Tech M&A Monthly: 12 Steps to a Successful Valuation

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Tech M&A Monthly12 Steps to a Successful Valuation

September 8, 2016

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A leader in the software industry, Bruce has founded or owned four software companies, including the largest vertical market software company, AMI, an Inc. 500 firm rated by IDC as the fastest growing computer-related company in the world.

He has served on advisory boards for Microsoft, IBM, DEC, Comdex and Apple, and as board member/founding investor in some of the most innovative firms in their field, including Blue Coat, Bright Star and Sabaki. Past advisor to two governors and a senator, a board member of the Washington Technology Center, and founder of the WTIA, the nation’s most active regional technology trade association.

He worked with the Canadian government to found SoftWorld, and he was recently chosen as one of the 200 most influential individuals in the IT community in Europe. He was also the only American juror for the recent Tornado 100 Awards given to Europe’s top technology firms

A graduate with Distinction from Harvard Business School, Bruce has written three books on business models for success, including Power Planning. He is a frequent lecturer and author.

WelcomeBruce MilneCEOCorum Group Ltd.

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Agenda

WelcomeNon-Tech BuyersSeptember 2016 Research Report12 Steps to a Successful ValuationQ&A

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“…increased activity from non-tech buyers”-- 451 Group

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Corum Research Report

Elon GasperVice President,Director of Research

Yasmin KhodamoradiAnalyst

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Public Markets

0%

5%

10%

15%

20%

25%

30%

35%Weekly Percentage Change

NASDAQ S&P TECH Dow Jones

7

The Bull Market, 2009-Present Last 12 months

0%

50%

100%

150%

200%

250%

300%

350% Daily Percentage ChangeNASDAQ S&P TECH

8

*Since the Great Depression. Source: S&P Capital IQ, The Associated Press

Macro view: 4 Longest* Bull Market Runs

Start End Years

Dotcom Bubble Oct. 11, 1990 Mar. 24, 2000 9.5

Current Mar. 9, 2009 ? 7.5

Postwar Boom Jun. 13, 1949 Aug. 2, 1956 7.1

That 70s Inflation Oct. 3, 1974 Nov. 28, 1980 6.2

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Corum Index

MarketTransactions

Aug. 2016Aug. 2015

321 292

Mega Deals 4 9

Largest Deal $8.0B $4.3B

PipelinePrivate Equity

Deals 13 29

VC Backed Exits 5447

Attributes30%Cross Border

Transactions 38%

Start-Up Acquisitions 11%15%

16 yrs13 yrs Average Life of Target

125%

Aug. 2015 Aug. 2016

Aug. 2015 Aug. 2016

0%

9%

27%

27%

23%

46%

123%

15%

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Mega Deals - 2016 YTD

$49B$27BHORIZONTAL

$31B $65BINFRASTRUCTUREINTERNETIT SERVICES

$3.1B

$5.0B

$6.0B

$6.0BIT Services division

CONSUMER

$19B

$1.5B

$8.5B

$2.0B

$3.3B

$2.8B

$3.0B

$1.0B

$1.1B

$1.6B

$1.7B

$2.5B

$2.1B

$1.5B

$1.4B

$1.2B

$29BVERTICAL

$1.3B

$9.3B

$4.4B

$26.2B

$1.0B

$2.7B

$1.1B

Intellectual Property Solutions

$3.5B

$7.0B

$4.8B

$1.0B

$1.0B

$2.4B

$6.9B

$5.9B

$2.6B

$2.7B

$1.0B

$1.1B

$3.3B

$32.4B

$2.2B

$2.0B

$3.9B

$1.4B

$1.2B

$1.5B

$1.1B

$4.6B

$1.3B

$1.8B

$1.5B $2.2B

$1.5B

$4.3B

$1.7B

$1.4B

$3.1B

$8.8BNon-Core Software Assets

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$49B$27BHORIZONTAL


$3.1B

$5.0B

$6.0B


CONSUMER

$19B

$1.5B

$8.5B

$2.0B

$3.3B

$2.8B

$3.0B

$1.0B

$1.1B

$1.6B

$1.7B

$2.5B

$2.1B

$1.5B

$1.4B

$1.2B

$29BVERTICAL

$1.3B

$9.3B

$4.4B

$26.2B

$1.0B

$2.7B

$1.1B


$3.5B

$7.0B

$4.8B

$1.0B

$1.0B

$2.4B

$6.9B

$5.9B

$2.6B

$2.7B

$1.0B

$1.1B

$3.3B

$32.4B

$2.2B

$2.0B

$3.9B

$1.4B

$1.2B

$1.5B

$1.1B

$4.6B

$1.3B

$1.8B

$1.5B $2.2B

$1.5B

$4.3B

$1.7B

$1.4B

$3.1B


Target: Rackspace US [USA]Acquirer: Apollo Global Management [USA]Transaction Value: $4.3B (2.1x EV/Sales and 6.4x EBITDA)

