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About Interesting Posts
Interesting documents about a variety of subjects from around the world. Posted on
edocr
.
manage
payment
software
B2B payment
Company
platform
acquired
automate
solution
portfolio Company
account
Sector Overview: Office of the CFO Q4 2023 Market Overview CONFIDENTIAL | 3 B2B $125T Modern finance, accounting and payment solutions are growing quickly and serve a large addressable market Watershed Moment for Office of the CFO ▪ The responsibilities of the CFO have evolved materially in recent years, expanding beyond traditional core audit and tax functions to include business planning, risk management & compliance, procurement & sourcing, and investor relations ▪ Organizations are increasingly looking to the Office of the CFO to deliver meaningful, actionable insights that closely monitor financial performance, drive growth and fuel innovation ▪ The Office of the CFO software market is highly fragmented and constantly evolving; we continue to see significant investment and innovation across the space, with many of the large strategics and private-equity platforms executing M&A to further bolster their capabilities Market Backdrop 75% Reduction in time spent when automation is introduced in the AR/AP and financial close processes 8-12 Average number of days required for CFOs to process an invoice 80% Of businesses have invested resources into B2B payment technology over the past two years Sources: IDC, Gartner, Goldman Sachs Investment Research, SCA Research Key Stats Massive Market Opportunity Market Leaders Bullish on Growth Prospects B2B payments represents a $100+ trillion market today … B2C $30T B2B Payments Mix … with 60% of payments still made via manual paper checks 60% Checks 40% Other “This is the Golden Age of accounting software and B2B payments with a huge market that’s ready for adoption” René Lacerte John Morris “In an increasingly digital world, there continues to be ever- strengthening demand for technology-first B2B automation and payment solutions, as enterprise customers aim to reduce costs and streamline back-office processes” CONFIDENTIAL | 4 The Office of the CFO represents an underserved opportunity with rapidly increasing digitization and innovation • Nearly 75% of CFOs still aggregate spending data, forecasts and scenarios using traditional offline tools • Additionally, approximately 60% of B2B payments are still made via paper check, creating opportunity for cost savings through investment into the automation of both (i) invoice workflows and (ii) payment processing • Modern software solutions empower finance teams to quickly transition from traditional, paper invoices and manual processing to streamlined, automated processing and electronic payments Automation & Data Driven Solutions • CFOs are seeking platforms that can integrate payments and sync operating data across departments in order to provide comprehensive enterprise-wide insights • Holistic platforms can be tailored to meet enterprise needs through pre-configured cloud ERP, RPA infrastructure, and data analytical tools • Accounting and finance platforms continue to develop deeper integrations between AP and AR vendors to enable a seamless payments experience and reduce overall vendor fatigue across the enterprise Holistic Platforms & Integrated Approach • B2B payments represents a daily business need and requires real-time communication and coordination among employees, customers, suppliers, vendors, and other stakeholders • Digitization of payments remains a powerful trend, with software-led payment channels growing ~2x overall payments industry growth rates • Over 60% of SMBs routinely receive late payment for invoices, creating significant opportunity to furth digitize payment journey Evolving Supply Chain and Payments Infrastructure • Timely and efficient cash flow and expense management is a core responsibility of the CFO • ~70% of B2B companies report working toward automating AP, AR, treasury and expense management processes to better manage cash flow and accelerate manual processes • Cutting-edge solutions are being deployed to help CFOs to better manage working capital and provide analytics for collection management Heightened Focus on Cash Flow Management • The modern office of the CFO has evolved from a traditional back-office function into a meaningful