TECHNOLOGY SERVICES MONTHLY Blockchain · 2018-03-23 · TECHNOLOGY SERVICES MONTHLY 1717 Arch Street, 39th Floor · Philadelphia, PA 19103 · ... equity capital market performance,

TECHNOLOGY SERVICES MONTHLY

1717 Arch Street, 39th Floor · Philadelphia, PA 19103 · www.mhhco.com

December 2017

Blockchain

MHH | Technology Services Group 2

Welcome to the December edition of the Mufson Howe Hunter TechnologyServices Monthly. This month, we focus on Blockchain. Each month, ourteam aims to provide you with a newsletter that contains thought-provoking content and analysis, as well as updates on macroeconomicthemes, equity capital market performance, private capital market trendsand noteworthy M&A activity–all of which is relevant to our core industrysectors:

Our Technology Services practice serves growth-oriented, rapidly scalablebusinesses that leverage proprietary and enabling technologies to addressthe evolving needs of modern enterprise customers. We apply deepindustry expertise and broad transaction experience to provide thoughtful,tailored advice and solutions for our clients. Our clients turn to us foroutstanding M&A advisory and capital-raising execution.

We hope you find this information valuable, and we welcome anycomments or suggestions.

Sincerely,

Brandon K. EckManaging Director, Head of Technology Services

Cloud Services Healthcare IT Infrastructure Services Specialty Consulting

Digital Agencies Information Services IT OutsourcingTech-Enabled Business

Process Outsourcing

Tech-Enabled Solutions

InternetOutsourcing

ServicesMobile

Enterprise Software

Welcome to the MHH Technology Services Newsletter!

Select 2017 Franchise Themes

Cloud Brokerage Services & Cloud Enablement: The convergence of IT services,outsourcing, hosting, managed services and cloud business models continues tocause significant change in sourcing strategies. This will benefit IT Outsourcers thatembrace flexible pricing strategies, including the delivery of offerings "as a service.”It will also drive demand for third-party outsourced tools and services.

Offshore Providers’ Transformation: The current political landscape and increasingclient demand for more automated and agile solutions is driving offshore providers toincrease their functional capabilities in cloud-based services that augment anddifferentiate existing delivery models. According to Information Services Group (ISG),As-a-Service annual contract value now represents 36% of the combined global marketfor sourcing services, nearly double early 2014 (ISG, 2016).

IoT-Optimized Infrastructure Services: “Connected things” will streamline vendoroperational models while reducing customer costs. IoT will introduce even more usefuldata to the cloud that needs to be captured and effectively managed. IaaS and PaaScompanies will be a direct beneficiary of this trend. Cisco expects database, analyticsand IoT workloads to account for 22% of the total workloads by 2020 (Cisco, 2016).

Healthcare Consumerism & Patient Engagement: The rising costs of healthcarepremiums and increased out-of-pocket consumer spend from rising deductibles areshifting healthcare consumer behaviors toward a more cost-conscious mentality. Inturn, payors and providers continue to focus on patient engagement-relatedtechnologies that improve the digital consumer experience.

What we are reading…

Population Health Management: Population health management continues to be atop priority for healthcare organizations, as the overall responsibility for keeping apopulation of patients healthy shifts to the provider. This, coupled with the economicmotivation of the risk-based, value-driven reimbursement model, is driving providerdemand for more actionable data about the patients they serve and data relating totheir post-acute care.

Zombie College Football Bowls and Kangaroo Jerky

Eric Schmidt Stepping Down as Alphabet's Executive Chairman to become a Technical Advisor

Sequoia is Looking to Raise a $5 Billion Investment Fund

AI in 2018: What works, what doesn't, and what's still science fiction

Gadgets with Gurman: The Year in Tech


https://www.wsj.com/articles/zombie-college-football-bowls-and-kangaroo-jerky-1513520664

https://techcrunch.com/2017/12/21/eric-schmidt-stepping-down-as-alphabets-executive-chairman-to-become-a-technical-advisor/

https://techcrunch.com/2017/12/20/sequoia-is-looking-to-raise-a-5-billion-investment-fund/?ncid=rss&utm_source=tctwreshare&utm_medium=feed&utm_campaign=Feed:+Techcrunch+(TechCrunch)&sr_share=twitter

https://venturebeat.com/2017/12/20/ai-in-2018-what-works-what-doesnt-and-whats-still-science-fiction/

https://www.bloomberg.com/news/videos/2017-12-21/gadgets-with-gurman-the-year-in-tech-video


The Mufson Howe Hunter Technology Services Group serves growth-oriented, rapidly scalable businesses that leverage proprietary and enabling technologies to address the evolving needs of modern enterprise customers. We apply deep industry expertise and broad transaction experience to provide thoughtful, tailored

advice and solutions for our clients. Our clients turn to us for outstanding M&A advisory and capital-raising execution.

