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3Q14

Roadmap to Valuation
Commentary and analysis provided by MergerTech research team, including breakout by sector (Hardware,
Healthcare IT, Internet/Digital Media, IT Services and Software)

October20,2014

3Q14: Roadmap to Valuation

3Q deal flow remained robust as the quarter marked the most technology M&A announcements since 4Q13. Year to date, over $190B of transactions have been
announced (+15% year-over-year [Y/Y]) over the first three quarters of 2013, putting 2014 on course to be the most active M&A year since the financial tumult of
2008. With over 1,600 total M&A transactions across the five sectors we actively monitor, we saw a 25% increase in quarter-over-quarter (Q/Q) deal activity.
Amongst transactions with disclosed deal values, average deal size rose 8% Q/Q following a 15% decline in the prior quarter. Average EV (enterprise
value)/revenues per transaction rebounded off of last quarters decline to 3.4x, coming in at 4.7x. Most notably, deal volume within the Internet
Software/Services sector rose 36% Q/Q and marked a five-year peak (576 deals in 3Q), highlighted by Zillows acquisition of Trulia (15x EV/revs) along with
Alliance Datas purchase of Conversant (4x EV/revs) in the advertising technology space.
Heading into the final quarter of 2014, we anticipate M&A activity to remain at record levels and eclipse 3Qs levels as both buyers and sellers race to get deals
closed before calendar year-end. Additionally, recent volatility in the markets may spur sellers to reconsider their long-term business plans and reassess a sale
before they lose any of the leverage they have built over the last few years.
Some of our 3Q observations about these sectors:
Sector
Hardware
Healthcare IT
Internet Software/Svcs.
IT Services
Software

Announced
Deals
375
56
576
250
347

Closed Deal Value


$14.6B
$3.2B
$19.4B
$4.9B
$29.6B

EV/ Revs
4.3x
2.1x
5.4x
5.0x
4.0x

EV /EBITDA
21.0x
11.9x
49.2x
10.1x
24.9x

MergerTech has continued to represent companies benefitting from this robust deal environment by closing three transactions in the quarter. Following on our
Q2 work in FinTech (Financial Technology), Enterprise Cloud Computing, Geospatial Data Discovery and Supply Chain Management, we have closed transactions
for clients providing Developer Services, Financial Data Analytics and Infrastructure Services for Government.
We believe this comprehensive report covering M&A market conditions by sector provides further insight into deal flow, M&A activity, industry leaders, as well as
an evaluation of quarterly market valuations and individual transactions. This report is published on quarterly on MergerTechs website as a resource for business
owners wanting to stay informed about the environment for technology M&A. If you have specific questions or would like to schedule an introductory call with our
team to review MergerTechs services, we can be reached at 925.215.2770 or inquiries@mergertech.com.

3Q14: Roadmap to Valuation


Facts & Figures

Total # of Tech M&A Transactions,:


Total YTD # of Tech M&A Transactions:
Total Tech M&A Transaction Value ($M):
Total YTD Tech M&A Transaction Value ($M):

3Q14
510
1,410
$67,649
$190,031

Q/Q
11.6%

$132.6
4.7x
23.3x

8%
38%
34%

3%
29%
68%

89
250
22
137
12

-7%
36%
29%
7%
-14%

-13%
18%
38%
-12%
50%

17
12
58
423

42%
-8%
-13%
16%

42%
33%
16%
0%

20.5%

Y/Y
3.4%
2.8%
6.6%
15.0%

Transactions included only with transaction value disclosed


Includes all announced/closed transactions

Valuation Summary
Average Deal Value ($M)
Average TEV/Revenue
Average TEV/EBITDA
TEV: Total Enterprise Value

Transactions by Region
Europe
Asia / Pacific
Africa / Middle East
United States and Canada
Latin America and Caribbean

Average Exit Multiples


Healthcare IT
Internet SW & Svcs
Hardware
IT Services
Software

EV/Revenues
2.1x
5.4x
4.3x
5.0x
4.0x

EV/EBITDA
11.9x
49.2x
21.0x
10.2x
24.9x

Avg Deal Value ($M)


$185.1
$130.0
$86.9
$64.8
$226.1

Active Buyers, by Total Transaction Size


SAP America, Inc.
Vista Equity Partners
Zillow, Inc.
Infineon Technologies AG
Microsoft Corporation
Alliance Data Systems Corporation
Thoma Bravo, LLC
Micro Focus International plc
Intel Corporation
Shanghai Pudong Science and Technology Investment Co., Ltd.

Deals by Transaction Range


Greater than $1 billion
$500 - $999.9M
$100 - $499.9M
Less than $100M

Source: CapitalIQ

10/20/14

MergerTech: M&A by Technology Entrepreneurs for Technology Entrepreneurs


5858 Horton Street, Suite 101, Emeryville, CA 94608; phone 925.215.2770

inquiries@mergertech.com

3Q14: Roadmap to Valuation

Sector Overview
Hardware
Healthcare IT
Internet Software & Services
IT Services
Software

Revenue
Growth %
8.3%
8.6%
30.8%
7.9%
7.3%

GM %
41.6%
53.9%
71.2%
37.5%
74.6%

EBITDA %
22.7%
14.7%
26.9%
22.9%
20.7%

Debt / Cash %
66.4%
9.0%
42.7%
146.1%
51.3%

EV / Revs
2.4x
3.0x
8.1x
3.0x
4.3x

EV / EBITDA
9.1x
12.1x
23.9x
11.1x
12.9x

Trailing twelve months


2014 consensus estimates
Note: company sector assignment as determined by CapitalIQ, median sector results displayed

Overall Composite Performance, 1-year


40.0%
35.0%
30.0%
25.0%
20.0%
15.0%
10.0%
5.0%
0.0%
5.0%
10.0%

VRCompositeoverall(Equal)IndexValue

NASDAQCompositeIndex(^COMP)IndexValue

Source: CapitalIQ

10/20/14

MergerTech: M&A by Technology Entrepreneurs for Technology Entrepreneurs


5858 Horton Street, Suite 101, Emeryville, CA 94608; phone 925.215.2770

inquiries@mergertech.com

3Q14: Roadmap to Valuation

Healthcare IT:
Top 40 Public Companies, by Market Capitalization
EV / Revenues
Company
Cerner Corporation
IMS Health Holdings, Inc.
M3, Inc.
athenahealth, Inc.
Veeva Systems Inc.
Allscripts Healthcare Solutions, Inc.
Medidata Solutions, Inc.
HMS Holdings Corp.
Shanghai Kingstar Winning Software Co., Ltd.
MedAssets, Inc.
CompuGroup Medical AG
Castlight Health, Inc.
Omnicell, Inc.
Advanced Computer Software Group plc
Quality Systems Inc.
EMIS Group PLC
Healthstream Inc.
Computer Programs & Systems Inc.
Agfa-Gevaert N.V.
Cegedim SA
Pharmagest Interactive Societe Anonyme
Imprivata, Inc.
Nexus AG
Craneware plc
Merge Healthcare Incorporated
Software Service, Inc.
Vocera Communications, Inc.
Raysearch Laboratories AB
Infinitt Healthcare Co., Ltd.
ND Software co., Ltd.
iCAD, Inc.
UBCare Co., Ltd.
Simulations Plus, Inc.
Streamline Health Solutions, Inc.
BIT Computer Co. Ltd.
PRO Medicus Ltd.
MEDIAN Technologies S.A.
Synektik Splka Akcyjna
UMS United Medical Systems International AG
CE Holdings Co., Ltd.

Pricing data as of:


Total cash includes cash & ST investments
Source: CapitalIQ

10/20/14

Ticker
NasdaqGS:CERN
NYSE:IMS
TSE:2413
NasdaqGS:ATHN
NYSE:VEEV
NasdaqGS:MDRX
NasdaqGS:MDSO
NasdaqGS:HMSY
SZSE:300253
NasdaqGS:MDAS
DB:COP
NYSE:CSLT
NasdaqGS:OMCL
AIM:ASW
NasdaqGS:QSII
AIM:EMIS
NasdaqGS:HSTM
NasdaqGS:CPSI
ENXTBR:AGFB
ENXTPA:CGM
ENXTPA:PHA
NYSE:IMPR
XTRA:NXU
AIM:CRW
NasdaqGS:MRGE
JASDAQ:3733
NYSE:VCRA
OM:RAY B
KOSDAQ:A071200
TSE:3794
NasdaqCM:ICAD
KOSDAQ:A032620
NasdaqCM:SLP
NasdaqCM:STRM
KOSDAQ:A032850
ASX:PME
ENXTPA:ALMDT
WSE:SNT
XTRA:UMS
TSE:4320

Market Cap Enterprise Value


($M)
($M)
$20,317
$19,483
8,696
12,415
5,188
5,063
4,999
5,107
3,600
3,250
2,417
2,937
2,393
2,410
1,654
1,756
1,524
1,461
1,245
2,035
1,192
1,593
1,160
1,001
980
854
898
977
829
713
758
765
662
550
644
620
442
723
439
1,031
393
336
369
284
228
195
224
193
211
418
209
183
205
85
198
194
181
176
163
99
152
130
114
87
114
106
85
95
83
84
81
67
63
62
61
59
60
71
54
39

Current Price
as % of 52 wk
94%
92%
93%
64%
57%
68%
65%
71%
64%
78%
89%
31%
90%
90%
57%
95%
60%
80%
74%
86%
88%
91%
83%
81%
77%
77%
42%
91%
84%
85%
70%
82%
98%
54%
93%
93%
90%
84%
79%
93%

2013

2014E

EV / EBITDA
2015E

2013

2015E

6.5x
4.7x
15.9x
8.0x
13.8x
2.1x
7.9x
3.6x
28.6x
3.0x
2.6x
68.3x
2.2x
3.0x
1.6x
4.5x
4.2x
3.3x
0.2x
0.9x
2.1x
3.2x
2.0x
4.6x
1.8x
1.5x
1.0x
6.4x
2.2x
0.9x
3.5x
1.1x
9.0x
2.7x
2.1x
6.4x
56.2x
2.3x
1.3x
0.5x

5.8x
4.6x
NM
6.8x
10.7x
2.1x
7.0x
4.0x
14.6x
2.9x
2.4x
23.3x
2.0x
2.8x
1.5x
3.5x
3.2x
2.9x
0.2x
0.9x
2.3x
3.1x
1.9x
4.2x
1.9x
NM
0.9x
5.6x
NM
NM
3.0x
NM
8.2x
3.0x
NM
NM
NM
2.2x
1.4x
NM

5.0x
4.3x
9.4x
5.5x
8.6x
2.0x
5.8x
3.4x
11.9x
2.8x
2.3x
12.7x
1.8x
2.6x
1.4x
3.3x
2.7x
2.8x
0.2x
0.9x
2.2x
2.5x
1.8x
3.8x
1.9x
NM
0.8x
4.7x
NM
NM
2.2x
NM
5.7x
2.5x
NM
4.0x
NM
2.1x
1.3x
NM

26.2x
17.6x
43.4x
93.2x
79.9x
297.5x
75.6x
13.7x
125.2x
9.8x
15.9x
NM
16.3x
22.0x
9.8x
13.8x
24.0x
11.6x
2.0x
6.7x
10.9x
NM
17.8x
16.6x
16.2x
6.2x
NM
NM
13.8x
3.9x
198.9x
52.1x
24.7x
NM
70.0x
NM
NM
14.3x
3.7x
4.9x

16.8x
14.1x
NM
38.0x
42.3x
13.5x
29.9x
15.9x
59.2x
8.7x
11.9x
NM
10.5x
12.1x
10.9x
11.1x
20.8x
10.4x
2.6x
5.2x
9.3x
NM
9.4x
14.1x
10.1x
NM
NM
13.4x
NM
NM
23.4x
NM
NM
25.5x
NM
NM
NM
11.1x
3.3x
NM

14.4x
12.7x
26.8x
30.9x
35.4x
11.0x
24.3x
11.7x
45.6x
8.2x
10.1x
NM
9.1x
11.4x
8.3x
10.2x
17.0x
9.7x
2.2x
5.0x
8.9x
NM
8.0x
12.9x
8.9x
NM
NM
10.8x
NM
NM
12.5x
NM
NM
16.2x
NM
7.8x
NM
8.9x
3.2x
NM

Revenue
Rev Growth %
(TTM, $M)
(TTM)
$3,075
13.4
2,614
0.0
404
43.1
672
36.0
260
54.9
1,373
(2.2)
305
24.2
467
(4.5)
60
25.8
683
1.8
678
8.4
28
0.0
407
14.4
340
68.0
453
0.3
213
36.9
152
30.9
203
3.7
3,698
(10.4)
1,226
(0.9)
154
(0.2)
82
0.0
112
13.1
43
2.7
216
(12.3)
133
44.5
102
1.8
35
22.0
67
0.0
128
21.9
36
13.2
67
0.0
11
8.8
27
(3.8)
35
3.6
13
27.9
2
45.1
28
24.2
53
(3.5)
74
10.6

GM %
EBITDA % Rev Growth % Total Cash Total Debt
(LTM)
(LTM)
(2-yr fwd)
(MRQ, $M) (MRQ, $M)
84.8
26.2
15.2
$989
$155
53.4
23.8
0.0
266
3,985
65.4
34.8
0.0
144
1
59.4
9.1
24.6
109
217
61.6
20.4
34.3
350
0
46.0
2.1
4.5
39
559
74.6
8.2
22.5
218
235
34.7
23.6
2.0
96
198
57.6
22.4
47.1
62
0
76.9
29.6
4.0
6
796
36.4
16.2
8.5
21
462
12.4
(295.7)
0.0
160
0
53.9
14.7
11.6
126
0
50.2
14.6
6.6
42
124
54.0
11.3
7.7
116
0
47.7
30.3
16.9
20
20
56.5
16.3
23.6
112
0
47.1
27.9
4.7
24
0
30.0
9.6
(3.5)
216
457
45.4
13.2
0.6
109
751
25.9
22.2
2.6
65
2
70.6
(15.7)
0.0
86
2
30.1
11.2
9.5
35
0
95.4
28.6
11.5
33
0
59.4
13.4
(1.4)
24
231
35.4
29.5
19.4
27
0
62.1
(15.1)
0.8
121
1
96.7
(2.3)
22.9
4
0
56.2
6.8
0.0
17
11
42.2
19.8
0.0
74
3
73.0
2.2
32.3
35
13
57.4
5.6
0.0
27
0
86.6
40.6
33.8
8
0
51.4
(34.2)
15.8
5
10
22.1
9.5
0.0
9
10
98.0
19.1
0.0
14
0
NM
0.0
0.0
0
0
38.7
16.1
9.4
6
4
48.0
38.4
3.5
7
10
23.4
12.6
0.0
22
6