partner and profit center within the organization • Nearly 70% of CFOs believe their role has become more strategic in recent years, with many now viewing their position as a “business partner” responsible for driving growth and profitability • CFOs continue to invest into technology and analytics that allow them to better analyze financial data, streamline existing workflows, surface unique insights, and identify opportunities for growth Evolution from Cost Center to Profit Center Sector Observations & Key Trends Sources: IDC, Gartner, SCA Research CONFIDENTIAL | 5 Office of the CFO Technologies Legacy, On-Premise Technology Legacy systems developed by iconic database providers, typically requiring significant upfront customization and on-premise hosting Best-of-Breed Point Solutions Best-of-breed offerings built to capitalize on verticalization opportunity and serve range of SMBs to enterprise clients Integrated, Cloud-Based Platforms Digital, end-to-end solutions designed to address major pain points and consolidate increasingly siloed information across various ERP and internal data systems Overview of Technology Solutions Today’s accounting and finance departments utilize a broad mix of legacy technology, cloud-based platforms and robust point solutions to glean insights and drive efficiencies with within their organizations CONFIDENTIAL | 6 B2B Payments Payroll / Benefits Platforms ERP / Accounting Platforms Tax Management Treasury Management Expense Management SMB Accounting Corporate Performance Management Broad software suites that include solutions to digitize and automate the entire lifecycle of corporate performance management Budgeting, planning, integrated financial planning, performance reporting, forecasting and modelling Financial consolidation and reporting, reconciliation management, close management, subscription management Full-stack platforms delivering integrated suite of payment functionality including accounts payable/receivable automation workflows, supply chain financing, as well as payment coordination and execution Legacy and vertical specific platforms designed to manage all day-to-day business activities of CFOs, including accounting, procurement, project management, risk management and compliance, and supply chain Solutions that facilitate payroll and compensation management, time & attendance management, payroll reporting and integrations, and HR/benefits management Case specific financial applications used for automating accounts payable and invoice processing, including OCR, invoice matching, and customer approval workflows AR and cash collections management solutions, including automated invoice generation and distribution, dispute management, deduction management, reporting Solutions that enable enterprises to address their various tax compliance (sales, VAT, payroll, property, etc.) needs within a consolidated platform Cash flow management and forecasting, financing and risk management, liquidity management, reporting and documentation Manages P&L reporting, bank account reconciliation, inventory management, expense tracking, and invoice generation Receipt management, travel management, corporate card issuance and management, mobile tracking, reporting and approval workflows Procure-to-pay software, spend and procurement analytics, supplier relationship management (SRM), and e- procurement Full-Suite Budgeting & Planning Financial Close & Sub. Mgmt. Integrated Payments AP Automation AR Automation Sourcing / Procurement How We View the Market Opportunity Source: SCA Research CONFIDENTIAL | 7 B2B Payments Payroll / Benefits Platforms ERP / Accounting Platforms Tax Management Treasury Management Expense Management SMB Accounting Corporate Performance Management Full-Suite Budgeting & Planning Financial Close & Sub. Mgmt. Integrated Payments AP Automation AR Automation Sourcing / Procurement Source: SCA Research Office of the CFO Market Map CONFIDENTIAL | 8 Financial Backing NYSE: AVID NYSE: BILL NYSE: FLT NYSE: GPN PAR: QDT NASDAQ: RPAY NYSE: WEX HQ San Jose, CA Charlotte, NC Lawrenceville, NJ San Mateo, CA Atlanta, GA Atlanta, GA Morrisville, NC Bagneux, France Atlanta, GA Portland, ME No. of Acquisitions 9 4 11 22 59 44 11 24 14 26 Notable M&A Transactions 2022 | Und. 2022 | Und. 2022 | Und. 2021 | $49M 2022 | $14M 2022 | $4.0B 2022 | Und. 2021 | $90M 2021 | $115M 2023 | $250 2021 | Und. 