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$49B$27BHORIZONTAL


$3.1B

$5.0B

$6.0B


CONSUMER

$19B

$1.5B

$8.5B

$2.0B

$3.3B

$2.8B

$3.0B

$1.0B

$1.1B

$1.6B

$1.7B

$2.5B

$2.1B

$1.5B

$1.4B

$1.2B

$29BVERTICAL

$1.3B

$9.3B

$4.4B

$26.2B

$1.0B

$2.7B

$1.1B


$3.5B

$7.0B

$4.8B

$1.0B

$1.0B

$2.4B

$6.9B

$5.9B

$2.6B

$2.7B

$1.0B

$1.1B

$3.3B

$32.4B

$2.2B

$2.0B

$3.9B

$1.4B

$1.2B

$1.5B

$1.1B

$4.6B

$1.3B

$1.8B

$1.5B $2.2B

$1.5B

$4.3B

$1.7B

$1.4B

$3.1B


Target: Merkle [USA]Acquirer: Dentsu Aegis Network [United Kingdom]Transaction Value: $1.5B (reported)

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$49B$27BHORIZONTAL


$3.1B

$5.0B

$6.0B


CONSUMER

$19B

$1.5B

$8.5B

$2.0B

$3.3B

$2.8B

$3.0B

$1.0B

$1.1B

$1.6B

$1.7B

$2.5B

$2.1B

$1.5B

$1.4B

$1.2B

$29BVERTICAL

$1.3B

$9.3B

$4.4B

$26.2B

$1.0B

$2.7B

$1.1B


$3.5B

$7.0B

$4.8B

$1.0B

$1.0B

$2.4B

$6.9B

$5.9B

$2.6B

$2.7B

$1.0B

$1.1B

$3.3B

$32.4B

$2.2B

$2.0B

$3.9B

$1.4B

$1.2B

$1.5B

$1.1B

$4.6B

$1.3B

$1.8B

$1.5B $2.2B

$1.5B

$4.3B

$1.7B

$1.4B

$3.1B


Target: LanguageLine Solutions [USA]Acquirer: Teleperformance [France]Transaction Value: $1.5B

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$49B$27BHORIZONTAL


$3.1B

$5.0B

$6.0B


CONSUMER

$19B

$1.5B

$8.5B

$2.0B

$3.3B

$2.8B

$3.0B

$1.0B

$1.1B

$1.6B

$1.7B

$2.5B

$2.1B

$1.5B

$1.4B

$1.2B

$29BVERTICAL

$1.3B

$9.3B

$4.4B

$26.2B

$1.0B

$2.7B

$1.1B


$3.5B

$7.0B

$4.8B

$1.0B

$1.0B

$2.4B

$6.9B

$5.9B

$2.6B

$2.7B

$1.0B

$1.1B

$3.3B

$32.4B

$2.2B

$2.0B

$3.9B

$1.4B

$1.2B

$1.5B

$1.1B

$4.6B

$1.3B

$1.8B

$1.5B $2.2B

$1.5B

$4.3B

$1.7B

$1.4B

$3.1B


Target: Sensus [USA]Acquirer: Xylem [USA]Transaction Value: $1.7B (2.0x EV/Sales and 8.9x EBITDA)

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$49B$27BHORIZONTAL


$3.1B

$5.0B

$6.0B


CONSUMER

$19B

$1.5B

$8.5B

$2.0B

$3.3B

$2.8B

$3.0B

$1.0B

$1.1B

$1.6B

$1.7B

$2.5B

$2.1B

$1.5B

$1.4B

$1.2B

$29BVERTICAL

$1.3B

$9.3B

$4.4B

$26.2B

$1.0B

$2.7B

$1.1B


$3.5B

$7.0B

$4.8B

$1.0B

$1.0B

$2.4B

$6.9B

$5.9B

$2.6B

$2.7B

$1.0B

$1.1B

$3.3B

$32.4B

$2.2B

$2.0B

$3.9B

$1.4B

$1.2B

$1.5B

$1.1B

$4.6B

$1.3B

$1.8B

$1.5B $2.2B

$1.5B

$4.3B

$1.7B

$1.4B

$3.1B


Target: Intel Security (former McAfee) [USA]Acquirer: TPG Capital [USA]Transaction Value: $3.1B

