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1Q 2010 Software Industry Equity Report Contents

U.S. ECONOMY: SOFTWARE INDUSTRY MACROECONOMICS........................................................................ 1

IT SPENDING............................................................................................................................................................ 2

PUBLIC SOFTWARE COMPANY STOCK PERFORMANCE ................................................................................. 2

PUBLIC SOFTWARE COMPANY MARKET VALUATIONS ................................................................................... 2

PUBLIC SOFTWARE COMPANY FINANCIAL PERFORMANCE .......................................................................... 4

PUBLIC SOFTWARE COMPANY PERFORMANCE BY PRODUCT CATEGORY ................................................ 5

PUBLIC SOFTWARE AS A SERVICE (SAAS) COMPANY MARKET VALUATIONS AND FINANCIAL PERFORMANCE....................................................................................................................................................... 6

PUBLIC INTERNET COMPANY MARKET VALUATIONS AND FINANCIAL PERFORMANCE........................... 7

INITIAL PUBLIC OFFERINGS.................................................................................................................................. 9

MERGERS AND ACQUISITIONS: THE NUMBERS.............................................................................................. 10 M&A DEAL VOLUME AND SPENDING: ALL INDUSTRY SECTORS ............................................................................... 10 SOFTWARE M&A DEAL VOLUME AND SPENDING..................................................................................................... 10 SOFTWARE M&A DEAL CURRENCY ........................................................................................................................ 11 PRIVATE VS. PUBLIC BUYERS ................................................................................................................................. 12 SOFTWARE M&A VALUATIONS ............................................................................................................................... 12 M&A EXIT VALUATIONS BY SOFTWARE CATEGORY................................................................................................. 15 SAAS .................................................................................................................................................................... 16

APPENDIX A: 1Q10 PUBLIC MARKET VALUATIONS AND STATISTICS BY PRODUCT CATEGORY........... 18

APPENDIX B: 1Q10 MERGERS AND ACQUISITIONS, SELECT PUBLIC SELLER VALUATIONS.................. 21

APPENDIX C: 1Q10 MERGERS AND ACQUISITIONS, MOST ACTIVE BUYERS ............................................. 22

APPENDIX D: 1Q10 MERGERS AND ACQUISITIONS, SOFTWARE INDUSTRY MEGA-DEALS..................... 23

APPENDIX E: 1Q10 MERGERS AND ACQUISITIONS, SELECT SOFTWARE-AS-A-SERVICE SELLERS...... 24

APPENDIX F: 1Q10 MERGERS AND ACQUISITIONS – DEAL INSIGHT ........................................................... 25

APPENDIX G: SELECT 1Q10 SOFTWARE INDUSTRY MERGERS AND ACQUISITIONS................................ 27


Software Equity Group, L.L.C. Investment Banking / Mergers & Acquisitions

1| 1Q10 SOFTWARE INDUSTRY EQUITY REPORT www.softwareequity.com


U.S. ECONOMY: SOFTWARE INDUSTRY MACROECONOMICS

We begin our analysis, as always, with a brief synopsis of recent U.S. Gross Domestic Product (GDP) behavior during the prior quarter. GDP is best defined as the total market value of all final goods and services produced in a country in a given year, equal to total consumer, investment and government spending, plus the value of exports, minus the value of imports. When we published our 1Q09 Report a year ago, GDP contracted 6.4%, following 2.7% and 5.4% declines in 3Q08 and 4Q08, respectively (Figure 1). These significant and continuing declines, equating to $490 billion, officially put the U.S. in a recession for the first time since 1990. In February 2009, President Obama signed the $787 billion stimulus package into law. Although the impact of this legislation is the subject of ongoing debate, the GDP’s rate of decline slowed in 2Q09 to 0.7% and GDP actually grew by 2.2% in 3Q09 and an encouraging 5.6% in the fourth quarter. As we went to press, the Bureau of Economic Analysis (BEA) is predicting GDP will rise a modest but encouraging 3.0% in 1Q10 (Figure 1). The 1Q10 forecast seems a bit optimistic in light of recently released economic data. The U.S. Conference Board’s Leading Economic Index (LEI) inched up 0.1% in February, marking the 11th consecutive month of LEI growth. Looking a

bit closer at the Conference Board’s LEI, only four of ten indicators increased in February. The positive contributors, beginning with the largest positive contributor, were interest rate spread, real money supply, index of supplier deliveries (vendor performance) and manufacturers’ new orders for consumer goods and materials. The negative contributors, beginning with the largest negative contributor, were average weekly manufacturing hours, stock prices, the index of consumer expectations, building permits, manufacturers’ new orders for nondefense capital goods and average weekly initial claims for unemployment insurance (inverted). Despite the GDP’s modest but sustained improvement, jobs remained in relatively scarce supply, dampening hopes for a rapid recovery. The U.S. unemployment rate improved slightly from its 4Q09 high of 10.1% (Figure 1). Nonfarm payroll employment increased by 162,000 jobs in 1Q10, with most new jobs created in the temporary help services and healthcare sectors. Federal government employment also rose, reflecting the hiring of temporary workers for Census 2010. While the current unemployment rate of 9.7% is no cause for celebration, serious job cutting appears to have subsided, and we believe 2010 will continue to see signs of stabilization and measured improvement.

Figure 1: U.S. Gross Domestic Product and Unemployment Rate

1.2%

3.5%

7.5%

2.7%3.0%

3.5% 3.6%

2.5%3.0%

2.6%

3.9%

1.3%

4.8%

2.7%

1.1%

2.1%1.2%

3.2% 3.6%

2.1%

-0.7%

1.5%

-2.7%

-5.4%

-6.4%

-0.7%

2.2%

5.6%

3.0%

-8%

-6%

-4%

-2%

0%

2%

4%

6%

8%

10%

GDP % Growth

Unemployment Rate

2003 2004 2005 2006 2007 2008 2009




IT SPENDING CIOs reined back hard on spending for software, hardware and IT services in 2009. Following IT spending increases of 9% in 2007 and 6% in 2008, most IT spending surveys are estimating domestic IT capital spending declined 10% - 12% in 2009. To provide some perspective, we estimate every percentage increase/decrease in IT spending equates to approximately $5 billion. It appears the worst is over. Extrapolating from three different IT spending surveys we’ve analyzed, it’s likely CIO purse strings will continue to loosen in 2010, if the economy doesn’t backslide. In its March 2010 survey, Goldman Sachs revised its IT spending forecast to +5% in 2010, an encouraging improvement over its +2% projection in July 2009. According to the Goldman Sachs Survey, internal IT staffing is now the area of greatest pent-up demand, which should help shrink the unemployment rate if the budget priority translates into new hires. Among other IT spending priorities surveyed, hardware remains in the top spot, suggesting a notable desktop/server/storage refresh in 2H10. Although prior IT spending surveys underscored the reluctance of most enterprise CIOs to invest heavily in SaaS applications, receptivity to SaaS appears to be slowly growing. While SaaS adoption rates of enterprise CIOs remain much lower than SMB CIOs, Goldman’s latest survey suggests enterprise CIO acceptance of SaaS may be shifting from “edge” to “core” applications. While only 11% of respondents stated they preferred SaaS, 13% said they’d always consider SaaS, and 23% identified themselves as delivery method (SaaS vs. on-premise) agnostic. Just 19% reported an unwillingness to use a SaaS model.1 The Goldman Sachs survey also included interesting data on the breadth of SaaS applications currently deployed – and currently planned for deployment – by enterprise CIOs. Salesforce automation, web conferencing, email, expense management, e-recruiting and collaboration, the standard bearers of enterprise SaaS applications, continue to make inroads. Noteworthy, though, is the modest growth in enterprise SaaS applications for accounting and

1 Goldman Sachs March 7, 2010 IT Spending Survey

billing, human capital management and security/compliance. All that said, we remain convinced that widespread enterprise adoption of mission critical SaaS solutions will not occur until CIOs/CTOs are no longer concerned with SaaS security and the viability of integrating SaaS applications with on-premise applications. We do, however, anticipate markedly increased spending on SaaS solutions by Small/Medium Businesses (SMBs) during the remainder of 2010 if the economic recovery continues, particularly ERP, CRM, supply chain and financial applications. PUBLIC SOFTWARE COMPANY STOCK PERFORMANCE After racking up losses in January and February, the public markets recovered in March. The Dow, S&P 500 and NASDAQ closed the quarter up 3.1%, 3.2% and 4.4%, respectively, from the first trading day of 2010 (Figure 2). By comparison, the software industry consistently outperformed the major stock market indices in 1Q10 (Figure 2). As of March 31, the median stock price of the SEG Software Index, our tracking survey of 173 publicly traded software companies, gained 6.3% over the January 2 opening price. Investors, once again, took relative comfort in the software industry’s unique ability to maintain healthy operating margins despite flat or declining revenue and a very difficult economy. Indeed, 161 out of the 249 (64.7%) public companies comprising our Software, SaaS and Internet indices reported higher year-to-date (YTD) stock prices at the close of 1Q10. Eight achieved YTD market returns greater than 40% (Figure 3). PUBLIC SOFTWARE COMPANY MARKET VALUATIONS Enterprise valuations of public software companies continued to rebound in 1Q10. The median enterprise value (EV) to revenue multiple of public companies in our SEG Software Index increased for the fourth consecutive quarter, rising from 1.2x in 1Q09 to 2.1x in 1Q10 (Figure 4). What’s more, the median EV/Revenue multiple for the SEG Software Index remained at or above 2.0x for two consecutive quarters for the first time in two years – 4Q07 to 1Q08 being the last. This encouraging




trend line is primarily driven by a median 64.3% stock price gain of companies comprising the SEG Software Index during the same period. Investors, once again, favored the largest (annual revenue) public software companies in 1Q10, believing they are far better positioned to weather a long storm and best positioned to recover quickly. SEG Software Index companies with revenues greater than $1 billion posted a median EV/Revenue multiple of 2.9x in 1Q10, compared

to a median EV/Revenue multiple of 1.2x for software companies with revenue less than $100 million (Figure 5). While most of the listed companies in our tracking indices saw improved EV/Revenue multiples year-over-year, ten public software, SaaS and Internet companies excelled at boosting their market valuations (Figure 6). Overall, these overachievers reported a TTM median revenue growth rate of 23.9% and an impressive TTM median EBITDA margin of 37.7%. The ultimate overachiever is still Baidu, often referred to as “China’s Google”. Baidu’s median 1Q10 EV/Revenue of 25.1x once again catapulted the company to the top spot on our EV/Revenue valuation list. Its valuation is boosted by year-

Figure 3: High Flyers – YTD Stock Market Return

Company Ticker Category2010 Stock Return

InsWeb Corp. INSW Internet - eCommerce & Portals 59%

TheStreet.com, Inc. TSCM Internet - New Media 54%

OpenTable OPEN Internet - eCommerce & Portals 50%

Radware Ltd. RDWR Networking & Connectivity 46%

Constant Contact CTCT CRM, Sales & Marketing Software 45%

Baidu, Inc. BIDU Internet - Search Engine 45%

Renaissance Learning, Inc. RLRN Education & Computer Based

Training 43%

Stratasys, Inc. SSYS Engineering, PLM & CAD/CAM Software 42%

MakeMusic! Inc. MMUS Multimedia, Graphics, Digital Media 39%

THQ Inc. THQI Entertainment 39%

2010 High Flyers - Stock Market Return

Figure 4: SEG Software Index Key Statistics

Measure 1Q09 2Q09 3Q09 4Q09 1Q10EV/Revenue 1.2x 1.4x 1.8x 2.0x 2.1xEV/EBITDA 8.2x 9.5x 11.1x 12.9x 13.8xEV/Earnings 14.2x 18.9x 24.7x 29.3x 27.8xCurrent Ratio 1.9 1.9 1.9 2.0 2.0Cash & Eq ($M) $76.8 $78.9 $92.1 $93.9 $97.0Gross Profit Margin 67.4% 67.1% 67.2% 67.5% 68.5%EBITDA Margin 14.3% 15.3% 15.8% 15.3% 15.9%Net Income Margin 5.2% 4.5% 4.7% 5.6% 6.6%TTM Revenue Growth 11.1% 5.6% 1.7% -1.6% -0.1%TTM Total Revenue ($M) $220.1 $225.5 $231.2 $221.9 $215.2TTM Total EBITDA ($M) $28.1 $27.8 $30.0 $29.7 $32.6Debt / Equity Ratio 22.7% 23.3% 26.4% 24.6% 26.1%

SEG - Software: Median Metrics

-15.0%

-10.0%

-5.0%

0.0%

5.0%

10.0%

15.0%

DOW S&P 500 NASDAQ SEG SaaS Index SEG S/W Index SEG Internet Index

January February March

Figure 2: Major Market Indices Compared to the SEG Software, Internet and SaaS Indices




over-year (YoY) revenue growth of 39.1% and an EBITDA margin of 43.2%. Baidu also stands to reap additional benefits given Google’s recent departure from China. Even before Google’s pullout, Baidu led Google in China with double the market share and was showing no signs of slowing down. Baidu is now the third largest search site in the world and is rapidly closing on Yahoo! to become number two. Public software company valuations measured by median EV/EBITDA improved markedly, as well, increasing from 8.2x in 1Q09 to 13.8x in 1Q10 (Figure 4). In 1Q10, software companies with revenue greater than $1 billion posted a median EV/EBITDA multiple of 11.9x, while software companies with revenue between $100 million and $200 million were valued at 15.8x EV/EBITDA (Figure 5). The smallest companies (<$100 million revenue) in the SEG Software Index could muster neither revenue growth or significant profitability, setting the stage for further industry consolidation in 2010.

