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<p>Trevor Martin, Principal Ben Howe, CEO Fred Joseph, Partner 2 Legal Tech: Seeded and Ready to Launch Legal tech is very much an emerging sector. After several years of furious start-up activity, the industry is prime for its first wave of consolidation and later stage growth financing. Over the past five years, more than 700 legal tech start ups have been formed according to Tracxn Research 243 private placement deals since 2012 raising over $750 million in equity capital At the same time, the legal profession itself is playing catch-up to the IT adoption cycle blazed by the rest of the service-based industries, most notably the deployment of digital SMAC technologies (social, mobile, analytics and cloud) to achieve high productivity and a lower cost of delivery to the end market. Due to fee pressure, law firms are under pressure to perform more like hard driving businesses and less like laissez-faire partnerships Ironically, this promise of increased productivity has been the hang-up: as long as the legal profession bills by the hour, there's no rush to shorten those hours. These attitudes are beginning to change, as the following unfolds: A crushing workload that is outpacing net new additions of lawyers provides further impetus The shifting demographic mix of the lawyer pool itself (younger and more tech savvy) is forcing progress as it has in other change-resistant industries New marketplaces are emerging which are changing the status quo and cost structure Even so, the potential legal tech market is ~$16 billion with low penetration rates, making it ripe for opportunity Despite slow adoption, legal technology is finally at the cusp of accelerating growth and consolidation In this report we will examine historical themes and future trends, how the major players and smaller disrupters are redefining the legal tech market and what the future holds for the capital markets and M&A Source: Mitratech Holdings, Tracxn The US is the world's largest provider of legal services, with an estimated $437B in total annual revenues Whereas the typical US company spends 5.2% of revenues on IT, the legal industry spends significantly less, with 75% of law firms spending 4.0% or less At the same time, the US legal services industry, which employs 1.3 million workers, has a relatively high employee-to- revenue relationship in comparison to other industries 3 The Legal Industry: A Massive Market Underinvested in Tech Source: Law360, IBIS World, Inside Legal 27% 48% 18% 5% 2% 0% 10% 20% 30% 40% 50% 60% < 2% 2 - 4% 5 - 6% 7 - 10% > 10% Note: excludes soft costs such as staffing and training 75% of law firms surveyed estimated they spend between 0% and 4% of their total revenue on technology, well under the 5.2% average for US Companies 75% Law Firm Survey: What percent of firm revenue is spent on technology? Law firms have consistently dedicated a lower percentage of their budgets to IT spend 1,203 1,225 1,245 1,268 1,281 1,301 1,316 1,000 1,100 1,200 1,300 1,400 1,500 2010 2011 2012 2013 2014 2015 2016 Source: American Bar Association After a period of moderate growth, legal matters increased 20% in 2014 and have continued to rise since Source: Bureau of Labor Statistics Increased Efficiency is Needed More Work Fewer Lawyers Although roughly 1 in 250 Americans are attorneys, the number of attorneys has grown at a considerably slower rate versus the early 2000's, implying workload per attorney has increased substantially 75,000 new lawyers in the last 5 years, representing only a 1.5% annual increase on average Since 2009, in-house law departments have reduced their spend on outside counsel During that span, companies reduced the spend on outside counsel from 66% of total to 59% Due to fee pressure and rise of matter based pricing, law firms face pressure to operate more like traditional businesses with CEOs / CIOs versus outdated partnership model Less Outsourcing Huge Burden on In-House Dept Due to the factors above, Mitratech projects a 15-20% shift of legal work in-house This substantially increases the need for an efficient, streamlined legal process, making legal technology a critical tool for attorneys aiming to keep up with industry trends 130,839 132,930 135,072 137,374 140,372 143,085 145,325 120,000 125,000 130,000 135,000 140,000 145,000 150,000 2010 2011 2012 2013 2014 2015 2016 4 Number of Attorneys in the US (000s) US Non-Farm Labor Growth (000s) Benefits of legal tech are becoming harder to ignore as increasing work per lawyer has made efficiency mission critical $1,226 $1,203 $1,207 $514 $490 $538 $1,009 $514 $518 $523 $1,625 $611 $524 $649 $657 $488 $465 $437 $336 $825 $769 $768 0 500 1000 1500 $2,000 Law Firm Corporate [1] Includes calendaring/docketing ($574M), legal financial management ($556M), and legal process automation ($23M) Source: Mitratech Holdings ($USD Millions)Legal Software Addressable Market 5 While legal tech represents a large ~$16 billion market, low penetration rates make it ripe for opportunity The total addressable market for legal software is estimated at $15.9 billion, of which $3.5 billion is actually spent, implying less than 25% penetration $9.4 billion implied spend by Law Firms $6.5 billion implied spent by Corporate legal teams Much of IT legal spend is in financial matter management where on premise software still reigns supreme despite a narrow client base of roughly 500 1,000 larger companies 27% 19% Most funded sectors 18% Highest Corporate CAGR sectors Legal Tech Addressable Market by Product Type and End User Governance & Compliance and Contract Management offer the largest current market size with the strongest growth rate Established markets with less recent innovation, such as e-Billing, have remained relatively stagnant of late 6 Source: Mitratech Holdings Corporate Legal Tech Growth Areas Small market size Low Growth Large market size Low growth Small market size High Growth Large market size High growth While all 11 legal technology sub verticals are growing, Knowledge Management, Legal Analytics, and Legal Project Management are projected to grow the most in the next 3 years for the Corporate end user segment Legal Marketplace Legal Tech Landscape 7 DISCLAIMER: This is only a representative list and may not include all relevant companies. If your company is not on the list and would like to be added for future publications, please email tclarke@agcpartners.com and we would be happy to consider. Legal Management Artificial Intelligence / Machine Learning eDiscovery / Legal Hold Legal Research / Analytics DIY Law Source: 451Research, Capital IQ 1 2 5 4 3 6 7 Represents corresponding pages later in the report Large Diversified Legal Tech Enterprise Content Management is another large legal subsector, please refer to AGC's November 2016 report for additional information 8 Source: Stanford Law, Altman Weil Slow Adoption Nothing New to Legal Sector 93% 44% of law firm leaders think a focus on improved practice efficiency is a permanent trend in the legal market of law firm leaders state they have significantly changed their strategic approach to efficiency Slow adoption remains an issue