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$49B$27BHORIZONTAL


$3.1B

$5.0B

$6.0B


CONSUMER

$19B

$1.5B

$8.5B

$2.0B

$3.3B

$2.8B

$3.0B

$1.0B

$1.1B

$1.6B

$1.7B

$2.5B

$2.1B

$1.5B

$1.4B

$1.2B

$29BVERTICAL

$1.3B

$9.3B

$4.4B

$26.2B

$1.0B

$2.7B

$1.1B


$3.5B

$7.0B

$4.8B

$1.0B

$1.0B

$2.4B

$6.9B

$5.9B

$2.6B

$2.7B

$1.0B

$1.1B

$3.3B

$32.4B

$2.2B

$2.0B

$3.9B

$1.4B

$1.2B

$1.5B

$1.1B

$4.6B

$1.3B

$1.8B

$1.5B $2.2B

$1.5B

$4.3B

$1.7B

$1.4B

$3.1B


Non-Core Software Assets

Target: HPE Non-Core Software Assets [USA]Acquirer: Micro Focus International [UK]Transaction Value: $8.8B (estimated)

Sold to

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Horizontal Application Software Market

3.7x

18.2x

Public Valuation Multiples

EVSales

Since Q2 Corum Analysis

EVEBITDA

Aug. 2016

Upbeat increase to multi-year highs…

…with EBITDA taking a step back, as the market prioritizes growth over profits.

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$49B$27BHORIZONTAL


$3.1B

$5.0B

$6.0B


CONSUMER

$19B

$1.5B

$8.5B

$2.0B

$3.3B

$2.8B

$3.0B

$1.0B

$1.1B

$1.6B

$1.7B

$2.5B

$2.1B

$1.5B

$1.4B

$1.2B

$29BVERTICAL

$1.3B

$9.3B

$4.4B

$26.2B

$1.0B

$2.7B

$1.1B


$3.5B

$7.0B

$4.8B

$1.0B

$1.0B

$2.4B

$6.9B

$5.9B

$2.6B

$2.7B

$1.0B

$1.1B

$3.3B

$32.4B

$2.2B

$2.0B

$3.9B

$1.4B

$1.2B

$1.5B

$1.1B

$4.6B

$1.3B

$1.8B

$1.5B $2.2B

$1.5B

$4.3B

$1.7B

$1.4B

$3.1B


Target: Interactive Intelligence [USA]Acquirer: Genesys [USA]Transaction Value: $1.4B (3.3x EV/Sales)

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3.7x

18.2x

Deal Spotlight: Enterprise Resource Planning

EVSales


EVEBITDA

Aug. 2016



Target: Greentree International [New Zealand]Acquirer: MYOB Technology [Bain Capital] [Australia]Transaction Value: $20.2M

- ERP, CRM, SCM and BI software and SaaS

- Boosts MYOB’s reach into enterprise mid-market

- Likely to kick off MYOB’s further acquisitions in the space

Sold to

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3.7x

18.2x

Deal Spotlight: Project Portfolio Management

EVSales


EVEBITDA

Aug. 2016



Target: Innotas [USA]Acquirer: Planview [Insight Venture Partners] [USA]Transaction Value: $80M (5.3x EV/Sales)

- Project & portfolio management SaaS

- Expands Plainview’s business with small and mid-size customers

- Both Innotas and Plainview recognized as leaders in the Gartner Magic Quadrants

Sold to

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3.7x

18.2x

Deal Spotlights: Horizontal Other

EVSales


EVEBITDA

Aug. 2016



Sold to

Sold to

Target: BeyondCore [USA]Acquirer: salesforce.com [USA]Transaction Value: $110M (22x EV/Sales)

- Big data and predictive analytics SaaS

Target: Quip [USA]Acquirer: salesforce.com [USA]Transaction Value: $410M

- Team collaboration and document management SaaS

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3.7x

18.2x

Deal Spotlight: Horizontal Other

EVSales


EVEBITDA

Aug. 2016



Target: Orbitera [USA]Acquirer: Google [USA]Transaction Value: $100M (reported)

- Third-party e-commerce SaaS for ISV and businesses

- Helps Google to withstand Microsoft Azure and AWS’ cloud computing supremacy

- Integrates with Google Cloud Platform

Sold to

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2.1x

16.2x


EVSales

Corum Analysis

EVEBITDA

Consumer Software Market

Both multiples bounced back to May levels…

…as rising consumer spending supports demand.

Since Q2 Aug. 2016

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2.1x

16.2x

Deal Spotlights: Gaming Infrastructure

EVSales

Corum Analysis

EVEBITDA




Since Q2 Aug. 2016

Target: Curse [USA]Acquirer: Twitch Interactive [USA]

- MMO gaming add-on and on-line community

Sold to

Target: Beam Interactive Inc. [USA]Acquirer: Microsoft Corporation [USA]

- Online interactive video game streaming services

Sold to

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2.1x

16.2x

Deal Spotlights: Gaming Infrastructure

EVSales

Corum Analysis

EVEBITDA




Since Q2 Aug. 2016

Target: Sandboxr [USA]Acquirer: WhiteClouds [USA]

- Online service enabling video games players to customize and print in 3D objects from the game

- Sandboxr partnerships include video game studios, Hollywood studios & Amazon

Sold to

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2.1x

16.2x

Deal Spotlight: Gambling

EVSales

Corum Analysis

EVEBITDA




Since Q2 Aug. 2016

Target: DEQ Systems [Quebec, Canada]Acquirer: Scientific Games [USA]Transaction Value: $20.7M (2.9x EV/Sales)

