Corum Group MA Flash Report 7-2-2009

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M&A Flash ReportM&A Flash Report ± ± July 2009July 2009Software and IT Industry Market Update

Thursday, July 2, 200910:00 am PT



Corum Group Presentation 2

Mark ReedExecutive Vice PresidentCorum Group Ltd.

>> For today¶s presentation or more information, contact Pat Sultan([email protected], +1 425-455-8281 ext. 248)

Ryan BlakelyVice President, ResearchCorum Group Ltd.

Ward Carter PresidentCorum Group Ltd.

Ward's technology background includes a variety of management positions with theBurroughs Corporation (later Unisys). Then, as vice president of a Wall Streetinvestment firm and as principal in a regional venture firm, he raised capital for ventures in computer hardware, software, and biotechnology. As an executive for aSeattle-based archival storage software company, he attracted venture capital andassisted with the eventual acquisition of the company by a larger competitor. Aspresident of InfoMatrix, and later Discovery Sales + Marketing, Ward providedstrategic consulting support to emerging software companies.

He joined Corum in 1997, has successfully managed numerous software companymergers and acquisitions worldwide, and was appointed president in 2006. Hegraduated with Honors from Seattle University with a B.A. in Business.




Agenda

O verview of Current Market

Managing for an Exit

Marc Brown - Microsoft

Market and Valuation Analysis

Closing Comments - Q&A




Recent Headlines are Mixed

Economic contraction is slowing

Markets up 30-50% from lows

Mortgage defaults continue

Inflation a threat

Unemployment rising

³O ptimism´ indexes rising

M&A valuations stabilizing

Recovery by 2010 or 2014??

«. Have markets bottomed?




W here are Markets Headed?

Don¶t know, and can¶t control

DJIA +/- 2000 points in 12 months?

Don¶t base decisions on indexes

What you can control: how you spend your cash &

manage your business




Take Stock of W here You Are

Be honest about your business

Growing, adding customers, hiring, solid cash

position, attractive market, profitable

Cash stable, business slowing, not hiring

Burning cash, flat or negative growth, market sector troubled

Step back, evaluate situation and goals




Starting Today

O ld ModelGrowth at all costGet big fastRevolutionary product

Horizontal expansionThe next big thing

New ModelCash flow at all costCut the fatBecome necessary

Core focusImprove customers¶business now

1) Manage your cash carefully

2) Tune business model for the times




Starting Today«

3) Look at your company with an acquirer¶s eye

4) Clean up your company

Record keepingBusiness processBusiness planning & projections




Starting Today«

5) Make decisions with M&A in mindDevelopmentMarketing and SalesRevenue composition