Brandon EckManaging Director,Head of Technology Services

Prior Experience:

Managing Director, Head of Technology & Services, Janney Montgomery Scott

Principal, Katalyst Securities

Principal, RCW Mirus

215.399.5411 [email protected]

18+ Years of Experience

60+ Transactions Completed

Education:

Gettysburg College (BA)

Senior Banking Team Sector Coverage

Andrew WilsonVice President,Technology Services

Prior Experience:

Senior Associate, Technology & Services, Janney Montgomery Scott

Associate, TMT, J.P. Morgan

Attorney, M&A, Wilson Sonsini Goodrich & Rosati


8+ Years of Experience

20+ Transactions Completed

Education:

Duke University (JD, MBA)

U. North Carolina, Chapel Hill (BA)

Sell-side Advisory

Buy-side Assignments

Private Placements

Recapitalizations

Financial Advisory

Fairness Opinions

Tech-Enabled Solutions

Internet

Outsourcing Services

Mobile

Enterprise Software

IT Outsourcing

Healthcare IT

Digital Agencies

SpecialtyConsulting

InformationServices

InfrastructureServices

Tech-Enabled BPO

Cloud Services

TECHNOLOGY SERVICES PRACTICE OVERVIEW

Business Model Coverage


BLOCKCHAIN

What is Blockchain?

Originally associated specifically with bitcoin, the term blockchain now refers

to any distributed electronic ledger that uses software algorithms to reliably

and anonymously record transactions.1

Rather than rely on a single, centralized source for data validation (e.g., a

bank’s server), blockchain leverages decentralized verification from

numerous participants.

Blockchain uses cryptography and digital signatures to prove online identity

while maintaining anonymity regarding real-world personal identity.

In a public blockchain (e.g., bitcoin) no permission is required to view data

contained in the blockchain, and in the case of bitcoin, anyone may “edit”

such data by adding pending transactions to any given block.

Private blockchains allow defined groups of participants with an established

level of trust (e.g., internal committees or industry groups) to collaborate in

near real-time while avoiding the verification expense of public blockchains.

Blockchain in Financial Services… Some of the largest financial services firms are exploring possible uses of

blockchain to improve high-risk and/or time-consuming operations, including:

Reconciliation of cross-border payments

Compliance with anti-money laundering (AML), know-your-customer (KYC)

and other regulatory requirements

Access and identification security protocols

Use of “smart contracts” for trade settlement and execution of options

contracts, reducing reliance on intermediaries

How Does it Work?Below is an example of a typical cryptocurrency (e.g., bitcoin) transaction2

…and BeyondAlthough most widely associated with cryptocurrency and other financial

services, there are many developing applications of blockchain technology.

Automotive: In August 2017, EY announced the development of a blockchain

system, called Tesseract, that will enable companies or groups of individuals

to more easily share ownership and usage of vehicles.3

Healthcare: Many technologists and healthcare professionals see blockchain

technology as a way to streamline the sharing of medical records, protect

sensitive data and give patients more control over their information.4

Voting: Blockchain technology has been widely discussed as a means to

prevent tampering – or the perception thereof – in political elections,

especially in nations where trust in such processes is limited.

Supply Chain/Logistics: In August 2017, a group of 10 large food and retail

companies announced a partnership with IBM in an effort to explore

blockchain applications within the food supply chain.3

Programmatic Advertising: Philadelphia-based company, Amino Payments,

provides a digital media supply chain platform that tracks every penny of ad-

spend, enabling companies to keep track of where their money is spent.

Alice wants to sendmoney to Ben

A “block” is created for the transaction

This block is broadcast to every party in the network

Network members validate the transaction

The block is added to the chain, creating a permanent and transparent record

Ben receives the money from Alice

1 PWC | 2 Standard Chartered | 3 Reuters | 4 technologyreview.com (September 2017)


BLOCKCHAIN

Venture funding for bitcoin and blockchain technology has gone from nearly non-existent in 2012 to over $500 million annually in recent years.

