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M&A Monthly M&A Monthly –– June 2010June 2010yyTech Acquisition Frenzy Tax Impacta pactEMC Live Report
www.corumgroup.com
Thursday, June 10, 201010:00 am PT
Agendag
Market Overview
Tech Acquisition Frenzy
Recent Corum Transactions
Ta Impact Tax Impact
Corum M&A Update
EMC Live Report – Matt Olton, VP Corp Dev
Closing Comments - Q&A
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Closing Comments - Q&A
Presenters
Mark ReedExecutive Vice PresidentCorum Group Ltd.
Bruce MilneCEOCorum Group Ltd.
Nat BurgessPresidentCorum Group Ltd.
Dougan MilneDirector of Research
Miro ParizekManaging Director
Jeff BrownVice President
Matt OltonVP Corporate Development
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Corum Group Ltd. Corum Group Int’l, Sàrl Corum Group Ltd. EMC Corporation
Logisticsg
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>> For today’s presentation or more information, contact Pat Sultan([email protected], +1 425-455-8281 ext. 248)
Introduction
Bruce MilneCEOCorum Group Ltd.
A leader in the software industry, Bruce has founded or owned four software companies, including the largestA leader in the software industry, Bruce has founded or owned four software companies, including the largest vertical market software company, AMI, an Inc. 500 firm rated by IDC as the fastest growing computer-related company in the world.
He has served on advisory boards for Microsoft, IBM, DEC, Comdex and Apple, and as board member/founding investor in some of the most innovative firms in their field, including Blue Coat, Bright Star and Sabaki. Past advisor to two governors and a senator, a board member of the Washington Technology Center, and founder of the WTIA, the nation’s most active regional technology trade association.
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 was also the only American juror for the recent Tornado 100 Awards given to Europe’s top technology firms
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Tornado 100 Awards given to Europe s top technology firms
A graduate with Distinction from Harvard Business School, Bruce has written three books on business models for success, including Power Planning. He is a frequent lecturer and author.
Asia
J ’ M l t S ll A th L d 5th i 4 Japan’s Maelstrom Swallows Another Leader – 5th in 4 yrs
Indian Court Finds 8 Guilty for Deadly Bhopal Gas Leak
China’s Property Market Freezes – Speculators Not
WelcomeWelcome
China’s May Exports Rise 48.5%
Japan’s Economy Grew at an Annualized 5%
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Europe
D bt C D i EURO t F h L < $1 20 Debt Concerns Drive EURO to Fresh Lows < $1.20
Cuts Will Affect ‘Everyone’ – Cameron (UK)
Ready to Make Spending Cuts – Merkel (Germany)
Hungary Vows to Avert Greece-Like Crisis Hungary Vows to Avert Greece-Like Crisis
HSBC Bank Downgrades Europe, Excluding UK
German Factory Orders Unexpectedly Jump in April
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Americas
Chil F t t E i G th i 14 E th k Chile - Fastest Economic Growth in 14 years, Earthquake
Recovery
Brazil’s Economists Cut 2010 Inflation Forecast
Copper Demand May Double in 15 Years, CodelcoCopper Demand May Double in 15 Years, Codelco
Venezuelan GDP to Shrink 6.2%, Morgan Stanley
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United States
US’ $13T illi D bt P i d t O t k GDP US’s $13Trillion Debt Poised to Overtake GDP
Obama Borrowing Record Amounts to Fund Spending
U.S. Rebound Slowest Since 2002 on Euro Debt Woes
Raised the Odds of Double-Dip Recession to 1-in-4 Raised the Odds of Double-Dip Recession to 1-in-4
Geitner Tells G-20: “World Can’t Rely on US Consumer”
Texas Instruments Raises Q2 Forecast
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United States
H S l D li S t T bl Home Sales Decline, Suggests Trouble
Duration of Unemployment Rises to Record 34.4 Weeks
Buffett Expects ‘Terrible Problem’ for Municipal Debt
Wealthy Investors Bet on Property Stocks – Barclays Wealthy Investors Bet on Property, Stocks – Barclays
Gold Settles at Record
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Technologygy
Mi ft Chi f D f d Wi d ’ F t Microsoft Chief Defends Window’s Future
Google to Hand Over Intercepted Data
Apple Unveils $199 iPhone 4 – Fend Off Android
Tech Lifts S F Prices as Ocean View Gets 26 Bids Tech Lifts S.F. Prices as Ocean View Gets 26 Bids
Microsoft Financing Revives Convertibles
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Tech Acquisition Frenzyq y
Nat BurgessPresidentCorum Group Ltd.
