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TECHNOLOGY SERVICES MONTHLY

1717 Arch Street, 39th Floor · Philadelphia, PA 19103 · www.mhhco.com

January 2018

Franchise Themes

MHH | Technology Services Group 2

Welcome to the January edition of the Mufson Howe Hunter TechnologyServices Monthly. This month, we highlight major themes we expect tohave significant impact in 2018. Each month, our team aims to provide youwith a newsletter that contains thought-provoking content and analysis, aswell as updates on macroeconomic themes, equity capital marketperformance, private capital market trends and noteworthy M&A activity–all of which is relevant to our core industry sectors:

We hope you find this information valuable, and we welcome anycomments or suggestions.

Sincerely,

Brandon K. EckManaging Director, Head of Technology Services

Cloud Services Healthcare IT Infrastructure Services Specialty Consulting

Digital Agencies Information Services IT OutsourcingTech-Enabled Business

Process Outsourcing

Tech-Enabled Solutions

InternetOutsourcing

ServicesMobile

Enterprise Software

Welcome to the MHH Technology Services Newsletter!

Select 2018 Franchise Themes

What we are reading…

Healthcare IT: The sweeping paradigm shift toward population health managementand value-based reimbursement models – will continue to drive robust demand forhealthcare IT products and services. Consulting Services, Data Analytics and PatientEngagement Technology will comprise a growing portion of the overall HCIT market,reaching an estimated $74 billion in annual spending by 2021 (Markets and Marketsand MHH calculations). Service providers and solutions that improve interoperabilityamong myriad disparate systems will be in high demand for many years to come. Foradditional insight see our May 2017 and September 2017 TSM.

Digital Transformation & Advisory: Business processes will continue to migrate fromlegacy systems to modern technology (cloud, edge computing, analytics, IoT,blockchain, AI, etc.). We expect to see continued growth in the digital transformationconsulting (DTC) channel. Trusted advisors with the ability to sell across seniorbusiness stakeholders within an organization (CMO, CRO, CCO, COO, CIO) and whoprovide thought leadership, commercial insights, targeted research and proprietary IPwill be leaders in the category. For additional insight see our November 2017 TSM.

IoT-Optimized Infrastructure Services: “Connected things” will streamline vendoroperational models while reducing customer costs. IoT will introduce tons of usefuldata to the cloud that needs to be captured and effectively managed. IaaS and PaaScompanies will be a direct beneficiary of this trend. Cisco expects database, analyticsand IoT workloads to account for 22% of total workloads by 2020 (Cisco, 2016). Foradditional insight, see our June 2017 TSM.

Bitcoin Is Having Its Worst Month in Three Years

Amazon, Berkshire Hathaway and JPMorgan Team Up to Try to Disrupt Health Care

Seven Unexpected Blockchain Uses That Will Improve Business

A Slew of New Financial Rules Could Make the Big European Firms Even Bigger


Blockchain in Financial Services & Beyond: Although most widely associated withcryptocurrencies, some of the largest financial services firms are exploring usingblockchain technology to improve high-risk and/or time-consuming operations,including cross-border payments, AML & KYC compliance, IAM security protocols andsmart contracts. We also expect to see further adoption across a variety of otherindustries, including healthcare, automotive, manufacturing and retail, among others.For additional insight see our December 2017 TSM.

Regulation Technology: The rapid proliferation of new and increasingly complexregulations will continue to drive demand for RegTech solutions that provideoperational efficiencies and cost benefits when applied to compliance and riskmanagement practices. Increased regulation isn’t just a temporary challenge forglobal financial institutions – it’s the new reality. Financial services firms’ averagecosts to meet their obligations are $60 million; some are spending up to $500 millionon compliance with KYC and Customer Due Diligence (Thomson Reuters). Foradditional insight see our August 2017 TSM.