- Casino gaming systems and related integration services

- Enables buyer to diversify its table games offerings & expand international presence

Sold to

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2.1x

16.2x

Deal Spotlight: Gaming

EVSales

Corum Analysis

EVEBITDA




Since Q2 Aug. 2016

Sold to

Target: Kopla Games [Finland]Acquirer: flaregames [Germany]

- Mobile iOS and Android role playing video games

- The deal followed a successful partnership on Nonstop Knight game

- First acquisition by the German game publisher

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2.1x

16.2x

Deal Spotlights: Entertainment

EVSales

Corum Analysis

EVEBITDA




Since Q2 Aug. 2016

Target: Surreal [USA]Acquirer: STX Entertainment [USA]

- Produces, markets and distributes films, TV shows and digital programs globally

- The deal is deemed to help form STX’s full-scale VR content division

- Comes on heels of investment from Tencent Hong Kong telecom giant PCCW

Sold to

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Infrastructure Software Market

3.4x

14.0x


EVSales

Corum Analysis

EVEBITDA

Relatively stable values as sector searches for direction after heavy consolidation last year…

…leading to demand for profits as EBITDA jumps to highs for the year.

Since Q2 Aug. 2016

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3.4x

14.0x

Deal Spotlights: AI

EVSales

Corum Analysis

EVEBITDA



Since Q2 Aug. 2016

Target: Turi [USA]Acquirer: Apple [USA]Transaction Value: $200M (reported)

- Open source, big data, machine-learning predictive analysis software

Target: Nervana Systems [USA]Acquirer: Intel Corporation [USA]Transaction Value: $400M (reported)

- AI-focused SaaS for robotics, hardware, training of deep neural networks, software development

Sold to

Sold to

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3.4x

14.0x

Deal Spotlights: Security - Identity and Access Management

EVSales

Corum Analysis

EVEBITDA



Since Q2 Aug. 2016Sold to

Target: Sypris Electronics (CSS business) [USA]Acquirer: Analog Devices [USA]Transaction value: $42M

- Secure encrypted communications, key management and identity authentication software systems

Sold to

Target: PhenixID [Sweden]Acquirer: Clavister [Sweden]Transaction value: $7.6M

- Identity and access management software and services

Sold to

Target: 2FA [USA]Acquirer: Identity Automation [USA]

- Authentication tokens, card readers and IAM software

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3.4x

14.0x

Deal Spotlight: Enmeshed Systems

EVSales

Corum Analysis

EVEBITDA



Since Q2 Aug. 2016

Sold to

Target: Movidius [USA]Acquirer: Intel Corporation [USA]

- System-on-chip computer vision for drones, AR/VR, robots, security cameras, etc.

- Synergy with Intel’s RealSense camera technology

- Enables machines to see, understand and take action

- Includes algorithms for deep learning, depth processing and natural interactions

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Corum Research Report

Elon GasperVice President,Director of Research

Yasmin KhodamoradiAnalyst

12 Steps to a Successful Valuation

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Corum Group

Research

Publications

Education

Valuation

SELLERS

BUYER

S

Transactions

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Valuation Expertise

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To plan or settle estate tax issues

To generate settlement in a divorce

To obtain bank financing

To implement an employee stock ownership plan (ESOP)

To fulfill the requirements of a buy / sell agreement

To negotiate with venture investors

To satisfy the curiosity of a business owner

For the purposes of a strategic sale (auction process)

Possible Valuation Purposes

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10 Ways to Value a Company Sales multiple – Public peer group Earnings multiple – Public peer group Comparable M&A transaction analysis Discounted cash flow (DCF) Replacement cost analysis Dollars per R&D Developer Internal rate of return (IRR) Liquidation value Book value Internal Transaction Price

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12 Steps to a Successful Valuation1. Why do a Valuation?

2. Performing a SWOT Analysis

3. Creating a Company and Market Overview

4. Developing Pro Forma Financials

5. Understanding Valuation Methodologies

6. Mapping Public Peer Groups

7. Finding Comparable Transactions

8. Using Discounted Cash Flow (DCF)

9. Calculating Discount Rates

10. Determining Replacement Value

11. Weighting Valuations

12. When to Present a Valuation

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Why do a valuation?

Rob SchramSenior Vice PresidentCorum Group Ltd.

Rob has over 30 years of executive and entrepreneurial experience in multiple technologies: Integrated circuit testing, industrial process automation and control, communications software, security software, and energy software and services. Rob has founded and sold several companies and engaged in two IPOs. He was most recently CEO of Evergreen Fuel Technologies, Inc. in the energy sector. Rob is a broadly skilled strategic development professional with a proven reputation for targeting, negotiating and developing profitable ventures and a demonstrated ability to successfully analyze an organization's critical business requirements, identify deficiencies and opportunities, and develop innovative and cost-effective solutions for enhancing competitiveness, increasing revenues, and improving customer relationships.

