Global Technology M&A Trends and Analysis – 1H 2015

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  1. 1. www.woodsidecap.com Global Technology M&A Trends and Analysis 1H 2015 July 2015
  2. 2. 2Global Technology M&A Trends and Analysis l Woodside Capital Partners l July 2015 Software Industry Landscape Internet Software Online Services Systems Software Application Software IT services
  3. 3. 3Global Technology M&A Trends and Analysis l Woodside Capital Partners l July 2015 Hardware Industry Landscape Communications Equipment Electronic Equipment, Instruments & Components Technology Hardware, Storage & Peripherals Semiconductors & Semiconductor Equipment Technology Distributors
  4. 4. 4Global Technology M&A Trends and Analysis l Woodside Capital Partners l July 2015 CONTENTS Technology Trends 9 Software Sector M&A Overview 27 Stock Market Performance 61 Executive Summary 5 Hardware Sector M&A Overview 44
  5. 5. 5Global Technology M&A Trends and Analysis l Woodside Capital Partners l July 2015 Global digital ad tech spending is forecasted to reach US$253.0 Bn by 2018 with an estimated 36.6% share in media ad spending; Mobile Internet ad spending will dominate digital ad spending Mobile Internet ad spending will continue to have the biggest share in US digital ad spending; digital video ad spending share is set to increase to 15.5% of digital spending by 2018 Rise in associated loss due to data breach incidents has led to increases in spending by the US government on cyber security; cyber security market is expected to reach US$155 Bn by 2019 Global wearable technology shipments, including fitness devices, is expected to reach 126.1 Mn in 2019 from 19.6 Mn in 2014 Smart homes market is estimated to be the largest market within smart cities, constituting 26.6% share in 2017; sales to expand at 26.9% CAGR over 2012 17; IoT market to accelerate to US$7.1 Tn by 2020 and IoT-enabled devices to represent 50% of global connected devices by 2020, driven by low component cost and need for connectivity Global e-commerce and m-commerce markets are forecast to reach US$1.3 Tn and US$626 Bn, respectively by 2018, led by rapid smartphone adoption and internet penetration; US e-commerce and m-commerce markets to reach US$491.5 Bn and US$132.7 Bn, respectively in 2018 Global semiconductor market to reach US$369.6 Bn by 2017, driven by integrated circuits segment; Asia-Pacific region continue to be the largest and fastest growing market Executive Summary Technology Trends Growth in digital ad tech sector, driven by programmatic marketing platform, real-time-bidding, and mobile ad growth, expected to lead to increased M&A activity during the next 12 months Enterprises seeking technology innovations to reduce business vulnerability and threats from emerging finance solutions are likely to increase M&A activities The need to establish presence in the sector and the growing demand for smart mobility with decline in hardware costs to drive deal activity in IoT sector Consolidation among players, omni-channel capabilities and need to build supply chain to drive M&A in e-commerce space in 2015 In 2015, M&A activity in semiconductor sector continues to be fuelled by shift from PCs to mobiles, new technologies that improve connectivity and functionality Demand for analytics and low-cost architecture is expected to drive M&A activity in HR technologies and smart storage solutions Technology Industry Outlook
  6. 6. 6Global Technology M&A Trends and Analysis l Woodside Capital Partners l July 2015 Global M&A activity in 2015 is expected to continue the robust deal activity experienced in 2014; Deal value surges in the first two months of Q2 2015 Global mid-market deal volume and value surge in Q1 2015 after a subdued previous quarter; US mid-market deal value driven by few major deals in Q1 2015 Global average transaction size surges in Q1 2015 over Q4 2014; Mid market deals rise in Q1 2015; Mega deals drive transaction value in the first two months of Q2 2015 US average transaction size trend upwards for all size segments in Q1 2015; First two months of Q2 2015 witnesses robust increase in deal value led by mega deals Global M&A activity remained robust in 2014, with high deal volume and average transaction size; Momentum is expected to continue in 2015 with increasing average transaction size Globally, online services and application software experience the largest M&A activity among the software sub-sectors, accounting for over 85% of deal volume in Q1 2015 M&A activity in software industry is led by online services and application software sub-sectors in US, accounting for over 87% of deal volume in Q1 2015 Strategic buyers dominate the global and US M&A activity in the software industry; over 95% of acquisitions have been made by strategic buyers US and Canada accounts for nearly half of global M&A activity in software industry, followed by Europe Global and US M&A transactions marked by higher purchase price multiples in Q1 2015 compared to Q1 2014 Cross-border M&A accounts for nearly one-fourth of global transactions; cross-border deal value at three-year high in the first two months of Q2 2015 US buyers have acquired more software companies outside the US than non-US buyers have acquired in the US; both inbound and outbound M&A activity remain buoyant in Q2 2015 Yahoo, Google and Twitter have been the most active recent acquirers in the software industry Executive Summary Software Industry: M&A Activity
  7. 7. 7Global Technology M&A Trends and Analysis l Woodside Capital Partners l July 2015 Executive Summary Global hardware industry M&A activity registered strong growth in first five months of 2015; deal value highest in three years The number of deals below US$50 Mn and above US$500 Mn increased in Q1 2015 over Q4 2014; large ticket deals drove transaction value in first two months of Q2 2015 Global mid-market deal volume and value decline in Q1 2015; US mid-market deal value also fell in Q1 2015 Average transaction size trends upwards for all size segments in Q1 2015 in the US; first two months of Q2 2015 witness robust increase in deal value, led by mega deals Global M&A activity remained robust in first five months of 2015, with high deal volume and average transaction size Globally, electronic equipment and semiconductors witnessed the largest M&A activity in deal volume and value in Q1 2015 M&A activity in the US was led by electronic equipment, instruments and components, and communications equipment sub-sectors in US, accounting for over 64% of deal volume in Q1 2015 Strategic buyers dominate global M&A activity in hardware industry with over 90% of deals Strategic buyers dominate M&A activity in US hardware industry, representing over 90% of deals US and Canada record highest M&A activity in hardware industry, accounting for 41% transactions by deal volume and 49% by deal value Global and US M&A transactions marked by lower purchase revenue multiples in Q1 2015 than Q4 2014 and Q1 2014 Global M&A transactions marked by higher purchase price EBITDA multiples than Q4 2014 and Q1 2014 in Q1 2015; US M&A transactions marked by lower purchase price EBITDA multiples in Q1 2015 Cross-border M&A accounts for over one-fourth of global transactions; cross-border deal value reaches three-year high in first two months of Q2 2015 Number of US inbound deals increased in Q1 2015 while outbound deals remained flat; deal value of inbound M&A registered record growth as compared to the last three years Intel, Ametek and Arrow Electronics have been the most active recent acquirers in the hardware industry Hardware Industry: M&A Activity
  8. 8. 8Global Technology M&A Trends and Analysis l Woodside Capital Partners l July 2015 CONTENTS Technology Trends 9 Software Industry M&A Overview 27 Stock Market Performance 61 Executive Summary 5 Hardware Industry M&A Overview 44
  9. 9. 9Global Technology M&A Trends and Analysis l Woodside Capital Partners l July 2015 Global Digital Ad Tech Spending (US$ Bn) Global Mobile Internet Ad Spending (US$ Bn) Digital ad spending is expected to rise at a CAGR of 14.9% from 2014 to 2018, driven by mobile, digital video, and programmatic buying Effective data-driven targeting, low CPMs, and a direct feedback loop that enables the calculation of ROI on digital advertising dollars spent have driven increased spending According to comScore, ~60% of time spent online in 2014 was on mobile devices, with the majority of this activity being within apps Global Digital Advertising: Global ad tech spending continues to grow rapidly, with mobile advertising steadily increasing its share of spending Source: eMarketer 120.0 145.0 171.0 198.0 225.0 253.0 23.1% 26.6% 29.6% 32.2% 34.5% 36.6% 2013 2014 2015E 2016E 2017E 2018E Digital ad spending % of total media ad spending 19.2 42.6 68.7 101.4 133.7 166.6 16.0% 29.4% 40.2% 51.2% 59.4% 65.9% 2013 2014 2015E 2016E 2017E 2018E Mobile Internet ad spending % of digital ad spending