http://www.mhhco.com/publication_pdfs/Technology Services Monthly - May 2017 Draft V7.pdf

http://www.mhhco.com/publication_pdfs/Technology Services Monthly - September 2017 v7.pdf

http://files.constantcontact.com/07e77b89001/4d746220-10ae-436a-b23a-bbe775e0f45c.pdf

http://www.mhhco.com/publication_pdfs/Technology Services Monthly - June 2017 - FINAL.pdf

https://www.wsj.com/articles/bitcoin-is-having-its-worst-month-in-three-years-1517383582

https://www.nytimes.com/2018/01/30/technology/amazon-berkshire-hathaway-jpmorgan-health-care.html?action=click&contentCollection=Opinion&module=Trending&version=Full&region=Marginalia&pgtype=article

https://www.forbes.com/sites/forbesfinancecouncil/2018/01/31/seven-unexpected-blockchain-uses-that-will-improve-business/#ebdc7bf24926

https://qz.com/1169541/what-is-mifid-ii-europes-sweeping-financial-regulations-which-begin-today/

http://www.mhhco.com/publication_pdfs/Technology Services Monthly - December 2017 v6 (1).pdf

http://www.mhhco.com/publication_pdfs/Technology Services Monthly - August 2017_2xiwbq.pdf


The Mufson Howe Hunter Technology Services Group serves growth-oriented, rapidly scalable businesses that leverage proprietary and enabling technologies to address the evolving needs of modern enterprise customers. We apply deep industry expertise and broad transaction experience to provide thoughtful, tailored

advice and solutions for our clients. Our clients turn to us for outstanding M&A advisory and capital-raising execution.

Brandon EckManaging Director,Head of Technology Services

Prior Experience:

Managing Director, Head of Technology & Services, Janney Montgomery Scott

Principal, Katalyst Securities

Principal, RCW Mirus

215.399.5411 [email protected]

18+ Years of Experience

60+ Transactions Completed

Education:

Gettysburg College (BA)

Senior Banking Team Sector Coverage

Andrew WilsonVice President,Technology Services

Prior Experience:

Senior Associate, Technology & Services, Janney Montgomery Scott

Associate, TMT, J.P. Morgan

Attorney, M&A, Wilson Sonsini Goodrich & Rosati


8+ Years of Experience

20+ Transactions Completed

Education:

Duke University (JD, MBA)

U. North Carolina, Chapel Hill (BA)

Sell-side Advisory

Buy-side Assignments

Private Placements

Recapitalizations

Financial Advisory

Fairness Opinions

Tech-Enabled Solutions

Internet

Outsourcing Services

Mobile

Enterprise Software

IT Outsourcing

Healthcare IT

Digital Agencies

SpecialtyConsulting

InformationServices

InfrastructureServices

Tech-Enabled BPO

Cloud Services

TECHNOLOGY SERVICES PRACTICE OVERVIEW

Business Model Coverage


SP500 NSDQ DJIA

December 1.0% 0.4% 1.8%

LTM 19.4% 28.2% 25.1%

3-Year 29.9% 45.8% 38.7%

U.S. PPI, CPI and PCE

10-Year Treasury Rate

U.S. Unemployment & Labor

U.S. Market Indices

Sources: CapitalIQ , Federal Reserve Bank of St. Louis

U.S. ECONOMIC INDICATORS

Unemployment Rate

Labor Participation Rate

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%

Dec-14 Apr-15 Aug-15 Dec-15 Apr-16 Aug-16 Dec-16 Apr-17 Aug-17 Dec-17

10-Year Teasury Rate

61.8%

62.0%

62.2%

62.4%

62.6%

62.8%

63.0%

63.2%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

10.0%


Unemployment Rate Labor Participation Rate

-3.0%

-2.5%

-2.0%

-1.5%

-1.0%

-0.5%

0.0%

0.5%

1.0%

1.5%

2.0%


Consumer Price Index Producer Price Index Personal Consumption Expenditures

-20.0%

-10.0%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%


S&P 500 NASDAQ Dow Jones Industrial Average


$0.0B

$0.5B

$1.0B

$1.5B

$2.0B

$2.5B

$3.0B

$3.5B

$4.0B

$4.5B

-

100

200

300

400

500

600

2010 2011 2012 2013 2014 2015 2016 2017

Total CapitalNumber of Deals

Deal Count Total Capital Invested*

Source: Pitchbook*For deals with announced transaction value**Please contact the MHH Technology Services Group directly for any information regarding valuation and deal size