6) Articulate your story




M&A ± from a Buyer¶s Perspective

Use downturn to build a more

valuable company

Act while competitors are scramblingBenefit from strong recurring revenue

Deal based on perceived value, not multiples

No patience for unsubstantiated upside pitch

Cash balances strong




C orporate C ash

C ompany Year Ago C ash C urrent Period C ash

Sun $2,272 $2,700

Apple $11,875 $25,010

Nokia $3,130 $2,404

Microsoft $10,339 $23,900

Oracle $8,262 $12,620

HP $10,153 $12,920

EMC $5,843 $7,250

Cisco $5,191 $33,550

Google $8,656 $17,780SAP $1,804 n/a

Yahoo! $2,292 $3,450

IBM $12,741 $12,300

Sym a n tec $1,890 $1,990




Top Technology Stocks

C ompany Stock Price07/01/2008

Stock Price03/03/2009

Stock Price07/01/2009

% C hange fromMarch

Sun $10.74 $4.54 $9.22 103.08%

Apple $174.68 $87.71 $142.83 62.84%

Nokia $24.21 $9.25 $14.77 59.68%Microsoft $26.87 $16.03 $24.04 49.97%

Oracle $21.31 $15.06 $21.74 44.36%

HP $44.00 $28.30 $38.68 36.68%

EMC $14.65 $10.13 $13.14 29.71%

Cisco $23.15 $14.50 $18.80 29.66%

Google $534.73 $326.67 $418.99 28.26%

SAP $51.89 $32.28 $40.37 25.06%

Yahoo! $20.20 $12.58 $15.41 22.50%

IBM $119.27 $88.01 $104.84 19.12%

Sym a n tec $19.74 $13.15 $15.63 18.86%




Shopping List ± Buyer One

Competitors active in M&A³Dramatically expand´ software side through acquisitionsPrefer SaaSVertical focus vs. horizontalConsider Retail, Telecom, Financial Services, PublicSector, Healthcare

Targets 5 to 100 mil in revO EM or outright acquisition




Shopping List ± Buyer Two

IT services / BP O ServicesBuilding geographic reach, adding technology andcustomers

$10 to 200 mil revenueNorth America, Japan or EuropeERP, CRM, Data Recovery, Infrastructure Mgmt,HealthcareO ff-shoring opportunities a plus




Marc BrownManaging Director, Corporate DevelopmentGroup

Marc Brown is a managing director in the Corporate Development Group at Microsoft Corp.,where he has been employed since January 2000. From May 1998 to December 1999, hewas an associate in the Private Equity and Emerging Companies Group of the law firmGoodwin, Procter & Hoar LLP. Before that, he was an associate in the Mergers and

Acquisition and Merchant Banking groups at the Union Bank of Switzerland, from 1987 to1991.

Brown holds a doctor of jurisprudence degree from Georgetown University Law Center, anMBA in Finance from New York University and a bachelor of arts in Economics from ColgateUniversity.




Ryan Blakely

Vice President, ResearchCorum Group Ltd.

Ryan joined Corum in 1998 and has held a number of roles central to research and marketanalysis in the software and technology space. With over ten years experience in thesoftware M&A environment, Ryan has an intimate understanding of the software industry asa whole, especially as it relates to mergers and acquisitions. As the Vice President of

Research, Ryan directs Corum¶s research group in both North America and Europe, andhas played a direct role in developing buyer relationships during his tenure with Corum. Healso is a major contributor to Corum¶s research reports. Ryan graduated from WashingtonState University with a B.A. in Business Management, with a focus on EntrepreneurialStudies.




M&A Activity ± June

Number of Software and IT M&A Transactions

0 50 100 1 50 2 0 0 250 300 350 400

June

2009 2008 2007 2006 2005 2004




M&A Activity

0 50 100 150 200 250 300 3 5 0 400

a ¡ uary

February

March

April

May

Ju ¡ e

2009 2006 2005




Public Markets

40.00

50.00

60.00

70.00

80.00

90.00

100.00

110.00

120.00

Ju n- 08 Ju l-08 Aug -08 S ep- 08 Oct -08 Nov -08 D e c -08 J an- 09 Feb-09 M a ¢ -09 A p ¢ -09 M ay- 09 Ju n- 09

Nasdaq S& P Te ch Dow




Q 2:08 Q 3:08 Q 4:08 Q 1:09 Q 2:09

EV EBI D 10 .12 x 11 .01 x 7 .69 x 6 .82 x 9 .99 x

EV S 1 .81 x 1 .71 x 1 .04 x 1 .12 x 1 .50 x

Ho zontpp c t on

Softw

Horizontal Application Software Market

Public Valuations




N otable Transactions Spotlight:

Sector: Accounting/PayrollTarget: PayCycle Inc.

Buyer: IntuitDate: June 2009Transaction Value: $170 millionStructure: CashTransaction Multiple: 5.7x

C omments:Expanding product portfolioSaaS

Horizontal Application Software Market

Target Buyer

ETH Tech Ltd. Clear2Pay NVCura SoftwareSolutions

Softpro Systems

XyEnterprise SDL International

PayCycle Inc. Intuit, Inc.




