MERGE Webinar – Oct. 2009 - Corum Group Group Flash... · MERGE Webinar – Oct. 2009 Software...

USA Switzerland Germany France United Kingdom Canada Norway Brazil

MERGE Webinar MERGE Webinar –– Oct. 2009Oct. 2009Software and IT Industry Market Update:Is an international buyer in your future? y y

Thursday October 1 2009

www.corumgroup.com

Thursday, October 1, 200910:00 am PT

Mark ReedExecutive Vice PresidentCorum Group LtdCorum Group Ltd.

Bruce MilneCEO & ChairmanCorum Group Ltd.

Miro ParizekManaging DirectorCorum 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

(Washington Software Association) and as a recognized leader has served on numerous advisory boards including(Washington Software Association), and, as a recognized leader, has served on numerous advisory boards including

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 today’s presentation or more information, contact Pat Sultan(pats@corumgroup.com, +1 425-455-8281 ext. 248)

Dougan MilneResearchCorum Group Ltd.

Agendag

Overview of Current Market

International Update

Market and Valuation Analysis

Closing Comments Q&A Closing Comments - Q&A

Corum Group Presentation ■ 3

Recovery – Is Now the Time?y

“St k H B t Q t Si 1998”“Stocks Have Best Quarter Since 1998”

“IMF raises global 2010 growth forecast to 3.1% from 2.5%”

Corum Group Presentation ■ 4

Recovery – Is Now the Time?y

Corum M&A Activity High

Six Companies Sold in Q3

Six More in LOI During Q3

Si More Weighing Offers Six More Weighing Offers

Corum Group Presentation ■ 5

U.S. Economy

“U S Interest Rates Steady”

y

U.S. Interest Rates Steady

“Consumer Confidence Unexpectedly Drops”

“Pimco’s Bill Gross Buying Treasuries Amid Deflation

Concerns”

“Unemployment – Threatened Chronic Job Loss”

“F d R $11 6 T illi Bill!” “Fed Rescue - $11.6 Trillion Bill!”

Corum Group Presentation ■ 6

U.S. Real Estate

“Home Prices Climb Most Since 2005” Home Prices Climb Most Since 2005

“Vacation Timeshares Plunge”

“Industrial Real Estate Won’t Bottom Until 2010”

“Time to Drop $8000 1st Time Buyer Credit”Time to Drop $8000 1 Time Buyer Credit

Corum Group Presentation ■ 7

International Economies

“Trichet Says Too Early to Withdraw Stimulus”

“Spanish Inflation Rate Remains Negative”

“Pace of Eurozone Recovery Slows”

“Banks Call on Economists o er Lending Dro ght” “Banks Call on Economists over Lending Drought”

“WB Pres: Global Economy ‘Far From’ Secure”

Corum Group Presentation ■ 8

International Interest Rates

“Russia Cuts Bank Rate by Half Point to Stimulate”

“Israel Springs Interest Rate Rise”

“Negative Interest Rates in Sweden”

“ECB Lea es Interest Rates at 1%” “ECB Leaves Interest Rates at 1%”

“Brazil to Cut Interest Rate”

Corum Group Presentation ■ 9

Stock Markets

“Stock Climb Continues Since March”

“Europe IPO Market Thawing From Deep Freeze”

“Global Rally Shows Signs of Running Out of Steam”

“U S Stocks Close Higher on M&A Boost” “U.S. Stocks Close Higher on M&A Boost”

Corum Group Presentation ■ 10

Mega Dealsg

Xerox ACS: $6.4b; 1.3x

Adobe Omniture: $1 8b; 5 2xAdobe Omniture: $1.8b; 5.2x

SilverLake Skype: $2b; 5.1x

Dell Perot Systems: $3.9b; 1.4x

Corum Group Presentation ■ 11

Tech M&A

“People are finally putting their money where their mouth is ”money where their mouth is.

- Thompson Phillips Jr.