in the legal sector as long enduring standards, such as the billable hour, are making law firms hesitant to embrace technology with the potential to streamline time-consuming processes Diffusion of responsibility stems from the partnership model that is beginning to fade as law firms convert to a more progressive and streamlined management structure Recent research has shown law firms that have taken a more progressive approach to staffing, service delivery, and pricing commonly see improvements in gross revenue, revenue per lawyer, and profits per equity partner A clear disconnect exists between perceived and actual industry adoption of legal tech Importantly, legal tech has a long record of slow adoption, delaying efficiency The Billable Hour The accumulation of billable hours mentality provides a challenge to efficient legal practices Gives active attorneys minimal time to explore the adoption of new technology and / or learn new tools Apprehension in moving away from the billable hour, as this would require a new method of measuring value-add created by the legal profession The Partnership Model Money that would be spent on legal technology comes directly from the partner profit pool, creating a high bar to adoption Partnerships result in dispersion of responsibility and makes gaining the support of all partners near impossible Security Concerns / Lack of Infrastructure Law firms commonly have no / limited cloud-based infrastructure Tough to sell value proposition compelling enough to warrant overwhelming challenges of moving off legacy providers 9 Source: Stanford Law Speed Bumps to Legal Tech Adoption Cost Center Mentality Legal departments are viewed as cost centers within larger organizations, thus senior management is reluctant to approve high upfront technology investments Longer Sales Cycle Legal technology startups have stated that the largest impediment to selling has not been getting the initial meeting and a foot in the door, but rather moving from that initial meeting to final sale Individual Market and Lack of Awareness Unless already part of a larger organization, many smaller legal tech companies have difficulty persuading corporations around the effectiveness of their solution In order to combat the lack of trust stemming from lower awareness, legal tech solutions need to develop a brand which requires a large marketing budget Security Concerns Need to maintain a secure document environment has been a historical inhibitor as corporations perceive that in-house is safer The two largest end user populations have been historically slow adopters for a variety of reasons Law Firms Corporations Following their merger with Chinese law firm Dacheng in 2015, Dentons overtook Baker & McKenzie to become the world's largest law firm, with over 6,500 lawyers operating in 50+ countries In May 2015, Dentons announced the launch of NextLaw Labs, a global collaborative innovation platform focused on developing, deploying, and investing in new technologies and processes to transform the practice of law around the world NextLaw partnered with both IBM, who provides access to IBM Cloud and IBM's platform-as-a-service offering (Bluemix), as well as Seedcamp, who co-sponsors investments and provides training and mentorship NextLaw has now invested in 10 legal tech startups and has been profiled by American Lawyer and Law Matters, the latter of which stating: "The fruits of [Dentons] labor is creating advantages and opportunities, shaping the legal profession and transforming the industry" As global law firms begin to embrace legal technology, it will become difficult for other industry leaders to ignore innovation, as quantifying the value of legal services becomes easier as the industry shifts from an archaic system Others have already begun to follow Dentons' example, as LexisNexis (Relx Group) announced their own legal technology accelerator in early 2017 and announced their initial 5 participants in March (Visabot, TagDox, Separate.us, Ping, and JuriLytics) 10 Source: Dentons, Robert Ambrogi Case Study: Dentons Goes All In On Legal Tech World's largest law firm invests heavily in legal tech, now increasingly difficult for competitors to resist change Current Portfolio Background Innovation Looking- Forward Business Breakdowns Legal Performance Products $3.4B in 2016 legal revenue operating at 37% EBITDA margin Legal revenues decreased 1% over 2015 45% of legal revenue from Solutions business, and 41% from U.S. Online Legal Information Growth driven by subscription- based Legal Enterprise Solutions (Elite and Serengeti) U.S. Online Legal Information composed of Westlaw and Practical Law offerings Have indicated intent to grow SaaS- based offerings 1.6B in revenue from legal segment in 2016 Underlying Legal revenues increased by 2% 68% of revenue from North America, 21% from Europe, and 11% from rest of world Now serves legal customers in over 130 countries Flagship legal products are Lexis.com and Lexis Advance Focus on legal research In 2016, LexisNexis released new version of Lexis Advance, an innovative web application transforming how legal professionals conduct research 927M in 2016 legal revenue Legal revenues decreased by 1% over 2015 Legal revenue was 48% from digital, 41% from print and 11% from services In 2015, launched legal research platform Cheetah Growth in digital has been generally offset by decline in print Merging of Datacert and Tymetrix created one of world's largest and most recognizable enterprise legal management solutions 24% 27% 24% 25% Legal Tax & Accounting Health Governance Risk, & Compliance 11 Source: Company SEC Filings Public Companies with Legal Tech Presence 30% 13% 54% Legal Tax & Accounting Financial & Risk Other 24% 27% 35% 14% Legal Risk & Business Analytics Scientific, Technical, & Medical Exhibitions 1 Three large publics have huge divisions dedicated to the legal space 12 Source: 451Research, Robert Ambrogi, Bloomberg Players Get Smart on Legal Analytics Case Study #1: Market Leader Invests in Analytics Case Study #2: Industry Leader Acquires Analytics Platform / 2 Forward thinking legal tech players are differentiating themselves with legal analytics, through research and development, as well as inorganically through acquisitions In October 2016, Bloomberg Law announced the release of "Litigation Analytics", which allows attorneys to devised informed litigation strategies and anticipate outcomes of a trial. A sample insight released by Bloomberg was: "Judge Jack Weinstein in the Eastern District of New York has been almost four times more likely to deny a motion to dismiss in full than Judge Jesse Furman in the Southern District of New York. The disparity is particularly noticeable when it comes to corporate law cases, where Judge Weinstein has been five times more likely to deny a motion to dismiss in full." In November 2015, LexisNexis Legal, a subsidiary of Reed Elsevier, acquired Lex Machina for an undisclosed amount. Lex Machina provides a SaaS platform that helps lawyers predict the behaviors and outcomes of different legal strategies by mining, tagging, categorizing, and enhancing millions of Federal court dockets and documents. "Data