Technology and Software Industry Insight February 2018

Transcription

1 Industry Insight February 2018

2 M&A Update categories continue to outperform the S&P 500 index In 2017, transactions beat the 2016 volume and traded at significantly higher multiples compared to 2016 Select Recent Notable Publicly Announced M&A Transactions Date Status Target Transaction Size Buyer Oct-2017 Announced $2.28 billion Jul-2017 Announced $3.65 billion Jan-2017 Closed $4.03 billion Nov-2016 Announced $4.82 billion Sep-2016 Closed $8.73 billion Aug-2016 Closed $4.95 billion Inception Parent, Inc. 1

3 U.S. Industry M&A Market Overview U.S. transaction activity has been strong U.S. Number of Transactions by Buyer Type U.S. Transaction Multiples x x 15.2x 17.4x x 12.9x 11.7x 12.3x x x 1.8x 1.8x 2.7x 2.2x 2.6x 2.0x 2.2x 1.8x Strategic Financial EV / EBITDA EV / Revenue Source: Capital IQ. 2

4 Relative Stock Performance Group 1 Peakstone Index Trading Statistics categories performed favorably compared to the S&P % Fintech: 160% Software: 158% S&P 500: 82% 100% Financial Sofeware: 52% 50% 0% -50% Source: Capital IQ, data as of 02/01/2018. Note: Peakstone Indexes are equally weighted. Peakstone Financial Software Index FISV, JKHY, BKFS, , DH, SLH Peakstone Financial Technology Index V, MA, ADP, FDC, MCO, PAYX, FLT, WU, MGI, TRI Peakstone Software Index GOOGL, MSFT, IBM, ORCL, SAP, CSCO, HPQ 3

5 Comparable Valuation Trends Enterprise Value / EBITDA Group 1 Peakstone Index Trading Statistics categories performed favorably compared to the S&P x Financial Software: 12.6x Fintech: 9.4x 15.0x Software: 12.4x S&P 500: 13x 10.0x 5.0x Peakstone Financial Software Index FISV, JKHY, BKFS, , DH, SLH 0.0x Feb-2013 Feb-2014 Feb-2015 Feb-2016 Feb-2017 Feb-2018 Transportation & Logistics Food Distribution Specialty Finance S&P 500 Source: Capital IQ, data as of 02/01/2018. Note: Peakstone Indexes are equally weighted. Peakstone Financial Technology Index V, MA, ADP, FDC, MCO, PAYX, FLT, WU, MGI, TRI Peakstone Software Index GOOGL, MSFT, IBM, ORCL, SAP, CSCO, HPQ 4

6 Relative Stock Performance Group 2 Peakstone Index Trading Statistics Internet and SaaS categories significantly outperformed the S&P 500 index 400% 350% 300% 250% SaaS: 221% Internet: 321% S&P 500: 73% 200% 150% 100% 50% 0% -50% Source: Capital IQ, data as of 02/01/2018. Note: Peakstone Indexes are equally weighted. Peakstone Internet Index GOOGL, AMZN, FB, YHOO Peakstone SaaS Index CRM, WDAY, VEEV, ULTI, ATHN, GWRE, PAYC, MDSO, PFPT, SLH 5

7 Comparable Valuation Trends Enterprise Value / EBITDA Group 2 Peakstone Index Trading Statistics Internet and SaaS categories significantly outperformed the S&P 500 index 40.0x SaaS: 16.7x Internet: 10.8x S&P 500: 12.6x 20.0x 0.0x Source: Capital IQ, data as of 02/01/2018. Note: Peakstone Indexes are equally weighted. Peakstone Internet Index GOOGL, AMZN, FB, YHOO Peakstone SaaS Index CRM, WDAY, VEEV, ULTI, ATHN, GWRE, PAYC, MDSO, PFPT, SLH 6