  10. 10. 10Global Technology M&A Trends and Analysis l Woodside Capital Partners l July 2015 US Digital Advertising Spending (US$ Bn) 32.4 31.6 29.9 26.6 25.0 25.2 10.7 19.2 28.7 40.5 49.8 57.8 24.8% 37.8% 49.0% 60.4% 66.6% 69.7% 2013 2014 2015E 2016E 2017E 2018E Desktop Mobile Mobile as a % of total US Digital Video Advertising Spending (US$ Bn) 3.1 4.3 5.2 5.7 6.2 6.90.7 1.5 2.6 3.9 5.1 6.0 8.9% 11.5% 13.3% 14.3% 15.0% 15.5% 2013 2014 2015E 2016E 2017E 2018E Desktop Mobile Video as % of digital spending The penetration of new video-capable devices and increased popularity of video streaming services are leading viewership away from traditional television Ad tech budgets are shifting from linear television to online and mobile video, which has led to expansion in video advertising US Digital Advertising: Mobile ad spending in US to continue to increase share of digital ad spending Source: eMarketer; WCP Analysis
  11. 11. 11Global Technology M&A Trends and Analysis l Woodside Capital Partners l July 2015 Ad Tech M&A Drivers: Programmatic marketing platforms, real-time-bidding, and mobile ad growth Digital Ad Tech: Key M&A Transactions High demand for companies that provide innovative ways to create real value for brands is driving the M&A market in the digital ad tech space Digital ad tech companies that provide improved data analytics through complex algorithms, which enable effective and personalized targeting and provide real-time data, are expected to gain ground Need for customer relationship management systems with valuable social data on target audiences that advertisers can use to develop and provide successful marketing campaigns may drive further acquisitions and partnerships Programmatic marketing platforms that provide advanced methods to optimize and measure the return on investment for advertisers are likely to attract increased attention Source: Capital-IQ; WCP Analysis Digital Ad Tech: M&A Outlook Ann. Date Target Acquirer Deal Value (US$ Mn) EV/Revenue Target Description May-15 Shift Labs Brand Networks 50 NA Provides real-time marketing platform for advertisers May-15 AOL Verizon 4,759.40 1.7x Digital distributor of content, products, and services Apr-15 Bronto Software NetSuite 200 NA Provides cloud-based marketing platform Apr-15 Chango Rubicon Project 122 NA Programmatic advertising platform provider Mar-15 Mob Partner Cheetah mobile 58 1.9x Operates a mobile affiliate network that connects advertisers Mar-15 eXelate Nielsen NA NA Provides analytics, smart data & cloud products for marketers Mar-15 Avazu Dalian Zeus 333.6 NA Digital marketing services provider Mar-15 Yieldex AppNexus 100 NA Cross-channel revenue and inventory management platform Feb-15 SocialMoov Marin Software 18.8 NA Provides platform for social advertising Feb-15 Spotzot Valassis Comm NA NA Provides mobile advertising platforms with focus on location tech. Jan-15 ZipDial Twitter 30 NA Provides marketing, customer engagement & analytics solutions
  12. 12. 12Global Technology M&A Trends and Analysis l Woodside Capital Partners l July 2015 The per capita cost of data breaches continues to increase, with the average estimated cost at US$153.1 in 2015, up from US$146.9 in 2014 Spending on cyber security by the US government is expected to increase significantly due to the increasing losses from data breaches, which is among the highest in the world Per Capita Cost of Data Breach (US$) US Budget Allocation on Cyber Security Cyber Security Market Size (US$ Bn) Cyber Security: Increase in data breaches leads to spending increases Source: Ponemon Institute; MarketsandMarkets 188 210 177 143 131 120 131 52 37 201 195 183 158 141 127 135 70 51 217 211 186 163 146 135 133 78 56 US Germany France UK Italy Japan Australia Brazil India 2013 2014 2015E 0.9 14.0 2000 2016E 95.6 105.4 116.2 128.1 141.3 155.7 2014 2015E 2016E 2017E 2018E 2019E ~14x increase CAGR: 10.2%
  13. 13. 13Global Technology M&A Trends and Analysis l Woodside Capital Partners l July 2015 Cyber Security: Recent Transactions and Outlook Cyber Security: Key M&A Transactions The need for continuous improvement in technology to counter rapid evolving cyber threats is forecast to drive M&A as firms seek to acquire solutions rather than develop in-house Firms may look to buy innovation-driven, small-scale firms that offer niche cyber security services and products An increase in business vulnerability as a result of growth in connectivity (often through less secure devices such as mobile phones and cloud storage) is likely to drive companies to acquire/partner with other security providers to reduce the risk of potential loss of IP, reputation, and customers The increased use of electronic/mobile commerce and banking, greater use of digital cash, and growth in new payment models may also lead to increased acquisitions Source: Capital-IQ; WCP Analysis Cyber Security: M&A Outlook Ann. Date Target Acquirer Deal Value (US$ Mn) EV/Revenue Target Description Jun-15 OPenDNS Cisco 635.0 NA Cloud-based security solutions Jun-15 Virtustream EMC 1,200 NA Provides enterprise-class cloud software and services and cyber security solutions Jun-15 Knowledge Consulting Group ManTech International NA NA Provides cyber risk management, governance, operations, and compliance services May-15 Resolution1 Security General Dynamics Fidelis NA NA Provides incident resolution solutions May-15 Creative Computing Solutions Information innovators NA NA Cyber security and health-focused Solutions Apr-15 Information Security Solutions Assured Info. Security NA NA Cyber security, information technology security, and cyber intelligence solutions
  14. 14. 14Global Technology M&A Trends and Analysis l Woodside Capital Partners l July 2015 Internet of Things (IoT) Market Size (US$ Tn) Global Connected Devices (Bn) IoT devices are projected to contribute to ~50% of global connected devices by 2020 as a result of: Low cost to add IoT capability to consumer products, due to reduced component costs Increased demand for remote control, monitoring, and sensing functions The advent of low-priced sensors, low-cost internet bandwidth, big data analytics and the need for connectivity have led to growth in the IoT market IoT Market: Reduced component cost and need for connectivity to drive rapid growth Source: IDC, Strategy Analytics 1.9 2.7 3.8 5.6 7.1 2013 2015E 2017E 2019E 2020E 0 5 10 15 20 25 30 35 2014 2015E 2016E 2017E 2018E 2019E 2020E PCs Smartphones Tablets Internet Media Devices Smart TVs Smart Home Devices Wearables IoT 49.9% 4.8% 14.5% 4.8% 4.2% 5.9% 12.8% 3.0% CAGR: 20.4% As a % of total
  15. 15. 15Global Technology M&A Trends and Analysis l Woodside Capital Partners l July 2015 Global Wearable Device Shipments (Mn) Global Wearable Device Shipments by Product (Mn) Wearable device shipments are projected to reach 46.0 Mn by 2015 from 19.6 Mn in 2014; higher consumer awareness, new device launches, and cross platform adaptation of smart wearables are driving the demand for wearable devices Wrist-wear devices, such as watches and bands, account for 90.4% of wearable devices; they are forecast to reach 101.4 Mn in shipments in 2019 from 17.7 Mn in 2014, expanding at a CAGR of 41.8%. Global Wearables: Fitness devices to drive rapid growth Source: IDC; Note: Basic wearables are those devices that do not run third party applications 15 20 27 36 44 52 4 26 38 50 63 74 19 46 65 86 107 126 2014 2015E 2016E 2017E 2018E 2019E Basic Smart CAGR: 46.0% 19.6 126.1 17.7 101.4 1.6 6.7 5.6 0.1 5.1 0.2 7.3 2014 2019E Wristwear Modular Clothing Eyewear and Earwear Other
  16. 16. 16Global Technology M&A Trends and Analysis l Woodside Capital Partners l July 2015 Smart Home Market (US$ Bn) Smart Home Devices within smart cities (Mn) The smart home technology market is expected to reach US$71.8 Bn in 2017 from US$21.8 Bn in 2012, expanding at a CAGR of 26.9% Adoption is fueled by an increasing need for connectivity across devices for entertainment, computing, monitoring and control, and health The share of smart homes in smart cities is projected to increase to 39.9% in 2017 from 26.6% in 2015, fueled by investments in energy management, automation, and security Smart Homes: Rapid growth driven by need for connectivity across devices and energy management, automation and security Source: Deloitte University Press; Gartner 13.7 41.3 8.1 30.5 21.8 71.8 2012 2017E Smarthome hardware Smarthome installation services and fees CAGR: 26.9% 97.8 126.4 159.5 206.2 354.6 648.1294.2 586.1 1,067.0 237.2 298.9 371.0 252 304.9 371.1 19.9 33.4 57.3 2015E 2016E 2017E Public Services Smart Comm. Buildings Smart Homes Transport Utilities Others
  17. 17. 17Global Technology M&A Trends and Analysis l Woodside Capital Partners l July 2015 IoT Market: Large, traditional companies acquiring smaller IoT vendors to establish foothold in rapidly emerging IoT sector IoT: Key M&A Transactions Ann. Date Target Acquirer Deal Value (US$ Mn) EV/Revenue Target Description Jun-15 Altera Intel 15,844.5 8.3x Embedded chip company that specializes in reconfigurable chips Apr-15 Motorola Sol. Ent. device business Zebra 3,450.0 NA Rugged mobile comp, tablets, and WLAN products for business Feb-15 Exelis, Inc. Harris Corp. 5,193.2 1.43x Command, control, communication, computers, intelligence, and surveillance electronics and systems provider Feb-15 MyFitnessPal & Endomondo Under Armour 560.0 NA Health tracking app Social sports and fitness network Feb-15 AlertMe British Gas 67.7 NA Home energy-monitoring software provider Jan-15 Wit.ai Facebook NA NA Voice recognition technology Large players, in an attempt to establish their foothold in the IoT-enabled landscape, are expected to increase acquisitions/partnerships with niche players: 2014/15 saw Google buy manufacturers of Internet-enabled technology for homes (Nest acquisition) and wearables (WIMM Labs acquisition) The need to leverage declines in technology cost and increased use of Internet connectivity to improve consumer relationships, find new revenue sources, and gain differentiated competitive advantage is likely to increase M&A activity in the IoT sector The threat of competition from established technology companies that also have presence in the IoT space is likely to drive acquisitions by bigger brands (Under Armour acquisition of MyFitnessPal) Connected cars and industrial IoT solutions are anticipated to drive growth in M&A activity as the need for smart mobility solutions and industrial demand intensify Source: Capital-IQ; WCP Analysis IoT: M&A Outlook