and analytics are integral to the future of the practice of lawwe plan to leverage our extensive resources to bring the benefits of Legal Analytics to lawyers everywhere." (Sean Fitzpatrick, Managing Director, LexisNexis) 13 Source: Forbes, Robert Ambrogi AI Generating Early Excitement in Legal In 2016, Thomson Reuters announced it was using IBM Watson technology to develop artificial intelligence products specific to the legal vertical In February 2017, Thomson confirmed the Company has an AI legal product in beta with 9 customers, planning a full launch by mid 2017 In March 2016, Deloitte and Kira Systems announced an alliance "to bring the power of machine learning to the workplace, an innovation that could help free workers from the tedium of reviewing contracts and other documents." They are believed to be developing an AI tool to help diagram intricate corporate structures, as well as a self-service AI portal for law firms to configure custom AI tasks and more ROSS Intelligence, a startup utilizing IBM's Watson platform to answer lawyers' natural-language legal research questions, has raised over $2 million in seed funding and already secured blue-chip customers such as Dentons, Baker & Hostetler and Latham & Watkins Premonition, a legal startup applying AI to the largest legal database in the world, received a seed round at a valuation of $100 million 3 Both startups and established legal players have begun to invest in artificial intelligence as a means of streamlining efficiency within the legal process 2nd generation solutions are emerging Commonly offer multiple integrated functions (such as billing, accounting, and document management) These solutions also offer secure enhanced mobility access and are better aligned with the way that lawyers truly operate 14 Source: Mycase, OneLegal Legal Tech Moving to the Cloud Cloud usage growing with smaller, more flexible firms leading the charge Cloud usage grew 20% in 2016 according to the ABA LTRC's 2017 Legal Technology Survey Small firms are able to be more casual regarding confidentiality, security, and due diligence, leading them to use cloud-migration as an area of differentiation over large firms The potential cloud customer base is large but harder to sell into given higher churn rates and fewer scaled companies Belief that continued cloud adoption and growth will largely depend on vendor's and legal IT expert's ability to alleviate concerns around the cloud (mainly security) Elasticity is king with cloud-based solutions Historically, law firms have had to pay for IT infrastructure to handle peak needs, and double this for disaster recovery and business continuity Cloud based solutions allow law firms to pay only for what they need, saving money, time, and resources Litigation will lead the migration to the cloud Cloud-based software aimed at facilitating collaboration between litigation teams will allow teams of lawyers to share notes, documents, and evidence in a secure, web-based platform Hybrid-Cloud solutions are becoming increasingly popular, as they allow firms to migrate to the cloud at their own pace 4 Continuing the trend of slow adoption, movement to the cloud will serve as a competitive advantage for technology-forward law firms looking to bolster security, accessibility, and collaboration 15 Source: Gartner eDiscovery Sees Continued Consolidation The marketplace for eDiscovery solutions has seen a shift from large, legacy providers to younger SaaS offerings Newer solutions tout superior ease of use, more scalable architecture, faster release of new features and straightforward pricing Depending on the maturity of in-house eDiscovery processes, a shift to SaaS may not always be beneficial due to occasional high costs in migrating systems SaaS solutions are particularly attractive to organizations that have moved their data to the cloud (Office 365 or Google My Business), as well as for small and less complex cases with data volume below 50GB Large and growing market for eDiscovery software solutions Gartner estimates the eDiscovery market to be roughly $5 billion in 2015, roughly one-third ($1.7 billion) for software and the remaining ($3.3 billion) for services The eDiscovery market continues to grow due to rapid data growth * Differently colored boxes only indicated the main responsible team but not in an exclusive sense By 2021, roughly half of eDiscovery projects will be able to directly tap into Office 365 via built-in machine learning, up from less than 10% today eDiscovery represents a historically active M&A market eDiscovery service providers commonly host software from third parties, with some having proprietary technology Process optimization, price competitiveness, in-region expertise, quality of service / customer care, and technology portfolio are frequent areas of competition 5 eDiscovery represents a more developed legal tech subsector with a sizable market and a historically strong M&A market that points to further consolidation Rise of legal marketplaces allow consumers to be connected to the legal advice or contracts that they need Marketplaces provide directories that includes ratings, reviews and profiles and offer a wide range of products and services Additional goal of making the legal market more transparent, liquid, and fair to both buyers (law firms and corporate legal departments) and lawyers Companies that have had success in creation of marketplaces have embraced the "network effect" LegalZoom emerged as the most familiar consumer facing legal solution, offering standardized legal documents as an alternative to hiring a lawyer Avvo, founded in 2007, has received $132 million in funding and is a legal marketplace, lawyer's directory, Q&A forum, and offers legal marketing Other platforms such as Priori, UpCounsel and LawDingo make it quick and simple for consumers to learn about, compare, and connect with a massive network of legal professionals An increase in customer support channels increases the convenience of attaining necessary legal counsel Historically, support teams are only privy to 3.8% of customer problems, as frustration with customer support channels have caused clients to cease usage of products as opposed to attempting to seek help Legal marketplaces, such as Law Trades, have turned to new channels such as SMS and Facebook as a means of giving customers an array of customer support options, allowing them to choose what is easiest for them Currently, only 30% of customers interact with businesses through SMS, although the customer response rate is seven times higher than email, and the average American already spends 26 minutes per day texting Legal marketplace transformation provides a window into the future of legal services Law firms of the future may be a network of lawyers available through backend infrastructure, eliminating the need for human administration and allowing for lower prices for consumers and increased productivity 16 Source: TechCrunch, Above the Law, Mitratech Holdings, FrontApp Rise of Legal Marketplaces 6 Increased efficiency and transparency ushered in legal marketplaces, fundamentally changing the way legal services are bought and