides business intelligence technologies for organizations to fight financial crimes.

11/6/18

PredictHQ (Auckland, New Zealand) raised $10mm in a Series A funding round led by Aspect Ventures. PredictHQ is a business intelligence platform that aggregates and analyses real-time event data collected globally to help customers identify impactful events in the past and predict those in the future.

90

120

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180

210

240


5 Year M&A BI Index[1] vs. S&P 500, base = 100

M&A BI Index S&P 500

10x

20x

30x

40x

50x

60x

70x

2.0x

4.0x

6.0x

8.0x

10.0x

12.0x


EV /

EBIT

DA

EV /

Reve

nue




Splunk 16,356 15,300 12.0x 8.8x na 60.6x 34% 37% na 15%Tableau Softw are 10,413 9,457 10.8x 9.7x na na 6% 12% na naOpen Text Corporation 9,243 11,028 4.2x 3.9x 15.0x 10.6x 34% 8% 28% 37%Alteryx 3,693 3,536 26.9x 17.6x na nm 53% 53% na 1%Verint Systems 2,991 3,396 3.0x 2.7x 30.4x 11.6x 7% 9% 10% 24%MicroStrategy 1,496 797 1.6x 1.6x 9.8x 21.6x (1%) (1%) 16% 7%Hortonw orks 1,337 1,236 4.7x 3.6x na na 42% 30% na naTalend 1,045 956 6.4x 4.7x na na 40% 38% na naAttunity 501 463 7.5x 5.5x na 37.2x 14% 35% na 15%Dataw atch 167 161 4.3x 3.6x na nm 19% 19% na 4%





Public Market Data

08

Recent Activity

DECEMBER 2018


10/30/18

Sentieo (Harbour Beach, FL) raised $19mm in an equity funding round led by Centana Growth Partners. Sentieo provides an online equity research platform utilized by investment managers, corporates, wealth management advisors, investment banking advisory firms, venture capital firms and private equity firms.

10/30/18

Backstop Solutions (Chicago, IL) raised $20mm in an equity funding round led by Vistara Capital. Backstop provides cloud-based CRM software solutions for financial services providers including hedge funds, funds of funds, investment funds, pension funds, family offices, venture capital firms and private equity firms.

10/18/18

FundGuard (New York, NY) raised $4mm in an equity funding round from new investors Blumberg Capital and LionBird Ventures. FundGaurd provides an AI-powered, cloud-based investment funds operating systems platform for asset managers, custodian banks, and fund administrators to manage investments.

12x

15x

18x

21x

24x

27x

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4.5x

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100

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260


5 Year M&A Capital Markets Index vs. S&P 500, base = 100

M&A Capital Markets Index S&P 500


IHS Markit 21,620 27,533 7.6x 6.9x 24.6x 17.9x (1%) 12% 31% 38%Broadridge 12,673 13,612 3.2x 3.1x 16.9x 16.1x 24% 1% 19% 19%SS&C Technologies 12,163 17,859 10.7x 5.2x 28.4x 14.3x 13% 106% 38% 36%Computershare 7,271 8,240 3.7x 3.6x 15.0x 12.6x 10% 3% 25% 29%Envestnet 2,596 2,899 4.2x 3.6x 37.4x 18.5x 18% 19% 11% 19%SimCorp 2,555 2,518 6.5x 5.8x 24.1x 21.2x 16% 11% 27% 27%IRESS 1,430 1,568 5.0x 4.6x 21.7x 17.1x 10% 8% 23% 27%First Derivatives 714 741 3.3x 2.8x 27.2x 15.5x 23% 18% 12% 18%Linedata Services 248 321 1.6x 1.6x 8.1x 6.7x 7% (4%) 19% 25%Cinnober 188 176 4.2x 4.3x na na 7% (1%) na naStatPro Group 103 133 2.1x 1.8x 21.9x 11.6x 31% 15% 10% 16%Brady 68 62 2.1x 2.1x na 16.4x (10%) 4% na 13%




Data & Analytics – Financial Services

Public Market Data

09

DECEMBER 2018

Recent Activity


11/30/18

Wave Computing (Campbell, CA) raised $200mm in an equity funding round led by Oakmont Corporation with participation from existing investors. Wave Computing offers dataflow-based systems and embedded solutions for AI and deep learning. The company intends to use the funds to fund expansion opportunities.

