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www.corumgroup.com
M&A Flash ReportM&A Flash Report Nov. 2009Nov. 2009Software and IT Industry Market Update
Thursday, November 5, 200910:00 am PT
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Monthly M&A Flash Report
Bruce MilneCEOCorum Group Ltd.
Mark ReedExecutive Vice PresidentCorum Group Ltd.
Corum Group Presentation 2
>> For todays presentation or more information, contact Pat Sultan
([email protected], +1 425-455-8281 ext. 248)
Charles RimCorporate DeveloperGoogle
ruce ne, an oun er o orum, as overseen more ransac ons an anyone n e wor
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 worlds largest vertical marketsoftware firm, and was a founding investor in some of the most innovative firms in their field, includingBlue Coat, Bright Star and Sabaki.
A recognized industry expert, he has served as a personal advisor to Bi ll Gates on operating systems,Apple on the development of the Mac, and as one of top 10 industry advisors to IBM. He has served onthe board of Washington Technology Center at the University of Washington, and is the founder of theWTIA, the nations leading regional technology trade association.
Outside the U.S. he worked with the Canadian government to found SoftWorld, and he was recentlychosen 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 Europes.
A Deans List graduate in International Business from the UW, and a graduate With Distinction fromHarvard Business School, Mr. Milne has written three book, including Power Planning, How To StructureYour Software Company For Success.
Dougan MilneDirector of ResearchCorum Group Ltd.
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Agenda
Overview of Current Market
Market and Valuation Analysis
-
Corum Group Presentation 3
Closing Comments - Q&A
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World Overview
U.K. Services Index Rises to Highest in Two Years
Asia to Grow More Than Forecast, Adding Asset-Bubble Risk, World Bank Says
U.K. Consumer Confidence Holds at 1 -Year High
Corum Group Presentation 4
on House Price Recovery Europe Manufacturing, Services Industries Expand
for Ninth Straight Month
Carlsberg Cuts 2009 Sales Forecast as RussiaContracts More Than Expected
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World Overview
European Producer Prices Drop for Ninth Month as
Energy Costs Plummet 17%
Gold Extends Record High on India Purchase
Nissan Returns to Quarterly Profit on China Sales
Corum Group Presentation 5
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U.S. Overview
Time Warner Raises Annual Forecast, Reports Profit
that Exceeds Estimates
Service Industries in U.S. Probably Expanded asEconomic Recovery Spread
Corum Group Presentation 6
Dollar Drop Continues Retailers Optimistic About October Sales
Ford has over $1Billion profit for quarter
Cash for Clunkers Program was Almost Half of theWhole GDP Gain
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Financial Industry
Ministers Points to US/Europe Currency Collapse
UBS Rocked by Fresh Losses
U.K. TO Inject 37bn into Lloyds and RBS
The World Bank and IMF are raisin concerns that
Corum Group Presentation 7
efforts by governments and central banks to stoke arecovery will create asset bubbles in real estate,stock and currency.
For CIT Customers, An Uncertain Future Looms
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Financial Industry
FHA Digging Out After Loans Sour
Fed Keeps Key Rate at Record Low
VIX Volatility Gauge Soared 24%
Corum Group Presentation 8
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Dont Forget Unemployment
9.8 million workers are collecting unemployment.
Another 3.8 million are collecting emergencyunemployment benefits (a reference to unemployedpeople who have been out of work for more than 26
Corum Group Presentation 9
wee s . 5.2 million homeowners who are no longer paying
their mortgages and contracting income.
Income is still contracting rapidly with wages and
salaries off 4% to 5% year over year.
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Actions of the Titans
Warren Buffet made the biggest bet of hiscareer, agreeing to buy Burlington Northern ina $26.3 billion deal that reflects his long-termo timism about the U.S. econom .
Corum Group Presentation 10
Wilbur Ross Predicts Commercial Real EstateCrash
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Recent Transactions Closed
Corum Group Presentation 11
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Recent Transactions Closed
Corum Group Presentation 12
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Firms in Letter Of Intent (LOI)
Vertical market Financial Services
Mobile search applications
Vertical market Healthcare (SaaS)
Corum Group Presentation 13
etwor secur ty so ut ons IT Services
Mobile messaging solutions
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Current Offers
Network management solutions
Vertical market- Wholesale Distribution
Application development tools
Corum Group Presentation 14
nterpr se ontent anagement CRM
Vertical market Insurance
Enterprise Application Integration
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Dougan MilneDirector of ResearchCorum Group Ltd.