  18. 18. 18Global Technology M&A Trends and Analysis l Woodside Capital Partners l July 2015 Global E-commerce Sales* (US$ Bn) Global M-commerce Sales* (US$ Bn) Global e-commerce sales are expected to expand to US$1.3 Tn in 2018 from US$545 Bn in 2012, with Asia-Pacific and North America leading the market Global m-commerce sales are projected to increase at a CAGR of 47.4% over 2012-2018, driven by growth in the adoption of mobile devices such as smartphones and tablets Global E-commerce and M-commerce: Growth led led by rapid smartphone/Internet adoption combined with improved ability to transact via mobile devices Source: eMarketer; Euromonitor; Goldman Sachs; Ex-travel 61.0 133.0 204.0 298.0 415.0 516.0 626.0 2012 2013 2014E 2015E 2016E 2017E 2018E 545.0 638.0 752.0 882.0 1,024.0 1,179.0 1,346.0 2012 2013 2014E 2015E 2016E 2017E 2018E CAGR: 16.3% CAGR: 47.4%
  19. 19. 19Global Technology M&A Trends and Analysis l Woodside Capital Partners l July 2015 US E-commerce Sales (US$ Bn) US M-commerce Sales (US$ Bn) US is currently the largest retail e-commerce market, with US$304.1E Bn in global e-commerce sales in 2014 US retail m-commerce sales are forecast to rise to US$132.7 Bn in 2018 at a CAGR of 32.3% over 201218, driven by sales through tablets According to Forrester, US consumer adoption of smartphones and tablets is likely to rise to 244 mn and 150 mn users, respectively, in 2017 US E-Commerce and M-Commerce: M-Commerce to steadily increase overall share of E-Commerce Source: eMarketer 225.3 263.3 304.1 347.3 392.5 440.4 491.5 5.2% 5.8% 6.4% 7.0% 7.6% 8.2% 8.9% 2012 2013 2014E 2015E 2016E 2017E 2018E Retail E-commerce Sales % of Retail Sales 24.8 42.1 57.8 76.4 98.1 114.5 132.7 0.6% 0.9% 1.2% 1.5% 1.9% 2.1% 2.4% 2012 2013 2014E 2015E 2016E 2017E 2018E Retail M-commerce Sales % of Retail Sales
  20. 20. 20Global Technology M&A Trends and Analysis l Woodside Capital Partners l July 2015 E-Commerce M&A Drivers: Consolidation, omni-channel capabilities and need to build supply chain E-commerce/M-commerce: Key M&A Transactions Ann. Date Target Acquirer Deal Value (US$ Mn) EV/Revenue Target Description Jun-15 LightInTheBox Holding Zhejiang Aokang Shoes 83.5 0.67x Online retail company May-15 Menulog Group JUST EAT 687.3 33.0x Online takeaway food and home-delivery platform May-15 Hualian Electric Commerce China Strategic Holdings 258.1 NA Online shopping platform May-15 Geeknet GameStop 133.8 0.71x Online retailer for the global geek community Apr-15 Freecharge Snapdeal 400.0 NA Online mobile recharge provider Feb-15 Orbitz Worldwide Expedia 1,880.1 1.82x Online travel company Consolidation in the sector, with bigger companies acquiring smaller, niche ones, is projected to drive M&A as players seek to expand geographic reach and product line Growth in the concept of the omni-channel brand is likely to drive online retailers to acquire companies with physical real estate to provide inspection/trial of their products and engage with consumers. For instance, in 2014, Alibaba invested US$692 Mn in a Chinese department store operator to provide a storefront to its online operations and boost consumer experience Brick-and-mortar retailers may look to acquire e-commerce retailers to build their digital footprint and/or enter new markets To capitalize on mobile commerce, firms are likely to increase vertical and horizontal integration to expand mobile capabilities, thereby driving M&A in segments such as payments Source: Capital-IQ; WCP Analysis E-commerce/M-commerce: M&A Outlook
  21. 21. 21Global Technology M&A Trends and Analysis l Woodside Capital Partners l July 2015 Global Semiconductor Market by Segment (US$ Bn) Global Semiconductor Market by Region (US$ Bn) The global semiconductor market is forecasted to expand at a CAGR of 4.9% to US$369.6.0 Bn during 201217 led by the integrated circuits segment, which accounts for more than 80% of total semiconductor sales Asia-Pacific, the largest market, accounts for over 55% of the total semiconductor sales, and is projected to expand most rapidly at a CAGR of 6.6% over 201217 Global Semiconductors: Growth led by integrated circuits segment and Asia-Pacific region Source: World Semiconductor Trade Statistics 163.0 174.4 194.2 207.7 216.4 224.6 54.4 61.5 69.3 71.9 73.3 74.6 33.2 34.9 37.5 36.1 37.0 37.8 41.1 34.8 34.8 31.5 32.1 32.6 2012 2013 2014 2015E 2016E 2017E Asia Pacific Americas Europe Japan 238.2 251.8 277.3 285.8 295.3 303.9 26.2 27.6 29.9 32.4 33.5 34.7 19.1 18.2 20.2 20.4 21.0 21.6 8.0 8.0 8.5 8.7 9.1 9.5 2012 2013 2014E 2015E 2016E 2017E Integrated Circuits Optoelectronics Discrete Semiconductors Sensors 291.6 335.8 305.6 369.6 347.2 358.9
  22. 22. 22Global Technology M&A Trends and Analysis l Woodside Capital Partners l July 2015 Semiconductor M&A Drivers: Shift from PCs to mobiles, new technologies expected to improve connectivity and functionality Semiconductor: Key M&A Transactions Ann. Date Target Acquirer Deal Value (US$ Mn) EV/Revenue Target Description Jun-15 Altera Corp. Intel 18,220.5 8.31x A semiconductor company, which manufactures programmable logic devices and reconfigurable complex digital circuits May-15 Broadcom Corp. Avago Tech. 36,697.9 3.97x The company offers semiconductor solutions for wired and wireless communications May-15 NXP Semiconductors Investor Group 1,800.0 - Divestiture of RF Power business Apr-15 OmniVision Technologies Investor Group 1,897.8 1.00x The company designs, develops, manufactures, and markets semiconductor image-sensor devices Mar-15 Freescale Semiconductor NXP Semiconductor 17,297.2 3.58x The company manufactures embedded processors Mar-15 Philips LumiLeds Investor Group 2,900.0 1.80x The company develops, manufactures, and markets LEDs, modules, products, and systems for lighting applications The continued shift from PCs to mobile is likely to increase M&A activity among PC-focused chip manufacturers, as they look to acquire companies to boost their mobile capabilities New technologies, such as Internet-of-Things, wearables, and smart home, may create opportunities for the semiconductor sector; embedding smart capabilities into devices would require semiconductor companies to acquire innovative companies to optimize R&D investments Demand for products offering enhanced functionality, high processing speed, and reduced power consumption, is likely to increase M&A activity (Sumitomo Chemicals bid to acquire the compound semiconductor materials business of Hitachi Cable) Chinese companies and investment groups becoming more active as potential buyers Source: Capital-IQ; WCP Analysis Semiconductor: M&A Outlook
  23. 23. 23Global Technology M&A Trends and Analysis l Woodside Capital Partners l July 2015 HR Technology: Social sourcing in recruitment and demand for analytics expected to drive M&A activity HR Technology: Key M&A Transactions The cloud-based human capital management (HCM) applications market is projected to expand to US$8.4 Bn by 2018 from US$5 Bn in 2013 at a CAGR of 10.9% Big data and the growing contingent workforce are increasing demand for HR Technology Real-time workforce visibility and flexibility allow for organizations to respond to changing market conditions Cloud technology is creating massive economies of scale, while reducing IT resource involvement Adoption of social sourcing in recruitment, mobile applicant tracking, and Big Data analytics is forecasted to result in the acquisition of niche tech players Source: Entrepreneur; Capital-IQ; WCP Analysis HR Technology: M&A Outlook Ann. Date Target Acquirer Deal Value (US$ Mn) EV/Rev Target Description May-15 SuperiorHR Zuman NA NA Offers human resource (HR) outsourcing and consulting services Nov-14 bswift Aetna 400.0 NA Benefits administration technology & services to employers Oct-14 Allocate Software HgCapital 145.3 2.3x Workforce optimization & assurance s/w & services Oct-14 Evolv Cornerstone OnDemand 42.5 14.2x Provides workforce optimization solutions through big data Sep-14 Concur SAP 8,300.0 11.5x Cloud-based travel and expense management Apr-14 Distill Gild NA NA Provides platform enabling companies to find, engage, and hire talent with data and intelligence