10/24/18

Thomson Reuters (TSX:TRI) agreed to acquire Integration Point for an undisclosed sum. Integration Point offers a cloud-based trade management & compliance software. Thomson Reuters expects the acquisition to further strengthen its offerings in the global trade management space.

10/15/18

Tresata (Charlotte, NC) raised $50mm in funding from GCP Capital Partners valuing the company at $1bn. Tresata provides the software platform for real-time customer intelligence management. The company plans to use the funds to continue to fund its operations and accelerate growth.

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5 Year M&A Data & Analytics Financials Index vs. S&P 500, base = 100

M&A D&A Financial Index S&P 500


S&P Global 46,355 49,396 8.1x 7.8x 16.9x 15.7x 7% 5% 48% 50%Thomson Reuters 31,944 39,133 7.5x 7.1x 15.5x 30.2x 2% 6% 48% 23%Moody's 30,939 34,870 8.3x 7.7x 17.5x 16.0x 17% 8% 47% 48%Experian 22,264 25,578 5.6x 5.3x 16.8x 15.4x na 6% 33% 34%Verisk Analytics 20,743 23,178 10.8x 9.7x 23.5x 20.5x 8% 12% 46% 47%MSCI 14,354 15,530 12.2x 10.8x 23.6x 19.9x 11% 13% 52% 54%CoStar Group 13,489 12,418 12.9x 10.5x 49.6x 30.9x 15% 23% 26% 34%Equifax 12,485 14,921 4.4x 4.4x 13.4x 12.9x 7% 2% 33% 34%TransUnion 12,346 16,229 8.4x 6.9x 23.1x 17.7x 13% 21% 36% 39%FactSet Research Systems 9,117 9,454 7.5x 6.9x 22.1x 20.4x 10% 9% 34% 34%FICO 6,098 6,772 7.1x 6.4x 31.4x 28.1x 5% 12% 23% 23%Dun & Bradstreet 5,354 6,472 3.7x 3.7x 14.1x 12.7x 2% (0%) 26% 29%Morningstar 5,092 4,815 5.3x 5.4x 20.5x 18.6x 14% (2%) 26% 29%CoreLogic 3,318 4,943 2.7x 2.7x 12.8x 10.2x (5%) (3%) 21% 27%





Public Market Data

DECEMBER 2018

10


11/27/18Forrester (NASDAQ: FORR) acquired SiriusDecisions for $245mm in cash. SiriusDecisions provides businesses with actionable intelligence, frameworks, and guidance to aid sales, marketing, and product performance.

11/15/18

Information Resources (IRI) (Chicago, IL) raised a new undisclosed sum of capital led by Vestar Capital Partners with participation from existing investor, New Mountain Capital. IRI provides market research, data, and predictive analytics to CPG, OTC heal care, retail, financial services, and media companies.

11/12/18DTN (Burnsville, MN) acquired Weather Decision Technologies (WDT) for an undisclosed amount. WDT provides organizations with weather analytics for global asset protection and commodities trading decision support.

Recent Activity

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95

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125

140

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170


5 Year M&A Info & Mkt Research Index vs. S&P 500, base = 100

M&A Info & Mkt Research Index S&P 500


Reed Elsevier (RELX Group) 41,656 49,559 5.3x 5.2x 17.4x 14.7x 7% 3% 30% 35%Wolters Kluw er 17,043 19,266 3.8x 3.9x 14.0x 14.4x 3% (2%) 27% 27%Gartner 14,116 16,076 4.9x 4.1x 42.0x 22.6x 35% 20% 12% 18%Nielsen 9,661 18,019 2.7x 2.8x 10.6x 9.8x 4% (1%) 26% 28%Pearson 9,575 10,175 1.8x 1.9x 14.4x 11.7x (1%) (7%) 12% 16%Informa 7,555 11,050 4.9x 3.7x 15.5x 11.2x 31% 33% 32% 33%Euromoney Institutional Investor 1,752 1,651 3.3x 3.2x 12.4x 11.3x 8% 5% 27% 28%comScore 919 1,065 2.6x 2.6x na na 1% 3% na 3%Forrester Research 862 715 2.1x 2.0x 20.5x 18.5x 4% 5% 10% 11%




Insurance Software

Public Market Data

11

[1] Majesco added to the index as of IPO 6/30/15

Recent Activity

DECEMBER 2018


11/14/18

Hippo Insurance (Mountain View, CA) raised $70mm in a venture funding round led by Felicis Ventures and Lennar Corporation. Hippo Insurance provides an online platform to purchase home insurance in the US using an automated policy management and proactively monitors and alerts homeowners when repairs or weather protection is needed.