PUBLIC SOFTWARE COMPANY FINANCIAL PERFORMANCE Predictably, reduced IT spending by large enterprises had a devastating impact on the top line growth of public software companies. The median trailing twelve month revenue growth rate of companies comprising the SEG Software Index was in relative free fall during most of 2009, declining from +11.1% in 1Q09 to -1.6% in 4Q09 (Figure 4). However, 1Q10’s median TTM revenue growth rate of -0.1% may indicate the worst is behind us. As we’ve noted in prior reports, there’s typically a six to nine month lag between material changes in IT spending and the concomitant impact on public software company financial performance. That held true during the 2008 – 2009 economic downturn, and we expect it will also prove true to form during the recovery. Thus far, we see positive signs: According to our random sample of recent earnings calls of 28 public software companies (Figure 7), seventeen (61%) exceeded their most recent revenue projections. Should the IT spending forecasts prove accurate, look for markedly improved public software company revenue growth in 2H10. Until then, expect software companies to remain squarely focused on profitability, as they were throughout 2009 and in 1Q10 (Figure 4). Though many have begun to rehire and ramp up in anticipation of a sustained recovery, it has not been at the expense of operating profit. The median TTM EBITDA margin of SEG Software Index companies increased in 1Q10 to 15.9% from 14.3% in 1Q09. It hasn’t been easy. Of the 28 public software companies in our random sample, only four (14%) beat their EPS guidance to the Street. Most public software companies generated cash and maintained strong balance sheets in 1Q10,

Figure 6: High Flyers – Enterprise Value/Revenue

Company Ticker Category EV/RBaidu, Inc. BIDU Internet - Search Engine 25.1xArchipelago Learning, Inc. ARCL Education & Computer Based

Training 11.7x

SolarWinds, Inc. SWI Networking & Connectivity 10.8x

Mercadolibre, Inc. MELI Internet - eCommerce & Portals 10.6x

Longtop Financial Technologies LFT Financial Services Software 10.3x

OpenTable OPEN OpenTable 9.4x

VMWare VMW Storage & Systems Management Software 8.6x

ANSYS, Inc. ANSS Engineering, PLM & CAD/CAM Software 7.4x

NetEase.com, Inc. NTES Internet - eCommerce & Portals 7.1x

Concur CNQR Accounting & Finance 6.9x

2010 High Flyers - Enterprise Value/Revenue

1Q09 2Q09 3Q09 4Q09 1Q10 1Q09 2Q09 3Q09 4Q09 1Q10

Revenue Greater Than $1 billion 1.8x 2.2x 2.6x 2.8x 2.9x 7.3x 8.6x 10.5x 10.7x 11.9x -1.9% 24.5%Revenue Between $200 million and $1 billion 1.6x 1.8x 2.0x 2.1x 2.2x 10.1x 11.4x 11.4x 12.6x 12.5x 2.2% 18.6%Revenue Between $100 million and $200 million 1.2x 1.4x 2.0x 2.1x 2.3x 9.4x 13.7x 14.1x 15.5x 15.8x 4.1% 13.6%Revenue Less Than $100 million 0.6x 0.8x 0.8x 1.0x 1.2x 5.2x 7.7x 11.2x 12.9x 14.7x -9.2% 5.0%

1Q10 TTM Rev Growth

1Q10 EBITDA Margin

SEG Software Index CompaniesEV/Revenue EV/EBITDA

Figure 5: SEG Software Valuation and Financial Performance by Size of Buyer (TTM Revenue)




no small feat after a major recession, restructuring costs, and little or no revenue growth. SEG Software Index companies increased their year-over-year cash and cash equivalents by a median 26.3% in 1Q10, while maintaining a healthy median current ratio of 2.0, historically consistent with previous years and quarters (Figure 4). The significant cash reserves and strong balance sheets of most public software companies, particularly the industry’s largest players, bode well for small and mid-cap software companies, especially those that enable buyers to extend their product offerings and capture new turf.

PUBLIC SOFTWARE COMPANY PERFORMANCE BY PRODUCT CATEGORY While median financial performance metrics are useful for assessing the overall health of the software industry and making comparisons to other economic sectors, a deeper analysis of these key metrics by software product category provides much more insight about the software

ecosystem. By analyzing how public software companies in discrete product categories are performing, we increase our understanding of market trends, product category lifecycles, M&A trends, IT spending priorities and stock market behavior. As we’ve noted in past reports, public software company valuations vary widely each quarter by product category, and median multiples for the same category often fluctuate wildly from quarter-to-quarter. That axiom held true, once again, in 1Q10 (Figure 8). Security software led all other software categories in terms of market valuation during the first quarter. The median 3.3x EV/Revenue multiple of publicly listed security software providers was buoyed by stellar valuations for Check Point Software (6.6x), Sourcefire (5.4x), Commtouch Software (5.0x) and Cogent (4.8x). By contrast, traditional (i.e., perpetual license, non-SaaS) CRM companies bore the stigma of the lowest EV/Revenue multiple (0.8x) of any software product category. The median valuations of these traditional CRM providers have been well below the software industry median EV/Revenue for more than two years, signaling a distinct lack of investor enthusiasm for providers in this category. Still, the median EV/Revenue multiples for this and all other software product categories we track have increased year-over-year. Interestingly, there seemed to be little correlation in 1Q10 between a product category’s median EBITDA or revenue growth and its year-to-date stock return. Publicly listed Wireless software companies grew median TTM EBITDA aggressively (89.7% YoY), but reported a median 1Q10 stock gain of only 0.9% over their January 2 opening prices. Conversely, public software companies comprising the Engineering, PLM & CAD/CAM category saw median TTM EBITDA decline 6.1% in 1Q10 from 1Q09, yet saw their median 1Q10 stock return increase 12.0% from January 2. Public Education & eLearning software companies grew TTM revenue 18.1% in 1Q10 and reported a median 1Q10 stock gain of 9.1% from January 2. Traditional CRM providers’ median TTM revenue growth rate declined to -16.1% in 1Q10, yet their median 1Q10 stock return was +14.7% over their January 2 opening.

Figure 7: Expected vs. Delivered Revenue and EPS Results (as of March 31) Company Revenue EPSMicrosoft Corporation Cisco Systems, Inc.Oracle CorporationGoogle Inc.Adobe Systems Incorporated Electronic Arts Inc.BMC Software, Inc.

Mentor Graphics CorporationLawson Software, Inc. Jack Henry & Associates, Inc.TIBCO Software Inc. Avid Technology Inc.Open Text CorporationNICE Systems Ltd.

CSG Systems International, Inc.QAD Inc. Websense, Inc.MicroStrategy IncorporatedQuest Software Inc.Blackboard Inc.Rovi Corporation

American Software, Inc.Rainmaker Systems Inc.PDF Solutions, Inc.Chordiant Software, Inc.SourceForge, Inc.Pervasive Software Inc.NetSol Technologies Inc.

: Exceeded or Met Expectations: Did Not Meet Expectations

Company Revenues:

Greater than $1 billion

Company Revenues:

$500 million to $1 billion

Company Revenues: $100 - $500

million

Company Revenues: Less than

$100 million




PUBLIC SOFTWARE AS A SERVICE (SAAS) COMPANY MARKET VALUATIONS AND FINANCIAL PERFORMANCE The economic downturn had a devastating impact on SMBs, the market segment most responsible for the stellar growth rates of many SaaS providers during the preceding three years. The resulting pullback in SMB spending on IT, combined with slower than anticipated enterprise adoption of SaaS, continued to take their toll on public SaaS providers in 1Q10. By the close of the quarter, the annual median TTM revenue growth rate of public SaaS companies had plummeted to 14.1% from 33.5% a year earlier

(Figure 9). It was the tenth consecutive quarterly decline in SaaS revenue growth since 3Q07. Only four of seventeen SaaS companies (Constant Contact, Athenahealth, SuccessFactors and Medidata Solutions) achieved greater than 25% TTM revenue growth in 1Q10 (Figure 10). Nevertheless, investors remained optimistic about the prospects of an economic recovery and what it portends for SaaS providers. Companies comprising the SEG SaaS Index saw their 1Q10 median stock price soar a median 107.1% year- over year. As a result, the median EV/ Revenue multiple of public companies in our SEG SaaS Index jumped from 2.0x in 1Q09 to 3.3x in 1Q10 (Figure 9). Still, public SaaS company valuations remain well below pre-Recession levels and no longer dwarf the valuations of their on-premise counterparts. To provide historical perspective, at the close of 2007, public SaaS companies traded at a median EV/ Revenue multiple of 6.4x, compared to 2.7x for on-premise software providers - a 137% SaaS valuation premium. By 1Q10, the median SaaS EV/Revenue multiple had dropped to 3.3x vs. 2.1x for on-premise software companies, narrowing the differential valuation premium to 57%.

Revenue Growth

EBITDA Growth

EBITDA Margin

YTD Stock Return

1Q09 2Q09 3Q09 4Q09 1Q10 1Q09 2Q09 3Q09 4Q09 1Q10 1Q10 (TTM) 1Q10 (TTM) 1Q10 (TTM) 2010

Database & File Management 1.3x 1.4x 1.6x 2.1x 1.9x 7.1x 7.7x 7.6x 8.6x 8.8x 2.1% 12.7% 22.9% 3.9%Development Tools, Operating Systems & Application Testing Software 0.8x 1.2x 1.4x 1.3x 1.6x 5.6x 8.3x 9.7x 12.8x 9.4x -2.4% -3.0% 17.5% 1.8%

eCommerce Software 2.4x 3.0x 3.0x 2.6x 3.0x 16.5x 20.4x 19.4x 18.4x 18.8x 7.9% 42.7% 14.5% 7.3%Enterprise Application Integration 1.1x 1.4x 2.1x 2.1x 2.1x 6.8x 7.6x 11.4x 9.5x 9.4x 1.9% 16.6% 21.3% 7.4%Messaging, Conferencing & Communications 0.7x 1.1x 1.7x 1.8x 1.8x 5.8x 9.6x 10.7x 10.6x 14.1x 4.6% 21.6% 10.2% 9.9%Networking & Connectivity 1.9x 1.7x 2.0x 2.2x 2.4x 8.1x 8.0x 10.8x 13.7x 16.1x -0.1% 26.3% 21.3% 16.3%Security 2.0x 2.4x 3.4x 3.3x 3.3x 11.6x 11.3x 12.8x 13.8x 14.4x 8.3% 49.6% 16.1% 8.1%Storage & Systems Management Software 1.8x 1.6x 2.1x 2.4x 2.5x 8.5x 9.8x 11.0x 13.8x 11.8x 1.7% -8.6% 16.8% -1.0%Wireless 1.4x 1.3x 1.2x 1.3x 1.7x 11.0x 11.7x 13.6x 14.8x 11.8x -3.7% 89.7% 11.9% 0.9%

Billing & Service Management 0.9x 1.1x 1.3x 1.5x 2.2x 4.7x 5.5x 6.6x 7.4x 10.9x 6.1% 10.7% 20.5% 5.5%Business Intelligence 1.1x 1.5x 1.9x 2.4x 2.3x 7.1x 8.5x 10.6x 12.9x 13.7x -2.0% 23.5% 17.1% -0.3%Content/Document Management 1.6x 1.6x 1.7x 1.7x 2.0x 5.2x 6.5x 6.8x 7.4x 8.2x -9.4% 18.1% 22.5% -3.8%Customer Relationship Management, Marketing & Sales Software 0.4x 0.5x 0.7x 0.6x 0.8x 23.2x 51.0x 15.5x 17.1x 16.9x -16.1% 25.3% -1.8% 14.7%

Education & eLearning 1.2x 2.2x 1.9x 1.8x 1.7x 13.7x 14.6x 17.5x 16.9x 14.5x 18.1% 64.6% 11.6% 9.1%Electronic Design Automation 0.8x 0.9x 1.1x 1.4x 1.5x 15.5x 9.1x 9.8x 9.6x 21.3x -9.3% 11.4% 3.9% 11.4%Engineering, PLM & CAD/CAM Software 1.1x 1.4x 1.6x 1.7x 1.8x 5.7x 7.8x 11.5x 12.4x 14.9x -10.6% -6.1% 13.7% 12.0%Enterprise Resource Planning 1.0x 1.1x 1.4x 1.5x 1.7x 8.7x 9.0x 9.9x 9.7x 10.8x -8.1% 13.8% 18.4% 3.5%Entertainment 0.7x 1.0x 1.0x 1.0x 1.0x 4.4x 6.5x 7.3x 7.2x 9.0x -11.6% -13.3% 13.8% -1.8%Financial Services Software 1.8x 2.1x 2.3x 2.5x 2.5x 8.2x 9.1x 10.1x 10.1x 11.3x 2.2% 9.4% 19.3% 4.3%Healthcare 1.7x 2.4x 2.4x 2.6x 2.4x 11.9x 14.1x 15.2x 17.7x 16.4x 6.8% 12.3% 19.7% 3.0%Multimedia, Graphics, Digital Media 1.4x 1.7x 1.9x 2.5x 2.8x 9.0x 10.1x 13.1x 17.8x 18.2x -10.3% -1.8% 10.6% 7.6%Supply Chain Management & Logistics 0.9x 1.1x 1.3x 1.6x 1.6x 9.9x 10.3x 10.7x 13.0x 12.6x -10.9% 79.4% 10.6% 7.5%

Application Software

Infrastructure Software

SEG - Software: Median Metrics by Category

CategoryEV/Revenue EV/EBITDA

Figure 8: SEG Software Categories

Figure 9: SEG SaaS Index Key Statistics

Measure 1Q09 2Q09 3Q09 4Q09 1Q10EV/Revenue 2.0x 2.5x 2.7x 3.1x 3.3xEV/EBITDA 26.4x 38.8x 36.9x 38.8x 33.1xEV/Earnings 45.4x 44.4x 83.4x 98.9x 74.7xCurrent Ratio 1.4 1.4 1.6 1.6 2.1Cash & Eq ($M) $85.8 $88.0 $90.9 $93.0 $96.4Gross Profit Margin 68.1% 68.0% 67.4% 67.8% 67.6%EBITDA Margin 2.7% 3.3% 6.1% 6.7% 7.8%Net Income Margin -4.8% -3.5% -3.1% -2.1% -1.0%TTM Revenue Growth 33.5% 29.6% 21.3% 14.9% 14.1%TTM Total Revenue ($M) $136.3 $143.6 $144.7 $147.2 $153.1TTM Total EBITDA ($M) $4.2 $4.6 $6.5 $10.5 $11.8Debt / Equity Ratio 1.1% 0.8% 0.8% 0.8% 1.6%

SEG - SaaS: Median Metrics




Should there still be any doubt about whether the public markets value SaaS providers more on the basis of revenue growth than profitability, it should be noted that SaaS companies with TTM revenue growth rates higher than the group median commanded a median 5.0x EV/Revenue multiple, compared to a median 2.3x EV/Revenue multiple for SaaS companies with lower TTM revenue growth rates in 1Q10 (Figure 11). By comparison, SaaS companies with EBITDA margins higher than the group median trade at a median 3.5x EV/Revenue multiple vs. a median 2.9x EV/Revenue multiple for SaaS companies with EBITDA margins lower than the group median. Clearly, revenue growth continues to trump EBITDA from a SaaS valuation standpoint, even in today’s earnings driven market. However, as SaaS growth rates slow over time, profitability will become more important to SaaS company valuations. While profitability continues

to escape a good number of public SaaS companies, others seem to have turned the corner, reaping the benefits of subscription renewals, operational improvements and reduced infrastructure spending. The median TTM EBITDA margin for the SEG SaaS Index was 7.8% in 1Q10, almost three times greater than a year ago. Only three profitable SaaS companies, DealerTrack, Kenexa and Vocus, saw their TTM EBITDA margin decrease from 1Q09 (Figure 10). Still, the median SaaS TTM EBITDA margin as of 1Q10 is less than half the 15.9% median TTM EBITDA margin of the SEG Software Index. We remain convinced enterprise adoption of SaaS will lag analyst forecasts, as CIOs continue to wrestle with concerns about security and back office application integration. As a result, on premise, mission-critical applications will garner the bulk of enterprise software dollars in 2010. PUBLIC INTERNET COMPANY MARKET VALUATIONS AND FINANCIAL PERFORMANCE Though the software and Internet / eCommerce / Web 2.0 sectors are rapidly converging, clear distinctions remain between the two in terms of business model, revenue model, solution deployment and end user requirements. We've opted to track these major categories separately to enable a more granular analysis of each. Broadly defined, Internet companies are primarily internet based and their solutions are primarily – often exclusively – web deployed. Our Internet Index is comprised of companies whose principal business models fall within one or more of the following categories:

1Q09 2Q09 3Q09 4Q09 1Q10 1Q09 2Q09 3Q09 4Q09 1Q10 1Q09 2Q09 3Q09 4Q09 1Q10 1Q09 2Q09 3Q09 4Q09 1Q10Athenahealth (ATHN) Health Care Mgmt 7.7x 6.5x 7.2x 7.4x 6.7x 85.3x 50.4x 54.1x 56.0x 52.4x 39.6% 39.9% 41.5% 41.6% 38.3% 9.0% 12.8% 13.3% 13.2% 12.9%Concur (CNQR) Accounting & Finance 4.0x 5.0x 6.2x 6.6x 6.9x 17.6x 20.9x 25.0x 26.3x 27.6x 50.6% 35.5% 24.1% 14.9% 14.2% 22.5% 23.8% 24.7% 25.0% 25.1%Constant Contact (CTCT) CRM 3.4x 3.9x 4.6x 3.3x 3.3x 392.8x 335.4x 177.8x 66.8x 70.4x 72.8% 64.9% 57.2% 52.0% 47.9% 0.9% 1.2% 2.6% 4.9% 4.7%DealerTrack (TRAK) Vertical - Automotive 1.1x 1.7x 2.6x 2.5x 2.3x 6.4x 12.6x 25.0x 21.9x 21.0x 3.8% -5.0% -8.9% -8.7% -7.0% 17.2% 13.8% 10.2% 11.2% 10.9%DemandTec (DMAN) SCM 2.0x 2.0x 2.4x 2.3x 1.7x - - - - - 22.4% 15.8% 10.9% 7.8% 7.8% -2.4% -4.0% -5.0% -5.3% -5.3%Kenexa (KNXA) Workforce Mgmt 0.5x 0.9x 1.4x 1.4x 1.3x 2.9x 5.9x 10.7x 13.0x 13.9x 12.0% 3.4% -11.0% -20.7% -22.6% 17.3% 15.1% 12.6% 10.6% 9.5%LivePerson (LPSN) CRM 0.9x 1.5x 2.2x 3.1x 3.5x 11.6x 13.1x 15.3x 17.3x 17.0x 42.9% 32.8% 21.7% 14.6% 17.2% 7.5% 11.4% 14.3% 17.8% 20.7%Medidata Solutions (MDSO) Clinical Mgmt - - 2.5x 2.1x 2.0x - - 32.1x 16.6x 14.4x 67.9% - - 78.3% 32.8% -6.0% 3.3% 7.9% 12.6% 13.8%Netsuite (N) ERP 2.6x 3.8x 4.4x 5.1x 4.8x - - - - - 40.5% 33.9% 25.5% 15.5% 9.2% -7.7% -7.0% -6.9% -6.3% -6.6%RightNow (RNOW) CRM 1.1x 1.3x 2.1x 2.6x 2.9x - 63.4x 49.7x 38.8x 37.0x 25.3% 20.4% 13.0% 9.0% 8.7% -1.5% 2.1% 4.3% 6.7% 7.8%Salary.com (SLRY) Workforce Mgmt 0.3x 0.5x 0.8x 0.8x 0.7x - - - - - 28.1% 23.0% 20.8% 17.2% 14.1% -43.1% -43.9% -37.9% -31.9% -28.1%Salesforce.com (CRM) CRM 2.8x 3.8x 4.5x 6.0x 6.2x 32.0x 38.8x 41.7x 51.3x 51.4x 43.8% 36.0% 29.0% 23.6% 21.3% 8.6% 9.8% 10.7% 11.8% 12.1%SoundBite Communications (SDBT) CRM - - 0.3x 0.3x 0.2x - - - 63.1x - 9.4% 1.6% -6.8% -8.3% -7.0% -2.7% -1.2% -1.0% 0.5% -3.4%

SuccessFactors (SFSF) Workforce Mgmt 2.1x 2.9x 3.9x 7.0x 7.0x - - - - - 76.7% 66.2% 58.5% 46.7% 36.8% -56.3% -39.3% -23.6% -10.4% -5.3%Taleo (TLEO) Workforce Mgmt 1.2x 2.2x 2.7x 3.6x 3.8x 20.8x 31.1x 30.9x 31.5x 29.2x 31.5% 33.7% 35.0% 26.0% 17.8% 6.0% 7.1% 8.6% 11.3% 13.1%The Ultimate Software Group (ULTI) Workforce Mgmt 1.8x 2.5x 3.3x 3.4x 3.7x 68.9x 94.6x 94.8x 63.5x 73.2x 17.9% 16.1% 15.0% 13.4% 10.1% 2.7% 2.6% 3.4% 5.4% 5.0%

Vocus (VOCS) CRM 2.7x 3.2x 2.9x 3.0x 2.6x 49.3x 56.0x 48.2x 50.0x 54.9x 33.5% 26.4% 20.1% 13.5% 9.1% 5.5% 5.8% 6.1% 6.1% 4.7%2.0x 2.5x 2.7x 3.1x 3.3x 26.4x 38.8x 36.9x 38.8x 33.1x 33.5% 29.6% 21.3% 14.9% 14.1% 2.7% 3.3% 6.1% 6.7% 7.8%

SEG SaaS Index

Median:

TTM Revenue Growth EBITDA Margin Company Category

EV/Revenue EV/EBITDA

Figure 10: Public SaaS Companies

Figure 11: 1Q10 Public SaaS Company Revenue Growth Rate and EBITDA Margin vs. Revenue Multiple

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• Advertising – Companies that provide key elements in the Internet advertising arena such as search marketing services, software to host and manage ads and a network of websites that run ads. Representative companies include InfoSpace, SINA, and ValueClick.

• Communications – Companies that provide web-based communications, products, and services. Representative companies include Spark Networks, j2 Global Communications, and EarthLink.

• eCommerce & Portals – Companies whose main line of business is conducted over the web. Representative companies include 1-800 FLOWERS.COM, Amazon.com, Bluefly, eBay and Expedia.

• Financial – Companies that provide online financial services, content, and financial information resources. Representative companies include Banks.com, China Finance Online and Online Resources.

• Networking & Connectivity – Companies which provide content sharing, testing, measurement, and other related services via the Internet. Representative companies include Internap Network Services, iPass, Keynote Systems, and Sify Technologies.

• New Media – Companies that provide online information and content. Representative companies include TheStreet.com, WebMD and TechTarget.

• Search Engine – Companies include Baidu.com, LookSmart, Sohu.com and Yahoo!

The SEG Internet Index fared similarly to the SEG Software Index in 1Q10 (Figure 2). The median 1Q10 EV/TTM Revenue multiple for 59 public companies comprising the SEG Internet Index was 1.6x, while the median 1Q10 Internet company EV/TTM EBITDA multiple was 12.9x

(Figure 12). The median current ratio, measured as current assets divided by current liabilities, an indication of a company’s liquidity, was 2.6 in 1Q10, up from 1.9 in 1Q09, suggesting many Internet /eCommerce providers controlled spending and eschewed, or couldn’t get, additional debt financing. Indeed, the median cash and equivalents of these Internet providers increased by $17.5 million during that same period. Nevertheless, Internet providers were hard hit by the Great Recession. As a result of sharply reduced consumer spending, the median TTM revenue growth rate of the SEG Internet Index moved into net loss territory in 4Q09, declining to -0.1% before recovering slightly to +0.4% in 1Q10. The growth rate decline was almost identical to that experienced by public software companies. Enterprise valuations of companies comprising the SEG Internet Index varied widely by Internet category in 1Q10 (Figure 13). Internet Search Engine companies led all other categories in 1Q10, posting an impressive 3.0x EV/Revenue median valuation. Far less impressive were Internet Networking and Connectivity companies, which posted a median 0.8x EV/Revenue.

Measure 1Q09 2Q09 3Q09 4Q09 1Q10EV/Revenue 0.9x 1.2x 1.3x 1.3x 1.6xEV/EBITDA 6.2x 9.8x 11.8x 12.2x 12.9xEV/Earnings 12.0x 17.2x 17.7x 25.3x 22.7xCurrent Ratio 1.9 2.1 2.4 2.6 2.6Cash & Eq ($M) $67.0 $64.1 $64.2 $75.0 $84.5Gross Profit Margin 59.3% 58.8% 59.7% 60.1% 62.2%EBITDA Margin 11.3% 9.2% 11.1% 9.5% 12.6%Net Income Margin -1.3% 0.6% 0.6% 2.4% 3.5%TTM Revenue Growth 11.5% 5.0% 2.5% -0.1% 0.4%TTM Total Revenue ($M) $140.6 $138.5 $141.7 $137.0 $145.1TTM Total EBITDA ($M) $14.9 $13.5 $13.7 $12.9 $16.1Debt / Equity Ratio 22.2% 18.7% 14.5% 10.8% 9.2%

SEG - Internet: Median Metrics

Figure 12: SEG Internet Index Key Statistics

Revenue Growth (TTM)

EBTIDA Growth (TTM)

YTD Stock Return

1Q09 2Q09 3Q09 4Q09 1Q10 1Q09 2Q09 3Q09 4Q09 1Q10 1Q10 1Q10 2010Advertising 1.0x 0.8x 1.1x 0.9x 1.2x 6.3x 7.5x 11.3x 14.0x 21.5x -5.1% 29.6% 0.3%Communications 0.8x 0.9x 0.9x 1.3x 1.3x 4.2x 4.0x 4.9x 5.4x 6.1x -6.1% 8.8% 14.8%eCommerce & Portals 1.1x 1.6x 2.3x 1.9x 1.7x 7.1x 12.3x 15.3x 13.8x 13.3x 2.2% 12.4% 12.3%Financial 1.6x 1.8x 1.5x 1.2x 1.0x 8.8x 12.1x 12.4x 10.1x 3.7x -1.4% -2.7% 11.6%Networking & Connectivity 0.4x 0.5x 0.9x 0.8x 0.8x 3.4x 6.3x 6.5x 10.1x 9.8x 0.7% 40.8% 7.5%New Media 1.1x 1.4x 1.3x 1.4x 1.7x 5.7x 8.9x 16.4x 18.8x 20.6x 2.0% 40.5% 2.4%Search Engine 3.2x 3.2x 3.3x 3.0x 3.0x 10.3x 13.7x 11.2x 10.8x 15.3x -10.4% 14.4% 1.0%

Category

SEG - Internet Index

EV/Revenue EV/EBITDA

Figure 13: SEG Internet Index Median Metrics by Category




Although Internet category multiples have fluctuated quarter to quarter, the category leader (Search Engine) and laggard (Networking) have been the same since 2Q07, respectively. INITIAL PUBLIC OFFERINGS In the first quarter, SS&C Technologies Holdings (NASDAQ: SSNC) was the sole software company IPO. SS&C Technologies Holdings originally filed its S-1 in June 2007 on the heels of 27.1% TTM revenue growth and a 40.9% TTM EBITDA margin. Timing being everything, the provider of investment management software to the financial services industry withdrew its registration in October 2008. Hoping the worst has passed and sensing pent-up demand, SS&C Technologies Holdings filed a new S-1 in late December 2009 and listed on March 31, 2010, raising $161 million. As of the end of the first quarter, SS&C Technologies Holdings reported a TTM EBITDA margin of 44.0%, but a decline in TTM revenue growth of -3.2%. The IPO pipeline for U.S. software companies swelled to nine companies in 1Q10, up from five in 4Q09 (Figure 14). Five new software companies filed S-1’s in 1Q10: Motricity, Convio,

Eyeblaster, BroadSoft and SciQuest. While Motricity, BroadSoft and SciQuest are new filers, both Convio and Eyeblaster wisely withdrew their original registrations in 2008 and filed anew in 1Q10. Of the companies in the IPO pipeline, we believe TeleNav will be well received, given its impressive revenue growth and profitability. SaaS provider SciQuest should also fare well amongst the ranks of public SaaS companies for those same reasons. Conversely, IPO aspirants such as Digital Domain and Syngence will most likely have to shore up their financial performance or let their filings lapse. How will the software IPO market fare in 2010? Given the current economic climate and rapidly expanding IPO pipeline, a case can be made that if the economy continues to recover and the market indices respond in kind, pent-up investor demand could create a much improved environment for software IPOs. In such case, we are forecasting 12 – 15 software IPOs in 2010, and a host of additional filings.

Company Category Filing Date

Offering Amount

Annual Revenue

Net Income

TTM Revenue Growth

Syngence Corporation (TBD)Content/Document Management

11/15/07 $12,000,000 $2,703,000 -$2,253,000 -26.6%

Digital Domain (NASDAQ: DTWO)Multimedia, Graphics, Digital Media

12/11/07 $78,000,000 $77,800,000 -$19,910,000 16.1%

TeleNav, Inc. (NASDAQ: TNAV)Mobile Resource Management

10/30/09 $75,000,000 $110,880,000 $29,618,000 130.7%

SPS Commerce, Inc. (NASDAQ: SPSC)

Supply Chain Management

12/3/09 $46,000,000 $37,746,000 $1,162,000 23.0%

Motricity, Inc. (NASDAQ: MOTR) Wireless 1/22/10 $250,000,000 $113,695,000 -$16,301,000 10.2%

Convio, Inc. (NASDAQ: CNVO)Customer Relationship Management

1/25/10 $57,500,000 $63,086,000 -$2,095,000 10.7%

Eyeblaster, Inc. (TBD)Multimedia, Graphics, Digital Media

3/10/10 $115,000,000 $65,075,000 $9,828,000 2.0%

BroadSoft, Inc. (NASDAQ: BSFT)Messaging, Conferencing, & Communications

3/15/10 $103,500,000 $68,887,000 -$7,853,000 11.4%

SciQuest, Inc. (NYSE: SCI) eProcurement 3/26/10 $75,000,000 $36,179,000 $2,628,000 21.5%

Median: $75,000,000 $65,075,000 -$2,095,000 11.4%*Bold denotes pure play SaaS companies.

Figure 14: U.S. Software IPO Pipeline




MERGERS AND ACQUISITIONS: THE NUMBERS M&A Deal Volume and Spending: All Industry Sectors Globally, there were 9,093 M&A transactions in 1Q10, aggregating $465 billion. By comparison, 4Q09’s 10,028 deals worldwide aggregated $501 billion, while 1Q09’s 6,730 acquisitions pulled in $416 billion. In the U.S., M&A volume across all industry sectors aggregated 3,000 announced transactions in the first quarter of 2010, the fifth consecutive quarterly increase in deal activity (Figure 15). We expect the trend to continue for the balance of 2010. The first quarter’s deal tally marks a modest 5.3% increase over 4Q09’s 2,840 transactions, but a heartening 46% improvement over 1Q09’s 2,049 transactions. The total spend for 1Q10’s 3,000 transactions was a modest $202 billion, compared to $253 billion in 4Q09 and $271 billion in 1Q09. The disparity is primarily attributable to there being only one blockbuster ($20 billion+) deal in Q1 (Novartis’ $28.8 billion acquisition of healthcare supplies manufacturer Alcon, Inc.), compared to five such deals in 4Q09 and three in 1Q09.

