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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([email protected], +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 – [email protected]
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 @[email protected]
10500 NE 8th Street, Suite 1500Bellevue, WA 98004USA
Corum Group International S.à.r.l.
Miro Parizek, Managing DirectorUSA
+1.425.455.8281
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