Average
Median
Median excl High & Low

$1,582
416
1,129

$1,693
484
1,268

78%
83%
79%

7.4x
3.0
6.0

4.5x
3.0
4.0

3.8x
2.7
3.6

41.2x
16.3
34.2

16.8x
12.1
15.7

13.9x
10.8
13.1

$468
142
395

14.2
8.6
13.4

55.2
53.9
54.3

6.5
14.7
13.7

10.0
4.6
9.1

$96
37
75

$207
3
113

High
Low

20,317
54

19,483
39

98%
31%

68.3
0.2

23.3
0.2

12.7
0.2

297.5
2.0

59.2
2.6

45.6
2.2

3,698
2

68.0
(12.3)

98.0
12.4

40.6
(295.7)

47.1
(3.5)

989
0

3,985
0

9/30/14

MergerTech: M&A by Technology Entrepreneurs for Technology Entrepreneurs


5858 Horton Street, Suite 101, Emeryville, CA 94608; phone 925.215.2770

inquiries@mergertech.com

2014E

3Q14: Roadmap to Valuation

Healthcare IT Composite Performance, 1-year


25.0%

20.0%

15.0%

10.0%

5.0%

0.0%

5.0%

10.0%

VRCompositeHC(Equal)IndexValue

NASDAQCompositeIndex(^COMP)IndexValue

Source: CapitalIQ

10/20/14

MergerTech: M&A by Technology Entrepreneurs for Technology Entrepreneurs


5858 Horton Street, Suite 101, Emeryville, CA 94608; phone 925.215.2770

inquiries@mergertech.com

3Q14: Roadmap to Valuation

Healthcare IT M&A Activity


Total # of M&A transactions:
Total Deal Value ($M):
Average Deal Value ($M):
Average TEV/Revenue:
Average TEV/EBITDA:

56
$3,148
$185
2.1x
11.9x

Q/Q
8%
4315%
2497%
-1%
-86%

Y/Y
19%
1134%
844%
-18%
-39%

Transactions by Region
Europe
Asia / Pacific
Africa / Middle East
United States and Canada
Latin America and Caribbean

12
5
1
36
2

Deals by Transaction Range


Greater than $1 billion
$500 - $999.9mm
$100 - $499.9mm
Less than $100mm
Undisclosed

1
0
2
14
39

$350

16x

$300

14x

$250

12x
10x

$200

8x

$150

6x

$100

4x

$50

2x
0x

$0
1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10

4Q10

1Q11

2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14

AverageDealValue($M)

3Q14

AverageTEV/Revenue

3Q14 Most Active Buyers


Cognizant Technology Solutions Corporation
MedAssets, Inc.
Premier Healthcare Solutions, Inc.
Bridgepoint Development Capital
Premier, Inc.
Varian Medical Systems, Inc.
MAQUET GmbH
Formpipe Software AB
EMIS Group PLC
TELUS Health Solutions Inc.

10/20/14

MergerTech: M&A by Technology Entrepreneurs for Technology Entrepreneurs


5858 Horton Street, Suite 101, Emeryville, CA 94608; phone 925.215.2770
inquiries@mergertech.com

3Q14: Roadmap to Valuation

Healthcare IT M&A Transactions


Total Transaction
Announced Date Target/Issuer

Buyers/Investors

9/30/2014

MedSynergies, Inc.

Optum Inc.

9/26/2014

Visiodent Socit Anonyme (ENXTPA:SDT)

CM-CIC Capital Priv SA

Implied

Implied

Cash % of

Value ($M) EV/Revenues EV/EBITDA Consideration (%)


-

$4.3

1.1x

14.4x

100.0

9/25/2014

MethodCare, Inc.

ZirMed Inc.

9/23/2014

PatientKeeper, Inc.

HCA Holdings, Inc. (NYSE:HCA)

9/23/2014

Workflow.com, LLC

Connexin Software, Inc.

9/17/2014

XD3 Solutions Inc.

TELUS Health Solutions Inc.

9/17/2014

emsCharts Inc.

Golden Hour Data Systems, Inc.

9/15/2014

CogState Limited (ASX:CGS)

$3.1

1.6x

100.0

9/15/2014

TriZetto Corporation

Cognizant Technology Solutions Corporation (NasdaqGS:CTSH)

9/11/2014

Directed Medical Systems

Clinical Outcomes Management Systems, LLC

$2,700.0

9/10/2014

Lynx Design, Inc.

Google Inc. (NasdaqGS:GOOGL)

9/8/2014

Invatec Health Pty Ltd.

BioProspect Ltd. (ASX:BPO)

$0.2

9/4/2014

farma3tec S.r.l.

CompuGroup Medical AG (DB:COP)

9/4/2014

Futura International, LLC

OPIE Software

9/3/2014

Zoommed Inc., Canadian Operations of ZRx Prescriber Technology

TELUS Health Solutions Inc.

$6.3

100.0

9/3/2014

Rise Health, Inc.

Best Doctors, Inc.

9/2/2014

VetSpace Limited

MWI Veterinary Supply, Inc. (NasdaqGS:MWIV)

9/1/2014

AZE, Ltd.

Canon Marketing Japan Inc. (TSE:8060)

8/27/2014

Racers Informatica Ltda

MV Informtica Nordeste Ltda.

8/26/2014

Strategic Healthcare Programs, LLC

Roper Industries Inc. (NYSE:ROP)

8/26/2014

Medkinetics, LLC and Payor Enrollment Services LLC

Vendor Credentialing Service LLC

8/25/2014

Four Rivers Software Systems, Inc. and Facilities Technology Group, Inc.

Accruent, LLC

8/25/2014

Aperek, Inc.

Premier, Inc. (NasdaqGS:PINC)

8/13/2014

Sg2, LLC

MedAssets, Inc. (NasdaqGS:MDAS)

8/13/2014

Nirvaco AS

Datawell Oy

8/11/2014

ELM Exchange, Inc.

Medical Professional Mutual Insurance Company

8/6/2014

Telethrive, Inc.

8/6/2014

$48.5

100.0

$142.0

100.0

$2.7

100.0

Practice Fusion, Inc.

TheraSim, Inc.

Medscape, LLC

8/5/2014

TheraDoc, Inc.

Premier Healthcare Solutions, Inc.

8/5/2014

Transpire, Inc.

Varian Medical Systems, Inc. (NYSE:VAR)

8/5/2014

Benesan Corp

8/4/2014

MD Buyline, Inc.

8/4/2014

$117.0

100.0

$20.0

100.0

Kinnser Software, Inc.

TractManager, Inc.

LabLink Systems Informtica Ltda.

Pixeon Medical Systems

7/31/2014

Innovative Holdings, Inc., Mobile Applications Assets

BioCube, Inc. (OTCPK:BICB)

$0.0

7/31/2014

Encircle Healthcare Management, LLC

Source Medical Solutions, Inc.

7/30/2014

XIFIN, Inc.

GTCR, LLC

7/29/2014

Marbella Technologies, Inc.

GetWellNetwork, Inc.

7/28/2014

Medinexus Pty Ltd

Telstra Corporation Limited (ASX:TLS)

7/24/2014

Cannigistics Agri-Solutions Corp.

Calyx Bio-Ventures Inc. (TSXV:CYX)

7/23/2014

ORLive, Inc.

7/22/2014

simplifyMD, LLC

7/17/2014

Indigo 4 Systems Limited

EMIS Group PLC (AIM:EMIS)

7/17/2014

Stratis Business Systems, Inc.

Advanced Answers On Demand, Inc.

7/15/2014

Digital Spark Ltd.

Silverlink Software Limited

7/15/2014

Cetrea A/S

7/14/2014
7/14/2014

$0.5

BroadcastMed, Inc.

Azalea Health Innovations, Inc.

$6.3

1.5x

100.0

MAQUET GmbH

$16.1

3.7x

100.0

Phlexglobal Ltd.

Bridgepoint Development Capital

$71.8

2.8x

9.3x

100.0

PatientTrak

Lumin Medical LLC

7/10/2014

Oasis Medical Solutions Limited

Allscripts Healthcare Solutions, Inc. (NasdaqGS:MDRX)

7/8/2014

Infometers Inc.

Motivation Science Inc.

7/7/2014

Coleman Technologies LLC

Edafio Technology Partners

7/3/2014

Concept Integrations (I) Pvt. Ltd.

CURA Healthcare Pvt. Ltd.

7/2/2014

AVID Design, Inc.

Myelin Health Communications, Inc.

7/1/2014

GXP Ltd.

Formpipe Software AB (OM:FPIP)

$8.3

48.1

Source: CapitalIQ

10/20/14

MergerTech: M&A by Technology Entrepreneurs for Technology Entrepreneurs


5858 Horton Street, Suite 101, Emeryville, CA 94608; phone 925.215.2770
inquiries@mergertech.com

3Q14: Roadmap to Valuation

Healthcare IT VC Activity
Includes early-stage rounds only
Date of Funding
9/30/2014
9/29/2014
9/23/2014
9/22/2014
9/16/2014
9/10/2014
9/8/2014
8/28/2014
8/25/2014
8/6/2014
8/6/2014
7/28/2014
7/18/2014
7/16/2014
7/16/2014
7/16/2014
7/16/2014
7/8/2014

Company
Consensus Orthopedics
Pristine.io
Ivantis
AVIA
DoctorC
Lybrate
Tryton Medical
Deontics
Solstice Medical
Practo
Doctor on Demand
Ludi
Sancilio and Company
Nightingale
Pretty Padded Room
ListRunner
Prodigo Solutions
Mint Solutions

Amount
8,000,000
5,400,000
25,000,000
6,000,000
410,000
1,230,000
20,000,000
700,000
2,500,000
20,000,000
21,000,000
1,000,000
20,000,000
120,000
120,000
120,000
12,500,000
6,000,000

Currency
USD
USD
USD
USD
USD
USD
USD
GBP
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD

Series
Venture
A
B
Venture
Seed
Venture
Venture
Angel
Venture
B
A
A
Venture
Seed
Seed
Seed
Venture
A

City
El Dorado Hills
Austin
Irvine
Chicago
Hyderabad
New Delhi
Durham
London
Columbia City
Bangalore
San Francisco

State
CA
TX
CA
IL
Andhra Pradesh
Delhi
NC
London
IN
Karnataka
CA

Country
USA
USA
USA
USA
IND
IND
USA
GBR
USA
IND
USA

Riviera Beach
San Francisco

FL
CA
NY
CA
PA

USA
USA
USA
USA
USA

Mountain View
Pittsburgh

Source: Mattermark, Crunchbase, AngelList

10/20/14

MergerTech: M&A by Technology Entrepreneurs for Technology Entrepreneurs


5858 Horton Street, Suite 101, Emeryville, CA 94608; phone 925.215.2770
inquiries@mergertech.com

3Q14: Roadmap to Valuation


Internet Software & Services:
Top 40 Public Companies, by Market Capitalization
EV / Revenues
Company

Market Cap Enterprise Value


($M)
($M)

Ticker

NasdaqGS:GOOGL
Google Inc.
NYSE:BABA
Alibaba Group Holding Limited
NasdaqGS:FB
Facebook, Inc.
SEHK:700
Tencent Holdings Ltd.
NasdaqGS:BIDU
Baidu, Inc.
NasdaqGS:EBAY
eBay Inc.
NasdaqGS:YHOO
Yahoo! Inc.
NYSE:TWTR
Twitter, Inc.
NYSE:LNKD
LinkedIn Corporation
KOSE:A035420
Naver Corporation
TSE:4689
Yahoo Japan Corporation
NasdaqGS:EQIX
Equinix, Inc.
NasdaqGS:NTES
NetEase, Inc.
NasdaqGS:AKAM
Akamai Technologies, Inc.
NasdaqGS:YNDX
Yandex N.V.
DB:UTDI
United Internet AG
NYSE:QIHU
Qihoo 360 Technology Co. Ltd.
NasdaqGS:VRSN
VeriSign, Inc.
LSE:MAIL
Mail.ru Group
NasdaqGS:IACI
IAC/InterActiveCorp
Leshi Internet Information and Technology Corporation., BSZSE:300104
NasdaqGS:CSGP
CoStar Group Inc.
NYSE:P
Pandora Media, Inc.
NYSE:YELP
Yelp, Inc.
NasdaqGS:MELI
Mercadolibre, Inc.
NYSE:RAX
Rackspace Hosting, Inc.
NasdaqGS:Z
Zillow, Inc.
NYSE:ATHM
Autohome Inc.
SHSE:603000
People.cn CO.,LTD
NasdaqGS:YY
YY Inc.
TSE:2121
Mixi, Inc.
NYSE:SFUN
SouFun Holdings Ltd.
NYSE:YOKU
Youku Tudou Inc.
NasdaqGS:WB
Weibo Corporation
NYSE:AOL
AOL Inc.
NYSE:WUBA
58.com Inc.
NYSE:BITA
Bitauto Holdings Limited
TSE:2371
Kakaku.com., Inc.
SZSE:300059
Eastmoney Information Co.,Ltd.
SZSE:300017
Wangsu Science & Technology Co.,Ltd.

