MA Flash Report December 2009 FINAL - Corum Group...Corum Group Presentation 2 >> For today’s...

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M&A Flash Report M&A Flash Report –– Dec. 2009Dec. 2009Software and IT Industry Market Update

Thursday, December 3, 200910:00 am PT

Monthly M&A Flash Report

Bruce MilneCEOCorum Group Ltd.

Bruce Milne, CEO and founder of Corum, has overseen more M&A transactions than anyone in the world

Mark ReedExecutive Vice PresidentCorum Group Ltd.

Corum Group Presentation ■ 2

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

Bruce Milne, CEO and founder of Corum, has overseen more M&A transactions than anyone in the world over the past 25 years, generating over $6 Billion in wealth for clients in 24 countries.

He has founded or owned four software companies, including AMI, the world’s largest vertical market software firm, and was a founding investor in some of the most innovative firms in their field, including Blue Coat, Bright Star and Sabaki.

A recognized industry expert, he has served as a personal advisor to Bill Gates on operating systems, Apple on the development of the Mac, and as one of top 10 industry advisors to IBM. He has served on the board of Washington Technology Center at the University of Washington, and is the founder of the WTIA, the nation’s leading regional technology trade association.

Outside the U.S. he worked with the Canadian government to found SoftWorld, and he was recently chosen as one of the 200 most influential individuals in the IT community in Europe. He is also the only juror from North America for the Tornado 100 Awards in Europe’s.

A Deans List graduate in International Business from the UW, and a graduate “With Distinction” from Harvard Business School, Mr. Milne has written three book, including “Power Planning, How To Structure Your Software Company For Success”.

Dougan MilneDirector of ResearchCorum Group Ltd.

Tomoki YasudaAnalystCorum Group Ltd.

Valuations Up – “Time to Sell?”

AGENDA� Overview of Current Market� Market and Valuation Analysis� Closing Comments - Q&A


� Closing Comments - Q&A

Asia - East

� “Dubai World restructuring $26 Billion in debt...none backed by Government”

� “India Growth Shatters Forecasts – Up 7.9%”� “Tokyo Moves To Break Deflationary Spiral”


� “Wen Labels Renmindi Pressure ‘Unfair’”� “China Grows At A Faster Pace”� “Emergency Meeting As Yen Drops Most in 7 Months”

Europe Zone

� “EU Consumer Prices Up - First Time In 7 Months”� “British House Prices Climb For 4th Month”� “2010 U.K Recovery Prediction ‘Too Optimistic’”� “Eurozone Inflation Turns Positive”


� “Eurozone Inflation Turns Positive”� “U.K. Business Numbers Up As Jobs Are Lost –

‘Necessity Entrepreneurs!’”� “U.K. Write-Offs Hit Record”� “Eurozone Unemployment At 11 Yr. High”

Currencies

� “Swiss Franc Chosen Currency”� “Australia Raises Key Rates to 3.7%”� “Brazilian Real Best Performing Currency”� “Canada’s Currency Hits 18 Mo. High”


� “Canada’s Currency Hits 18 Mo. High”� “Dollar Resumes Slide”� “Gold Soars Past $1200”

North America

� “U.S. Business Activity Accelerates in November”� “Canada’s Recovers, but less than expected� 0.4%”“Chip Sales Rise 5.1% in October”� “Job Cuts Loom As Construction Stimulus Fades”


� “Job Cuts Loom As Construction Stimulus Fades”� “Steelmakers Downsizing Once Again”� “U.S. Manufacturing Expands 4th Month”� “ADP – Job Losses Exceed Expectations”� “Fed Sees Subdued Economic Rebound”

Housing

� “Lenders Face Sanctions For Failed Loan Modifications – 650,000 Trial Revisions Not Converted”

� “Wealthy Investors Raise Real Estate


� “Wealthy Investors Raise Real Estate Holdings”

� “Home Sales Unexpectedly Climb 3.7%”� “U.S. Commercial Mortgage Default 3.4% -

16 Yr. High”

Retail

� “Cyber Monday Online Retail Sales Increase 16%”

� “More Shoppers Hit Stores, Spend Less Each...Favor Low Price Items”


Each...Favor Low Price Items”� “Holiday Shopping Losing Meaning as U.S.

Economic Barometer”

Valuations Are UP – Why?