sold 17 Source: Tech Crunch, Robert Ambrogi DIY legal tech started with LegalZoom and has since significantly expanded the accessibility of legal products and services Although not aimed at displacing attorneys, DIY law allows small businesses an option to access affordable legal protection LegalZoom was the first company to offer a true alternative to hiring a lawyer, with a library of discounted standardized legal documents In many cases, lawyers and DIY law can work in unison, with legal professions providing guidance and strategy, but the clients taking control of the execution portion Mobile technology is revolutionizing the market for DIY law Increased accessibility is allowing legal contracts to enter smaller transactions Companies like Shake Law allow you to create, sign and send contracts quickly via mobile devices Legal contracts are now economically viable for transactions such as small freelance work, friendly bets, and minor loans Chatbots have entered the DIY legal space Legal chatbots have made it increasingly possible to secure sound legal guidance at reasonable rates Legally, 1Law, and LawDingo have all created similar chatbots to aid consumer's interactions with legal documents Mobile Drives Incremental Uptake in DIY Law 7 DIY law expands the boundaries of the legal sector by increasing the accessibility, affordability, and automation of simple legal transactions Thomson Reuters' acquisitions have been focused on their stated vision of being a leading provider of legal entity information, as seen by their February 2017 acquisitions of Avox and Clarient, which will be integrated into their portfolio of risk management offerings Thomson will look to continue targeting legal technology acquisitions in North America, where they forecast increased demand for legal services in 2017 due to changes in legislation and a more profitable financial sector 18 Source: Company SEC Filings, Company Earnings Calls Acquisition Focus of Largest Legal Tech Players 2000 - 2005 2006 - 2010 2011 - 2017 Reed Elsevier has placed an emphasis, through both R&D and M&A, on "next-generation legal research solutions that harness the power of Big Data and supporting the evolving information needs of the legal professional" Reed Elsevier's legal division is strongly focused on migrating off legacy infrastructure onto cloud-based subscription products, and will look to add bolt-on cloud analytics offerings to their New Lexis platform Most recent legal acquisition is Intelligize, a provider of SEC intelligence for legal professionals, in September 2016 19 Source: CB Insights Historical Legal Technology Financing 25 37 3 4 53 56 10 10 35 52 4 21 157 11 95 25 33 16 52 54 0 5 10 15 20 25 30 20 40 60 80 100 120 140 $160 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Investment ($M) Deals 2016 2015 2014 2013 2012 243 deals since 2012 raising over $750M in capital Legal tech deal activity hit an all time high in the 2nd half of 2016, with $106M invested across 46 deals, including 27 in Q4 2016 alone Largest quarter by invested capital was Q1 2015 with $157M invested, headlined by kCura's $125M raise in a round led by ICONIQ Capital Legal Tech: Deal Count and Invested Capital Dollars Invested ($M) Deal Count 67 Deals 60 Deals 48 Deals 21 Deals 47 Deals Historically legal tech has not seen the same amount of invested capital as other sectors, but momentum is building Source: Capital IQ, CB Insights, 451 Research 20 Top 10 Funded Legal Tech Companies Company Amount Raised Last Raise Investors Use of Funds $132M July 2015 TCV, Benchmark, Ignition, DAG Ventures, (2 others) Accelerate hiring Increase brand awareness Product expansion $125M February 2015 ICONIQ Capital Accelerate build-out of Relativity: platform for managing electronic data around litigation $100M [1] April 2011 Institutional Venture Partners, KPCB Fuel large marketing spend $72M May 2013 LexisNexis, Morgan Stanley, GV, August Capital, (2 others) Product expansion Potential acquisitions $54M May 2012 ABS Capital Partners, CIBC Product expansion: integrated delivery system allowing for effective managing of information Company Amount Raised Last Raise Investors Use of Funds $45M March 2013 Sorenson Capital Invest in new product development Fund general business expenses $36M February 2013 Carrick Capital Partners Invest in the commercialization of managed services offering $32M March 2012 FTV Capital Expand into new markets, including growth of Catalyst's Asia Division $26M March 2014 Bessemer Venture Partners Increase sales presence in Toronto and Europe $17M June 2014 K1 Investment Management Acquire eCloud Collect and push its services forward [1] Exact amount raised for LegalZoom is unknown, estimated to be ~$100 million Investor Number of Investments Most Recent Investment (Round Size) Companies Invested In 4 June 2015 - Ross Intelligence (<$1M) 3 January 2017 - Mighty AI ($14M) 3 July 2016 - CS Disco ($19M) 2 April 2014 - Avvo ($38M) 2 April 2014 - Avvo ($38M) 2 June 2014 - Zapproved ($15M) 2 May 2016 - Notarize ($9M) 2 November 2013 - UpCounsel ($3M) 21 Source: Capital IQ, TechCrunch Most Active Investors Since 2012 While the legal industry has historically been a slower adopter of technology, market forces are driving innovation and disruption. Using legal tech is no longer optional to remain competitive, especially when clients and practitioners are demanding it. There is a belief that the pace of change and adoption is increasing as the legal workforce becomes more mobile, younger, and tech-savvy. Hopefully, this report has captured some of those themes and highlighted some of the up-and-coming disruptive players. Why is this disruption happening? As the reimagined Legal Tech sector is still somewhat nascent, the pressure has been mounting to innovate and disrupt the status quo. Efficiencies are actively sought at in-house legal departments with increasing focus to improve profit margins as the volume of case matter has risen. Further, the changing requirements of lawyers such as the need for ubiquitous access to data and information are starting to transform the landscape. However, the pace of technological innovation and adoption has been slower compared to some other service verticals in the economy such as banking. There still are some serious structural impediments from the two largest end- user constituents that have hampered investment. Primarily, law firms entrenchment in the billable hour psyche and partnership structures create apprehension to change. Secondly, in-house legal departments are viewed as a cost center and while increasing ROI through efficiency is beneficial, investing in sales technology and focusing on profit centers may be an easier sell. Despite these challenges, there is still an enormous market that is ripe for investment and disruption. According to CB Insights, startups attacking the legal industry received $155M of invested capital in 2016 from a record number of deals, 67. Many key focus areas highlighted in this report will change for the better in 2017 and beyond. We hope this report has shed some light on the historical challenges facing the Legal Tech industry, why 2017 is the year that