Client Briefing April 2019 | 1

2019 JEGI | CLARITY MEDIA & TECHNOLOGY CONFERENCEJEGI | CLARITY hosted its 15th annual Media & Technology Conference on January 17th at the Time Warner Center in New York City. The 2019 Conference brought together nearly 500 senior executives and investors from the global media, information, marketing, software and tech-enabled services sectors for an afternoon of highly engaging programming and peer-to-peer networking.

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Attendees filled the conference venue to watch presentations from A-list speakers

April 2019

CLIENT BRIEFING

Focused on “Where to Look Next for Growth & Profit in Digital Markets,” the event provided key insights from high-profile speakers across JEGI | CLARITY’s core markets on how to stay relevant in today’s fast-paced and rapidly evolving digital landscape.

JEGI | CLARITY is extremely grateful to the event’s long-time sponsors for their support: BDO; Boston Consulting Group; Capital One; Intralinks; Koller Search Partners; Morgan Lewis; and Oracle NetSuite.

In addition, JEGI | CLARITY would also like to thank the esteemed roster of speakers who contributed their time and effort to the Conference. Biographies for all speakers, as well as the full program guide and select presentations, can be found at: www.jegi.com/resources/2019-JEGI-Media-Technology-Conference.

On the following pages, we have provided excerpts from several Conference sessions.

IN THIS ISSUE

1 2019 JEGI | CLARITY Conference

2 Opening Keynote

3 Direct to Consumer Disruptors

3 Major Legal Trends

4 Mid-Day Keynote

5 Corporate M&A

6 JEGI | CLARITY Sector Insights

8 Technology Marketing

9 Partnering with PE

10 Closing Keynote

11 Investor Speak

12 Exceptional Transaction Experience

ModeratorJohn Rose, Senior Partner & Managing Director, BCG

Keynote SpeakerMike Reed, Chief Executive Officer, New Media Investment Group

2 | Client Briefing April 2019

OPENING KEYNOTE FIRESIDE CHAT

(from left) John Rose (BCG), Mike Reed (New Media Investment Group)

Mike Reed, Chief Executive Officer of New Media Investment Group as well as GateHouse Media, provided insight on how he has navigated and ultimately succeeded in the challenging newspaper industry.

John Rose: Where are the sustainable value sweet spots in the news business?

Mike Reed: The real sustainable model is in the small to mid-size markets, where you can be the sole or dominant provider of comprehensive hyper-local news. In today’s world, where content and news is available from so many different sources 24-7, content is as valuable as ever. What gives content a little more value is when you can do something that’s truly unique. In a small to mid-size town, the local newspaper is still the only comprehensive, dominant source for local news, and we think there’s sustainability long-term in that piece of the business.

Rose: How, for a larger newspaper organization, do you deal with the drag-along fixed costs of print?

Reed: We regionalize and centralize what doesn’t have to be done locally.From a local perspective, we only have to be in the market to sell, cover news and distribute. We don’t really have to do anything else in the local market, whether it’s editing, accounting, payroll, HR, legal - all of that can be

done centrally. The real benefit to that is, while you lower your costs, you also improve quality, because you’re paying a more talented person than that individual newspaper could afford on its own.

Rose: Local is one sustainable place in terms of cost structure. Do you see any others outside of that?

Reed: The traditional media business and newspapers are challenged in two places: metro markets and traditional advertising. In the metro markets, you have major metropolitan newspapers, but they aren’t really local other than maybe the coverage of professional sports teams, which they dominate. The traditional advertising model, which metros are more dependent on than smaller market newspapers, is broken as well. Businesses have so many different platforms and ways to reach consumers today - more economically, more targeted - and they just don’t need to run traditional advertising in any meaningful way going forward. Businesses that are trying to continue building around advertising are, I believe, doomed to fail. That’s a fading, declining category.

Rose: You’ve done some cool stuff on the consumer revenue side too. You have thought about opportunities that a lot of others have also thought about, but you think about them in a different way.

Reed: Obviously, we have a consumer subscription business, but we know we can’t raise prices forever, so there’s a limit to how much subscription revenue we’re going to be able to take out of a market. Yet we have a great relationship with consumers in our communities, so we thought about how we could create an additive business that was focused on consumers.

We thought about experiential, which is something that so many folks are into. It was a way for us to not only reach the population we reach with our newspapers, but also the millennials in the younger generation. We built a local events business. Not an events business like you might typically think about. I try to create something unique to our markets. We’re doing $50 million in revenue, with almost a 50% profit margin on that event business. Once a year, we hold an Espy Awards event in our local markets for high school kids, and we recognize the male and female athletes of the year in every different high school sport. It’s been a huge success.