  24. 24. 24Global Technology M&A Trends and Analysis l Woodside Capital Partners l July 2015 Storage Market: Software-defined storage and infrastructure convergence for personal and enterprise data storage expected to drive M&A activity Storage: Key M&A Transactions The high cost and vulnerability of physical servers and storage devices are driving enterprises to adopt cloud storage as it offers the option of low- cost scalability with easy access and management of data Data protection and other add-on storage capabilities will become more directly linked to storage solutions Storage will move beyond serving database-friendly LUNs to providing more application-centric storage features Private cloud storage, particularly Tier-2 storage, is expected to be rolled out in larger deployments in 2015 by both the government sector and larger enterprises The need for advanced SSDs, flash arrays, software-defined-storage, and infrastructure convergence for personal and enterprise data storage is anticipated to drive M&A activity Source: Appsruntheworld; TechTarget; Capital-IQ; WCP Analysis Storage: M&A Outlook Ann. Date Target Acquirer Deal Value (USD Mn) EV/Rev. Target Description Apr-15 IBM Storage Lenovo 3,400.0 NA Entire storage portfolio of IBM Mar-15 Spansion Cypress 5,000.0 NA Supplier of flash memory and microcontrollers Mar-15 Amplidata WD/HGST NA NA Object-based software defined storage solution Jan-15 CloudOn Dropbox 100.0 NA Mobile document creator and editor Jul-14 InMage Systems. Microsoft Corporation NA NA provides backup, disaster recovery, and cloud platform software for enterprises Apr-14 InkTank Red Hat 175.0 NA Open source object storage provider
  25. 25. 25Global Technology M&A Trends and Analysis l Woodside Capital Partners l July 2015 Industry Landscape of Technology Sub-sectors Internet of Things Semiconductor Digital and Video Advertising Cyber Security HR Technology & Storage E-commerce / M-commerce
  26. 26. 26Global Technology M&A Trends and Analysis l Woodside Capital Partners l July 2015 CONTENTS Technology Trends 9 Software Industry M&A Overview 27 Stock Market Performance 61 Executive Summary 5 Hardware Industry M&A Overview 44
  27. 27. 27Global Technology M&A Trends and Analysis l Woodside Capital Partners l July 2015 Global and US Software M&A Activity: Robust deal activity expected to continue through 2015 with deal value surging in the first two months of Q2 2015 Global & US: Deal Volume and Value 6.2 6.0 3.5 4.7 3.2 4.7 6.4 6.8 10.6 6.2 4.2 4.2 7.4 7.3 6.3 9.7 9.8 9.4 3.1 23.5 11.6 10.7 29.4 13.7 26.9 7.3 8.8 15.0 569 590 597 553 512 512 558 567 541 651 554 508 496 385 286 275 297 302 266 256 276 268 281 323 296 243 251 191 12'Q1 12'Q2 12'Q3 12'Q4 13'Q1 13'Q2 13'Q3 13'Q4 14'Q1 14'Q2 14'Q3 14'Q4 15'Q1 15'Q2* Deal Value (USD Bn) - Global (Ex. US) Deal Value (USD Bn) - US Deal Volume - Global Deal Volume - US Global deal volume in the software industry decreased 2.4% QoQ and 8.3% YoY to US$496B in Q1 2015, while aggregate deal value increased 40.9% QoQ to US$16.1 Bn in 2015Q1 led by acquisition of Advent Software (US$2.6 Bn) by SS&C Technologies and Fundtech by DH Corporation (US41.3 Bn). However, deal value in 2015Q1 declined 59.7% YoY as 2014Q1 witnessed one of the largest deals (Facebooks acquisition of WhatsApp valued at US$19.7 Bn) US deal volume rose 3.3% QoQ but declined 10.7% YoY to 251 in Q1 2015. Aggregate deal value surged 19.3% QoQ but decreased 70.2% YoY to US$8.8 Bn in Q1 2015. Deal value in US for the first two months of Q2 2015 stood higher than Q1 2015 at US$15.0 Bn led by two large deals (AOL and Informatica Corp.) Source: Capital-IQ; *Till June 8, 2015; Note: Deals that are announced, closed or effective; Deal value includes transactions with disclosed values only
  28. 28. 28Global Technology M&A Trends and Analysis l Woodside Capital Partners l July 2015 Global: Deal Volume by Ticket Size 136 142 144 121 109 117 137 130 112 137 99 104 80 71 28 34 28 22 24 21 27 46 32 41 37 32 33 17 4 7 6 9 3 11 10 6 13 11 13 7 7 7 12'Q1 12'Q2 12'Q3 12'Q4 13'Q1 13'Q2 13'Q3 13'Q4 14'Q1 14'Q2 14'Q3 14'Q4 15'Q1 15'Q2* Deals (USD500 Mn) Global: Deal Value by Ticket Size (US$ Bn) Deals below US$50 Mn dominate the M&A deal volume, with 80 transactions valued at US$1.2 Bn in Q1 2015. Average deal value stood at US$14.6 Mn in Q1 2015 compared to US$12.5 Mn in 2014Q4 and US$12.0 Mn in Q1 2014 Mid Market witnessed 33 transactions valued at US$6.2 Bn in Q1 2015. Average deal value stood at US$188.3 Mn vs. US$142.7 Mn in Q4 2014 and US$150.3 Mn in Q1 2014. Deal value for large deals (>US$500 Mn) totaled US$8.7 Bn from 7 transactions, with an average deal value of US$1.2 Bn in Q1 2015 Global M&A Software Trends: Average transaction size increasing; Mid market deals rise in Q1 2015; Mega deals drive transaction value in the first two months of Q2 2015 1.7 1.9 1.5 1.7 1.3 1.2 1.6 1.7 1.3 1.9 1.3 1.3 1.2 1.1 4.7 5.4 4.1 3.3 2.9 3.9 4.6 8.0 4.8 6.1 7.1 4.6 6.2 4.2 6.0 8.5 7.7 9.1 2.2 23.1 11.8 7.8 33.9 11.9 22.7 5.7 8.7 17.0 12'Q1 12'Q2 12'Q3 12'Q4 13'Q1 13'Q2 13'Q3 13'Q4 14'Q1 14'Q2 14'Q3 14'Q4 15'Q1 15'Q2* Deals (USD500 Mn) Source: Capital-IQ; *Through June 8, 2015; Note: Deal value includes transactions with disclosed values only
  29. 29. 29Global Technology M&A Trends and Analysis l Woodside Capital Partners l July 2015 Global Mid-Market Software M&A: Deal volume and value surge in Q1 2015 Global & US: Mid Market Deal (US$50-500 Mn) Volume and Value Global mid-market deal volume rose marginally to 33 as compared to 32 in Q1 2014 and Q4 2014. Deal value surged 36.0% QoQ and 29.1% YoY to US$6.2 Bn in Q1 2015. Major deals in Q1 2015 included the acquisition of MyFitnessPal by Under Armour and KCG Hotspot by BATS Global Markets US mid-market deals stood at 13 in Q1 2015 vis--vis 16 in Q4 2014 and 18 in Q4 2014. Aggregated deal value was US$2.7 Bn, an increase of 14.3% QoQ and at similar levels compared to Q1 2014 1.0 2.8 2.0 0.9 1.3 2.2 2.4 3.7 2.1 3.4 2.3 2.2 3.6 1.9 3.7 2.6 2.2 2.3 1.6 1.7 2.2 4.4 2.7 2.7 4.8 2.3 2.7 2.2 28 34 28 22 24 21 27 46 32 41 37 32 33 1719 15 14 14 13 10 9 24 18 18 22 16 13 8 12'Q1 12'Q2 12'Q3 12'Q4 13'Q1 13'Q2 13'Q3 13'Q4 14'Q1 14'Q2 14'Q3 14'Q4 15'Q1 15'Q2* Deal Value (USD Bn) - Global (Ex. US) Deal Value (USD Bn) - US Deal Volume - Global Deal Volume - US Source: Capital-IQ; *Through June 8, 2015; Note: Deal value includes transactions with disclosed values only
  30. 30. 30Global Technology M&A Trends and Analysis l Woodside Capital Partners l July 2015 US: Deal Volume by Transaction Size US: Deal Value by Transaction Size (US$ Bn) In Q1 2015, there were 30 transactions below US$50 Mn representing a total value of US$500 Mn. Average deal value rose to US$15.7 Mn in Q1 2015 from US$14.2 Mn in Q4 2014 and US$13.6 Mn in Q1 2014 Mid-Market had 13 transactions valued at US$2.7 Bn in Q1 2015. Average deal value was US$204.3 Mn vs. US$145.2 Mn in Q4 2014 and US$204.3 Mn in Q1 2014. Deal value for large deals (>US$500 Mn) totaled US$5.6 Bn from 4 transactions, with an average deal value of US$1.4 Bn in Q1 2015 US Software M&A: Average transaction size increases in Q1 2015; Mega deals drive growth in Q2 2015 0.7 0.8 0.6 0.8 0.5 0.4 0.6 0.6 0.7 0.9 0.5 0.5 0.5 0.4 3.7 2.6 2.2 2.3 1.6 1.7 2.2 4.4 2.7 2.7 4.8 2.3 2.7 2.2 1.9 6.3 7.0 6.3 1.0 21.3 8.7 5.8 26.1 10.0 21.5 4.5 5.6 12.4 12'Q1 12'Q2 12'Q3 12'Q4 13'Q1 13'Q2 13'Q3 13'Q4 14'Q1 14'Q2 14'Q3 14'Q4 15'Q1 15'Q2* Deals (USD500 Mn) 46 52 51 48 42 43 58 46 48 59 39 37 30 22 19 15 14 14 13 10 9 24 18 18 22 16 13 8 1 5 5 5 1 8 7 5 8 9 12 5 4 5 12'Q1 12'Q2 12'Q3 12'Q4 13'Q1 13'Q2 13'Q3 13'Q4 14'Q1 14'Q2 14'Q3 14'Q4 15'Q1 15'Q2* Deals (USD500 Mn) Source: Capital-IQ; *Through June 8, 2015; Note: Deal value includes transactions with disclosed values only
  31. 31. 31Global Technology M&A Trends and Analysis l Woodside Capital Partners l July 2015 Global Software M&A Activity by Quarter Global: Average Deal Size 12'Q1, $74.2 Mn 12'Q2, $86.1 Mn 12'Q3, $74.9 Mn 12'Q4, $92.4 Mn 13'Q1, $46.5 Mn 13'Q2, $189.4 Mn 13'Q3, $103.0 Mn 13'Q4, $96.4 Mn 14'Q1, $255.1 Mn 14'Q2, $105.5 Mn 14'Q3, $208.3 Mn 14'Q4, $80.9 Mn 15'Q1, $134.4 Mn 15'Q2*, $234.6 Mn $0Mn $50Mn $100Mn $150Mn $200Mn $250Mn $300Mn 20 25 30 35 40 45 50 55 60 AverageDealSize(US$Mn) Deal Volume (>USD50 Mn) Bubble size indicates total deal value for disclosed deals >$50 Mn) Source: Capital-IQ; * Through June 8, 2015; Note: Deal value includes transactions with disclosed values only Green indicates year 2012, Blue 2013, Orange 2014 and Yellow 2015 Data Label: Quarter, Average Deal Size
  32. 32. 32Global Technology M&A Trends and Analysis l Woodside Capital Partners l July 2015 Global: Deal Volume by Sector 21 16 16 17 29 21 29 27 25 30 13 15 12 8 313 350 339 313 281 291 322 336 322 386 329 318 314 259 42 40 37 38 46 36 38 40 40 43 52 38 32 25 141 148 161 139 123 117 126 131 108 146 122 107 108 69 39 27 33 32 21 28 33 26 27 27 26 16 19 14 13 9 11 14 12 19 10 7 19 19 12 14 11 10 12'Q1 12'Q2 12'Q3 12'Q4 13'Q1 13'Q2 13'Q3 13'Q4 14'Q1 14'Q2 14'Q3 14'Q4 15'Q1 15'Q2* Internet Software Online Services IT Services Application Software Systems Software Multiple Sectors Global: Deal Value by Top 2 Sub-Sectors (US$ Bn) Online services dominate the global M&A activity, accounting for over 60% of the transactions in Q1 2015. Number of transactions totaled 314 in Q1 2015 vs. 318 in Q4 2014 and 322 in Q 2014. Application software, the second largest sector in terms of M&A activity, had 108 transactions in Q1 2015, similar to 107 transactions in Q4 2014 and 108 deals in Q1 2014 In terms of deal value, online services and application software have consistently remained the top two sectors. Deal value totaled US$6.9 Bn for online services and US$6.0 Bn for application software in Q1 2015 Global M&A Activity by Software Sector 3.1 9.0 2.9 4.1 2.3 10.3 9.9 12.0 29.2 12.8 15.5 6.2 6.9 15.18.1 5.6 6.6 5.3 1.8 3.6 3.3 5.4 4.5 11.5 4.0 6.0 6.4 9.9 1.3 1.1 3.8 4.7 2.3 8.1 4.4 2.2 5.4 2.7 4.0 1.4 3.2 0.8 12'Q1 12'Q2 12'Q3 12'Q4 13'Q1 13'Q2 13'Q3 13'Q4 14'Q1 14'Q2 14'Q3 14'Q4 15'Q1 15'Q2* Online Services Application Software Systems Software Others Source: Capital-IQ; *Through June 8, 2015; Note: Deal value includes transactions with disclosed values only