There were fewer U.S. leveraged buy-outs and private equity backed transactions in 1Q10 than the closing quarter of 2009, but the number of M&A transactions and total purchase price were both significantly greater year-over-over. According to Capital IQ, there were 218 leveraged buy-outs in 1Q10, down from 277 in 4Q09, but well above 1Q09’s 158 deals. Aggregate dollars spent per quarter followed a similar trend; 1Q10 LBOs fetched $5.8 billion, down from $11.2 billion in 4Q09, but well above the paltry $1.1 billion spent the same period a year ago. With the notable easing of the credit markets, look for LBO activity and spending to significantly ramp in 2H10. Globally, it was very much the same. There were 616 LBOs and private equity transactions worth $11.7 billion worldwide in 1Q10, compared to 728 deals worth $27.3 billion in 4Q09 and 522 transactions aggregating $3.8 billion in 1Q09. Software M&A Deal Volume and Spending Software M&A transactions accounted for 12.6% of all U.S. M&A activity in 1Q10, on par with 4Q09, and modestly lower than software’s 15.4%

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Source: Capital IQ




share in 1Q09. The first quarter’s 379 software deals totaled $4.3 billion, compared to 348 transactions aggregating $7.7 billion in 4Q09, and 316 transactions totaling $2.9 billion in 1Q09 (Figures 16 and 17). After five consecutive quarterly declines, software M&A deal activity appears to have bottomed out in 2Q09 with only 309 announced transactions. 1Q10 marks the third consecutive quarterly increase in deal activity, and the 379 announced transactions indicate we are beginning to approach historic norms of approximately 425 transactions per quarter.

Despite steadily growing deal activity, total software M&A spending in Q1 was well below the quarterly price tags reported in 2006, 2007 and 2008. From 2Q06 through 2Q08, aggregate dollars spent topped $10 billion per quarter, primarily due to a robust number of mega-deals (transactions with enterprise value greater than $500 million). Elliot Management’s announced acquisition of Novell ($1.02EV billion, 1.2xEV TTM revenue) was the sole mega-deal announced in 1Q10. Software M&A Deal Currency

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Figures 16 and 17: U.S. Software Sector M&A Activity and Dollars Spent




The percentage of all-cash software M&A transactions declined to 67% in 1Q10 (Figure 18), while the percentage of sellers receiving stock or a combination of cash and stock grew to 33% from 29% in both 4Q09 and 1Q09. 1Q10 marks the first time we’ve seen all cash transactions fall below 70% since 3Q07. This is likely a sign of the times. Buyers mostly refused to use their undervalued stock as deal currency during the downturn, but are more forthcoming now that their stock prices have rebounded. And sellers, less concerned about volatility in the public markets and anxious for additional upside, are more willing to accept an offer that includes a small stock component.

Private vs. Public Buyers In assessing each quarter’s M&A activity, we continue to track the mix of public and private buyers because it provides useful insight about the current software M&A ecosystem and the level of interest and likely valuation range a potential sell-side candidate might attract. Low M&A deal volumes and fewer public buyers usually connote lower valuations. Conversely, higher deal volume and 40%+ public buyers mean increased deal competition and more strategic valuations. Public buyers accounted for 38% of all acquirers in 1Q10 (Figure 19). By comparison, public software companies comprised only 34% of buyers in 1H09, but cautiously began returning to

the table in search of strategic tuck-ins in 2H09, accounting for 40% of all M&A deals - which helped the median exit multiple to advance. With the credit markets rebounding and the cost of debt still relatively cheap, a good number of cash rich public software companies are considering debt financed acquisitions, as are private equity firms in search of greater leverage than they’ve seen in the past two years.

Software M&A Valuations The software industry’s benchmark median exit multiple rose sharply in 1Q10 to 2.2x TTM revenue, an encouraging uptick from 4Q09’s median M&A valuation of 1.9x TTM revenue, and a stellar improvement over 1Q09’s median exit multiple of 1.3x TTM revenue (Figure 20). Q1

35% 42% 38%38%

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Figure 19: Public vs. Private Software M&A Buyers and Sellers

74% 72% 71% 67%

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Figure 18: Software M&A Form of Payment




marked the first time the median exit multiple has been greater than 2.0x since 1Q08.

Since very few software transactions publicly identify a private software seller’s TTM EBITDA, we did not have sufficient data to ascertain the median EBITDA exit multiple paid them in 1Q10. We did, however, determine that Q1’s median exit multiple for public software company sellers was 13.0x TTM EBITDA in 1Q10, up sharply from 11.8x in 4Q09, and the highest since 4Q08’s median exit multiple of 15.6x TTM EBITDA (Figure 21). While a variety number of factors drive an exit multiple, we’ve repeatedly demonstrated in our prior Quarterly Reports that three of the most important determinants of exit valuation are the seller’s equity structure, financial performance and product category (Figure 22). To determine if the same held true, once again, we analyzed all 1Q10 M&A transactions with ascertainable revenue multiples to determine how exit valuation was affected by ownership status (private vs. public company), size (revenue) of buyer and seller, and the seller’s software product category. As a first step, we sorted 1Q10’s transactions by ownership type, separating public from private software company sellers to ascertain any difference in median TTM exit multiple. Public company sellers received a median 1.3x TTM revenue exit valuation, while privately held software companies commanded a median 2.7x TTM revenue multiple.

The wide variance between public and private seller exit multiples in 1Q10 continues the reversal of a well-established trend. Over the past few years, we’ve noted a shrinking variance between public and private seller exit valuations, with traditionally higher public company exit premiums declining over time as public stock market valuations dropped and many of the best performing and most valuable public companies were acquired. The trend continued in 1Q10, when several devalued, underperforming public companies

11.3x8.7x

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Figure 21: Public Software Company Seller Valuation as a Multiple of EBITDA

Figure 20: Software M&A Valuation as a multiple of revenue (Quarterly)

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Q2 2009 Q3 2009 Q4 2009 Q1 2010

Figure 22: 1Q10 TTM Median Multiples – Segmentation (Enterprise Value/Revenue)

Private Sellers 2.7x Median Multiple

Public Sellers 1.3x Median Multiple

74%

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39%61%




were acquired, including Nstein, acquired by OpenText ($27EV million, 1.2x TTM revenue); Novell, acquired by Elliot Management ($1.02EV

billion, 1.2x TTM revenue); and Chordiant, acquired by Software Pegasystems ($100.2EV million, 1.3x TTM revenue). Please see Appendix B for additional public seller exit valuations in 1Q10. Conversely, most of the highest exit multiples in 1Q10 were paid to private software companies deemed by their large public suitors to be highly strategic and worthy of an acquisition premium. Many of these private targets were venture-backed entities that were well-funded, growing and, consequently, expensive. Noteworthy examples include CA’s acquisition of Nimsoft ($350 million, 10.0x TTM revenue estimate); Iron Mountain’s acquisition of Mimosa Systems ($112 million, 3.2x TTM revenue estimate); Informatica’s acquisition of Siperian ($130 million, 2.9x TTM revenue estimate); and Success Factors’ acquisition of Inform Business Impact ($40.5 million, 2.7x TTM revenue). As a next step, we separated public and private software company buyers to ascertain any difference in median purchase price paid in 1Q10. Historically, public buyers have paid higher exit multiples than private buyers: 2.5x vs. 2.0x TTM revenue in 2007; 2.0x vs. 1.7x in 2008; and 1.9x vs. 1.2x in 2009. The disparity in exit valuations paid by public vs. private software company buyers continued in the first quarter. Public buyers paid a median 2.5x TTM revenue exit multiple in 1Q10, while private buyers paid a median 2.0x TTM revenue multiple. Despite the continuing disparity, it’s important to note Q1’s multiples are markedly higher than 2009 and directly in line with 2007. We did note a statistical aberration during the quarter. For the first time in our analysis, buyers with revenue less than $200 million paid higher premiums than buyers with revenue greater than $200 million (2.7x by buyers <$200 million revenue vs. 2.0x by buyers >$200 million revenue). These smaller acquirers justified the premium by targeting small (<$20 million revenue), undervalued private companies with flat or declining revenue but products that could provide significant upside to the buyer (Figure 22).

We slice and dice software M&A transactions this way in part to remind our readers that the median software industry TTM revenue and EBITDA exit multiples we report each quarter have little bearing on the prospective exit valuation of a particular software company. Examples abound of companies selling for modest multiples in strong economies and eyebrow-raising multiples in tough economic times. In every economy, the software company valuation range is wide and the valuation drivers are many and varied. And so we also analyzed 1Q10’s median software M&A multiple horizontally and vertically, segregating vertical market software company sellers (e.g. retail, financial services, telecom, manufacturing, etc.) from sellers with horizontal software solutions (infrastructure, enterprise applications, etc.). In 1Q10, providers of vertical software accounted for 37% of all software M&A, confirming vertical providers remain, for the time being, attractive acquisition targets, primarily because of their predictable and substantial recurring revenue, domain expertise and highly defensible market positions (Figure 23). Horizontal solution providers comprised 63% of sellers.

In the first quarter, vertical market providers received a median 1.8x TTM revenue exit valuation, while their horizontal market counterparts were valued at a median 2.2x TTM

Figure 23: 1Q10 Horizontal vs. Vertical Sellers

37%63%

Vertical Horizontal

Figure 24: Horizontal vs. Vertical Software M&A Multiples

Horizontal Vertical1Q10 2.2x 1.8x4Q09 1.7x 2.3x3Q09 2.3x 1.5x2Q09 1.7x 1.6x1Q09 1.3x 1.1x




revenue multiple. Median exit valuations of vertical software companies have fluctuated widely over the past two years, and especially over the past four quarters, reaching a relative high in 4Q09 never before seen. 1Q09 saw the median vertical exit valuation, and the vertical-horizontal exit valuation variance, return to pre-2008 norms (Figure 24). M&A Exit Valuations by Software Category While company size and software delivery model demonstrably impact valuation, software product category continued to be the single most important M&A valuation driver in 1Q10. For most software product categories, there is often an insufficient number of transactions that publicly report both seller TTM revenue and buyer purchase price, essential data in ascertaining the applicable median exit value for the product category. Consequently, we aggregate the data each quarter on a TTM basis. As a result, it may take several quarters to detect changing product category valuation trends, and certain outlier transactions consummated nine or twelve months ago may have a residual impact on their product category multiples. Among the 12 product categories we tracked in 1Q10 (Figure 25), Development Tools/IT Asset Management software providers led the pack, in part due to several 2Q09 transactions which will fall off next quarter. Transactions in this category, which boasted a 3.0x TTM revenue median exit valuation, included Cisco’s acquisition of Tidal Software ($105 million, 4.0x TTM revenue estimate) in 2Q09; EMC’s acquisition of Configuresoft ($87 million, 3.0x TTM revenue estimate) in 2Q09; VMWare’s acquisition of SpringSource ($446 million, 14.8x TTM revenue estimate) in 3Q09; Compuware’s acquisition of Gomez ($290 million, 5.5x TTM revenue) in 4Q09, and CA’s acquisition of Nimsoft ($350 million, 10.0x TTM revenue estimate) in 1Q10. Exit valuations for other software product categories ranged from a median 2.7x TTM revenue for providers of Healthcare industry applications, to 0.8x TTM revenue for traditional (on-premise) enterprise resource planning software. Exit valuations in the Healthcare software sector fluctuated most widely over the past two quarters, increasing rather dramatically

from 1.5x TTM revenue in 4Q09 to 2.7x in 1Q10 as concerns about the IT spending impact of Federal healthcare reform subsided. From a deal activity standpoint, Wireless and Healthcare led all other product categories in 1Q10 (Figure 26), followed by Development Tools/ IT Asset Management and CRM/ Marketing/Sales Automation tools. Accounting applications were in least demand by acquirers in 1Q10.

Figure 25: Software M&A by Product Category

0.8x

0.9x

1.1x

1.2x

1.3x

1.3x

1.5x

1.6x

2.0x

2.4x

2.7x

3.0x

EnterpriseResourcePlanning

CRM, Marketing &Sales

Supply ChainManagement &

Logistics

Content/DocumentManagement

Engineering, PLM& CAD/CAM

Messaging,Conferencing &

Communications

Financial Services

Other Verticals(A&D, Telco,Retail, etc.)

HR & WorkforceManagement

BI, Risk andCompliance

Healthcare

Dev Tools & ITAsset

Management




SaaS Until 3Q08, the stellar revenue growth of SaaS providers, fueled largely by the enthusiastic response of small-medium businesses to a hosted business model and the SaaS promise of a more predictable and profitable revenue model, helped drive SaaS exit multiples through the roof (e.g., median 5.5x TTM revenue in 1Q07; 4.8x in 1Q08). Then the Great Recession took its toll on both enterprises and small/medium businesses (SMBs) alike, IT spending plummeted, and the median TTM revenue growth rate of the public companies comprising our SEG SaaS dropped steadily, from 46.5% in 2Q08, to 40.9% in 3Q08, to 35.9% in the final quarter of 2008. It took some time for the rapidly declining SaaS growth rates to sink in. SaaS exit valuations

remained high in 3Q08 (5.4x TTM revenue) and 4Q08 (4.8x TTM revenue). However, far fewer buyers showed an appetite for such lofty multiples. The number of SaaS M&A transactions declined quickly and sharply – from 36 deals in 1H08 to 25 SaaS exits in 2H08, a 31% drop. In 1H09, as the median TTM growth rate of public SaaS companies continued to fall, M&A activity and exit valuations slipped further, as well. There were only nine SaaS deals reported in 1Q09 with a median exit valuation of 1.2x TTM revenue, and eight SaaS transactions in 2Q09 (insufficient data to calculate a reliable median exit multiple). In 3Q09, however, after four consecutive quarters of decline, SaaS deal volumes and exit valuations both improved. In the third quarter we counted thirteen SaaS company exits at a median valuation of 3.3x TTM revenue. There were some 20 SaaS company acquisitions in 4Q09, but only

Figure 26: Software M&A by Product Category

Manufacturing & Asset Mgmt

Retail

Other Verticals

Gov't / A&D

Financial Services

Netw orking & Connectivity

Healthcare

HR & Workforce Mgmt

Entertainment

Messaging, Conferencing & Communications

Multimedia, Graphics, Digital Media

Enterprise Application Integration

Enterprise Resource Planning

Engineering, PLM & CAD/CAM

Electronic Design AutomationElectronic Commerce

Education & Computer Based Training

Dev. Tools, IT Asset Mgmt & App. Testing

Database & File Mgmt

CRM, Marketing & Sales Softw are

Content/Document Mgmt

Business Intelligence

Billing & Service Provisioning

Accounting

Wireless

Supply Chain Mgmt & LogisticsStorage & Systems MgmtSecurity

Telecommunications




two ascertainable revenue multiples in the quarter: Compuware’s acquisition of Gomez ($290 million, 5.5x TTM revenue) and Descartes Systems’ acquisition of Porthus N.V. ($36.9 million, 1.1x TTM revenue). In 1Q10, ten SaaS providers were acquired, but there was insufficient data released about these transactions to enable a median exit multiple to be calculated, with the exception of Success Factors’ acquisition of Inform Business Impact for 2.7x TTM revenue. On a TTM basis (2Q09 – 1Q10), there were some 51 SaaS company mergers and acquisitions, but only six such transactions provided data sufficient to calculate a median exit multiple - 3.0x TTM revenue.




