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Bowstring Advisors, a division of Citizens Capital Markets, served as the exclusive financialadvisor to AutoQuotes, the leading technology company for the foodservice equipment andsupplies industry, on its majority recapitalization with Luminate Capital Partners.
Kate Schimdt, Chair of the Board of Directors of AutoQuotes, commented, “Bowstring’sdetailed approach to working with us and our team was highlighted during every part ofthe transaction. The team went to great lengths to understand us, our company, ourproduct and our value proposition; they also made sure it was continuously reinforced.Bowstring’s unwavering support gave us the confidence they would successfully marketour company, and it’s fair to say they exceeded our expectations. Bowstring made anintimidating process seem simple and we are grateful for their involvement every step ofthe way.”
This transaction was led by Scott Rhodes, Managing Director at Bowstring and head of theSoftware practice, leveraging our expertise in Software and Industrial Services.
Private Equity Providing Fuel to Middle-Market M&APrivate equity continues to fuel the M&A middle market, particularly for software companies that possess these key desirableattributes: recurring revenue-driven business models, best-of-breed applications and above-average revenue growth.
Even with fundraising taking a (relative) breather in 2018, U.S. private equity still raised $166 billion in new capital, providingplenty of dry powder to support continued strong deal activity. Our outlook is for another strong year of M&A deal activity butour crystal ball is now less clear beyond 2019 given heightened concerns surrounding a global economic slowdown andincreased stock market volatility.
In 2018, each of the six transactions completed by our software group involved private equity as the buyer (either directly orthrough a portfolio company) or seller. In addition, five of our six software deals were on behalf of businesses in the HRTechnology sub-sector, making us the most active investment bank in this field. We were the exclusive financial advisor onthe following deals:
▪ AutoQuotes in its majority recapitalization to Luminate Capital Partners
▪ Talent Rover in its sale to Bullhorn (a portfolio company of Insight Venture Partners)
▪ COMPAS Technology in its sale to Avionte (a portfolio company of Serent Capital)▪ nextSource (a portfolio company of H.I.G. Capital and Prudential Capital Group) in its sale to management
▪ Acendre in its majority recapitalization to Strattam Capital
▪ Workforce Insight (a portfolio company of Baird Capital) in its sale to managementIn other M&A news, Bowstring Advisors was acquired on March 1st by Citizens Financial Group, Inc., one of the nation’s oldestand largest financial institutions. We are now operating as a division of Citizens Capital Markets. The acquisition will enable usto provide a broader set of solutions to our clients. See the next page for the official February 19th deal announcement.
Scott RhodesManaging Director & Software Practice Leader
Software InsightsMARCH 2019
November 2018
Source: PitchbookNote: The testimonials presented are applicable to the individuals depicted and may not be representative of the experience of others. The testimonials are not paid and are not indicative of future performance or success.
2
Citizens Financial Group Further Expands M&A Advisory Team with Bowstring Advisors Acquisition
Transaction strengthens coverage with additional sector expertise to serve growing client need
PROVIDENCE, RI (February 19, 2019) – Citizens Financial Group, Inc. (“Citizens”) [NYSE: CFG] today announced a definitiveagreement to purchase certain assets of Bowstring Advisors (“Bowstring,” formerly CHILDS Advisory Partners), an Atlanta-based merger and acquisition advisory firm that delivers a range of financial services to commercial and industrial clientsnationwide. This transaction, which follows several other recent additions of key industry talent, products and solutions,further strengthens Citizens’ advisory capabilities.“Clients view Citizens as a trusted partner committed to delivering complete solution sets, quality execution and excellentservice throughout their business life cycle,” said Donald McCree, vice chairman and head of Commercial Banking. “Wecontinue to move decisively to broaden our capabilities. The addition of the highly regarded Bowstring team more thandoubles our M&A advisory business with deep knowledge in key industry sectors such as healthcare, technology andbusiness services, while strengthening our coverage nationally and further enhancing our ability to deliver for our clients.”
“We share Citizens’ ambition to build robust advisory capabilities, as well as their commitment to exceptional client solutions.We look forward to delivering Citizens’ broad set of capital markets capabilities to our growing client base,” said BowstringCEO Jim Childs, who founded the firm in 2009.