investment dam is broken and some of the amazing ideas that are ripe for disruption come flooding in. 22 Reimagining the Way the Law Should be Practiced 23 Note: This document is intended to serve as an informative article only in order to further discussion, analysis and independent verification. This document is based upon sources believed to be reliable, however, we do not guaranty the sources' actuary. Unless otherwise indicated, AGC does not believe that the information contained herein is sufficient to serve as the basis of an investment decision. There can be no assurance that these statements, estimates or forecasts will be attained and actual results may be materially different. This is not a solicitation of an offer of any kind. To learn more about the company/companies that is/are the subject of this commentary, contact one of persons named herein who can give you additional information. AGC's Dedicated Legal Tech Team Ben is a Co-Founder and the CEO of AGC Partners In 26 years as an investment banker, Ben has completed more than 300 transactions Prior to AGC, he served as Managing Director, Head of M&A and Executive Committee Member at SG Cowen Securities, and prior to that served as Head of Technology Investment Banking for the East Coast and Europe at Montgomery Securities He serves as co-chairman of Excel Academy, which has four charter schools in East Boston, and served on the board of Portsmouth Abbey and the advisory board of Trinity College He holds a B.A. in Economics from Trinity College and an M.S. in Accounting from The Stern School of Business at NYU Ben Howe Co-Founder, CEO Trevor is a Principal at AGC Partners Trevor has over 12 years of experience in investment banking and corporate finance roles He has advised on more than 35 closed transactions, totaling over $40 billion in deal value Prior to AGC, Trevor worked at Moelis & Company in their Boston office as Senior Vice President. Prior to Moelis, Trevor worked at UBS in the technology, media, and telecom group in New York for six years. He started his career at the Nielsen Company in their corporate finance group Trevor holds an MBA from the Amos Tuck School of Business at Dartmouth College and a B.A. from Georgetown University Trevor works in AGC's Boston headquarters and resides in Boston with his wife and son Trevor Martin Principal AGC is a leading investment bank with a focus on providing strategic advisory services to technology companies, helping them achieve their vision. AGC Partners, now in its 14th year of business, announced a record 32 transactions in 2016. With more than 50 investment banking professionals across the Americas and in Europe, we provide global coverage across all products and sectors, from software and digital media to tech-enabled services and mobile communications. Since our inception in 2003, AGC Partners has completed 302 investment banking transactions for emerging growth companies. Fred Joseph Partner Prior to AGC, Fred spent 7 years at Cowen & Co., and held positions at J.P. Morgan and Smith Barney Fred was a founding member of Beechtree Capital, a middle market leverage buyout firm With more than 120 completed transactions in his 25 plus years in the industry, Fred has raised public and private capital for both early stage and late stage corporations in the technology and healthcare sectors The majority of Fred's work has been in Mergers & Acquisitions, where, cumulatively, he has executed in excess of $7 billion in transactions Fred holds a B.A. from Swarthmore College and an M.B.A. from Columbia University 24 M&A and Private Placement Activity Appendix 25 Legal Tech M&A Activity Since 2014 Source: 451 Research, Capital IQ, Traxcn Date Target Acquirer Transaction Value EV/TTM Revenue Target Description 1/6/17 Responsive Data Solutions Advanced Discovery ND ND Provides litigation support services and eDiscovery solutions to law firms and corporate legal departments 11/4/16 Brainspace BC Partners; Medina Capital ND ND Provides eDiscovery software, information governance and compliance, and enterprise knowledge sharing and discovery solutions 10/21/16 Kroll Ontrack LDiscovery $410 ND Provides information management, data recovery, and legal technology solutions including, a do-it-yourself data recovery software for various operating systems and media type that provides file recovery 9/8/16 Equivalent DATA Consilio ND ND Provides e-discovery solutions to attorneys, investigators, corporations, and legal professionals worldwide 9/1/16 Integreon NewQuest Capital Partners ND ND Provides integrated legal, discovery, research, and business support solutions to professionals 7/27/16 Epiq Systems DTI 1,026 1.9x Provides professional services and integrated technology solutions for the legal profession in the United States and internationally 6/28/16 Patent River Anaqua ND ND Provides patent prosecution data for the intellectual property industry 6/2/16 Recommind Open Text Corporation 163 ND Develops Software-as-a-Service (SaaS) based advanced analytics platform that identifies the facts, which matter for eDiscovery, investigations, contract analysis, and information governance 5/19/16 JURINNOV Technology Concepts & Design ND ND Provides integrated technology solutions that address the e-discovery and data security needs of legal and business communities 5/17/16 Lawin1 Legal Process Solutions MyeCA.in 1 ND Provides online legal services for businesses in Indiia 5/4/16 Guardian Digital Forensics Envista ND ND Provides e-discovery services comprise case consulting services, collection of data, and early case assessment services 4/4/16 Espion BSI Professional Services EMEA ND ND Provides information governance, eDiscovery, cloud assurance, managed security, and research and development services to legal advisers 2/1/16 Veritext Pamplona Capital ND ND Provides deposition and legal litigation support solutions and services 1/28/16 Kiersted Systems OmniVere ND ND Provides electronic discovery and legal technology consulting solutions to law firms and corporate legal departments Date Target Acquirer Transaction Value EV/TTM Revenue Target Description 1/19/16 Review Less Inspired Review ND ND Provides e-discovery process, predictive coding execution, and advanced analytical review tools 1/19/16 Litigation Document Group Xcellence ND ND Offers a suite of electronic discovery services, including collection, analysis, processing, review, and production of digital and paper-based information 1/11/16 ABI Document Support Services ExamWorks Group $62 ND Provides outsourced electronic records retrieval, e-discovery and document and records management services for businesses in the legal and health insurance sectors 1/7/16 Millnet Financial Advanced Discovery ND ND Provides ediscovery and legal document services in the United Kingdom 1/4/16 LDiscovery The Carlyle Group ND ND Develops e-Discovery management solutions and provides legal and technology consulting services 12/15/15 Inventus Solutions [Clearlake Capital] RPX Corporation 232 4.4x Provides e-discovery document collection, review, processing and related information management SaaS, as well as e-discovery and litigation support managed