U.S. TECH SERVICES MIDDLE-MARKET PRIVATE EQUITY: BUY-OUT ACTIVITY

Company Investor Date Sector

Dec 20 IT Outsourcing

Dec 8 IT Outsourcing

Dec 6Business Process

Outsourcing

Dec 6Infrastructure

Services

Dec 5 Healthcare IT

Dec 5 Healthcare IT

PE Buy-Outs, Trailing 8 Quarters, as of Dec. 31

PE Buy-Outs, by Deal Size PE Buy-Outs, Historical Annual, as of Dec. 31

Select Dec. 2017 Buy-Outs**

Breakthrough Technology Group

Connect Business Div.

35%

21%

12%

32%

$0-25mm

$25-50mm

$50-100mm

$100-250mm

$0.0B

$0.2B

$0.4B

$0.6B

$0.8B

$1.0B

$1.2B

-

20

40

60

80

100

120

140

1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17


Add-Ons Platform Total Capital Invested*


$0.0B

$1.0B

$2.0B

$3.0B

$4.0B

$5.0B

$6.0B

$7.0B

$8.0B

-

200

400

600

800

1,000

1,200

2010 2011 2012 2013 2014 2015 2016 2017



U.S. TECH SERVICES MIDDLE-MARKET PRIVATE EQUITY: MINORITY ACTIVITY

Source: Pitchbook*For deals with announced transaction value**Please contact the MHH Technology Services Group directly for any information regarding valuation, deal size, and investors

Company Stage Date Sector

PE Growth / Expansion

Dec 31 Healthcare IT

Angel / Seed Dec 20Infrastructure

Services


Dec 18Infrastructure

Services

Early Stage VC Dec 12Infrastructure

Services

Later Stage VC Dec 11 Healthcare IT


Dec 10 Healthcare IT

PE Minority, by Stage PE Minority, Historical Annual, as of Dec. 31

$0.0B

$0.5B

$1.0B

$1.5B

$2.0B

$2.5B

-

50

100

150

200

250

300

1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17



PE Minority, Trailing 8 Quarters, as of Dec. 31Select Dec. 2017 Minority Deals**

48%

27%

18%

7%

Angel / Seed

Early Stage VC

Later Stage VC

PE Growth/Expansion


Source: CapitalIQ

VALUATION & PERFORMANCE METRICS

Median Operational KPIs

Median Valuation Metrics

IT Outsourcing: technology services and consulting solutions, including engineering, application development, knowledge management and business process management

Business Process Outsourcing: services for administering and managing select technology-enabled business processes, including outsourced product development, finance and accounting, human resources, research and analytics, and other industry-specific processes

Infrastructure Services: providers of managed, hosting and consulting services around planning, designing, implementing and managing mission-critical IT infrastructure

Information Services: providers of independent rating, benchmarking, research and data analytic services

Healthcare IT: software and technology-related services focused on the design, development, creation, use and maintenance of information systems for the healthcare industry

ITO

BPO

IFS

IS

HIT

Sector Indices Performance, as of December 29, 2017

SP500 NSDQ ITO BPO IFS IS HIT

December 1.0% 0.4% 2.8% 2.5% (0.4%) (0.5%) (4.2%)