Corum Group Presentation ■ 12

Presenter

Miro Parizek, Managing Director Corum Group International - Zurich

University of Pennsylvania, Computer Science Wharton School of BusinessWharton School of Business Software Industry since 1983 Founder of three software and IT service companies Exited North American Software and MediaGold 12 years M&A Advisor with the Corum Group Led on dozens of M&A transactions in virtually all

software and IT related sectors including Datacenter Infrastructure Datacenter Infrastructure Vertical software Horizontal solutions IT Services Enterprise Appplications

Corum Group Presentation ■ 13

Web Commerce

International M&A

Corum Group Presentation ■ 14

International M&A

C Challenges Cultural differences

Integration across bordersIntegration across borders• Establishing clear organization structures

• Fostering teamwork

Benefits Economies of scale

Growth for top (and hopefully) bottomline

Higher service levels for international customers

Access to “rare” domain expertise

Corum Group Presentation ■ 15

Access to rare domain expertise

Global leadership position

International versus Domestic

Corum Group Presentation ■ 16

Source: Thomson Financial

European Public Markets

Corum Group Presentation ■ 17

Equity Valuations Not in Bubble Territoryy y

Corum Group Presentation ■ 18

Source: Datastream

International Buyers of U.S. Companiesy

22%23% FRANCE

19%19%

GERMANY

UK

21%8%NORDIC

BENELUX

OTHER

Corum Group Presentation ■ 19

Source: 451 Group

Top Non-U.S. Buyersy

Europe IT Services Asia SAP - DE Siemens - DE Software AG - DE Pearson - UK

Bull - FR Thales Group - FR Cegedim - FR

At O i i FR

China Security Kingdee International CDC

T dMi Pearson - UK Autonomy - UK Sage - UK Thomson Reuters - UK

Atos Origin - FR Capgemini - FR Steria - FR Logica - UK

TrendMicro NTT Fujitsu Namco Bandai

Dassault - FR Ubisoft - FR Wolters Kluwer - NED

Logica UK Computacenter - UK Getronics - BE

Namco Bandai NEC Sony

Canada Research in Motion OpenText

LAM Datasul SA - BR BuscaPe com - BR

India Wipro TaTa

Corum Group Presentation ■ 20

OpenText CGI

BuscaPe.com BR Hildebrando SA - MX

TaTa Infosys Satyam

Related Cross-Border Transactions

Buyer U.S. Target Detailsy g

• Skydata creates business mobile applicationsfor RIM, Windows and iPhone

• Terms undisclosed• Terms undisclosed • Provides Ticker data management for

financial service companies

• Terms undisclosed• Terms undisclosed• Provides subscription-based automotive

GPS devices and software for consumers

• Estimates $124m in cash• Estimates $124m in cash• SaaS, enterprise manufacturing intelligence

software

• Transaction valued at $3 2m

Corum Group Presentation ■ 21

• Transaction valued at $3.2m

“Lesser Known” Non-U.S. Buyersy

Australia IndiaHCL Technologies 3 deals; $10m $50m• Computershare Ltd - 7 deals; $4m - $120m

Canada• Constellation Software – 18 deals;

• HCL Technologies – 3 deals; $10m - $50m• 3i Infotech – 5 deals; $4m – $80m

Israel$1m - $25m

• Softchoice Corp. - 3 deals; $3m - $50m• Tucows Inc. - 5 deals; $1m – $20m

• Ness Technologies – 3 deals; $10m - $80m• NICE Systems – 5 deals; $10m - $300m

U.K. France

• ILOG Inc. - 2 deals; $2m - $15m• Ubisoft - 3 deals; $10m - $100m (est.)

B siness Objects 7 deals $4m $100m

• SDL International - 3 deals; $15 - $60m• Misys PLC – 3 deals; $13m - $330m

Philippines• Business Objects - 7 deals, $4m - $100m

pp• IPVG Corp. – 2 deals; $10m - $15m

Corum Group Presentation ■ 22

Field Updatep

Bruce Lazenby

John MelotteRegional DirectorUnited KingdomBruce Lazenby

Regional Director Canada

United Kingdom

Corum Group Presentation ■ 23

Jerome FougeratRegional DirectorFrance

Dougan MilneI i l R hInternational ResearchCorum Group Ltd.

Dougan is a Research Analyst who has worked for 3 years with Corum's international groupDougan is a Research Analyst who has worked for 3 years with Corum s international group headquartered in Zürich, Switzerland. Prior to joining Corum's team in 2005, Dougan spent three years working in the banking industry with Bank of America, and Citigroup's Private Wealth business unit. Before entering finance and investment banking, Dougan founded the successful garment distribution business, Billions Apparel. Dougan has a Bachelors degree

f f Sin Business Economics from the University of San Diego.