2021 | $675M 2021 | $56M 2020 | $1.5B 2021 | $38M 2021 | $500M 2017 | $218M 2020 | $20M 2021 | $506M 2020 | $1.3B 2021 | Und. 2021 | $2.3B 2019 | Und. 2020 | $122M 2019 | $208M 2021 | $933M 2017 | Und. 2019 | $100M 2020 | $93M 2020 | $575M 2019 | Und. — 2018 | Und. 2019 | $111M 2017 | $104M 2019 | $24.5B. 2013 | $43M 2015 | $50M 2020 | $50M 2019 | $339 B2B Payments Platforms The B2B payments sector continues to experience record levels of consolidation activity as fast-growing platforms seek to add scale, new clients and geographies, as well as capabilities to differentiate themselves in the market Acquisition Strategy Breakdown: B2B Payments Source: Pitchbook, SCA Research Note: “Und.” denotes undisclosed CONFIDENTIAL | 9 Date Target Buyer Target Description EV ($m) EV / Revenue Nov-23 Mobile and online payment software for contractors $250 Und. Nov-23 Capital markets communication software $95,652 17.8x Sep-23 Analytics and data for the mortgage, real estate, and capital markets industries $13,100 7.7x Jul-23 EDI, e-invoicing, and digital supply chain software $75 4.3x May-23 Electronic invoice management for Microsoft Dynamics $229 9.1x Feb-23 B2B payment processing software $1,300 4.6x Feb-23 Credit card program management software $275 Und. Jan-23 Tax automation software designed for accounting firms $500 8.3x Dec-22 Tax preparation and filing software $720 3.0x Dec-22 Accounts receivable and B2B payments platform $1,700 8.2x Dec-22 Cloud-based platform for business spend management $8,000 9.8x Oct-22 Automated tax compliance software $8,400 10.6x Aug-22 Payment processing software $4,000 7.4x Jul-22 Purchase-to-pay and e-invoicing software Und. 6.3x Jul-22 Intelligent automation for digital workflow transformation $1,840 Und. Jun-22 Cloud-based financial modeling and planning software $10,700 16.5x May-22 Accounts payable and integrated payments software $2,600 5.1x Mar-22 Process automation software to streamline operational efficiency $1,477 5.7x Oct-21 Automation software designed to automate and optimize invoices $500 Und. Mean 8.3x Median 7.7x Recent M&A Activity Source: Pitchbook, SCA Research Note: “Und.” denotes undisclosed CONFIDENTIAL | 10 Source: Pitchbook, as of November 16, 2023 Note: Multiples greater than 100x and less than 0x denoted as “-” Numbers in millions, except per share price Public Company Valuations Trading Statistics Trading Multiples Operating Metrics Share Enterprise EV / Revenue EV / EBITDA EV / FCF Revenue Growth EBITDA Margin % Rule of 40 Company Price % 52w Value LTM NTM LTM NTM LTM NTM LTM NTM LTM NTM LTM NTM Intuit $555.79 98% $158,792 11.1x 9.9x 40.2x 24.7x 36.2x 27.7x 13% 14% 27% 41% 40% 56% Fiserv 125.24 96% 98,681 5.2x 5.1x 12.7x 11.2x 18.6x 22.1x 8% 1% 41% 45% 50% 47% PayPal 58.26 65% 61,911 2.1x 1.9x 10.7x 7.7x 14.7x 9.7x 8% 8% 20% 25% 28% 33% FIS 54.46 69% 50,464 4.6x 5.0x - 12.1x 13.5x 17.2x 35% -31% -87% 41% -52% 10% Square 56.30 63% 30,788 1.5x 1.3x - 12.8x 32.8x 14.3x 23% 14% 1% 9% 23% 23% Global Payments 114.46 88% 45,940 4.8x 4.9x 13.7x 9.7x 17.3x 16.0x 6% -4% 35% 50% 42% 47% Fleetcor 235.86 85% 22,919 6.2x 5.5x 11.7x 10.1x 14.5x 16.6x 11% 9% 54% 55% 65% 64% Paycom 177.11 47% 9,764 6.0x 5.2x 16.7x 12.6x 24.3x 27.8x 26% 12% 36% 41% 62% 53% Paylocity 154.13 66% 8,423 6.8x 6.0x 32.4x 17.7x 26.1x 30.5x 34% 18% 21% 34% 55% 52% SAGE 11.91 91% 13,247 5.2x 4.5x 29.8x 18.3x 35.9x 23.2x 14% 15% 20% 24% 34% 39% Xero 66.22 76% 9,900 10.5x 9.7x - 35.0x 66.6x 64.5x 23% 15% 1% 29% 24% 44% WEX 178.37 87% 7,647 3.1x 2.8x 9.5x 6.2x 8.9x 9.6x 12% 7% 32% 44% 45% 52% Bill.com 59.64 43% 5,632 5.0x 4.6x - 48.9x 25.5x 25.6x 50% 12% -15% 12% 36% 24% Workiva 94.64 82% 5,123 8.4x 7.0x - - - 67.2x 18% 16% -15% 5% 3% 21% Paycor 20.72 69% 3,641 6.3x 5.6x 71.7x 17.8x 32.2x 94.9x 27% 17% 9% 31% 36% 48% Blackline 56.08 72% 3,712 6.5x 5.6x 68.8x 23.6x 44.5x 34.4x 15% 12% 9% 22% 25% 34% ACI Worldwide 26.07 89% 3,795 2.7x 2.4x 11.7x 9.0x 15.0x 11.0x -1% 6% 23% 27% 22% 33% Paysafe 13.31 55% 3,137 2.0x 1.8x 7.8x 6.2x 11.0x 15.5x 6% 8% 26% 29% 31% 37% Flywire 22.54 63% 2,099 5.6x 4.3x - 33.8x 54.3x - 40% 22% 0% 12% 41% 34% Vertex 26.23 93% 4,024 7.3x 6.3x 78.0x 33.0x - 70.6x 16% 13% 9% 19% 26% 32% E2Open 3.34 46% 2,161 3.3x 3.3x - 10.1x 13.5x - 8% -4% -89% 34% -81% 30% PROS 36.15 93% 1,837 6.2x 5.5x - - - - 10% 10% -17% 5% -7% 15% Zuora 8.28 68% 1,019 2.5x 2.1x - 18.0x - - 12% 12% -38% 12% -26% 23% AvidXchange 