� Buoyant Financial Markets� Pent up buyer demand� Currency fluctuations – Dollar on sale!� PE buyers are back


� PE buyers are back� Cash available

Rise in Valuations Fuel Sales

� Divestitures are up� Venture Capitalists are moving portfolio� Sellers are responding to buyer overtures� Mega Deals are being done


� Mega Deals are being done� Even smaller transactions are happening

Recent Transactions Closed


Firms in Letter Of Intent (LOI)

� Vertical market – Financial Services� Mobile search applications� Vertical market – Healthcare (SaaS)� Network security solutions


� Network security solutions� IT Services� Mobile messaging solutions

Current Offers

� Network management solutions� Vertical market - Wholesale Distribution� Application development tools� Enterprise Content Management


� Enterprise Content Management� CRM � Vertical market – Insurance� Enterprise Application Integration

Tomoki YasudaAnalystCorum Group Ltd.

Market Valuation Analysis


Tomoki is currently an analyst working at Corum’s headquarters in Bellevue, WA. At Corum, Tomoki is responsible for conducting research and market analysis on companies, economy, and valuations. He is a contributor to the Merger and Acquisitions Quarterly and has been responsible for updating the internal processes for Corum.

Public Markets

90.00

100.00

110.00

120.00

Nasdaq S&P Tech Dow


40.00

50.00

60.00

70.00

80.00

90.00

Feb-09 Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09

M&A Activity – November

Number of Software and IT M&A Transactions

233

267


2004

2005

319

247

0 50 100 150 200 250 300 350

November

2009 2008 2007 2006 2005 2004

Corum Index – M&A Statistics

# of Transactions# of Mega DealsLargest DealAverage Deal SizeMedian Seller Size

Nov-082333

$5,352$209$13

Nov-092679

$5,200$356$23


$ values in millions

Median Seller Size# VC backed Exits% Terms UndisclosedAll Cash (announced)% Targets were Public% Public Buyers

$1322

68%43%15%51%

$2334

66%44%16%49%

Horizontal Application Software Market

Public Valuations Deal Spotlight:

Sector: SCMTarget: i2 Technologies, Inc.Buyer: JDA Software Group, Inc.Date: November 2009Transaction Value: $556.1 millionTransaction Multiple: 1.7x

Horizontal


Transaction Multiple: 1.7xStructure: Cash & Stock

Comments:� Formerly stalled deal� Strengthening key verticals� Expanded product portfolio

Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09

EV/EBITDA 6.82 x 9.23 x 9.39 x 9.99 x 11.06 x 11.06 x 12.67 x 12.26 x 11.66 x

EV/S 1.12 x 1.16 x 1.35 x 1.50 x 1.58 x 1.93 x 2.41 x 2.21 x 2.29 x

Horizontal

Application

Software

Public Valuations

Vertical Application Software Market

Deal Spotlight:

Sector: HealthcareTarget: IMS Health, Inc.Buyer: TPG Capital/CPP Investment BoardDate: November 2009Transaction Value: $5.2 billionVertical


Transaction Multiple: 2.4x Structure: Cash

Comments:� Healthcare vertical� Positioned for long-term growth� Private equity megadealMar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09


EV/S 1.14 x 1.31 x 1.40 x 1.51 x 1.51 x 1.66 x 1.80 x 1.57 x 1.82 x

Vertical

Application

Software

Public Valuations

Consumer Application Software Market

Deal Spotlight:

Sector: GamingTarget: Playfish, Ltd.Buyer: Electronic Arts, Inc.Date: November 2009Transaction Value: $275 millionTransaction Multiple: 5.5x


Structure: Cash w/additional earn-out of up to $100m through 2011.

Comments:� Change in gaming dynamic� Social gaming going mainstream� Client baseMar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09


EV/S 0.64 x 0.69 x 0.50 x 0.53 x 0.53 x 0.59 x 0.83 x 0.60 x 0.61 x

Consumer

Application

Software

Infrastructure Market


Sector: SecurityTarget: Guardium, Inc.Buyer: IBM CorporationDate: November 2009Transaction Value: $232 millionTransaction Multiple: 6.1x


Transaction Multiple: 6.1xStructure: Cash

Comments:� Latest in a string of acquisitions by IBM� Focus on application infrastructure security� Streamline compliance



EV/S 1.43 x 1.55 x 1.52 x 1.72 x 1.95 x 2.02 x 2.14 x 2.20 x 2.27 x

Infrastructure

Software

Internet Market


Sector: Mobile AdvertisingTarget: AdMob, Inc.Buyer: Google, Inc.Date: November 2009Transaction Value: $750 millionTransaction Multiple: 37.5x

Internet


Transaction Multiple: 37.5xStructure: Stock

Comments:� Strengthening Google’s presence in the mobile� Interactive marketing abilities� Technology and TalentMar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09


EV/S 1.60 x 2.11 x 2.26 x 2.30 x 2.48 x 2.60 x 2.70 x 2.19 x 2.45 x

Internet

IT Services Market


Sector: IT ServicesTarget: CFC Information SystemesBuyer: Adesso AGDate: November 2009Transaction Value: N/A


Comments:� Geographic expansion� Domain expertise



EV/S 0.56 x 0.60 x 0.61 x 0.63 x 0.68 x 0.68 x 0.73 x 0.73 x 0.63 x

IT Services

Dougan MilneDirector of ResearchCorum Group Ltd.