Bowstring will become part of Citizens Capital Markets, Inc., complementing Western Reserve Partners, which significantlyincreased the bank’s M&A capabilities when it was acquired in 2017. The addition of the Bowstring team will furtheraccelerate the build out of Citizens’ M&A and financial advisory capabilities. Citizens’ recently released eighth annual MiddleMarket M&A Outlook noted a strong appetite among mid-sized companies for growth through M&A. This transaction furtherstrengthens Citizens’ growing presence in the Southeast and nationally.The transaction, which is expected to close in the first half of 2019, subject to Bowstring receiving FINRA approval, will befunded with cash. Under the terms of the agreement, Citizens’ wholly-owned subsidiary, Citizens Capital Markets, Inc.(“CCMI”), will purchase certain assets of Bowstring and upon closing, Bowstring will operate as a division of CCMI. Terms ofthe transaction were not disclosed.
Debevoise & Plimpton LLP acted as legal advisor to Citizens. Morris Manning & Martin, LLP acted as legal advisor toBowstring on the transaction.
For more information about Citizens, visit the Citizens Commercial Banking website at www.citizensbank.com/commercial.
3
Software Trading Multiples
HR Tech Conference – Meet Our Team
Conferences, Trading Multiples, Indices & Rates
Major Indices & Rates
Upcoming ConferencesEnterprise Value
LTM Revenue
HR Tech 7.2x
Sales & Marketing Tech 5.9x
SaaS 9.3x
% Change3 Month 12 Month
HR Tech 79,625.08 (8.1%) 22.0%
Sales & Marketing Tech 220,402.29 (15.0%) 28.9%
SaaS 166,095.68 (10.4%) 36.6%
Dow Jones 25,439.39 (11.8%) (5.6%)
NYSE 12,440.22 (13.1%) (11.2%)
NASDAQ 7,426.95 (17.5%) (3.9%)
AMEX 2,485.72 (15.7%) (13.9%)
S&P 500 2,745.73 (14.0%) (6.2%)
Russell 2000 1,545.11 (20.5%) (12.2%)
USD/Euro 0.87 1.5% 4.9%
USD/Yen 109.72 (3.3%) (2.6%)
USD/Pound 0.78 2.4% 6.0%
U.S. Prime Rate 5.500% 25.00 Bps 100.00 Bps
U.S. Treasury - 10 Year 2.690% (36.00 Bps) 29.00 Bps
LIBOR - 3 month 2.808% 40.93 Bps 111.34 Bps
Fed Funds Overnight Rate 2.400% 22.00 Bps 107.00 Bps
Close as of 12/31/2018
600+ HR leaders in attendance
April 15 – 17 | PhoenixScott Rhodes, MD and Software Practice Leader, will attend
Deloitte Impact 2019
Schedule a meeting to discuss M&A sector trends and [email protected]
Source: S&P Capital IQ
4
Software M&A Valuations
Quarterly Trends in U.S. Middle-Market Software M&A Activity
M&A Activity and Trends
Software Public Market Valuations
▪ U.S. middle-market software M&A activity hasremained on pace in Q3 and Q4 2018 with 794 dealsclosed representing a 5% increase over the prior yearperiod
▪ Software valuations remained strong in Q4 2018 withthe HR Tech and SaaS public market composites upfrom Q2 2018 despite selloff in Q4
▪ Corporate cash balances and private equity dry powderremain at an all-time high; U.S. private equityfundraising did decline by 26% to $166B across 186funds
▪ Add-on investments continue to increase as PE firmsdeploy buy-and-build strategies to create largerplatforms with broader product suites
▪ As 2018 progressed, signs of economic weaknessabroad, rising interest rates and concerns over tradetensions led to volatility in the broader capital markets
▪ Outlook for 2019 is varied — market volatility isanticipated to subside as economic concerns lessenand healthy earnings growth persevere
(TEV / Revenue)
(TEV / Revenue)
(# of Deals)
Sources: Pitchbook & S&P Capital IQ
6.7x 6.6x
9.0x
6.8x 5.9x
10.7x
7.2x5.9x
9.3x
HR Tech Sales & Marketing Tech SaaS