1,3, 4 CB Insights | 2 Pitchbook

Early LeadersThe ten most well-funded blockchain technology companies

Funded Amount1 Company Description2

$136

$117

$116

$94

$90

$76

$67

$44

$40

$34

Provider of payment tools for bitcoin and other digital currency services.

Infrastructure provider allowing companies to successfully digitize their assets and safely transact them over the internet.

Developer of a digital currency platform that helps merchants and consumers transact with bitcoin currency.

Developer of global financial settlement services enabling customers to instantly pay vendors in any currency with no chargebacks.

The company's application platform provides decentralized digital currency, enabling users and senders to earn digital money on any device, in any country, with no need for a bank account.

The company offers interoperable blockchain technologies (sidechains) and applies innovative uses of cryptography for commercial privacy within blockchain infrastructures.

Provider of tools for digital ledgers to track and settle digital assets in a cryptographically secure environment, enabling financial services firms to improve their efficiency and security.

Developer of bitcoin applications, enabling financial institutions to offer seamless, programmatic and peer-to-peer transfer of digital assets.

The company provides a peer-to-peer payment system and digital currency to its clients, along with security services that include digital wallet and digital vault for client bitcoin accounts.

Operator of a bitcoin exchange marketplace whose systems make use of blockchain technology for settlement of financial transactions.

1.

2.

3.

4.

5.

6.

7.

8.

9.

10.

(Tim Draper)

4

Most Active VC Investors in Bitcoin3

1

2

3

4

5

6

7

8

9

10


U.S. PPI, CPI and PCE

10-Year Treasury Rate

U.S. Unemployment & Labor

U.S. Market Indices

Sources: CapitalIQ , Federal Reserve Bank of St. Louis

U.S. ECONOMIC INDICATORS

Unemployment Rate

Labor Participation Rate

SP500 NSDQ DJIA

October 2.2% 2.8% 3.8%

LTM 29.1% 20.4% 26.9%

3-Year 43.5% 28.1% 36.2%

-20.0%

-10.0%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

Nov-14 Mar-15 Jul-15 Nov-15 Mar-16 Jul-16 Nov-16 Mar-17 Jul-17 Nov-17

S&P 500 NASDAQ Dow Jones Industrial Average

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%


10-Year Teasury Rate

62.0%

62.2%

62.4%

62.6%

62.8%

63.0%

63.2%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

10.0%


Unemployment Rate Labor Participation Rate

-3.0%

-2.5%

-2.0%

-1.5%

-1.0%

-0.5%

0.0%

0.5%

1.0%

1.5%

2.0%


Consumer Pri ce Index Producer Price Index Personal Consumption Expendit ures


Company Investor Date Sector

Nov 16Infrastructure

Services

Nov 16Infrastructure

Services

Nov 8 Healthcare IT

Nov 7 IT Outsourcing

Nov 1Infrastructure

Services

Nov 1Business Process

Outsourcing

Source: Pitchbook*For deals with announced transaction value**Please contact the MHH Technology Services Group directly for any information regarding valuation and deal size

U.S. TECH SERVICES MIDDLE-MARKET PRIVATE EQUITY: BUY-OUT ACTIVITYSelect Nov. 2017 Buy-Outs** PE Buy-Outs, Trailing 8 Quarters, as of Nov. 30

PE Buy-Outs, by Deal Size PE Buy-Outs, Historical Annual, as of Nov. 30

$0.0B

$0.2B

$0.4B

$0.6B

$0.8B

$1.0B

$1.2B

-

20

40

60

80

100

120

140

1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17

Total CapitalNumber of Deals

Add-Ons Platform Total Capital Invested*

36%

20%

13%

32%$0-25mm

$25-50mm

$50-100mm

$100-250mm

$0.0B

$0.5B

$1.0B

$1.5B

$2.0B

$2.5B

$3.0B

$3.5B

$4.0B

$4.5B

-

100

200

300

400

500

600

2010 2011 2012 2013 2014 2015 2016 2017


Deal Count Total Capital Invested*


Company Stage Date Sector

Angel / Seed Nov 30Infrastructure

Services

Angel / Seed Nov 16 Healthcare IT

Early Stage VC Nov 7 Healthcare IT

Angel / Seed Nov 2Information

Services

Angel / Seed Nov 1 Healthcare IT

Later Stage VC Nov 1Infrastructure

Services

U.S. TECH SERVICES MIDDLE-MARKET PRIVATE EQUITY: MINORITY ACTIVITYSelect Nov. 2017 Minority Deals** PE Minority, Trailing 8 Quarters, as of Nov. 30