  33. 33. 33Global Technology M&A Trends and Analysis l Woodside Capital Partners l July 2015 US: Deal Volume by Sector US: Deal Value by Top 2 Sub-Sectors (US$ Bn) Online services represented over 60% of the transactions in Q1 2015 in US. Number of transactions totaled 158 in Q1 2015 vs 160 in Q4 2014 and 187 in Q1 2014. Application software, the second most active sector, had 61 transactions in Q1 2015 compared to 47 transactions in Q4 2014 and 51 deals in Q1 2014 Online services and application software are the dominant sectors in software industry. Deal value for transactions with disclosed value totaled US$5.1 Bn for application software and US$3.0 Bn for online services in Q1 2015 US M&A Activity by Software Sub-Sector 12 8 7 9 18 7 16 14 10 11 3 8 7 2 170 165 176 176 147 158 163 166 187 199 204 160 158 136 18 16 17 24 23 14 20 19 12 18 22 17 13 12 62 67 74 73 59 54 55 51 51 70 50 47 61 33 16 16 16 16 12 12 17 15 13 16 12 5 7 6 8 3 7 4 7 11 5 3 8 9 5 6 5 2 12'Q1 12'Q2 12'Q3 12'Q4 13'Q1 13'Q2 13'Q3 13'Q4 14'Q1 14'Q2 14'Q3 14'Q4 15'Q1 15'Q2* Internet Software Online Services IT Services Application Software Systems Software Multiple Sectors 2.31.2 5.2 2.6 1.1 7.6 4.9 7.4 22.5 8.6 14.1 4.5 3.0 9.1 4.4 4.1 5.5 3.2 1.2 3.0 1.9 4.7 3.4 10.5 2.0 5.1 5.49.4 0.7 0.4 1.9 3.6 0.9 6.5 3.6 1.5 2.2 1.6 2.3 0.9 0.7 0.6 12'Q1 12'Q2 12'Q3 12'Q4 13'Q1 13'Q2 13'Q3 13'Q4 14'Q1 14'Q2 14'Q3 14'Q4 15'Q1 15'Q2 Internet Software Online Services Application Software Systems Software Others Source: Capital-IQ; *Till June 8, 2015; Note: Deal value includes transactions with disclosed transaction values only
  34. 34. 34Global Technology M&A Trends and Analysis l Woodside Capital Partners l July 2015 Global: Deal Volume by Buyer Type Global: Deal Value by Buyer Type (US$ Bn) Strategic buyers accounted for over 95% of the transactions, and 459 in Q1 2015 compared to 468 in Q4 2014 and 497 in Q1 2014 Financial buyers led only 22 M&A transactions in Q1 2015Q1 vs. 23 in Q4 2014 and 29 in Q1 2014 Deal value for transactions led by strategic buyers rose to US$14.7 Bn in Q1 2015 from US$8.7 Bn in Q4 2014 but declined compared to US$31.6 Bn in Q1 2014 Financial buyers accounted for US$1.3 Bn in Q1 2015 vs. US$2.4 Bn in Q4 2014 and US$8.4 Bn in Q1 2014 Strategic Buyers Dominating Global Software M&A Activity 521 540 534 500 462 474 497 516 497 599 497 468 459 357 28 35 25 34 27 25 33 26 29 34 40 23 22 16 1 1 1 2 1 3 1 1 2 1 12'Q1 12'Q2 12'Q3 12'Q4 13'Q1 13'Q2 13'Q3 13'Q4 14'Q1 14'Q2 14'Q3 14'Q4 15'Q1 15'Q2* Strategic Buyer Financial Buyer Both 8.8 11.2 11.6 11.7 5.1 17.7 12.1 14.7 31.6 13.7 22.8 8.7 14.7 12.2 3.7 3.5 1.6 2.2 1.2 10.6 5.8 2.3 8.4 6.2 8.2 2.4 1.3 9.91.1 0.1 0.4 0.5 0.1 0.2 12'Q1 12'Q2 12'Q3 12'Q4 13'Q1 13'Q2 13'Q3 13'Q4 14'Q1 14'Q2 14'Q3 14'Q4 15'Q1 15'Q2* Strategic Buyer Financial Buyer Both Source: Capital-IQ; Note: 261 transactions did not disclose buyer details; Deal value refers to deals with disclosed transaction value
  35. 35. 35Global Technology M&A Trends and Analysis l Woodside Capital Partners l July 2015 US: Deal Volume by Buyer Type US: Deal Value by Buyer Type (US$ Bn) Strategic Buyers Dominating US Software M&A Activity 273 256 269 281 247 240 251 250 263 296 263 223 236 178 9 15 11 17 12 13 17 12 12 20 28 11 10 8 1 1 3 12'Q1 12'Q2 12'Q3 12'Q4 13'Q1 13'Q2 13'Q3 13'Q4 14'Q1 14'Q2 14'Q3 14'Q4 15'Q1 15'Q2* Strategic Buyer Financial Buyer Both 5.9 7.9 8.6 7.2 3.1 13.7 7.3 10.7 28.4 8.0 18.7 5.0 8.2 9.7 0.3 1.8 1.1 2.2 0.1 9.8 4.3 0.1 1.1 5.7 8.2 2.3 0.6 5.4 0.1 12'Q1 12'Q2 12'Q3 12'Q4 13'Q1 13'Q2 13'Q3 13'Q4 14'Q1 14'Q2 14'Q3 14'Q4 15'Q1 15'Q2* Strategic Buyer Financial Buyer Both Source: Capital-IQ; Note: 85 deals did not disclose buyer details; Deal Volume includes all transactions for which buyer details are disclosed; Deal value refers to deals with disclosed transaction value Strategic buyers also represented over 95% of the transactions, and were involved in 236 transactions in Q1 2015 compared to 223 in Q4 2014 and 263 in Q1 2014 Financial buyers led 10 M&A transactions in Q1 2015 vs. 11 in Q4 2014 and 12 in Q1 2014 Deal value for transactions led by strategic buyers increased to US$8.2 Bn in Q1 2015 from US$5.0 Bn in Q4 2014 but declined compared to US$31.6 Bn in Q1 2014 Deal value for transactions led by financial buyers was US$600 Mn in Q1 2015 vs US$D2.3 Bn in Q4 2014 and US$1.1 Bn in Q1 2014
  36. 36. 36Global Technology M&A Trends and Analysis l Woodside Capital Partners l July 2015 Global: Deal Volume by Region Global: Deal Value by Region (US$ Bn) US and Canada Accounts for Nearly Half of Total M&A activity in Software Industry, Followed by Europe 316 309 328 322 292 285 296 291 300 347 317 274 270 203 177 186 184 156 145 153 162 177 170 190 150 145 136 104 55 69 62 57 53 55 71 74 45 74 62 64 64 58 13 12 14 10 13 8 15 16 12 25 12 7 12 9 8 14 9 8 9 11 14 9 14 15 13 18 14 11 12'Q1 12'Q2 12'Q3 12'Q4 13'Q1 13'Q2 13'Q3 13'Q4 14'Q1 14'Q2 14'Q3 14'Q4 15'Q1 15'Q2* United States and Canada Europe Asia / Pacific Latin America and Caribbean Africa / Middle East 6.3 11.1 10.2 10.0 3.2 24.8 11.9 11.0 29.4 13.8 27.0 7.4 8.9 15.03.2 3.2 2.3 2.4 1.6 2.0 2.8 4.5 8.9 4.7 2.6 2.5 4.6 4.9 2.8 0.9 0.7 0.8 1.4 1.2 3.0 1.8 1.2 1.0 1.3 1.3 2.3 1.6 0.1 0.4 0.1 0.1 0.1 0.2 0.1 0.1 0.1 0.8 0.1 0.1 0.2 0.2 0.4 0.3 0.3 0.4 0.4 0.6 12'Q1 12'Q2 12'Q3 12'Q4 13'Q1 13'Q2 13'Q3 13'Q4 14'Q1 14'Q2 14'Q3 14'Q4 15'Q1 15'Q2* United States and Canada Europe Asia / Pacific Latin America and Caribbean Africa / Middle East US and Canada led the M&A activity in software industry, accounting for over 54% of the total global deals in Q1 2015. Number of deals in US stood at 270 in Q1 2015 compared to 274 in Q4 2014 and 300 in Q1 2014 Europe is the second most active market, with 136 transactions in Q1 2015 In total deal value for the software industry, US and Canada accounted for around 55%, with US$8.9 Bn in Q1 2015 vs US$7.4 Bn in Q4 2014 and US$29.4 Bn in Q1 2014 Europe remained the second largest market with transactions worth US$4.6 Bn in Q1 2015 Source: Capital-IQ; *Through June 8, 2015; Note: Deal value includes transactions with disclosed transaction values only
  37. 37. 37Global Technology M&A Trends and Analysis l Woodside Capital Partners l July 2015 Global: Average EV/ Revenue Multiple and TTM Revenue 2.5x 3.2x 2.4x 2.6x 2.3x 3.7x 2.6x 3.3x 2.8x 3.5x 4.0x 3.5x 3.4x 3.0x 45.3 33.1 55.7 53.1 22.3 286.9 57.5 40.5 69.1 47.3 88.1 50.0 41.3 116.2 12'Q1 12'Q2 12'Q3 12'Q4 13'Q1 13'Q2 13'Q3 13'Q4 14'Q1 14'Q2 14'Q3 14'Q4 15'Q1 15'Q2* EV/ Revenue Multiple Average TTM Revenue (USD Mn) US: Average EV / Revenue Multiple and TTM Revenue 3.2x 2.4x 4.1x 3.2x 3.1x 4.3x 3.7x 5.4x 3.9x 4.5x 5.0x 4.5x 4.6x 2.7x 41.1 73.4 115.6 115.4 40.9 258.2 137.8 51.5 126.6 58.5 158.4 74.1 112.1 361.6 12'Q1 12'Q2 12'Q3 12'Q4 13'Q1 13'Q2 13'Q3 13'Q4 14'Q1 14'Q2 14'Q3 14'Q4 15'Q1 15'Q2* EV/ Revenue Multiple Average TTM Revenue (USD Mn) Average EV / Revenue multiple was 3.4x in Q1 2015 compared to 3.5x in Q4 2014 and 2.8x in Q1 2014 Average revenue of the acquired company decreased to US$41.3 Mn in Q1 2015 from US$50.0 Mn in Q4 2014 and US$69.1 Mn in Q1 2014 Average EV / Revenue multiple increased to 4.6x in Q1 2015 from 4.5x in Q4 2014 and 3.9x in Q1 2014 Average revenue of an acquired company rose to US$112.1 Mn in Q1 2015 from US$74.1 Mn in Q4 2014, but decreased compared to US$126.6 Mn in Q1 2014 Valuation Trends: Software Revenue Multiples Higher in 2015 vs. 2014 in US and Worldwide Source: Capital-IQ; *Through June 8, 2015; Note: Deal value includes transactions with disclosed values only
  38. 38. 38Global Technology M&A Trends and Analysis l Woodside Capital Partners l July 2015 Global: Average EV / EBITDA Multiple and TTM EBITDA US: Average EV / EBITDA Multiple and TTM EBITDA Average EV / EBITDA multiple rose to 16.7x in Q1 2015 from 15.9x in Q4 2014 and 11.0x in Q1 2014 Average EBITDA of the acquired company was US$16.3 Mn in Q1 2015 vs. US$8.4 Mn in Q4 2014 and US$17.1 Mn in Q1 2014 Average EV/ EBITDA multiple increased to 25.5x in Q1 2015 from 17.3x in Q4 2014 and 10.9x in Q1 2014 Average EBITDA of the acquired company surged to US$29.5 Mn in Q1 2015 from US$9.5 Mn in Q4 2014 and US$13.3 Mn in Q1 2014 Valuation Trends: Software EBITDA Multiples Higher in 2015 vs. 2014 in US and Worldwide 17.9x 14.4x 13.8x 12.4x 11.7x 11.8x 17.7x 15.1x 11.0x 26.4x 15.7x 15.9x 16.7x 16.0x 8.4 13.2 13.5 22.2 4.1 48.6 10.1 12.0 17.1 16.2 24.9 8.4 16.3 38.3 12'Q1 12'Q2 12'Q3 12'Q4 13'Q1 13'Q2 13'Q3 13'Q4 14'Q1 14'Q2 14'Q3 14'Q4 15'Q1 15'Q2* EV/ EBITDA Multiple Average TTM EBITDA (USD Mn) 24.5x 7.3x 19.4x 16.2x 13.5x 13.2x 27.5x 20.9x 10.9x 34.8x 15.3x 17.3x 25.5x 20.6x 4.2 26.2 23.6 39.7 4.7 92.2 15.3 7.1 13.3 12.3 35.3 9.5 29.5 70.4 12'Q1 12'Q2 12'Q3 12'Q4 13'Q1 13'Q2 13'Q3 13'Q4 14'Q1 14'Q2 14'Q3 14'Q4 15'Q1 15'Q2* EV/ EBITDA Multiple Average TTM EBITDA (USD Mn) Source: Capital-IQ; *Through June 8, 2015; Note: Deal value includes transactions with disclosed values only