Market Valuation Analysis
Corum Group Presentation 15
Dougan is the head of Corums research team serving as the Director of Research. Duringhis time with Corum, Dougan spent three years working with Corum's international groupheadquartered in Zrich, Switzerland. Prior to joining Corum's team in 2005, Dougan spentthree years working in the banking industry with Bank of America, and Citigroup's PrivateWealth 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 ofSan Diego.
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Public Markets
100.00
110.00
120.00
Nasdaq S&P Tech Dow
Corum Group Presentation 16
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
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M&A Activity September
Number of Software and IT M&A Transactions
225
286
Corum Group Presentation 17
2004
2005
329
311
0 50 100 150 200 250 300 350
October
2009 2008 2007 2006 2005 2004
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Corum Index M&A Statistics
# of Transactions# of Mega Deals >$1B
Largest Deal
Average Deal Value
Oct-09
2864
$3,000
$230
Oct-08
2543
$1,000
$235
Corum Group Presentation 18
$ values in millions
e an e er evenue
# VC backed Exits
% Terms Undisclosed
All Cash (announced)
% Targets Public
% Buyers Public
63
36
72%
46%
18%
46%
30
19
61%
53%
18%
51%
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Horizontal Application Software Market
Public Valuations Deal Spotlight:
Sector: PLMTarget: IBM PLM Software AssetsBuyer: Dassault SystmesDate: October 2009Transaction Value: $600 millionStructure: Cash
Corum Group Presentation 19
Comments: Market share Technology Expanded product portfolio
Feb-09 Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09
EV/EBITDA 5.85 x 6.82 x 9.23 x 9.39 x 9.99 x 11.06 x 11.06 x 12.67 x 12.26 x
EV/S 1.12 x 1.12 x 1.16 x 1.35 x 1.50 x 1.58 x 1.93 x 2.41 x 2.21 x
Horizontal
Application
Software
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Public Valuations
Vertical Application Software Market
Deal Spotlight:
Sector: InsuranceTarget: Risk Management Solutions Weather derivatives softwarefranchiseBuyer: MDA FederalDate: October 2009
Corum Group Presentation 20
Transaction Value: n/a
Comments: Gains weather-related risk tech Expands product portfolio Client base
Feb-09 Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09EV/EBITDA 6.19 x 6.53 x 7.26 x 7.99 x 8.17 x 8.91 x 9.01 x 9.32 x 8.42 x
EV/S 1.01 x 1.14 x 1.31 x 1.40 x 1.51 x 1.51 x 1.66 x 1.80 x 1.57 x
Vertical
ApplicationSoftware
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Public Valuations
Consumer Application Software Market
Deal Spotlight:
Sector: Consumer HealthTarget: Vasectomy.com,HealthNews.org,BusinessFinance.com,TheNewParentGuide.comBuyer: Internet Brands
Corum Group Presentation 21
Date: September 2009
Transaction Value: $6.7mStructure: unknown
Comments: Several online consumer sites Broadened portfolio and customer
base Now operating in sevenhigh-interest consumer categories
Feb-09 Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09
EV/EBITDA 2.40 x 2.74 x 3.81 x 2.83 x 4.47 x 4.57 x 4.27 x 5.88 x 5.23 x
EV/S 0.58 x 0.64 x 0.69 x 0.50 x 0.53 x 0.53 x 0.59 x 0.83 x 0.60 x
Consumer
Application
Software
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Infrastructure Market
Public Valuations Deal Spotlight:
Sector: VirtualizationTarget: Gresham Enterprise Storage- Storage Director BusinessBuyer: Tributary SystemsDate: October 2009Transaction Value: n/a
Corum Group Presentation 22
Structure: n/a
Comments: Complements product line Includes offering to IBM, Windows,Linux, Unix users
Feb-09 Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09EV/EBITDA 6.32 x 6.98 x 8.46 x 8.29 x 8.74 x 9.59 x 10.92 x 10.46 x 10.81 x
EV/S 1.31 x 1.43 x 1.55 x 1.52 x 1.72 x 1.95 x 2.02 x 2.14 x 2.20 x
InfrastructureSoftware
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Internet Market
Public Valuations Deal Spotlight:
Sector: e-CommerceTarget: Retail Convergence Ru La La, SmartBargains.comBuyer: GSI CommerceDate: October 2009Transaction Value: $180 million
Corum Group Presentation 23
Sellers Revenue: $134.6 millionTransaction Multiple: 1.3xStructure: $90 cash, $90 stock+ additional earnout
Comments: Multi-interest consumer strategy
Market leading brands Interactive marketing abilities
Feb-09 Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09
EV/EBITDA 6.05 x 7.54 x 9.80 x 11.78 x 11.81 x 13.32 x 13.02 x 15.80 x 11.81 x
EV/S 1.36 x 1.60 x 2.11 x 2.26 x 2.30 x 2.48 x 2.60 x 2.70 x 2.19 x
Internet
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IT Services Market
Public Valuations Deal Spotlight:
Sector: IT ServicesTarget: Bearing Point Chinese Services DivisionBuyer: Dell/PerotDate: October 2009Transaction Value: N/A
Corum Group Presentation 24
Comments: Geographic expansion Off-shoring Domain expertise
Feb-09 Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09
EV/EBITDA 5.27 x 5.32 x 5.76 x 5.51 x 5.24 x 5.56 x 5.67 x 6.66 x 6.10 x
EV/S 0.55 x 0.56 x 0.60 x 0.61 x 0.63 x 0.68 x 0.68 x 0.73 x 0.73 x
IT Services
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Why Now?