9.77 77% 1,693 4.7x 3.8x - 35.0x - 49.4x 21% 18% -10% 9% 11% 27% RePay 7.19 69% 1,002 3.4x 3.1x 16.6x 7.1x 10.8x 14.4x 9% 4% 21% 44% 30% 48% Paymentus 16.67 97% 1,910 3.3x 2.6x 48.6x 29.2x 81.3x 43.2x 23% 16% 7% 9% 30% 25% Expensify 2.19 19% 160 1.0x 1.1x - 11.4x 18.7x 77.7x -4% -4% -14% 10% -19% 5% Mean 5.0x 4.5x 30.0x 18.4x 28.0x 34.0x 17% 9% 4% 27% 21% 35% Median 5.0x 4.6x 16.7x 12.8x 21.5x 25.6x 14% 12% 9% 27% 30% 34% Firm Overview What We Do Our Target Deal Size Industry Sweet Spot Software Capital is a leading independent investment bank focused on technology companies in the lower middle market Who We Work With We work exclusively with founders and entrepreneurs, avoiding the inherent conflicts of interest with larger investment banks We focus on software and internet companies with innovative business models Our typical transaction value is between $20 - $200 million • Growth equity • Secondary capital • Acquisition financing Growth Capital Mergers & Acquisitions • Buyouts / Full sale M&A • Majority recapitalizations • Add-on acquisitions • Strategic and operational guidance for growth Corporate Strategy Software Capital Overview 100% Software & SaaS Advisory Focus Reputation for delivering extraordinary outcomes Mission driven culture with unparalleled commitment Established relationships and active dialogue with key investors Unique, data-driven strategic insight Singular Focus and Vast Experience Leads to Best-in-Class Results for Our Clients CONFIDENTIAL | 12 CONFIDENTIAL | 13 Software Areas of Focus Dedicated Senior Team With Extensive Deal Experience David McMahon Managing Director Michael McMahon Managing Director Mergers & Acquisitions Equity Financing Investment Banking Institutional Investing Investment Banking Institutional Investing has been acquired by has been acquired by a portfolio company of has been acquired by a portfolio company of a portfolio company of has been acquired by has been acquired by a portfolio company of IQ Queensborough Integra Systems has been acquired by has been acquired by has been acquired by has been acquired by has been acquired by a portfolio company of received growth financing from received growth financing from received growth financing from received growth financing from received growth financing from Accounting, Finance & Payments Analytics & Data Management Content & Collaboration Mgmt Cyber & System Security DevOps & IT Management Human Capital Mgmt & Payroll Sales, Marketing, Support Supply Chain & Logistics Vertical & Other Software CONFIDENTIAL | 14 Sell-side Advisor Sell-side Advisor Sell-side Advisor Sell-side Advisor Sell-side Advisor Sell-side Advisor • SafetySkills is a cloud-based EHS & learning management software with a robust library of digital courses and compliance tracking • Acquired by HSI, a leading EHS, training and compliance software provider • Positioned SafetySkills library of OSHA, EHS, and HR content and software as an integrated platform for safety and compliance • Acquisition strengthens HSI’s market leadership across EHS and compliance offerings • OnPay Solutions is a cloud- based accounts payable, invoice automation, and processing software • Acquired by Medius, leader in accounts payable automation • Positioned OnPay as an integrated payment processor with market leading source-to-pay platform • Strategic acquisition strengthens Medius’s US market footprint and network of 40 different banking integrations • Earth Class Mail is online platform for managing postal mail virtually • Acquired by LegalZoom, the leading provider of small business formation solutions • Marquee deal provides LegalZoom an entry point into the large and highly fragmented virtual address category • Accelerates product roadmap and enables LegalZoom to expand wallet share of existing customer base • Pinpoint is the leading provider of expiration date management solutions for the food retail industry • Acquired by Upshop, a leader in SaaS-based total store operations for retailers • Strategic acquisition for Upshop’s software portfolio to complement existing item management solution (FreshIQ) • Combination will help Upshop realize its vision of digitizing store operations across the grocery industry • Inspyrus is a fintech company that specializes in transforming accounts payable to profits • Acquired by MineralTree, portfolio company of Great Hill Partners • Positioned