11/13/18

Seeman Holtz Property & Casualty (Boca Raton, FL) acquired Goji for an undisclosed sum. Goji is an online diversified P&C insurance comparison platform that aggregates available P&C insurance products from several providers to list alternatives depending on their users’ needs.

11/1/18

Compare.com (Richmond, VA) raised $35mm in a venture funding round led by Admiral Group (LSE:ADM). Compare.com provides an insurance comparison Website that allows users to input their information once and receive multiple purchasable quotes from different insurance carriers in the United States.

8x

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EV /

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90

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190

240


5 Year M&A Insurance Tech Index[1] vs. S&P 500, base = 100

M&A Insurance Tech Index S&P 500


Guidew ire Softw are 7,638 6,876 11.9x 9.5x nm 42.2x 28% 25% 7% 23%Ebix 1,493 2,036 5.6x 4.1x 16.4x 12.1x 22% 35% 34% 34%CorVel 1,331 1,240 2.3x na 17.6x nm 7% na 13% nmSapiens 611 626 2.3x 2.2x 29.1x 14.9x 25% 7% 8% 15%Majesco 276 273 2.3x na nm nm (6%) na 1% nm




Payment Technology

Public Market Data

12

Recent Activity

DECEMBER 2018

[1] SafeCharge (SCH) added to the index as of 4/4/14, PayPal (PYPL) added as of 7/7/15, Worldpay (WPG) added as of 10/14/15, First Data (FDC) added as of 10/16/15, Square (SQ) added as of 11/20/15.


11/20/18

Form3 (London, UK) raised $13mm in a Series B funding round led by Draper Esprit. Form3 is a cloud technology provider of payments-as-a-service processing for customers across multiple sectors, including banks, payment institutions and card payment processors. The company raised $5mm in a Series A round last year.

11/13/18

Poynt (Palo Alto, CA) raised $100mm in a Series C funding round led by Elavon and National Australia Bank. Poynt offers POS software and hardware solutions for offline retailers. The company plans to use the funds to expand into new markets in Asia, Europe, South America, invest in new talent and also invest in product and partner development.

11/9/18

Edenred (ENX:EDEN) agreed to acquire CSI Enterprises for $600mm. CSI Enterprises provides corporate payment solutions. Edenred proceeded with the acquisition of CSI Enterprises after deciding not to pursue an investment in French payments company Ingenico.

12x

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5 Year M&A Payment Tech Index[1] vs. S&P 500, base = 100

M&A Payment Tech Index S&P 500

Company Market Enterprise(USD millions) Cap Value CY2017E CY2018E CY2017E CY2018E CY2017E CY2018E CY2017E CY2018E

PayPal 102,886 95,299 7.3x 6.2x 39.3x 23.9x 21% 18% 19% 26%Square 33,168 33,021 nm 21.0x nm nm 43% 60% 14% 16%Worldpay 26,824 34,799 9.2x 8.9x 20.6x 18.5x 11% 4% 45% 48%Wirecard 18,713 17,515 10.0x 7.5x 39.1x 27.4x 45% 34% 26% 27%First Data 18,412 37,412 4.6x 4.4x 13.0x 11.5x 4% 6% 35% 38%FleetCor Technologies 17,808 21,324 9.5x 8.8x 19.0x 15.6x 23% 7% 50% 56%Global Payments 17,745 22,440 5.6x 5.7x 20.3x 16.0x 5% (0%) 28% 35%Total System Services 16,063 19,304 5.7x 5.0x 19.7x 14.2x 12% 13% 29% 35%Western Union 8,410 10,936 2.0x 1.9x 8.4x 7.8x 2% 2% 24% 25%WEX 6,759 8,615 6.9x 5.8x 19.5x 13.5x 23% 19% 35% 43%Cielo 6,586 8,443 2.8x 2.8x 6.3x 6.8x (6%) 1% 44% 41%Euronet Worldw ide 6,382 6,142 2.7x 2.4x 15.5x 12.4x 15% 13% 18% 19%EVERTEC 2,040 2,506 6.2x 5.6x 18.0x 11.9x 5% 11% 34% 47%PayPoint 767 724 2.7x 4.0x 9.5x 8.9x (0%) (32%) 28% 44%SafeCharge 506 418 3.7x 3.1x 13.3x 11.3x 7% 22% 28% 27%MoneyGram International 141 835 0.5x 0.6x 3.8x 3.5x (2%) (10%) 14% 16%