8 Public Trading Comparables by Sector Select Public Trading Comparables ($ in millions) Market Enterprise Enterprise Value / Forward Gross EBITDA Company Name Cap Value Revenue EBITDA EBIT P/E Ratio Margin % Margin % Financial Software Fiserv, Inc. $28,647 $33, x 16.7x 21.4x 22.1x 47% 34% Black Knight Financial Services, Inc. $7,037 $8, x 17.5x 30.7x 0.0x 46% 46% Jack Henry & Associates Inc. $8,911 $8, x 19.6x 24.0x 30.9x 43% 31% Oracle Financial Services Software Ltd. $5,391 $5, x 17.6x 18.2x 24.7x 54% 41% Solera Holdings Inc. $1,064 $2, x 10.4x 16.9x 0.0x 15% 8% DH Corporation $411 $ x 12.2x 18.9x 24.0x 23% 12% Financial Software Median $6,214 $6, x 17.1x 20.1x 23.0x 44% 33% Financial Technology Visa, Inc. $262,523 $273, x 21.3x 21.7x 25.3x 97% 68% Master Card, Inc. $174,121 $171, x 24.3x 25.9x 27.6x 100% 57% Automatic Data Processing, Inc. $49,394 $49, x 18.2x 20.8x 25.2x 43% 21% First Data Corp. $14,618 $35, x 11.7x 17.6x 10.3x 60% 35% Moody's Corp. $29,536 $33, x 17.0x 18.4x 20.2x 71% 47% Paychex, Inc. $23,045 $22, x 16.1x 17.8x 24.1x 71% 44% FleetCor Technologies, Inc. $17,056 $20, x 18.1x 23.3x 18.4x 76% 51% Western Union Co. $8,892 $11, x 8.3x 10.3x 10.8x 40% 25% MoneyGram International, Inc $594 $1, x 5.9x 13.3x 10.2x 52% 14% Thomson Reuters Corp. $402 $ x 14.0x 16.2x 18.2x 30% 11% Financial Technology Median $20,050 $28, x 16.6x 18.1x 19.3x 66% 40% Internet Alphabet Inc. $724,499 $626, x 17.5x 21.7x 25.3x 59% 32% Amazon.com, Inc. $648,510 $661, x 44.0x 161.3x 162.2x 37% 8% Facebook, Inc. $511,600 $469, x 20.2x 23.3x 24.5x 87% 57% Yahoo! Inc. $61,556 $62, x 82.8x 141.6x 0.0x 47% 12% Internet Median $580,055 $548, x 32.1x 82.4x 24.9x 53% 22% Source: Capital IQ, data as of 02/01/

9 Public Trading Comparables by Sector (continued) Select Public Trading Comparables ($ in millions) Market Enterprise Enterprise Value / Forward Gross EBITDA Company Name Cap Value Revenue EBITDA EBIT P/E Ratio Margin % Margin % Software Alphabet Inc. $724,499 $626, x 17.5x 21.7x 25.3x 59% 32% Microsoft Corporation $678,968 $633, x 19.1x 26.0x 23.2x 63% 35% Oracle Corporation $197,583 $187, x 12.4x 13.7x 15.6x 58% 39% IBM Corporation $138,415 $172, x 10.6x 14.6x 10.8x 46% 21% SAP SE $119,993 $120, x 14.2x 17.4x 18.8x 71% 29% Cisco Systems, Inc. $195,421 $159, x 11.1x 12.8x 15.7x 63% 30% Hewlett-Packard Company $33,086 $32, x 7.5x 8.2x 11.1x 18% 8% Software Median $195,421 $172, x 12.4x 14.6x 15.7x 59% 30% SaaS salesforce.com, inc. $77,272 $76, x 137.7x NM 67.2x 73% 6% Workday, Inc. $23,722 $21, x NM NM 106.9x 70% -10% Veev a Systems Inc. $7,837 $7, x 43.6x 47.7x 57.4x 69% 25% The Ultimate Software Group, Inc. $6,838 $6, x 85.0x 150.0x 42.3x 62% 8% Guidewire Software, Inc. $5,782 $5, x 143.1x NM 86.5x 60% 7% athenahealth, Inc. $5,256 $5, x 32.4x 60.1x 36.3x 53% 14% Paycom Software, Inc. $4,817 $4, x 49.0x 61.1x 34.7x 86% 23% Medidata Solutions, Inc. $3,800 $3, x 44.1x 62.0x 39.0x 77% 15% Proofpoint, Inc. $4,884 $4, x NM NM 96.5x 72% -5% Solera Holdings Inc. $1,064 $2, x 10.4x 16.9x NM 15% 8% Saas Median $5,519 $5, x 46.6x 60.6x 57.4x 70% 8% Total Median $13,132 $17, x 16.9x 19.1x 21.2x 56% 26% Source: Capital IQ, data as of 02/01/