Great Timing Whos In?
Everyone: Small Large firms
Asset Sales
Corum Group Presentation 25
What For?
Cash Cow / Discontinued Tech.
Focus / Re-focus
Streamlining / Fat Cutting
Cash & Growth
Prepare for Exit
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Charles RimCorporate DevelopmentGoogle
The Google Perspective
Corum Group Presentation 26
Charles Rim is currently Principal in the Corporate Development Team at Google, Inc.heading Asia coverage. CorpDev is responsible for all forms of strategic investments andacquisitions at Google. Previously, Mr. Rim was a Director at Yahoo!Korea in charge ofStrategy& Corporate Development, and prior to that stint was the VP/CFO of Korea Thrunet(formerly NASDAQ-listed, now merged with Hanaro Telecom), Korea's first broadbandcarrier.
In addition to his corporate career in finance and investments, Mr. Rim was an investmentbanker briefly with Citigroup and with Credit Agricole (W.I.Carr Securities) in Asia, withpostings in HK, Jakarta and Singapore. As an investment banker, the main focus ofactivities was in M&A, IPO advisory and equity capital markets financing. Previous to hisbanking career, Mr. Rim was a practicing attorney (again, focused on securities and M&A)both in the USA and Korea.
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Corum Group Presentation 27London November 17
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Partial Speaker List
November 17, London [email protected]
Corum Group Presentation 28
Frank Boenke
Wellington Partners
Bernard DalleIndex Ventures
Andrew Tsao
Silicon Valley Bank
Kristof de Spiegeleer
SUN (Q-Layer)
Pelle Hjortblad
ProjectPlace
Anil HansjeeGoogle
Jenny Rosberg
NASDAQ
Mike PeplowBanctec
Ashley WardEuropean LeadershipProgramme
Gustavo GarciaBuyVIP
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www.worldfinancialsymposiums.comGrowth and Exit Strategies
Staging for RecoveryThe Future of M&A, VC, Private Equity and Public Offerings in the New Tech Landscape
November 17 2009 London
Corum Group Presentation 29
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
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Upcoming Corum Events
November 3: Houston SUSO
November 5: Flash Webinar (Intl)
November 10: Flash Webinar (France)
November 11: Flash Webinar (DACH)
November 17: London WFS
December 15: New York City WFS
January 7: Flash Webinar (Intl)
January 12: Toronto MB & SUSO
January 14: Flash Webinar (France)
Januar 14: Ottawa MB
Corum Group Presentation 30
November 18: Ft. Lauderdale
MB
November 19: Tampa MB
December 3: Flash Webinar (Intl)
December 8: London SUSO
December 10: Flash Webinar (Nordic)
Merge Briefing (MB)Selling Up Selling Out (SUSO)World Financial Symposium (WFS)
January 15: Montreal
MB
January 19: Calgary MB
January 21: Flash Webinar (Nordic)
January 25-27:Miami Progress Conference
January 28: Flash Webinar (DACH)
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Contact Information
Corum Group Ltd.
Bruce Milne, [email protected]
Dougan Milne, Director [email protected] Corum Grou International S..r.l.
Corum Group Presentation 31
Research and Conferences:www.corumgroup.com
10500 NE 8th Street, Suite 1500Bellevue, WA 98004USA
+1 425-455-8281
Beim ParadeplatzBasteiplatz 78001 ZrichSwitzerland
+41 44 251 82 65