MAJOR LEGAL TRENDS FOR 2019

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Mike Edelhart: Boxed is an ecommerce company focused on bulk products. Why this, why now and how have you managed to disrupt this market?

Chieh Huang: I did not anticipate 99% of the challenges. Overall, we were just so lucky that the industry winds of change were blowing at our backs. Retail’s constantly in flux, but the speed of change is faster and more violent than ever.

DIRECT-TO-CONSUMER DISRUPTORS

Chieh Huang (Boxed)

Edelhart: What have you learned from your earlier businesses?

Huang: I used to work with one of the first mobile social game developers for the iPhone. Before the IPO, Zynga acquired our company. To go from starting in one of our mom’s attics to raising money to being acquired to an IPO on NSDAQ, then watching Zynga’s stock run up to $16.00 and then within three quarters seeing it at $1.85...

People say grit is having the wherewithal to just keep going, but I think it’s actually two-sided. Don’t let yourself get too low, don’t let yourself get too high.

Edelhart: What have you done under the surface to make Boxed work?

Huang: We write both the front-end and back-end software. On the back-end, we’re one of the only food retailers that surfaces expiration dates. We also parse out all the orders through one checkout system. One step below that, we’re trying to figure out retail faster than the retailers figure out technology. We actually design, engineer, and manufacture our own robotics.

Chieh Huang, Co-Founder & CEO of Boxed, discussed his experiences and learnings as an entrepreneur with Mike Edelhart, Managing Partner at Social Starts.

Edelhart: You’ve been getting attention for your compassionate employee benefits programs. Why are you doing it, from a business point of view?

Huang: Showing folks that we care about them is what powers our culture. You start seeing it in the bottom line because they’re not going to give you just the minimum effort. They want the company to succeed. Our fulfillment costs are actually lower than Amazon’s.

Edelhart: Why do you feel like you’re becoming a media company?

Huang: A significant part of our revenue comes from non-selling activities. Big brands are starting to realize that if they spend money on Facebook or Google, they send the traffic elsewhere, and then they start to lose the scent. Whereas if they spend that money with us, we not only tell them ‘this is how much you spent’ but also, ‘this is who you spent it on, who clicked, and whether we converted that customer for you.’ Real time ROI.

Rob Dickey, Partner at Morgan Lewis, discussed Corporate Venture Capital (CVC). A few key takeaways include:

Mr. Dickey’s complete presentation is available at: www.jegi.com/resources/2019-JEGI-Media-Technology-Conference

• In 2018, CVC deals continued to increase both in number of deals and aggregate deal value

• Corporate VCs were involved in 16% of venture rounds and 51% of total VC investment

• Corporate VCs may offer greater resources to issuers beyond capital

• Corporate VCs may have different goals for exits – an IPO or sale of entire company may not be desired

• Corporate VCs need to carefully consider how confidential issuer information is shared internally

• Everyone in the ecosystem – the corporate VC, the issuer and any other investors – needs to reconsider assumptions about how the relationship will work

ModeratorAmir Akhavan, Managing Director, JEGI

Keynote SpeakerMike Steib, Former Chief Executive Officer, XO Group (now The Knot Worldwide)

4 | Client Briefing April 2019

MID-DAY KEYNOTE FIRESIDE CHAT

Mike Steib, Former Chief Executive Officer of XO Group (now The Knot Worldwide), shared his story about how he transformed The Knot into a two sided e-commerce marketplace.

Amir Akhavan: Help us unpack some of the core elements of what XO does today.

Mike Steib: If you were a typical American couple planning a wedding, you would be setting out on a journey that takes 13 months and will cost you more than your after-tax income for that year. From a business perspective, that’s a $60 billion annual industry in the U.S., and one where XO Group had an opportunity when I joined the company. The Knot was part of a suite of products and strategy that the company called ‘life stage media.’ We were getting people’s eyeballs when they were planning a wedding and selling ads to them.

We saw an opportunity to take this brand that people loved, at the moment in your life where you need help planning a complicated event, and connect you to vendors who would pay significant amounts of money for the opportunity to book business with our users. We thought, “Let’s take The Knot brand. Let’s build a suite of wedding planning software, put it in an app, build out a two-sided marketplace of local vendors, charge those vendors a subscription rate to be in the marketplace, connect the users to the vendors, and try to grow our company.” The 75% of the company represented by that strategy is growing 20%, and the company is delivering adjusted EBITDA margins over 20% and expanding.

Akhavan: The Knot was in existence

about 20 years before you came in and you basically found a publishing and ads business. Tell us about how you evaluated the state-of-the-state and what the first few things were from a strategy standpoint that you had to implement.

Steib: First, because it was a new challenge, we just needed a lot more people. We recruited new execs, and they started to build out their teams. If this was to be a technology-driven company, we had to have two things. One, the underlying technology had to work really well. The code base early on was as old as The Knot brand, and not a single person who had written the code was still there maintaining it. It needed a complete organ transplant. The second component was building good consumer products that people want to use. There’s a craft to product management.