Pricing data as of:


Total cash includes cash & ST investments
Source: CapitalIQ

10/20/14

Current Price
as % of 52 wk

2013

2014E

EV / EBITDA
2015E

2013

2014E

2015E

Revenue
(TTM, $M)

Rev Growth %
(TTM)

GM %
(LTM)

EBITDA % Rev Growth % Total Cash Total Debt


(LTM)
(2-yr fwd)
(MRQ, $M) (MRQ, $M)

$394,259
219,016
205,508
137,892
76,514
70,290
40,530
31,291
25,539
22,727
21,646
11,260
11,137
10,654
8,837
8,613
8,496
6,891
5,878
5,495
5,099
5,024
4,989
4,920
4,797
4,655
4,647
4,417
4,415
4,186
4,164
4,078
3,732
3,686
3,536
3,269
3,237
3,140
3,092
2,856

$344,271
220,156
191,878
135,441
72,874
68,242
39,002
29,396
23,178
21,931
17,678
14,807
8,155
10,493
8,755
8,919
8,378
6,714
5,102
5,532
5,323
4,974
4,664
4,569
4,591
4,393
4,289
4,164
4,192
3,786
3,978
3,731
2,098
3,208
3,648
2,855
3,059
2,984
2,728
2,751

96%
89%
99%
86%
94%
95%
93%
69%
82%
92%
62%
95%
94%
92%
61%
92%
54%
88%
63%
82%
67%
71%
60%
67%
74%
60%
70%
73%
92%
78%
82%
50%
47%
72%
84%
63%
79%
67%
97%
79%

5.3x
26.0x
24.0x
13.5x
12.6x
3.8x
7.8x
41.4x
14.0x
9.4x
4.8x
6.4x
5.1x
6.2x
6.6x
2.4x
11.6x
6.8x
5.6x
1.6x
13.8x
10.0x
5.9x
17.7x
9.8x
2.9x
18.5x
20.2x
23.8x
11.6x
47.5x
5.9x
3.5x
15.4x
1.4x
19.0x
10.3x
10.8x
66.9x
14.3x

5.2x
19.9x
15.7x
10.5x
9.1x
3.8x
8.9x
21.6x
10.6x
8.1x
NM
6.1x
4.5x
5.4x
6.2x
2.4x
6.2x
6.6x
5.8x
1.8x
5.0x
8.7x
5.1x
12.2x
9.0x
2.5x
13.2x
13.2x
16.2x
6.6x
6.3x
5.1x
3.2x
9.9x
1.4x
11.3x
8.9x
9.3x
26.8x
8.9x

4.4x
14.9x
11.6x
8.5x
6.5x
3.3x
8.7x
13.0x
8.0x
6.7x
4.4x
5.5x
3.8x
4.6x
5.0x
2.1x
4.2x
6.3x
4.8x
1.7x
3.7x
7.4x
3.9x
8.4x
7.7x
2.1x
9.7x
9.3x
11.6x
4.4x
2.9x
4.2x
2.3x
6.8x
1.3x
7.6x
6.7x
7.3x
19.1x
5.8x

19.1x
50.6x
48.8x
39.4x
31.9x
14.3x
20.2x
NM
139.0x
35.5x
9.0x
16.4x
10.9x
18.8x
17.9x
18.5x
41.3x
11.4x
14.1x
10.3x
34.2x
52.9x
NM
NM
27.8x
11.1x
NM
43.0x
92.3x
43.4x
NM
10.2x
41.9x
NM
8.4x
148.1x
63.8x
22.8x
NM
58.8x

13.1x
35.8x
23.9x
24.5x
27.2x
11.6x
31.8x
120.8x
41.5x
24.3x
NM
13.3x
9.8x
12.4x
15.2x
12.3x
23.8x
10.1x
11.1x
10.7x
15.4x
27.8x
81.5x
66.2x
27.8x
7.5x
80.2x
28.4x
52.1x
20.8x
16.0x
10.7x
NM
NM
7.2x
NM
33.5x
18.7x
270.1x
31.1x

10.9x
27.5x
18.0x
19.5x
18.9x
10.4x
30.1x
54.2x
28.9x
17.8x
8.2x
11.7x
8.2x
10.8x
12.1x
10.2x
13.6x
9.5x
9.2x
8.4x
17.0x
22.0x
35.4x
37.0x
23.2x
6.4x
46.4x
20.5x
35.5x
13.7x
9.3x
8.5x
21.0x
42.7x
6.7x
104.9x
21.2x
14.8x
144.3x
20.3x

$65,142
9,246
10,013
11,153
6,416
17,050
4,622
974
1,847
2,533
3,889
2,293
1,594
1,761
1,335
3,842
993
988
780
2,978
731
495
800
297
505
1,659
257
252
199
419
224
692
550
230
2,374
200
279
308
60
254

21.1
0.0
63.7
36.8
52.8
13.5
(4.2)
117.3
48.5
10.0
10.1
12.6
14.1
19.9
36.2
11.5
121.3
6.3
24.5
(1.4)
232.9
20.9
0.0
66.2
21.4
16.3
68.6
68.7
49.0
113.7
102.3
35.6
42.0
0.0
9.9
86.7
43.7
25.9
116.4
64.2

57.7
73.5
80.9
57.1
63.6
68.2
71.6
63.0
86.8
77.5
82.7
51.2
72.5
68.5
70.8
34.6
82.6
81.1
61.2
70.1
18.5
72.6
43.5
93.2
78.8
67.0
90.9
86.7
59.1
52.5
81.3
84.0
29.9
74.8
28.0
94.9
78.9
91.7
69.1
43.0

29.8
51.6
54.2
35.4
38.4
29.2
16.7
(73.1)
10.6
30.3
54.3
41.0
47.0
35.1
37.8
16.0
26.6
61.5
45.5
17.3
24.1
25.9
(1.4)
2.2
35.9
25.6
(1.9)
48.0
27.1
31.9
25.7
55.5
11.0
0.4
18.2
14.5
23.5
49.9
7.4
25.3

14.8
38.9
44.9
27.2
46.5
13.5
0.3
84.1
37.9
22.4
0.0
11.8
18.9
20.3
25.2
13.7
72.5
5.0
17.9
4.7
94.5
23.3
33.5
53.1
12.0
15.5
49.5
49.4
46.8
69.8
222.6
18.6
34.3
0.0
9.0
60.1
39.7
24.1
87.8
55.8

$58,315
9,587
13,956
8,166
7,825
7,369
2,744
2,097
2,367
1,172
4,380
616
3,306
757
663
105
804
1,545
776
1,069
165
445
324
351
491
340
358
253
248
796
201
927
1,634
499
136
414
178
171
359
103

$8,327
9,987
326
5,630
3,919
5,321
1,178
202
0
337
0
3,936
331
595
582
436
605
1,368
0
1,080
369
395
0
0
281
78
0
0
0
396
0
581
0
20
238
0
0
0
0
0

Average
Median
Median excl High & Low

$35,110
5,297
26,508

$32,922
5,213
25,540

78%
79%
78%

13.6x
10.1
12.5

8.8x
8.1
8.5

6.5x
6.0
6.3

37.2x
27.8
34.5

35.2x
23.9
29.1

24.7x
17.9
22.1

$4,006
981
2,501

44.5
30.8
41.3

68.5
71.2
68.4

26.4
26.9
28.0

37.5
26.2
34.1

$3,400
710
2,042

$1,163
303
961

High
Low

394,259
2,856

344,271
2,098

99%
47%

66.9
1.4

26.8
1.4

19.1
1.3

148.1
8.4

270.1
7.2

144.3
6.4

65,142
60

232.9
(4.2)

94.9
18.5

61.5
(73.1)

222.6
0.0

58,315
103

9,987
0

9/30/14

MergerTech: M&A by Technology Entrepreneurs for Technology Entrepreneurs


5858 Horton Street, Suite 101, Emeryville, CA 94608; phone 925.215.2770
inquiries@mergertech.com

3Q14: Roadmap to Valuation


Internet Software/Services Composite Performance, 1-year
100.0%
90.0%
80.0%
70.0%
60.0%
50.0%
40.0%
30.0%
20.0%
10.0%
0.0%
10.0%
20.0%

VRCompositeInternetSW/Svcs(Equal)IndexValue

NASDAQCompositeIndex(^COMP)IndexValue

Source: CapitalIQ

10/20/14

MergerTech: M&A by Technology Entrepreneurs for Technology Entrepreneurs


5858 Horton Street, Suite 101, Emeryville, CA 94608; phone 925.215.2770
inquiries@mergertech.com

3Q14: Roadmap to Valuation

Internet Software & Services M&A Activity


Total # of M&A transactions:
Total Deal Value ($M):
Average Deal Value ($M):
Average TEV/Revenue:
Average TEV/EBITDA:

576
$19,366
$130
5.4x
49.2x

Q/Q
36%
281%
125%
47%
178%

Y/Y
43%
98%
61%
59%
55%

Transactions by Region
Europe
Asia / Pacific
Africa / Middle East
United States and Canada
Latin America and Caribbean

143
90
14
311
18

Deals by Transaction Range


Greater than $1 billion
$500 - $999.9mm
$100 - $499.9mm
Less than $100mm
Undisclosed

5
6
17
21
427

$160
$140
$120
$100
$80
$60
$40
$20
$0

16x
14x
12x
10x
8x
6x
4x
2x
0x
1Q09 2Q09 3Q09

4Q09

1Q10

2Q10

3Q10

4Q10

1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13

AverageDealValue($M)

4Q13

1Q14

2Q14

3Q14

AverageTEV/Revenue

3Q14 Most Active Buyers


Zillow, Inc.
Alliance Data Systems Corporation
Shaw Communications, Inc.
News Corporation
YouTube, LLC
Rakuten, Inc.
Amazon.com Inc.
Mapfre SA
Vrde Partners Europe Limited
Intel Corporation

10/20/14

MergerTech: M&A by Technology Entrepreneurs for Technology Entrepreneurs


5858 Horton Street, Suite 101, Emeryville, CA 94608; phone 925.215.2770

inquiries@mergertech.com

10

3Q14: Roadmap to Valuation

Internet Software & Services Top 50 M&A Transactions


Total Transaction
Announced Date Target/Issuer

Implied

Implied

Cash % of

Buyers/Investors

Value ($M) EV/Revenues EV/EBITDA Consideration (%)

9/30/2014

Move, Inc. (NasdaqGS:MOVE)

News Corporation (NasdaqGS:NWSA)

$1,030.8

3.9x

92.5x

95.3

9/26/2014

Econa Shopping GmbH

RTL Interactive GmbH

$34.9

100.0

9/25/2014

Direct Line Insurance Group PLC, Italian and German Operations

Mapfre SA (CATS:MAP)

$700.2

100.0

9/23/2014

Nexage Inc.

Millennial Media Inc. (NYSE:MM)

$88.0

14.4x

25.6

9/22/2014

McGraw-Hill Construction Information Group

Symphony Technology Group

$320.0

1.9x

100.0

9/18/2014

FeedHenry Ltd.

Red Hat, Inc. (NYSE:RHT)

$82.0

100.0

9/18/2014

Yieldbroker Pty Limited

ASX Limited (ASX:ASX)

$58.4

100.0

9/15/2014

Ezi Holdings Pty Ltd.

Global Payments Inc. (NYSE:GPN)

$275.2

100.0

9/15/2014

FolioDynamix, Inc.

Actua Corporation (NasdaqGS:ACTA)

$210.0

9/12/2014

Fabrix Systems Ltd.

Ericsson (OM:ERIC B)

$95.0

9/11/2014

Conversant, Inc. (NasdaqGS:CNVR)

Alliance Data Systems Corporation (NYSE:ADS)

$2,448.9

4.0x

12.0x

46.0

9/9/2014

Ebates Performance Marketing, Inc.

Rakuten, Inc. (TSE:4755)

$1,000.0

6.0x

100.0

9/5/2014

SuperDerivatives Inc.

Intercontinental Exchange, Inc. (NYSE:ICE)

$350.0

9/5/2014

Jiangsu Guanghe Huiyun Big Data

ShenZhen Zero-Seven Co.,Ltd. (SZSE:000007)

$158.2

30.9

9/3/2014

Location Labs Inc.

AVG Technologies USA, Inc.

$233.0

8.5x

100.0

9/3/2014

Baseline, LLC.

Gracenote, Inc.

$50.0

100.0

9/3/2014

Mikro Odeme A.S.

Wirecard AG (XTRA:WDI)

$34.2

100.0

9/2/2014

Kuaipan Personal and Kansunzi Business and Assets

Shenzhen Xunlei Networking Technologies, Co., Ltd.

$33.0

100.0

9/2/2014

Connected Car Solutions Limited

Quindell Plc (AIM:QPP)

$30.5

100.0

9/1/2014

Shanghai Baoku Network Technology Co Ltd

Zhangjiagang Chemical Machinery Co., Ltd. (SZSE:002564)

$169.1

2.5x

4.8

8/28/2014

Jifutong Payment Company Limited

ICube Technology Holdings Limited (SEHK:139)

$77.4

8/25/2014

Twitch Interactive, Inc.

Amazon.com Inc. (NasdaqGS:AMZN)

$970.0

100.0

8/22/2014

XTone Animation Group

Zhejiang WHWH Industry Co., Ltd. (SHSE:600576)

$203.2

45.0

8/13/2014

LSI Corporation, Axxia Networking Business and Related Assets

Intel Corporation (NasdaqGS:INTC)

$650.0

5.8x

100.0

8/11/2014

Ooyala, Inc.

Telstra Corporation Limited (ASX:TLS)

$270.0

100.0

8/5/2014

[x+1], Inc.

Rocket Fuel Inc. (NasdaqGS:FUEL)

$236.0

3.3x

42.4

8/4/2014

Bancopopular-e, S.A.

Vrde Partners Europe Limited

$684.2

100.0

8/4/2014

Electronic Payment Exchange, Inc.

American Bancard, LLC

$50.0

100.0

8/1/2014

ViaMedia Pty Ltd.

Blue Label Telecoms Limited (JSE:BLU)

$33.7

100.0

7/31/2014

ViaWest, Inc.

Shaw Communications, Inc. (TSX:SJR.B)

$1,200.0

13.0x

100.0

7/28/2014

Trulia, Inc. (NYSE:TRLA)

Zillow, Inc. (NasdaqGS:Z)

$3,305.4

14.8x

7/28/2014

iProperty Group Limited (ASX:IPP)

REA Austin Pty Ltd

$100.1

26.9x

100.0

7/25/2014

Twitch Interactive, Inc.

YouTube, LLC

$1,000.0

100.0

7/25/2014

Genieo Innovation Ltd.

Somoto Ltd. (TASE:SMTO)

$33.5

69.4

7/24/2014

iomart Group plc (AIM:IOM)

Host Europe WVS Limited

$572.8

5.8x

14.9x

100.0

7/24/2014

Quintiq Holding B.V.

Dassault Systmes BV

$336.7

3.3x

100.0

7/24/2014

Alog Data Centers do Brasil S.A.

Equinix, Inc. (NasdaqGS:EQIX)

$225.0

100.0

7/23/2014

Axeda Corporation

PTC Inc. (NasdaqGS:PTC)

$170.0

7/22/2014

Bizo, Inc.

LinkedIn Corporation (NYSE:LNKD)

$175.0

7/22/2014

Alcatel-Lucent Shanghai Bell Enterprise Communications Co., Ltd.

$30.6

100.0
-

7/17/2014

Venda, Inc.

NetSuite Inc. (NYSE:N)

$50.5

7/17/2014

Citrus Lane, Inc.