LTM 19.4% 28.2% 26.1% 19.1% 36.1% 39.6% 35.5%

3-Year 29.9% 45.8% 36.6% 50.8% 66.9% 69.6% 6.3%

-40.0%

-20.0%

0.0%

20.0%

40.0%

60.0%

80.0%


2.2x 2.5x

3.5x

6.5x

3.2x

ITO BPO IFS IS HIT

EV/2018E REVENUE

10.0x

13.8x

11.0x

15.8x14.5x

ITO BPO IFS IS HIT

EV/2018E EBITDA

15.6x

25.8x

19.1x

22.7x25.6x

ITO BPO IFS IS HIT

FWD PRICE/EARNINGS

12.5%

9.8%

13.1%

14.5%

11.6%

HIT

IS

IFS

BPO

ITO

2018E REVENUE GROWTH

57.4%

62.2%

63.9%

36.8%

31.7%

HIT

IS

IFS

BPO

ITO

LTM GROSS MARGIN

11.2%

39.8%

25.4%

14.0%

16.7%

HIT

IS

IFS

BPO

ITO

LTM EBITDA MARGIN


Valuation Metrics Relative Valuation**

Select December 2017 Precedent Transactions*

Source: CapitalIQ*Please contact the MHH Technology Services Group directly for any information regarding valuation and deal size**Excluded: DXC

Announced Acquirer Target Description

December 19 Managed services, data backup and other

computer support services

December 18 IT consulting solutions

December 15 Business management systems

December 14 Communications services campaigns for brands

December 7 Business and technology consulting solutions

IT OUTSOURCING

($ in millions) Operating Metrics Valuation Multiples

LTM LTM

Market Revenue Gross EBITDA(2) EBITDA EV / Revenue EV / EBITDA

Company Cap (1) 2018E 2019E Margin 2018E 2019E Margin LTM 2018E 2019E LTM 2018E 2019E

Accenture plc (ACN) $94,406 $38,922 $41,546 31.7% $6,731 $7,281 16.3% 2.6x 2.4x 2.2x 13.6 x 13.6 x 12.6 x

Cognizant Technology Solutions Corporation (CTSH) $41,877 $16,202 $17,638 38.6% $3,523 $4,046 19.9% 2.6x 2.3x 2.2x 12.3 x 10.8 x 9.4 x

DXC Technology Company (DXC) $27,072 $24,017 $24,382 25.3% $4,911 $5,346 13.8% 2.1x 1.4x 1.4x 14.5 x 6.8 x 6.2 x

Infosys Limited (INFY) $35,479 $11,496 $12,119 35.3% $3,028 $3,201 27.0% 2.8x 2.6x 2.5x 10.5 x 9.9 x 9.3 x

Wipro Limited (WIT) $23,776 $8,685 $9,005 28.9% $1,819 $1,799 20.2% 2.4x 2.3x 2.2x 11.7 x 11.0 x 11.2 x

HCL Technologies Limited (HCLTECH) $19,423 $8,389 $9,074 33.8% $1,835 $1,945 22.4% 2.5x 2.2x 2.0x 11.2 x 10.0 x 9.5 x

CGI Group Inc. (GIB.A) $15,445 $9,122 $9,376 30.1% $1,684 $1,765 16.7% 1.9x 1.8x 1.8x 10.8 x 10.0 x 9.5 x

Atos SE (ATO) $15,258 $15,704 $16,155 13.9% $2,108 $2,244 13.3% 1.1x 1.0x 1.0x 7.9 x 7.3 x 6.9 x

Syntel, Inc. (SYNT) $1,905 $892 $934 37.7% $231 $239 26.7% 2.4x 2.4x 2.3x 8.6 x 9.4 x 9.2 x

Virtusa Corporation (VRTU) $1,294 $1,097 $1,223 28.2% $96 $119 6.5% 1.5x 1.2x 1.1x 16.9 x 14.2 x 11.4 x

Perficient, Inc. (PRFT) $666 $515 $547 33.7% $80 $86 11.1% 1.6x 1.4x 1.3x 11.1 x 9.2 x 8.4 x

Mean $25,145 $12,276 $12,909 30.6% $2,368 $2,552 17.6% 2.1x 1.9x 1.8x 11.7x 10.2x 9.4x

Median $19,423 $9,122 $9,376 31.7% $1,835 $1,945 16.7% 2.4x 2.2x 2.0x 11.2x 10.0x 9.4x

NA = Not Available; NM = Not Meaningful; LTM = Latest Twelve Months As of close December 29, 2017.