APPENDIX A: 1Q10 PUBLIC MARKET VALUATIONS AND STATISTICS BY PRODUCT CATEGORY

Billing & Service Management 1Q09 2Q09 3Q09 4Q09 1Q10Current Ratio 2.8 2.8 3.0 3.1 3.0EBITDA Margin 13.7% 17.0% 20.2% 20.5% 20.5%Gross Profit Margin 50.6% 51.4% 52.0% 52.8% 54.1%Net Income Margin 11.3% 10.9% 10.8% 11.9% 14.4%TTM Earnings Growth (YoY) 5.5% 10.8% -3.1% -13.9% 54.3%TTM Revenue Growth (YoY) 11.0% 8.5% 7.5% 17.0% 6.1%TTM EBITDA Growth (YoY) 61.4% 9.0% 9.3% 10.7% 10.7%Cash as Percent of Market Cap 38.2% 27.0% 27.7% 23.9% 22.3%Enterprise Value Growth (YoY) -29.1% 5.5% -10.9% 26.2% 52.3%EV/Revenue 0.9x 1.1x 1.3x 1.5x 2.2xEV/EBITDA 4.7x 5.5x 6.6x 7.4x 10.9xEV/Earnings 8.6x 9.4x 12.1x 13.4x 14.8x

Business Intelligence 1Q09 2Q09 3Q09 4Q09 1Q10Current Ratio 1.9 2.2 2.2 2.2 2.2EBITDA Margin 16.4% 17.6% 17.4% 17.0% 17.1%Gross Profit Margin 77.8% 78.2% 77.8% 78.0% 77.6%Net Income Margin 11.0% 11.2% 11.4% 11.3% 11.2%TTM Earnings Growth (YoY) -3.7% 3.3% 27.9% 46.8% 2.2%TTM Revenue Growth (YoY) 6.9% 1.5% -0.5% -2.0% -2.0%TTM EBITDA Growth (YoY) 8.2% 2.7% 12.0% 23.9% 23.5%Cash as Percent of Market Cap 36.7% 32.5% 27.5% 24.9% 24.0%Enterprise Value Growth (YoY) -46.2% -32.3% 2.4% 120.7% 143.0%EV/Revenue 1.1x 1.5x 1.9x 2.4x 2.3xEV/EBITDA 7.1x 8.5x 10.6x 12.9x 13.7xEV/Earnings 10.3x 13.6x 18.9x 28.6x 29.9x

Content & Document Management 1Q09 2Q09 3Q09 4Q09 1Q10Current Ratio 1.2 1.2 1.4 1.4 1.4EBITDA Margin 24.5% 23.7% 23.1% 23.0% 22.5%Gross Profit Margin 72.0% 72.7% 72.5% 72.6% 71.5%Net Income Margin 6.4% 0.2% -13.1% -6.6% 0.8%TTM Earnings Growth (YoY) 85.7% 63.4% 34.4% 88.0% -55.8%TTM Revenue Growth (YoY) 7.6% -7.0% -0.7% -11.1% -9.4%TTM EBITDA Growth (YoY) 7.8% 13.6% 4.8% -4.1% 18.1%Cash as Percent of Market Cap 31.3% 25.2% 18.8% 18.9% 27.1%Enterprise Value Growth (YoY) -24.6% -28.8% -4.9% 44.2% 59.7%EV/Revenue 1.6x 1.6x 1.7x 1.7x 2.0xEV/EBITDA 5.2x 6.5x 6.8x 7.4x 8.2xEV/Earnings 8.3x 14.6x 31.8x 41.0x 48.7x

Customer Relationship Management 1Q09 2Q09 3Q09 4Q09 1Q10Current Ratio 1.4 1.4 1.4 1.5 1.5EBITDA Margin 0.9% 0.4% -0.7% -3.0% -1.8%Gross Profit Margin 54.0% 53.9% 52.9% 52.6% 54.3%Net Income Margin -11.3% -13.4% -7.4% -13.9% -11.9%TTM Earnings Growth (YoY) 48.8% -5.3% 28.9% 33.3% -4.8%TTM Revenue Growth (YoY) -8.7% -9.1% -15.8% -16.9% -16.1%TTM EBITDA Growth (YoY) 164.2% -12.8% -13.1% 72.1% 25.3%Cash as Percent of Market Cap 43.7% 46.0% 35.2% 34.3% 29.1%Enterprise Value Growth (YoY) -61.5% -55.9% -38.4% 58.0% 56.3%EV/Revenue 0.4x 0.5x 0.7x 0.6x 0.8xEV/EBITDA 23.2x 51.0x 15.5x 17.1x 16.9xEV/Earnings - 27.7x 26.6x 22.8x 23.6x

Database & File Management 1Q09 2Q09 3Q09 4Q09 1Q10Current Ratio 2.1 2.0 2.4 2.4 1.7EBITDA Margin 22.0% 20.9% 22.4% 22.9% 22.9%Gross Profit Margin 81.7% 82.1% 83.0% 83.7% 84.1%Net Income Margin 12.3% 12.7% 13.5% 13.9% 14.0%TTM Earnings Growth (YoY) -1.6% -2.6% -2.6% 1.3% 3.4%TTM Revenue Growth (YoY) 10.5% 5.0% 2.0% 3.4% 2.1%TTM EBITDA Growth (YoY) 20.5% 21.2% 20.0% 11.8% 12.7%Cash as Percent of Market Cap 36.8% 30.8% 31.7% 29.6% 27.4%Enterprise Value Growth (YoY) -23.9% -9.8% -2.9% 49.6% 49.4%EV/Revenue 1.3x 1.4x 1.6x 2.1x 1.9xEV/EBITDA 7.1x 7.7x 7.6x 8.6x 8.8xEV/Earnings 14.3x 14.8x 17.2x 18.2x 17.5x

Dev. Tools, Op Systems & App Testing 1Q09 2Q09 3Q09 4Q09 1Q10

Current Ratio 2.1 2.1 2.1 2.0 1.9EBITDA Margin 15.8% 16.3% 15.6% 16.3% 17.5%Gross Profit Margin 70.4% 70.4% 70.4% 70.2% 71.2%Net Income Margin 7.2% 7.2% 6.2% 6.7% 8.4%TTM Earnings Growth (YoY) -11.8% -24.4% -3.0% -7.5% -15.0%TTM Revenue Growth (YoY) 14.1% 7.2% 3.1% -2.7% -2.4%TTM EBITDA Growth (YoY) 33.3% 24.9% 20.1% 9.4% -3.0%Cash as Percent of Market Cap 34.9% 28.2% 19.3% 28.8% 21.3%Enterprise Value Growth (YoY) -57.5% -45.0% -21.0% 46.1% 47.7%EV/Revenue 0.8x 1.2x 1.4x 1.3x 1.6xEV/EBITDA 5.6x 8.3x 9.7x 12.8x 9.4xEV/Earnings 12.7x 17.7x 25.3x 24.1x 23.4x

eCommerce Software 1Q09 2Q09 3Q09 4Q09 1Q10Current Ratio 1.7 1.8 1.8 1.8 1.9EBITDA Margin 8.1% 10.5% 13.2% 14.1% 14.5%Gross Profit Margin 62.4% 63.8% 65.2% 65.6% 66.0%Net Income Margin -13.8% -14.9% -8.0% 5.7% 9.4%TTM Earnings Growth (YoY) -37.6% 30.3% 297.5% 33.9% 165.6%TTM Revenue Growth (YoY) 30.1% 12.3% 7.9% 7.9% 7.9%TTM EBITDA Growth (YoY) 154.1% 85.7% 60.8% 11.3% 42.7%Cash as Percent of Market Cap 25.0% 27.9% 26.2% 28.2% 29.2%Enterprise Value Growth (YoY) -43.5% -47.9% -37.3% 13.8% 6.3%EV/Revenue 2.4x 3.0x 3.0x 2.6x 3.0xEV/EBITDA 16.5x 20.4x 19.4x 18.4x 18.8xEV/Earnings 27.8x 29.8x 45.0x 21.0x 21.0x

Education & eLearning 1Q09 2Q09 3Q09 4Q09 1Q10Current Ratio 0.9 1.1 0.9 1.1 1.2EBITDA Margin 11.0% 12.2% 9.0% 11.6% 11.6%Gross Profit Margin 72.4% 72.6% 72.6% 74.1% 74.8%Net Income Margin -1.9% -1.3% 0.9% 2.2% 4.0%TTM Earnings Growth (YoY) 56.1% 65.0% -45.3% -58.3% 161.1%TTM Revenue Growth (YoY) 3.7% 3.9% 11.7% 18.1% 18.1%TTM EBITDA Growth (YoY) 26.3% 40.5% -4.2% 47.8% 64.6%Cash as Percent of Market Cap 16.9% 12.6% 14.0% 22.5% 20.1%Enterprise Value Growth (YoY) -49.6% -31.5% -12.4% 81.1% 82.3%EV/Revenue 1.2x 2.2x 1.9x 1.8x 1.7xEV/EBITDA 13.7x 14.6x 17.5x 16.9x 14.5xEV/Earnings 124.2x 104.3x 79.9x 50.2x 43.2x

Electronic Design Automation 1Q09 2Q09 3Q09 4Q09 1Q10Current Ratio 1.7 1.8 1.8 1.8 1.9EBITDA Margin 2.2% -4.4% -9.7% -2.3% 3.9%Gross Profit Margin 79.8% 79.3% 78.2% 79.3% 80.2%Net Income Margin -22.2% -86.9% -89.8% -69.9% -8.9%TTM Earnings Growth (YoY) 27.6% 35.0% -514.0% 81.7% 76.0%TTM Revenue Growth (YoY) -31.1% -39.1% -32.3% -17.9% -9.3%TTM EBITDA Growth (YoY) 112.2% 26.4% 16.5% -3.0% 11.4%Cash as Percent of Market Cap 43.3% 34.6% 35.6% 32.7% 33.1%Enterprise Value Growth (YoY) -67.9% -51.5% -31.0% 37.5% 34.1%EV/Revenue 0.8x 0.9x 1.1x 1.4x 1.5xEV/EBITDA 15.5x 9.1x 9.8x 9.6x 21.3xEV/Earnings - 10.1x 10.3x 12.9x -

Engineering, PLM & CAD/CAM Software 1Q09 2Q09 3Q09 4Q09 1Q10Current Ratio 1.7 1.8 1.8 1.9 1.9EBITDA Margin 20.1% 19.2% 15.1% 12.2% 13.7%Gross Profit Margin 81.8% 82.0% 81.9% 81.3% 81.7%Net Income Margin 7.4% 4.4% 2.9% 0.7% 3.8%TTM Earnings Growth (YoY) -7.5% -25.0% -26.6% -13.6% -3.8%TTM Revenue Growth (YoY) 11.1% 2.0% -4.4% -11.3% -10.6%TTM EBITDA Growth (YoY) 22.6% -6.5% -3.7% -5.0% -6.1%Cash as Percent of Market Cap 30.2% 21.3% 18.3% 20.1% 19.2%Enterprise Value Growth (YoY) -55.8% -51.5% -31.0% 37.5% 47.0%EV/Revenue 1.1x 1.4x 1.6x 1.7x 1.8xEV/EBITDA 5.7x 7.8x 11.5x 12.4x 14.9xEV/Earnings 12.5x 18.6x 24.0x 29.0x 36.9x




APPENDIX A: 1Q10 PUBLIC MARKET VALUATIONS AND STATISTICS BY PRODUCT CATEGORY (CONTINUED)

Enterprise Application Integration 1Q09 2Q09 3Q09 4Q09 1Q10Current Ratio 2.1 1.9 1.8 1.8 1.7EBITDA Margin 18.5% 18.8% 19.8% 20.5% 21.3%Gross Profit Margin 71.1% 71.7% 71.8% 71.6% 71.3%Net Income Margin 11.3% 9.5% 10.1% 10.0% 10.4%TTM Earnings Growth (YoY) -6.7% -4.0% 1.3% 27.9% 27.8%TTM Revenue Growth (YoY) 7.8% 3.8% -5.2% -3.6% 1.9%TTM EBITDA Growth (YoY) 15.0% 10.3% 15.5% 15.4% 16.6%Cash as Percent of Market Cap 31.7% 29.3% 38.6% 35.5% 32.9%Enterprise Value Growth (YoY) -40.5% -24.1% 2.3% 76.1% 98.3%EV/Revenue 1.1x 1.4x 2.1x 2.1x 2.1xEV/EBITDA 6.8x 7.6x 11.4x 9.5x 9.4xEV/Earnings 14.4x 16.1x 19.7x 21.1x 20.2x

Enterprise Resource Planning 1Q09 2Q09 3Q09 4Q09 1Q10Current Ratio 1.2 1.2 1.2 1.5 1.4EBITDA Margin 14.1% 15.3% 17.4% 17.3% 18.4%Gross Profit Margin 54.0% 53.9% 54.8% 56.5% 57.4%Net Income Margin 3.4% 3.9% 4.7% 5.9% 8.0%TTM Earnings Growth (YoY) 1.1% -0.8% -3.8% -5.4% 81.7%TTM Revenue Growth (YoY) 11.3% 3.2% -3.2% -8.1% -8.1%TTM EBITDA Growth (YoY) 19.2% 15.6% 6.1% 10.3% 13.8%Cash as Percent of Market Cap 32.4% 31.4% 25.5% 19.6% 20.3%Enterprise Value Growth (YoY) -46.5% -25.2% -8.5% 41.7% 39.3%EV/Revenue 1.0x 1.1x 1.4x 1.5x 1.7xEV/EBITDA 8.7x 9.0x 9.9x 9.7x 10.8xEV/Earnings 16.1x 20.4x 22.5x 23.8x 21.7x

Entertainment 1Q09 2Q09 3Q09 4Q09 1Q10Current Ratio 1.7 1.8 1.9 1.7 2.3EBITDA Margin 17.5% 14.1% 24.0% 22.4% 13.8%Gross Profit Margin 55.5% 56.1% 59.0% 60.3% 61.2%Net Income Margin 6.2% 3.9% -2.7% -7.6% -8.3%TTM Earnings Growth (YoY) 46.5% -32.4% 31.1% -22.8% 34.2%TTM Revenue Growth (YoY) 32.6% 47.7% 14.0% -11.6% -11.6%TTM EBITDA Growth (YoY) 32.5% 3.7% 57.3% -13.2% -13.3%Cash as Percent of Market Cap 48.5% 36.9% 31.4% 31.4% 31.5%Enterprise Value Growth (YoY) -67.7% -63.0% -44.1% 23.3% 57.1%EV/Revenue 0.7x 1.0x 1.0x 1.0x 1.0xEV/EBITDA 4.4x 6.5x 7.3x 7.2x 9.0xEV/Earnings 5.1x 8.9x 12.9x 13.3x 11.3x