Akhavan: When did you know it was working?

Steib: The transformation had to happen in three phases. The first was that we had to add talent to the organization. The next phase was building out a two-sided marketplace. We had to demonstrate that we could get people to actually use our product suite all the time for planning the wedding. The third part, once we knew it was working, we hired a terrific president who came in and rebuilt the sales machine.

Akhavan: What were some learnings around things like UX, UI, product development, and talent that had to basically crack the code of creating that equilibrium in a two-sided marketplace, so that everyone is satisfied with the experience?

Steib: Getting the company to be really good at mobile apps was hard. The whole business had been built on the web. We

kept saying the future of the company is an app, which is fundamentally different than thinking about ‘what do I want to build an app to complement?’ It was how do we get every job that needs to be done by the consumer into an app? Then the task becomes what do I put in front of you? Then it’s leveraging what we know about this consumer in particular and this broader set of underlying data that we have to personalize the experience.

Akhavan: Every consumer media brand now is thinking about incorporating commerce into their strategy, whether it’s affiliate networks or creating marketplaces. What advice would you give to someone as they’re thinking about that transformation?

Steib: We found that we had to develop a middle step between content and commerce, and it’s the wedding planning software I was describing. We did some analytics about a year in – this was a heavy lift, but we were able to track for every unique user who came into our product set, where else in our experience did that user go? And when you looked at the chart many came for one thing and then only came back for whatever they did the first time. Then there was one group that shot off the chart, which was when people adopted the tools we were building for planning your wedding, they did everything. The strategy for us became to use content to attract our audience and cultivate our brand.

(from left) Amir Akhavan (JEGI | CLARITY), Mike Steib (XO Group)

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CORPORATE M&A: TURNING THE BIG SHIP

Tolman Geffs: Sheila, I knew you back at Primedia, which was a deal machine. Then at WPP, which was also a deal machine. Now, you’re at Spotify, which grows 40% a year organically. Are you going to buy a lot of stuff?

Sheila Spence: The little-known secret about Spotify is that the company has actually done 15 acquisitions in its relatively short lifespan. But that being said, the company has really focused in its history on acquisitions that are about driving the core business. We did an acquisition last year that was probably the first that falls into that category of strategically extending beyond our core business.

Geffs: To turn a big ship you need to make big moves and deals. An amazing example is Acxiom divesting its core business to form LiveRamp as a stand-alone public company. How did you have the courage to do that?

David Eisenberg: You have to have alignment of board, management and investors. You have to have a holistic plan of where you want to head – not just buy something, but you have to have a plan for fundamentally changing the culture, changing the products.

Geffs: How do you view your role in terms of helping shape strategy at Informa?

Alex Roth: My role was to put a proper filter on the pipeline. We determined

incredible. One of the more interesting things that happened over the past couple weeks, was our CEO declaring that he believes in entertainment and removing the overhang that he’s going to sell Sony Pictures. I think it’s our job to try to think strategically about what our next move is and where we invest our capital.

Geffs: What’s the biggest risk you see in what you’re doing now?

Eisenberg: It’s not continuing that same level of willingness to take risk. You have to move, but at the same time, be careful to keep the things that are so special about your organization and culture.

Roth: We restructured the company and our costs. We figured out which market we were already in and wanted to double down on. What we haven’t done is gone to a space that is developing and said, “We’re going to be the pioneer in developing this market, and then we’re going to own it when we’re done.” That requires a different level of commitment and confidence to really go after.

Spence: When we make acquisitions, they have to become part of an integrated organism, and what we have to think about is how we prioritize what we do because the living, breathing organism has to run the business and embrace new strategic priorities. We just need to make sure we’re stack-ordering these wherever they’re going to have the most strategic impact.

Keane: For us at Gartner, it’s balancing between trying to always disrupt ourselves, while also looking for opportunities that could potentially disrupt our business.

Moreno: The ability to know where your value is in an ever-changing world, I believe, is going to be very interesting.

(from left) Tolman Geffs (JEGI | CLARITY), David Eisenberg (LiveRamp), Christian Keane (Gartner), Erik Moreno (Sony), Sheila Spence (Spotify), Alex Roth (Informa)

A panel of senior corporate development executives discussing M&A as a strategy for growth and change.

what the slowest growing piece of our business was and we decided to put that cash to use in another part of our business - tradeshow operations. We decided to go after tradeshows in a big way. We saw that the largest market with roughly 50% was the US. We identified US-based companies that we could buy and bought them in the order of smallest to largest. Since then, we have actually done two transactions that were a quarter to half of our market cap.