‡ = excluded from Mean and Median calculations Excludes non-recurring, discontinued operations and stock-based compensation

Source: Public Filings, Press Releases and Published Research Reports

(1)

(2)

ACN CTSH INFY

WIT

HCLTECH GIB.A

ATO

SYNT

VRTU

PRFT

0.0 x

0.5 x

1.0 x

1.5 x

2.0 x

2.5 x

3.0 x

0.0% 10.0% 20.0% 30.0% 40.0%

EV/Revenue (2018E)

Revenue Growth (2018E) + EBITDA Margin (LTM)

ACN

CTSH

INFY

WIT

HCLTECH GIB.A

ATO SYNT

VRTU

PRFT

0.0 x

2.0 x

4.0 x

6.0 x

8.0 x

10.0 x

12.0 x

14.0 x

16.0 x

-5.0% 0.0% 5.0% 10.0% 15.0% 20.0% 25.0%

EV/EBITDA (2018E)

Revenue Growth (2018E)


3.

Valuation Metrics


BUSINESS PROCESS OUTSOURCING


December 26 Outsourced care management services

December 14 Workforce development and training services

December 13 Third party benefit program administration

services

December 6 HR consulting services

December 5 Technology consulting and systems integration

Source: CapitalIQ*Please contact the MHH Technology Services Group directly for any information regarding valuation and deal size

Relative Valuation


LTM LTM



Automatic Data Processing, Inc. (ADP) $51,973 $13,638 $14,677 42.9% $2,902 $3,269 21.6% 4.1x 3.8x 3.5x 18.0 x 17.8 x 15.8 x

Genpact Limited (G) $6,127 $2,910 $3,106 39.1% $500 $529 16.8% 2.6x 2.4x 2.2x 14.4 x 13.8 x 13.1 x

EPAM Systems, Inc. (EPAM) $5,674 $1,761 $2,121 36.6% $320 $382 14.4% 3.8x 2.9x 2.4x 20.9 x 16.2 x 13.6 x

WNS (Holdings) Limited (WNS) $2,021 $769 $848 32.2% $165 $191 12.8% 2.9x 2.5x 2.3x 17.1 x 11.8 x 10.2 x

ExlService Holdings, Inc. (EXLS) $2,048 $831 $907 34.4% $148 $165 14.0% 2.5x 2.2x 2.0x 14.7 x 12.4 x 11.2 x

Luxoft Holding, Inc. (LXFT) $1,870 $1,045 $1,250 37.6% $173 $224 10.9% 2.1x 1.7x 1.5x 14.9 x 10.5 x 8.1 x

Globant S.A. (GLOB) $1,631 $491 $588 36.8% $81 $98 13.7% 4.1x 3.3x 2.7x 24.5 x 19.8 x 16.2 x

Mean $10,192 $3,063 $3,357 37.1% $613 $694 14.9% 3.2x 2.7x 2.4x 17.8x 14.6x 12.6x

Median $2,048 $1,045 $1,250 36.8% $173 $224 14.0% 2.9x 2.5x 2.3x 17.1x 13.8x 13.1x




(1)

(2)

ADP

G

EPAM

WNS EXLS

LXFT

GLOB

0.0 x

5.0 x

10.0 x

15.0 x

20.0 x

25.0 x

0.0% 10.0% 20.0% 30.0% 40.0%

EV/EBITDA (2018E)


ADP

G EPAM

WNS

EXLS

LXFT

GLOB

0.0 x

0.5 x

1.0 x

1.5 x

2.0 x

2.5 x

3.0 x

3.5 x

4.0 x

0.0% 10.0% 20.0% 30.0% 40.0% 50.0%

EV/Revenue (2018E)