services, for law firms, corporate legal departments and government agencies 11/23/15 Lex Machina LexisNexis Group ND ND Develops a Software-as-a-Service Legal Analytics platform that creates structured data sets about judges, lawyers, parties, and IP litigation information to companies and law firms 11/6/15 BDO H&A Forensics. BDO Canada ND ND Provides advisory services, eDiscovery, and computer forensics solutions to its corporate and legal clients faced with business and litigation risks 10/12/15 Ditto Document Services Advanced Discovery ND ND Provides digital asset management, eDiscovery, litigation support, print production, and fulfillment services 10/8/15 Aderant Holdings [Madison Dearborn Partners] Roper Technologies 675 ND Provides legal practice management software and SaaS for the legal sector globally 10/8/15 Daegis [ Unify Corporation] OpenText 14 0.6x Provides e-discovery SaaS and related document hosting services for businesses and the legal sector 9/21/15 Loislaw.com Fastcase.com ND ND Provides legal and related information to attorneys, law firms, law school faculty, and students; and others via Internet 7/7/15 Bridgeway Software Mitratech Holdings ND ND Provides legal management solutions for legal spend and matter management, corporate governance, and e-Discovery applications in legal departments 6/30/15 Consilio Shamrock Capital Advisors ND ND Provides eDiscovery software and services to assist law firms and corporations involved in internal and external investigations, litigation, and arbitration 26 Legal Tech M&A Activity Since 2014 (Cont'd) Source: 451 Research, Capital IQ, Traxcn Date Target Acquirer Transaction Value EV/TTM Revenue Target Description 4/8/15 Iris Data Services Epiq Systems $134 3.5x Provides outsourced e-discovery, computer forensics and legal document review services for businesses and law firms 1/9/15 Sky Analytics Huron Consulting Group 9 ND Provides outside legal expense management and invoice benchmarking SaaS for corporate in-house legal departments and law firms 1/9/15 Geotext Translations Lionbridge Technologies 17 1.0x Provides language solutions for legal professionals worldwide, offering document translation services, such as certified/sworn Geotext, Geotext, draft, and machine translations 12/4/14 LitSupport Information Management Group 14 ND Provides legal e-discovery services, as well as outsourced document management, digital document scanning and printing services, for businesses, law firms and government agencies in Australia and New Zealand 11/10/14 Hudson Legal e-Discovery Document Technologies 23 0.4x Provides e-discovery, project management and litigation support BPO services for corporate legal departments and law firms 11/10/14 Legal eDiscovery Business DTI 23 ND Provides information management and legal process outsourcing services 10/16/14 Discovery Solutions DTI ND ND Offers InsideOut, an in-house e-discovery management service that includes collections, attorney review and analysis, and document production services 9/2/14 SoftCode Tyler Technologies 5 ND Provides Microsoft-based civil case management and court service software for government, justice and police agencies 5/12/14 AccessData Group (litigation support services division) OmniVere 19 ND Provides digital forensics, analytics, e-discovery, record management software and services for the legal, law enforcement and government entities 5/7/14 PartnerJD TrustPoint ND ND Provides e-Discovery staffing solutions for law firms and corporations in Richmond 4/8/14 Smart Data Consulting Xerox Corporation ND ND Offers technology consulting and e-discovery services to legal, government, and corporate entities 2/26/14 Third Coast Holdings Wolters Kluwer Corporate Legal Services 180 3.2x Provides general ERP and case management software, SaaS and services for corporate legal and compliance departments 1/6/14 LegalZoom.com Permira Advisers 216 ND Provides personalized online legal solutions for families and small businesses 27 Legal Tech M&A Activity Since 2014 (Cont'd) Source: 451 Research, Capital IQ, Traxcn 28 Legal Tech Private Placement Activity Since 2013 Source: 451 Research, Capital IQ, Traxcn Note: Excludes all Private Placement Transaction with undisclosed values and values under $1 million Date Target Investors Target Description Amount ($M) 3/7/17 LawGeex Lool Ventures; LionBird Ventures; Recruit Holdings Provides a contract review platform for individuals and businesses, offering LawGeex, a platform that enables to upload one of over 30 contract types $7 1/10/17 Mighty AI Foundry Group, Madrona Venture Group, New Enterprise Associates Helps businesses to obtain the datasets they need to train and scale their computer vision and natural language model 14 12/14/16 LawTrades 500 Startups; Angel List; Graph Ventures A message-based platform that allows anyone to seamlessly find, hire, and work with corporate attorneys on a project basis 2 8/23/16 Logikcull OpenView Venture Partners; Storm Ventures Develops a cloud discovery and investigation platform for law firms, corporations, and governments 10 7/21/16 CS Disco Bessemer Venture Partners; The Stephens Group; LiveOak Venture Partners Develops e-discovery software that helps lawyers find evidence faster by reviewing documents in major cases and investigations 19 5/27/16 Notarize Polaris Partners; The Founders Fund; Ludlow Ventures Operates an online notary public service that enables users to connect with a commissioned Virginia eNotary public by live video call in the United States 9 5/13/16 Page Vault Golden Angels Investors; Meridian Street Capital; Nelnet; Foley Ventures; (3 others) Provides a software solution that allows legal professionals to capture Webpage content in a way that is forensically defensible and legally admissible 2 4/29/16 Everplans Transamerica Ventures; RGAx Operates a Website for people dealing with deathhypothetical people 6 4/19/16 LawGeex Lool Ventures; LionBird Ventures Provides a contract review platform for individuals and businesses, offering LawGeex, a platform that enables to upload one of over 30 contract types 3 2/4/16 Notarize Polaris Partners; Ludlow Ventures Operates an online notary public service that enables users to connect with a commissioned Virginia eNotary public by live video call in the United States 2 1/14/16 Everlaw Andreessen Horowitz; K9 Ventures Provides ediscovery and litigation cloud platform to law firms, corporate counsel, and government attorneys 8 29 Legal Tech Private Placement Activity (Cont'd) Source: 451 Research, Capital IQ, Traxcn Date Target Investors Target Description Amount ($M) 1/11/16 Wevorce Techstars Operates as a divorce mediation company providing online consultation services in the areas of foundation building, parenting planning, financial mapping, document prepping, and final review $3 12/11/15 Peppermint Technology Scottish Equity Partners Offers Peppermint Legal Service Platform, a legal practice and case management software that equips law firms, solicitors and lawyers for the future 13 11/5/15 Premonition ND Provides legal analytics services to law enforcement, lobbying, and healthcare markets 3 11/2/15 Lexoo Forward