Public Market Data

13

DECEMBER 2018

Recent Activity

[1] Euronext (ENX) added to the index as of IPO 6/20/14


11/16/18European Energy Exchange (Paris, France) acquired Powernext for an undisclosed sum. Powernext manages the natural gas activities of the European Energy Exchange (EEX).

10/30/18Coinbase (San Francisco, CA) raised $300mm in a venture funding round led by Tiger Global. Coinbase offers an exchange for Bitcoins, payment gateway for online merchants to accept Bitcoins and also provides APIs for developers.

10/29/18NXMH (Brussels, Belgium) acquired Bitstamp for an undisclosed sum. Bitstamp owns and operates a digital currency marketplace that allows companies and individuals to buy and sell bitcoin, litecoin, ethereum, ripple, and bitcoin cash.

11x

13x

15x

17x

6.5x

7.5x

8.5x

9.5x


EV /

EBIT

DA

EV /

Reve

nue



95

125

155

185

215


5 Year M&A Sec Exchanges Index[1] vs. S&P 500, base = 100

M&A Sec Exchanges Index S&P 500


CME Group 64,824 66,754 18.6x 15.8x 26.6x 22.9x 1% 16% 69% 69%IntercontinentalExchange (ICE) 47,071 54,264 12.1x 11.0x 19.1x 17.1x 3% 7% 61% 64%Hong Kong Exchange 36,379 8,062 5.7x 4.0x 7.0x 5.3x 18% 22% 69% 75%Deutsche Börse Group 23,656 25,206 8.7x 8.1x 17.6x 13.9x 3% 3% 48% 59%London Stock Exchange (LSE) 18,150 19,460 9.2x 7.2x 18.6x 14.0x 18% 9% 42% 51%The Nasdaq OMX Group 15,277 18,674 5.0x na 14.8x 14.4x 7% (100%) 32% naBM&F Bovespa 14,958 14,556 24.2x 11.9x 30.0x 16.7x 0% 29% 51% 71%CBOE 12,032 13,095 18.6x 28.2x 19.9x 16.4x 217% (79%) 30% 173%Japan Exchange Group (JPX) 9,685 9,540 9.8x 8.6x 14.2x 13.3x 4% 9% 66% 65%Australian Exchange (ASX) 8,482 7,718 11.6x 12.7x 14.2x 16.6x 5% (14%) 77% 77%Singapore Exchange (SGX) 5,748 5,079 8.7x 8.1x 16.0x 13.9x 3% 5% 53% 58%Euronext 4,097 4,115 7.3x 5.9x 12.6x 10.4x 7% 15% 54% 57%TMX Group 3,316 3,986 7.2x 6.6x 11.9x 11.9x 0% 9% 60% 55%

Trim Mean 17,776 16,343 10.7x 9.6x 16.8x 14.4x 6% (0%) 55% 65%Median 14,958 13,095 9.2x 8.4x 16.0x 14.0x 4% 9% 54% 64%



Security Software

Public Market Data

Recent Activity

14

DECEMBER 2018

[1] Mimecast (MIME) added to the index as of 11/19/15, Okta (OKTA) as of 4/7/17, Forescout (FSCT) as of 10/27/17, Carbon Black (CBLK) as of 5/8/18, Avast (AVST) as of 5/10/18 and Tenable (TENB) as of 7/26/18


11/29/18Venafi (Salt Lake City, UT) raised $100mm in a round that also included existing investors QuestMark Partners and NextEquity Partners. Venafi provides machine identity protection, securing connections and communications between machines.