Corum Group Presentation ■ 24

Public Markets

Nasdaq S&P Tech Dow

110.00

120.00Nasdaq S&P Tech Dow

80 00

90.00

100.00

60.00

70.00

80.00

40.00

50.00

Jan‐09 Feb‐09 Mar‐09 Apr‐09 May‐09 Jun‐09 Jul‐09 Aug‐09 Sep‐09

Corum Group Presentation ■ 25

p y g p

M&A Activity – Septembery

Number of Software and IT M&A Transactions

255

350

276

239

September

2004

2005

350

0 50 100 150 200 250 300 350 400

2009 2008 2007 2006 2005 2004

Corum Group Presentation ■ 26

2009 2008 2007 2006 2005 2004

Corum Index – M&A Statistics

Sep 09Sep 08# of Transactions# of Mega Deals >$1BLargest Deal

Sep-092556

$6 400

Sep-082421

$2 000Largest DealAverage Deal ValueMedian Seller Revenue# VC backed Exits

$6,400$381$11233

$2,000$99$2817

% Terms UndisclosedAll Cash (announced)% Targets Public

77%47%13%

64%59%16%

$ l i illi

% Buyers Public 45%49%

Corum Group Presentation ■ 27

$ values in millions

Horizontal Application Software Market

Public Valuations Deal Spotlight:Sector: Supply ChainTarget: LS Retail + To-IncreaseBuyer: MicrosoftDate: September 2009Transaction Value: $5 millionStructure: CashHorizontal

ApplicationSoftware Comments:

Microsoft Dynamics Vertical expansion 2 Nordic companies

Feb‐09 Mar‐09 Apr‐09 May‐09 Jun‐09 Jul‐09 Aug‐09 Sep‐09

EV/EBITDA 5.85 x 6.82 x 9.23 x 9.39 x 9.99 x 11.06 x 11.06 x 12.67 x

Software

EV/S 1.12 x 1.12 x 1.16 x 1.35 x 1.50 x 1.58 x 1.93 x 2.41 x

Corum Group Presentation ■ 28

Vertical Application Software Market

Public Valuations Deal Spotlight:Sector: PublicTarget: FKI LogistexBuyer: Lyngsoe ASDate: September 2009Transaction Value: n/a

Comments:Vertical ApplicationSoftware

Gains libraries International expansion Domain expertise Client base

Feb‐09 Mar‐09 Apr‐09 May‐09 Jun‐09 Jul‐09 Aug‐09 Sep‐09

EV/EBITDA 6.19 x 6.53 x 7.26 x 7.99 x 8.17 x 8.91 x 9.01 x 9.32 x

Software

EV/S 1.01 x 1.14 x 1.31 x 1.40 x 1.51 x 1.51 x 1.66 x 1.80 x

Corum Group Presentation ■ 29

Consumer Application Software Market

Public Valuations Deal Spotlight:Sector: Consumer FinanceTarget: MINT.comBuyer: IntuitDate: September 2009Transaction Value: $170mStructure: CashConsumer 

ApplicationSoftware Comments:

SaaS Connected services strategy Evolving business model

Feb‐09 Mar‐09 Apr‐09 May‐09 Jun‐09 Jul‐09 Aug‐09 Sep‐09

EV/EBITDA 2.40 x 2.74 x 3.81 x 2.83 x 4.47 x 4.57 x 4.27 x 5.88 x

Software

ConsumerEV/S 0.58 x 0.64 x 0.69 x 0.50 x 0.53 x 0.53 x 0.59 x 0.83 x

Corum Group Presentation ■ 30

Infrastructure Market

Public Valuations Deal Spotlight:Sector: SecurityTarget: VericeptBuyer: TrustWaveDate: September 2009Transaction Value: $20mRevenue Multiples: 2.0xStructure: Stock (est.)

Infrastructure Software

Comments: Critical data classification SaaS offering in the future

Feb‐09 Mar‐09 Apr‐09 May‐09 Jun‐09 Jul‐09 Aug‐09 Sep‐09

EV/EBITDA 6.32 x 6.98 x 8.46 x 8.29 x 8.74 x 9.59 x 10.92 x 10.46 x

EV/S 1.31 x 1.43 x 1.55 x 1.52 x 1.72 x 1.95 x 2.02 x 2.14 x

Corum Group Presentation ■ 31

Internet Market

Public Valuations Deal Spotlight:Sector: e-CommerceTarget: BuscaPe.comBuyer: NaspersDate: September 2009Transaction Value: $342m

Comments:Internet

Geographic expansion Dominant regional player Favorable demographicsFeb‐09 Mar‐09 Apr‐09 May‐09 Jun‐09 Jul‐09 Aug‐09 Sep‐09