10 Selected Industry Transactions Selected Transactions Date Target / Issuer Transaction Size ($mm) Buyers / Investors EV / EBITDA Transaction Comments 10/23/2017 BroadSoft, Inc. (NasdaqGS:BSFT) $2,281 Cisco Systems, Inc. (NasdaqGS:CSCO) 78.8x Cisco Systems, Inc. (NasdaqGS:CSCO) entered into an agreement to acquire BroadSoft, Inc. for $1.8 billion on October 20, /20/2017 BluePay, Inc. $760 First Data Corporation (NYSE:FDC) - First Data Corporation (NYSE:FDC) entered into a definitive stock purchase agreement to acquire BluePay, Inc. from TA Associates Management, L.P., BluePay management and others for $760 million on October 20, /17/2017 IntraLinks Holdings, Inc. $1,080 Siris Capital Group, LLC 46.0x Siris Capital Group, LLC entered into definitive agreement to acquire IntraLinks Holdings, Inc. from Synchronoss Technologies, Inc. (NasdaqGS:SNCR) for approximately $1 billion on October 17, /08/2017 Radial, Inc. $820 bpost SA/NV (ENXTBR:BPOST) - bpost SA/NV (ENXTBR:BPOST) agreed to acquire Radial, Inc. from Sterling Partners, Longview Asset Management Ltd. and others for an enterprise value of $820 million on October 8, /03/2017 CompuCom Systems, Inc. $1,000 Office Depot, Inc. (NasdaqGS:ODP) - Office Depot, Inc. (NasdaqGS:ODP) entered into a definitive agreement to acquire CompuCom Systems, Inc. from Thomas H. Lee Partners, L.P. for approximately $1 billion on October 3, /18/2017 Silver Spring Networks, Inc. (NYSE:SSNI) $958 Itron, Inc. (NasdaqGS:ITRI) - Itron, Inc. (NasdaqGS:ITRI) signed a definitive agreement to acquire Silver Spring Networks, Inc. (NYSE:SSNI) for approximately $950 million on September 17, /08/2017 BAM Technologies, LLC $1,580 The Walt Disney Company (NYSE:DIS) - The Walt Disney Company (NYSE:DIS) entered into an agreement to acquire an incremental 42% interest in BAM Technologies, LLC for approximately $1.6 billion on August 8, Source: Capital IQ. 9

11 Selected Industry Transactions (cont.) Selected Transactions Date 08/03/2017 Target / Issuer ACTIVE Network, The Communities and Sports Divisions Transaction Size ($mm) Buyers / Investors EV / EBITDA Transaction Comments $1,200 Global Payments Inc. (NYSE:GPN) - Roper Technologies, Inc. (NYSE:ROP) entered into a definitive agreement to acquire Deltek, Inc. from Prospect Capital Corporation (NasdaqGS:PSEC), managed by Prospect Capital Management L.P., Thoma Bravo, LLC, and others for $2.8 billion on December 6, /25/2017 Intacct Corporation $850 The Sage Group plc (LSE:SGE) - The Sage Group plc (LSE:SGE) agreed to acquire Intacct Corporation from Hummer Winblad Venture Partners, Split Rock Partners, LLC and others for $850 million on July 25, /24/2017 webmd health corp. (nasdaqgs:wbmd) $3,651 Internet brands, inc. 14.4x internet brands, inc. entered into a definitive agreement to acquire webmd health corp. (nasdaqgs:wbmd) for $2.5 billion on july 24, /06/2017 Syncsort incorporated $1,260 Centerbridge partners, l.p. - 07/03/2017 bankrate, inc. (nyse:rate) $1,622 red ventures holdco, lp 15.0x Siemens Industry, Inc. entered into an agreement to acquire Mentor Graphics Corp. (NasdaqGS:MENT) from Elliott Associates, L.P. and Elliott International, L.P., funds managed by Elliott Management Corporation and others for $4.2 billion on November 12, red ventures holdco, lp ( red ventures ) entered into a definitive agreement to acquire bankrate, inc. (nyse:rate) from apa excelsior vii, l.p., fund of apax partners and other shareholders for $1.3 billion on july 2, /23/2017 synchronoss technologies, inc. (nasdaqgs:sncr) $1,068 siris capital group, llc 18.2x siris capital group, llc made an offer to acquire remaining 87.1% stake in synchronoss technologies, inc. (nasdaqgs:sncr) for approximately $750 million on june 22, as per the terms of the offer, sncr shareholders will receive $18 per share. 06/13/2017 viawest, inc. $1,675 Peak 10 holding corporation - peak 10 holding corporation entered into an agreement to acquire viawest, inc. from shaw communications, inc. (tsx:sjr.b) for approximately $1.7 billion on june 12, the purchase consideration will be paid in cash. Source: Capital IQ. 10