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This seller is serious.

Leverage using a Professional Intermediary

I may not be the only

bidder.

Potential AcquirerSeller Intermediary

Wonderful if I buy you, terrible if I

don’t.

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Perform a SWOT Analysis

Rob GriggsVice PresidentCorum Group Ltd.

As a serial entrepreneur and investment banker, Rob Griggs has had a successful 35+ year career in the high technology arena. Early in his career he was a top performer at Apple before starting his first software company in the mid-1980’s. As a founder of Authorware / MacroMedia, NetRadio, Wit Capital, and many other companies, Rob’s sales, marketing, business development and capital raising skills have been honed over supporting hundreds of company financial transactions during his career.

His success and extensive experience in software M&A uniquely qualify him as an expert in building value and realizing wealth. Rob joined Corum Group, the world’s leading software M&A firm, with a specific focus on educating and helping prospective sellers maximize the value of their technology companies.

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Perform a SWOT Analysis

Strengths Weaknesses

Opportunities Threats

Helpful Harmful

Inte

rnal

Exte

rnal

44

Creating a Company/Market Overview

Steve joined Corum after 25 years of executive experience in various high-tech industries with both public and private venture-backed startups. He has extensive global experience, opening international markets and growing sales from zero to tens of million in revenue. He has been on the forefront of selling several companies and spinning off software divisions, highlighted by the sale of GetFon to Alestra (AT&T Mexico). He is fluent in Spanish.

Steve was the founding CEO of Solera Networks, a real-time intrusion detection security company. He also co-founded Auction Trust Network, an eCommerce company for online exchanges; which he sold to MediaForge (Rakuten Marketing). Steve is a board member of several software companies and has industry expertise in several areas: enterprise apps and infrastructure, security, mobile and wireless, media & entertainment, supply chain, and embedded devices/systems (IoT).

Steve JonesVice PresidentCorum Group Ltd.

45

Developing Pro Forma Financials

Allan WilsonVice PresidentCorum Group Ltd.

Allan has over 30 years of executive and entrepreneurial experience and has built and sold several software companies in sectors including, manufacturing, supply chain, big data, predictive analytics and social networks. He has deep understanding of Aerospace, Automotive, High Tech, Healthcare, Consumer Products and Military Contracting operating models.

Allan has extensive international experience and lived in Germany for a time working for SAP, following the sale of his company to them in 2009.

46

Actual Adjustment RecastRevenueLicense $10,000,000 $10,000,000Support & Maintenance $6,000,000 $6,000,000Consulting $4,000,000 $4,000,000

Total Revenue $20,000,000 $20,000,000Cost of Revenue $5,500,000 $5,500,000

Gross Margin $14,500,000 $14,500,000

Operating ExpensesSales & Marketing $4,800,000 ($4,900) $4,795,100R&D Expense $2,000,000 $2,000,000General & Administration $3,600,000 ($1,215,900) $2,384,100Other Operating Exp. $600,000 ($16,600) $583,400

Total Operating Expense $11,000,000 $9,762,600

Operating Income $3,500,000 $4,737,400Other ExpensesInterest Expense $250,000 ($50,000) $200,000Depreciation $150,000 $150,000

Earnings Before Tax $3,100,000 $4,387,400

Developing Pro Forma Financials

Earnings Before Tax $3,100,00 $4,387,400

47

Understanding Valuation Methods

Peter PrinceVice PresidentCorum Group Ltd.

Peter Prince has spent the last 27 years involved in starting and growing software companies or large divisions of international software companies. As well as following his entrepreneurial spirit he has held a number of senior roles for both privately held and public companies. He was part of several key acquisitions such as Software Artistry to IBM, Infinium to SSA GT and SSA Global to Golden Gate (Infor).

He was President of SSA Global EMEA prior to its sale and then CEO of Cogniti.

Peter has a diverse background within the software industry spanning Operations, Sales, Mergers and Acquisitions and Integration. He’s been retained by some of the largest Private Equity firms in an advisory capacity.

Peter has also focused on investing both time and funding into start-up and young companies over the recent years in a diverse range of sectors.

He attended Chiltern University attaining a business degree and later attended Harvard Business School successfully completing an executive course, Launching New Ventures.

48

Core Valuation Methods Sales Multiple (EV/S) – Public Peer Group

Revenue multiple of similar publicly traded companies

Earnings Multiple (EV/EBITDA) – Public Peer GroupEarnings multiple of similar publicly traded companies

Comparable M&A TransactionsSales multiple of companies like yours that have sold

Discounted Cash FlowThe present value of all future cash flows

Replacement Cost AnalysisHow much it would take to replace your product offering

49

Mapping Public Peer Groups

Ivan Ruzic, Ph.D.Vice PresidentCorum Group Ltd.