Geffs: Tell us how the Corporate Executive Board transaction came to be. Gartner is a very disciplined company, and that was quite a big move.

Christian Keane: Gartner had been performing tremendously well. We had almost 40 quarters of consecutive double-digit growth in our IT research business. At the same time, we knew that IT and technology decision-making were changing. So as great as the market opportunity was in our current market, we really knew that we had to do something provocative to expand beyond that space.

Geffs: How is Corp Dev different at Sony...at a really big, diversified company?

Erik Moreno: I visited Tokyo in November. What impressed me the most is that it is still an old-school holding company, and the intellectual horsepower of the senior leadership is

6 | Client Briefing April 2019

JEGI | CLARITY SECTOR INSIGHTS

Marketing ServicesMarcus Anselm

Digital disruption continues to affect media consumption. Ten years ago, people on average spent 188 minutes per day watching television as compared to 48 minutes per day on the internet. For the year ahead, the Internet is expected to take over. As a natural consequence of this, we’ve all changed the way we purchase goods. More time being spent online, more money being spent online. Ad spend has shifted, in turn. In 2003, just 4% of budgets globally were spent on digital as compared to 44% expected for 2019.

Not only do you need to be smarter to find your consumer via digital, you need to be fast, clear and targeted in communicating your content. Research shows that the attention span of humans is decreasing. Twelve seconds in 2003 compared to eight seconds in 2018, which is actually one second behind a goldfish. To efficiently serve people with a short attention span requires a particular skill and approach, and equally, the technology powering the message needs to be fast, because no one is going to wait around for four seconds for an image to load.

What does this mean for M&A? First, a huge change in the buyer landscape. In 2003, the range of marketing services buyers was tight in terms of where they came from, and private equity appetite was thin. Wind forward to the present day, and the types of buyers out there and the way they’re structuring deals has brought opportunities that simply never existed before. Last year, for the first time, more than 50% of

all transactions were carried out by groups not from a marketing services heritage and these buyers are focused on acquiring specific skills. Nearly two-thirds of all acquisitions in the space had targeted specialist capabilities. If you’re an owner of a business that may one day be acquired, you’re well advised to focus your efforts on becoming a market leader in one or two capabilities.

Within the agency world, there is no shortage of disruption and change. One thing is sure. The continuous disruption in this space is driving new entrants to the market, fueling M&A activity.

B2B MarketingAdam Gross

B2B marketing solutions can take many different forms, from print and digital media to events, e-mail marketing, search marketing and sales enablement solutions. They utilize different sets of data, insights and analytics to help sellers reach the right buyers at the right time with the right product or service.

Take the example of our client SmartBrief a privately held company transforming the marketplace. SmartBrief, has more than six million opt-in subscribers coming from e-mail newsletters targeting corporate employees and members of associations. The company utilizes its technology platform to enable marketers to target this deep database of decision-makers, both horizontally, by specific title or function across all industries, and vertically, meaning

all executives within a given industry. It creates a highly efficient and actionable way for marketers to reach key target audiences, a growing platform in the B2B marketing solutions ecosystem.

It’s no wonder that B2B marketing solutions like this are seeing significant levels of M&A activity as both corporations and financial investors are finding the sector ripe with strong

opportunities for growth and returns on investment. M&A is being driven by two key factors – confidence and capital. For confidence, the US equity markets are still trading at high levels, the US economy continues to grow (about 3% in 2018), and unemployment remains historically low. On the capital front, corporations have $3 trillion of capital, PE firms have $1.8 trillion of dry powder, and the debt markets remain vibrant.

How do companies increase their valuations and begin to sell into a revenue multiple? Multiples increase as business models move towards stickier, more visible and recurring revenue. Valuations expand with annual or longer-term contracts; as solutions move from project management to managed services to embedded workflow tools; and as pricing models evolve from cost plus to full license sale and EBITDA margins increase from 15% on the low end to more than 25% on the high end.

SMB Digital EnablementMichael Hirsch & Joseph Sanborn

The SMB market offers a huge addressable opportunity across a variety of companies with different software needs. We define the S in SMB as primarily owner-led private businesses with less than 100 employees. The M is companies with up to 2,500 employees, including small public corporations. There are more than six million companies in this category and they are critical to the US economy.

These SMBs operate in dynamic industries spanning professional services, consumer services, retail and community

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organizations. Examples include real estate agents wanting to engage prospects and customers at scale with unique local digital content. And even summer camps making the registration, payments and communications process easier for both parents and campers alike.

SMB software solutions need to be easy to use and affordable. And software vendors often must provide specialized vertical knowledge, features and customer care to drive sales adoption and to enable their customers to optimize their software experience.