"The tech landscape is evolving at a fantastic pace," says Nat Burgess, president of Corum Group, a mergers-and-acquisitions advisory firm. "Small, agile companies are developing tomorrow's solutions and M&A is the only way for big companies to keep up "
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solutions, and M&A is the only way for big companies to keep up.
Recent Corum Transactions
Miro ParizekManaging DirectorCorum Group International S.à.r.l.
Miro joined Corum in 1998 and has since advised clients in over a dozen countries on three continents. He was appointed Managing Director of Corum Group International S.à.r.l. at the end of 2005 and is responsible for Corum’s international business.
He has advised privately held sellers and publicly traded buyers ranging from 30 to over 1,000 employees in sectors as diverse as 3D imaging business performance management compiler software CRMin sectors as diverse as 3D-imaging, business performance management, compiler software, CRM, document and content management, enterprise systems management, ERP, human capital management, storage area networks, supply chain management, telecommunications, video editing and various other verticals.
Miro has 25 years of experience in the software and IT industry, and prior to Corum had founded and ran
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y p y, pthree software and IT related firms in the ‘80s and ‘90s, including a leading software distributor, North American Software. He was a founding member of the German Software Association (VSI), since merged with the local Multi-Media Association (dmmv) to form the National Association for Digital Economy (BVDW), where he had served as a board member for over a decade.
Recent Corum Transactions
Target Beta Systems ECM Solutions
Stock Symbol BSS (Frankfurt)
Has acquired the ECM division of
Year Founded 1983
Headquarters Augsburg, Germany
Primary Category Document ManagementPrimary Category Document Management
Primary Market Investment & Finance
Revenue Model License
Revenues € 28.8 million
Advisor Corum Group International, Sàrl
Miro ParizekFrank Berger
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Miro ParizekManaging DirectorCorum Group Int’l, Sàrl
Frank BergerRegional Director, GermanyCorum Group Int’l, Sàrl
Recent Corum Transactions
Mark ReedExecutive Vice PresidentCorum Group Ltd.
Mark joined Corum in 1997. During 1999 he took a sabbatical to participate in the launch of an Internet startup company, WorldStream Communications, as Vice President of Corporate Development. At WorldStream, Mark developed the core business plan, was a driving force behind the emphasis on B2B services, and launched their strategic alliance program.
Prior to Corum Mark served as Executive Vice President of a boutique investment bank where hePrior to Corum, Mark served as Executive Vice President of a boutique investment bank where he concentrated on providing private equity financing and arranging cross-border strategic alliances for high technology companies. Mark also served as Chief Operating Officer of a consulting company, advising multinational organizations such as Shell International Petroleum and the International Finance Corporation (World Bank Group) on new business development and foreign direct investment into Asia.
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Before moving into the finance sector, Mark was a software developer and project manager building application software on DEC and HP mini-computers. Mark studied mathematics and computer science at Seattle Pacific University and the University of Washington. He has a B.S. in Mathematics.
Recent Corum Transactions
Target Apex Systems Pte. Ltd.
Stock Symbol Private
Has acquired
Year Founded 1981
Headquarters Singapore
Primary Category Enterprise Solutionsy g y p
Primary Market Insurance
Revenue Model License
C GAdvisor Corum Group Ltd.
Mark ReedExecutive Vice PresidentCorum Group Ltd.
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Looming US Tax Impactg
Jeff BrownVice PresidentCorum Group Ltd.