Ivan Ruzic has had a successful 30+ year career in the software business that has included virtually every senior executive role. His resume spans marquee companies such as BEA systems, Novell and Borland as well as multiple startups including his own. His international experience is extensive and in addition to the United States has been involved in mergers and acquisitions in Europe, Africa and Asia. His success and extensive experience qualify him as an expert in building value and realizing wealth. Ivan joined Corum Group, the world’s leading software M&A firm, with a specific focus on educating and helping prospective sellers maximize the value of their technology companies.

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Market Enterprise Trailing Twelve Months Forward Ticker Company Price Value Value Sales EBITDA EPS Sales EPS

BMC BMC 47.71 8,477 7,300 1,960 643 2.47 2,140 3.19

CA CA Technologies 25.06 12,821 11,570 4,440 1,626 1.54 4,710 2.08

CVG Convergys 13.21 1,609 1,740 2,630 143 1.08 2,240 1.14

EGAN eGain Communications 1.35 30 33 35 6 0.18 N/A N/A

ININ Interactive Intelligence 35.95 640 438 152 23 0.55 191 1.23

NICE NICE Systems 35.40 2,220 1,850 662 99 0.69 761 2.02

PEGA Pegasystems 36.01 1,334 1,270 320 31 0.14 426 1.27

RNOW RightNow Technologies 26.86 869 717 176 17 0.23 215 0.64

SPRT Support.com 6.76 319 236 38 (18) (0.38) 66 (0.07)

SYMC Symantec 17.39 13,499 13,900 5,990 1,743 0.97 6,440 1.54

VRNT Verint Systems Inc 35.18 1,290 1,710 713 84 (0.61) 772 2.62

Comparables – Public Peer Group(in USD Millions)

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Trailing 12-Month Multiples Forward MultiplesTicker Company Sales Earnings Sales Earnings

BMC BMC 3.72 x 11.36 x 3.41 x 14.96

CA CA Technologies 2.61 x 7.12 x 2.46 x 12.05

CVG Convergys 0.66 x 12.18 x 0.78 x 11.59

EGAN eGain Communications 0.95 x 5.86 x N/A N/A

ININ Interactive Intelligence 2.89 x 18.90 x 2.30 x 29.23

NICE NICE Systems 2.79 x 18.72 x 2.43 x 17.52

PEGA Pegasystems 3.97 x 41.23 x 2.98 x 28.35

RNOW RightNow Technologies 4.08 x 42.95 x 3.34 x 41.97

SPRT Support.com 6.25 x nm 3.56 x nm

SYMC Symantec 2.32 x 7.97 x 2.16 x 11.29

VRNT Verint Systems Inc 2.40 x 20.38 x 2.21 x 13.43

Median Multiple 2.79 x 15.45 x 2.44 x 14.96 x After 25% Liquidity Discount 2.10 x 11.59 x 1.83 x 11.22 x

Applied Financial Metric $4,300,000 $900,000 $7,500,000 $1,742,000 Implied Value $9,000,000 $10,400,000 $13,725,000 $19,550,000

*nm (not meaningful) for multiples over 50x or negative

(in $millions)

(in USD Millions)Comparables – Public Peer Group

After 25% Liquidity Discount 2.10 x 11.59 x 1.83 x 11.22 x

Applied Financial Metric $4,300,000 $900,000 $7,500,000 $1,742,000 Implied Value $9,000,000 $10,400,000 $13,725,000 $19,550,000

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Finding Comparable Transactions

Peri Pierone has spent the last 25 years creating value in the B2B software marketplace. He has held numerous strategic roles with large global firms like SAP, Business Objects and Fiserv where he was part of several key acquisitions and was responsible for introducing a variety of new applications to market. Peri has also held leading roles in several small privately held software companies that eventually sold to large private equity firms or to other strategic buyers. Through the years he has been intimately involved as an insider on numerous transactions as the acquirer and as the one positioning itself to be acquired.

Most recently he was CEO of Axiom EPM, where he led the company’s transformation from a traditional enterprise license business to a true SaaS offering. He was instrumental in driving the sale of the company in 2014 to strategic buyer, Kaufman Hall.

He received his bachelor’s degree in business from the University of Washington and his M.B.A from Keller Graduate School.

Peri PieroneVice PresidentCorum Group Ltd.

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Seller Buyer Deal ValueTarget's Revenue

Buyer Seller Date Announced

Purchase Price

Seller Revenue TTM

EV/S Multiple

Consona Corp. [fka Made2Manage Systems] SupportSoft Inc. (Enterprise business)Apr-09 $20.0

$42.1

0.48 x

SupportSoft's enterprise business, which provides enterprise technical support software and services to digital service providers, corporate IT departments and managed service providers globally.Alcatel-Lucent Motive Communications, Inc. Jun-08

$67.8

$64.4

1.05 x

Provides Interent and IP-based cable television service management software to telecommunications service providers.Oracle Corporation Art Technology Group, Inc.

