Webinar July 12 2007

8/8/2019 Webinar July 12 2007

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www.corumgroup.comwww.corumgroup.com

July 12, 2007

2007 Software M&A Outlook

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Speakers

Mark S. ReedExecutive Vice President

Ward CarterPresident

Miro ParizekManaging Director International

Ryan Blakely

Vice President, Research

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AgendaOpening Remarks - Corum

M&A Market Overview

Market Trends

IPO Market

International

Public Markets

Valuations

Top Buyers & Active Sectors

Corum Q2 M&A Briefing Release

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Corum Group

M&A specialists since 1985M&A specialists since 1985

Software and IT expertsSoftware and IT experts – – mostly former CEOsmostly former CEOs

Dominant North American and European presenceDominant North American and European presence

200+ transactions completed200+ transactions completed

$6 billion in wealth created$6 billion in wealth created

58% cross58% cross --border transactionsborder transactions

Host ofHost of Selling Up Selling Out Selling Up Selling Out conferencesconferences

Sponsor ofSponsor of World Financial Symposiums World Financial Symposiums conferencesconferences

Publisher of industryPublisher of industry --leading M&A researchleading M&A research

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Headlines tell the story

“Can M&A’s Best Times Get Better?”Wall Street Journal, January 2007

“Money is Everywhere – But for HowLong?”

Wall Street Journal, January 2007

“Stock Surge + Bond Boom = M&AMagic”

Wall Street Journal, April 2007

“As Deal Barriers Fall, Takeover BidsMultiply”

Wall Street Journal, May 2007

“M&A – The Best Investment Gamein Town”

Moneyextra.com UK, May 2007

“Greed Keeps Fear in Check”Wall Street Journal, June 2007

“Market Pressures Test Resilienceof Buyout Boom”

Wall Street Journal, June 2007

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Surge in M&A Continues

Source: Thomson Financial

M&A Market – All Industries

First half 2007 – M&A up 53% worldwide$2.5 trillion in worldwide M&A

Europe – $1.02 trillion in 2007 YTD

U.S. – $1.03 trillion in 2007 YTD

2006 – $3.7 trillion in worldwide M&A

M&A MarketM&A Market – – All IndustriesAll Industries

First half 2007 – M&A up 53% worldwide$2.5 trillion in worldwide M&A

Europe –

$1.02 trillion in 2007 YTD

U.S. – $1.03 trillion in 2007 YTD

2006 – $3.7 trillion in worldwide M&A

M&A Market – Software and IT

$350 billion in 2007 YTD

Q2:07 transaction volumes outpacing

volumes from Q2:06

M&A MarketM&A Market – – Software and ITSoftware and IT

$350 billion in 2007 YTD

Q2:07 transaction volumes outpacing

volumes from Q2:06

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Software and IT M&A ActivityNumber of Transactions by SectorNumber of Transactions by Sector

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%30.00%

35.00%

40.00%

45.00%

50.00%

2005 % Deal

Volume

2006 % DealVolume

2007% DealVolume YTD

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Software and IT M&A ActivityNumber of Transactions by SectorNumber of Transactions by Sector

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

35.00%

40.00%

45.00%

50.00%

Q3:06

Q4:06

Q1:07

Q2:07

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M&A is the Primary Source of Liquidity

$0$100$200$300$400$500$600$700$800$900

$1,000$1,100$1,200$1,300$1,400$1,500$1,600$1,700

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

YTD

I n B i l l i o n

M&A Dollar Volume IPO Amount Raised

In Dollar Volume – U.S. dollar volume all industries

Source: Dealogic, IPO Central

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U.S. IPO Market

The NumbersThe Numbers – – All IndustriesAll Industries

2007 poised to be the best year for IPOs since 2000

Broad market rally pushing high volume of new filings

Venture-backed technology deals return to the IPO scene

Technology IPOs represent approximately 30% of all IPOs

…meaning more tech firms are returning to the public markets

2007 poised to be the best year for IPOs since 2000

Broad market rally pushing high volume of new filingsVenture-backed technology deals return to the IPO scene

Technology IPOs represent approximately 30% of all IPOs

…meaning more tech firms are returning to the public markets

The NumbersThe Numbers – – All IndustriesAll Industries

Q2:06 Q2:07 % Change

# of IPO Pricings 42 56 33.33%

Total Value $9,300 $15,400 65.59%

Average Value $221 $274 24.05%

Values are in millions

Source: IPO Central

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Surge in M&A – Deal DriversEnormous liquidity (equity and debt)

Strong stock markets

Recovery in IPO market

Analysts favorable to acquisitions

Private Equity in 25% of deals

Converging market sectors

Heavy competition for market leadership

Strength of Euro / British Pound

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M&A Dominant Corporate Strategy