11/16/18

BlackBerry agreed to acquire Cylance (Irvine, CA) for $1.4bn in cash. Cylance develops antivirus and endpoint protection solutions with artificial intelligence. Cylance has raised nearly $300 million to date from investors that include Blackstone, DFJ, Khosla Ventures, Dell Technologies and KKR. This acquisition marks a pivot for BlackBerry towards enterprise services and in particular cybersecurity.

11/5/18Thoma Bravo agreed to acquire Venafi (Burlington, MA) from Broadcom for $950mm in cash. Veracode provides a cloud-based application security platform. The seller, Broadcom just closed on its $18.9mm acquisition of CA announced in July.

Company Market Enterprise EV / Revenue EV / EBITDA Revenue Growth EBITDA Margin(USD millions) Cap Value CY2017A CY2018E CY2017A CY2018E CY2017A CY2018E CY2017A CY2018E

Check Point Softw are 17,783 16,013 8.6x 8.4x 17.1x 15.6x 7% 3% 51% 54%Palo Alto Netw orks 16,223 14,643 7.4x 5.7x nm 21.4x 27% 29% nm 27%Symantec 13,929 16,458 3.5x 3.5x 25.3x 7.7x 25% 0% 14% 45%Fortinet 12,974 11,339 7.6x 6.3x 67.7x 25.5x 17% 20% 11% 25%F5 Netw orks 10,502 9,463 4.5x 4.3x 14.9x 11.1x 4% 4% 30% 39%Okta 6,792 6,519 25.1x 17.4x nm nm 62% 44% nm nmProofpoint 5,062 4,872 9.5x 6.9x nm 45.5x 37% 38% nm 15%FireEye 3,849 3,711 4.9x 4.5x nm 32.3x 5% 11% nm 14%Avast 3,322 4,605 7.1x 5.7x 18.1x 10.3x 92% 24% 39% 55%CyberArk 2,778 2,392 9.1x 7.2x nm 27.0x 21% 26% 11% 27%Tenable 2,594 2,330 12.4x 8.8x nm nm 51% 41% nm nmSophos 2,308 2,439 4.0x 3.4x nm 27.8x 17% 17% 2% 12%Mimecast 2,226 2,259 9.4x 7.1x nm 52.4x 41% 32% 5% 14%Imperva 1,984 1,680 5.2x 4.8x nm 37.7x 22% 10% nm 13%Forescout 1,142 949 4.3x 3.3x nm nm 32% 32% nm nmRadw are 1,107 807 3.8x 3.4x nm 26.9x 8% 11% nm 13%Carbon Black 1,072 909 5.6x 4.4x nm nm 39% 29% nm nmTrim Mean 5,786 5,608 6.9x 5.6x 20.2x 25.5x 27% 22% 18% 26%Median 3,322 3,711 7.1x 5.7x 18.1x 26.9x 25% 24% 12% 25%

30x

35x

40x

45x

50x

55x

60x

4.0x

5.0x

6.0x

7.0x

8.0x

9.0x

10.0x


EV /

EBIT

DA

EV /

Reve

nue



90

120

150

180

210

240

270


5 Year M&A Security Index[1] vs. S&P 500, base = 100

M&A Security Index S&P 500


15

Technology-Enabled Financial Institutions

Public Market Data

Recent Activity

[1] Elevate (ELVT) added to the index as of IPO 4/6/17


11/16/16

LendingTree (NASDAQ:TREE) acquired Iron Horse Holdings (dba: CompareCards) for $130mm. CompareCards is an online platform enabling consumer credit card comparisons, and providing credit education and credit health management solutions. The transaction consideration consists of $85mm cash at closing and up to $45mm of earn-out payments paid during 2017 and 2018.

11/10/16

Intrum Justitia (STO:IJ) acquired 1st Credit for £130mm ($161mm), valuing the Company at an implied 3.9x 2015 EBITDA. 1st Credit provides debt purchase and outsourced debt collection services for banks, credit card providers, utilities, telecoms, and retail companies.