12 Selected Industry Transactions (cont.) Selected Transactions Date Target / Issuer Transaction Size ($mm) Buyers / Investors EV / EBITDA Transaction Comments 05/03/2017 Kofax limited $1,350 thoma bravo, llc - thoma bravo, llc entered into a definitive agreement to acquire kofax limited from lexmark international, inc. for $1.4 billion on may 3, /03/2017 telvent dtn, llc $900 Tbg Ag - salesforce.com, inc. (NYSE:CRM) entered into an agreement to acquire Krux Digital Inc. for approximately $770 million on October 3, /14/2017 moneygram international, inc. (nasdaqgs:mgi) $1,929 euronet worldwide, inc. (nasdaqgs:eeft) 8.0x euronet worldwide, inc. (nasdaqgs:eeft) made a proposal to acquire moneygram international, inc. (nasdaqgs:mgi) from thomas h. lee partners, l.p., carlson capital, l.p. and other shareholders for approximately $1 billion on march 14, /26/2017 moneygram international, inc. (nasdaqgs:mgi) $1,987 alipay (uk) limited 8.5x alipay uk ltd. ( alipay ) entered into a definitive agreement to acquire moneygram international, inc. for approximately $760 million on january 26, /24/2017 appdynamics, inc. $4,033 cisco systems, inc. (nasdaqgs:csco) - cisco systems, inc. (nasdaqgs:csco) agreed to acquire appdynamics, inc. for $3.7 billion on january 24, under the terms of the agreement, cisco paid approximately $3.7 billion in cash and assumed equity awards. 12/14/2016 neustar, inc. (nyse:nsr) $2,942 gic special investments pte. ltd.; golden gate private equity, inc 6.9x golden gate private equity, inc and gic special investments pte. ltd. entered into a definitive agreement to acquire neustar, inc. (nyse:nsr) for $2 billion on december 14, /07/2016 fidelity national information services inc, sungard public sector and education businesses $850 vista equity partners llc; powerschool group llc - vista equity partners fund vi, l.p. of vista equity partners and powerschool group llc signed a definitive agreement to acquire sungard public sector and education businesses for $850 million on december 7, Source: Capital IQ. 11

13 Selected Industry Transactions (cont.) Selected Transactions Date Target / Issuer Transaction Size ($mm) Buyers / Investors EV / EBITDA Transaction Comments 12/06/2016 intralinks holdings, inc. $903 synchronoss technologies, inc. (nasdaqgs:sncr) 42.8x synchronoss technologies, inc. (nasdaqgs:sncr) entered into a definitive agreement to acquire intralinks holdings, inc. (nyse:il) for approximately $800 million on december 5, /06/2016 Deltek, inc. $2,800 roper technologies, inc. (nyse:rop) - roper technologies, inc. (nyse:rop) entered into a definitive agreement to acquire deltek, inc. for $2.8 billion on december 6, /06/2016 verizon communications inc., portfolio of 24 data center sites $3,600 equinix, inc. (nasdaqgs:eqix) - equinix, inc. (nasdaqgs:eqix) signed a definitive agreement to acquire portfolio of 24 data center sites from verizon communications inc. (nyse:vz) for $3.6 billion in cash on december 6, the consideration is subject to certain adjustments. 11/16/2016 Infor, inc. $2,000 koch equity development, llc - koch equity development, llc agreed to acquire a stake in infor, inc. for $2 billion on november 16, /14/2016 Mentor graphics corporation $4,821 Siemens industry, inc. 24.8x siemens industry, inc. entered into an agreement to acquire mentor graphics corp. (nasdaqgs:ment) for $4.2 billion on november 12, /14/2016 servicemax, inc. $915 ge digital llc - ge digital llc agreed to acquire servicemax, inc. for approximately $920 million on november 14, the transaction is subject to the regulatory approvals and customary closing conditions. 11/07/2016 earthlink holdings corp. $1,120 windstream holdings, inc. (nasdaqgs:win) 5.1x windstream holdings, inc. (nasdaqgs:win) entered into an agreement and plan of merger to acquire earthlink holdings corp. (nasdaqgs:elnk) for approximately $670 million on november 5, Source: Capital IQ. 12

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15 Recent Financial and Technology Transactions 14

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