Immediate impact on top/bottom line

Stimulate growth in new or existing markets

Counter takeover attempts

Speed time to market

Forestall competitive threats

Gain talent, brand and domain expertise

Fill product and technology gaps

Tap into emerging marketsProvide pathway to a global presence

Gain access to innovation

Support for acquisitions is stronger than ever:Support for acquisitions is stronger than ever:

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Global M&A ActivityCross-border transactions increasing

During the 1H:07 Europe equaled the U.S. in deal volume for the first time in four years

European deal activity up 73% in 1H:07

Britain continues to have the most aggressive European buyers, completing

approximately $175 billion in M&A transactions (all industries)

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Global MarketplaceCurrently almost 60% of CorumCurrently almost 60% of Corum ’’s recent transactions are crosss recent transactions are cross --borderborder

Cross Border58%

Intra-Country42%

A trend we are seeing throughout the industryA trend we are seeing throughout the industry

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Corum Transactions 2007

Human capitalmanagement solutions

Stepstone - NorwayExecuTRACK - Germany

Networking and

lobby services forgame publishers &developers

Activision – U.S.DemonWare - Ireland

HR information

systems for middlemarket enterprises

BPO ManagementServices – U.S.Human ResourceMicrosystems – U.S.

Electronic invoicing

and legal spendmanagementsolutions

DataCert – U.S.CorpraSoft – U.S.

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Provider ofestimating and earthmeasuring softwarefor contractors

Maxwell – U.S.Quest – U.S.

Value-addeddistributor of voice,data and convergedcommunicationssolutions

Westcon – U.S.CRANE – U.K.

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March 2006 – The Carlyle Group (U.K.) acquired UC4, an enterprise job schedulingvendor based in Austria

March 2007 – UC4, with a follow-on investment from Carlyle, acquired AppWorx, anevent-driven business application automation and batch integration technologyvendor based in the U.S.

Creating a global provider of IT process automation and optimization solutions

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Public Markets – Reaching New Heights

NASDAQ London AIM Stockholm Shanghai

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Public Valuation Multiples

TTM EV/S Multiples

Unchanged

Increased

Decreased

Sector Q2:06 Q3:06 Q4:06 Q1:07 Q2:07 Y on Y Q to Q

Digital Media 2.82 x 2.74 x 2.59 x 1.92 x 2.07 x

Enterprise Applications 4.27 x 4.35 x 4.43 x 3.87 x 3.98 x

Business Intelligence 2.15 x 2.87 x 3.03 x 3.13 x 3.25 x

Enterprise Content Management 1.46 x 1.89 x 2.15 x 2.07 x 2.37 x

Supply Chain Management 1.58 x 1.60 x 1.89 x 2.10 x 2.29 x

Enterprise Infrastructure 2.36 x 2.40 x 2.77 x 2.86 x 2.88 x

Legacy Extension / SOA 2.59 x 1.36 x 1.70 x 2.18 x 2.56 x

Software Development Tools 1.44 x 1.88 x 1.71 x 2.00 x 2.22 x

Storage 2.43 x 2.66 x 2.98 x 3.68 x 3.29 x

Gaming 1.44 x 2.25 x 2.47 x 2.54 x 2.24 x

Internet Infrastructure 3.57 x 4.03 x 3.63 x 3.83 x 3.91 x

Internet Pure Play 3.34 x 4.00 x 3.78 x 3.41 x 3.23 x

IT Services 0.78 x 0.84 x 0.80 x 0.80 x 0.89 x

Security 3.00 x 2.94 x 3.36 x 3.15 x 3.69 x

Wireless 2.28 x 2.07 x 2.34 x 1.46 x 1.75 x

Vertical Market - Engineering 2.71 x 2.69 x 3.06 x 3.40 x 3.29 x

Vertical Market - Financial Services 3.26 x 3.53 x 3.17 x 3.28 x 3.12 x

Vertical Market - Government 1.21 x 1.24 x 1.13 x 1.16 x 1.15 x

Vertical Market - Healthcare 1.98 x 2.69 x 2.36 x 2.28 x 2.53 x

Vertical Market - Other 2.63 x 1.75 x 2.02 x 1.19 x 2.71 x

Vertical Market - Telecom 2.02 x 2.12 x 2.10 x 1.33 x 1.52 x

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Public Multiples Vary Dramatically

TTM EV/Sales RangeTTM EV/Sales Range

NicheApplications

1.50x – 3.5x

Security Software

1.80x – 6.90x

Financial Services

1.90x – 5.10x

00

1x1x

2x2x

3x3x

4x4x

5x5x

Software as aService

3.90x – 9.50x

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Looking Back – Valuation Multiples

