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CAPITALMIND HOSTING PRESENTATION
April 2017
Jules van den Munckhof
Analyst
+31 (0)73 – 623 87 [email protected]
Paris office
T: +33 1 48 24 63 00
F: +33 1 48 24 63 02
62 rue La Boétie
75008 Paris
France
Ron Belt
Managing Partner
+31 (0)73 – 623 87 74
’s–Hertogenbosch office
T: +31 (0)73 – 623 87 74
F: +31 (0)73 – 623 87 75
Reitscheweg 49
5232 BX ’s–Hertogenbosch
The Netherlands
Strictly private and confidential CAPITALMIND HOSTING PRESENTATION | April 2017 | page 2
Oxilion acquires JDN ICT Services
12/7/2016
Warburg Pincus invests in 1&1 Internet SE
11/8/2016
Intelligent acquires Openminds8/19/2016
Pulsant acquires Onyx6/9/2016
Voxtel acquires XL Internet Services
3/17/2016
1&1 Internet acquires Home.pl12/30/2015
IS Group acquires Net Ground
11/30/2015
Aurelius acquires COLT's managed cloud business11/13/2015
Sentia acquires Nines10/7/2015
Waterland invests in Intelligent6/15/2015
Daisy Group acquires Pheonix IT Group5/21/2015
Waterland acquires PaaSPlaza2/1/2015
Host Europe acquires intergenia12/17/2014
KPN acquires Argeweb8/1/2014
Vitruvian acquires ASP4All Bitbrains7/17/2014
Oak Hill invests in Pulsant6/16/2014
Broad Horizon acquires Multrix3/1/2014
Host Europe acquires DomainFactory11/29/2013
Cinven acquires Host Europe7/1/2013
GMT & VSS invests in IT–Ernity
Claranet acquires Star Technologies11/1/2012
ASP4all acquires Mcom
7/4/2012
Peer1 hosting acquires Netbenefit's hosting divison
6/1/2012
Pulsant acquires ENS10/28/2011
Pulsant acquires Dedipower9/30/2011
Bridgepoint acquires Pulsant11/12/2010
Dada acquires Poundhost1/18/2010
Denit acquires Dutch Cloud3/14/2017
United Internet acquires Strato12/15/2016
GoDaddy acquires Host Europe12/6/2016
EQT acquires TransIP Group8/31/2016
KKR invests in OVH8/16/2016
IS Group acquires Fortytwo & Redbee4/1/2016
Main Capital Partners acquires Denit2/9/2016
12/22/2015
KPN acquires IS Group6/7/2015
IT–Ernity acquires CloudVPS
11/6/2014
IS Group acquires WideXS7/1/2014
ING invests in IS Group4/24/2014
ASP4all and Bitbrains merge1/9/2014
1&1 Internet acquires Arsys8/1/2013
IS Group acquires NXS
5/1/2013
ABRY Partners acquires Basefarm12/1/2012
IT–Ernity acquires ProServe
9/1/2012
6/1/2012
IT–Ernity acquires DDS City
4/3/2012
HgCapital acquires Zitcom
HgCapital acquires ScanNet12/22/2015
Intelligent acquires Sentia11/19/2015
Interoute acquires Easynet8/9/2015
Intelligent acquires Priorweb6/2/2015
ATP invests in One.com4/28/2015
Waterland acquires Jitscale1/1/2015
Denit acquires Munt Internet9/2/2014
IT–Ernity acquires Bedrijvenweb
ISIS Equity Partners acquires Onyx IT10/18/2011
Host Europe acquires Heart Internet8/1/2011
Montagu acquires Host Europe
9/1/2010
Deutsche Telekom acquires Strato AG11/1/2009
2010 2011 2012 2013 2014 2015 2016 2017
5/1/2013
Capitalmind deals
Private Equity (backed) deals
M&A IN THE MARKETDeal timeline
2009
Strictly private and confidential
Size matters
CAPITALMIND HOSTING PRESENTATION | April 2017 | page 3
M&A IN THE MARKETTransaction multiples
0,0
2,0
4,0
6,0
8,0
10,0
12,0
14,0
<10m 10m - 20m 20m - 50m 50m - 100m 100m - 150m >150m
0,0
0,5
1,0
1,5
2,0
2,5
3,0
3,5
<10m 10m - 20m 20m - 50m 50m - 100m 100m - 150m >150m
Revenue multiple per revenue segment
EBITDA multiple per revenue segment
The graphs reveal a clear trend withincreasing multiples for dealsinvolving targets with higherrevenues.
Size
516 19 22 20
49
66
5
10 14 7
13
17
0
10
20
30
40
50
60
70
80
90
2010 2011 2012 2013 2014 2015 2016
Simple economies of scale areattributable to this effect. In thededicated hosting industry for example,smaller hosting companies often hireself-employed persons to manage aspecific system. But this is only a part–time job, making the hours ratherexpensive.
Larger companies can actuallydirectly employ such persons andsignificantly reduce personnel costs
Number of transactions over the years
Obvious market consolidation in the recent years with growing amount of deals
Strictly private and confidential CAPITALMIND HOSTING PRESENTATION | April 2017 | page 4
M&A IN THE MARKETBuyer examples
TELECOMHOSTING
PRIVATE EQUITYDEDICATED WEB–HOSTING
Large
Medium
Very large
Strictly private and confidential
Combining both acquisition strategies will increase the ARPU and customer base
CAPITALMIND HOSTING PRESENTATION | April 2017 | page 5
BUY-AND-BUILDCombining acquisition strategies
The most successful way to create synergies is by a mixture of bothacquisition strategies, thus increasing the customer base and increasingthe product offering. In its essence, it is a basic ‘p x q’ strategy, whereboth the price and quantity increase.