Partners; London Co-Investment Fund Operates an online platform that allows businesses to find and compare quotes from specialized commercial lawyers in the United Kingdom 1 10/13/15 Concord Worldwide Western Technology Investment; Alven Capital Partners; Cota Capital Provides a cloud-based platform that enables users to clarify contract terms in real time with clinical laboratory supply and medical device providers 3 8/12/15 Mighty AI Foundry Group, Madrona Venture Group, New Enterprise Associates Helps businesses to obtain the datasets they need to train and scale their computer vision and natural language model 10 7/28/15 Lecorpio M2O Provides integrated and collaborative suite of software solutions to automate, manage, and optimize intellectual property (IP), compliance, and billing processes of corporate legal departments 15 7/28/15 UpCounsel Menlo Ventures; Compound; Homebrew Management Operates as a marketplace for legal services focused on businesses and startups 10 7/22/15 Avvo Technology Crossover Ventures; Vulcan Capital; Coatue Management Operates an online legal marketplace that connects consumers and lawyers 72 2/3/15 kCura ICONIQ Capital Develops Web-based e-discovery applications for managing large volumes of electronic evidence during litigation and investigations 125 11/21/14 Mighty AI Foundry Group, Madrona Venture Group, New Enterprise Associates Helps businesses to obtain the datasets they need to train and scale their computer vision and natural language model 4 Note: Excludes all Private Placement Transaction with undisclosed values and values under $1 million 30 Legal Tech Private Placement Activity (Cont'd) Source: 451 Research, Capital IQ, Traxcn Date Target Investors Target Description Amount ($M) 11/17/14 Renew Data Ldiscovery Provides eDiscovery solutions to corporations and law firms in the United States $40 11/12/14 CS Disco Bessemer Venture Partners; LiveOak Venture Partners Develops e-discovery software that helps lawyers to find evidence faster by reviewing documents in major cases and investigations 10 6/30/14 Zapproved K1 Investment Management Provides e-discovery Software-as-a-Service (SaaS) solutions for corporate legal teams 15 5/7/14 Onomatics Balderton Capital Provides TrademarkNow, a Web-based system for intelligent trademark management, analyzing trademarks and ranking them into an order relevant to the users 4 5/1/14 Lecorpio M2O Provides integrated and collaborative suite of software solutions to automate, manage, and optimize intellectual property (IP), compliance, and billing processes of corporate legal departments 10 4/7/14 Avvo Benchmark; Ignition Partners; Coatue Management; DAG Ventures Operates an online legal marketplace that connects consumers and lawyers 38 3/25/14 Clio Bessemer Venture Partners Provides a web-based practice management system that is specifically designed for solo practitioners and small law firms 20 2/3/14 Ravel Law New Enterprise Associates; North Bridge Venture Partners; The Experiment Fund; Work-bench Co-op Owns and operates an online legal research platform 8 10/30/13 LawDingo Altair Capital Management Enables users to access lawyers within their state via video chat, phone or email 1 10/17/13 Anaqua Bessemer Venture Partners Provides intellectual asset management software and maintenance services 25 10/2/13 UpCounsel CrossLink Capital; Compound; SV Angel; Collaborative Fund; Homebrew Management Operates as a marketplace for legal services focused on businesses and startups 4 5/28/13 Judicata Khosla Ventures Develops research and analytics tools for lawyers 6 Note: Excludes all Private Placement Transaction with undisclosed values and values under $1 million 32 M&A and Growth Equity focus Enterprise value between $50M and $350M Reputation for closing deals large and small at premium valuations A record 32 announced transactions in the 2016 with buyers from around the world including Microsoft, Oracle, HPE, Rakuten and Carlyle, and more than 45 current engagements High transaction volume fuels deep market knowledge and extensive worldwide technology contacts One of the largest tech banking teams in the world with 50 employees 14 years in business, 302 completed transactions, and 52 consecutive quarters of profitability Headquartered in Boston with offices in Silicon Valley, New York, London, and Minneapolis Ranked The Top Technology Boutique Bank 33 Fred Joseph Maria Lewis Kussmaul Eric Davis Russ Workman Cybersecurity Advanced Threat Defense CASB Endpoint Identity Access Management Network SECURITY Ben Howe BI / Analytics CRM ECM ERP FinTech / Payments HCIT / Life Sciences HCM IT Services Marketing / Sales Automation Supply Chain Technical Software SOFTWARE AdTech Consumer E-Commerce Food Tech Gaming DIGITAL MEDIA & INTERNET Big Data Cloud Computing Communications Infrastructure Data Center Jon Guido Ben Howe Hugh Hoffman Fred Joseph Dennis Rourke Charlie Schopp Elena Marcus Doug Hurst Trevor Martin Linda Gridley Elena Marcus Gee Leung Trevor Martin Jon Guido Joe Dews Scott Card Rob Buxton Markus Salolainen INFRASTRUCTURE Greg Roth Security Orchestration Security Services Threat Intelligence User Behavior Analytics Vulnerability IOT / SCADA Vertical SaaS Automotive Building / Engineering Education Healthcare Legal Non-Profit Public Sector Real Estate Retail Travel & Expense Internet Mobile Social Virtual Reality / Augmented Reality Energy & Industrial Tech Internet of Things Mobility Solutions Semiconductors Storage Joe Dews Deep Domain Knowledge and an Average 20 Years of Experience 34 Client Buyer Process and Outcome ND / ND AGC advised L2, a provider of digital performance benchmarking to Fortune 500 brands, on its sale to Gartner AGC ran a highly efficient, disciplined process, reaching out to a carefully selected group of top digital media buyers and receiving multiple term sheets The Company's price expectations were very specific; AGC drove effective price valuation rationales to get buyers to meet those expectations and adopt a view of L2's data driven digital measurement capabilities as potentially transformative to their business ND / ND AGC advised Cognilytics on a sale to CenturyLink AGC reached out to a targeted group of potential acquirers; of that group, several parties conducted an evaluation of the business and held introductory meetings with the management team Following receipt of an LOI, AGC pushed other prospective acquirers into a competitive process that resulted in a higher enterprise value and better terms with the ultimate acquirer, CenturyLink ND / ND AGC advised Simplygon, an AR / VR company, on its sale to Microsoft in January, 2017 Within two weeks of launching a market test, AGC generated multiple in-person meetings including several top global technology strategic buyers The highly competitive process generated multiple strategic bids Upon receiving Microsoft's term sheet, AGC negotiated seller friendly terms and our client signed the term sheet within 24 hours AGC advised FMCG Direct, a leading data-driven marketing services provider to financial services on its sale to Deluxe Corporation (NYSE: DLX) The Company had inbound interest from multiple parties which AGC fielded, keeping