Care.com, Inc. (NYSE:CRCM)

$48.5

7/16/2014

Shenzhen Globalegrow E-Commerce Co Ltd

Shanxi Baiyuan Trousers Chain Management Co., Ltd. (SZSE:002640)

$166.3

5.8

7/16/2014

Mobotap, Inc.

Changyou.com Limited (NasdaqGS:CYOU)

$91.0

100.0

7/14/2014

HealthPocket, Inc.

Health Insurance Innovations, Inc. (NasdaqGM:HIIQ)

$33.6

64.5

7/11/2014

RelateIQ, Inc.

Salesforce.com, Inc (NYSE:CRM)

$391.0

7/10/2014

All Homes Pty Ltd.

Domain Group

$46.9

100.0

7/8/2014

Nanjing Hanen Animation & Game Co., Ltd.

Guangdong Golden Glass Technologies Limited (SZSE:300093)

$83.3

50.9

7/2/2014

McGraw Hill Financial, Inc., New Jersey Data Center

QTS Realty Trust, Inc. (NYSE:QTS)

$70.0

100.0

7/2/2014

Colo Facilities Atlanta, LLC

Zayo Colocation, Inc.

$52.5

100.0

Source: CapitalIQ

10/20/14

MergerTech: M&A by Technology Entrepreneurs for Technology Entrepreneurs


5858 Horton Street, Suite 101, Emeryville, CA 94608; phone 925.215.2770

inquiries@mergertech.com

11

3Q14: Roadmap to Valuation

Internet Software & Services VC Activity


Includes early-stage rounds of greater than $100,000
Date of Funding
9/30/2014
9/29/2014
9/29/2014
9/25/2014
9/25/2014
9/24/2014
9/24/2014
9/24/2014
9/23/2014
9/23/2014
9/19/2014
9/19/2014
9/18/2014
9/18/2014
9/18/2014
9/17/2014
9/17/2014
9/17/2014
9/16/2014
9/16/2014
9/15/2014
9/15/2014
9/15/2014
9/15/2014
9/13/2014
9/12/2014
9/11/2014
9/8/2014
9/8/2014
9/4/2014
9/2/2014
9/1/2014
8/29/2014
8/27/2014
8/26/2014
8/22/2014
8/22/2014
8/21/2014
8/21/2014
8/20/2014
8/20/2014
8/20/2014
8/19/2014
8/13/2014
8/12/2014
8/12/2014
8/11/2014
8/11/2014
8/11/2014
8/8/2014
8/7/2014
8/6/2014
8/6/2014
8/4/2014
8/1/2014

10/20/14

Company
ArtSetters
Parcel
Comprimato
MasteryConnect
StackAdapt
Massdrop
Qualtrics
Tharakan Web Innovations
Silvercar
Typeform
Zakaz
Experifun
SocialChorus
Jack Erwin
Rockit Education
Splice
Newsela
BeautyCon
1jiajie
Colorescience
Boston Startup School
GIDEEN
Bellabox
StudyTube
Product Hunt
Babadu
MobilePaks
PrettySecrets
Teleport Inc
Scarosso
Sgrouples
vBrand
Zoomin.com
Hipvan
FeedVisor
GlobeIn
TECNALIA RESEARCH
LTG Exam Prep Platform
Product Hunt
OrderUp
Gladitood
QikServe
WebLinc
Adskom
EverString
Dolls Kill
Chairish
Synup
TrueFacet
RoundPegg
MoveInSync
YogaTrail
Drop Messages
webinar.ru
Women.com

Amount
1,000,000
1,000,000
1,000,000
15,200,000
900,000
6,500,000
150,000,000
1,000,000
14,000,000
1,200,000
2,500,000
260,000
7,500,000
9,000,000
500,000
4,500,000
4,099,999
2,000,000
4,000,000
15,000,000
3,000,000
100,000
2,700,000
1,000,000
6,000,000
2,900,000
1,700,000
2,000,000
2,500,000
11,000,000
1,200,000
550,000
8,000,000
1,400,000
6,000,000
2,100,000
2,120,000
3,000,000
880,000
7,000,000
350,000
525,000
6,000,000
850,000
12,000,000
5,000,000
4,000,000
500,000
118,000
485,000
4,000,000
320,000
1,200,000
7,300,000
120,000

Currency
USD
USD
EUR
USD
USD
USD
USD
USD
USD
EUR
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
EUR
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
GBP
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD

Series
Seed
Seed
Venture
B
Seed
A
B
Seed
B
Seed
A
Seed
B
B
Seed
A
A
Seed
A
B
A
Angel
B
Seed
A
B
Seed
A
Seed
B
Seed
Seed
Venture
A
A
A
Seed
A
Seed
A
Seed
Venture
A
Seed
A
Seed
A
Seed
Seed
B
A
Seed
Seed
A
Seed

City

State Country

Brooklyn
Brno
Salt Lake City
Toronto
San Francisco
Provo
Chennai
DFW Airport
Barcelona
Kyiv
Bangalore
San Francisco
New York
Hanoi
New York
New York
Los Angeles
Beijing
Carlsbad
Boston
Malibu
Singapore
Amsterdam
San Francisco
St.Petersburg
Portland

NY
UT
ON
CA
UT
TX

CA
NY
NY
NY
CA
CA
MA
CA

CA
FL
OR

USA
CZE
USA
CAN
USA
USA
IND
USA
ESP
UKR
IND
USA
USA
VNM
USA
USA
USA
CHN
USA
USA
USA
SGP
NLD
USA
RUS
USA

Palo Alto
Berlin
Mountain View
Palo Alto
Mumbai
Singapore
Tel Aviv
Mountain View

CA

CA

USA
DEU
USA
USA
IND
SGP
ISR
USA

Boston
San Francisco
Baltimore

MA
CA
MD

USA
USA
USA

Roslin
Philadelphia
Singapore
Mountain View
San Francisco
San Francisco
Wilmington
New York
Boulder
Bangalore
Stuttgart
Boston
Moscow
Los Angeles

CA
CA

PA
CA
CA
CA
DE
NY
CO

MA
CA

GBR
USA
SGP
USA
USA
USA
USA
USA
USA
IND
DEU
USA
RUS
USA

MergerTech: M&A by Technology Entrepreneurs for Technology Entrepreneurs


5858 Horton Street, Suite 101, Emeryville, CA 94608; phone 925.215.2770

inquiries@mergertech.com

12

3Q14: Roadmap to Valuation

Date of Funding
7/31/2014
7/29/2014
7/28/2014
7/28/2014
7/28/2014
7/24/2014
7/24/2014
7/24/2014
7/23/2014
7/22/2014
7/21/2014
7/21/2014
7/21/2014
7/18/2014
7/16/2014
7/16/2014
7/16/2014
7/16/2014
7/16/2014
7/16/2014
7/15/2014
7/15/2014
7/14/2014
7/11/2014
7/10/2014
7/10/2014
7/9/2014
7/8/2014
7/7/2014
7/2/2014

Company
BIGWORDS.com
Frameri
Peel-Works
ChoiceStream
Marinanow
Branching Minds
VenueBook
TuvaLabs
Anomo
Cotopaxi
Canva
Swoon Editions
ParkWhiz
Threadflip
JUNIQE.com
MTailor
Tiempo App
Theorem
Product Hunt
iVillage
Nosto
OpenEd
Bustle
Barkbox
mediakraftnetworks.de
Travelata
Ellevation
roposo.com
lmbang
Hippocampus Learning Centres

Amount
300,000
750,000
2,000,000
7,500,000
370,000
350,000
2,000,000
430,000
800,000
3,000,000
3,600,000
4,000,000
10,000,000
13,000,000
1,300,000
120,000
120,000
120,000
120,000
120,000
5,500,000
2,000,000
5,000,000
15,000,000
16,500,000
7,000,000
2,000,000
1,000,000
20,000,000
2,397,981

Currency
USD
USD
USD
USD
EUR
USD
USD
USD
USD
USD
USD
GBP
USD
USD
EUR
USD
USD
USD
USD
USD
USD
USD
USD
USD
EUR
USD
USD
USD
USD
USD

Series
Venture
Seed
A
B
Seed
Seed
Seed
Seed
Seed
Seed
A
A
B
B
Seed
Seed
Seed
Seed
Seed
Seed
A
Seed
B
B
B
B
Venture
Seed
B
Venture

City
Annapolis
Cincinnati
Mumbai
Boston
Arzachena
New York
New York
New York
Bellevue
Cottonwood Heights
Surry Hills
London
Chicago
San Francisco
Berlin

State Country
MD USA
OH
USA
IND
MA
USA
ITA
NY
USA
NY
USA
NY
USA
WA USA
UT
USA
AUS
GBR
IL
USA
CA
USA
DEU

San Francisco
San Francisco
San Francisco
New York
Helsinki
Los Gatos
New York
New York

CA
CA
CA
NY

Moscow
Boston
Gurgaon
Shenzhen
Bangalore

CA
NY
NY

MA

USA
USA
USA
USA
FIN
USA
USA
USA
RUS
USA
IND
CHN
IND

Source: Mattermark, Crunchbase, AngelList

10/20/14

MergerTech: M&A by Technology Entrepreneurs for Technology Entrepreneurs


5858 Horton Street, Suite 101, Emeryville, CA 94608; phone 925.215.2770

inquiries@mergertech.com

13

3Q14: Roadmap to Valuation


Hardware:
Top 40 Public Companies, by Market Capitalization
EV / Revenues
Company
Apple Inc.
Intel Corporation
Samsung Electronics Co. Ltd.
Cisco Systems, Inc.
QUALCOMM Incorporated
Taiwan Semiconductor Manufacturing Company Limited
Hewlett-Packard Company
EMC Corporation
Texas Instruments Inc.
Hon Hai Precision Industry Co., Ltd.
ASML Holding NV
Ericsson
Hitachi Ltd.
Micron Technology, Inc.
Canon Inc.
SK Hynix Inc.
Nokia Corporation
Keyence Corp.
Applied Materials, Inc.
Corning Inc.
Murata Manufacturing Co., Ltd.
Broadcom Corp.
MediaTek Inc.
Western Digital Corporation
TE Connectivity Ltd.
Avago Technologies Limited
SanDisk Corp.
ARM Holdings plc
Seagate Technology Public Limited Company
Kyocera Corp.
NXP Semiconductors NV
Motorola Solutions, Inc.
Amphenol Corporation
Analog Devices, Inc.
Lenovo Group Limited
Delta Electronics Inc.
FUJIFILM Holdings Corporation
Renesas Electronics Corporation
BOE Technology Group Company Limited
Hoya Corp.

Pricing data as of:


Total cash includes cash & ST investments
Source: CapitalIQ

10/20/14

Market Cap Enterprise Value


($M)
($M)

Ticker
NasdaqGS:AAPL
NasdaqGS:INTC
KOSE:A005930
NasdaqGS:CSCO
NasdaqGS:QCOM
TSEC:2330
NYSE:HPQ
NYSE:EMC
NasdaqGS:TXN
TSEC:2317
ENXTAM:ASML
OM:ERIC B
TSE:6501
NasdaqGS:MU
TSE:7751
KOSE:A000660
HLSE:NOK1V
TSE:6861
NasdaqGS:AMAT
NYSE:GLW
TSE:6981
NasdaqGS:BRCM
TSEC:2454
NasdaqGS:WDC
NYSE:TEL
NasdaqGS:AVGO
NasdaqGS:SNDK
LSE:ARM
NasdaqGS:STX
TSE:6971
NasdaqGS:NXPI
NYSE:MSI
NYSE:APH
NasdaqGS:ADI
SEHK:992
TSEC:2308
TSE:4901
TSE:6723
SZSE:000725
TSE:7741

Current Price
as % of 52 wk

2013

2014E

EV / EBITDA
2015E

2013

2014E

2015E

Revenue
(TTM, $M)

Rev Growth %
(TTM)

GM %
(LTM)

EBITDA % Rev Growth % Total Cash Total Debt


(LTM)
(2-yr fwd)
(MRQ, $M) (MRQ, $M)

$603,278
172,394
163,406
128,347
125,316
102,316
66,197
59,359
50,912
46,412
43,527
41,802
36,867
36,686
35,995
32,018
31,358
26,349
26,329
24,968
24,066
23,888
23,157
22,735
22,628
22,002
21,963
20,661
18,672
17,093
16,332
15,876
15,697
15,550
15,493
15,389
14,806
14,300
13,937
13,901

$596,392
168,376
124,658
97,192
107,172
100,051
71,949
58,739
52,756
39,661
41,522
35,655
69,061
39,547
29,972
33,002
23,227
21,933
25,405
25,154
22,002
22,150
17,819
20,085
24,021
26,243
21,310
19,725
19,938
13,014
19,479
15,480
16,618
13,486
12,145
14,242
13,536
14,590
11,856
11,896

97%
98%
79%
97%
91%
87%
93%
97%
96%
92%
99%
97%
95%
98%
98%
89%
98%
99%
92%
86%
97%
97%
83%
94%
85%
96%
90%
81%
91%
93%
93%
93%
94%
88%
91%
85%
97%
86%
95%
98%

3.4x
2.9x
0.5x
1.8x
3.9x
5.1x
0.6x
2.4x
3.8x
0.3x
5.7x
1.0x
0.8x
2.8x
0.8x
2.2x
1.3x
7.4x
2.7x
2.9x
2.7x
2.3x
3.4x
1.1x
1.7x
8.2x
2.9x
15.4x
1.3x
0.9x
3.3x
1.6x
3.3x
4.3x
0.3x
2.3x
0.6x
1.7x
2.3x
2.9x

3.2x
3.0x
0.6x
2.0x
3.9x
4.1x
0.6x
2.4x
4.1x
0.3x
5.8x
1.1x
0.8x
2.3x
0.9x
2.2x
1.5x
8.2x
2.7x
2.5x
2.6x
2.7x
2.5x
1.3x
1.7x
5.2x
3.2x
15.6x
1.4x
1.0x
3.5x
2.5x
3.1x
4.5x
0.3x
2.2x
0.6x
1.9x
2.1x
2.8x

2.9x
3.0x
0.6x
1.9x
3.6x
3.7x
0.6x
2.2x
3.9x
0.3x
4.8x
1.1x
0.8x
2.1x
0.9x
2.0x
1.4x
7.3x
2.6x
2.4x
2.5x
2.6x
2.2x
1.3x
1.6x
4.3x
2.8x
13.3x
1.4x
0.9x
3.2x
2.5x
2.9x
4.1x
0.2x
2.0x
0.6x
2.0x
2.0x
2.8x