CenterPointHR LLC


Valuation Metrics


INFRASTRUCTURE SERVICES

Source: CapitalIQ*Please contact the MHH Technology Services Group directly for any information regarding valuation and deal size**Excluded: WIX


December 26 Voice, data, risk management and networking

solutions

December 11 Managed cloud application services for the

Oracle ecosystem

December 11 Backup disaster recovery and intelligence

business continuity services

December 7 Software and hardware focused IT solutions

December 1 Cloud infrastructure for enterprise cloud

solutions

Relative Valuation**


LTM LTM



Equinix, Inc. (REIT) (EQIX) $35,457 $5,061 $5,482 50.4% $2,434 $2,679 42.8% 10.7x 8.7x 8.0x 22.7 x 18.0 x 16.4 x

United Internet AG (UTDI) $13,769 $6,051 $6,433 35.3% $1,461 $1,632 22.0% 3.3x 2.7x 2.5x 14.9 x 11.0 x 9.8 x

Zayo Group Holdings, Inc. (ZAYO) $9,103 $2,646 $2,744 63.9% $1,340 $1,423 45.4% 6.2x 5.5x 5.3x 12.4 x 10.8 x 10.2 x

VeriSign, Inc. (VRSN) $11,280 $1,208 $1,259 83.2% $867 $932 65.0% 9.8x 9.4x 9.0x 14.0 x 13.1 x 12.1 x

GoDaddy Inc. (GDDY) $6,826 $2,541 $2,824 64.8% $702 $805 11.7% 4.2x 3.5x 3.2x 28.1 x 12.8 x 11.1 x

Endurance International Group Holdings, Inc. (EIGI) $1,205 $1,172 $1,206 50.5% $343 $360 23.5% 2.6x 2.6x 2.6x 8.9 x 9.0 x 8.6 x

Wix.com Ltd. (WIX) $2,616 $557 $704 83.5% $110 $165 -9.1% 6.2x 4.3x 3.4x NM 22.0 x 14.6 x

Web.com Group, Inc. (WEB) $1,063 $783 $816 68.9% $205 $221 20.3% 2.3x 2.2x 2.1x 9.9 x 8.4 x 7.8 x

Internap Corporation (INAP) $310 $277 NA 51.6% $95 NA 27.2% 2.8x 2.9x NM 10.1 x 8.5 x NM

Mean $9,070 $2,255 $2,683 61.3% $840 $1,027 28.6% 5.3x 4.6x 4.5x 15.1x 12.6x 11.3x

Median $6,826 $1,208 $2,001 63.9% $702 $868 25.4% 4.2x 3.5x 3.3x 13.2x 11.0x 10.7x




(1)

(2)

EQIX

UTDI

ZAYO

VRSN GDDY

EIGI WEB

INAP

0.0 x

2.0 x

4.0 x

6.0 x

8.0 x

10.0 x

12.0 x

14.0 x

16.0 x

18.0 x

20.0 x

-5.0% 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0%

EV/EBITDA (2018E)


EQIX

UTDI

ZAYO

VRSN

GDDY

EIGI

WEB

INAP

0.0 x

1.0 x

2.0 x

3.0 x

4.0 x

5.0 x

6.0 x

7.0 x

8.0 x

9.0 x

10.0 x

0.0% 20.0% 40.0% 60.0% 80.0%

EV/Revenue (2018E)



TECHNOLOGY SERVICES: INFORMATION SERVICES

Valuation Metrics


INFORMATION SERVICES

Source: CapitalIQ*Please contact the MHH Technology Services Group directly for any information regarding valuation and deal size**Gartner (IT) y/y growth rate pro forma adjusted for the acquisition of CEB, Inc.