Jeff joined Corum in 2007 as Regional Director in Houston, Texas. He has over 25 years of entrepreneurial and consulting experience building software and business services companies. He specializes in information technology for engineering, scientific and business applications. He also understands the energy industry and multinational operations.
Jeff helped form and was President of Severn Trent Worksuite a FTSE 100 subsidiary which became theJeff helped form and was President of Severn Trent Worksuite, a FTSE 100 subsidiary, which became the leading provider of enterprise and wireless workflow management software. Jeff was Vice President at IntelliGIS, a pioneer in geographic information systems and wireless computing. Additionally, he launched Western Hemisphere operations for Simon Petroleum Technology, a provider of petroleum reservoir management software, and was a member of the initial management team at GeoQuest Systems, which became the leader in petroleum decision support systems.
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p pp y
Jeff began his career on the research staff at Columbia University and is a published author. He holds a degree in Geology from the State University of NY.
Revenue Growth to Offset US LTCG Tax
10.00
12.00
14.00
16.00 Inflation & Bank
Capital Gains Tax
2010 Revenue Base
2.00
4.00
6.00
8.00
2010 2011 2012 2013
0.002010 2011 2012 2013
Revenue Target ($MM) 10.00 11.59 13.06 14.53
Enterprise Value ($MM) 18.00 19.13 20.13 21.25
YoY Revenue Growth --- 15.9% 12.6% 11.3%
EBITDA 20% 20% 20% 20%
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EBITDA 20% 20% 20% 20%
EBITDA Multiple 9.00 x 9.00 x 9.00 x 9.00 x
Corum M&A Update
Dougan MilneDirector of ResearchCorum Group Ltd.
Dougan is Director of Research at the Corum Group, Ltd in Seattle, WA. Previously, he spent 3 years based out of Corum's European headquarters in Zürich, Switzerland. Prior to joining Corum's team in 2005, Dougan spent 3 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. In 2006, he started an advertising company serving the motorcycle industry, Modo Marketing. Dougan has a Bachelors degree in Business Economics from the University of San Diego (USA).
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Public Markets
Nasdaq S&P Tech Dow
110.00
120.00
Nasdaq S&P Tech Dow
80 00
90.00
100.00
60.00
70.00
80.00
40.00
50.00
M 09 J 09 J l 09 A 09 S 09 O t 09 N 09 D 09 J 10 F b 10 M 10 A 10 M 10
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May‐09 Jun‐09 Jul‐09 Aug‐09 Sep‐09 Oct‐09 Nov‐09 Dec‐09 Jan‐10 Feb‐10 Mar‐10 Apr‐10 May‐10
M&A Activity – Mayy y
Number of Software and IT M&A TransactionsNumber of Software and IT M&A Transactions
282
304
205
232
May
158
234
360
158
0 50 100 150 200 250 300 350 400
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2010 2009 2008 2007 2006 2005 2004
Corum Index – M&A Statistics
May‐09 May‐10
# of Transactions 232 282
Corum Index
# of Transactions 232 282
# of Mega Deals 4 6
Largest Deal $8,500 $6,100
Average Deal Size $319 $288 g
Median Seller Size $37 $64