Financial Services Software 1Q09 2Q09 3Q09 4Q09 1Q10Current Ratio 1.4 1.4 1.3 1.3 1.4EBITDA Margin 20.1% 19.6% 18.9% 19.0% 19.3%Gross Profit Margin 55.8% 55.2% 55.7% 56.1% 56.5%Net Income Margin 9.7% 8.7% 9.0% 10.0% 11.2%TTM Earnings Growth (YoY) -18.7% -7.5% -12.0% 2.5% 14.3%TTM Revenue Growth (YoY) 10.1% 5.6% 3.4% 1.8% 2.2%TTM EBITDA Growth (YoY) 19.0% 13.6% 8.7% 13.8% 9.4%Cash as Percent of Market Cap 19.8% 16.7% 13.8% 13.5% 14.7%Enterprise Value Growth (YoY) -33.8% -26.3% -13.0% 35.6% 28.5%EV/Revenue 1.8x 2.1x 2.3x 2.5x 2.5xEV/EBITDA 8.2x 9.1x 10.1x 10.1x 11.3xEV/Earnings 19.8x 25.1x 26.3x 24.5x 24.0x

Healthcare 1Q09 2Q09 3Q09 4Q09 1Q10Current Ratio 2.5 2.7 2.3 2.4 2.3EBITDA Margin 21.3% 16.2% 20.3% 21.3% 19.7%Gross Profit Margin 57.1% 57.3% 57.7% 57.3% 56.7%Net Income Margin 8.1% 7.7% 9.3% 6.8% 5.8%TTM Earnings Growth (YoY) 14.4% -7.4% -46.5% -18.2% -1.7%TTM Revenue Growth (YoY) 6.6% 7.4% 8.9% 6.8% 6.8%TTM EBITDA Growth (YoY) 21.4% -7.6% 11.8% -1.5% 12.3%Cash as Percent of Market Cap 23.1% 19.1% 12.2% 11.1% 11.5%Enterprise Value Growth (YoY) -38.6% -7.7% 38.5% 47.8% 60.5%EV/Revenue 1.7x 2.4x 2.4x 2.6x 2.4xEV/EBITDA 11.9x 14.1x 15.2x 17.7x 16.4xEV/Earnings 18.8x 24.4x 42.5x 64.4x 49.2x

Messaging, Conferencing & Comm. 1Q09 2Q09 3Q09 4Q09 1Q10

Current Ratio 1.7 1.7 1.7 1.9 2.0EBITDA Margin 9.2% 9.7% 10.5% 10.6% 10.2%Gross Profit Margin 64.0% 64.6% 64.4% 65.3% 65.2%Net Income Margin 4.3% 4.4% 4.5% 4.5% 3.6%TTM Earnings Growth (YoY) -66.9% -58.8% -38.3% 81.9% 11.0%TTM Revenue Growth (YoY) 6.9% 4.3% 6.8% 8.8% 4.6%TTM EBITDA Growth (YoY) 41.5% -13.9% 39.9% 48.9% 21.6%Cash as Percent of Market Cap 38.7% 23.3% 21.5% 21.2% 17.4%Enterprise Value Growth (YoY) -60.8% -24.7% 9.9% 137.3% 191.7%EV/Revenue 0.7x 1.1x 1.7x 1.8x 1.8xEV/EBITDA 5.8x 9.6x 10.7x 10.6x 14.1xEV/Earnings 19.3x - 16.0x 21.1x 35.2x

Multimedia, Graphics, Digital Media 1Q09 2Q09 3Q09 4Q09 1Q10Current Ratio 2.1 2.1 2.2 2.2 2.2EBITDA Margin 15.4% 17.2% 14.9% 11.6% 10.6%Gross Profit Margin 69.7% 69.7% 68.9% 68.7% 68.7%Net Income Margin 8.1% 6.8% 3.7% 5.1% 2.5%TTM Earnings Growth (YoY) -34.7% -16.4% -55.5% -12.4% -1.3%TTM Revenue Growth (YoY) 1.2% -7.0% -12.6% -10.1% -10.3%TTM EBITDA Growth (YoY) 43.5% 34.0% -14.8% -1.8% -1.8%Cash as Percent of Market Cap 34.4% 25.6% 20.4% 15.2% 17.9%Enterprise Value Growth (YoY) -60.9% -48.5% -29.8% 42.8% 59.7%EV/Revenue 1.4x 1.7x 1.9x 2.5x 2.8xEV/EBITDA 9.0x 10.1x 13.1x 17.8x 18.2xEV/Earnings 13.4x 21.0x 24.5x 39.4x 48.7x

Networking & Connectivity 1Q09 2Q09 3Q09 4Q09 1Q10Current Ratio 2.0 2.0 2.2 2.2 2.3EBITDA Margin 13.9% 18.8% 19.8% 20.5% 21.3%Gross Profit Margin 76.2% 77.2% 77.6% 78.1% 78.4%Net Income Margin 3.9% 7.5% 9.0% 10.1% 10.4%TTM Earnings Growth (YoY) 1.5% 32.4% 34.1% 23.1% 27.4%TTM Revenue Growth (YoY) 11.1% 6.8% 4.0% 1.9% -0.1%TTM EBITDA Growth (YoY) 4.9% 19.7% 50.9% 54.7% 26.3%Cash as Percent of Market Cap 36.4% 27.3% 27.0% 24.3% 22.2%Enterprise Value Growth (YoY) -42.2% -27.3% -14.1% 39.0% 49.6%EV/Revenue 1.9x 1.7x 2.0x 2.2x 2.4xEV/EBITDA 8.1x 8.0x 10.8x 13.7x 16.1xEV/Earnings 15.6x 25.9x 28.4x 29.4x 38.6x

Security 1Q09 2Q09 3Q09 4Q09 1Q10Current Ratio 1.9 2.1 2.2 2.2 2.1EBITDA Margin 14.1% 17.3% 18.5% 16.5% 16.1%Gross Profit Margin 76.5% 76.9% 77.0% 77.4% 77.4%Net Income Margin 2.0% 0.6% 2.4% 5.7% 7.6%TTM Earnings Growth (YoY) 7.2% 11.5% 7.3% 14.4% 101.7%TTM Revenue Growth (YoY) 19.7% 11.7% 10.2% 8.3% 8.3%TTM EBITDA Growth (YoY) 32.4% 33.6% 28.9% 20.2% 49.6%Cash as Percent of Market Cap 24.3% 22.3% 19.3% 15.5% 16.9%Enterprise Value Growth (YoY) -33.1% -12.0% 3.7% 41.1% 46.3%EV/Revenue 2.0x 2.4x 3.4x 3.3x 3.3xEV/EBITDA 11.6x 11.3x 12.8x 13.8x 14.4xEV/Earnings 16.2x 20.5x 29.6x 17.1x 19.3x

Storage & Systems Management 1Q09 2Q09 3Q09 4Q09 1Q10Current Ratio 2.0 2.0 2.1 2.1 2.2EBITDA Margin 22.1% 20.3% 19.6% 18.0% 16.8%Gross Profit Margin 80.5% 80.4% 80.7% 80.9% 80.3%Net Income Margin 8.2% 7.1% 6.4% 6.0% 8.6%TTM Earnings Growth (YoY) 21.4% 10.8% 0.2% -5.4% 5.8%TTM Revenue Growth (YoY) 9.6% 12.5% 8.9% 5.9% 1.7%TTM EBITDA Growth (YoY) 26.6% 29.0% 18.3% 10.5% -8.6%Cash as Percent of Market Cap 24.6% 21.3% 18.1% 17.8% 18.5%Enterprise Value Growth (YoY) -36.1% -30.9% -13.1% 45.9% 60.5%EV/Revenue 1.8x 1.6x 2.1x 2.4x 2.5xEV/EBITDA 8.5x 9.8x 11.0x 13.8x 11.8xEV/Earnings 16.8x 19.4x 26.0x 29.4x 28.3x




APPENDIX A: 1Q10 PUBLIC MARKET VALUATIONS AND STATISTICS BY PRODUCT CATEGORY (CONTINUED)

Supply Chain Management & Logistics 1Q09 2Q09 3Q09 4Q09 1Q10Current Ratio 1.4 1.8 1.8 1.5 2.0EBITDA Margin 10.1% 11.3% 10.8% 10.9% 10.6%Gross Profit Margin 54.5% 54.9% 55.3% 56.4% 56.9%Net Income Margin -0.4% 1.4% 1.6% 3.6% 4.9%TTM Earnings Growth (YoY) 19.6% 79.4% 87.7% -40.6% 106.8%TTM Revenue Growth (YoY) 0.7% 2.6% 1.5% -3.4% -10.9%TTM EBITDA Growth (YoY) -27.8% -34.7% -29.2% 3.5% 79.4%Cash as Percent of Market Cap 23.6% 21.1% 24.9% 19.2% 17.6%Enterprise Value Growth (YoY) -45.4% -30.6% -28.9% 83.2% 41.2%EV/Revenue 0.9x 1.1x 1.3x 1.6x 1.6xEV/EBITDA 9.9x 10.3x 10.7x 13.0x 12.6xEV/Earnings 16.0x 39.5x 25.4x 26.8x 35.1x

Wireless 1Q09 2Q09 3Q09 4Q09 1Q10

Current Ratio 2.3 3.1 2.8 3.0 2.0EBITDA Margin 10.5% 10.2% 11.9% 12.5% 11.9%Gross Profit Margin 47.5% 47.3% 46.8% 46.5% 46.6%Net Income Margin 1.0% -0.1% 0.7% 0.2% -0.1%TTM Earnings Growth (YoY) 101.7% 99.7% 45.7% -50.9% -50.9%TTM Revenue Growth (YoY) 1.7% 8.6% 13.2% -4.6% -3.7%TTM EBITDA Growth (YoY) 76.8% 59.2% 86.4% -29.2% 89.7%Cash as Percent of Market Cap 25.9% 16.2% 21.9% 16.1% 16.2%Enterprise Value Growth (YoY) -30.1% -37.6% 23.4% 8.4% -98.4%EV/Revenue 1.4x 1.3x 1.2x 1.3x 1.7xEV/EBITDA 11.0x 11.7x 13.6x 14.8x 11.8xEV/Earnings - - 67.0x 31.9x 34.3x




APPENDIX B: 1Q10 MERGERS AND ACQUISITIONS, SELECT PUBLIC SELLER VALUATIONS

Buyer Seller Purchase PriceEnterprise

Value EV/Rev EV/EBITDATTM Rev

Growth

Elliott Management Novell (Nasdaq:NOVL) $1,865,530,000 $1,016,170,000 1.2x 7.5x -9.7%

Thoma Bravo Plato Learning (Nasdaq:TUTR) $142,220,000 $114,570,000 1.8x 35.6x -5.2%

Pegasystems (Nasdaq:PEGA) Chordiant Software (Nasdaq:CHRD) $152,540,000 $100,210,000 1.3x - -28.8%

Haemonetics (NYSE:HAE) Global Med Technologies (OTC:GLOB) $62,860,000 $56,060,000 1.8x 13.7x 36.0%

Open Text (Nasdaq:OTEX) Nstein Technologies (TSXV:EIN) $33,040,000 $27,410,000 1.2x - 1.6%

Coreworx Decision Dynamics Technology (TSXV:DDY) $6,200,000 $3,890,000 1.2x - 30.5%




APPENDIX C: 1Q10 MERGERS AND ACQUISITIONS, MOST ACTIVE BUYERS


Value TTM Revenue EV/RevAdvanced Computer Software (AIM:ASW) COA Solutions $156,530,000 $156,530,000 $93,730,000 1.7x

Cerrus $552,000 $552,000 - -Atego Aonix North America - - - -

Blue River Software - - - -Bentley Systemsd Enterprise Informatics (OTC:EINF) - - - -

Exor Corporation - - - -CA (Nasdaq:CA) Nimsoft* $350,000,000 $350,000,000 $35,000,000 10.0x

Oblicore - - - -Dell (Nasdaq:DELL) Exanet $12,000,000 $12,000,000 - -

KACE Networks - - - -Constellation Software (TSX:CSU) Gladstone (AIM:GLD) $13,450,000 $15,680,000 $14,530,000 1.1x

Centaman Holdings Pty - - - -SDS Software - - - -TietoEnator Majiq - - - -

Google (Nasdaq:GOOG) DocVerse - - - -Nextmail - - - -

Informatica (Nasdaq:INFA)* Siperian $130,000,000 $130,000,000 $45,000,000 2.9x29West - - - -

Kingdee International Software (SEHK:268) Guangzhou ProWay Technology $3,080,000 $3,080,000 - -

Shenzhen Jiama Information System $2,930,000 $2,930,000 - -

Nuance Communications (Nasdaq:NUAN) Language and Computing $13,390,000 $13,390,000 - -

MacSpeech $12,210,000 $12,210,000 - -NVM Private Equity Lanner Group $4,510,000 $4,510,000 - -

ADP Dealer Services - - - -Oracle (Nasdaq:ORCL) AmberPoint - - - -

Convergin - - - -Playdom Offbeat Creations - - - -

Three Melons SA - - - -Synopsys (Nasdaq:SNPS) CoWare - - - -

VaST Systems Technology - - - -Thomson Reuters (TSX:TRI) Discovery Logic - - - -

Aegis Software - - - -TrustWave Holdings BitArmor Systems - - - -

Intellitactics - - - -VMware (NYSE:VMW) RTO Software - - - -

Zimbra - - - -*revenue estimate




APPENDIX D: 1Q10 MERGERS AND ACQUISITIONS, SOFTWARE INDUSTRY MEGA-DEALS


Value EV/Rev EV/EBITDATTM Rev Growth

Elliott Management Novell (Nasdaq:NOVL) $1,865,530,000 $1,016,170,000 1.2x 7.5x -9.7%




APPENDIX E: 1Q10 MERGERS AND ACQUISITIONS, SELECT SOFTWARE-AS-A-SERVICE SELLERS

Buyer Seller DateEnterprise

ValueSeller

Revenue EV/RevCSDC Systems Grantium 3/16/2010 - -

K3 Business Technology (AIM:KBT) DigiMIS 3/2/2010 $3,180,000 - -

TLC IT Group Vigabyte 2/12/2010 - -

Proofpoint Everyone.net 2/9/2010 - -

SuccessFactors (Nasdaq:SFSF) Inform Business Impact* 2/4/2010 $40,500,000 $15,000,000 2.7x