11/20/18 Undisclosed

Relendex (London, UK) raised £72mm (~$91mm) in a debt funding round led by an undisclosed investor. Relendex provides peer-to-peer property lending services. The company plans to use the funds to help facilitate loans up to £10mm and provideinfrastructure to lenders, in an effort to increase customer confidence.

11/16/18 Bastion CapitalSezzle (Minneapolis, MN) raised $100mm in a debt funding round led by Bastion Capital. Sezzle provides interest-free installment plans for online shoppers. The company plans to use the funds to grow its retail payments business with existing and new merchant partners.

11/6/18

Virtu (NASDAQ:VIRT) agreed to acquire ITG for $1.1bn. ITG provides technology-enabled trading solutions for brokers and asset managers. The transaction is expected to provide diversification to Virtu’s revenue and enhance the company’s customer experience.

DECEMBER 2018

Company Market Market Cap / Revenue Market Cap / EBT Revenue Growth EBT Margin(USD millions) Cap CY2017A CY2018E CY2017A CY2018E CY2017A CY2018E CY2017A CY2018E

The Charles Schw ab 61,107 7.1x 6.0x 16.7x 12.2x 15% 18% 42% 49%TD Ameritrade 30,618 7.7x 5.4x 19.2x 11.5x 20% 41% 40% 47%E*TRADE 13,630 5.4x 4.7x 12.0x 8.8x 21% 14% 45% 54%MarketAxess 8,236 20.7x 19.0x 40.8x 34.4x 7% 9% 51% 55%BGC Partners 5,140 1.6x 1.8x 30.8x 7.4x 15% (13%) 5% 24%Interactive Brokers 4,360 2.8x 2.3x 4.1x 2.6x 10% 20% 67% 90%IG Group 2,799 4.1x 4.0x 8.9x 7.8x 3% 2% 46% 51%TP ICAP 2,222 1.0x 1.0x 8.5x 5.7x 96% 2% 12% 17%LendingClub 1,456 2.5x 2.1x na 15.8x 15% 21% na 13%Investment Technology Group 1,037 2.2x 2.0x nm na 4% 6% 1% naMonex Group 954 2.2x 1.9x 19.3x na 15% 15% 11% naOn Deck 622 3.2x 1.6x na 14.2x 40% 100% na 11%BinckBank 333 1.7x 2.0x 35.5x na (0%) (14%) 5% naGAIN Capital 331 1.1x 0.9x na 3.3x (27%) 23% na 27%Elevate Credit 209 0.3x 0.3x 69.3x 1.8x 16% 18% 0% 14%

Trim Mean 5,518 3.3x 2.8x 21.3x 8.9x 14% 14% 26% 31%Median 2,222 2.5x 2.0x 19.2x 8.3x 15% 15% 26% 37%

12x

14x

16x

19x

21x

23x

2.5x

3.2x

3.9x

4.6x

5.3x

6.0x


EV /

EBT

EV /

Reve

nue

5 Year LTM Revenue & EBT Multiples

Market Cap / LTM Revenue Market Cap / LTM EBT

84

100

116

132

148

164


5 Year M&A Fintech Sector Index vs. S&P 500, base = 100

M&A Tech-enabled Fin Institutions Index S&P 500


16

MERGER AND ACQUISITION TRANSACTIONS

Software and Services Transaction Activity

Software and Services Transaction Multiples

DECEMBER 2018

Note: Mid-market M&A defined as transactions with enterprise values below $1 billion.

(1)

(1)

(1)

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

0

50

100

150

200

250

300

350

400

Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3

2015 2016 2017 2018

Agg

rega

te V

alue

($b

n)

Num

ber

of T

rans

actio

ns

Number of Transactions Aggregate Value

0x

1x

2x

3x

4x

5x

6x

7x

0x

6x

12x

18x

24x

30x

36x

42x

Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3

2015 2016 2017 2018

EV

/ R

even

ue

EV

/ E

BIT

DA

EV / EBITDA EV / Revenue

CLIENTS CHOOSE M&A TO ADVISE THEM ON THEIR IMPORTANT STRATEGIC MOVES

17

DECEMBER 2018

“The team at Marlin & Associates was critical to our completion of this important strategic transaction, providing invaluable guidance throughout every step of the process. Their expertise in financial technology, SaaS, and the Salesforce ecosystem helped us to prepare effectively and best position Tier1CRM to potential investors. Their knowledge of the market helped us to identify the ideal investors as we move into the next phase of growth at Tier1. We could not have closed this transaction without their steady hand throughout.” Mark Notten, CEO, Tier1CRM

has received an equity investment from

Marlin & Associates acted as exclusive strategic and financial advisor to Investment Metrics

has been acquired by

Marlin & Associates acted as exclusive strategic and financial advisor to OptionsCity Software