The cloud continues to be the driving platform for SMB digital enablement. Users basically need broadband, a browser and not much else. With a mouse click or a finger tap, they need to know that their business software will simply work. Ease of use combined with low cost and speedy deployment all continue to fuel SMB software adoption. SMB software also aggressively leverages now ubiquitous mobile first technologies and apps to perform business functions, including managing workflows, taking customer payments, communicating with employees, better engaging with their customers and so much more.

Finally, SMB software providers are allowing for API integrations to build up partner ecosystems to provide customers with low-cost, low-effort application integration, enabling them to focus more on growth and less on the daily grind. This trend mitigates the disjointed use of solutions such as spreadsheets and e-mail to manage critical business functions.

Favorable trends around SMB software adoption are attracting investor attention, particularly growth equity. Growth equity’s philosophy aligns well with SMB software

investments, an area that other investors have historically shied away from. The growth investor embraces relatively smaller addressable markets, where there is an opportunity to be a break out market leader. And they are comfortable with 20-50% growth rates - which is low compared to most SaaS models. The growth investor strikes a balance between the high cash burn orientation of VCs and the cash flow focus of PEs.

All this investment activity is leading to the evolution of SMB digital enablement strategies. Version 1.0 consisted largely of horizontal one-size-fits-all solutions to acquire customers, drive engagement, fulfill orders and administer a company’s back office. As a result, user satisfaction was often low and churn was high. Version 2.0 of SMB digital enablement is all about vendors providing solutions tailored to the specific needs of a given vertical market. Vendors benefit by having happier long-term customers and a lower cost of acquisition than most first-generation providers.

As entrepreneurs and growth investors look for their exits, we have seen the emergence of SMB vertical software consolidators. EverCommerce, backed by Providence Equity, has been buying up a wide range of vertical software vendors serving SMB markets ranging from hair salons and fitness studios to small contractors. Together Work has bought software vendors focused on niche areas around recreation, camps and community organizations, and which itself was recently acquired by GI partners at a lofty multiple. These are examples of holding company structures being created by later stage and private equity investors to aggressively consolidate vertical software companies focused on SMB markets. Their strategy is often to maintain brands and front

end interfaces, but integrate on the back end where scale can matter.

The public markets have also seen notable examples of SMB consolidators, including Mind Body, which focuses on the fitness market, and announced last Christmas Eve that it was going private with Vista Equity, a nearly $2 billion transaction. We see this consolidation activity as the tip of the iceberg

in the creation of several larger SMB software vendors.

Human Capital Management (HCM)Jeff Becker

In the early-2000s, the HCM space could be considered prehistoric, dominated from a technology perspective by a handful of legacy ERP vendors. Solutions really focused on just employee recordkeeping. Also at the time, enterprise software was sold primarily on a perpetual license model, usually at seven figure-plus deal sizes. HR as a cost center couldn’t afford this type of purchase, and as a result, there was very little innovation going on in the HCM software sector.

Shortly after, the HCM landscape changed for the better. For the previous two decades, most enterprises had really focused on their back end ERP systems and automating things like supply chain, but then started to realize that, in fact, what was left to get more efficiency out of was actually their people. That was the biggest opportunity for differentiation. Around the same time, SaaS models began to emerge, and we started to see a lot of VC activity and IPOs in the HCM space.

Today, HCM solutions address major enterprise pain points. We have historically low levels of unemployment, creating a big skills gap and war for talent, as companies are seeking to find the right people. Other factors include the gig economy and the big influx of millennials in the workforce. Finally, analytics and predictive insights are always desired by enterprises, especially in HR. All of these trends have resulted in the sector garnering high valuations because between those factors, it is a truly horizontal opportunity across all sectors.

HCM SaaS companies historically have traded at a premium to their general SaaS counterparts, and for the past few years have outperformed the overall market. So HCM still has a very bright future ahead of it, and as you think about trends in other areas like analytics and AI being applied in the HR market, you can easily envision added efficiency gains by HR professionals and HCM processes, generally, and also optimized employee experiences.

ModeratorSabrina Horn, Senior Advisor, Tech Practice, Finn Partners

Keynote SpeakerJason Maynard, Senior Vice President of Global Field Operations, Oracle NetSuite Global Business Unit

8 | Client Briefing April 2019

TECHNOLOGY MARKETING - THE CMO VIEW

Sabrina Horn: Let’s talk about the Oracle | NetSuite acquisition. By all rights, it is one of the most successful transactions Oracle has ever done.

Jason Maynard: I admit that we were all a little scared when NetSuite got acquired, because we didn’t know exactly what that meant for us. To Oracle’s credit, they have managed this acquisition intelligently. They have turbocharged our growth by giving us opportunities to invest even quicker than before.

One of the challenges that we had at NetSuite was we needed to really expand internationally. We have been able to leverage the Oracle infrastructure to grow in all sorts of different markets. They have really given us that jet fuel, and we can piggyback off of their global infrastructure.