PE Minority, by Stage PE Minority, Historical Annual, as of Nov. 30

Source: Pitchbook*For deals with announced transaction value**Please contact the MHH Technology Services Group directly for any information regarding valuation, deal size, and investors

$0.0B

$0.5B

$1.0B

$1.5B

$2.0B

$2.5B

-

50

100

150

200

250

300

1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17



48%

27%

18%

7%

Angel / Seed

Early Stage VC

Later Stage VC

PE Growth/Expansion

$0.0B

$1.0B

$2.0B

$3.0B

$4.0B

$5.0B

$6.0B

$7.0B

$8.0B

0

200

400

600

800

1,000

1,200

2010 2011 2012 2013 2014 2015 2016 2017




Source: CapitalIQ

VALUATION & PERFORMANCE METRICS

Median Operational KPIs

Median Valuation Metrics

IT Outsourcing: technology services and consulting solutions, including engineering, application development, knowledge management and business process management

Business Process Outsourcing: services for administering and managing select technology-enabled business processes, including outsourced product development, finance and accounting, human resources, research and analytics, and other industry-specific processes

Infrastructure Services: providers of managed, hosting and consulting services around planning, designing, implementing and managing mission-critical IT infrastructure

Information Services: providers of independent rating, benchmarking, research and data analytic services

Healthcare IT: software and technology-related services focused on the design, development, creation, use and maintenance of information systems for the healthcare industry

ITO

BPO

IFS

IS

HIT

Sector Indices Performance, as of November 30, 2017

SP500 NSDQ ITO BPO IFS IS HIT

October 2.2% 3.6% 4.2% 5.6% 2.9% 2.5% (1.7%)

LTM 21.1% 29.6% 23.7% 31.5% 33.9% 31.3% 22.5%

3-Year 27.6% 45.3% 35.3% 50.0% 81.1% 61.9% 9.5%

9.4%

6.8%

19.8%

17.3%

9.0%

HIT

IS

IFS

BPO

ITO

2017E REVENUE GROWTH

57.4%

62.2%

63.9%

36.8%

31.7%

HIT

IS

IFS

BPO

ITO

LTM GROSS MARGIN

11.2%

39.8%

25.4%

14.0%

16.7%

HIT

IS

IFS

BPO

ITO

LTM EBITDA MARGIN

-40.0%

-20.0%

0.0%

20.0%

40.0%

60.0%

80.0%


2.0x

2.9x3.7x

7.5x

3.9x

ITO BPO IFS IS HIT

EV/2017E REVENUE

10.5x

15.7x

12.0x

17.6x 17.0x

ITO BPO IFS IS HIT

EV/2017E EBITDA

15.9x

29.6x

20.9x

26.5x29.2x

ITO BPO IFS IS HIT

FWD PRICE/EARNINGS


Valuation Metrics Relative Valuation**

Select November 2017 Precedent Transactions*

Source: CapitalIQ*Please contact the MHH Technology Services Group directly for any information regarding valuation and deal size**Excluded: ACN and DXC

Announced Acquirer Target Description

November 30 Engineering and R&D services

November 21 Managed cloud and hosting services

November 16 Managed services, hosting options, security

services, and IT consulting services

November 13 Managed IT operations, application hosting, and

managed cloud services

November 1 IT management consulting services

IT OUTSOURCING

($ in millions) Operating Metrics Valuation Multiples

LTM LTM

Market Revenue Gross EBITDA(2) EBITDA EV / Revenue EV / EBITDA

Company Cap (1) 2017E 2018E Margin 2017E 2018E Margin LTM 2017E 2018E LTM 2017E 2018E

Accenture plc (ACN) $90,984 NA $38,716 31.7% $6,086 $6,769 16.3% 2.4x NM 2.3x 13.2 x 14.4 x 12.9 x

Cognizant Technology Solutions Corporation (CTSH) $42,620 $14,804 $16,197 38.6% $3,039 $3,515 19.9% 2.7x 2.6x 2.4x 12.5 x 12.7 x 11.0 x

DXC Technology Company (DXC) $27,426 $20,182 $24,018 25.3% $3,938 $4,927 13.8% 2.1x 1.7x 1.4x 14.7 x 8.5 x 6.8 x

