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Software M&A Update

Q1 2017 June 28, 2017

Software Investment Banking and M&A Advisory

Table of Contents

• M&A Market Brief – Page 3-6

• Notable Software M&A Transactions in Q1 – Page 7-8

• Publicly Traded Software Firms (Valuation Table) – Page 9-11

• M&A Spotlight: Mobileye / Intel – Page 12

• M&A Spotlight: AppDynamics / Cisco – Page 13

• Buyout Spotlight: CCC Information Services / Advent International – Page 14

• Buyout Spotlight: D+H / Vista Equity Partners – Page 15

DISCLAIMER

Solganick & Co. is an independent investment banking and M&A advisory firm focused exclusively on the global Software, IT

Services and Digital Media industry sectors. We cover the software sector comprehensively including enterprise, cloud, SaaS and

cyber security. We advise buyers and sellers of companies and efficiently execute M&A transactions that help increase

shareholder value. Our professionals have advised on $20+ billion in M&A transactions to date and have current clients and

relationships globally with entrepreneurs, companies and leading private equity firms within the sectors we cover.

Sources for our research and data include: Dealogic, ValueWalk, Pwc, Company Websites, SEC Filings, MergerMarket, Berkery Noyes, Deloitte, Fortune, 451 Research, medium.com, Vista Point, CNBC

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Solganick & Co.

Solganick & Co.

M&A Market Brief Global, U.S. and Software M&A Activity Q1 2017

Worldwide

With global economic uncertaintyleading up to US election andfallout from Brexit, the totalnumber of M&A deals announcedin Q1 2017 fell by 17.9% versus Q12016, overal deal value was up by8.9% to a total of $678.5 billion. Thisdynamic fed through to liftaverage deal value to $403.4million.

The increase in M&A volume hasbeen driven by cross-borderacquisitions, which have doubledin the last 5 years to $288.4bn in2017 Q1. The US is the topacquiring nation for cross-borderM&A

Increased scrutiny of Chinesebuyers by regulators andpoliticians in target markets hasalso prompted the steep scalingback of activity. The outboundpurchases by Chinese buyersdropping by a tremendous 86percent (by value) compared tothe same quarter last year.

Cross-border M&A deals involvingEuropean targets also fell 39% forQ1 2017 as the world is opting totake a more restrained approachon Brexit aftermath.

M&A fundamentals are pointing toa vigorous year of deal making in2017, especially in the technologyspace with disruptive industriessuch as artificial intelligence,fintech and the internet of thingscontinuing to attract investorattention. As such, investors canexpect more volatility in 2017.

United States

Turmoil creates opportunity. US M&A activity have had an encouraging start to 2017.

Deal value was up by 21% year-on-year, from $251 billion in Q1 2016 to $303 billion in Q1 2017,

Although overall deal value was stable and volume increased, megadeals worth $5B or more dipped. The value and volume of those were down by 29% and 44%, respectively.

While the trends in megadeals and middle market deals are important, the overall volume increase in Q1 2017 compared to Q1 2016 indicates the market is holding steady.

Outbound US activity was more prevalent than inbound in Q1, comprising 77% of cross-border deal value

Software

Software dominated overall technology deal value and volumes during Q1. The transaction volume increased 16 percent over the past three months, from 456 to 528.

Traditional technology corporates and non-digital businesses striving to maintain relevance through acquisition of emerging technologies

Strategic acquirers completed seven of the top ten highest value software deals in Q1 2017. Intel Corporation acquired Mobileye with the deal value of $15.3 billion and a revenue multiple of 41.6x, which is the most influential deal of the software industry in Q1.