Horn: What can we expect from NetSuite this year?

Maynard: We’re investing a lot in product to expand internationally, and a lot of that is from our customers who are pulling us into places. We’re focused on ease of use of NetSuite; we are adding new customers faster than ever, and part of that is our investment to make the product easier to use. The last is to continue to focus on verticals.

Horn: You talk about running marketing like you’re running a hedge fund. How is your approach to marketing different at NetSuite?

Maynard: I was a Wall Street analyst. I published content and I had looked at every software business model under the sun, but had not actually operated a marketing group. When I took over, there was a serious disconnect between a dollar of marketing spend and any business outcome that was satisfactory to the executive team. I thought ‘let’s bring a math department to marketing.’ We built this crazy thing like a financial model, where we could tie dollars spent on advertising to an actual customer.

Horn: One of the things that you’re doing this year is around the notion of humanizing communications. Grow Wire, which is your in-house content marketing platform, is a big part of that. Can you talk to us about what humanizing communications looks like?

Maynard: We sell ERP: nobody likes ERP, right? What we are trying to do is not talk to our customers or our prospects in a jargon-filled three letter acronym-based approach. And I would say for many years and I was guilty of this coming from Silicon Valley - we basically thought our audience were folks who live in New York, Boston, San Francisco, LA and maybe Chicago, and so we wanted to talk in nerd speak to all those folks. Our goal was how do we grow, because we had this theory that there were a lot of growing companies located between San Francisco and New York. That was the premise that we operated on. Let’s see if we can go talk to those folks. What we’re trying to do is simplify our message.

We believe that every business is going to have to be a content publisher. We started Grow Wire as our alternative to Inc, Entrepreneur or Fast Company. We said, “Let’s take ourselves out of the story and just put a site up with great business advice, content, stories of entrepreneurial success and failure.”

Horn: You create the content in-house and hired a really amazing team to help

do your marketing. Is there still a role for the agency within NetSuite? And from a broader industry perspective, what is the impact on the agency industry right now in terms of that shift to in-house communications?

Maynard: We still use agencies, but we do a lot of things in-house. We have a paid search team that are like my traders - buying and selling keywords and ads all day long. That, to us, is a core competency. But we use agencies for public relations, events, and some digital advertising. The challenge that we’ve had is that most of the agencies are still very siloed and singular discipline focused. At the end of the day, I have to produce ROI, so I have to be integrated across all my functions as the head of marketing and produce an output. No agency was built that way, so we had to silo and cut up our budget.

Horn: When you market against your competitors, is what you say to target an SAP customer any different from what you say to a Workday customer? How do you do that?

Maynard: You know, here’s the thing. We’re not that focused on our competitors. I feel like that’s again very old school. We believe, for better or worse, that we’re going to create our own demand. I’d rather focus our energy on how do we have the right message in the marketplace that compels you to call us.

Jason Maynard, SVP of Global Field Operations at Oracle NetSuite, discussed how he approaches marketing at a global technology company, like Oracle.

(from left) Sabrina Horn (Finn Partners), Jason Maynard (Oracle NetSuite)

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PARTNERING WITH PRIVATE EQUITY

When you’re running a business and trying to do M&A, you are sometimes faced with a choice between the M&A process and running your business, and that’s very challenging. PE ownership creates a partnership that actually enables the principals to continue to manage the business while the sponsor takes care of M&A.

We look to grow businesses in the most strategically valid way... to accelerate growth as quickly and sensibly as we can, without sacrificing quality.

For us, it was important to develop a thesis around where we thought we could partner to determine where to invest and how to grow the business. It wasn’t always easy.

Chemistry between a private equity firm and the companies that it is going to be partnering with is incredibly important.

We decided early on to rebrand. The process was critical, because it forces self-examination. It’s not just an exercise in changing your brand name. It’s the process that you go through as an organization to redefine and transform yourself.

Alignment of strategic vision was really critical early on.

One of the things we’ve done with our follow-on acquisitions is they’ve been thematic, just like CIP’s investment in us was thematic.

Scott Marden, Managing Partner at CIP Capital, and Jim Owens, President & CEO of Cisive, discussed what it is like to partner with private equity.

(from left) Scott Marden (CIP Capital), Jim Owens (Cisive)

Senior executives and investors from the global media, information, marketing, software and tech-enabled services sectors at the JEGI | CLARITY Media & Technology Conference

ModeratorWilma Jordan, Founder & CEO, JEGI

Keynote SpeakerSir Martin Sorrell, Executive Chairman, S4 Capital

10 | Client Briefing April 2019

CLOSING KEYNOTE FIRESIDE CHAT

Wilma Jordan: You’ve coined the phrase faster, better, cheaper to describe your newest platform. What market dynamics are driving your thinking?

