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Jack Berlin
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1 │ Software Industry Update Q1 2015 Mergers & Acquisitions ï¼ Capital Raising ï¼ Strategic Advisory Software Industry Update Q1 2015 2 │ Software Industry Update Q1 2015 Vista Point Advisors Overview Unconflicted Advice Deep Technology Domain Expertise Differentiated Negotiation Framework Vista Point exclusively provides sell- side M&A and Capital Raising advisory services to technology businesses removing the conflict of interest associated with working both sides of the table. Vista Point bankers are industry specialists that focus exclusively on core technology markets allowing us to provide relevant insights into our client’s business and create the strategic framework to optimize valuation. The firm utilizes a unique negotiation framework to increase the competitiveness of the transaction process, and ultimately yield higher valuations at better terms for clients. Vista Point Advisors was founded on the principle that founder-led technology companies in the emerging and middle markets are unique and require specialized attention and advice when considering investment and exit opportunities. Our unique focus on sell-side processes provides our clients with unconflicted advice that assures our interests are completely aligned with the entrepreneur. VPA is focused exclusively on working with founder- owned and operated businesses to deliver the most favorable transactions at premium valuations. 3 │ Software Industry Update Q1 2015 Representative Vista Point Advisors Transactions *Completed by VPA professionals while at another investment bank has been acquired by April 2014 has been acquired by March 2014 received investment from March 2013 has been acquired by January 2013 has been acquired by November 2013 has been acquired by August 2014 received investment from December 2014 has been acquired by February 2015 received investment from November 2014 has been acquired by November 2014 received investment from January 2013 has been acquired by* October 2010 has been acquired by* December 2010 has been acquired by March 2012 has been acquired by March 2015 4 │ Software Industry Update Q1 2015 • There were 265 reported software M&A transactions in Q1 2015 totaling $15 billion in transaction value ─ Notable strategic deals include: o SS&C Technologies' $2.6 billion acquisition of Advent Software o Hewlett-Packard’s $2.4 billion acquisition of Aruba Networks o D+H’s $1.3 billion acquisition of Fundtech o Lexmark’s $955 million acquisition of Kofax o Autodesk’s acquisition of Tweak Software • The software IPO market continues to be active with 2 major IPOs pricing in Q1 2015 ─ Box (NYSE:BOX), a cloud-based enterprise content collaboration solution, raised $175 million and has traded up 39% ─ MaxPoint Interactive (NYSE:MXPT), a digital advertising services provider, raised $75 million and has traded down 17%, reflecting continued trouble for publically traded ad-tech assets • In on-going public market performance, results have been positive in the last 3 months: ─ Financial Technology traded up 17.2% ─ CRM traded up 10.1% ─ Supply Chain Management traded up 6.0% ─ Human Capital Management traded up 5.9% Q1 2015 Software Industry Overview 5 │ Software Industry Update Q1 2015 Most Active Acquirers (Since 2010) Source: Capital IQ as of 3/31/2015 Notable Recent Transactions Deals <$1bn Deals >$1bn Acquirer Target Date 02/02/15 02/09/15 03/02/15 03/24/15 03/30/15 EV $2,550m N/A $2,360m $955m $1,250m EV / LTM Rev 6.4x N/A 2.9x 3.2x 4.8x EV / LTM EBITDA 24.8x N/A 29.2x 43.0x 21.0x Active Acquirers and Notable Transactions $4.7 $3.9 $14.1 $0.7 $0.0 $16.4 $4.2 $4.0 $1.2 $1.3 $0.4 $15.1 $4.4 $2.5 $0.3 $0.0 $10.0 $20.0 R e p o rt e d V al u e ( $ b n ) 47 35 33 23 21 20 20 20 20 15 15 14 14 13 13 1 2 5 1 2 2 1 3 1 1 0 10 20 30 40 50 N u m b e r o f Tr an sa ct io n s 6 │ Software Industry Update Q1 2015 Quarterly Software M&A Value and Deal Count (Since 2010) Source: Capital IQ as of 3/31/2015 Software M&A Market Overview 344 334 327 336 337 340 366 363 368 349 363 322 299 286 207 304 324 308 345 250 265 0 100 200 300 400 Q 1 '1 0 Q 2 '1 0 Q 3 '1 0 Q 4 '1 0 Q 1 '1 1 Q 2 '1 1 Q 3 '1 1 Q 4 '1 1 Q 1 '1 2 Q 2 '1 2 Q 3 '1 2 Q 4 '1 2 Q 1 '1 3 Q 2 '1 3 Q 3 '1 3 Q 4 '1 3 Q 1 '1 4 Q 2 '1 4 Q 3 '1 4 Q 4 '1 4 Q 1 '1 5 N u m b e r o f Tr an sa ct io n s $8 $24 $22 $14 $6 $15 $31 $13 $18 $19 $17 $17 $5 $22 $22 $18 $15 $23 $48 $9 $15 $0 $10 $20 $30 $40 $50 $60 Tr an sa ct io n V al u e ( $ b n ) 7 │ Software Industry Update Q1 2015 69% 9% 8% 5% 5% 4% Q4 '14 60% 10% 8% 10% 3% 10% Q1 '15 Transactions by Reported Value Transactions by Target Funding Total: $9B Total: $15B 50M+ $30 - $50M $10 - $30M $0.1 - $10M Undisclosed No Funding $500M - $1B >$1B $250M - $500M $100M - $250M $50M - $100M <$50M Source: Capital IQ as of 3/31/2015 Software M&A Market Overview 72% 65% 66% 65% 66% 68% 72% 73% 71% 70% 65% 71% 67% 67% 64% 64% 64% 66% 62% 66% 65% 0% 20% 40% 60% 80% 100% Q 1 '1 0 Q 2 '1 0 Q 3 '1 0 Q 4 '1 0 Q 1 '1 1 Q 2 '1 1 Q 3 '1 1 Q 4 '1 1 Q 1 '1 2 Q 2 '1 2 Q 3 '1 2 Q 4 '1 2 Q 1 '1 3 Q 2 '1 3 Q 3 '1 3 Q 4 '1 3 Q 1 '1 4 Q 2 '1 4 Q 3 '1 4 Q 4 '1 4 Q 1 '1 5 8 │ Software Industry Update Q1 2015 35 44 23 25 17 17 18 13 17 14 12 11 8 8 12 7 9 5 5 3 62 45 30 27 22 22 15 17 12 12 13 10 12 9 4 9 6 10 9 10 84 66 40 50 51 30 23 22 30 29 29 11 23 16 9 9 10 23 19 10 181 155 93 102 90 69 56 52 59 55 54 32 43 33 25 25 25 38 33 23 0 50 100 150 200 Investments Made Within last 6 months Within 6-12 months Within 12-24 months 13 4 4 6 6 3 6 2 1 3 4 9 4 2 4 4 1 3 18 7 3 1 9 4 4 7 4 3 4 3 4 4 1 10 1 2 29 11 9 8 12 8 7 7 6 5 5 12 7 6 7 5 4 10 8 3 60 22 16 15 27 15 17 16 11 11 13 24 15 6 13 5 9 24 10 8 0 15 30 45 60 Portfolio Exits Within last 6 months Within 6-12 months Within 12-24 months Source: Capital IQ as of 3/31/2015 Despite High Valuations, Investments Lead Exits 3:1 Top 20 Most Active Investors Across Software & Internet Over the Last 2 Years 9 │ Software Industry Update Q1 2015 Average Price Performance Post IPO Year # of IPOs % Primary vs. Secondary File to Price Change 1 Day 7 Days 130 Days Since IPO 2015 YTD 22.6% 13.5% 12.9% 14.3% 2014 27.1% 25.2% 19.9% 17.5% 2013 26.0% 28.4% 33.9% 16.4% Source: Capital IQ as of 3/31/2015 IPO Summary 20 12 9 41 0 10 20 30 40 50 Software Internet Hardware 84.2% 15.8% % Primary Shares % Secondary Shares 90.5% 9.5% % Primary Shares % Secondary Shares 100.0% 0.0% % Primary Shares % Secondary Shares 33.3% 66.7% 0.0% Increase No Change No Decrease 33.3% 55.6% 11.1% Increase No Change No Decrease 34.1% 51.2% 14.6% Increase No Change No Decrease 26 14 5 45 0 10 20 30 40 50 Software Internet Hardware 2 1 3 0 2 4 Software Internet Hardware 10 │ Software Industry Update Q1 2015 0% 50% 100% 150% 200% 250% 300% Apr-12 Jun-12 Aug-12 Oct-12 Dec-12 Feb-13 Apr-13 Jun-13 Aug-13 Oct-13 Dec-13 Feb-14 Apr-14 Jun-14 Aug-14 Oct-14 Dec-14 Feb-15 Apr-15 EV / Revenue EV / EBITDA 3 Year Public Market Performance % of 52 Week High LTM 2015E LTM 2015E High Growth Software: AKAM, ATHN, AZPN, CALD, CKSW, CRM, CSLT, CSOD, CYBR, DATA, ELLI, ENV, EPAY, FEYE, FLTX, FTNT, HDP, HSTM, LOGM, MDSO, MOBL, N, NOW, NQ, OTEX, PANW, PCTY, PFPT, QIHU, QLYS, QTWO, SPLK, SWI, TRAK, TSX:CSU, TXTR, ULTI, VDSI, VEEV, VRNS, VRNT, WDAY, WK, YDLE All Software: See all bucketed companies High Margin Software: AKAM, AVG, AZPN, CA, CHKP, EBIX, FDS, FISV, INTU, JKHY, MDAS, MSCI, MSFT, NSR, ORCL, OTEX, PAYX, PRGS, SAP, SWI, TSX:DSG, VRSN Source: Capital IQ as of 3/31/2015 Software Public Market Performance Index Performance Over Last 3 Years High Growth Software (>20% LTM Revenue Growth) +102% NASDAQ Composite Index +57% All Software +52% S&P 500 Index +46% High Margin Software (>30% LTM EBITDA Margins) +33% 91% 96% 87% 80% 85% 90% 95% 100% All Software High Margin High Growth 4.5x 5.4x 7.7x 4.0x 5.0x 6.5x 0.0x 2.0x 4.0x 6.0x 8.0x 10.0x All Software High Margin High Growth 19.5x 14.4x 29.0x 14.4x 12.9x 26.8x 0.0x 10.0x 20.0x 30.0x 40.0x All Software High Margin High Growth