December 21 Research and tracking services for transaction

professionals

December 7 Electronic stock exchange and related services

December 5 Social media and advertising focused predictive

data analytics services

December 5 Social analytics solutions for brand marketers

December 1 Investor research and regulatory document

services



LTM LTM



S&P Global Inc. (SPGI) $43,197 $6,321 $6,707 71.1% $3,074 $3,283 46.7% 7.8x 7.2x 6.8x 16.1 x 14.9 x 13.9 x

Moody's Corporation (MCO) $28,208 $4,510 $4,796 71.2% $2,171 $2,343 47.6% 8.3x 7.3x 6.9x 16.5 x 15.2 x 14.1 x

IQVIA Holdings Inc. (Q) $20,362 $8,531 $9,013 42.1% $2,221 $2,414 22.1% 3.7x 3.4x 3.2x 15.7 x 13.2 x 12.1 x

IHS Markit Ltd. (INFO) $17,872 $3,805 $4,030 61.3% $1,515 $1,639 30.8% 6.2x 5.7x 5.4x 16.1 x 14.4 x 13.3 x

Verisk Analytics, Inc. (VRSK) $15,810 $2,306 $2,455 63.1% $1,129 $1,216 46.3% 8.9x 8.0x 7.6x 19.5 x 16.4 x 15.2 x

Gartner, Inc. (IT) $11,164 $4,023 $4,451 60.0% $836 $940 12.2% 4.6x 3.5x 3.1x 31.2 x 16.6 x 14.8 x

MSCI Inc. (MSCI) $11,397 $1,407 $1,541 78.2% $752 $841 51.3% 10.3x 9.0x 8.2x 18.9 x 16.9 x 15.1 x

FactSet Research Systems Inc. (FDS) $7,539 $1,373 $1,466 52.9% $469 $499 33.4% 6.2x 5.7x 5.4x 17.2 x 16.7 x 15.8 x

Mean $19,444 $4,035 $4,307 62.5% $1,521 $1,647 36.3% 7.0x 6.2x 5.8x 18.9x 15.5x 14.3x

Median $16,841 $3,914 $4,240 62.2% $1,322 $1,428 39.8% 7.0x 6.5x 6.1x 16.8x 15.8x 14.4x




(1)

(2)

SPGI

MCO

Q

INFO

VRSK

IT

MSCI FDS

0.0 x

4.0 x

8.0 x

12.0 x

16.0 x

20.0 x

24.0 x

0.0% 5.0% 10.0% 15.0% 20.0%

EV/EBITDA (2018E)


SPGI MCO

Q

INFO

VRSK

IT

MSCI

FDS

0.0 x

1.0 x

2.0 x

3.0 x

4.0 x

5.0 x

6.0 x

7.0 x

8.0 x

9.0 x

10.0 x

0.0% 20.0% 40.0% 60.0% 80.0%

EV/Revenue (2018E)



TECHNOLOGY SERVICES: INFORMATION SERVICES


December 21 Integrated software solutions for home health

and hospice

December 14 Patient-provider-payer connection platform

December 14 Preoperative planning software developer

December 13 Data management and other solutions for

hospitals and large health systems

December 5 Web-based solution for the healthcare sector

Valuation Metrics


HEALTHCARE IT

Source: CapitalIQ*Please contact the MHH Technology Services Group directly for any information regarding valuation and deal size**Excluded: CSLT



LTM LTM



Cerner Corporation (CERN) $22,401 $5,578 $6,075 85.1% $1,832 $2,009 27.8% 4.4x 4.0x 3.6x 15.0 x 12.1 x 11.0 x

Veeva Systems Inc. (VEEV) $7,813 $806 $952 69.4% $261 $313 25.0% 10.8x 8.7x 7.4x 33.1 x 27.0 x 22.6 x

athenahealth, Inc. (ATHN) $5,324 $1,342 $1,491 52.0% $338 $392 11.0% 4.6x 4.1x 3.7x 28.3 x 16.2 x 14.0 x

Allscripts Healthcare Solutions, Inc. (MDRX) $2,629 $2,148 $2,276 50.3% $427 $454 10.1% 2.6x 2.0x 1.9x 20.2 x 10.3 x 9.7 x

Inovalon Holdings, Inc. (INOV) $2,188 $487 $535 64.6% $124 $136 17.0% 4.4x 3.9x 3.6x 21.4 x 15.4 x 14.1 x