EV/EBITDA 6.05 x 7.54 x 9.80 x 11.78 x 11.81 x 13.32 x 13.02 x 15.80 x

EV/S 1.36 x 1.60 x 2.11 x 2.26 x 2.30 x 2.48 x 2.60 x 2.70 x

Corum Group Presentation ■ 32

IT Services Market

Public Valuations Deal Spotlight:Deal Spotlight:Sector: IT ServicesTarget: eVisoryBuyer: IQ Business GroupBuyer: IQ Business GroupDate: September 2009Transaction Value: N/A

Comments:

IT Services

Comments: Geographic expansion Cultural expansion Domain expertiseFeb‐09 Mar‐09 Apr‐09 May‐09 Jun‐09 Jul‐09 Aug‐09 Sep‐09

EV/EBITDA 5.27 x 5.32 x 5.76 x 5.51 x 5.24 x 5.56 x 5.67 x 6.66 x/ 5.27 x 5.32 x 5.76 x 5.51 x 5.24 x 5.56 x 5.67 x 6.66 x

EV/S 0.55 x 0.56 x 0.60 x 0.61 x 0.63 x 0.68 x 0.68 x 0.73 x

Corum Group Presentation ■ 33

Market and Valuation Summary

Transaction volumes back up! Transaction volumes back up!

Continue to see month on month increases in public valuationsvaluations

Good valuations for strategic opportunities

Active buyer universe: Public Private and PE Active buyer universe: Public, Private and PE

Private equity putting dollars to work: Buyout, Roll-up, etc.Roll up, etc.

Mega Deals are back.

Corum Group Presentation ■ 34

Corum Group Presentation ■ 35London – November 17

Partial Speaker List

November 17, London – info@worldfinancialsymposiums.com

Frank BoenkeWellington Partners

Andrew TsaoSilicon Valley Bank

Kristof de SpiegeleerSUN (Q-Layer)

Pelle HjortbladProjectPlace

Jenny RosbergNASDAQ

Bernard DalleAnil Hansjee Mike PeplowAshley Ward Gustavo Garcia

Corum Group Presentation ■ 36

Bernard DalleIndex Ventures

Anil HansjeeGoogle

Mike Peplow Banctec

Ashley WardEuropean Leadership Programme

Gustavo GarciaBuyVIP

www.worldfinancialsymposiums.comy p

Growth and Exit StrategiesGrowth and Exit Strategies Staging for Recovery

The Future of M&A VC Private Equity and Public Offerings in the New Tech LandscapeThe Future of M&A, VC, Private Equity and Public Offerings in the New Tech Landscape

November 17, 2009 London

Attend this conference to learn about: Raising capital in the current environment The new rules of global tech M&A The role of private equity in a credit-starved market The IPO window Creative transaction structures Finding value and opportunity in the cloud

Corum Group Presentation ■ 37

Finding value and opportunity in the cloud Acquisition multiples, VC tactics and more

Upcoming Corum Eventsg

October 5: Prague – SUSO October 23: Munich – MB

October 6: Boston – MB

October 8: Lyon – MB

October 8: Washington DC MB

October 27: Frankfurt – MB

October 27: Dublin – SUSO

November 3: Houston SUSOOctober 8: Washington DC – MB

October 13: Scotland – MB

October 13: Austin – SUSO

November 3: Houston – SUSO

November 5: MERGE Webinar (Int’l)

November 10: MERGE Webinar (France)

October 14: Ireland – MB

October 20: Stockholm – MB/SUSO

O t b 22 D k MB/SUSO

November 11: MERGE Webinar (DACH)

November 17: London – WFS

N b 18 Ft L d d l MBOctober 22: Denmark – MB/SUSO

October 22: Grenoble – MB

November 18: Ft. Lauderdale – MB

November 19: Tampa – MB

Merge Briefing (MB)

Corum Group Presentation ■ 38

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

Contact Information

Corum Group Ltd.

Bruce Milne, CEO

Dougan Milne, ResearchD @Douganm@corumgroup.com

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

Corum Group International S.à.r.l.

Miro Parizek, Managing DirectorUSA

+1.425.455.8281

g gMirop@corumgroup.com

Beim ParadeplatzBasteiplatz 78001 Zü i h

Research and Conferences:

8001 ZürichSwitzerland

+41.44.251.82 65

Corum Group Presentation ■ 39

Research and Conferences:www.corumgroup.com