Toronto, Canada

Atlanta, GA

Marlin & Associates acted as exclusive strategic and financial

advisor to TMX Group

has sold the Atrium wireless and extranet infrastructure

businesses to

a portfolio company of

Hamilton, Bermuda

Marlin & Associates acted as exclusive strategic and financial advisor to QuoVadis and ABRY


London, UKreceived an investment

from


advisor to OpenGamma

New York City, NY




advisor to Advise Technologies, LLC

New York City, NY

Lake Success, NY

Marlin & Associates acted as exclusive strategic and financial advisor to M&O Systems, Inc.



advisor to Tier1CRM

has received an equityinvestment from

Marlin & Associates acted as exclusive strategic and

financial advisor to MSCI Inc.

New York, NY

has sold Financial Engineering Associates, Inc. to

A portfolio company ofDallas, TX

New York, NY

has acquired

New York, NY

Marlin & Associates acted as exclusive strategic and financial advisor to Aquiline Holdings LLC


advisor to RapidRatings

San Francisco, CA

has received a $30 million equity investment from

New York, NYCharlotte, NC


advisor to Zenmonics

has received an equity investment from

Jacksonville, FL

CLIENTS CHOOSE M&A TO ADVISE THEM ON THEIR IMPORTANT STRATEGIC MOVES

18

DECEMBER 2018

“Throughout this process, the team at Marlin & Associates provided great financial and strategic advice. They served as a true strategic partner and integral part of the team as they guided the complex cross-border carve-out project. Marlin & Associates unique industry expertise played a critical role in bringing this project to a successful conclusion for all stakeholders." Eric SinclairPresident, TMX Datalinx



financial advisor to Alacra, Inc.

Palo Alto, CA

New York, NYParis, France

Palo Alto, CA


financial advisor to Everteam.

has acquired the Business Process Management

business from

Campbell, CA

received an investment from


advisor to Trunomi.

Boston, MA

Windsor, CT

Marlin & Associates acted as exclusive strategic and financial advisor to Varden Technologies.


New York, NY

Dublin, Ireland

Marlin & Associates acted as financial advisor to Aquiline

Capital Partners.

has invested in

has sold the assets of

to

Marlin & Associates acted as exclusive strategic and financial advisor to CNO Financial Group.

Dublin, Ireland

London, United KingdomMarlin & Associates acted as

exclusive strategic and financial advisor to Information Mosaic.

has been acquired bySan Francisco, CA

has led a $60 million investment in

New York, NY

Marlin & Associates acted as exclusive financial advisor

Francisco Partners.

Brentwood, TN


Marlin & Associates acted as strategic and financial advisor to Agilum Healthcare Intelligence

has been acquired bySan Mateo, CA


financial advisor to Xignite.

received a strategicinvestment from

Tokyo, Japan

Salt Lake City, UT

Chicago, IL

Marlin & Associates acted as exclusive strategic and financial advisor to iTransact Group, LLC


Phoenix, AZ

Boston, MA and San Francisco, CA


advisor to BillingTree

has completed a majority recapitalization with

M&A Award USA TMT Advisory Firm of the Year (2012, 2015) – Acquisition International

• Financial Technology Deal of the Year (2012, 2011)• North America Small Mid Markets Corporate Deal of the Year (2013)• Corporate M&A Deal of the Year (2010)• Technologies Deal of the Year (2010)* Firm-wide Awards