the appropriate amount of tension to create a competitive bidding environment AGC commenced outreach in less than two weeks of engagement resulting in over 40 NDAs signed and ~20 meetings with management AGC leveraged the high level of interest it collected from the outreach to negotiate a more compelling offer and better terms for FMCG $200M / ND $400M / 8.5x AGC initially advised Prolexic on their $30M capital raise led by Trident Capital and Intel in 2013, and subsequently advised the Company on their $400M dollar sale to Akamai Following a competitive financing round, Prolexic was approached by Akamai to be acquired By driving an extremely competitive process and providing access to the right decision makers, AGC was able to achieve an 8.5x acquisition transaction multiple $275M / 7.4x AGC initially advised iSIGHT on their $30M capital raise from Bessemer in 2014, and subsequently advised the Company on their sale to FireEye (Nasdaq: FEYE) in January 2016 In light of inbound interest, AGC was engaged to run a rapid, highly disciplined M&A process to test the market and simultaneously stoke existing interest from the buyer at the table By positioning iSIGHT's superior technology, continued market traction, and viable growth strategy to the market, AGC was able to drive a competitive process that improved negotiating leverage resulting in optimal deal terms and a massive exit multiple $1B / 8.0x AGC advised SS&C on a $1 billion dollar sale to the Carlyle Group at an 8x revenue multiple AGC set up an intense 2-day roadshow with the top 6 technology buyout firms: Carlyle, Summit, Thomas Lee, Tudor, Warburg Pincus, Welsh Carson AGC created an auction environment and generated bids in 30 days AGC drove a 80% premium to the pre-deal trading price EV / Revenue Multiple Source: 451 Research Market-Defining M&A 35 Client Investor Check Size / Enterprise Value Process and Outcome $70M / $145M AGC advised Mandiant on a $70M capital raise at a $145M valuation and 5.1x revenue multiple The proceeds were used to repurchase shares from investors and to fuel strategic growth initiatives Mandiant leveraged KPCB's knowledge and expertise following the investment and grew rapidly before being acquired by FireEye in 2014 for $1B, 6x the pre-money equity value of the AGC growth equity transaction $25M / ND AGC closed a $25M investment led by North Bridge Growth Equity The transaction included primary and secondary capital to provide liquidity to shareholders and to finance erecruit's first growth equity round $36M / ND AGC closed a $36M investment led by Partech Ventures with participation from existing investors, Finnish Industry Investment and Draper Esprit The investment will be used to further accelerate existing sales and marketing activities for M-Files, as well as to expand into new markets in North America, EMEA, and APAC and liquidity to shareholders $65M / ND AGC kicked off a highly competitive growth equity process that ultimately brought in 8 term sheets from prospective investors Buildium moved forward with Sumeru and closed a $65M capital raise The capital was a mix of primary and secondary to provide liquidity to shareholders and K1, and to fuel future strategic growth $49M / ND AGC advised Litmus on a $49M capital raise that valued the company at 6x revenues AGC leveraged inbound interest to drive an intense 60-day process, soliciting multiple preemptive term sheets from top PE and strategic buyers, representing a valuation that was over 2x the original offer The invested capital was a mix of primary and secondary to provide liquidity to the existing shareholders and to drive strategic growth initiatives $27M / ND AGC helped Building Engines, a leading real estate software provider, raise $27M After bringing in multiple term sheets, with both minority and majority options, AGC assisted Building Engines in choosing the right partner with which to move forward The capital was a mix of primary and secondary for liquidity to shareholders and fuel strategic growth $375M / $535M AGC advised Planet Fitness on a $375M capital raise led by TSG Consumer Partners at a $480M value AGC conducted a frenzied auction in the middle of August and signed the definitive agreement roughly 60 days after signing the engagement letter Planet Fitness went public on the NYSE in August 2015 opening at an implied equity value of $1.6B, 4.3x the pre-money equity valuation at the close of the AGC transaction Market-Defining Financings Source: 451 Research 36 AGC Works With Over 800 Global Strategic Buyers 37 Three annual technology conferences optimized for private companies and entrepreneurs Leveraging a robust and proprietary 1-on-1 meeting format to arrange 6,000+ meetings between private company CEOs and investors/buyers at events throughout the year High-caliber panel discussions featuring renowned tech industry experts on hot topics and trends Leading public and private emerging growth companies spanning all major tech sectors, including Cloud/SaaS, FinTech, HCIT, E-Commerce, Infrastructure, IoT, Security, Mobile and Social, regularly attend our conferences 2,000 professionals from all of the leading PE / VC firms and corporate venture funds and strategic buyers attended our conferences over the past 12 months San Francisco 2017 featured 450 technology companies and 3,500+ 1-on-1 meetings Boston 2016 featured 170 technology companies and 1,500+ 1-on-1 meetings Boston November, 2017 San Francisco February, 2017 London June, 2017 Premier Industry Investor / Buyer Conferences 38 Our Partner authored "Insights" publications insure that we are ahead of important sector and financing trends We uncover new technologies that are beginning to emerge We uncover new companies in emerging landscapes We maintain dialog with the most active investors and strategic buyers We distribute to a proprietary list of over 10,000 industry participants Deep Domain Expertise Across Sectors 39 sold to sold to Sold to Global Expertise: 45 Cross-Border Deals in 18 Countries 40 SOFTWARE / TECH ENABLED SERVICES / ENERGY TECH COMMUNICATIONS / SEMICONDUCTOR / IT INFRASTRUCTURE DIGITAL MEDIA & INTERNET FIN TECH HCIT INFORMATION SECURITY & DEFENSE AGC Works Smart and Hard 302 Closed Deals Head and shoulders above the others 41 Leveraged multiple indications of interest into an excellent outcome We're thrilled with the outcome 24 x 7 commitment, creativity, and persistence Super smart, responsive, and insightful Provided invaluable counsel and execution support There is nobody I would rather have in my corner Gary Gauba, President, Advanced Solutions Group, CenturyLink Gary founded and successfully sold three companiesSoftline, Systech, and Cognilyticsall with AGC Partners as his advisor What Clients Say About Us 42 Strong Relationships with the Leading Strategic and Financial Buyers and Growth Equity Investors Outstanding Sector Knowledge Enables AGC to Effectively Position our Clients in the Market One of the Largest Global Technology Banking Teams Engagements Led by Partners, Not Handed Down to Junior Bankers Premier Industry Investor Conferences AGC Drives Both Big and Small Deals to Premium Valuations Why Partner With AGC </p>