  39. 39. 39Global Technology M&A Trends and Analysis l Woodside Capital Partners l July 2015 Cross-Border Software M&A: Nearly one-fourth of global transactions; 3-year high in value in Q2 2015 Global: Cross-Border M&A Cross-border M&A activity remained buoyant in 2014, registering 618 deals compared to 506 deals in 2013. Deal value for disclosed deals totaled US$24.1 Bn in 2014 vs. US$15.3 Bn in 2013 Cross-border M&A deal volume stood at 121 in Q1 2015 compared to 155 in Q4 2014 and 143 in Q1 2014. Deal value for disclosed deals totaled US$5.1 Bn in 2015Q1 vs US$3.5 Bn in Q4 2014 and US$7.6 Bn in Q1 2014 Source: Capital-IQ; *Through June 8, 2015; Note: Deal value includes transactions with disclosed values only 4.9 6.1 2.7 4.0 2.2 3.5 3.9 5.7 7.6 4.4 8.7 3.5 5.1 11.7 128 164 152 113 114 125 142 125 143 171 149 155 121 112 12'Q1 12'Q2 12'Q3 12'Q4 13'Q1 13'Q2 13'Q3 13'Q4 14'Q1 14'Q2 14'Q3 14'Q4 15'Q1 15'Q2* Cross-Border M&A Deal Value (USD Bn) Cross-Border M&A Deal Volume
  40. 40. 40Global Technology M&A Trends and Analysis l Woodside Capital Partners l July 2015 US Cross-Border Software M&A Activity: Generally strong and stable; transaction size surged in Q2 2015 US: Inbound and Outbound Deals US inbound M&A deal volume was 163 in 2014 compared to 125 in 2013. US outbound M&A activity remained robust in 2014, registering 224 deals compared to 188 deals in 2013. US inbound M&A was 28 in Q1 2015 compared to 36 in Q4 2014 and Q1 2014. Deal value for disclosed deals rose to US$2.7 Bn in Q1 2015 from US$0.9 Bn in Q4 2014 and US$1.8 Bn in Q1 2014. Outbound deals totaled 48 in Q1 2015 compared to 59 in Q4 2014 and 49 in Q1 2014. Deal value for disclosed deals totaled US$ 400 Mn in Q1 2015 vs US$1.6 Bn in Q4 2014 and US$2.2 Bn in Q1 2014. Source: Capital-IQ; *Through June 8, 2015; Note: Deal value includes transactions with disclosed values only 0.7 0.9 0.3 1.7 0.2 1.2 1.9 1.4 1.8 0.4 6.1 0.9 2.7 5.5 2.6 3.3 1.5 1.8 0.6 1.4 1.0 2.9 2.2 2.8 1.1 1.6 0.4 4.7 30 37 42 35 36 25 35 29 36 41 50 36 28 30 58 59 62 34 42 46 52 48 49 68 48 59 48 41 12'Q1 12'Q2 12'Q3 12'Q4 13'Q1 13'Q2 13'Q3 13'Q4 14'Q1 14'Q2 14'Q3 14'Q4 15'Q1 15'Q2* Inbound Deal Value (USD Bn) Outbound Deal Value (USD Bn) Inbound Deal Volume Outbound Deal Volume
  41. 41. 41Global Technology M&A Trends and Analysis l Woodside Capital Partners l July 2015 Notable Transactions in Software Industry 2012 2013 2014 2015 YTD Internet Software Online Services IT Services Application Software Systems Software (USD2.4 Bn; NA) (USD125.0 Mn; NA) (USD324.0 Mn; NA) (USD155.0 Mn; NA) (USD205.7 Mn; 2.0x) (USD200.0 Mn; NA) (USD62.1 Mn; NA) (USD28.0 Mn; 2.7x) (USD1.6 Bn; 3.4x) (USD1.2 Bn; NA) (USD2.6 Bn; 8.0x) (USD2.0 Bn; NA) (USD19.7 Bn; NA) (USD3.3 Bn; 14.8x) (USD4.8 Bn; 1.7x) (USD4.1 Bn; 7.6x) (USD0.9 Bn; 1.5x) (USD0.8 Bn; 5.4x) (USD4.1 Bn; 2.1x) (USD0.6 Bn; NA) (USD1.1 Bn; 2.7x) (USD1.0 Bn; NA) (USD1.8 Bn; 1.7x) (USD0.4 Bn; 5.7x) (USD2.7 Bn; 2.7x) (USD2.1 Bn; 3.2x) (USD1.0 Bn; NA) (USD1.0 Bn; NA) (USD4.7 Bn; 3.9x) (USD2.4 Bn; 2.9x) (USD5.3 Bn; 4.6x) (USD2.6 Bn; 6.4x) Open Solutions LLC (USD1.0 Bn; 5.0x) (USD171.5 Mn; 4.5x) (USD8.4 Bn; 3.1x) (USD2.4 Bn; 8.9x) (USD0.8 Bn; 8.1x) (USD0.4 Bn; NA) (USD0.5 Bn; NA) (USD0.2 Bn; NA) and others Source: Capital-IQ; Text in brackets (Deal Value, EV / Revenue Multiple)
  42. 42. 42Global Technology M&A Trends and Analysis l Woodside Capital Partners l July 2015 Most Active Acquirers in Software Industry Since 2012: Yahoo, Google and Twitter Most Active Buyers by Number of Deals (Since 2012) 30 27 22 20 20 20 18 16 16 16 15 Yahoo Google Twitter IBM Oracle Trimble Cisco Dropbox Facebook Vista Equity Partners* Microsoft Source: Capital-IQ; * Financial Buyer
  43. 43. 43Global Technology M&A Trends and Analysis l Woodside Capital Partners l July 2015 CONTENTS Technology Trends 9 Software Industry M&A Overview 27 Stock Market Performance 61 Executive Summary 5 Hardware Industry M&A Overview 44
  44. 44. 44Global Technology M&A Trends and Analysis l Woodside Capital Partners l July 2015 Global Hardware M&A Activity: Strong growth in 2015; Deal value highest in three years Global & US: Deal Volume and Value 15.2 8.5 9.3 5.4 4.3 11.1 8.2 7.3 4.4 8.1 5.3 9.8 10.6 40.0 3.9 4.9 3.0 10.3 31.2 3.8 11.0 10.3 7.7 16.2 9.4 10.9 34.7 59.4 295 262 276 261 228 229 217 245 281 270 255 267 288 209 97 95 93 90 91 85 83 77 119 92 94 90 106 71 12'Q1 12'Q2 12'Q3 12'Q4 13'Q1 13'Q2 13'Q3 13'Q4 14'Q1 14'Q2 14'Q3 14'Q4 15'Q1 15'Q2* Deal Value (USD Bn) - Global (Ex. US) Deal Value (USD Bn) - US Deal Volume - Global Deal Volume - US The global deal volume increased 7.9% QoQ and 2.5% YoY to 288 in Q1 2015, while the aggregate deal value grew to US$45.3 Bn in Q1 2015 compared to US$20.7 Bn in Q4 2014 and US$12.1 Bn in Q1 2014. This was led by the acquisition of Freescale Semiconductors (US$17.3 Bn) by NXP Semiconductors Deal volume in the US rose 17.8% QoQ, but declined 10.9% YoY to 106 in Q1 2015. Aggregate deal value surged 218.5% QoQ and 350.3% YoY to US$34.7 Bn in Q1 2015. Deal value in the US for the first two months Q2 2015 stood higher than that for all of Q1 2015 at US$59.4 Bn, as a result of two mega deals: Broadcom (US$36.7 Bn) by Avago Technologies and Altera (US$18.2 Bn) by Intel Source: Capital-IQ; *Through June 8, 2015; Note: Deals that are announced, closed or effective; Deal value includes transactions with disclosed values only
  45. 45. 45Global Technology M&A Trends and Analysis l Woodside Capital Partners l July 2015 Global: Deal Volume by Ticket Size 83 82 97 83 68 78 75 87 81 72 67 64 69 51 22 36 25 28 21 20 21 22 30 27 25 29 26 24 7 6 3 8 4 6 5 5 5 12 7 7 12 11 12'Q1 12'Q2 12'Q3 12'Q4 13'Q1 13'Q2 13'Q3 13'Q4 14'Q1 14'Q2 14'Q3 14'Q4 15'Q1 15'Q2* Deals (USD500 Mn) Global: Deal Value by Ticket Size (US$ Bn) Deals below US$50 Mn dominated the M&A deal volume, with 69 transactions valued at US$900 Mn in Q1 2015. The average deal value stood at US$13.5 Mn in Q1 2015, vs. US$13.1 Mn in Q4 2014 and US$12.0 Mn in Q1 2014 The mid-market witnessed 26 transactions at USD4.3 Bn in 2015Q1. The average deal value was USD166.4 Mn in 2015Q1, compared with USD179.1 Mn in 2014Q4 and USD144.4 Mn in 2014Q1 The deal value for large deals (>US$500 Mn) totaled US$40.0 Bn from 12 transactions, with an average deal value of US$3.3 Bn in Q1 2015 Global M&A Hardware Trends: Large increase in transaction size in 2015 contrasts with overall decline in volume since 2012 1.0 0.9 1.2 1.2 0.7 0.8 0.7 0.8 1.0 0.9 0.7 0.8 0.9 0.7 3.7 6.0 4.3 3.6 2.7 4.0 4.3 4.1 4.3 6.9 3.8 5.2 4.3 3.3 14.4 6.5 6.8 10.9 32.0 10.1 14.1 12.7 33.9 16.5 10.3 14.7 40.0 95.4 12'Q1 12'Q2 12'Q3 12'Q4 13'Q1 13'Q2 13'Q3 13'Q4 14'Q1 14'Q2 14'Q3 14'Q4 15'Q1 15'Q2* Deals (USD500 Mn) Source: Capital-IQ; *Through June 8, 2015; Note: Deal value includes transactions with disclosed values only
  46. 46. 46Global Technology M&A Trends and Analysis l Woodside Capital Partners l July 2015 Global Hardware M&A Trends: Mid-market deal volume and value generally flat since 2012 Global & US: Mid Market Deal (US$50-500 Mn) Volume and Value The global mid-market deal volume declined to 26 in Q1 2015, compared with 29 in Q4 2014. The deal value declined 16.7% QoQ and 0.1% YoY to US$4.3 Bn in Q1 2015. The major deals in Q1 2015 were the acquisition of Annapurna Labs (US$400.0 Mn) by Amazon and Vitesse Semiconductor (US$399.0 Mn) by Microsemi US mid-market deals stood at five in Q1 2015 vs nine in Q4 2014 and 13 in Q1 2014. The deal value totaled US$1.1 Bn, decreasing 41.4% QoQ and 33.7% YoY 1.7 3.8 2.5 2.2 1.9 2.1 2.2 1.8 2.7 3.1 2.0 3.3 3.2 2.4 2.0 2.2 1.8 1.4 0.8 1.9 2.2 2.3 1.7 3.8 1.8 1.9 1.1 0.9 22 36 25 28 21 20 21 22 30 27 25 29 26 24 12 14 8 10 6 9 9 10 13 15 10 9 5 7 12'Q1 12'Q2 12'Q3 12'Q4 13'Q1 13'Q2 13'Q3 13'Q4 14'Q1 14'Q2 14'Q3 14'Q4 15'Q1 15'Q2* Deal Value (USD Bn) - Global (Ex. US) Deal Value (USD Bn) - US Deal Volume - Global Deal Volume - US Source: Capital-IQ; *Through June 8, 2015; Note: Deal value includes transactions with disclosed values only
  47. 47. 47Global Technology M&A Trends and Analysis l Woodside Capital Partners l July 2015 US: Deal Volume by Ticket Size US: Deal Value by Ticket Size (US$ Bn) The number of deals below US$50 Mn was 21, and had a total value of US$400 Mn in Q1 2015. The average deal value rose to US$19.9 Mn in Q1 2015, from US$18.1 Mn in Q4 2014 and US$12.6 Mn in Q1 2014 The mid-market had five transactions totaling US$1.1 Bn in Q1 2015. The average deal value rose to US$221.1 Mn vs. US$209.5 Mn in Q4 2014 and US$128.2 Mn in Q4 2014 The deal value for large deals (>US$500 Mn) totaled US$33.2 Bn from nine transactions, with an average deal value of US$3.7 Bn in Q1 2015 US Hardware M&A Trends: Large increase in transaction size in 2015 contrasts with overall decline in volume since 2012 0.3 0.3 0.4 0.5 0.2 0.3 0.3 0.2 0.5 0.3 0.1 0.3 0.4 0.2 2.0 2.2 1.8 1.4 0.8 1.9 2.2 2.3 1.7 3.8 1.8 1.9 1.1 0.9 1.6 2.4 0.9 8.4 30.2 1.6 8.5 7.7 5.6 12.1 7.6 8.7 33.2 58.3 12'Q1 12'Q2 12'Q3 12'Q4 13'Q1 13'Q2 13'Q3 13'Q4 14'Q1 14'Q2 14'Q3 14'Q4 15'Q1 15'Q2* Deals (USD500 Mn) 22 25 27 25 23 24 24 21 36 18 13 19 21 12 12 14 8 10 6 9 9 10 13 15 10 9 5 7 2 3 1 6 2 2 3 2 3 7 5 3 9 5 12'Q1 12'Q2 12'Q3 12'Q4 13'Q1 13'Q2 13'Q3 13'Q4 14'Q1 14'Q2 14'Q3 14'Q4 15'Q1 15'Q2* Deals (USD500 Mn) Source: Capital-IQ; *Through June 8, 2015; Note: Deal value includes transactions with disclosed values only