# VC backed Exits 31 42
% Terms Undisclosed 72% 78%
All Cash (announced) 51% 43%
% Targets were Public 19% 15%
% Public Buyers 45% 51%
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*$ values in millions
Horizontal Application Software Market
Public Valuations Deal Spotlight:
Sector: CollaborationTarget: CubeTreeBuyer: SuccessFactors, Inc.Transaction Value: $50mStructure: Cash, Stock, EarnoutHorizontal
Applicationf
Comments: Talent & Technology Collaborative SaaS Expanding PortfolioMay‐09 Jun‐09 Jul‐09 Aug‐09 Sep‐09 Oct‐09 Nov‐09 Dec‐09 Jan‐10 Feb‐10 Mar‐10 Apr‐10 May‐10
EV/EBITDA 9 39 x 9 99 x 11 06 x 11 06 x 12 67 x 12 26 x 11 66 x 11 67 x 10 76 x 11 16 x 12 71 x 12 07 x 11 39 x
Software
EV/EBITDA 9.39 x 9.99 x 11.06 x 11.06 x 12.67 x 12.26 x 11.66 x 11.67 x 10.76 x 11.16 x 12.71 x 12.07 x 11.39 x
EV/S 1.35 x 1.50 x 1.58 x 1.93 x 2.41 x 2.21 x 2.29 x 2.41 x 2.48 x 2.42 x 2.11 x 2.24 x 2.12 x
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Vertical Application Software Market
Public Valuations Deal Spotlight:
Sector: Energy + MiningTarget: Matrikon, Inc.Buyer: Honeywell InternationalTransaction Value: $142mEV/S: 1.8x revenuesStructure: Cash + Stock
Vertical ApplicationSoftware Structure: Cash + Stock
Comments: Vertical Targeting Brand Name in Energy + Mining
F d ti f V ti lMay‐09 Jun‐09 Jul‐09 Aug‐09 Sep‐09 Oct‐09 Nov‐09 Dec‐09 Jan‐10 Feb‐10 Mar‐10 Apr‐10 May‐10
Software
Foundation for VerticalsEV/EBITDA 7.99 x 8.17 x 8.91 x 9.01 x 9.32 x 8.42 x 8.96 x 9.54 x 9.37 x 10.30 x 11.15 x 11.51 x 12.53 x
EV/S 1.40 x 1.51 x 1.51 x 1.66 x 1.80 x 1.57 x 1.82 x 2.01 x 1.90 x 1.92 x 1.95 x 2.22 x 1.86 x
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Consumer Application Software Market
Public Valuations Deal Spotlight:
Sector: RetailTarget: Buy.comBuyer: Rakuten, Inc.Transaction Value: $250mStructure: CashConsumer
Application
Comments: Roller Coaster Massive Retail Footprint Geographic ExpansionMay‐09 Jun‐09 Jul‐09 Aug‐09 Sep‐09 Oct‐09 Nov‐09 Dec‐09 Jan‐10 Feb‐10 Mar‐10 Apr‐10 May‐10
EV/EBITDA 2 83 4 47 4 57 4 27 5 88 5 23 5 71 4 91 4 89 4 67 6 25 7 96 10 99
Software
EV/EBITDA 2.83 x 4.47 x 4.57 x 4.27 x 5.88 x 5.23 x 5.71 x 4.91 x 4.89 x 4.67 x 6.25 x 7.96 x 10.99 x
EV/S 0.50 x 0.53 x 0.53 x 0.59 x 0.83 x 0.60 x 0.61 x 0.70 x 0.66 x 0.73 x 0.77 x 0.93 x 0.82 x
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Infrastructure Market
Public Valuations Deal Spotlight:
Sector: Disaster RecoveryTarget: Double-TakeBuyer: VisionSolutions (ThomaBravo)Transaction Value: $242m2.4x TTM Revenues14 4x TTM EBITDA
Infrastructure Software 14.4x TTM EBITDA
Structure: Cash
Comments: Privatized
PE B k dMay‐09 Jun‐09 Jul‐09 Aug‐09 Sep‐09 Oct‐09 Nov‐09 Dec‐09 Jan‐10 Feb‐10 Mar‐10 Apr‐10 May‐10
PE-Backed Market Consolidation
EV/EBITDA 8.29 x 8.74 x 9.59 x 10.92 x 10.46 x 10.81 x 9.76 x 11.61 x 10.26 x 9.83 x 10.33 x 11.02 x 10.47 x
EV/S 1.52 x 1.72 x 1.95 x 2.02 x 2.14 x 2.20 x 2.27 x 2.37 x 2.30 x 2.24 x 2.39 x 2.57 x 2.21 x
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Internet Market
Public Valuations Deal Spotlight:
Sector: Internet ContentTarget: Motortopia.comBuyer: Beckett MediaTransaction Value: N/AStructure: N/AInternet
Comments: Building on the Brand Market Presence Expanded PortfolioMay‐09 Jun‐09 Jul‐09 Aug‐09 Sep‐09 Oct‐09 Nov‐09 Dec‐09 Jan‐10 Feb‐10 Mar‐10 Apr‐10 May‐10
EV/EBITDA 11.78 x 11.81 x 13.32 x 13.02 x 15.80 x 11.81 x 13.03 x 15.13 x 14.40 x 14.52 x 15.89 x 15.82 x 13.31 x
EV/S 2.26 x 2.30 x 2.48 x 2.60 x 2.70 x 2.19 x 2.45 x 2.55 x 2.34 x 2.36 x 2.54 x 2.74 x 2.42 x
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IT Services Market
Public Valuations Deal Spotlight:
Sector: BPOTarget: Stanley Inc. Buyer: CGI GroupTransaction Value: $951m1.2x TTM Revenue15 5x EBITDA
IT Services
15.5x EBITDAStructure: N/A
Comments: Acquiring Gov. Contracts
P h i t US F dMay‐09 Jun‐09 Jul‐09 Aug‐09 Sep‐09 Oct‐09 Nov‐09 Dec‐09 Jan‐10 Feb‐10 Mar‐10 Apr‐10 May‐10
Push into US FedEV/EBITDA 5.51 x 5.24 x 5.56 x 5.67 x 6.66 x 6.10 x 6.16 x 6.60 x 6.44 x 6.37 x 6.97 x 7.33 x 6.49 x
EV/S 0.61 x 0.63 x 0.68 x 0.68 x 0.73 x 0.73 x 0.63 x 0.67 x 0.81 x 0.64 x 0.83 x 0.85 x 0.74 x
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Market Tracker – Top Tech
Top Buyers June 1, 2009 June 1, 2010 % Change Acquisitionsp y , , g q
AAPL $139.35 $260.83 87.2% 5EMC $12.42 $18.69 50.5% 4MSFT $19.31 $26.46 37.0% 10CSCO $17.46 $23.35 33.7% 7HPQ $34.35 $45.58 32.7% 4ORCL $18.58 $22.64 21.9% 11ORCL $18.58 $22.64 21.9% 11IBM $108.37 $127.41 17.6% 11GOOG $426.56 $493.37 15.7% 19CA $17.96 $19.63 9.3% 5SAP $43.94 $44.38 1.0% 6YHOO $16.58 $15.02 ‐9.4% 7SYMC $16.01 $13.84 ‐13.6% 5
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Average Change 23.6% Total 94
EMC Live Report
Matt OltonVice President, Corporate DevelopmentEMC Corporation
Matthew Olton is Vice President, Corporate Development of EMC Corporation and leads EMC’s global mergers and acquisitions and strategic investments practices, as well as EMC’s acquisition integration functions.
Since joining EMC, Matt has led, in various capacities, more than $12 billion in acquisitions for EMC and has played a direct role in transforming EMC into one the world's leading technology companies. Matt moved to his current role in 2006 from EMC’s Office of the General Counsel, where he was Associate General Counsel, overseeing acquisitions, investments and other matters.
Prior to joining EMC, Matt was a corporate attorney at Skadden Arps and Goodwin Procter in Boston.
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Upcoming Corum Eventsg
June 17: Rebroadcasts M&A Update July 8: M&A Update WebinarJune 17: Rebroadcasts – M&A Update Webinar
June 22: Dallas – MB
July 8: M&A Update Webinar
July 17: Special Event (SIIA Conference – Dallas)
June 24: Houston – MB
June 24: Special Event (Capital Roundtable – New York)
July 19: Special Event (Casual Connect Games – Seattle)
July 21: Special Event (Softletter SaaS University Washington DC)
June 29: Austin– MBUniversity – Washington DC)
Merge Briefing (MB)g g ( )Selling Up Selling Out (SUSO)
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