National Research Corporation (NRCI.B) $980 $128 NA 58.2% $43 NA 33.5% 8.2x 7.4x NM 23.3 x 22.1 x NM

Quality Systems, Inc. (QSII) $865 $536 $560 56.4% $81 $84 11.3% 1.7x 1.7x 1.6x 13.0 x 11.0 x 10.6 x

HealthStream, Inc. (HSTM) $739 $266 $284 56.7% $42 $47 11.1% 2.5x 2.3x 2.2x 21.3 x 14.5 x 13.2 x

Computer Programs and Systems, Inc. (CPSI) $404 $284 $303 53.2% $53 $56 10.5% 2.1x 1.9x 1.8x 16.2 x 10.4 x 9.7 x

Castlight Health, Inc. (CSLT) $502 $163 $194 66.1% ($9) $13 -41.8% 3.4x 2.6x 2.2x NM NM 33.4 x

Mean $4,384 $1,174 $1,408 61.2% $319 $389 11.6% 4.5x 3.9x 3.1x 21.3x 15.4x 15.4x

Median $1,584 $511 $560 57.4% $102 $136 11.2% 3.9x 3.2x 2.2x 21.3x 14.5x 13.2x




(1)

(2)

CERN

VEEV

ATHN

MDRX

INOV

NRCI.B

QSII

HSTM

CPSI

0.0 x

5.0 x

10.0 x

15.0 x

20.0 x

25.0 x

30.0 x

0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0%

EV/EBITDA (2018E)


CERN

VEEV

ATHN

MDRX

INOV

NRCI.B

QSII HSTM

CPSI

0.0 x

1.0 x

2.0 x

3.0 x

4.0 x

5.0 x

6.0 x

7.0 x

8.0 x

9.0 x

10.0 x

0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0%

EV/Revenue (2017E)


Connect Business Div.

Health Platforms, Inc.


The Mufson Howe Hunter Technology Services IndicesIT Outsourcing is currently comprised of: ACN, CTSH, INFY, NESI:HCLTECH, GIB.A, WIT, ENXTPA:ATO, SYNT, VRTU, PRFT; Business Process Outsourcing Index is currently comprised of: ADP, G, EPAM, LXFT, EXLS, WNS,GLOB; Infrastructure Services Index is currently comprised of: EQIX, ZAYO, UTDI, VRSN, DFT, GDDY, EIGI, WIX, WEB, INAP; Information Services Index is currently comprised of: SPGI, Q, MCO, INFO, VRSK, IT, MSCI, FDS;and, Healthcare IT is currently comprised of: CERN, VEEV, ATHN, MDRX, WBMD, INOV, QSII, HSTM, NRCI.B, CPSI, CSLT.

The companies that comprise each Index periodically change as a result of mergers, acquisitions, initial public offerings and other transactions; therefore, comparisons to historical time periods and historicalperformance for each Index may not entirely correspond and correlate to the Index’s current performance. Historical performance is not a guarantee or prediction of future results. The information and statistical datacontained herein have been obtained from sources that Mufson Howe Hunter believes are reliable, but Mufson Howe Hunter makes no representation or warranty as to the accuracy or completeness of any suchinformation and data and expressly disclaims any and all liability relating to or resulting from your use of these materials. The information and data contained herein are current only as of the date(s) indicated andMufson Howe Hunter has no intention, obligation or duty to update these materials after such date(s). These materials do not constitute an offer to sell or the solicitation of an offer to buy any securities.

Copyright © January 2018 Mufson Howe Hunter & Company LLC. All rights reserved. Technology Services Monthly is produced monthly by Mufson Howe Hunter. Mufson Howe Hunter provides a full range of investment

banking services to Technology Services companies. For more information, visit www.mhhco.com.Icons by Flaticon.

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Brandon EckManaging Director,

Head of Technology Services


For more information, please contact:

Andrew WilsonVice President,

Technology Services


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