2.3

2.7 2.72.9

6.7

3.0

2.01.5 1.5 1.6 1.8 2.1 2.3 2.2 2.5

2.6 2.9 2.95 3.11

0.00

1.00

2.00

3.00

4.00

5.00

6.00

7.00

P / S M u

l t i p l e

1 H : 9

8

2 H : 9

8

1 H : 9

9

2 H : 9

9

1 H : 0

0

2 H : 0

0

1 H : 0

1

2 H : 0

1

1 H : 0

2

2 H : 0

2

1 H : 0

3

2 H : 0

3

1 H : 0

4

2 H : 0

4

1 H : 0

5

2 H : 0

5

1 H : 0

6

2 H : 0

6

1 H : 0

7

M&A Transaction MultiplesM&A Transaction Multiples – – Software IndustrySoftware Industry

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Top Buyers 1H:07Strategic BuyersStrategic Buyers

Google 8Cisco Systems 7

Oracle 5

Sungard Data Systems 5

Bentley Systems 4

CDC Software 4

Domin-8 Enterprise Solutions 4

First Data Corporation 4

Microsoft Corporation 4

Nuance Communications 4

SAP AG 4

Battery VenturesCarlyle Group

Hellman & Friedman

Kohlerg Kravis Roberts & Co.

Francisco Partners

Vector Capital

*Partial List

Active Private Equity Firms*Active Private Equity Firms*

75+ strategic buyers with 2 or 3 transactions75+ strategic buyers with 2 or 3 transactions

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Private Buyers

Number of private buyers increasingNumber of private buyers increasing

Relatively flat IPO market and high cost of being public

Cash and credit available to Private Equity

Financial buyers comfortable with technology deals

AcxiomAlliance Data SystemsAvayaCeridianEmbarcaderoFirst DataKronos, Inc.SafeNet, Inc.

Notable companies that have gone privateNotable companies that have gone private

Freescale SemiconductorIntergraph Corp.John H. HarlandOpen SolutionsSabre HoldingsWatchGuard Technologies

20062006 20072007

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Transaction Highlights – Private Equity

ObservationsObservationsFundraising at record highs

Strong focus on technology

Tier two PE firms looking at smaller opportunities

Substantial prior investment in tech, and many deals are synergistic adding to current portfolio

Look more like strategic buyers

Buyer Seller Value (Millions $) Sector

Kohlberg KravisRoberts & Co.

First DataCorporation

$25,600 Financial Services

Silver LakePartners and

TPG, Inc.

Avaya Inc. $8,200 EnterpriseInfrastructure

Silver LakePartners and

ValueAct Capital

AcxiomCorporation

$3,000 IT Services

BatteryVentures Quovadx, Inc. $136.70 Vertical Market

Carlyle Group RMI Undisclosed Vertical Market

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Transaction Highlights – Strategic

ObservationsObservationsWilling to pay high valuations, for the right deal

Product expansion through complementary technology acquisitionMarket convergence

Broaden customer mix (i.e. SMB to enterprise)

Buyer Seller Value(Millions $)

Sector

Google, Inc. DoubleClick

Corporation

$3,100 Internet Infrastructure

Infor GlobalSolutions

WorkbrainCorporation

$227 Enterprise Applications

Eniro AB Krak $72.30 Internet Infrastructure

SonicWall, Inc. AventailCorporation

$25 Security

Sage Group plc SnowdropSystems Limited

£ 17 Enterprise Applications

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Transaction Highlights – International

ObservationsObservationsGlobal expansion

Local domain expertiseDesire to get into the U.S. markets

Buyer Seller Value(Millions $)

Sector

WPP Group PLC 24/7 Real Media,

Inc.

$649 Internet Infrastructure

Software AG webMethods,Inc.

$546 SOA

Websense, Inc. SurfControl plc $400 Security

UC4 Software AppWorx Undisclosed Enterprise Infrastructure

SAP AG OutlookSoftCorporation Undisclosed Business Intelligence

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Active Sectors

Sectors with strong transaction volumesSectors with strong transaction volumes

Enterprise Infrastructure

Internet – Infrastructure and Pure Plays

IT Services

Vertical market applications

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Corum Briefing - Sample

Market Headlines:

“Mobile Banking Catching On in US Slowly”Computerworld - May 2007

“Online Back Security Worsens”Techworld - June 2007

“Banking, Fin Sectors Leaders In IT Spend”Economic Times India – June 2007

“Banking Solutions Chase $ Dream”Economic Times India – June 2007

Vertical Market – Financial Services

Public Peer Group (In $U.S. millions – except share prices) Stock Stock Market Enterprise