Nov-10

$1,000.0

$193.9

5.16 x

Provides a broad range of e-commerce software and software as a service (SaaS) for businesses globally. Software provides features for online payments, merchandising, email marketing, business analytics, content management and customer service automation. Pitney Bowes Inc. Portrait Software Jun-10

$64.1

$23.3

2.75 x

Provides customer interaction management, analytics and optimization software for businesses globally.Pegasystems Inc. Chordiant Software, Inc. Mar-10

$161.5

$76.3

2.12 x

Provides customer experience management (CEM) software for the telecom, healthcare, insurance and financial services sectors.Enghouse Systems Limited Mettoni Group Ltd

Apr-10

$22.6

$25.7

0.88 x

Provides, through its subsidiaries, call center management and customer care software and telecommunications expense management software as a service (SaaS) for businesses globally. Software is compatible with Cisco, Nortel and Avaya systems.Support.com [fka SupportSoft Inc.] YourTechOnline.com Inc. May-08

$2.7

$2.3

1.17 x

Provides technology support and repair services to customers in North America. Services are delivered remotely over the Internet.Convergys Corporation Intervoice, Inc. [Intervoice-Brite, Inc.] Jul-08

$335.0

$206.2

1.62 x

Provides interactive voice response and call center automation software to enterprises and telecommunications markets.salesforce.com InStranet

Aug-08

$31.5

$15.0

2.10 x

Provides contact center and sales content management software to businesses. Applications automate the dispersal of customer service-focused information.Customers include 3M, AXA, BNP Paribas, France Telecom, Orange, SFR Cegetel, Wanadoo and Zurich North Art Technology Group, Inc. InstantService, Inc. Jan-10

$17.0

$5.5

3.09 x

Provides chat and email-based customer service automation and analytics software as a service (SaaS) for businesses.OpSource, Inc. LeCayla Technologies Limited Feb-08 $1.0 $0.2 5.00 x Provides customer metering, on-boarding and billing software for software as a service (SaaS) and web based applications software providers. Software records and reports software usage allowing providers to offer SaaS on a pay per use and metered basis.

Median Sales Multiple

2.10x

Implied Value $9,000,000

Comparables - Transactions (in USD Millions)

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Using Discounted Cash Flow (DCF)

Daniel BernsteinVice PresidentCorum Group Ltd.

Daniel Bernstein has worked in a number of roles over a twenty year career in high technology, most recently as the founder and CEO of Sandlot Games Corporation, a leading casual games publisher and developer. Having sold Sandlot Games to Digital Chocolate in 2011, Daniel started a small games studio and a consulting practice where he advises larger companies such as RealNetworks and smaller high growth businesses on product development, strategic initiatives, and M&A opportunities. Prior to Sandlot Games, Daniel Bernstein held director level positions in companies such as Wild Tangent and Monolith. An accomplished composer, Daniel also writes music for most of the games he works on. Daniel holds a BS in Computer Science and an MA in Music Composition from the University of Virginia.

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Calculating Discounted Cash Flow (DCF)

Y1 Y2 Y3 TerminalValue

$1.5M1.251

$2.3M1.252

$3M1.253

$18.7M × 2.181.253

$1.2M

$1.5M

$1.5M

$20.9M

$25.1MY1 Earnings = $1.5M Y2 Earnings = $2.3MY3 Earnings = $1.5M Y3 Revenue = $18.7MTerminal Multiple = 2.18x Discount factor = 25%

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Calculating Discount Rates

Steve HassettVice PresidentCorum Group Ltd.

Steve was previously a corporate development executive with Verint Systems, Sage Group plc, and ran a new ventures group for The Weather Channel. Prior to that he was CEO of iTendant, a SaaS and mobile software company he co-founded in 2000. He is the author of the "The Risk Premium Factor: A New Model for Understanding the Volatile Forces that Drive Stock Prices" (Wiley 2011) and has also published in the Journal of Applied Corporate Finance, Ad Age, CNBC.com and is a regular contributing author for the Seeking Alpha investment website. Steve is also inventor of U.S. Patent 9,378,515, which deals with the availability of mobile content based on a user's location and the time of transmission.

He holds an MBA from the Darden School of Business at the University of Virginia and a B.S. from Rensselaer Polytechnic Institute.

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Determining Replacement Value

David LevineVice PresidentCorum Group Ltd.

Dave joined Corum in 2015 and has a diverse background in technology and life sciences. As an executive and entrepreneur, Dave has been operating and investing in companies sitting at the convergence of commerce and eCommerce as well as innovative life science businesses for over twenty-five years. Recently, Dave was CEO North America for Gaxsys, an eCommerce and logistics company that is a leader in last mile logistics and fulfillment for eCommerce marketplaces. Dave has been on both sides of the mergers and acquisitions table having sold a life science technology company, facilitated sell side and buy side technology transactions and has also scaled multiple technology companies globally in the eCommerce, life sciences and innovation intelligence markets. Dave sits on boards of public and private companies including one company that recently filed for an IPO. Dave holds a business degree from the Indiana University, Kelley School of Business.