  48. 48. 48Global Technology M&A Trends and Analysis l Woodside Capital Partners l July 2015 Global Hardware M&A Activity by Quarter Global: Average Deal Size Bubble size indicates deal value (for disclosed deals >$50 Mn) Source: Capital-IQ; * Through June 8, 2015; Note: Deal value includes transactions with disclosed values only Green indicates year 2012, Blue 2013, Orange 2014 and Yellow 2015 Data Label: Quarter, Average Deal Size 12'Q1, $170.4 Mn 12'Q2, $107.9 Mn 12'Q3, $98.3 Mn 12'Q4, $131.5 Mn 13'Q1, $381.7 Mn 13'Q2, $143.4 Mn 13'Q3, $189.6 Mn 13'Q4, $154.3 Mn 14'Q1, $104.1 Mn 14'Q2, $218.5 Mn 14'Q3, $149.1 Mn 14'Q4, $207.3 Mn 15'Q1, $423.4 Mn 15'Q2*, $1,155.2 Mn -$200Mn $0Mn $200Mn $400Mn $600Mn $800Mn $1000Mn $1200Mn $1400Mn 23 28 33 38 43 AverageDealSize(US$Mn) Deal Volume (>USD50 Mn)
  49. 49. 49Global Technology M&A Trends and Analysis l Woodside Capital Partners l July 2015 Global: Deal Volume by Sub-Sector 61 35 54 38 47 32 36 52 42 37 43 45 49 39 126 134 113 116 99 88 90 100 144 106 111 118 120 92 13 18 14 16 16 19 15 13 17 31 15 13 17 9 40 33 29 44 21 39 35 36 31 43 38 42 42 31 55 42 66 47 45 51 41 44 47 53 48 49 60 38 12'Q1 12'Q2 12'Q3 12'Q4 13'Q1 13'Q2 13'Q3 13'Q4 14'Q1 14'Q2 14'Q3 14'Q4 15'Q1 15'Q2* Technology Distributors Semiconductors & Semiconductor Equipment Technology Hardware, Storage & Peripherals Electronic Equipment, Instruments & Components Communications Equipment Global: Deal Value by Top 2 Sub-Sectors (US$ Bn) Electronic equipment, instruments and components dominated global M&A activity, accounting for over 40% transactions in Q1 2015. The number of transactions totaled 120 in Q1 2015, vs. 118 in Q4 2014 and 144 in Q1 2014. Technology distributors, the second largest sub-sector in terms of M&A activity, had 60 transactions in Q1 2015, compared with 49 in Q4 2014 and 47 in Q1 2014 Communications equipment and semiconductors and semiconductor equipment were the top two sectors based on deal value Global Hardware M&A Activity by Sub-Sector 13.6 6.9 2.8 6.2 4.7 6.2 14.4 28.8 3.2 8.1 8.4 8.4 4.3 7.1 4.1 29.2 1.6 7.6 3.8 2.7 8.5 4.1 6.0 6.9 8.2 23.2 61.8 2.2 2.3 3.7 2.6 4.9 3.5 3.8 4.6 4.8 3.3 11.1 3.8 6.3 7.7 8.7 12'Q1 12'Q2 12'Q3 12'Q4 13'Q1 13'Q2 13'Q3 13'Q4 14'Q1 14'Q2 14'Q3 14'Q4 15'Q1 15'Q2* Rest Technology Distributors Semiconductors & Semiconductor Equipment Technology Hardware, Storage & Peripherals Electronic Equipment, Instruments & Components Communications Equipment Source: Capital-IQ; *Through June 8, 2015; Note: Deal value includes transactions with disclosed values only
  50. 50. 50Global Technology M&A Trends and Analysis l Woodside Capital Partners l July 2015 US: Deal Volume by Sector US: Deal Value by Top 2 Sub-Sectors (US$ Bn) Electronic equipment, instruments and components represented more than 41% of the transactions in Q1 2015 in US. Number of transactions totaled 44 in Q1 2015 vs. 35 in Q4 2014 and 64 in Q1 2014. Communications equipment, the second most active sub-sector, had 24 transactions in Q1 2015 compared to 16 transactions in Q4 2014 and 21 deals in Q1 2014 Semiconductors and Semiconductor Equipment was the largest sub-sector in terms of deal value in Q1 2015 with value totaling US$19.3 Bn Global Hardware M&A Activity by Sub-Sector 23 16 21 13 22 15 12 25 21 9 19 16 24 17 40 52 35 45 42 34 33 35 64 42 41 35 44 28 4 6 8 3 5 11 5 4 4 12 7 9 8 2 16 13 11 15 6 15 17 6 15 14 16 15 14 12 14 8 18 14 16 10 16 7 15 15 11 15 16 12 12'Q1 12'Q2 12'Q3 12'Q4 13'Q1 13'Q2 13'Q3 13'Q4 14'Q1 14'Q2 14'Q3 14'Q4 15'Q1 15'Q2* Technology Distributors Semiconductors & Semiconductor Equipment Technology Hardware, Storage & Peripherals Electronic Equipment, Instruments & Components Communications Equipment 2.4 4.1 2.2 2.6 3.3 4.7 14.2 2.9 2.1 7.4 6.0 3.2 3.4 0.4 28.2 1.1 1.4 4.8 0.8 1.4 0.9 3.1 7.1 3.2 5.9 19.3 58.6 0.7 0.6 0.9 3.1 0.7 0.7 2.1 0.5 1.2 5.3 0.4 2.8 1.2 0.4 12'Q1 12'Q2 12'Q3 12'Q4 13'Q1 13'Q2 13'Q3 13'Q4 14'Q1 14'Q2 14'Q3 14'Q4 15'Q1 15'Q2* Others Technology Distributors Semiconductors & Semiconductor Equipment Technology Hardware, Storage & Peripherals Electronic Equipment, Instruments & Components Communications Equipment Source: Capital-IQ; *Through June 8, 2015; Note: Deal value includes transactions with disclosed transaction values only
  51. 51. 51Global Technology M&A Trends and Analysis l Woodside Capital Partners l July 2015 Global: Deal Volume by Buyer Type Global: Deal Value by Buyer Type (US$ Bn) Strategic buyers account for over 90% of the M&A deals: 248 in Q1 2015 compared with 228 in Q4 2014 and 243 in Q1 2014 Financial buyers led 23 M&A transactions in Q1 2015, vs 16 in Q4 2014 and 14 in Q1 2014 The deal value for transactions by strategic buyers rose to US$33.0 Bn in Q1 2015, from US$15.4 Bn in Q4 2014 and US$10.8 Bn in Q1 2014 Financial buyers accounted for US$11.6 Bn in Q1 2015, representing a significant increase from US$5.0 Bn in Q4 2014 and US$0.3 Bn in Q1 2014 Strategic Buyers Dominating Global Hardware M&A Activity 265 221 246 220 201 199 190 221 243 236 228 228 248 178 14 21 16 22 13 17 11 11 14 11 12 16 23 20 1 1 4 3 2 1 12'Q1 12'Q2 12'Q3 12'Q4 13'Q1 13'Q2 13'Q3 13'Q4 14'Q1 14'Q2 14'Q3 14'Q4 15'Q1 15'Q2* Strategic Buyer Financial Buyer Both 18.4 12.2 11.5 14.9 7.2 8.5 18.6 16.0 10.8 23.1 12.9 15.4 33.0 94.2 0.7 1.2 0.8 0.5 28.1 6.2 0.5 1.6 0.3 1.8 5.0 11.6 4.0 0.7 0.9 0.1 0.7 12'Q1 12'Q2 12'Q3 12'Q4 13'Q1 13'Q2 13'Q3 13'Q4 14'Q1 14'Q2 14'Q3 14'Q4 15'Q1 15'Q2* Strategic Buyer Financial Buyer Both Source: Capital-IQ; Note: 226 transactions did not disclose buyer details; Deal value refers to deals with disclosed transaction value
  52. 52. 52Global Technology M&A Trends and Analysis l Woodside Capital Partners l July 2015 US: Deal Volume by Buyer Type US: Deal Value by Buyer Type (US$ Bn) Strategic Buyers Dominating US Hardware M&A Activity 89 84 83 79 84 79 74 69 113 83 86 82 93 59 7 9 6 9 7 4 5 4 3 5 6 5 9 10 1 1 1 12'Q1 12'Q2 12'Q3 12'Q4 13'Q1 13'Q2 13'Q3 13'Q4 14'Q1 14'Q2 14'Q3 14'Q4 15'Q1 15'Q2* Strategic Buyer Financial Buyer Both 3.4 4.4 2.3 9.9 3.0 3.6 10.6 8.8 7.7 15.3 7.7 7.0 25.8 57.2 0.6 0.6 0.7 0.4 28.1 0.3 0.4 1.5 0.04 1.7 3.9 8.2 2.2 0.9 0.7 12'Q1 12'Q2 12'Q3 12'Q4 13'Q1 13'Q2 13'Q3 13'Q4 14'Q1 14'Q2 14'Q3 14'Q4 15'Q1 15'Q2* Strategic Buyer Financial Buyer Both Source: Capital-IQ; Note: 34 deals did not disclose buyer details; Deal Volume includes all transactions for which buyer details are disclosed; Deal value refers to deals with disclosed transaction value Strategic buyers accounted for over 90% of M&A transactions in the US: 93 transactions in Q1 2015, compared with 82 in Q4 2014 and 113 in Q1 2014 Financial buyers led nine M&A transactions in Q1 2015, vs five in Q4 2014 and three in Q1 2014 The deal value for transactions led by strategic buyers increased to US$25.8 Bn in Q1 2015, from US$7.0 Bn in Q4 2014 and US$7.7 Bn in Q1 2014 The deal value for transactions led by financial buyers was US$8.2 Bn in Q1 2015, vs US$3.9 Bn in Q4 2014 and US$41.0 Mn in Q1 2014
  53. 53. 53Global Technology M&A Trends and Analysis l Woodside Capital Partners l July 2015 Global: Deal Volume by Region Global: Deal Value by Region (US$ Bn) Hardware Deal Activity by Region 115 106 104 98 102 91 88 91 126 103 100 102 120 75 112 103 98 94 77 80 73 84 86 96 70 80 93 73 53 44 60 53 42 47 50 57 56 59 71 73 61 57 4 5 2 7 5 4 2 5 5 10 9 6 8 4 11 4 12 9 2 7 4 8 8 2 5 6 6 12'Q1 12'Q2 12'Q3 12'Q4 13'Q1 13'Q2 13'Q3 13'Q4 14'Q1 14'Q2 14'Q3 14'Q4 15'Q1 15'Q2* United States and Canada Europe Asia / Pacific Latin America and Caribbean Africa / Middle East 4.9 5.5 3.1 10.4 31.3 4.2 11.0 10.8 7.7 16.8 9.4 11.1 35.0 59.4 2.1 4.6 1.9 0.8 0.4 8.2 6.5 0.9 1.7 1.6 0.6 3.6 7.6 28.1 11.9 1.3 7.1 3.6 3.4 2.4 1.6 5.0 2.6 5.3 2.5 4.7 2.2 11.7 0.01 0.9 0.2 0.5 0.3 0.02 0.1 0.8 0.1 0.6 0.3 0.02 0.1 0.1 0.1 1.1 0.1 0.3 0.01 0.01 0.005 0.1 0.02 0.001 2.0 1.3 0.4 12'Q1 12'Q2 12'Q3 12'Q4 13'Q1 13'Q2 13'Q3 13'Q4 14'Q1 14'Q2 14'Q3 14'Q4 15'Q1 15'Q2* United States and Canada Europe Asia / Pacific Latin America and Caribbean Africa / Middle East The US and Canada led M&A activity in the hardware industry, accounting for ~41% of deals in Q1 2015. The number of deals in the region was 120 in Q1 2015, compared with 102 in Q4 2014 and 126 in Q1 2014 Europe was the second most active market, with 93 transactions in Q1 2015 The US and Canada accounted for over 49% of the deal value in the hardware industry, which totaled US$35.0 Bn in Q1 2015, vs US$11.1 Bn in Q4 2014 and US$7.7 Bn in Q1 2014 Europe, with transactions worth US$7.6 Bn, remained the second largest market in Q1 2015 Source: Capital-IQ; *Through June 8, 2015; Note: Deal value includes transactions with disclosed transaction values only
  54. 54. 54Global Technology M&A Trends and Analysis l Woodside Capital Partners l July 2015 Global: Average EV/ Revenue Multiple and TTM Revenue 1.5x 1.3x 1.3x 1.6x 1.4x 1.5x 1.5x 2.1x 2.7x 1.8x 2.2x 2.2x 1.8x 2.0x 53.2 186.0 261.3 171.0 1,117.3 286.9 606.0 174.5 67.7 102.8 100.0 163.2 235.3 568.6 12'Q1 12'Q2 12'Q3 12'Q4 13'Q1 13'Q2 13'Q3 13'Q4 14'Q1 14'Q2 14'Q3 14'Q4 15'Q1 15'Q2* EV/ Revenue Multiple Average TTM Revenue (USD Mn) US: Average EV/ Revenue Multiple and TTM Revenue 1.8x 1.6x 2.7x 2.1x 1.4x 1.6x 1.5x 2.9x 3.1x 2.0x 2.1x 3.0x 1.9x 2.0x 69.9 95.5 360.0 305.9 4,388.6 146.7 389.1 223.3 91.9 155.0 280.4 178.6 463.8 929.2 12'Q1 12'Q2 12'Q3 12'Q4 13'Q1 13'Q2 13'Q3 13'Q4 14'Q1 14'Q2 14'Q3 14'Q4 15'Q1 15'Q2* EV/ Revenue Multiple Average TTM Revenue (USD Mn) The average EV/Revenue multiple was 1.8x in Q1 2015, compared with 2.2x in Q4 2014 and 2.7x in Q1 2014 The target companys average revenue rose to US$235.3 Mn in Q1 2015, from US$163.2 Mn in Q4 2014 and US$67.7 Mn in Q1 2014 The average EV/Revenue multiple decreased to 1.9x in Q1 2015, from 3.0x in Q4 2014 and 3.1x in Q1 2014 The acquired companys average revenue surged to US$463.8 Mn in Q1 2015, from US$178.6 Mn in Q4 2014 and US$91.9 Mn in Q1 2014 Global and US Hardware M&A Revenue Multiples Source: Capital-IQ; *Through June 8, 2015; Note: Deal value includes transactions with disclosed values only