Infosys Limited (INFY) $34,583 $10,866 $11,556 35.3% $2,906 $3,036 27.0% 2.8x 2.7x 2.5x 10.2 x 10.0 x 9.6 x

Wipro Limited (WIT) $21,896 $8,555 $8,808 28.9% $1,838 $1,824 20.2% 2.2x 2.1x 2.1x 10.6 x 9.9 x 10.0 x

HCL Technologies Limited (HCLTECH) $18,295 $7,896 $8,499 33.8% $1,752 $1,873 22.4% 2.3x 2.2x 2.0x 10.5 x 9.9 x 9.2 x

CGI Group Inc. (GIB.A) $14,956 $8,601 $8,950 30.1% $1,559 $1,652 16.7% 1.9x 1.9x 1.8x 10.5 x 10.5 x 9.9 x

Atos SE (ATO) $15,494 $15,145 $15,580 13.9% $1,995 $2,083 13.3% 1.1x 1.0x 1.0x 8.0 x 7.9 x 7.6 x

Syntel, Inc. (SYNT) $2,122 $898 $892 37.7% $227 $231 26.7% 2.6x 2.7x 2.7x 9.4 x 10.6 x 10.4 x

Virtusa Corporation (VRTU) $1,361 $961 $1,096 28.2% $68 $96 6.5% 1.6x 1.5x 1.3x 17.8 x 21.0 x 14.9 x

Perficient, Inc. (PRFT) $676 $485 $515 33.7% $70 $80 11.1% 1.6x 1.5x 1.4x 11.3 x 10.6 x 9.3 x

Mean $24,583 $8,839 $12,257 30.7% $2,134 $2,371 17.6% 2.1x 2.0x 1.9x 11.7x 11.5x 10.1x

Median $18,295 $8,578 $8,950 31.7% $1,838 $1,873 16.7% 2.2x 2.0x 2.0x 10.6x 10.5x 9.9x

NA = Not Available; NM = Not Meaningful; LTM = Latest Twelve Months As of close November 30, 2017.

‡ = excluded from Mean and Median calculations Excludes non-recurring, discontinued operations and stock-based compensation

Source: Public Filings, Press Releases and Published Research Reports

(1)

(2)

ACN

CTSH

INFY

HCLTECHWIT

GIB.A

ATO

SYNT

VRTU

PRFT

0.0 x

5.0 x

10.0 x

15.0 x

20.0 x

25.0 x

-10.0% 0.0% 10.0% 20.0% 30.0%

EV/EBITDA (2017E)

Revenue Growth (2017E)

ACN

CTSH INFY

HCLTECHWIT

GIB.A

ATO

SYNT

VRTU

PRFT

0.0 x

0.5 x

1.0 x

1.5 x

2.0 x

2.5 x

3.0 x

0.0% 10.0% 20.0% 30.0% 40.0% 50.0%

EV/Revenue (2017E)

Revenue Growth (2017E) + EBITDA Margin (LTM)


3.

Valuation Metrics


BUSINESS PROCESS OUTSOURCING


November 21 Incoming and outgoing call center and back

office services

November 20 Telemarketing, digital marketing, and analytics Business support services unit (51% Stake)

November 15 Payroll and tax management services

November 12 . Project and permanent placement services

November 1 Consulting and outsourcing solutions

Source: CapitalIQ*Please contact the MHH Technology Services Group directly for any information regarding valuation and deal size

Relative Valuation


LTM LTM



Automatic Data Processing, Inc. (ADP) $50,762 $12,740 $13,638 42.9% $2,604 $2,902 21.6% 4.0x 4.0x 3.7x 17.6 x 19.4 x 17.4 x

Genpact Limited (G) $6,224 $2,726 $2,910 39.1% $454 $500 16.8% 2.6x 2.6x 2.4x 14.6 x 15.4 x 14.0 x

EPAM Systems, Inc. (EPAM) $5,357 $1,447 $1,761 36.6% $258 $320 14.4% 3.6x 3.4x 2.8x 19.6 x 18.9 x 15.2 x

WNS (Holdings) Limited (WNS) $2,072 $687 $769 32.2% $127 $165 12.8% 3.0x 2.9x 2.6x 17.5 x 15.7 x 12.1 x

ExlService Holdings, Inc. (EXLS) $2,083 $758 $831 34.4% $130 $148 14.0% 2.5x 2.5x 2.3x 15.0 x 14.4 x 12.7 x