PGP Corp. Chosen Security 2/2/2010 - -

NorthgateArinso Neller 2/1/2010 - -

Citrix Online GoToManage 1/31/2010 - -

AdvancedMD Software PracticeOne 1/6/2010 - -

Sterling Infosystems Abso 1/4/2010 - -

*revenue estimate




APPENDIX F: 1Q10 MERGERS AND ACQUISITIONS – DEAL INSIGHT CA (NASDAQ: CA) acquires Nimsoft Category: IT Performance and Availability Monitoring Purchase Price: $350,000,000 Revenue (Estimate): $35,000,000 Revenue Multiple (Estimate): 10.0x Payment Terms: Cash SEG’s Perspective: Leading IT infrastructure vendor, CA, acquires Nimsoft, a provider of IT performance and availability monitoring solutions to the mid-market enterprise sector. Nimsoft brings CA IT monitoring solutions capable of monitoring both on-demand applications such as Amazon Web Services and Salesforce.com, as well as internal applications, databases and physical and virtual server environments. The company’s cloud-computing monitoring capabilities also bolster CA’s position in the mid-market and international markets, two areas of high growth potential for cloud application adoption. Nimsoft follows a string of recent CA acquisitions including NetQos, Cassat, Oblicore and 3Tera, and is CA’s largest acquisition of a VC-backed company since its purchase of Wily Technology in 2006 ($375 million). After investing $22 million in Nimsoft over two rounds in 2007 and 2008, Goldman Sachs, JMI Equity and Northzone Ventures will see a quick and hefty return. Open Text (NASDAQ: OTEX) acquires Nstein Technologies (TSXV: EIN) Category: Digital Content Management Software Purchase Price: $27,410,000EV Seller Revenue (TTM): $23,260,000 Seller EBITDA (TTM): ($400,000) Revenue Multiple (TTM): 1.2xEV Payment Terms: Cash SEG’s Perspective: Leading content management vendor, Open Text, acquires Nstein Technologies, a provider of digital asset management, web content management and text mining solutions. Through it’s acquisition of Nstein, Open Text picks up an attractive customer base and extends its product suite to offer semantic analytics technologies (text mining software), allowing customers more advanced digital search capabilities. However, Nstein’s digital asset management (DAM) and web content management (WCM) solutions significantly overlap with Open Text’s current offerings, which the company picked up through acquisitions of Artesia and eMotion (DAM), and Vignette and Hummingbird (WCM) in recent years. The modest 1.2x TTM revenue valuation is likely a result of Nstein’s flat TTM revenue growth, negative profitability and significant product overlap. SuccessFactors (NASDAQ: SFSF) acquires Inform Business Impact Category: Business Analytics and Workforce Planning Purchase Price: $40,050,000 Seller Revenue (Estimate): $15,000,000 Revenue Multiple (Estimate): 2.7x Payment Terms: Cash/Stock/Earn-out SEG’s Perspective: SuccessFactors, a leading provider of SaaS employee performance management software, acquires Australian based Inform Business Impact, a provider of SaaS business analytics and workforce planning software. The acquisition bolsters SuccessFactors message of providing business execution software by adding solutions geared towards enabling HR departments to use analytics effectively in making business decisions, and also adds highly complementary strategic consulting capabilities. This represents SuccessFactor’s second acquisition, and first since going public in 2007. The acquisition also follows closely on the heels of Authoria’s merger with PeopleClick ($100 million), both providers of SaaS talent management applications.




APPENDIX F: 1Q10 MERGERS AND ACQUISITIONS – DEAL INSIGHT (CONTINUED) Pegasystems (NASDAQ: PEGA) acquires Chordiant Software (NASDAQ: CHRD) Category: CRM Business Process Management and Analytics Purchase Price: $104,240,000EV Seller Revenue (TTM): $76,310,000 Seller EBITDA (TTM): (1,570,000) Revenue Multiple (TTM): 1.4xEV

Payment Terms: Cash SEG’s Perspective: Pegasystems, the largest pure-play business process management vendor, acquires Chordiant Software, a provider of on-premise CRM and business process management solutions. Chordiant’s real-time predictive decisioning engine is highly complementary to Pegasystems’ rules and complex event processing offering in the contact center automation space. Chordiant also provides Pegasystems with a number of industry focused customer experience management applications for the retail banking, insurance and communications sectors deemed complementary to Pegasystems’ current vertical offerings. The modest 1.4x TTM revenue offer is not surprising given Chordiant has seen its TTM revenue decline 29% year-over-year, has posted only two profitable years since 1996, and is selling via a perpetual model in a fast adopting SaaS CRM marketplace. Progress Software (NASDAQ: PRGS) acquires Savvion Category: Business Process Management Purchase Price: $49,000,000 Seller Revenue (Estimate): $20,000,000 Revenue Multiple (Estimate): 2.5x Payment Terms: Cash SEG’s Perspective: Leading infrastructure applications vendor, Progress Software, acquires Savvion, a provider of best-of-breed business process management solutions. Savvion’s BPM suite is highly complementary to Progress’ current Business Event Processing, Business Transaction Assurance and Integration product portfolio, and offers industry specific solutions for financial services, communications, healthcare, life sciences, energy and manufacturing, which are areas of strong presence for Progress. Progress’ recent BPM partner, Lombardi Software, was purchased by IBM in December 2009, leaving Progress to look for a new dance partner. Thoma Bravo acquires Plato Learning (NASDAQ: TUTR) Category: Teaching and Learning Management Applications Purchase Price: $114,570,000EV Seller Revenue (TTM): $64,730,000 Seller EBITDA (TTM): $3,220,000 Revenue Multiple (TTM): 1.8xEV

Payment Terms: Cash SEG’s Perspective: Software focused private equity firm, Thoma Bravo, acquires Plato Learning, a leading provider of K-12 and adult learning management solutions. The take private transaction will allow Plato Learning to focus on continuing to grow new subscription revenue, wind down its perpetual software sales, and convert its perpetual customers to its subscription model, without having to meet quarterly street expectations. Over the past several years, Plato has steadily grown its subscription revenue to over 60% of total revenue. Conversely, it’s perpetual license and associated services revenues have steadily declined, contributing to overall declining revenue growth, modest profitability, and in turn, tough public market scrutiny.




APPENDIX G: SELECT 1Q10 SOFTWARE INDUSTRY MERGERS AND ACQUISITIONS Date Buyer Seller03/31/2010 NVM Private Equity Limited ADP Dealer Services International03/31/2010 Playdom, Inc. Three Melons SA03/31/2010 Media Zoom (Impresa Digital) Producao Multimedia Lda InfoPortugal S.A.03/30/2010 - Cyber Planet Interactive Company Limited03/29/2010 VPIsystems, Inc. Elanti Systems, Inc.03/29/2010 Green Energy Management Services, Inc. CDSS Wind Down, Inc. (OTCBB:CWDW)03/29/2010 HgCapital; HgCapital Trust plc (LSE:HGT) Stepstone Solutions (Uk) Ltd03/26/2010 NTT Data Corporation (TSE:9613) MCS Ltd.03/26/2010 ValueFirst Messaging Pvt. Ltd. Packet Shaper Technologies Pvt. Ltd.03/26/2010 Nokia Corp. (HLSE:NOK1V) Novarra, Inc.03/26/2010 Research In Motion Limited (TSX:RIM) Viigo Inc.03/26/2010 Maverick Capital, Ltd. Loopt, Inc.03/26/2010 Rocket Software, Inc. Computer Corporation of America03/25/2010 Scripped, Inc. Zhura, Inc.03/25/2010 Imperial Logistics e-Logics (Pty) Ltd.03/25/2010 Host Europe GmbH Vanager GmbH03/25/2010 Thoma Bravo, LLC Plato Learning, Inc. (NasdaqGM:TUTR)03/25/2010 Tibco Software Inc. (NasdaqGS:TIBX) Netrics, Inc.03/25/2010 Ness Technologies Inc. (NasdaqGS:NSTC) Gilon Business Insight Ltd.03/23/2010 NetEnrich Inc. Simply Continuous, Inc.03/23/2010 Connect 2 Media Ltd. Sennari, Inc.03/22/2010 Logility, Inc. Optiant, Inc.03/22/2010 Cryptzone AB (OM:CZON B) ControlGuard Ltd.03/22/2010 Informatica Corporation (NasdaqGS:INFA) 29West, Inc.03/22/2010 Cadence Design Systems Inc. (NasdaqGS:CDNS) Taray, Inc.03/18/2010 ForceLogix Technologies Inc. (TSXV:FLT) XenoWize, LLC03/17/2010 Gist, Inc. Learn That Name LLC03/17/2010 Autotask Corporation VARStreet, Inc.03/17/2010 The Casnet Group, Inc. NCD Corp, Software Division03/16/2010 CSDC Systems Inc. Grantium Inc.03/16/2010 Taliance Control.IT Unternehmensberatung GmbH03/16/2010 Goodtech ASA (OB:GOD) Troll Power AS03/16/2010 DMC International Ltd. (BSE:517973) VSoft Services Pvt. Ltd.03/15/2010 UCS Group Ltd. (JSE:UCS) Argility Limited03/15/2010 Brady plc (AIM:BRY) Brady Switzerland03/15/2010 Media365 Bouyaka03/15/2010 NVM Private Equity Limited Lanner Group Limited03/14/2010 Pegasystems Inc. (NasdaqGS:PEGA) Chordiant Software, Inc. (NasdaqGM:CHRD)03/12/2010 EXFO Inc (TSX:EXF) NetHawk Oyj03/12/2010 HootSuite Media, Inc. Swift App, Inc.03/12/2010 Satuit Technologies, Inc. Wealth Management Technologies LLC03/12/2010 Rovi Corporation (NasdaqGS:ROVI) MediaUnbound, Inc.03/12/2010 Datum International Ltd. Root 3 Systems Ltd.03/11/2010 RadiSys Corporation (NasdaqGS:RSYS) Pactolus Communications Software Corporation03/11/2010 Hardis S.A. Sextant Informatique SA03/11/2010 Cascadia Investments, Inc. (OTCPK:CDIV) Apple Inc., Eighteen Games Applications03/11/2010 EG Solutions (AIM:EGS) XTAQ Limited03/10/2010 Schlumberger Limited (NYSE:SLB) Nexus Geosciences, Inc.03/10/2010 Vestel Elektronik Sanayi Ve Ticaret AS (IBSE:VESTL) Cabot Izmir Yazilim ve Donanim Ticaret Sanayi A.S.03/10/2010 Edge EHR Corp. Goal Software, Inc.03/10/2010 Advent Software, Inc. (NasdaqGS:ADVS) Goya AS03/10/2010 CA, Inc. (NasdaqGS:CA) Nimsoft, Inc.03/10/2010 ubroadcast, Inc. (OTCBB:UBCI) Santéon, Inc.03/08/2010 Digitick SAS Satori Billetterie SA03/08/2010 vbCity.com LLC Exact Magic Software, LLC, Certain Software Tools03/08/2010 Orthopaedic Synergy, Inc. PRAXIM Medivision03/08/2010 Blackboard Inc. (NasdaqGS:BBBB) Saf-T-Net, Inc.03/05/2010 K3 Landsteinar Nederland BV Pebblestone Netherlands03/05/2010 Google Inc. (NasdaqGS:GOOG) DocVerse, Inc.03/04/2010 PayPoint plc (LSE:PAY) Verrus Mobile Technologies, Inc. and Verrus U.K. Ltd.03/03/2010 TrustWave Holdings, Inc. Intellitactics, Inc.03/03/2010 ESO Solutions Inc. Poly Lingo03/03/2010 Playdom, Inc. Offbeat Creations, Inc.03/03/2010 Markinson Business Solutions Pty Ltd. Acuere Pty Ltd., CRM Division03/02/2010 iRely, LLC Summit Software, Inc.03/02/2010 Federal Signal Corp. (NYSE:FSS) VESystems LLC03/02/2010 Advanced Computer Software plc (AIM:ASW) Cerrus Ltd.03/02/2010 Sony Computer Entertainment Worldwide Studios Media Molecule Limited03/02/2010 K3 Business Technology Group plc (AIM:KBT) DigiMIS Limited03/02/2010 Kingdee International Software Group Co. Ltd. (SEHK:268) Guangzhou ProWay Technology Co., Ltd.