10.5x
8.2x
2.5x
7.2x
12.6x
8.3x
5.5x
11.1x
13.6x
6.4x
21.8x
8.0x
8.1x
12.1x
5.4x
5.5x
11.2x
16.2x
17.4x
8.4x
12.8x
17.3x
18.7x
6.2x
9.3x
32.6x
10.1x
43.6x
7.2x
6.7x
16.0x
9.8x
16.0x
14.9x
10.3x
15.1x
5.1x
13.3x
10.1x
15.4x

9.6x
7.2x
2.9x
5.9x
10.1x
6.2x
5.5x
8.1x
10.8x
5.7x
22.4x
9.1x
7.1x
6.5x
5.1x
4.3x
10.9x
15.7x
11.4x
6.9x
10.5x
16.2x
10.2x
6.2x
8.6x
12.6x
9.0x
32.0x
7.2x
7.3x
11.8x
12.7x
14.0x
12.5x
8.2x
13.1x
5.4x
12.1x
NM
11.0x

8.9x
7.0x
2.9x
5.7x
10.5x
5.5x
5.3x
7.6x
10.0x
5.2x
16.2x
7.8x
7.3x
5.3x
5.1x
4.0x
9.8x
14.1x
10.4x
6.5x
9.6x
12.2x
9.4x
6.1x
7.7x
9.6x
8.3x
26.1x
6.9x
7.0x
11.0x
11.1x
12.8x
11.1x
6.8x
11.4x
5.0x
11.1x
NM
10.0x

$178,144
53,912
221,796
47,142
26,276
21,406
111,768
23,580
12,548
134,212
8,461
33,232
82,780
16,358
36,955
14,942
16,456
2,734
8,796
8,794
8,611
8,235
5,989
15,130
13,769
3,417
6,499
1,277
13,724
14,320
5,137
8,425
4,959
2,729
40,315
6,206
20,576
8,325
5,183
4,346

5.2
3.0
2.7
(3.0)
13.0
13.9
(0.8)
5.7
2.0
7.9
43.3
(2.8)
7.4
80.3
5.9
27.5
76.8
24.5
22.7
10.2
19.3
1.3
57.7
(1.4)
4.2
42.4
15.4
14.8
(4.4)
10.4
12.7
12.5
11.1
2.9
16.3
8.3
7.3
5.6
3.8
15.3

38.4
62.2
39.5
60.3
59.4
47.8
23.7
62.2
55.1
6.8
41.6
36.2
26.5
33.2
49.4
41.8
43.6
78.2
41.8
41.4
35.2
50.9
47.2
28.8
33.8
47.5
49.8
95.2
28.0
26.2
46.9
48.1
31.4
65.6
13.0
26.2
37.8
37.7
20.8
47.0

33.2
40.8
22.7
26.8
33.9
62.4
11.8
23.1
35.6
4.9
30.0
14.3
10.5
33.2
17.2
47.4
16.0
51.4
19.8
30.9
24.7
16.2
23.3
20.6
19.7
26.5
36.1
42.6
19.6
13.2
24.9
17.3
22.4
34.8
3.4
15.9
11.6
18.8
20.8
28.9

8.8
4.0
(4.6)
4.4
8.2
17.5
(0.8)
6.3
5.7
7.1
13.8
1.8
1.0
9.5
0.8
10.5
(26.1)
13.0
16.0
14.9
9.3
0.4
34.5
0.8
5.8
54.6
11.1
14.3
2.7
3.4
12.7
(15.8)
10.4
11.4
20.5
9.4
2.0
(2.8)
2.8
5.8

$37,926
17,406
59,962
52,074
18,153
10,557
14,474
7,649
2,804
21,189
3,695
10,222
5,748
4,534
8,113
3,074
12,395
4,741
2,871
5,886
2,720
3,133
6,574
5,088
1,613
1,277
2,679
1,002
2,654
5,477
661
2,876
1,444
4,932
5,533
2,053
6,509
2,491
7,171
2,857

$31,040
13,388
13,811
20,912
11
8,245
19,833
5,494
4,648
12,839
1,529
3,442
28,676
6,593
21
4,103
3,453
0
1,947
3,703
332
1,395
1,139
2,438
3,000
5,518
2,028
14
3,920
336
3,580
2,450
2,344
2,868
1,954
415
3,379
2,667
4,829
625

Average
Median
Median excl High & Low

$56,618
24,968
42,996

$53,825
24,021
40,295

93%
93%
93%

2.9x
2.3
2.6

2.8x
2.4
2.6

2.6x
2.2
2.4

12.2x
10.3
11.6

10.0x
9.1
9.6

8.9x
8.0
8.6

$32,131
13,769
27,839

15.3
8.3
13.8

43.1
41.6
42.1

25.2
22.7
24.7

7.8
7.1
7.3

$9,471
5,088
8,344

$5,854
3,379
5,331

High
Low

603,278
13,937

596,392
11,856

99%
79%

15.4
0.3

15.6
0.3

13.3
0.2

43.6
2.5

32.0
2.9

26.1
2.9

221,796
1,277

80.3
(4.4)

95.2
6.8

62.4
3.4

54.6
(26.1)

59,962
661

31,040
0

9/30/14

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3Q14: Roadmap to Valuation


Hardware Composite Performance, 1-year
40.0%
35.0%
30.0%
25.0%
20.0%
15.0%
10.0%
5.0%
0.0%
5.0%
10.0%

VRCompositeHardware(Equal)IndexValue

NASDAQCompositeIndex(^COMP)IndexValue

Source: CapitalIQ

10/20/14

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15

3Q14: Roadmap to Valuation


Hardware M&A Activity
Total # of M&A transactions:
Total Deal Value ($M):
Average Deal Value ($M):
Average TEV/Revenue:
Average TEV/EBITDA:

Q/Q
21%
-19%
-53%
88%
2%

375
$14,629
$87
4.3x
21.0x

Y/Y
43%
16%
-16%
69%
109%

Transactions by Region
Europe
Asia / Pacific
Africa / Middle East
United States and Canada
Latin America and Caribbean

100
154
13
102
6

Deals by Transaction Range


Greater than $1 billion
$500 - $999.9mm
$100 - $499.9mm
Less than $100mm
Undisclosed

5
1
19
144
206

$350

8x
7x
6x
5x
4x
3x
2x
1x
0x

$300
$250
$200
$150
$100
$50
$0
1Q09

2Q09

3Q09

4Q09

1Q10

2Q10

3Q10

4Q10

1Q11

2Q11

3Q11

4Q11

AverageDealValue($M)

1Q12

2Q12

3Q12

4Q12

1Q13

2Q13

3Q13

4Q13

1Q14

2Q14

3Q14

AverageTEV/Revenue

3Q14 Most Active Buyers


Infineon Technologies AG
Shanghai Pudong Science and Technology Investment Co., Ltd.
Hua Capital Management Ltd.
Intel Corporation
Aristocrat Leisure Ltd.
TTM Technologies Inc.
Powerise Information Technology Co., Ltd.
Murata Electronics North America, Inc.
SoftBank Corp.
Siliconware Precision Industries Co. Ltd.

10/20/14

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3Q14: Roadmap to Valuation


Hardware Top 50 M&A Transactions
Total Transaction

Implied

Implied

Cash % of

Announced Date Target/Issuer

Buyers/Investors

Value ($M) EV/Revenues EV/EBITDA Consideration (%)

9/26/2014

Spreadtrum Communications Inc. and RDA Microelectronics Inc

Intel Corporation (NasdaqGS:INTC)

$1,468.9

9/26/2014

Tecnisco Limited

$28.0

1.1x

100.0

9/25/2014

HIMS International Corporation

DIOTEK Co., Ltd. (KOSDAQ:A108860)

$26.9

100.0

9/24/2014

Qimonda AG, Patent Business

Infineon Technologies AG (XTRA:IFX)

100.0

9/22/2014

Viasystems Group, Inc. (NasdaqGM:VIAS)

TTM Technologies Inc. (NasdaqGS:TTMI)

9/22/2014

Neul Limited

Huawei Technology Co., Ltd. (SZSE:002502)

9/17/2014

EMCORE Corporation, Space Photovoltaics Business

Veritas Capital

9/17/2014

Gilat Satellite Networks Ltd. (NasdaqGS:GILT)

First Israel Mezzanine Investors Ltd.

9/16/2014

Ituran Location & Control Ltd. (TASE:ITRN)

9/12/2014

Vanzo Communication Inc.

Hubei Kaile Science and Technology Co., Ltd. (SHSE:600260)

9/10/2014

Guangdong Saifei Sapphire Technology Co., Ltd.

Shenzhen Sunyes Electronic Manufacturing Holding Co.,Ltd. (SZSE:002388)

9/7/2014

LedHut Ltd

Batteries Plus Bulbs

9/2/2014

Shenzhen Tinno Mobile Technology Corp.

Powerise Information Technology Co., Ltd.

9/1/2014

NS Indstria de Aparelhos Mdicos LTDA.

8/30/2014

SAG Solarstrom AG, Substantially All Assets

8/22/2014

100.0

$159.8

$1,006.4

0.8x

7.2x

68.8

$25.0

100.0

$150.0

2.1x

100.0

$25.6

1.0x

24.1x

100.0
100.0

$29.0

2.2x

6.8x

$140.2

15.0

$45.8

37.2x

100.0

$31.0

100.0

$696.0

100.0

OMRON HEALTHCARE Co., Ltd.

$95.9

2.2x

100.0

SF Suntech Deutschland GmbH

$85.5

100.0

$468.8

2.2x

100.0

Peregrine Semiconductor Corporation (NasdaqGS:PSMI)

Murata Electronics North America, Inc.

8/22/2014

Sihong Tianganghu Photovoltaic Power Generation Co. Ltd

Zhenfa Energy Group Co., Ltd.

$27.8

8/21/2014

Imago Group PLC

ScanSource, Inc. (NasdaqGS:SCSC)

$40.6

100.0

8/20/2014

International Rectifier Corporation (NYSE:IRF)

Infineon Technologies AG (XTRA:IFX)

$3,040.6

2.2x

13.9x

100.0

8/19/2014

ProMos Technologies Inc., Factory Buildings and Attached Equipment (Taichung City)

Siliconware Precision Industries Co. Ltd. (TSEC:2325)

$213.2

100.0

8/19/2014

GSI Technology Inc. (NasdaqGS:GSIT)

GigOptix, Inc. (AMEX:GIG)

$178.8

1.7x

79.5

8/15/2014

Harxon Corporation

Beijing BDStar Navigation Co., Ltd. (SZSE:002151)

$158.4

11.5x

10.3

8/15/2014

Intersmart Comrcio Importao Exportao de Equipamentos Eletrnicos, S.A.

ScanSource, Inc. (NasdaqGS:SCSC)

$135.3

100.0

100.0

8/15/2014

Jiaxing Jiali Electronics Co.,Ltd.

Beijing BDStar Navigation Co., Ltd. (SZSE:002151)

8/14/2014

OmniVision Technologies, Inc. (NasdaqGS:OVTI)

Shanghai Pudong Science and Technology Investment Co., Ltd.; Hua Capital

$47.4

1.3x

$1,677.2

0.8x

9.1x

100.0

8/14/2014

Ecil Met Tec Ltda

Vesuvius plc (LSE:VSVS)

$37.8

8/14/2014

Digital Optics Co., Ltd. (KOSDAQ:A106520)

Tudor & Company Co., Ltd

$27.4

100.0

1.3x

7.5x

8/13/2014

Fujin Precision Industrial (Jincheng) Co., Ltd.

Futaihua Industrial (Shenzhen) Co., Ltd.

$64.0

100.0

100.0

8/8/2014

Chengdu Guowei Science Co., Ltd.

Tongfang Guoxin Electronics Co., Ltd. (SZSE:002049)

$26.7

8/7/2014

Beijing Bode Communication Equipment Co., Ltd.

Zhejiang Yonggui Electric Equipment Co., Ltd. (SZSE:300351)

$69.1

29.5

8/6/2014

Brightstar Corp.

SoftBank Corp. (TSE:9984)

$298.0

100.0

8/5/2014

MFS Technology (S) Pte. Ltd.

Navis Capital Partners; Novo Tellus Capital Partners

$118.2

0.8x

10.9x

100.0

8/4/2014

Innovaciones Microelectrnicas, S.L.

e2v Technologies plc (LSE:E2V)

$45.9

6.1x

8/1/2014

Futurelogic Group Inc.

JCM American Corporation

$70.6

1.5x

100.0

8/1/2014

Shenzhen CHINO-E Communication Co., Ltd.

Fujian Electronics and Information (Group) Co., Ltd.

$45.3

0.8x

100.0

7/31/2014

Shenzhen CHINO-E Communication Co., Ltd.

Fujian Furi Electronics Co.,Ltd. (SHSE:600203)

$129.6

0.8x

7/30/2014

Cortina Systems, Inc.

Inphi Corporation (NYSE:IPHI)

$120.0

7/30/2014

ProSoft Technology, Inc.

Belden Inc. (NYSE:BDC)

$105.0

2.1x

100.0

7/28/2014

Hefei Xin Sheng Photoelectric Technology Co., Ltd.

BOE Technology Group Company Limited (SZSE:000725)

$180.2

100.0

100.0

7/28/2014

United Wireless Ltd

Stadium Group plc (AIM:SDM)

$23.8

7/25/2014

PNE Industries Ltd (SGX:P07)

$23.7

1.0x

9.8x

100.0

7/18/2014

OJSC Sitronics-Nanotechnologies

JSC Mikron (UNQ-RUS:MKRO)

$92.4

7/17/2014

Ayrshire Electronics

Key Tronic Corp. (NasdaqGM:KTCC)

$46.9

0.4x

100.0

7/15/2014

China National Electronic Devices Corp.

Beijing Shiji Information Technology, Co., Ltd. (SZSE:002153)

$50.7

0.6x

100.0

7/14/2014

ISSC Technologies Corp. (GTSM:5261)

Microchip Technology (Barbados) II Incorporated

$47.9

3.9x

22.5x

100.0

7/11/2014

Capella Microsystems (Taiwan), Inc. (GTSM:3582)

Vishay Intertechnology Inc. (NYSE:VSH)

$179.7

3.4x

15.8x

100.0

7/7/2014

Newport Media Inc.