Luxoft Holding, Inc. (LXFT) $1,729 $884 $1,048 37.6% $135 $173 10.9% 2.0x 1.9x 1.6x 13.8 x 12.4 x 9.7 x

Globant S.A. (GLOB) $1,404 $407 $491 36.8% $65 $83 13.7% 3.6x 3.4x 2.8x 21.0 x 21.0 x 16.4 x

Mean $9,947 $2,807 $3,064 37.1% $539 $613 14.9% 3.0x 2.9x 2.6x 17.0x 16.7x 13.9x

Median $2,083 $884 $1,048 36.8% $135 $173 14.0% 3.0x 2.9x 2.6x 17.5x 15.7x 14.0x




(1)

(2)

ADP

G

EPAM

WNS EXLS

LXFT

GLOB

0.0 x

5.0 x

10.0 x

15.0 x

20.0 x

25.0 x

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

EV/EBITDA (2017E)


ADP

G EPAM

WNS EXLS

LXFT

GLOB

0.0 x

0.5 x

1.0 x

1.5 x

2.0 x

2.5 x

3.0 x

3.5 x

4.0 x

4.5 x

0.0% 10.0% 20.0% 30.0% 40.0% 50.0%

EV/Revenue (2017E)



Valuation Metrics


INFRASTRUCTURE SERVICES

Source: CapitalIQ*Please contact the MHH Technology Services Group directly for any information regarding valuation and deal size**Excluded: WIX


November 29 . Peer-to-peer cloud storage network

November 27 Cloud access security company

November 15 Web hosting, cloud, and email services

November 9 Private data centers and Infrastructure-as-a-

Service solutions

November 8 Cloud-based archiving platform

Relative Valuation**


LTM LTM



Equinix, Inc. (REIT) (EQIX) $36,339 $4,349 $5,046 50.4% $2,041 $2,434 42.8% 10.9x 10.3x 8.9x 23.2 x 21.9 x 18.4 x

United Internet AG (UTDI) $13,592 $4,994 $6,038 35.3% $1,321 $1,451 22.0% 3.3x 3.2x 2.6x 14.7 x 12.0 x 10.9 x

Zayo Group Holdings, Inc. (ZAYO) $8,742 $2,481 $2,647 63.9% $1,233 $1,336 45.4% 6.0x 5.7x 5.3x 12.0 x 11.4 x 10.6 x

VeriSign, Inc. (VRSN) $11,345 $1,165 $1,208 83.2% $804 $867 65.0% 9.9x 9.8x 9.4x 14.1 x 14.2 x 13.1 x

GoDaddy Inc. (GDDY) $6,166 $2,224 $2,541 64.8% $586 $702 11.7% 3.9x 3.7x 3.3x 26.0 x 14.2 x 11.8 x

Endurance International Group Holdings, Inc. (EIGI) $1,342 $1,172 $1,172 50.5% $341 $343 23.5% 2.7x 2.8x 2.8x 9.3 x 9.5 x 9.4 x

Wix.com Ltd. (WIX) $2,496 $424 $557 83.5% $68 $109 -9.1% 5.8x 5.4x 4.1x NM 33.6 x 21.0 x

Web.com Group, Inc. (WEB) $1,121 $755 $783 68.9% $193 $205 20.3% 2.4x 2.4x 2.3x 10.2 x 9.2 x 8.7 x

Internap Corporation (INAP) $351 $280 $279 51.6% $90 $94 27.2% 3.0x 3.0x 3.1x 10.7 x 9.5 x 9.1 x

Mean $9,055 $1,983 $2,252 61.3% $742 $838 28.6% 5.3x 5.1x 4.6x 15.0x 15.1x 12.6x

Median $6,166 $1,172 $1,208 63.9% $586 $702 25.4% 3.9x 3.7x 3.3x 13.1x 12.0x 10.9x




(1)

(2)

EQIX

UTDI

ZAYO

VRSN GDDY

EIGI WEB

INAP

0.0 x

5.0 x

10.0 x

15.0 x

20.0 x

25.0 x

-10.0% 0.0% 10.0% 20.0% 30.0%

EV/EBITDA (2017E)


EQIX

UTDI

ZAYO

VRSN

GDDY

EIGI

WEB

INAP

0.0 x

2.0 x

4.0 x

6.0 x

8.0 x

10.0 x

12.0 x

0.0% 20.0% 40.0% 60.0% 80.0%

EV/Revenue (2017E)



TECHNOLOGY SERVICES: INFORMATION SERVICES

Valuation Metrics


INFORMATION SERVICES

Source: CapitalIQ*Please contact the MHH Technology Services Group directly for any information regarding valuation and deal size**Gartner (IT) y/y growth rate pro forma adjusted for the acquisition of CEB, Inc.