Insyprus as mission critical software provider with highly sticky enterprise-level customers • Deal provides MineralTree a strong back-end software that allows for real-time connectivity to customer’s financial systems • HomeCEU is a leader in continuing education for healthcare professionals with a focus on therapy • Acquired by Colibri Group which provides online learning solutions for licensing, continuing education and professional development • Highly strategic deal providing Colibri with complementary professional user base • Deal enhances Colibri’s healthcare offering with premiere continuing education and training content has been acquired by a portfolio company of GRC / Training has been acquired by a portfolio company of Payments & Fintech has been acquired by Business Mgmt has been acquired by a portfolio company of Office of the CFO has been acquired by a portfolio company of GRC / Training Recently Completed Transactions Vertical Software a portfolio company of has been acquired by CONFIDENTIAL | 15 Committed Resources Pay a one-time, upfront retainer and get a team that is 100% focused on your transaction for the life of the relationship Aligned Incentives Our success fees scale based on getting you a better valuation Pay When You Get Paid 95%+ of our compensation comes when your deal is closed successfully Our engagements are simple to understand and designed to completely align our interests Working with Software Capital Advisors CONFIDENTIAL | 16 has been acquired by a portfolio company of Case Study: Inspyrus Acquired by MineralTree (Great Hill Partners) Transaction Profile Advised Inspyrus on its sale to Mineral Tree, via its financial sponsor, Great Hill Partners • Transaction: Buyout • Consideration: Not disclosed • Sector: Office of the CFO • Sub-Sector: AP automation Transaction Notes & Rationale • MineralTree had followed Inspyrus closely for years and believed the Company was well-aligned to the its stated mission of digitizing the invoice journey • Inspyrus adds robust product features to MineralTree’s expanding platform, including advanced PO matching, Artificial Intelligence-enabled predictive coding, and real-time invoice capture • The combination of capabilities from Inspyrus and MineralTree accelerates the digitization of Accounts Payable and B2B payments processing across more companies globally • Twelve months after our transaction closed, the newly combined entity was acquired by Global Payments for $500+ million, resulting in a significant ‘second bite of the apple’ for the founder who opted to roll some of his proceeds Inspyrus Profile • Based in Redwood City, CA, Inspyrus is a leading provider of SaaS-based platform for automating and monetizing accounts payable to more than 40 enterprise customers across various verticals, ERP systems and geographies • The Company’s platform provides out-of-the-box, real-time integration with the world’s leading ERP systems, including Oracle’s E-Business, Oracle’s JD Edwards, Oracle ERP Cloud and SAP • Customers process over 1 million invoices per month across 30+ countries and 18+ languages using Inspyrus software • Large recurring revenue base driven by SaaS, Perpetual License Update, and Managed Services business model MineralTree / Great Hill Partners Profile • MineralTree is a leading provider of Accounts Payable (AP) and Payment Automation solutions for finance professionals at middle market enterprises • MineralTree’s cutting-edge solutions provide customers with unparalleled visibility and significant cost savings in an affordable, integrated and secure platform • Great Hill Partners is a leading private equity firm managing over $8 billion in capital commitments; the firm primarily invests in middle-market technology companies and has an extensive track record of building long-term partnerships with entrepreneurs and providing flexible resources to help companies scale CONFIDENTIAL | 17 Case Study: OnPay Solutions acquired by Medius (Marlin Equity) Transaction Profile Advised OnPay Solutions on its sale to Medius, via its financial sponsor, Marlin Equity Partners • Transaction: Buyout • Consideration: Not disclosed • Sector: Office of the CFO • Sub-Sector: B2B Payments Transaction Notes & Rationale • Marquee transaction enables Medius to integrate payment processing directly into its source-to-pay platform, enhancing its customers' operational