Atmel Corporation (NasdaqGS:ATML)

$170.0

4.0x

100.0

7/7/2014

Movea SA

InvenSense International, Inc.

$74.8

100.0

7/6/2014

Video Gaming Technologies, Inc.

Aristocrat Leisure Ltd. (ASX:ALL)

$1,283.0

5.4x

8.2x

100.0

7/1/2014

Tilera Corporation

EZchip Semiconductor Ltd. (NasdaqGS:EZCH)

$130.0

Source: CapitalIQ

10/20/14

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17

3Q14: Roadmap to Valuation


Hardware VC Activity
Includes early-stage rounds only

Date of Funding
9/24/2014
9/23/2014
9/19/2014
9/16/2014
9/15/2014
9/10/2014
9/1/2014
8/26/2014
8/21/2014
8/18/2014
8/13/2014
8/11/2014
7/29/2014
7/29/2014
7/22/2014
7/21/2014
7/17/2014
7/16/2014
7/16/2014
7/15/2014
7/10/2014
7/1/2014

Company
Apptentive
COTA
makemoji
BlueBridge Digital
Everypost
Jimubox
Oyokey
Hike
Nervana Systems
Algolux
ClariPhy Communications
Hapzing
Kurbo Health
LVenture Group
Sunrise
Jinn
nantmobile
Notice Software
doblet
Yo
NextInput
Whatt Inc

Amount
5,300,000
3,700,000
1,000,000
1,000,000
850,000
37,000,000
1,010,000
65,000,000
3,300,000
2,600,000
19,740,000
20,000
5,800,000
4,970,000
6,000,000
200,000
30,000,000
120,000
120,000
1,500,000
1,500,000
500,000

Currency
USD
USD
USD
USD
USD
USD
USD
USD
USD
CAD
USD
USD
USD
EUR
USD
USD
USD
USD
USD
USD
USD
USD

Series
A
A
Seed
Seed
Seed
B
Seed
Venture
A
A
Venture
Seed
A
Venture
A
Seed
Venture
Seed
Seed
Seed
Angel
Seed

City
Seattle
Murcia
Los Angeles
Fisher
Miami
Beijing
Dallas
New Delhi
San Diego
Montreal
Los Altos
Cincinnati
Palo Alto
Roma
New York
London
Los Angeles
Toledo
San Francisco

State Country
WA USA
ESP
CA
USA
IN
USA
FL
USA
CHN
TX
USA
IND
CA
USA
CAN
CA
USA
OH USA
CA
USA
ITA
NY
USA
GBR
CA
USA
OH USA
CA
USA

New York

NY

USA

Source: Mattermark, Crunchbase, AngelList

10/20/14

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18

3Q14: Roadmap to Valuation

IT Services:
Top 40 Public Companies, by Market Capitalization
EV / Revenues
Company
International Business Machines Corporation
Visa Inc.
Tata Consultancy Services Limited
MasterCard Incorporated
Accenture plc
Automatic Data Processing, Inc.
Infosys Ltd.
Cognizant Technology Solutions Corporation
Cielo SA
Wipro Ltd.
HCL Technologies Ltd.
Amadeus IT Holding SA
Fiserv, Inc.
Fidelity National Information Services, Inc.
Paychex, Inc.
Xerox Corporation
Alliance Data Systems Corporation
Fujitsu Limited
FleetCor Technologies, Inc.
Cap Gemini S.A.
CGI Group, Inc.
NTT Data Corporation
SK C&C Co. Ltd.
Tech Mahindra Limited
Computer Sciences Corporation
The Western Union Company
Atos SE
Amdocs Limited
Gartner Inc.
Teradata Corporation
Nomura Research Institute, Ltd.
Computershare Limited
Total System Services, Inc.
Broadridge Financial Solutions, Inc.
Global Payments Inc.
Sabre Corporation
Jack Henry & Associates Inc.
Wirecard AG
Vantiv, Inc.
WEX Inc.

Pricing data as of:


Total cash includes cash & ST investments
Source: CapitalIQ

Market Cap Enterprise Value


($M)
($M)
$189,373
$226,254
132,959
128,895
86,632
83,398
85,597
81,425
51,069
46,725
40,050
40,418
34,589
30,000
27,217
23,088
25,525
26,308
23,610
21,081
19,431
18,065
16,642
18,570
16,108
19,627
16,069
20,381
16,037
15,478
15,170
22,339
13,786
23,781
12,731
16,589
11,831
13,005
11,348
11,218
10,515
12,687
10,100
11,997
10,085
11,314
9,461
8,966
8,871
9,338
8,498
10,648
8,309
8,265
7,274
6,100
6,531
6,593
6,498
5,789
6,446
6,179
5,916
7,036
5,749
6,988
4,976
5,153
4,765
6,152
4,743
7,586
4,591
4,530
4,559
3,740
4,511
8,157
4,276
4,685

Ticker
NYSE:IBM
NYSE:V
BSE:532540
NYSE:MA
NYSE:ACN
NasdaqGS:ADP
BSE:500209
NasdaqGS:CTSH
BOVESPA:CIEL3
BSE:507685
BSE:532281
CATS:AMS
NasdaqGS:FISV
NYSE:FIS
NasdaqGS:PAYX
NYSE:XRX
NYSE:ADS
TSE:6702
NYSE:FLT
ENXTPA:CAP
TSX:GIB.A
TSE:9613
KOSE:A034730
BSE:532755
NYSE:CSC
NYSE:WU
ENXTPA:ATO
NasdaqGS:DOX
NYSE:IT
NYSE:TDC
TSE:4307
ASX:CPU
NYSE:TSS
NYSE:BR
NYSE:GPN
NasdaqGS:SABR
NasdaqGS:JKHY
XTRA:WDI
NYSE:VNTV
NYSE:WEX

Current Price
as % of 52 wk
95%
91%
98%
87%
95%
98%
97%
83%
85%
98%
99%
91%
98%
96%
96%
93%
83%
83%
95%
96%
91%
92%
93%
98%
93%
82%
80%
94%
96%
75%
97%
92%
93%
96%
94%
86%
91%
85%
89%
93%

2013

2014E

EV / EBITDA
2015E

2013

2014E

2015E

2.2x
10.2x
6.7x
9.3x
1.5x
3.0x
3.9x
2.5x
9.7x
3.1x
4.2x
4.3x
4.0x
3.3x
6.3x
1.0x
5.4x
0.4x
13.4x
0.8x
1.4x
1.0x
5.1x
3.4x
0.7x
1.9x
0.7x
1.8x
3.7x
2.0x
1.7x
3.4x
3.1x
2.0x
2.7x
2.3x
3.7x
5.7x
3.9x
5.9x

2.3x
9.9x
5.6x
8.7x
1.5x
3.2x
3.5x
2.3x
7.6x
2.8x
3.3x
4.4x
3.9x
3.2x
5.9x
1.1x
4.5x
NM
11.8x
0.9x
1.3x
0.9x
4.7x
2.6x
0.7x
1.9x
0.7x
1.7x
3.3x
2.1x
1.7x
3.4x
2.9x
2.0x
2.3x
2.5x
3.6x
4.9x
5.8x
5.7x

2.3x
9.0x
4.8x
7.8x
1.5x
3.0x
3.3x
2.0x
6.9x
2.6x
2.9x
4.1x
3.7x
3.0x
5.5x
1.1x
3.9x
0.4x
9.7x
0.8x
1.3x
0.9x
4.2x
2.3x
0.7x
1.8x
0.7x
1.6x
3.0x
2.0x
1.6x
3.3x
2.6x
1.9x
2.2x
2.4x
3.4x
4.1x
4.9x
4.9x

9.0x
16.6x
22.2x
16.8x
10.6x
16.6x
14.0x
12.4x
18.2x
14.8x
16.5x
12.3x
13.4x
13.0x
14.9x
8.5x
18.6x
5.7x
26.5x
9.3x
9.6x
6.7x
33.6x
16.0x
4.7x
7.4x
7.0x
9.7x
21.8x
9.3x
7.4x
15.9x
13.7x
10.7x
11.9x
11.8x
11.3x
24.3x
15.2x
15.6x

8.5x
14.7x
19.0x
14.8x
9.4x
15.9x
13.2x
11.0x
14.9x
11.8x
12.8x
11.2x
11.9x
10.5x
13.8x
6.9x
15.3x
NM
20.1x
8.0x
7.9x
5.6x
36.3x
12.9x
4.3x
7.9x
6.7x
8.6x
17.2x
7.7x
8.3x
12.5x
9.9x
9.2x
11.0x
8.9x
10.5x
17.5x
11.9x
13.3x

8.1x
13.1x
16.7x
12.9x
9.0x
13.8x
12.3x
9.7x
13.4x
11.1x
11.9x
10.6x
11.2x
9.8x
12.9x
7.0x
13.1x
4.9x
16.7x
7.3x
7.6x
5.1x
32.1x
10.8x
4.1x
7.6x
5.8x
7.8x
14.8x
7.3x
7.8x
11.6x
8.7x
8.5x
10.3x
8.0x
9.7x
14.1x
10.1x
11.2x

Revenue
Rev Growth %
(TTM, $M)
(TTM)
$96,191
(4.0)
11,705
7.9
14,300
30.0
8,898
13.9
30,002
5.0
11,833
8.1
8,526
7.8
9,601
19.7
3,288
19.2
7,459
18.2
5,360
14.4
4,435
8.1
4,951
7.6
6,200
4.6
2,532
9.0
20,804
(1.7)
2,485
19.4
47,706
9.2
1,008
25.4
13,913
0.2
9,820
13.4
13,679
6.4
2,351
4.5
3,303
110.4
12,981
(6.1)
5,460
0.5
11,638
(3.0)
3,509
5.6
1,898
11.5
2,739
3.6
3,893
7.2
2,011
(0.2)
2,417
30.1
2,558
5.2
2,629
8.9
2,995
0.0
1,210
7.1
764
24.7
2,237
13.1
757
12.4

GM %
EBITDA % Rev Growth % Total Cash Total Debt
(LTM)
(LTM)
(2-yr fwd)
(MRQ, $M) (MRQ, $M)
49.1
25.6
(0.9)
$9,725
$46,470
96.0
64.4
9.4
4,064
0
38.7
30.7
16.7
3,484
34
100.0
58.7
12.1
5,714
1,494
32.3
16.3
5.0
4,924
27
48.8
21.0
0.4
1,816
2,185
37.5
28.6
9.5
5,232
0
40.4
21.1
14.4
4,129
0
62.1
51.2
17.6
196
1,063
32.4
22.9
10.2
3,411
785
38.6
26.3
14.1
1,577
169
46.5
38.6
7.8
614
2,669
43.3
29.3
5.1
329
3,848
32.8
25.7
6.0
794
4,928
70.6
42.8
7.7
559
0
30.8
12.1
(0.6)
1,007
7,709
31.3
28.0
18.2
631
10,284
26.7
7.4
0.0
3,703
6,602
78.1
55.1
22.1
298
1,471
24.9
9.8
3.8
1,717
1,544
29.4
15.6
3.8
123
2,401
23.2
14.5
6.7
2,540
4,267
100.0
12.9
11.6
565
1,836
33.7
21.5
15.1
595
60
26.9
15.1
1.1
2,440
2,880
41.4
25.1
2.2
1,605
3,756
11.5
10.7
6.3
1,263
966
35.3
18.3
5.7
1,175
0
60.7
17.2
11.5
318
380
54.5
23.2
4.2
934
225
27.0
20.4
4.2
1,068
658
18.3
24.4
4.2
465
1,659
30.9
22.6
11.7
251
1,461
31.1
20.4
5.8
348
524
62.7
20.7
7.9
596
2,072
37.0
20.2
0.0
252
3,096
42.9
34.5
7.6
70
9
33.8
25.2
23.5
1,035
146
54.7
24.3
18.9
231
3,486
56.1
40.4
15.4
319
708

Average
Median
Median excl High & Low

$25,081
11,348
21,197

$26,509
12,687
21,726

92%
93%
92%

3.7x
3.1
3.5

3.6x
3.0
3.4

3.2x
2.6
3.0

13.8x
13.0
13.5

12.1x
11.1
11.6

10.7x
10.1
10.3

$10,238
4,951
8,171

11.9
7.9
9.7

43.7
37.5
43.4

25.7
22.9
25.1

8.2
7.6
8.3

$1,790
1,007
1,622

$3,107
1,471
2,019

High
Low

189,373
4,511

226,254
3,740

99%
75%

13.4
0.4

11.8
0.7

9.7
0.4

33.6
4.7

36.3
4.3

32.1
4.1

96,191
764

110.4
(6.1)

100.0
11.5

64.4
7.4

23.5
(0.9)

9,725
70

46,470
0

9/30/14

10/20/14
MergerTech: M&A by Technology Entrepreneurs for Technology Entrepreneurs
5858 Horton Street, Suite 101, Emeryville, CA 94608; phone 925.215.2770
inquiries@mergertech.com

19

3Q14: Roadmap to Valuation

IT Services Composite Performance, 1-year


30.0%
25.0%
20.0%
15.0%
10.0%
5.0%
0.0%
5.0%
10.0%

VRCompositeITSvcs(Equal)IndexValue

NASDAQCompositeIndex(^COMP)IndexValue

Source: CapitalIQ

10/20/14
MergerTech: M&A by Technology Entrepreneurs for Technology Entrepreneurs
5858 Horton Street, Suite 101, Emeryville, CA 94608; phone 925.215.2770
inquiries@mergertech.com

20

3Q14: Roadmap to Valuation

IT Services M&A Activity


Total # of M&A transactions:
Total Deal Value ($M):
Average Deal Value ($M):
Average TEV/Revenue:
Average TEV/EBITDA:

250
$4,928
$65
5.0x
10.1x

Q/Q
24%
120%
33%
-50%
-21%

Y/Y
22%
230%
135%
132%
56%

Transactions by Region
Europe
Asia / Pacific
Africa / Middle East
United States and Canada
Latin America and Caribbean

79
68
10
76
17

Deals by Transaction Range


Greater than $1 billion
$500 - $999.9mm
$100 - $499.9mm
Less than $100mm
Undisclosed

2
0
10
64
174

20x

$250
$200

15x

$150
10x
$100
5x

$50

0x

$0
1Q09

2Q09

3Q09

4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12

AverageDealValue($M)

4Q12

1Q13

2Q13

3Q13

4Q13 1Q14 2Q14 3Q14

AverageTEV/Revenue

3Q14 Most Active Buyers


Cerner Corporation
Ingenico S.A.
VINCI Energies S.A.
Optimal Payments Plc
TIVIT Terceirizao de Tecnologia e Servios S/A
Wipro Ltd.
Dimension Data Australia Pty Ltd
Sinodata Co., Ltd.
Mitsui & Co. Ltd.
Publicis Groupe SA

10/20/14

MergerTech: M&A by Technology Entrepreneurs for Technology Entrepreneurs


5858 Horton Street, Suite 101, Emeryville, CA 94608; phone 925.215.2770
inquiries@mergertech.com

21

3Q14: Roadmap to Valuation

IT Services Top 50 M&A Transactions


Total Transaction

Implied

Implied

Cash % of

Announced Date Target/Issuer

Buyers/Investors

9/29/2014

Angran Shidai Tech

BesTV New Media Co.