Sir Martin Sorrell: McKinsey did a survey a few years ago on sustained competitiveness, and the chief factor was not the CEO or cost-cutting, it was positioning the business in revenue growth sectors. That was the key reason why businesses had longevity. I looked at the $20 billion in portfolio when I left WPP and there were three areas of significant topline growth that struck me: first-party data, digital content, and digital media planning. First-party data fueling digital content and a digital media planning environment. That’s at the heart of what we do at S4. The primary issue is control of data. Unilever didn’t buy Dollar Shave Club because it wanted to go into competition with Procter and Gillette; it bought it because it gave it access to a consumer database. That’s the central battleground over the coming years: control of the data and the customer relationship.

I was at CES in Las Vegas, and I had never seen clients in such a state of experimentation – it was phenomenal. If you’re running a business, it’s almost like running a political campaign but with no election date; it’s coming at you

full on, and you have to be proactive and reactive, so faster is critically important.

Better means not being committed to one technology. Using what MediaMonks does, which is a content company and what MightyHive does in the programmatic area, we use technologies as quickly as possible and deploy them very effectively and cheaper.

The other thing we’ve done differently is that I have insisted on a unitary structure. In conversations with the principals of both MightyHive and MediaMonks, my first sentence was, if you want to sell your company I am not interested. If you want to sell it in or buy in, I am. Instead of earn-outs, the deal was half shares, half cash, so everybody has a principal interest.

The three areas, faster, better, cheaper and the unitary structure are critical to S4’s approach.

Jordan: What do you foresee for S4 if you’re looking forward five years? How do you see this being shaped differently than the way you shaped WPP?

Sorrell: When I was at Saatchi’s, people would ask us that question, and I was fortunate enough to work for the Saatchi brothers at a very interesting time. When people used to ask that question

they seemed to think that we had this sort of meticulous plan. We didn’t. And no one thought that after 18 short months, WPP would acquire a company 13 times their size (J. Walter Thompson).

The thing that I always found interesting at WPP is where we got significant differentiation. I saw that in the production area. I saw that in the digital media planning and buying area. I saw it where we went in through the digital door of clients and we surreptitiously penetrated through digital, and six months later the CMO said take the traditional stuff as well.

What I’m really interested in is how you meaningfully differentiate what you do in competitive categories. We have a wonderful client list at S4, one that most companies would die for. The issue for us is that we don’t have as much penetration as we should. So the test will be meaningful differentiation and much more significant client relationships.

Coming back to your question, where do I see it in five years, the honest answer is I don’t know.

Audience: How do you see concerns over privacy and regulation getting resolved, like those involving Facebook?

Sorrell: I don’t see anything stopping Google, Facebook or Amazon. The ad revenues of Facebook might be 50, 55 billion last year, Google 125 billion, Amazon at 10, but growing very fast. I predict that Amazon will match Google and Facebook in fairly short order. Regulation is really a critical issue. The government in China is worried about the growth of Alibaba and Tencent to the same degree. The seven sisters parallel what we saw in the energy industry. Bezos is the John D. Rockefeller of this century.

Wilma Jordan sat down with Sir Martin Sorrell, Executive Chairman of S4 Capital and former Founder & CEO of WPP, to discuss his vision for the agency of the future.

(from left) Wilma Jordan (JEGI | CLARITY), Sir Martin Sorrell (S4 Capital)

(from left) Alex Jutkowitz (Group SJR), Sheila Spence (Spotify), Wilma Jordan (JEGI | CLARITY), Sir Martin Sorrell (S4 Capi-tal), Jonathan Davis (JEGI | CLARITY)

• The market has been really volatile recently, both down and up, but the market fundamentals overall remain exceptionally strong...

• ...based on 3% GDP growth in 2018, a 2.3% target for 2019, unemployment at a 17-year low, and exceptionally strong job reports.

• Corporate M&A and sponsor-to-sponsor LBO notched $348 billion; that’s 15 billion higher than the previous high watermark.

• In December, we saw deal flow pause in the private markets. People slowed down and wanted to see what January looked like. Debt markets are opening back up, trading levels have come back up, equity markets have been

stronger, private transactions have strong valuations. The foreseeable future looks quite strong; we are seeing all the same trends we saw in the strength of 2018.

• There’s a high level of liquidity and we’ve been in a long low-rate environment.

• Institutional interest via CLO formation posted a record year in 2018.

• PE dry powder is approaching $2 trillion dollars globally.

• Private equity firms have been trying to find assets that they can use as a platform for consolidation over a period.

• Add-on transactions have represented about 60 to 70% of the transaction volume out there.

• Despite all the dry powder that has been raised and having non-regulated lenders, purchase price multiples have stayed relatively stable.