Symbol Company Price Value Value P/E EV/EBITDA EV/S P/E EV/S

ADVS Advent Software Inc. $32.55 $884.6 $865.9 12.15 x 30.42 x 4.60 x 87.97 x 3.65 xEPAY Bottomline Technologies Inc. $12.35 $302.7 $242.7 N/A 29.45 x 2.17 x 23.75 x 1.87 xCKFR CheckFree Corporation $40.20 $3,530.0 $3,310.0 29.34 x 11.97 x 3.59 x 19.05 x 2.85 xFISV Fiserv Inc. $56.80 $9,550.0 $10,250.0 22.27 x 10.41 x 2.19 x 17.26 x 1.95 xJKHY Jack Henry & Associates Inc. $25.75 $2,310.0 $2,340.0 23.62 x 11.59 x 3.61 x 20.28 x 3.16 xORCC Online Resources Corp. $10.98 $287.2 $340.4 N/A 14.54 x 3.22 x 21.96 x 2.26 xSONE S1 Corporation $7.99 $492.6 $422.7 25.77 x 22.66 x 2.15 x 22.83 x 1.95 xTSS Total System Services Inc. $29.51 $5,830.0 $5,450.0 22.70 x 9.64 x 3.03 x 20.78 x 3.03 x

Median Valuation Multiples 23.16 x 13.25 x 3.12 x 21.37 x 2.56 x

Trailing Multiple Forward Multiple

3.12 x

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Corum’s Q2 Briefing Sample (cont.)

Vertical Market – Financial Services

M & A Tr a n s a c t io n s

TN S Ac qui res Dia lec t Paym ent TechnologiesTrans ac t ion N e twork Serv ices , a g loba l co m m unicat ions and ne tw ork se rv ices p rov ider, has acqu i redDia lec t P aym ent Techno log ies , a p riva te ly own ed in te rna t iona l pa yme nts p rocess ing t echno logy com panyheadq uar te red in Aus t ra l ia . D ia lec t Payme nt Techno log ies ’ p rem ie r In te rne t pa yme nt ga tew ay g ives TN Sentry into the large ‘card not present ’ ( Interne t and c al l center transac t ions) ma rket , wh ich is current lyexper ienc ing s ign if i can t g row th wo r ldw ide . Th i s e l ec tron ic t ransa c t ions e ng ine add s a ke y e leme nt toTN S’ se rv ices su it e tha t is usab le in a l l geog raph ies . Throug h the acqu is i tion , TN S a l so e n te rsre la tionsh ips wi th new ke y cus tome rs p r imar i ly in the A s ia/Pac i f ic r eg ion , inc lud ing c red it , deb i t and AT Mcard p rov iders an d re ta ile r s .

A n n o u n c e m e n t D a t e : J u n e 1 9 , 2 0 0 7De a l Va lue : $4 .2 m ill ion

CyberSou rce to Acqui re A uthorize .Ne t

Cy berSource Co rpora tion , lead ing p rov ider o f e l ec t ron ic paym ent and r i sk m anagem ent so lu t ions isacqu i r ing Author ize .Ne t H olding s , Inc . , a l ead ing p rov ider o f IP -based pa yme nt so lu tions . The acqu is i t ion

jo ins two h igh ly com plem enta ry bu s inesses , pos it ion ing C yberS ource to fu r the r cap i t a l ize on the g row ingwe b-based paym en t oppor tun i ty. Bo th comp anies a re l eaders in en ab ling e -comm erce bus inesses toaccep t on l ine paym ents fo r goods and se rv ices . Co l lec t ive ly, the com panies p roce ssed approx im ate ly 1.1b i ll ion t r ansac t ions in 2 006 , r epresen t ing $65 b i l lion o f e -com m erce . The a cqu i s it ion w i ll ena b leCy berSource to p rov ide lead ing paym ent so lu t ions to a l l seg m ents o f the e -com merce indus t ry.

A n n o u n c e m e n t D a t e : J u n e 1 8 , 2 0 0 7De a l Va lue : $565 m il lion (S tock and cash)Se l l e r R evenue : $98 .5 mi l lion TTM

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Contact Information

Corum Group InternationalCorum Group International S.S. àà .r.l.r.l

General Guisan – Quai 30CH-8002 ZurichSwitzerland

+41 44 251 82 65

www.corumgroup.comwww.corumgroup.com

Corum Group Ltd.Corum Group Ltd.

10500 NE 8th Street, Suite 1500

Bellevue, WA 98004USA

+1 425-455-8281

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Webinar July 12 2007