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Fully burdened cost per person $100,000

Number of people per year 25

Number of Years in Development 3

$7,500,000

Fully burdened cost per contractor $ 66,000

Number of contractors per year 5

Number of Years in Development 3

$990,000 Fully burdened cost to develop software $8,490,000

Time to Market Factor 1.50x

Valuation Based on Replacement Value $12,735,000

Replacement Value Analysis

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Weighting Valuations

Jon joined Corum in 2010 out of their Seattle headquarters and is now based in Amsterdam. He has close to 30 years experience serving high technology companies with the last 20 mainly in chief operating and chief executive roles. During this time Jon has become known for his ability to successfully integrate strategies and tactics into well executed operating plans, building strong teams and achieving excellent results.

Jon has served as President and CEO of The PowerTech Group, a security and compliance software company sold to Help/Systems in 2008, and Microserv Technology Services, a nationwide tech services company which was acquired by Halifax Corporation in 2003. Earlier he served as President and COO of Traveling Software, a leading developer of communications software in Seattle. Prior to his operating roles Jon held vice president roles in sales, marketing and business development for technology companies.

Jon has taught in the software product management program at the University of Washington and holds a business administration degree from San Francisco State University.

Jon ScottManaging DirectorCorum Group International

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Weighting Valuation Methods

Comparable Public Company Analysis Financial

Metric Applied Multiple Implied Value Weight Weighted Value

Trailing Multiples

Enterprise Value/TTM Revenue 4,300,000 2.10 x 9,000,000 8.3% 750,000

Trailing P/E 900,000 11.59 x 10,400,000 8.3% 870,000

Forward Multiples Enterprise Value/FY Revenue 7,500,000 1.83 x 13,725,000 8.3% 1,100,000

Forward P/E - FY Earnings 1,742,000 11.22 x 19,550,000 8.3% 1,600,000

Total

Weighting of Method

33.3% 4,320,000

Comparable Transaction Analysis 4,300,000 2.1 x 9,000,000 33.3% 3,000,000

Discounted Cash Flow Analysis 21,750,000 33.3% 7,200,000

Assumptions/Definitions: EV = Enterprise Value (Market Capitalization + Debt - Cash)

Total Weighted Fair Market Value $14,500,000

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When to Present a Valuation

Entertainment software entrepreneur Jim Perkins is directly responsible for publishing some of the industry’s biggest franchises, including Unreal, Duke Nukem, Wolfenstein, Doom, Hunting Unlimited, and Driver. A well-known senior executive with a 22-year track record of publishing such bestselling hits, he founded and grew two highly successful software publishing companies (FormGen and ARUSH) from start-ups to multi-million dollar enterprises. Jim also launched Radar Group, the first Transmedia Incubation Company to monetize entertainment franchises across all media, including film and television. His success and extensive experience in software production, marketing and public relations, packaging, online and retail distribution and software M&A, uniquely qualify him as an expert in building value and realizing wealth. Jim joined Corum Group, the world’s leading software M&A firm, with a specific focus on educating and helping prospective sellers maximize the value of their digital media companies.Jim Perkins

Executive Vice PresidentCorum Group, Ltd.

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Valuation - Present as Late as Possible

The marketplace may spotlight your most valuable attributes

Buyers may disclose preferred valuation methods, comparables, structures & reasons

Use the most current growth in revenue & profits in the analysis

Time for the auction environment to develop

You may never present a valuation

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12 Steps to a Successful Valuation1. Why do a Valuation?

2. Performing a SWOT Analysis

3. Creating a Company and Market Overview

4. Developing Pro Forma Financials

5. Understanding Valuation Methodologies

6. Mapping Public Peer Groups

7. Finding Comparable Transactions

8. Using Discounted Cash Flow (DCF)

9. Calculating Discount Rates

10. Determining Replacement Value

11. Weighting Valuations

12. When to Present a Valuation

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Upcoming Conference ScheduleSelling Up Selling Out (SUSO) - Ready to go to market? During this half-day workshop, learn to prepare, position, research, value, negotiate, and execute due diligence for maximum price and structure. This is the most attended Tech M&A event ever – participants have done over $1 trillion in transaction value.

Merge Briefing (MB) - The Merge Briefing is a 90-minute executive briefing providing a current M&A market update (trends, valuations, etc.), as well as a brief overview of the Tech M&A process: “8 Steps To An Optimal Outcome.”

www.CorumGroup.com/Events

Sep. 14: Atlanta – SUSO

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After the Deal – Celebration

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www.corumgroup.com