Technology and Digital Media

Investment Banking M&A Advisory

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Software M&A in Q1 2017

While normally a slow period for technology M&A as companies digest & integrate acquisitions performed in the end of the year, Q1 2017 started off strong with both volumes and values surpassing levels seen since 2014. Q1 2017 dealmakers continued to focus on Software acquisitions, with buyers representing traditional technology corporates and non-digital businesses striving to maintain relevance through the acquisition of emerging technologies. The 2% increase in total deal value from the 1st quarter of 2016 was inflated by Intel’s blockbuster acquisition of Mobileye for over $15.4B, representing the first and only megadeal thus far in 2017. The Mobileye acquisition follows several related transactions in 2016 by high profile acquirers such as Uber’s acquisition of Otto for $680 million and General Motors’ acquisition of Cruise Automation for $581 million. This continuous fever of big companies over the automatic driving indicates the high potential of this specific industry and the related market of integration and interaction between software and hardware.

Fig 1. Global M&A Deal Value — Quarterly Comparison

Source: MergerMarket 2017



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Fig 2. Tech Deal Overview

Fig 3. Software M&A Deals – Quarterly Comparison

Source: Berkery Noyes



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Software deals have traditionally dominated U.S. tech deals. Over the past five years, from 2013-2017, software deals dominated the category of large and mid-size U.S. technology deals ($100 million - $10 billion), announcing $229.1 billion in deals.

Outlook for the Rest of 2017 The impact of 2016 electoral and referendum outcomes, in addition to a number of key global elections and administration changes slated for 2017, are likely to contribute to regulatory uncertainty. No one really knows what's coming but bulking up bolsters survival chances. With ongoing modest GDP growth expected, companies will look externally for opportunities to complement organic growth, benefiting from their experience navigating 2016’s uncertain market conditions. The technology industry, which has been one of the most active sectors, should also continue seeing high M&A rates, with continued investment from non-digital buyers, renewed interest from foreign investors and a potential M&A spree from technology giants if cash repatriation via tax reform comes to fruition. Internet, tech-enabled services, financial technology and healthcare IT will all experience more consolidation.



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Table 1. Notable Software M&A Transactions, Q1 2017

Announcement Date

Target Acquirer Target Description Deal Size EV /

RevenueEV /

EBITDA

03/28/17 Junifer SystemsGentrack Gro up (NZX/ASX: GTK)

Provider of customer information and billing systems created to cover the gap in the provision of backend systems for utility companies.

$56.45M 4.19x

03/22/17 AppDynamicsC isco Systems

(NASDAQ: C SC O)

Developer of an application performance management (APM) software created to monitor the performance of business applications.

$3.70B 17.52x

03/22/17 Invincea, Inc. Sopho s (LSE : SOPH)Developer of an endpoint security software intended to kill enterprise IT threats without impacting business performance.

$120.00M 12.24x 13.59x

03/20/17BI- SAM

Technologies SA

FactSet Research Systems (NASDAQ:

FDS)

Developer of portfolio analytics platforms intended for investment strategy evaluation.

$205.20M 7.33x 12.12x

03/13/17 Davis + Henderso nM isys, Vista E quity

Partners

Developer of lending and payments software products created to deliver financial technology to banks worldwide.

$3.67B 2.88x

03/13/17 M obilE ye N.V. Intel (NASDAQ:

INTC ) Developer of collision avoidance system designed to reduce vehicle injuries and fatalities.

$15.30B 41.60x

03/03/17 TIO Netwo rksPaypal (Nasdaq:

PYPL)

Provider of a cloud-based multi-channel bill payment processing and receivables management platform designed to process real-time customer account payments.

$232.24M 2.48x

02/28/17 LightC yber LtdPalo Alto Networks

(NYSE : PANW )

Developer of a behavioral attack detection platform designed to identify attacks based on identifying behavioral anomalies inside the network..

$130.00M 130.00x 16.64x

02/27/17C C C Informatio n

ServicesAdvent

Internatio nal

Developer of SaaS collision repair and insurance estimating software created to help customers make informed auto collision claims and repair management decisions.

$3.00B

02/22/17Halogen Software

Inc.Saba Software, Vector C apital

Developer of a cloud-based employee performance and talent management software created to ensure that all talent programs - recruitment, learning, succession and compensation - are tightly connected to and reinforce improved, ongoing performance and brilliant business outcomes.