Market Valuation Analysis


Dougan is the head of Corum’s research team serving as the Director of Research. During his time with Corum, Dougan spent three years working with Corum's international group headquartered in Zürich, Switzerland. Prior to joining Corum's team in 2005, Dougan spent three years working in the banking industry with Bank of America, and Citigroup's Private Wealth business unit. Before entering finance and investment banking, Dougan founded the successful garment distribution business, Billions Apparel and the advertising firm, ModoMarketing. Dougan has a Bachelors degree in Business Economics from the University of San Diego.

Unique Opportunity

� Mega Deals

� Divestitures


� Private Equity Buyers

� Venture Portfolio Exits

� Re-Valuations

Nat BurgessExecutive Vice PresidentCorum Group Ltd.

ChairmanWorld Financial Symposiums

World Financial Symposiums


Nat joined Corum in 1996 and brings a diverse background in technology M&A and law. While with the Enforcement Division of

the U.S. Securities and Exchange Commission, Nat helped identify and build cases against securities fraud schemes. With the

Strategic Development Division of Morgan Stanley's M&A group, Nat worked on cross-border acquisitions of U.S. and European

companies by Japanese firms, and on financings by large Japanese public companies. Nat moved to Morgan Stanley's Tokyo

office, where he reported directly to the President of Morgan Stanley, Japan Ltd. and focused exclusively on cross-border M&A.

After Morgan Stanley, Nat co-founded Postcard Software, a creator of advertiser-driven bilingual (English and Japanese) Internet

content. At Activision, Nat lead the company's on-line business development.

Nat earned an undergraduate degree in Japanese literature from Yale College and a law degree from UCLA. While in law school,

Nat wrote articles for the International Forum at Yale, Tokyo Journal. Nat is frequently quoted in industry publications, a highly

sought speaker at industry conferences, and Chairman of the World Financial Symposiums.

Corum Group Presentation ■ 29London – November 17

Partial Speaker List

December 15, New York – [email protected]


David VirnelliIBM

Jeff BrennanPitney Bowes

Jeff HoffmeisterMorgan Stanley NY

Arun PrakashVirgo Capital

Ryan Ziegler Edison Ventures

Peter CoffeeSalesforce.com

Greg OsinoffRenewData

www.worldfinancialsymposiums.com

Growth and Exit Strategies Staging for Recovery

The Future of M&A, VC, Private Equity and Public Offerings in the New Tech Landscape

December 15, 2009 � New York


December 15, 2009 � New YorkAttend this conference to learn about:

� Raising capital in the current environment � The new rules of global tech M&A � The role of private equity in a credit-starved market � The IPO window � Creative transaction structures � Finding value and opportunity in the cloud � Acquisition multiples, VC tactics and more

Upcoming Corum Events

December 3: Flash Webinar – (Int’l)

December 8: London – SUSO

December 10: Flash Webinar (Nordic)

December 15: New York City – WFS

January 7: Flash Webinar – (Int’l)

January 21: Flash Webinar – (Nordic)

January 25-27:Miami – Progress Conference

January 28: Flash Webinar (DACH)

February 4: Flash Webinar – (Int’l)

February 16: Dallas – MB


January 7: Flash Webinar – (Int’l)

January 12: Toronto – MB & SUSO

January 14: Flash Webinar (France)

January 14: Ottawa – MB

January 15: Montreal – MB

January 19: Calgary – MB

Merge Briefing (MB)Selling Up Selling Out (SUSO)World Financial Symposium (WFS)

February 16: Dallas – MB

February 18: Bellevue – SUSO

March 2: Houston – MB

March 4: Flash Webinar – (Int’l)

March 28: Oslo – SUSO

March 21: San Francisco – MB

Contact Information

Corum Group Ltd.

Bruce Milne, [email protected]

Dougan Milne, Director of [email protected] Corum Group International S.à.r.l.


Research and Conferences:www.corumgroup.com

10500 NE 8th Street, Suite 1500Bellevue, WA 98004USA

+1 425-455-8281

Corum Group International S.à.r.l.

Beim ParadeplatzBasteiplatz 78001 ZürichSwitzerland

+41 44 251 82 65

MA Flash Report December 2009 FINAL - Corum Group...Corum Group Presentation 2 >> For today’s...

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