November 29 . Procurement and sourcing applications

November 28 Multi-asset trading technology and infrastructure

November 15 BI and enterprise analytics services

November 3 Channel data solutions for tech companies

November 1 Operator of search marketing platform



LTM LTM



S&P Global Inc. (SPGI) $42,197 $5,966 $6,314 71.1% $2,874 $3,072 46.7% 7.6x 7.5x 7.1x 15.8 x 15.5 x 14.5 x

Moody's Corporation (MCO) $29,013 $4,098 $4,507 71.2% $1,955 $2,169 47.6% 8.5x 8.3x 7.5x 16.9 x 17.3 x 15.6 x

IQVIA Holdings Inc. (Q) $21,472 $8,036 $8,531 42.1% $2,034 $2,221 22.1% 3.9x 3.8x 3.6x 16.3 x 14.9 x 13.7 x

IHS Markit Ltd. (INFO) $17,662 $3,567 $3,803 61.3% $1,385 $1,515 30.8% 6.1x 6.0x 5.7x 16.0 x 15.6 x 14.2 x

Verisk Analytics, Inc. (VRSK) $15,880 $2,130 $2,306 63.1% $1,041 $1,130 46.3% 8.9x 8.7x 8.1x 19.6 x 17.9 x 16.5 x

Gartner, Inc. (IT) $10,959 $3,358 $4,023 60.0% $698 $836 12.2% 4.6x 4.1x 3.4x 30.7 x 19.6 x 16.4 x

MSCI Inc. (MSCI) $11,592 $1,271 $1,402 78.2% $660 $750 51.3% 10.4x 10.1x 9.2x 19.2 x 19.5 x 17.2 x

FactSet Research Systems Inc. (FDS) $7,817 NA $1,373 52.9% $434 $469 33.4% 6.5x NM 5.9x 17.9 x 18.8 x 17.4 x

Mean $19,574 $4,061 $4,032 62.5% $1,385 $1,520 36.3% 7.1x 6.9x 6.3x 19.0x 17.4x 15.7x

Median $16,771 $3,567 $3,913 62.2% $1,213 $1,322 39.8% 7.0x 7.5x 6.5x 17.4x 17.6x 16.0x




(1)

(2)

SPGI

MCO Q

INFO

VRSK IT

MSCI

0.0 x

4.0 x

8.0 x

12.0 x

16.0 x

20.0 x

24.0 x

-60.0% -40.0% -20.0% 0.0% 20.0% 40.0% 60.0%

EV/EBITDA (2017E)


SPGI MCO

INFO

VRSK

IT

0.0 x

1.0 x

2.0 x

3.0 x

4.0 x

5.0 x

6.0 x

7.0 x

8.0 x

9.0 x

10.0 x

0.0% 20.0% 40.0% 60.0% 80.0%

EV/Revenue (2017E)



TECHNOLOGY SERVICES: INFORMATION SERVICES


November 29 Health information and technology company

November 23 Patient record systems, process automation

systems, and management info systems

November 23 Clinical software developer

November 15 Healthcare IT solutions for student health centers

November 6 Pharmacy network design and management

Valuation Metrics


HEALTHCARE IT

Source: CapitalIQ*Please contact the MHH Technology Services Group directly for any information regarding valuation and deal size**Excluded: CSLT



LTM LTM



Cerner Corporation (CERN) $23,498 $5,154 $5,578 85.1% $1,671 $1,832 27.8% 4.6x 4.5x 4.2x 15.8 x 13.9 x 12.7 x

Veeva Systems Inc. (VEEV) $8,467 $681 $806 69.4% $227 $261 25.0% 11.9x 11.4x 9.6x 36.3 x 34.0 x 29.6 x

athenahealth, Inc. (ATHN) $5,318 $1,212 $1,344 52.0% $265 $340 11.0% 4.6x 4.5x 4.1x 28.3 x 20.6 x 16.1 x