• Professional Services B-to-B Deal of the Year (2017)*• Cross-Border Deal of the Year (2016)*• Cross-Border Boutique Investment Banking Firm of the Year (2016)*• Boutique Investment Banking Firm of the Year (2014, 2015, 2016)*• Advisory Firm of they Year (2015)*• Middle Market International Professional Services (B-to-B) Deal of the Year (2013)• Financial Services Deal of the Year (2013, 2012 and 2011)• Information Technology Deal of the Year (2011)• Middle Market Deal of the Year <$25M (2011)• Corporate and Strategic Acquisition of the Year (2011)• Middle Market Financial Services Deal of the Year (2011 and 2010)• Middle Market Information Technology Deal of the Year (2011 and 2010)• Middle Market International Financial Services Deal of the Year (2013 and 2010)• Middle Market International Information Technology Deal of the Year (2010)• Middle Market Financial Services Turnaround Deal of the Year (2009)• Middle Market Information Technology Turnaround Deal of the Year (2009)• Middle Market International Deal of the Year(2008)• Middle Market Financial Services Deal of the Year (2008)• Middle Market Technology Deal of the Year (2008)• Middle Market Investment Banking Firm of the Year (2008 and 2007)*• Middle Market International/Cross Border Deal of the Year (2007, Below $100M)• Middle Market Financial Services Deal of the Year (2007, Below $100M)

PEER AND INDUSTRY GROUP RECOGNITION

19

Boutique Investment Banking Firm of the Year(2014, 2015, 2016) - The M&A Advisor

The M&A Advisor and The M&A Forum have recognized Marlin & Associates for excellence in multiple deal categories including:

The Global M&A Network has recognized Marlin & Associates for excellence in multiple deal categories through its M&A Atlas Awards:

TMT Advisory Firm of the Year (2017)

Boutique Investment Banking Firm of the

Year(2017)

– ACQ5 (Acquisition Finance

Magazine)

“We are always grateful to be recognized for our hard work, but we are more pleased that we areable to help our clients achieve the results that they seek.”

Ken MarlinFounder and Managing Partner

DECEMBER 2018

Note: Not a complete list.

Ken Marlin

Founder and Managing Partner of M&A• Twice named to II’s Tech 50• Member Market Data Hall of Fame• MD Veronis Suhler Stevenson• CEO of Telesphere Corporation • CEO of Telekurs (NA)• EVP Bridge Information systems• SVP at Dun & Bradstreet• BA from the University of California (Irvine)• MBA from UCLA, post-MBA from New

York University Jason Panzer

Chief Operating Officer of M&A• 20+ years of M&A experience advising

technology and PE firms globally• VP Business Development at FactSet• M&A attorney of Skadden, Arps, Slate,Meagher and Flom

• CFO of JCF Group• MBA from Columbia Business School• J.D. from Fordham Law School• CFA Charterholder

• 18+ years of investment banking andprivate equity experience

• Named twice to Dealer’s Digest and recently M&A Advisor’s “40-Under-40”

• Founded Marlin & Associates with Ken Marlin

• Formerly at Veronis Suhler Stevenson, Morgan Stanley, and American International Group

• BS from Binghamton University

MARLIN AND ASSOCIATES: WHO WE ARE

OUR SENIOR TEAM BRINGS EXTENSIVE DEPTH, BREADTH AND INDUSTRY EXPERTISE TO OUR CLIENTS

Michael Maxworthy

20

DECEMBER 2018

"The Marlin & Associates team was a highly valued player in completing our transaction. Their professional expertise and commitment to the process, preparation, positioning, presentation, and leadership got us to the finish line. They’re smart, available whenever needed, and bring the work ethic to get the deal done.”

Roman BrunnerCEO, QuoVadis

Tom Selby

• 18+ years of M&A experience • VP of Business Development at SunGard• Founder of software company sold to

SunGard • Started career designing trading software

for TD Bank• BaSC, Engineering from University of

Toronto

Sam Levy

• 10+ years of technology investment banking experience

• Experience working with both large corporations and entrepreneurial technology-based companies

• Formerly at BNPParibas,• MBA, NYU Stern, MS from

CentraleSupelec

Tom Selby

Anup Agarwal

• 18+ years of investment banking experience

• Formerly at Lehman Brothers, Bear Stearns and Houlihan Lokey

• MBA, University of Virginia (Darden); BS, Birla Institute of Technology & Science


New York | Washington, D.C. | Toronto

www.MarlinLLC.com

21

M&A MARKET UPDATE · Like the tales American politicians told us about Vietnam, it was lies. Now,...

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