$55.0

100.0

9/26/2014

Rejob Co.,Ltd.

ZIGExN Co., Ltd. (TSE:3679)

$18.1

2.2x

100.0

9/25/2014

Sinobpo

Beijing Philisense Technology Co., Ltd. (SZSE:300287)

$97.8

30.0

9/23/2014

SMT S.A. (WSE:SMT)

$4.9

1.0x

16.7x

100.0
100.0

9/19/2014

Hangzhou Unimas Information Technology Co., Ltd.

Beijing Venustech Inc. (SZSE:002439)

9/12/2014

Datatech AS

Atea AS

9/4/2014

Netmagic Solutions Pvt. Ltd.

9/4/2014
9/4/2014
9/4/2014

REV Solutions, Inc. And 99.99% stake in REVTech Solutions India Pvt. Ltd.

Priority Fulfillment Services, Inc.

9/2/2014

Nurun, Inc.

Publicis Groupe SA (ENXTPA:PUB)

8/27/2014

Banelco S.A.

Visa Argentina SA

Value ($M) EV/Revenues EV/EBITDA Consideration (%)

$29.1

$4.7

0.8x

4.3x

NTT Communications Corporation

$95.3

100.0

DigitalHongKong.com (SEHK:8007)

Hotex Holdings Limited

$21.9

62.4x

100.0

DigitalHongKong.com (SEHK:8007)

Liang Tan Yi Xing International Foundation Company Limited; Hotex Holdings Limited

$9.1

62.4x

100.0
100.0

$5.8

$114.4

0.9x

100.0

$4.8

100.0

8/26/2014

Royal Imtech N.V., ICT Division

VINCI Energies S.A.

$336.0

0.3x

7.8x

100.0

8/26/2014

Grupo Sonitel

Cable & Wireless Panama S.A.

$41.0

0.5x

100.0

8/26/2014

SinoCom Software Group Limited (SEHK:299)

$18.6

0.0x

0.2x

100.0

8/26/2014

NIIT Ltd., School Business Undertaking

Hole-In-The-Wall Education Limited

$17.9

100.0

8/26/2014

PCGI Consulting Services Inc. and Paradigm Consulting Group Inc.

SOMOS Consulting Group Ltd.

$14.4

0.7x

69.2

8/25/2014

Pure Hacking Pty Ltd

PS & C Ltd (ASX:PSZ)

$7.7

50.0

8/25/2014

Inova Solution Ltda

B2finance

$4.8

100.0
100.0

8/21/2014

Yuanjiang Information Technology Co., Ltd.

Heilongjiang Tianlun Real Estate Development Co., Ltd. (SZSE:000711)

$89.4

5.3x

8/21/2014

Micro Screen Software Technology (Shanghai) Co., Ltd.

People.cn CO.,LTD (SHSE:603000); People Okooo Media Technology Co., Ltd.

$29.7

100.0

8/12/2014

Oakton Ltd. (ASX:OKN)

Dimension Data Australia Pty Ltd

$158.5

1.0x

13.2x

100.0

8/12/2014

Kryptos Networks Pvt Ltd.

Inmeta Crayon ASA

$3.9

0.7x

100.0

8/7/2014

Synapsis Soluciones y Servicios IT Limitada

TIVIT Terceirizao de Tecnologia e Servios S/A

$196.9

100.0

8/6/2014

Tianjin Binhe Innovation Technology Co., Ltd.

Sinodata Co., Ltd. (SZSE:002657)

$129.5

40.0

8/6/2014

Mitsui Knowledge Industry Co., Ltd. (TSE:2665)

Mitsui & Co. Ltd. (TSE:8031)

$122.8

0.2x

7.7x

100.0
100.0

8/5/2014

Siemens Medical Solutions USA, Inc., Siemens Health Services

Cerner Corporation (NasdaqGS:CERN)

8/5/2014

connectis AG and Softix AG

SPIE SA

8/5/2014

Verifone Commerce Solutions, Inc.

TIO Networks Corp. (TSXV:TNC)

$1,300.0

$52.8

0.4x

100.0

$3.0

100.0

7/30/2014

Ultrawise Incorporated Corporation

DingLi Communications Corp., Ltd. (SZSE:300050)

$101.3

4.1x

17.8

7/30/2014

Ultrawise Incorporated Corporation

$3.4

4.7x

100.0

$33.2

1.1x

11.6x

100.0

$4.3

1.3x

5.6x

33.0

$49.1

100.0
100.0

7/29/2014

Chinasoft International Ltd. (SEHK:354)

7/24/2014

Kamanchi Limited

Nasstar plc (AIM:NASA)

7/21/2014

Xiamen Ritoinfo Technology Company Limited

Capinfo Company Limited (SEHK:1075)

7/17/2014

ATCO I-Tek Inc.

Wipro Ltd. (BSE:507685)

7/16/2014

Radio Network Solutions Proprietary Limited

Poynting Holdings Limited (JSE:POY)

7/16/2014

Yaskawa Information Systems Corp. (TSE:2354)

Mitsui & Co. Principal Investments Ltd.

$195.2

$10.1

83.9

$8.1

0.1x

8.8x

100.0

7/15/2014

R Systems International Limited, Pune And Chennai Unit

R Systems Products & Technologies Limited

$13.0

7/15/2014

Beijing Nasoft Co., Ltd.

$6.9

100.0

7/15/2014

Beijing Nasoft Co., Ltd.

$2.8

100.0

7/8/2014

Beijing THPower Electrical Automation Co. Ltd.

Beijing Jetsen Technology Co., Ltd. (SZSE:300182)

$6.5

5.6x

100.0

7/6/2014

Comsec Consulting Ltd.

Eldav Investments Ltd (TASE:ELDAV)

$22.4

100.0

7/3/2014

R and S Consulting CC

Pan-African Private Equity Funds

$13.2

7/2/2014

GlobalCollect BV

Ingenico S.A. (ENXTPA:ING)

$1,119.4

2.7x

16.4x

100.0

7/2/2014

FX Networks Ltd.

Vocus (New Zealand) Holdings Limited

$104.5

2.0x

9.0x

31.2

7/2/2014

New Vision Baltija UAB

PSI Group ASA (OB:PSI)

$6.8

0.6x

90.3

7/1/2014

Meritus Payment Solutions, Inc.

Optimal Payments Plc (AIM:OPAY)

$211.4

2.8x

16.3x

100.0

7/1/2014

MNS Holdings LLC

Tolt Solutions, Inc.

$28.2

0.8x

7/1/2014

Global Merchant Advisors, Inc.

Optimal Payments Plc (AIM:OPAY)

$15.0

1.8x

3.3x

100.0

7/1/2014

Beijing HUITONG High-tech information Co. Ltd.

Tatwah Smartech Co., Ltd. (SZSE:002512)

$14.9

4.6x

100.0

Source: CapitalIQ

10/20/14

MergerTech: M&A by Technology Entrepreneurs for Technology Entrepreneurs


5858 Horton Street, Suite 101, Emeryville, CA 94608; phone 925.215.2770
inquiries@mergertech.com

22

3Q14: Roadmap to Valuation


IT Services VC Activity
Date of Funding Company
Amount Currency Series City
State
7/8/2014
Ayehu Software Technologies na
USD
A
Tel Aviv

Country
ISR

Source: Mattermark, Crunchbase, AngelList

10/20/14

MergerTech: M&A by Technology Entrepreneurs for Technology Entrepreneurs


5858 Horton Street, Suite 101, Emeryville, CA 94608; phone 925.215.2770
inquiries@mergertech.com

23

3Q14: Roadmap to Valuation


Software:
Top 40 Public Companies, by Market Capitalization
EV / Revenues
Company
Microsoft Corporation
Oracle Corporation
VMware, Inc.
Salesforce.com, Inc
Adobe Systems Inc.
Intuit Inc.
Symantec Corporation
Dassault Systemes SA
Workday, Inc.
Activision Blizzard, Inc.
Check Point Software Technologies Ltd.
Nintendo Co. Ltd.
Autodesk, Inc.
CA Technologies, Inc.
Citrix Systems, Inc.
Mobileye N.V.
Electronic Arts Inc.
Red Hat, Inc.
ServiceNow, Inc.
Gemalto NV
Concur Technologies, Inc.
Ansys, Inc.
Open Text Corporation
Splunk, Inc.
Sage Group plc
Synopsys Inc.
GungHo Online Entertainment, Inc.
Constellation Software Inc.
FactSet Research Systems Inc.
Cadence Design Systems Inc.
Tableau Software, Inc.
Oracle Corporation Japan
Nuance Communications, Inc.
CDK Global, Inc.
Oracle Financial Services Software Limited
FireEye, Inc.
Trend Micro Inc.
PTC Inc.
Hundsun Technologies Inc.
Fortinet Inc.

Pricing data as of:


Total cash includes cash & ST investments
Source: CapitalIQ

10/20/14

Market Cap Enterprise Value


($M)
($M)
$381,999
$320,273
169,630
151,161
40,362
35,225
35,611
37,114
34,508
32,496
25,028
23,613
16,229
14,275
16,175
14,980
15,345
14,008
14,916
15,033
13,210
11,977
12,873
5,898
12,521
11,361
12,435
11,084
11,733
12,190
11,377
11,228
11,132
9,402
10,546
9,743
8,564
8,316
7,933
7,481
7,238
7,096
6,963
6,179
6,749
7,641
6,639
5,801
6,373
6,958
6,186
5,365
5,492
4,854
5,336
5,659
5,080
4,944
4,992
4,770
4,991
4,364
4,963
4,116
4,924
6,412
4,903
4,522
4,692
3,614
4,552
4,087
4,534
3,487
4,329
4,340
4,286
4,222
4,138
3,580

Ticker
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NasdaqGS:ATVI
NasdaqGS:CHKP
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Current Price
as % of 52 wk
97%
89%
83%
86%
93%
99%
92%
96%
71%
86%
95%
74%
94%
77%
98%
91%
92%
90%
82%
80%
97%
85%
94%
52%
83%
93%
61%
99%
94%
91%
71%
89%
79%
89%
82%
31%
89%
91%
100%
94%

2013

2014E

EV / EBITDA
2015E

2013

2014E

2015E

3.6x
4.0x
6.5x
8.7x
7.3x
5.2x
2.0x
5.5x
28.6x
3.0x
8.2x
0.9x
4.9x
2.3x
3.9x
118.3x
2.4x
6.5x
18.8x
2.3x
12.2x
7.1x
5.5x
18.3x
3.0x
2.5x
2.8x
4.9x
5.4x
3.1x
16.4x
2.9x
3.2x
0.0x
5.7x
20.9x
3.2x
3.2x
20.4x
5.3x

3.4x
3.9x
5.8x
6.9x
7.9x
5.3x
2.1x
5.1x
18.2x
3.2x
8.1x
1.2x
4.6x
2.5x
3.8x
83.4x
2.3x
5.7x
12.4x
2.3x
9.7x
6.5x
4.0x
13.6x
3.2x
2.6x
2.9x
3.3x
5.3x
3.0x
11.7x
2.7x
3.2x
NM
5.5x
9.5x
3.4x
3.2x
16.8x
4.8x

3.1x
3.7x
5.1x
5.6x
6.6x
5.2x
2.1x
4.6x
12.4x
3.1x
7.6x
1.3x
4.4x
2.5x
3.5x
52.0x
2.1x
5.0x
8.9x
2.0x
7.8x
5.9x
3.9x
10.2x
3.0x
2.4x
3.0x
2.9x
4.9x
2.8x
8.6x
2.6x
3.0x
NM
5.0x
6.5x
3.3x
3.1x
13.5x
4.2x

9.8x
9.3x
24.1x
NM
42.2x
18.2x
7.4x
18.2x
NM
10.2x
15.5x
NM
26.6x
7.2x
18.8x
NM
42.2x
32.4x
NM
15.9x
213.3x
15.3x
23.3x
NM
10.9x
14.9x
5.8x
38.2x
15.1x
15.6x
NM
10.6x
30.5x
0.0x
15.9x
NM
10.4x
15.0x
95.5x
41.4x

10.0x
8.0x
16.3x
40.1x
29.4x
15.0x
6.6x
16.3x
NM
9.3x
14.0x
28.4x
24.9x
6.5x
12.5x
208.4x
8.7x
21.5x
142.0x
12.9x
61.4x
12.7x
12.1x
NM
10.8x
8.4x
5.0x
17.1x
14.2x
9.6x
187.1x
9.4x
11.8x
NM
14.1x
NM
9.9x
11.7x
87.9x
24.8x

8.7x
7.4x
13.9x
30.9x
20.3x
16.3x
6.1x
14.0x
NM
8.8x
13.4x
13.2x
21.3x
6.4x
11.5x
104.2x
8.5x
18.6x
80.9x
10.5x
47.2x
11.6x
11.4x
187.9x
10.1x
7.9x
5.5x
14.1x
12.9x
8.6x
97.2x
9.0x
11.5x
NM
12.5x
NM
9.7x
10.1x
65.0x
20.6x

Rev Growth %
Revenue
(TTM, $M)
(TTM)
$86,833
11.5
38,499
3.0
5,589
15.0
4,767
37.3
4,115
(1.2)
4,506
8.0
6,702
(3.5)
2,899
2.3
616
74.4
4,289
(13.9)
1,436
5.3
5,577
(10.6)
2,371
3.7
4,489
(1.6)
3,048
9.4
121
0.0
3,840
1.3
1,667
16.6
542
65.5
3,269
1.2
668
31.8
896
8.0
1,625
19.2
366
51.6
2,208
(3.7)
2,023
5.8
1,805
95.9
1,467
40.8
920
7.3
1,501
7.1
308
87.8
1,498
0.0
1,893
2.2
1,974
7.3
651
14.2
268
132.9
1,094
9.8
1,335
4.8
201
17.1
685
20.0