Allscripts Healthcare Solutions, Inc. (MDRX) $2,584 $1,817 $2,141 50.3% $367 $429 10.1% 2.5x 2.4x 2.0x 20.0 x 11.9 x 10.2 x

Inovalon Holdings, Inc. (INOV) $2,319 $452 $488 64.6% $111 $124 17.0% 4.7x 4.5x 4.2x 22.8 x 18.3 x 16.5 x

Quality Systems, Inc. (QSII) $919 $527 $536 56.4% $82 $81 11.3% 1.8x 1.8x 1.8x 13.8 x 11.6 x 11.6 x

National Research Corporation (NRCI.B) $897 $118 $128 58.2% $39 $43 33.5% 7.4x 7.3x 6.8x 21.3 x 22.2 x 20.2 x

HealthStream, Inc. (HSTM) $758 $247 $266 56.7% $37 $42 11.1% 2.6x 2.6x 2.4x 22.0 x 17.0 x 14.9 x

Computer Programs and Systems, Inc. (CPSI) $407 $268 $284 53.2% $49 $53 10.5% 2.1x 2.1x 1.9x 16.3 x 11.2 x 10.4 x

Castlight Health, Inc. (CSLT) $522 $131 $164 66.1% ($24) ($9) -41.8% 3.5x 3.4x 2.7x NM NM NM

Mean $4,569 $1,061 $1,173 61.2% $283 $320 11.6% 4.6x 4.4x 4.0x 21.8x 17.9x 15.8x

Median $1,619 $489 $512 57.4% $96 $103 11.2% 4.1x 3.9x 3.4x 21.3x 17.0x 14.9x




(1)

(2)

CERN

VEEV

ATHN

MDRX

INOV

QSII

NRCI.B

HSTM

CPSI

0.0 x

5.0 x

10.0 x

15.0 x

20.0 x

25.0 x

30.0 x

35.0 x

40.0 x

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

EV/EBITDA (2017E)


CERN

VEEV

ATHN

MDRX

…

QSII

NRCI.B

HSTM

CPSI

0.0 x

2.0 x

4.0 x

6.0 x

8.0 x

10.0 x

12.0 x

0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0%

EV/Revenue (2017E)



The Mufson Howe Hunter Technology Services IndicesIT Outsourcing is currently comprised of: ACN, CTSH, INFY, NESI:HCLTECH, GIB.A, WIT, ENXTPA:ATO, SYNT, VRTU, PRFT; Business Process Outsourcing Index is currently comprised of: ADP, G, EPAM, LXFT, EXLS, WNS,GLOB; Infrastructure Services Index is currently comprised of: EQIX, ZAYO, UTDI, VRSN, DFT, GDDY, EIGI, WIX, WEB, INAP; Information Services Index is currently comprised of: SPGI, Q, MCO, INFO, VRSK, IT, MSCI, FDS;and, Healthcare IT is currently comprised of: CERN, VEEV, ATHN, MDRX, WBMD, INOV, QSII, HSTM, NRCI.B, CPSI, CSLT.

The companies that comprise each Index periodically change as a result of mergers, acquisitions, initial public offerings and other transactions; therefore, comparisons to historical time periods and historicalperformance for each Index may not entirely correspond and correlate to the Index’s current performance. Historical performance is not a guarantee or prediction of future results. The information and statistical datacontained herein have been obtained from sources that Mufson Howe Hunter believes are reliable, but Mufson Howe Hunter makes no representation or warranty as to the accuracy or completeness of any suchinformation and data and expressly disclaims any and all liability relating to or resulting from your use of these materials. The information and data contained herein are current only as of the date(s) indicated andMufson Howe Hunter has no intention, obligation or duty to update these materials after such date(s). These materials do not constitute an offer to sell or the solicitation of an offer to buy any securities.

Copyright © December 2017 Mufson Howe Hunter & Company LLC. All rights reserved. Technology Services Monthly is produced monthly by Mufson Howe Hunter. Mufson Howe Hunter provides a full range of

investment banking services to Technology Services companies. For more information, visit www.mhhco.com.Icons by Flaticon.

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Brandon EckManaging Director,

Head of Technology Services


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Andrew WilsonVice President,

Technology Services


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TECHNOLOGY SERVICES MONTHLY Blockchain · 2018-03-23 · TECHNOLOGY SERVICES MONTHLY 1717 Arch Street, 39th Floor · Philadelphia, PA 19103 · ... equity capital market performance,