efficiency and strengthening their anomaly, fraud and risk detection capabilities • OnPay Solutions' technology strengthens Medius's ability to automate payment processing through its own platform as well as existing third-party payment partners to simplify and streamline the payments workflow • The deal also expands Medius's footprint in the domestic US market with the addition of OnPay Solutions' team • Successful outcome resulting from highly tailored and competitive process as well as significant investor interest across the rapidly evolving B2B payments category OnPay Solutions Profile • Based in Jacksonville, FL, OnPay Solutions is a leading provider of SaaS-based AP automation solutions • The Company’s platform helps customers automate their invoice payments using 'no touch' virtual card, ACH, check and wire payments • OnPay’s integrated source-to-pay suite includes a network of 360,000 vendors and 40 different banking integrations • Highly attractive recurring revenue profile with sticky customer base of more than 400 customers ranging from mid-sized companies to some of the most established enterprises and institutions in the United States Medius / Marlin Equity Profile • Medius is a cloud-based accounts payable automation software created to streamline and efficiently manage the invoice process • The Company’s platform is designed to reduce clients manual work, accelerate invoice processing and unlock greater financial control and visibility • Marlin Equity Partners is a premier technology-focused private equity firm managing over $8.5 billion in capital commitments; the firm primarily invests in middle-market companies and has an extensive track record of executing successful M&A and organic growth strategies has been acquired by a portfolio company of CONFIDENTIAL | 18 Case Study: Pinpoint Software Acquired by Upshop (Prairie Capital) Transaction Profile PinPoint Software was acquired by Upshop, via its financial sponsor, Prairie Capital • Transaction: Buyout • Consideration: Not disclosed • Sector: Retail Technology • Sub-Sector: Grocery Technology Transaction Notes & Rationale • The combination of capabilities from Pinpoint and Upshop will help accelerate the digitization of total store operations across the grocery industry • Pinpoint adds a valuable technology platform and experienced customer support unit to Upshop that will result in additional solutions to customers that drive food waste reduction and increased profit margins • In an industry where waste is a top concern, automated proactive expiration date management enables Upshop to increase the sales and sustainability of the entire retail food shopping experience for their customers through quantification, analysis, and action • This was Upshop’s second acquisition following their purchase of ShopperKit in 2021 PinPoint Software Profile • Pinpoint Software provides an inventory and task management platform that helps drive operational efficiency and execution for grocers, retailers, and healthcare institutions • The company’s flagship product, Date Check Pro, is an expiration date management software that allows grocery retailers to facilitate in-store audits, identify expiring products, and reduce shrink • Pinpoint helps hundreds of supermarkets eliminate their expired shrink and provide better products and experiences for their shoppers • Pinpoint was founded in 2011 and headquartered in Madison, WI Upshop / Prairie Capital Profile • Upshop provides total store operations software to more than 150+ grocery and convenience stores across more than 200,000+ locations • Upshop simplifies and streamlines store operations by connecting fresh, center, eCommerce, and DSD solutions • Prairie Capital is a Chicago-based private equity firm targeting investments of $25 million to $45 million in growing companies across the business & consumer services, education, healthcare, and industrial technology verticals. • Since 1997, Prairie Capital has raised over $5 billion of commitments and invested in nearly 150 businesses. has been acquired by a portfolio company of Mike McMahon Managing Director mike@softwarecap.com (714) 642-9975 David McMahon Managing Director david@softwarecap.com (714) 642-9976 DISCLAIMER: The information contained herein was prepared by representatives of Software Capital LLC (“SCA”). 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