  55. 55. 55Global Technology M&A Trends and Analysis l Woodside Capital Partners l July 2015 Global: Average EV/ EBITDA Multiple and TTM EBITDA US: Average EV/ EBITDA Multiple and TTM EBITDA The average EV/EBITDA multiple rose to 15.5x in Q1 2015 from 12.9x in Q4 2014 and 12.4x in Q1 2014 The acquired companys average EBITDA rose to US$94.1 Mn in Q1 2015, vs US$38.4 Mn in Q4 2014 and US$13.5 Mn in Q1 2014 The average EV/EBITDA multiple decreased to 16.4x in Q1 2015, from 17.8x in Q4 2014 and 16.9x in Q1 2014 The acquired companys average EBITDA surged to US$143.1 Mn in Q1 2015, from US$31.0 Mn in Q4 2014 and US$20.6 Mn in Q1 2014 Global and US Hardware M&A EBITDA Multiples 16.7x 12.2x 9.9x 11.1x 7.9x 8.7x 10.3x 11.9x 12.4x 13.8x 9.9x 12.9x 15.5x 17.4x 6.8 72.4 54.2 8.9 342.0 21.8 49.6 128.5 13.5 34.4 44.0 38.4 94.1 193.1 12'Q1 12'Q2 12'Q3 12'Q4 13'Q1 13'Q2 13'Q3 13'Q4 14'Q1 14'Q2 14'Q3 14'Q4 15'Q1 15'Q2* EV/ EBITDA Multiple Average TTM EBITDA (USD Mn) 17.8x 13.4x 12.5x 25.4x 5.5x 9.1x 12.1x 20.4x 16.9x 14.5x 9.3x 17.8x 16.4x 18.4x (1.5) 11.7 17.6 22.5 947.7 8.8 113.2 39.0 20.6 51.2 65.9 31.0 143.1 275.2 12'Q1 12'Q2 12'Q3 12'Q4 13'Q1 13'Q2 13'Q3 13'Q4 14'Q1 14'Q2 14'Q3 14'Q4 15'Q1 15'Q2* EV/ EBITDA Multiple Average TTM EBITDA (USD Mn) Source: Capital-IQ; *Through June 8, 2015; Note: Deal value includes transactions with disclosed values only
  56. 56. 56Global Technology M&A Trends and Analysis l Woodside Capital Partners l July 2015 Cross-Border M&A: Represents over one-fourth of global transactions; Deal value surges in 2015 Global: Cross-Border M&A Deals Cross-border M&A activity remained buoyant in 2014, registering 342 deals over 251 deals in 2013. The deal value for disclosed deals totaled US$31.1 Bn in 2014, vs US$20.2 Bn in 2013 The total number of cross-border M&A deals was 97 in Q1 2015, compared with 85 in Q4 2014 and 74 in Q1 2014. The deal value for disclosed deals surged to US$27.2 Bn in Q1 2015, vs US$11.4 Bn in Q4 2014 and US$2.6 Bn in Q1 2014 Source: Capital-IQ; *Through June 8, 2015; Note: Deal value includes transactions with disclosed values only 3.2 7.9 6.2 5.5 1.0 7.3 6.5 5.4 2.6 9.1 7.9 11.4 27.2 73.6 106 85 97 79 61 58 59 73 74 94 89 85 97 74 12'Q1 12'Q2 12'Q3 12'Q4 13'Q1 13'Q2 13'Q3 13'Q4 14'Q1 14'Q2 14'Q3 14'Q4 15'Q1 15'Q2* Cross-Border M&A Deal Value (USD Bn) Cross-Border M&A Deal Volume
  57. 57. 57Global Technology M&A Trends and Analysis l Woodside Capital Partners l July 2015 US Cross-Border Hardware M&A Activity: Number of deals flat for past three years; Deal value achieved record high in 2015 US: Inbound and Outbound Deals Inbound M&A deal volume in the US grew significantly to 76 in 2014, compared to 46 in 2013. US outbound M&A activity remained robust in 2014, recording 82 deals vs. 68 deals in 2013 US inbound M&A activity was 19 in 2015Q1, and similar to Q4 2014 (20). The deal value for disclosed deals rose to US$18.9 Bn in Q1 2015, from US$4.2 Bn in Q4 2014 and US$100 Mn in Q1 2014. Outbound deals totaled 31 in Q1 2015, compared to 16 in Q4 2014 and 14 in Q1 2014. The deal value for disclosed deals totaled US$3.6 Bn in Q1 2015, vs US$1.2 Bn in Q4 2014 and US$1.0 Bn in Q1 2014 Source: Capital-IQ; *Through June 8, 2015; Note: Deal value includes transactions with disclosed values only 0.3 1.2 0.2 3.9 0.2 1.3 0.5 0.4 0.1 6.0 7.0 4.2 18.9 38.7 0.4 2.6 4.4 0.7 0.4 0.1 0.4 0.9 1.0 2.0 0.5 1.2 3.6 2.6 11 15 18 17 12 14 14 6 17 20 20 19 19 16 34 26 37 22 18 11 19 20 14 23 29 16 31 18 12'Q1 12'Q2 12'Q3 12'Q4 13'Q1 13'Q2 13'Q3 13'Q4 14'Q1 14'Q2 14'Q3 14'Q4 15'Q1 15'Q2* Inbound Deal Value (USD Bn) Outbound Deal Value (USD Bn) Inbound Deal Volume Outbound Deal Volume
  58. 58. 58Global Technology M&A Trends and Analysis l Woodside Capital Partners l July 2015 Notable Transactions in Hardware Industry 2012 2013 2014 2015 YTD Communications Equipment Electronic Equipment and Instruments and Components Technology Hardware, Storage and Peripherals Semiconductors and Semiconductor Equipment Technology Distributors (USD10.0 Bn; NA) (USD2.5 Bn; 0.7x) (USD5.0 Bn; 0.3x) (USD2.0 Bn; 6.1x) (USD3.9 Bn; 3.2x) (USD2.8 Bn; NA) (USD23.1 Bn; 1.2x) (USD5.1 Bn; NA) (USD2.9 Bn; 1.5x) (USD1.0 Bn; 2.0x) (USD7.2 Bn; 1.8x) (USD4.0 Bn; NA) (USD2.6 Bn; 3.1x) (USD1.7 Bn; 3.9x) (USD6.5 Bn; 6.0x) (USD2.4 Bn; 4.1x) (USD804.0 Mn; NA) (USD710.7 Mn; 0.8x) (USD28.1 Bn; 0.4x) (USD685 Mn; NA) (USD3.4 Bn; NA) (USD1.3 Bn; 2.7x) (USD336.6 Mn; NA) (USD215.0 Mn; 3.6x) (USD3.7 Bn; 0.6x) (USD2.7 Bn; 4.2x) (USD6.6 Bn; 2.5x) (USD1.7 Bn; 1.7x) (USD3.0 Bn; 2.2x) (USD2.4 Bn; 7.1x) (USD36.7 Bn; 4.0x) (USD18.2 Bn; 8.3x) (USD857.0 Mn; 0.2x) (USD525.8 Mn; NA) (USD1.4 Bn; 12.4x) (USD401.5 Mn; 0.3x) (USD506.1 Mn; NA) (USD439.4 Mn; 0.2x) (USD182.8 Mn; NA) (USD137.7 Mn; 0.2x) Source: Capital-IQ; Text in brackets (Deal Value, EV / Revenue Multiple) Memory Japan Technology Focus Multimedia Technology (Shanghai) Join-In (Holding) PSI Systems Electric Power Control System & others SAMT Giovanna Investment Hong Kong Limited and Others
  59. 59. 59Global Technology M&A Trends and Analysis l Woodside Capital Partners l July 2015 Most Active Hardware Acquirers: Intel, Ametek and Arrow Electronics Most Active Buyers by Number of Deals (Since 2012) 12 10 7 7 7 6 6 6 5 5 5 Intel Ametek Arrow Electronics Microchip Technology ABB Exclusive Networks SAS SBA Communications Lagercrantz Cansel Survey Equipment Google IHS Nigeria Source: Capital-IQ; Note: M.Tech Holdings has not been included as it acquired nine of its related entities CAD Worx Warehouse NDS West Micro System Telecom tower assets Nigeria and Cameroon, Rwanda, Zambia and Cote d'Ivoire Telecom tower assets
  60. 60. 60Global Technology M&A Trends and Analysis l Woodside Capital Partners l July 2015 CONTENTS Technology Trends 9 Software Industry M&A Overview 27 Stock Market Performance 61 Executive Summary 5 Hardware Industry M&A Overview 44
  61. 61. 61Global Technology M&A Trends and Analysis l Woodside Capital Partners l July 2015 Technology Stock Performance: Technology indices have outperformed broader market indices, led by US; Volatility has trended down Global Technology Market Performance 0 50 100 150 200 250 300 350 Jan-09 May-09 Oct-09 Feb-10 Jul-10 Nov-10 Apr-11 Aug-11 Jan-12 May-12 Oct-12 Feb-13 Jul-13 Nov-13 Apr-14 Aug-14 Jan-15 May-15 1-Month 3-Month 6-Month 1 Year 3 Year 5 Year S&P Global Technology Index (0.6%) 0.4% 3.0% 13.5% 61.9% 89.8% S&P Global Index (1.8%) 0.1% 1.3% 2.2% 51.2% 64.5% S&P US Technology Index 0.3% 0.9% 3.6% 18.2% 72.7% 120.5% S&P US Index (1.0%) (0.3%) 1.0% 8.6% 63.7% 96.5% Source: Bloomberg S&P US 500 Information Technology Index S&P Global 1200 Information Technology Index S&P 500 Index S&P Global 1200 Index 0 10 20 30 40 50 60 Jan-09 May-09 Oct-09 Feb-10 Jul-10 Nov-10 Apr-11 Aug-11 Jan-12 May-12 Oct-12 Feb-13 Jul-13 Nov-13 Apr-14 Aug-14 Jan-15 May-15 Volatility: CBOE Volatility Index Volatility falls below historical average
  62. 62. 62Global Technology M&A Trends and Analysis l Woodside Capital Partners l July 2015 Global: EV / Revenue Multiple Global: EV / EBITDA Multiple Global: Revenue (US$ per share) Global: EBITDA (US$ per share) Global Technology Stock Valuations: Technology stocks trade at an EV / Revenue multiple premium compared to overall market, while EV / EBITDA multiples are at a discount 1.6x 1.5x 1.4x 1.5x 2.0x 2.3x 2.3x 2.2x 1.6x 1.6x 1.4x 1.5x 1.7x 1.7x 1.9x 1.8x 2009 2010 2011 2012 2013 2014 2015E 2016E S&P Global 1200 Information Technology Index S&P Global 1200 Index 839 976 1,039 1,086 998 992 1,015 1,067 1,195 1,247 1,341 1,392 1,390 1,378 1,311 1,383 2009 2010 2011 2012 2013 2014 2015E 2016E S&P Global 1200 Information Technology Index S&P Global 1200 Index 10.8x 8.1x 7.1x 8.0x 9.2x 9.6x 8.9x 8.3x 7.4x 9.4x 8.8x 7.8x 8.6x 9.8x 10.0x 9.5x 2009 2010 2011 2012 2013 2014 2015E 2016E S&P Global 1200 Information Technology Index S&P Global 1200 Index 125 183 198 196 213 234 263 284 200 228 239 237 242 239 239 261 2009 2010 2011 2012 2013 2014 2015E 2016E S&P Global 1200 Information Technology Index S&P Global 1200 Index Source: Bloomberg
  63. 63. 63Global Technology M&A Trends and Analysis l Woodside Capital Partners l July 2015 US: EV / Revenue Multiple US: EV / EBITDA Multiple US: Revenue (US$ per share) US: EBITDA (US$ per share) US Technology Stock Valuations: US technology stocks trade at a higher EV / Revenue multiple premium compared to overall market, and a similar EV / EBITDA multiple discount 2.4x 2.2x 1.9x 2.0x 2.7x 3.0x 3.0x 2.9x 1.7x 1.8x 1.6x 1.7x 2.0x 2.1x 2.2x 2.1x 2009 2010 2011 2012 2013 2014 2015E 2016E S&P US 500 Information Technology Index S&P 500 Index 140 163 190 204 196 210 217 228 903 939 1,019 1,064 1,099 1,144 1,129 1,200 2009 2010 2011 2012 2013 2014 2015E 2016E S&P US 500 Information Technology Index S&P 500 Index 10.9x 8.7x 7.4x 7.6x 9.9x 10.7x 9.5x 8.8x 10.1x 9.7x 8.4x 9.0x 10.7x 11.6x 10.9x 10.0x 2009 2010 2011 2012 2013 2014 2015E 2016E S&P US 500 Information Technology Index S&P 500 Index 31 42 49 53 53 59 68 74 150 173 194 200 208 212 230 251 2009 2010 2011 2012 2013 2014 2015E 2016E S&P US 500 Information Technology Index S&P 500 Index Source: Bloomberg
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