$223.84M 2.58x 36.86x

02/10/17

Benefits Administration and

HR Business Process

Outsourcing Platfo rm

Blackstone GroupProvider of cloud-based benefit consultation services.

$4.8B 2.12x 21.58x

02/09/17 C omptel No kia(NOK)Comptel designs and builds software-based mobile data communications solutions for the telecommunication industry.



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Table 1. Notable Software M&A Transactions, Q4 2017 – Cont’d

Source: PitchBook

Announcement Date

Target Acquirer Target Description Deal Size EV /

RevenueEV /

EBITDA

02/03/17 Trello , Inc.Atlassian (NASDAQ:

TE AM )

Developer of an online collaboration tool. The company operates an online collaboration tool that offers a visual and collaborative way to manage projects and get organized.

$425.00M 0.93x 10.77x

02/02/17 M SC SoftwareHexagon (STO:

HE XA B)Provider of computer aided engineering software. $834.00M 3.63x

02/01/17Double- Take

SoftwareC arbonite (NAS:

C ARB)

Provider of data protection and recovery software intended to help customers to protect and recover business-critical data and applications to support disaster recovery, high availability and centralized backup.

$65.25M

01/24/17 AquilentBooz Allen

Hamilton (NYSE : BAH)

Developer of web-based software for the federal government. The company offers web-content management services for the acquisition, management, storage, preservation and delivery of content within and across an organization.

$250.00M 0.44x 119.18x

01/23/17 LANDE SK SoftwareHeat Software,

C learlake C apital Group

Provider of systems security services and process management software.

$1.10B

01/19/17 Automic SoftwareC A Technologies

(NASDAQ: C A)

The company's automation software platform offers software for data automation, finance automation, cloud automation, business processes, applications and infrastructure.

$637.12M 4.21x 27.50x

01/19/17 IntraLinksSynchronoss Technologies

(NASDAQ: SNC R)

Provider of a cloud-based content collaboration network intended to offer online workspace for document exchange.

$821.00M 2.66x



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Publicly Traded Software Firms, Valuation Table ( Average EV/EBITDAs are calculated excluding the companies with negative EV/EBITDA)

Enterprise Software Stock Price (as of 3/31)

Market Cap ($USD mm)

Enterprise Value (EV) / Revenue EV/EBITDA

Microsoft Corporation [MSFT] $65.86 $521,941 5.5 17.0

Oracle Corporation [ORCL] $44.61 $188,299 4.8 11.7

Pegasystems Inc. [PEGA] $43.85 $3,348 4.5 54.3

Red Hat, Inc. [RHT] $86.5 $15,539 6.5 35.2

SAP SE [SAP] $98.17 $117,608 5.1 17.7

SS&C [SSNC] $35.40 $7,089 6.5 18.5

Average (Mean) 5.5 25.7

Banking and Financial Software Stock Price (as of 3/31)

Market Cap ($USD mm)

Enterprise Value (EV) / Revenue EV/EBITDA

CA Technologies Inc. [CA] $ 31.72 $ 13,513 3.1 8.4

CoreLogic, Inc. [CLGX] $ 40.72 $ 3,563 2.7 13.0

NCR Corp. [NCR] $ 45.68 $ 5,737 1.3 9.5

DST Systems Inc. [DST] $ 122.50 $ 4,043 2.8 11.0

Fidelity National Information [FIS] $ 79.62 $ 25,956 3.9 14.6

Fiserv, Inc. [FISV] $ 115.31 $ 25,403 5.4 16.2

Genpact Limited [G] $ 24.76 $ 5,122 2.2 13.4

Jack Henry & Associates [JKHY] $ 93.10 $ 7,394 5.3 15.0




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Security Software Stock Price (as of 3/31)