• From a lender’s perspective, there is more caution today than there was three months ago.

• There’s a lot more scrutiny around growth assumptions, given how late we are in the cycle. There is more leverage in the system as rates continue to increase.

• High yield has been having a tough go of it for the past couple of years because of high yield fixed rate products and the expectation that interest rates are going to continue to rise.

• We are seeing some divergence between the public markets and private markets. Public markets trade based on momentum but the private market is based on fundamentals and the fundamentals seem strong.

• If we do have a recession, you want to be there with partners that you’ve dealt with a lot of times over the years. (from left) Davis Noell (Providence Equity), Patrick Donoghue (BDO), Ray Shu (Capital One), Sage Nakamura (Capital

One), Sam Barthelme (JEGI | CLARITY)

Client Briefing April 2019 | 11www.jegiclarity.com

Privacy is a big issue from a government point of view. I am not sure that the consumer is all that worried about it. I don’t know about you but I have never failed to accept when I’m going on to a website, ever. In the early days, we always thought we would get consumers to opt out. Opt in is the only way now.

Audience: Is it more important to focus on growth in large markets or to acquire portable expertise that could be applied in every market?

Sorrell: WPP was active in 113 countries in one way or another, and probably that’s too many. Currently S4 is in 12 countries and I would add Germany, France, Italy and Spain. I don’t think we’ll go through much more. I was in Buenos Aires during the Youth Olympics. It’s the

first time the Olympic Games has really used social/digital media in an advanced way. This was the people’s games in my mind. Argentinian creative advertising talent is remarkable. It’s cheaper as well

because of the currency and inflation there. Try to find those markets where there is that sort of potential.

INVESTORS/LENDERS SPEAK

Client Briefing April 2019 | 12

EXCEPTIONAL M&A TRANSACTION EXPERIENCE

JEGI | CLARITY’s client is mentioned first in each of the above transactions

Turnkey Intelligence is a leading sports research and advisory firm.

Dennis Publishing is a leading consumer media and e-commerce organisation.

FC Business Intelligence is a leading B2B events and information business.

Challenger is a leading performance improvement platform, focused on sales, marketing and customer service in-person and online training.

Hjaltelin Stahl is a leading Danish multi-channel experience agency.

Brainlabs is a leading technology-led digital marketing agency.

MTM provides Learning & Development data and analytics solutions to measure & evaluate effectiveness of L&D investment.

OPEN Health is a leading multi-disciplinary health communications and market access group.

PBM is a leading business media and communications company serving the home furnishings and gift industries.

HAS BEEN SOLD TO

ZRG Partners is a leading global executive search firm.

RECAPITALIZED BY

“As a founder and entrepreneur with no previous transaction experience, the JEGI | CLARITY team was a vital contributor to the ultimate success of our deal. We were impressed throughout with their commitment, intelligence and insights, and they brilliantly orchestrated the entire process for us. We appreciated their adapt-able approach to our internal timetable, and they brought about a great outcome for both sides. We could not have asked for a better team to guide and support us.”

David Altenau Founder & CEO, FuseFX

“I am super happy we chose JEGI | CLARITY to advise. Going into a process I wasn’t sure what the difference or value add would be; on the other side I can confidently say that they were the differ-ence between a good and an exceptional outcome. At the same time as driving a fantastic process, they also represented us in a way that reflected our business culture. I would recommend them in a heartbeat!”

Daniel Gilbert Chief Executive Officer, Brainlabs

RKD Group is a leading provider of omnichannel fundraising and marketing services to the nonprofit sector.

A PORTFOLIO COMPANY OF

HAS BEEN SOLD TO

GTI is the UK and Ireland’s leading graduate recruitment and early careers specialist.

Blue 449 is a leading UK media agency.

FMAV is a leading audiovisual and live event production company.

MERGE is a leading integrated healthcare marketing and technology development agency.

HAS BEEN SOLD TO

A PORTFOLIO COMPANY OF

FuseFX is a leading independent visual effects studio providing services for television, feature films, commercials, & VR productions.

NEW YORK150 East 52nd Street18th FloorNew York, NY 10022 +1 212 754 0710

BOSTONOne Liberty Square11th FloorBoston, MA 02109+1 617 294 6555

LONDON90 Long Acre LondonWC2E 9RA +44 20 3402 4900

SYDNEYL35, Tower OneInternational Towers100 Barangaroo Avenue Sydney, NSW 2000 +61 2 8046 6840

Mobile Nations is a leading digital publisher focused on consumer electronics and affiliate e-commerce monetization.

HAS BEEN SOLD TO

ThinkHR is a leading provider of trusted HR knowledge software and services.

HAS RECEIVED A SIGNIFICANT INVESTMENT FROM

A PORTFOLIO COMPANY OF