GM %
EBITDA % Rev Growth % Total Cash Total Debt
(MRQ, $M) (MRQ, $M)
(LTM)
(LTM)
(2-yr fwd)
69.0
37.0
10.6
$84,941
$23,215
61.4
43.7
3.8
51,616
32,570
85.8
26.0
15.6
6,637
1,500
76.0
0.1
28.0
845
2,347
85.2
17.5
10.3
3,520
1,508
85.8
33.0
5.1
1,914
499
83.5
29.0
0.9
4,049
2,095
86.8
28.6
11.7
1,843
508
63.9
(25.2)
55.2
1,822
485
65.1
27.2
4.6
4,204
4,321
88.4
54.7
6.1
1,234
0
28.2
(7.4)
(4.2)
7,556
0
87.1
15.3
6.8
1,906
747
85.5
31.7
(0.9)
3,260
1,909
85.5
23.8
9.1
820
1,277
74.6
4.1
0.0
149
0
60.9
9.5
5.3
2,316
586
84.8
18.9
15.0
803
0
63.3
(15.5)
48.2
677
429
38.5
14.9
10.2
510
14
62.5
3.3
25.6
816
673
87.4
46.5
9.6
784
0
72.8
27.6
11.5
428
1,319
86.7
(40.8)
37.2
838
0
94.3
29.5
0.5
186
787
82.5
17.8
6.1
903
83
67.0
55.9
5.1
727
9
32.3
9.8
27.6
101
439
61.6
36.6
7.8
136
0
85.3
19.0
8.1
655
433
91.4
5.0
48.1
627
0
0.0
0.0
4.7
894
0
59.2
9.1
2.9
888
2,376
39.1
21.3
0.0
403
22
51.2
39.5
11.3
1,110
0
60.0
(103.6)
97.3
464
0
83.0
35.1
4.1
1,133
0
72.3
23.7
4.1
304
315
86.4
20.7
25.9
84
4
70.3
12.5
17.2
558
0

Average
Median
Median excl High & Low

$24,753
7,933
15,650

$21,930
7,481
14,366

85%
89%
87%

9.8x
4.9
7.2

7.8x
4.3
5.9

6.1x
4.1
5.0

26.7x
15.6
21.2

31.8x
12.9
27.3

26.3x
12.1
22.2

$5,330
1,805
3,268

19.6
7.3
17.4

69.7
74.6
71.3

15.8
20.7
18.1

14.5
8.1
13.1

$4,926
845
2,894

$2,063
433
1,295

High
Low

381,999
4,286

320,273
3,487

100%
31%

118.3
0.0

83.4
1.2

52.0
1.3

213.3
0.0

208.4
5.0

187.9
5.5

86,833
121

132.9
(13.9)

94.3
0.0

55.9
(103.6)

97.3
(4.2)

84,941
84

32,570
0

9/30/14

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3Q14: Roadmap to Valuation


Software Composite Performance, 1-year
25.0%

20.0%

15.0%

10.0%

5.0%

0.0%

5.0%

10.0%

VRCompositeSoftware(Equal)IndexValue

NASDAQCompositeIndex(^COMP)IndexValue

Source: CapitalIQ

10/20/14

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3Q14: Roadmap to Valuation

Software M&A Activity


Total # of M&A transactions:
Total Deal Value ($M):
Average Deal Value ($M):
Average TEV/Revenue:
Average TEV/EBITDA:

Q/Q
18%
252%
99%
-61%
24%

347
$29,616
$226
4.0x
24.9x

Y/Y
38%
61%
6%
-15%
151%

Transactions by Region
Europe
Asia / Pacific
Africa / Middle East
United States and Canada
Latin America and Caribbean

102
84
10
131
6

Deals by Transaction Range


Greater than $1 billion
$500 - $999.9mm
$100 - $499.9mm
Less than $100mm
Undisclosed

5
5
14
98
211

16x
14x
12x
10x
8x
6x
4x
2x
0x

$250
$200
$150
$100
$50
$0
1Q09

2Q09

3Q09

4Q09

1Q10

2Q10

3Q10

4Q10

1Q11

2Q11

AverageDealValue($M)

3Q11

4Q11

1Q12

2Q12

3Q12

4Q12

1Q13

2Q13

3Q13

4Q13

1Q14

2Q14 3Q14

AverageTEV/Revenue

3Q14 Most Active Buyers


SAP America, Inc.
Vista Equity Partners
Microsoft Corporation
Thoma Bravo, LLC
Micro Focus International plc
P2 Capital Partners, LLC
Shanghai Chenghai Enterprise Development Co., Ltd.
Gemalto NV
Bison Capital Holding Company Limited
Teleperformance S.A.

10/20/14

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3Q14: Roadmap to Valuation

Software Top 50 M&A Transactions


Total Transaction

Implied

Implied

Cash % of

Announced Date Target/Issuer

Buyers/Investors

Value ($M) EV/Revenues EV/EBITDA Consideration (%)

9/29/2014

TIBCO Software Inc. (NasdaqGS:TIBX)

Vista Equity Partners

$4,533.9

3.7x

23.8x

100.0

9/24/2014

IGG Inc. (SEHK:8002)

$49.4

3.6x

11.0x

100.0

9/22/2014

Epiq Systems, Inc. (NasdaqGS:EPIQ)

P2 Capital Partners, LLC

$993.4

2.2x

16.4x

100.0

9/22/2014

PAI Group, Inc.

Sage Group plc (LSE:SGE)

$157.8

4.1x

100.0

9/18/2014

Concur Technologies, Inc. (NasdaqGS:CNQR)

SAP America, Inc.

$8,468.0

11.5x

235.8x

100.0

9/16/2014

GDC Technology Limited

Huayi Brothers Media Corporation (SZSE:300027)

$67.6

100.0

9/15/2014

Mojang AB

Microsoft Corporation (NasdaqGS:MSFT)

$2,500.0

7.7x

100.0

9/15/2014

The Attachmate Group, Inc.

Micro Focus International plc (LSE:MCRO)

$2,302.4

2.5x

13.7x

9/15/2014

Mobilethink A/S

Spirent Communications Plc. (LSE:SPT)

$20.0

2.4x

100.0

9/12/2014

Guangzhou Deepsea Software Development Co., Ltd.

The Great Wall Group Co., Ltd. Guangdong (SZSE:300089)

9/11/2014

Movirtu Limited

BlackBerry Limited (TSX:BB)

$160.1

$32.5

100.0

9/8/2014

MK Test Systems Ltd.

Synova Capital LLP

$32.3

100.0

9/5/2014

Global Computer Enterprises Inc., Certain Assets

General Services Administration

$18.3

100.0

9/3/2014

Clear2Pay nv/sa

Fidelity National Information Services, Inc. (NYSE:FIS)

100.0

9/2/2014

Compuware Corporation (NasdaqGS:CPWR)

Thoma Bravo, LLC

9/2/2014

BeyondTrust Software, Inc.

9/2/2014
9/2/2014
9/2/2014

$492.7

$2,366.4

2.9x

24.5x

100.0

Veritas Capital

$310.0

100.0

Shanda Games Limited (NasdaqGS:GAME)

Haitong Securities Co., Ltd. (SHSE:600837)

$204.5

2.8x

6.3x

100.0

XRS Corporation (NasdaqCM:XRSC)

Omnitracs, LLC

$190.6

3.4x

28.9x

100.0

MicroEdge, LLC

Blackbaud Inc. (NasdaqGS:BLKB)

$160.0

100.0

9/2/2014

SOFTPRO GmbH

Kofax Limited (LSE:KFX)

$34.7

2.6x

34.7x

100.0

9/1/2014

Jinhua Licheng Information Technology Corporation Limited

Zhangjiagang Chemical Machinery Co., Ltd. (SZSE:002564)

$69.1

2.7x

100.0

9/1/2014

Geminose Inc.

Starbreeze AB (publ) (OM:STAR)

$17.2

8/21/2014

Supercell Oy

SoftBank Corp. (TSE:9984)

$344.1

3.7x

10.3x

100.0

8/19/2014

DIANDIAN Interacitve (Beijing) Technology Ltd.

Shanghai Chenghai Enterprise Development Co., Ltd. (SHSE:600634)

$960.0

100.0

8/15/2014

Beijing Hugeland Technologies Co., Ltd.

Beijing Tongtech Co., Ltd. (SZSE:300379)

$68.3

7.3x

33.7

8/14/2014

Shanghai Douwan Network Technology Co., Ltd.

Song Liao Automotive Co., Ltd (SHSE:600715)

$232.0

17.3x

100.0

8/14/2014

Ningbo KingT software Co., Ltd

Wonders Information Co., Ltd (SZSE:300168)

$73.1

100.0

8/12/2014

NonStop Games Ltd

King Digital Entertainment plc (NYSE:KING)

$90.0

100.0

8/8/2014

SafeNet, Inc.

Gemalto NV (ENXTAM:GTO)

$890.0

100.0

8/7/2014

Synergy Marketing, Inc. (JASDAQ:3859)

Yahoo Japan Corporation (TSE:4689)

$80.7

1.7x

12.0x

100.0

8/6/2014

Sophisticated Business Systems, Inc.

BluePhoenix Solutions USA Inc.

$23.5

8/4/2014

Jinny Software Ltd.

Enghouse Systems Limited (TSX:ESL)

$17.7

0.8x

100.0

8/1/2014

Enett International Pty Ltd

Travelport Worldwide Limited (NYSE:TVPT)

$65.0

7.4x

100.0

7/31/2014

Gamania Digital Entertainment Co., Ltd. (GTSM:6180)

GigaMedia Ltd. (NasdaqGS:GIGM)

$18.8

0.5x

11.7x

100.0

7/30/2014

NQ Mobile Inc. (NYSE:NQ)

Bison Capital Holding Company Limited

$773.0

2.5x

100.0

7/30/2014

TouchNet Information Systems, Inc.

Heartland Payment Systems, Inc. (NYSE:HPY)

$375.0

100.0

7/29/2014

Evermobile ST, Ltda.

Ciao Technology, Ltda.

$18.8

7/23/2014

UT Game

Zhejiang Great Southeast Co.,Limited (SZSE:002263)

$90.7

40.0

7/22/2014

Juniper Networks Inc., Pulse Product Portfolio

Siris Capital Group, LLC

$250.0

50.0

7/22/2014

FEESA Limited

KBC Advanced Technologies plc (AIM:KBC)

$19.2

4.9x

89.1

7/21/2014

Exact Software Deutschland GmbH

Sage Software GmbH

$22.0

1.6x

100.0

7/16/2014

Beijing WushenCentury Network Technology Co., Ltd

Anhui Deli Household Glass Co., Ltd. (SZSE:002571)

$159.8

32.8

7/9/2014

Aegis Business Group, Inc.

Teleperformance S.A. (ENXTPA:RCF)

$610.0

1.5x

100.0

7/9/2014

Neebula Systems Ltd.

ServiceNow, Inc. (NYSE:NOW)

$100.0

100.0

7/9/2014

Scytl Secure Electronic Voting, S.A.

SAP Ventures

$20.0

5.2x

100.0

7/8/2014

Shanghai P&C Information Technology Co., Ltd

Beijing Orient National Communication Science & Technology Co., Ltd. (SZSE:300166)

$72.7

25.0

7/7/2014

Trusted Positioning Inc.

InvenSense, Inc. (NYSE:INVN)

$31.0

68.4

7/4/2014

Agencyport Software Europe Limited

Xchanging PLC (LSE:XCH)

$109.9

3.4x

12.8x

100.0

7/3/2014

Total Objects Limited

Xchanging PLC (LSE:XCH)

$36.0

42.0x

100.0

7/2/2014

Beijing JMT Mobile Co., Ltd.

Shenzhen Keybridge Communications Co., Ltd. (SZSE:002316)

$33.3

10.7x

100.0

Source: CapitalIQ

10/20/14

MergerTech: M&A by Technology Entrepreneurs for Technology Entrepreneurs


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3Q14: Roadmap to Valuation

Software VC Activity
Includes early-stage rounds only

Date of Funding
9/30/2014
9/28/2014
9/25/2014
9/24/2014
9/18/2014
9/15/2014
9/10/2014
8/24/2014
8/21/2014
8/18/2014
8/13/2014
8/7/2014
8/7/2014
8/6/2014
8/5/2014
7/28/2014
7/22/2014
7/18/2014
7/18/2014
7/18/2014
7/18/2014
7/16/2014
7/10/2014
7/4/2014
7/2/2014

Company
Baremetrics
argus-sec.com
Context Relevant
Numerify
Code Climate
Cloudyn
Bastille Networks
BugHerd
Lastline
BlockTrail B.V.
Verold
Adatao
GridCraft
Splice Machine
Bitglass
SkyKick
EdgeWave
Aspire
FFFavs
ArchiveSocial
Wemo Lab
Bannerman
Malwarebytes
Hungama Digital Media
Veros Systems

Amount
500,000
4,000,000
13,500,000
15,000,000
2,000,000
4,000,000
1,500,000
1,000,000
10,000,000
500,000
1,600,000
13,000,000
2,200,000
3,000,000
25,000,000
3,000,000
6,000,000
400,000
50,000
1,000,000
2,720,000
120,000
30,000,000
40,000,000
3,000,000

Currency
USD
USD
USD
USD
USD
USD
USD
AUD
USD
EUR
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD

Series
Seed
A
B
B
Seed
A
Angel
A
Venture
Seed
B
A
Seed
B
B
Venture
A
Seed
Seed
Seed
Venture
Seed
A
Venture
A

City
Birmingham
Tel Aviv
Seattle
Cupertino
New York
Tel Aviv
Atlanta
Melbourne
Redwood City
Amsterdam
Toronto
Sunnyvale
Boulder
San Francisco
Campbell
Seattle
San Diego

State Country
AL USA
ISR
WA USA
CA USA
NY USA
ISR
GA USA
VIC AUS
CA USA
NLD
ON CAN
CA
CO USA
CA USA
CA USA
WA USA
CA USA

Santa Monica
Durham
Venice
San Francisco
San Jose
Mumbai
College Station

CA
NC
CA
CA
CA
TX

USA
USA
USA
USA
USA
IND
USA

Source: Mattermark, Crunchbase, AngelList

10/20/14

MergerTech: M&A by Technology Entrepreneurs for Technology Entrepreneurs


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inquiries@mergertech.com

28

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