Market Cap ($USD mm) EV/Revenue EV/EBITDA

CA Technologies Inc. [CA] $31.72 $13,513 3.1 8.4

Check Point Software [CHKP] $102.66 $17,468 9.3 19.1

FireEye Inc. [FEYE] $12.61 $2058 2.6 N/A

Fortinet, Inc. [FTNT] $38.35 $6620 4.5 62.1

Imperva, Inc. [IMPV] $41.05 $1325 4.0 N/A

Progress Software Corporation [PRGS] $29.05 $1437 3.3 160.9

Red Hat, Inc. [RHT] $86.5 $15,539 6.5 35.2

Symantec Corp. [SYMC] $30.68 $20,556 4.4 21.9


Software - NEC Stock Price (as of 3/31)


BroadSoft, Inc. [BSFT] $40.20 $1,193 3.6 31.0

CA Technologies Inc. [CA] $31.72 $13,513 3.1 8.4

CommVault Systems, Inc. [CVLT] $50.80 $2,294 3.1 141.5

PTC Inc. [PTC] $52.55 $6,023 5.7 131.7

Splunk Inc. [SPLK] $62.29 $8,341 4.5 62.1


CRM Stock Price (as of 3/31)


Microsoft Corporation [MSFT] $65.86 $521,941 5.5 17.0

Oracle Corporation [ORCL] $44.61 $188,299 4.8 11.7

Salesforce.com, Inc. [CRM] $82.49 $56,736 6.9 77.1

SAP SE [SAP] $98.17 $117,608 5.1 17.7




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Business Intelligence & Analytics Stock Price (as of 3/31)


Teradata Corporation [TDC] $31.12 $4,036

MicroStrategy Inc. [MSTR] $187.8 $2,146


Source: PitchBook

HR/HCM Software Stock Price (as of 3/31)


Cornerstone OnDemand [CSOD] $38.89 $2,162 5.0 N/A

Workday Inc. [WDAY] $83.28 $16,507 9.6 N/A

Average (Mean) 7.3 N/A



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M&A Spotlight

Mobileye acquired by Intel for $15.3 Billion Mar 13, 2017-First they partnered, and now comes the acquisition: The computing giant Intel has confirmed that it is acquiring Mobileye, a leader in computer vision for autonomous driving technology, for $15.3 billion — the biggest-ever acquisition of an Israeli tech company. Specifically, “Under the terms of the agreement, a subsidiary of Intel will commence a tender offer to acquire all of the issued and outstanding ordinary shares of Mobileye for $63.54 per share in cash, representing a fully-diluted equity value of approximately $15.3 billion and an enterprise value of $14.7 billion,” the company noted in a statement. Mobileye today covers a range of technology and services, including sensor fusion, mapping, front- and rear-facing camera tech and, beginning in 2018, crowdsourcing data for high-definition maps, as well as driving policy intelligence underlying driving decisions. This deal will bring under Intel’s umbrella not only a much bigger range of the different pieces that go into autonomous driving systems, but also a number of relationships with automakers. In the call today, Mobileye’s CTO and co-founder Amnon Shashua said the company is working with 27 car manufacturers, including 10 production programs with Audi, BMW and others going into 2017. Intel has disclosed several other acquisitions in Israel to fill out that strategy, including buying a personal assistant platform from Ginger Software; Omek Interactive for gesture-based technologies; and Replay Technologies for 3D video. Source: https://techcrunch.com/2017/03/13/reports-intel-buying-mobileye-for-up-to-16b-to-expand-in-self-driving-tech/

https://techcrunch.com/2017/03/13/reports-intel-buying-mobileye-for-up-to-16b-to-expand-in-self-driving-tech/

https://techcrunch.com/2017/03/13/reports-intel-buying-mobileye-for-up-to-16b-to-expand-in-self-driving-tech/



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Cisco Acquired AppDynamics for $3.7 Billion