Combining scale acquisitions with diversification acquisitions, will likelyresult in increased cross–sell, increased customer base and eventually inincreased ARPU.
After a scale acquisition, the acquired company’s customers can betransferred to the acquirer’s platform, creating one single customer baseto which (new) services can be offered.
Using both strategies, the synergies and positive effects of theacquisitions will be larger as every newly acquired user will likely have ahigher ARPU (due to expanded service offering), increasing totalrevenues.
The ‘Buying Scale’ strategy also works without prior diversificationacquisitions, although it will most likely have less synergies as the newcustomers have access to a smaller range of services. This strategy willproduce similar results as discussed in the previous slides.
Buying base / scale
Capitalmind has analysed over 250 hosting deals in the recent years; thechart below shows the rationale behind the acquisitions.
The majority of acquisition strategies is focused at either increasing thescope of the service offering (34%) or increasing the customer base /buying scale (40%).
Acquisition strategies
16%
34%
40%
9%
Geographical expansion Improved offering Scale Technology
Analysed acquisition strategies 2010 – 2017
Strictly private and confidential
Successful hosting companies follow roughly two acquisition strategies: buy scale and / or buy diversification
CAPITALMIND HOSTING PRESENTATION | April 2017 | page 6
BUY-AND-BUILDTwo roads to success
Buy-and-build through buying scale Buy-and-build through buying diversification
Buying scale Buying diversification
Company A
Capacity used: 70%
Company B
Capacity used: 60%
High costs and spare capacity1
Acquire for economies of scale2
A acquires B Company BCompany A
Utilise synergies3
Company ABOccupancy rate:
Personnel costs:
Other costs:
EBITDA margin:
Expand service offering through acquisitions1
Integrate acquisitions on single platform2
Drive cross-sell on customer base 3
Company AARPU:
Personnel costs:
Other costs:
EBITDA margin:
Company B Company C
Company A
15m
1m
Company A
15m
80%
Platform ANEW! NEW! NEW!
Company D
1m 1m
Customer base
Strictly private and confidential
Our global reach and deal flow enable us to reach out and find the best business partner for you
CAPITALMIND HOSTING PRESENTATION | April 2017 | page 7
THOMSON REUTERS
International affiliates
Capitalmind
Jan Willem JonkmanPhil Seefried Andy Currie Michel Degryck Ervin Schellenberg
Michael HarveyStig Madsen Nuccia Cavalieri Igor Gorostiaga Lukas André
Fausto GarciaOmer Unsal Mark Bond Michael Gerrard Marcos Quiroz
Owen Hultman Mahesh Singhi Chayot Vitayanonektavee Pieter Veldtman
STRONG EUROPEAN INTEGRATED TEAM & INTERNATIONAL AFFILIATES (REPRESENTATIVE BELOW)
2006 London, UK
2006 Stockholm, Sweden
2007 Frankfurt, Germany
2007 Istanbul, Turkey
2008 Delhi, India
2008 Miami, USA
2009 Amsterdam, NL
2009 Warsaw, Poland
2010 Barcelona, Spain
2010 London, UK
2011 Milan, Italy
2011 Cape Town, RSA
2012 Paris, France
2012 Moscow, Russia
2013 Rio de Janeiro, Brazil
2013 Madrid, Spain
2014 Denver, USA
2014 Wiesbaden, Germany
2015 Tokyo, Japan
2015 Istanbul, Turkey
2016 Amsterdam, NL
2016 Mumbai, India
BI–ANNUAL PARTNERS MEETINGS
AWARD WINNING
Capitalmind has been in the top 10 of theThomson Reuters mid–marketleague tables for many years
CAPITALMINDUnparalleled European and international reach
Strictly private and confidential
Global sector team drives deal origination and execute transactions
CAPITALMIND HOSTING PRESENTATION | April 2017 | page 8
International leading and award–winning Corporate Finance
United Kingdom: Offices in London, Birmingham
and Nottingham – over 50 deal executive and
research led professionals.
Italy: Top M&A office boutique in Italy with specific
expertise in TMT.
United States: 8 offices throughout the US – some
65 sector–based managing directors.
Japan: Number one M&A boutique in Japan.
Owen HultmanJapan
Jamie HopeUK
Jean–Arthur DatéeFrance
Matthias HoltmeyerGermany
Leonardo AntunesBrazil
Pieter VeldtmanSouth Africa
Bratzo TorresPeru
Javier ArceMexico
Jose BarrenaSpain
Omer UnsalTurkey
Bimal RajIndia
Stefano TrifoneItaly
Evgeny PlaksenSwitzerland
John BatdorfUS
Ron BeltThe Netherlands
CAPITALMINDInternational sector team
Strictly private and confidential
Smart advice, by your side, worldwide
FRANCE
Paris
62, rue la Boétie
75008 Paris
France
BENELUX
‘s–Hertogenbosch
Reitscheweg 49
5232 BX ‘s–Hertogenbosch
The Netherlands
Japan
Mexico
Peru
Poland
Russia
Slovenia
South Africa
Spain
Switzerland
Thailand
Turkey
UK
USA
Australia
Brazil
Canada
China
India
Italy
NORDICS
Copenhagen
Strandvejen 60
2900 Hellerup
Denmark
GERMANY
Frankfurt / Main
Mainzer Strasse 19
65185 Wiesbaden
Germany
BENELUX
Amsterdam
Vreelandseweg 7
1216 CG Hilversum
The Netherlands
3. TRACK-RECORD3.3. Completed TMT deals