APPENDIX G: SELECT 1Q10 SOFTWARE INDUSTRY MERGERS AND ACQUISITIONS (CONTINUED) Date Buyer Seller03/02/2010 Coreworx Inc. Decision Dynamics Technology Ltd. (TSXV:DDY)03/02/2010 AtegoTM blue river software GmbH03/02/2010 - Geensoft SAS03/02/2010 Elliott Mgmt Corporation; Elliott Int'l Capital Advisors Inc Novell Inc. (NasdaqGS:NOVL)03/01/2010 Syscatech Sdn. Bhd. Viztel Solutions Bhd (KLSE:VIZTEL)03/01/2010 Mobclix, INC. heartbeat03/01/2010 The X-Change Corporation (OTCPK:XCHC) Notus Digital Network Corp.03/01/2010 Access Intelligence plc (AIM:ACC) Cobent Limited02/28/2010 Primary Capital Limited Amtech Power Software Limited02/26/2010 ReachLocal, Inc. SMBLive, Inc.02/26/2010 United Stationers Supply Company MBS Dev Inc.02/26/2010 Net 1 Ueps Technologies Inc. (NasdaqGS:UEPS) FIHRST Management Services (Pty) Ltd.02/26/2010 Interthinx, Inc. Strategic Analytics Inc.02/26/2010 Zaptronix Limited (JSE:ZPT) i to i Technologies Pty Ltd.02/25/2010 PRGX UK Ltd. Etesius Limited02/24/2010 Koninklijke Philips Electronics NV (ENXTAM:PHIA) Somnolyzer 24 x 7 Automated Scoring Solutions Business02/24/2010 hi5 Networks, Inc. Big Six Games, Inc.02/24/2010 gomembers, Inc. Computility, Inc.02/23/2010 Pocketgear, Inc. Handango, Inc.02/23/2010 Unit 4 Agresso NV (ENXTAM:U4AGR) IBS Consist B.V.02/23/2010 Edserv Softsystems Limited (NSEI:EDSERV) Bridle Information and Technology Solutions Pvt. Ltd.02/23/2010 Alibris, Inc. Monsoon, Inc.02/22/2010 Raytheon Co. (NYSE:RTN) Compucat Research Pty. Ltd.02/22/2010 Broadlane, Inc. Symbio Solutions, Inc.02/22/2010 ngmoco, Inc. Freeverse Corporation02/22/2010 High Amuse Limited Raxco Assets Corp.02/22/2010 VMware, Inc. (NYSE:VMW) RTO Software, Inc., RTO Discover, RTO PinPoint, and RTO Virtual Profiles02/22/2010 Iron Mountain Inc. (NYSE:IRM) Mimosa Systems, Inc.02/22/2010 Open Text Corp. (NasdaqGS:OTEX) Nstein Technologies Inc. (TSXV:EIN)02/21/2010 Left Behind Games Inc. (OTCBB:LFBG) Digital Praise Inc.02/19/2010 Advanced Media Publications, Inc. InfoWave Technologies, Inc.02/19/2010 Geos Communications, Inc. (OTCBB:GCMI) shoot it!, LLC02/19/2010 Provident Capital Ventures Global Supply Chain Solutions, Inc.02/19/2010 Velocity Technology Solutions, LLC netASPx, Inc.02/18/2010 Gary Jonas Computing Ltd. Centaman Holdings Pty Ltd.02/18/2010 Mohawk Fine Papers, Inc. LabPrints, Inc.02/18/2010 Futura Retail Solution AG medeas software ag02/18/2010 Kaplan IT, Inc. Atlantic Link Limited02/18/2010 TriTech Software Systems, Inc. Ortivus, Inc.02/18/2010 GlobalLogic, Inc. Cubika02/17/2010 Google Inc. (NasdaqGS:GOOG) Nextmail Corp.02/17/2010 Nuance Communications, Inc. (NasdaqGS:NUAN) Language and Computing Inc.02/16/2010 RealPage, Inc. Domin-8 Enterprise Solutions, LLC02/16/2010 Mentor Graphics Corp. (NasdaqGS:MENT) Freescale Semiconductor Inc., Virtual Garage02/15/2010 Tivoli Systems, Inc. Intelliden Corporation02/15/2010 Winshuttle, Inc. Winshuttle (Deutschland) GmbH02/13/2010 Playtech Limited (AIM:PTEC) Virtue Fusion Ltd.02/12/2010 Cheetah Technologies, L.P. Symmetricom, Inc., Video Quality of Experience Business02/12/2010 ANXeBusiness Corp. ETSec, Inc.02/12/2010 Nuance Communications, Inc. (NasdaqGS:NUAN) MacSpeech, Inc.02/12/2010 Solware ASC2i S.A.S.02/12/2010 MAXIMUS, Inc. (NYSE:MMS) Deltaware Systems, Inc.02/12/2010 Accenture plc (NYSE:ACN) RiskControl Serviços Ltda.02/12/2010 TLC IT Group Pty Ltd. Vigabyte Pty. Ltd.02/12/2010 Saltus Technologies, LLC MacroSolve, Inc., digiTICKET Electronic Ticketing Product Line02/11/2010 - FreeSlate, Inc.02/11/2010 Telenity Inc. Construia02/11/2010 Skyfire Labs, Inc. Kolbysoft02/11/2010 Trunkbow International Holdings, Ltd. Trunkbow Technologies, Inc.02/11/2010 Dell Inc. (NasdaqGS:DELL) KACE Networks, Inc.02/11/2010 Advanced Computer Software plc (AIM:ASW) COA Solutions Ltd.02/10/2010 Oracle Corp. (NasdaqGS:ORCL) Convergin, Inc.02/10/2010 VIZRT Ltd. (OB:VIZ) Adactus AS02/10/2010 Quality Systems Inc. (NasdaqGS:QSII) Opus Healthcare Solutions, Inc.02/09/2010 Bentley Systems, Incorporated Exor Corporation Limited02/09/2010 Proofpoint, Inc. Everyone.net, Inc.02/09/2010 Autonomy Corp. plc (LSE:AU.) MicroLink, LLC02/09/2010 Thomson Reuters Corporation (TSX:TRI) Aegis Software, Inc.02/09/2010 MINDBODY, Inc. ClientMagic Software02/09/2010 Bentley Systems, Incorporated Enterprise Informatics Inc. (OTCPK:EINF)




APPENDIX G: SELECT 1Q10 SOFTWARE INDUSTRY MERGERS AND ACQUISITIONS (CONTINUED) Date Buyer Seller02/08/2010 Calico Energy, Inc. Invaluable Technologies, Inc.02/08/2010 Parametric Technology Corporation (NasdaqGS:PMTC) Planet Metrics Inc.02/08/2010 Dell Inc. (NasdaqGS:DELL) Exanet Ltd.02/08/2010 - Software Nemotec, S.L.02/08/2010 Healthcare Of Today, Inc. Tall Umbrella, Inc.02/08/2010 Zad Mobile, Inc. Emotive Communications, Inc.02/08/2010 Enprise Solutions Ltd Very Impressive Software, MYOB EXO Business02/08/2010 Synopsys Inc. (NasdaqGS:SNPS) CoWare, Inc.02/08/2010 Oracle Corp. (NasdaqGS:ORCL) AmberPoint, Inc.02/08/2010 Creative Realities, Inc. DOOHit Digital, LLC02/08/2010 Civica Pty Limited Management & Executive Software Pty Limited02/05/2010 SunGard Data Systems Inc. Inmatrix Technology Pty. Ltd.02/05/2010 ICAP Group Holdings plc TriOptima AB02/05/2010 Intel Corporation (NasdaqGS:INTC) Virtutech, Inc.02/04/2010 SuccessFactors, Inc. (NasdaqGM:SFSF) Inform Business Impact02/04/2010 Sybase, Inc. (NYSE:SY) Aleri, Inc.02/04/2010 Verint Systems Inc. (OTCPK:VRNT) Iontas Ltd.02/03/2010 Grupo Linx Inter Commerce Technologies and Csi Comércio Soluções Inteligentes Ltda02/03/2010 SPT Group AS Neotechnology Consultants Ltd.02/03/2010 Option NV (ENXTBR:OPTI) iNEWiT02/03/2010 QUALCOMM Inc. (NasdaqGS:QCOM) Mango Technologies Pvt. Ltd.02/03/2010 Gemalto NV (ENXTPA:GTO) Valimo Wireless Oy02/03/2010 Network Equipment Technologies Inc. (NasdaqGM:NWK) Evangelyze Communications, SmartSIP Product Line02/03/2010 First Derivatives plc (AIM:FDP) Cognotec Holdings Ltd., Cognotec Ireland Ltd., and Cognotec Ltd.02/03/2010 CJ Internet Corp. (KOSE:A037150) Seed9 Entertainment, Inc.02/03/2010 International Business Machines Corp. (NYSE:IBM) Initiate Systems, Inc.02/02/2010 PGP Corporation Chosen Security, Inc.02/01/2010 NorthgateArinso UK Limited Neller Pty Ltd.02/01/2010 Access UK Ltd. Select Software UK Ltd.02/01/2010 HealthTech Holdings, Inc. MEDHOST, Inc.02/01/2010 Concerro, Incorporated RES-Q Healthcare Systems, Inc.02/01/2010 Synopsys Inc. (NasdaqGS:SNPS) VaST Systems Technology Corporation02/01/2010 The Active Network, Inc. Channel:1 Corporation01/31/2010 Avid Technology Inc. (NasdaqGS:AVID) Blue Order AG01/31/2010 Haemonetics Corp. (NYSE:HAE) Global Med Technologies Inc. (OTCBB:GLOB)01/31/2010 Citrix Online, Inc. GoToManage01/29/2010 Ortec B.V. BlueKaizen SA01/29/2010 Bhrosemand Commodities Pvt. Ltd. Splash Media Works Ltd. (BSE:512048)01/28/2010 Barricode, Inc. (OTCBB:BCDI) 2230354 Ontario Inc.01/28/2010 Trimble Navigation Limited (NasdaqGS:TRMB) Pondera Engineers, LLC01/28/2010 Informatica Corporation (NasdaqGS:INFA) Siperian, Inc.01/28/2010 Value Team S.p.A. Net Solving Spa, Payment Systems Divisions and Cryptography Systems01/27/2010 Stratify, Inc. Legal Imaging Technologies, Inc.01/27/2010 Good Technology, Inc. CloudSync, Inc.01/27/2010 TransLogix Systems Pty Ltd. Transit Computer Systems Pty. Ltd.01/27/2010 Sony Electronics, Inc. Convergent Media Systems Corporation01/26/2010 Solera Holdings Inc. (NYSE:SLH) Softwaresysteme GTLDATA GmbH01/26/2010 SolarWinds, Inc. (NYSE:SWI) Tek-Tools, Inc.01/26/2010 Ipswitch, Inc. Dorian Software Creations Inc.01/26/2010 Precious Metals Exchange Corp. (OTCPK:PRMX) Gold Amigo, LLC01/26/2010 Dentsu Holdings USA, Inc. Innovation Interactive Inc.01/26/2010 Southwest Business Corporation Cognasys, LLC01/25/2010 Comcast Spectacor, LP Paciolan, Inc.01/25/2010 CDC Software Corporation (NasdaqGM:CDCS) PeoplePoint Software Pty Ltd.01/25/2010 Cinnabar Ventures Inc. (OTCBB:CNBR) YIPPY, Inc.01/25/2010 - Sylob S.A.01/24/2010 Harris Computer Systems, Inc. SDS Software Inc.01/22/2010 Objectif Lune, Inc. Edmond Research & Development BV01/22/2010 Kingdee International Software Group Co. Ltd. (SEHK:268) Shenzhen Jiama Information System Co., Ltd.01/20/2010 CustomCall Data Systems, Inc. Concretio.com, Inc.01/20/2010 Bally Technologies, Inc. (NYSE:BYI) Games4You, LLC01/20/2010 Hosted Data Transaction Solutions Inc. (TSX:HDX) Posera, Inc.01/20/2010 Novasys S.A. Tridoo SAS01/20/2010 Auxitec Ipelium SARL01/20/2010 Wuhan City Public Transportation Company Limited Hubei E-Tong-Ka System Company Limited01/20/2010 Ifbyphone, LLC Cloudvox01/20/2010 NewsGator Technologies, Inc. Tomoye Corporation01/20/2010 AtegoTM Aonix North America, Inc.01/20/2010 Mastek Ltd. (BSE:523704) Kognitio Ltd., Data Migration Product01/20/2010 Vista Equity Partners Accruent, Inc.




APPENDIX G: SELECT 1Q10 SOFTWARE INDUSTRY MERGERS AND ACQUISITIONS (CONTINUED) Date Buyer Seller01/19/2010 Hunt Global Resources, Inc. Tombstone Technologies, Inc. (OTCBB:TMCI)01/19/2010 InterCall, Inc. Stream57 LLC01/19/2010 Everleaf Gaming Limited Universal Poker Network01/18/2010 JF Hillebrand UK Limited ABV Logistics Ltd.01/18/2010 OpenLink Financial, Inc. SMARTsoft01/18/2010 SECIB SAS DictaPlus France SAS01/18/2010 IRESS Market Technology Limited (ASX:IRE) SENTRYi Pte. Ltd.01/18/2010 Novi Management A/S Continia Software A/S01/15/2010 Lace Mamba Global Mamba Games Ltd.01/15/2010 Cicero, Inc. (OTCBB:CICN) SOAdesk LLC01/14/2010 Pointstreak.com Inc. STEVA Sports Software Inc.01/14/2010 Williams & Gallagher, LLC; Grindstone Partners, LLC TelStar Hosted Call Center Solutions Inc.01/14/2010 Versata Inc. PurchasingNet, Inc.01/13/2010 Lincolnshire Mgmt, Inc.; Delta Air Lines Inc. (NYSE:DAL) Aerosim Technologies, Inc.01/13/2010 Progressive Technology Federal Systems, Inc. LibLime, Inc.01/13/2010 DL Software (ENXTPA:ALSDL) Juxta SA01/13/2010 Business Recovery Services, Inc. Open Solutions Inc., Flex Assets01/12/2010 Ericsson Telecomunicazioni S.p.A. Gruppo Pride S.p.A.01/12/2010 iForem Inc. Enmoda Inc.01/12/2010 TrustWave Holdings, Inc. BitArmor Systems, Inc.01/12/2010 NIKSUN, Inc. Sandstorm Enterprises, Inc.01/12/2010 WinSoft SA Algoba Systems, S.A.01/12/2010 VMware, Inc. (NYSE:VMW) Zimbra, Inc.01/12/2010 Consumer Health Technologies, Inc. P+W Software, Inc.01/12/2010 LearnForce Partners LLC ExamForce, Inc.01/12/2010 Liaison Technologies, LLC Advanced Data Exchange, Inc.01/12/2010 Symantec Corporation (NasdaqGS:SYMC) Gideon Technologies, Inc.01/12/2010 Unica Corp. (NasdaqGM:UNCA) Pivotal Veracity, LLC01/12/2010 Visiant Pimsoft Srl OSIsoft, Inc., Sigmafine Data Reconciliation, Yield and Production Accounting01/11/2010 Trade Me Ltd. BookIt Limited01/11/2010 Topcon Europe Positioning B.V. Roadware B.V.01/11/2010 Triple Point Technology, Inc. Softmar Group S.A.01/11/2010 TA Associates, Inc. eCircle AG01/11/2010 CA, Inc. (NasdaqGS:CA) Oblicore, Inc.01/08/2010 Jaded Pixel Technologies Inc. MNDCreative, LLC01/08/2010 Cambridge Technology Enterprises Limited (BSE:532801) Vox Holdings Inc.01/08/2010 DIS Technology Holdings Bhd (KLSE:DISTECH) UniekSoft Solutions Sdn. Bhd.01/08/2010 Progress Software Corp. (NasdaqGS:PRGS) Savvion, Inc.01/08/2010 Art Technology Group Inc. (NasdaqGM:ARTG) InstantService, Inc.01/07/2010 Akka Technologies (ENXTPA:AKA) Real Fusio01/07/2010 SplashData, Inc. iambic, Inc.01/07/2010 PAS Card AB Identitech AB01/07/2010 Motorola Inc. (NYSE:MOT) SecureMedia, Inc.01/07/2010 Lawson Software Americas, Inc. Healthvision Inc.01/06/2010 P&C Claims, Inc. GenSource Corporation01/06/2010 Altantic Zeiser GmbH SOFHA GmbH01/06/2010 Iron Data Solutions, LLC Versa Systems Ltd.01/06/2010 Cahaya Kombinasi Sdn. Bhd. Portrade International Sdn Bhd01/06/2010 SeaChange International Inc. (NasdaqGM:SEAC) VividLogic, Inc.01/06/2010 AdvancedMD Software, Inc. PracticeOne, LLC01/06/2010 Intergraph Corporation COADE, Inc.01/06/2010 Rogue Wave Software, Inc. Total View Technologies, Inc.01/05/2010 Autodesk, Inc. (NasdaqGS:ADSK) 3am Solutions (UK) Limited, Dynamite VSP and Dynamite SIM01/05/2010 Automatic Data Processing, Inc. (NasdaqGS:ADP) DO2 Technologies, Inc.01/04/2010 Elecsys International Corporation SensorCast, LLC01/04/2010 Critical Path, Inc. ShoZu Ltd.01/04/2010 - Clydebuilt Solutions Limited01/04/2010 Sterling Infosystems, Inc. Abso, Inc.01/04/2010 FX Alliance, LLC Lava Trading, Inc.01/04/2010 Thomson Reuters Corporation (TSX:TRI) Discovery Logic, Inc.01/04/2010 EMC Corporation (NYSE:EMC) Archer Technologies LLC01/01/2010 Callidus Software Inc. (NasdaqGM:CALD) ACTEK, Inc.01/01/2010 Business Propulsion Systems, Inc. Resolver, Inc.

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