March 22, 2017 – Cisco (NASDAQ: CSCO) today announced that it has completed the acquisition of AppDynamics, a leader in application and business monitoring. Together, Cisco and AppDynamics will deliver visibility across the network, data center, security and applications and drive digital transformation that improves customer experiences. AppDynamics empowers the world's largest customers to digitally transform themselves faster and with more confidence. With AppDynamics, enterprises can watch every line of code and understand its impact on user experience and application performance, while providing real-time insight into the digital business. Together with AppDynamics, Cisco will now be able to offer intelligence, correlation and insights at every level of the infrastructure, security and application. This will enable customers to make more informed IT decisions and improve business results. "We acquired AppDynamics because they are a market leader in a category that will be a cornerstone for how enterprises drive their business forward," said Rowan Trollope, senior vice president and general manager, Internet of Things (IoT) and Applications, Cisco. "Together, AppDynamics and Cisco will be the only company that can deliver complete visibility spanning from the infrastructure to application to end user." Source: https://newsroom.cisco.com/press-release-content?type=webcontent&articleId=1833254

https://newsroom.cisco.com/press-release-content?type=webcontent&articleId=1833254



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PE Buyout Spotlight

Advent International Acquired CCC Information Services for $3 Billion

February 28, 2017 – CCC Information Services Inc. (“CCC”), a leading Software as a Service provider to the automotive, insurance, and collision repair industries, announced today that it has selected Advent International (“Advent”), a global investment firm with deep experience in the technology sector, as its next equity partner. Advent will purchase equity assets from CCC’s previous owners Leonard Green Partners (“LGP”) and Texas Pacific Group (“TPG”).

Newslink:

http://www.prweb.com/releases/2017/03/prweb14105738.htm

http://www.prweb.com/releases/2017/03/prweb14105738.htm



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Vista to Buy DH Corp. for $2.03 Billion, Combine with Misys March 13, 2017- Vista Equity Partners LLC agreed to buy DH Corp. (Davis + Henderson) in a deal that values the Canadian financial services provider at about C$2.73 billion ($2.03 billion), aiming to create a financial technology powerhouse by combining it with Misys Ltd.

The C$25.50-a-share cash offer announced Monday is an 11 percent premium above DH Corp.’s closing price Friday of C$23.04 a share, and 36 percent above where shares closed on Dec. 5, before reports that the company was exploring strategic alternatives. Including debt, the transaction for the Toronto-based company is valued at C$4.8 billion.

The takeover underscores a series of purchases intended to help DH Corp. pivot into a financial technology firm as demand for its traditional check-printing services declined. In 2015, DH Corp. agreed to buy payment-technology provider Fundtech Ltd. for $1.25 billion as part of that effort. The company was founded in 1875 as Davis + Henderson.

The combined company will have a global reach and is expected to have approximately $2.2 billion in revenues, approximately 10,000 employees and more than 9,000 customers across 130 countries, according to a press release.

Source: https://www.bloomberg.com/news/articles/2017-03-13/vista-to-buy-dh-corp-to-combine-with-financial-tech-firm-misys https://www.americanbanker.com/news/d-h-to-be-acquired-merged-with-misys

https://www.bloomberg.com/news/articles/2017-03-13/vista-to-buy-dh-corp-to-combine-with-financial-tech-firm-misys

https://www.bloomberg.com/news/articles/2017-03-13/vista-to-buy-dh-corp-to-combine-with-financial-tech-firm-misys

https://www.americanbanker.com/news/d-h-to-be-acquired-merged-with-misys



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About Solganick & Co.

Solganick & Co., Inc. is an independent investment banking and M&A advisory firm focused exclusively on the global software, IT services and digital media industry sectors. We advise buyers and sellers of companies and efficiently execute M&A transactions that help increase shareholder value. Our professionals have advised on $20+ billion in M&A transactions to date and have current clients and relationships globally with entrepreneurs, companies and leading private equity firms within the sectors we cover.

Please contact us for information regarding this report or to inquire about an M&A transaction.

Solganick & Co., Inc.

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[email protected] [email protected]

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Software M&A Update › wp-content › uploads › 2017 › 06 › Solganick-S… · Tech Deal Overview Fig 3. Software M&A Deals – Quarterly Comparison Source: ... tech-enabled