Public Valuations

Vertical Application Software Market

Q2 : Q3 : Q4 : Q1 : Q2 :

V BI D 11.07 x 9.37 x 6.92 x 6.53 x 8.17 x

EV S 2.19 x 1.71 x 1.26 x 1.14 x 1.51 x

V t c Applic t ion

So ft




N otable TransactionsSpotlight:

Sector: Financial ServicesTarget: Prospectus CentralBuyer: RR Donnelley & SonsDate: June 2009Transaction Value: Undisclosed

C omments:Big buys smallDistressed sector Building on prior successSaaS

Target Buyer

eResearchTechnology (EDC)

O mniCommSystems

eQuilibriumSolutions

EnerN O C

Prospectus Central R.R. Donnelley

Vertical Application Software Market




Public Valuations

C onsumer Application Software Market

Q2 :08 Q3 :08 Q4 :08 Q1 :09 Q2 :09

EV EBI DA 10.99 x 11.45 x 5.41 x 2.74 x 4.47 x

EV S 1.70 x 0.99 x 0.61 x 0.64 x 0.53 x

Consum r Applic t ion

So ft r





Sector: MobilityTarget: Dash NavigationBuyer: Research In MotionDate: June 2009Transaction Value: Undisclosed

C omments:SaaSDifferentiator Hot space

Target Buyer

Fueps SpA Dada SpAId Software ZeniMax Media

Mustache Inc. Fanzter

Dash Navigation Research InMotion

C onsumer Application Software Market




Infrastructure Market

Public Valuations

Q2:08 Q3:08 Q4:08 Q1:09 Q2:09

E E D 11 .39 x 8 .98 x 6 .4 7 x 6 .98 x 8 .7 4 x

E 1 .98 x 1 .67 x 1 .4 7 x 1 .43 x 1 .7 2 x

Infrastru ctureSoftware





Sector: Development ToolsTarget: Wind River Buyer: Intel CorporationDate: June 2009Transaction Value: $884 millionStructure: CashTransaction Multiple: 2.2x

C omments:New software focus

Target Buyer

HourGlassTechnologies

Ipswitch

Wind River Intel Corporation

Infrastructure Market




Internet Market

Public Valuations

Q 2 08 Q 3 08 Q 4 08 Q 1 09 Q 2 09

E E ITD 11 .94 x 9 .60 x 8 .11 x 7 .54 x 11 .81 x

E S 2 .71 x 2 .34 x 1 .10 x 1 .60 x 2 .30 x

Internet





Sector: Advertising /local networking

Target: GoingBuyer: AO L, Inc.Date: June 2009Transaction Value: Undisclosed

C omments:Desire to be localMillion-plus unique visitors monthly

Target Buyer

Talkzilla.com TZ HoldingsSiliconinvestor.com TZ Holdings

SendTec Inc. PHIDS Inc.

SnapTell A9.com

Going Inc. A O L

Internet Market




IT Services Market

Public Valuations

Q 2 08 Q 3 08 Q 4 08 Q 1 09 Q 2 09

E E ITD 6 .92 x 6 .50 x 5 .36 x 5 .32 x 5 .24 x

E S 0 .89 x 0 .80 x 0 .70 x 0 .56 x 0 .63 x

ITSer vices





Sector: ServicesTarget: Carillion plcBuyer: Capita Group plcDate: June 2009Transaction Value: $57 million

C omments:Intra-countryServices around the networkValuation in µservices¶ range

Target Buyer

Resource Group AG

Swisscom AG

Bearing Point Keane

Structurum AS Inmeta ASA

Carillion plc Capita Group plc

IT Services Market




C ontact Information

Research and Conferences:www.corumgroup.com

C orum Group Ltd.

Ward Carter, [email protected]

Ryan Blakely, VP [email protected]

10500 NE 8th Street, Suite 1500Bellevue, W A 98004USA

+1 425-455-8281

C orum Group International S.à.r.l.

Beim ParadeplatzBasteiplatz 78001 ZürichSwitzerland

+41 44 251 82 65

Corum Group MA Flash Report 7-2-2009

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