Q2 2018 Q3 2018 Q4 2018
330
285 296 313 298 299267 281
338299 288 290
331 326 317337
86
94 75
92
72 60
4152
55
7452 57
6748
4347
11
13 12
17
1612
16
14
1116
29 21
20
149
16
7
9 14
11
97
9
14
109
11 9
11
96
19
434
401 397
433
395378
333361
414398
380 377
429
397375
419
0
50
100
150
200
250
300
350
400
450
500
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2015 2016 2017 2018
Undisclosed Less than $100M $100M - $499M $501M - $1,000M
2.8x 2.7x3.0x
3.5x
2015 2016 2017 2018
5
Provider of human resources, employee benefits, payroll and
risk management services on an outsourced basis
Provider of employee assistance and financial wellness programs
Provider of a real-time employee engagement platform using data
to measure and improve an organization’s health
Provider of an online platform that enables businesses to find
and work with highly-skilled independent professionals
Developer of an online document storage platform
Developer of SaaS solutions designed for managing the
contingent workforce
Q4 2018
ACQUIRED BY
Q4 2018
ACQUIRED BY
Q4 2018
ACQUIRED BY
Q4 2018
$187MINITIAL PUBLIC OFFERING
Q3 2018
ACQUIRED BY
Q3 2018
ACQUIRED BY
Notable HR Tech Transactions
ENTERPRISE VALUE: $1.2BEV / REVENUE: ND
ENTERPRISE VALUE: $400MEV / REVENUE: 12.0x
ENTERPRISE VALUE: $426EV / REVENUE: 4.1x
ENTERPRISE VALUE: $300EV / REVENUE: ND
ENTERPRISE VALUE: $300MEV / REVENUE: ND
NASDAQGS:UPWK
12,476,693 SHARES$15 PER SHARE
Source: Pitchbook & S&P Capital IQ
6
Developer of marketing engagement, analytics and
automation platforms for digital marketers
Provider of a software development platform that
offers software development collaboration tools
Developer of a digital communication platform that
enables businesses to engage with their customers via email
reliably, effectively and at scale
Provider of a cross-channel marketing analytics platform
with AI-powered insights
Developer of an internet technology platform that
enables and optimizes the real-time sale and purchase of digital
advertising
Provider of a cloud-based data analytics platform created to simplify data management
Q4 2018
ACQUIRED BY
Q4 2018
ACQUIRED BY
Q4 2018
ACQUIRED BY
Q3 2018 Q3 2018
ACQUIRED BY
Q3 2018
ACQUIRED BY
Notable Software Transactions
ENTERPRISE VALUE: $4.8BEV / REVENUE: ND
ENTERPRISE VALUE: $2.0BEV / REVENUE: 13.4x
ENTERPRISE VALUE: $7.5BEV / REVENUE: ND
ENTERPRISE VALUE: $2.0BEV / REVENUE: ND
ENTERPRISE VALUE: $600MEV / REVENUE: ND
ENTERPRISE VALUE: $750MEV / REVENUE: ND
ACQUIRED BY
Source: Pitchbook & S&P Capital IQ
7
Market Data Operating Statistics EV as a Multiple of: GrowthStock Price LTM LTM CY2019 17 - '18
Company Name 12/31/18 Revenue EBITDA % Margin Revenue EBITDA Revenue EBITDA GrowthAverage
Workday, Inc. $159.68 92.5% $35,129.6 $34,738.3 $2,616.0 ($223.9) (8.6%) 13.3x NM 9.8x 51.3x* 36.1% 34.9%
Paychex, Inc. $65.15 85.7% $23,394.8 $22,693.1 $3,506.7 $1,439.6 41.1% 6.5x 15.8x 5.6x 14.3x 7.3% 7.3%
The Ultimate Software Group, Inc. $244.87 73.7% $7,656.9 $7,532.4 $1,087.2 $116.3 10.7% 6.9x 64.8x * 5.5x 23.3x 21.2% 23.1%
Paycom Software, Inc. $122.45 74.6% $7,177.2 $7,126.9 $566.3 $190.9 33.7% 13.4x 52.8x * 10.0x 24.6x 30.8% 36.1%
Paylocity Holding Corporation $60.21 68.1% $3,179.0 $3,094.1 $417.7 $43.6 10.4% 7.8x 85.9x * 6.1x 21.4x 25.8% 30.6%
Cornerstone OnDemand, Inc. $50.43 85.2% $2,955.8 $2,852.8 $531.6 $0.6 0.1% 5.4x NM 5.1x 23.5x 11.6% 18.4%
Upwork Inc. $18.11 77.1% $1,925.1 $2,113.4 $240.8 ($9.4) (3.9%) 8.8x NM 7.0x 948.8x* 25.1% ND
Benefitfocus, Inc. $45.72 82.5% $1,461.2 $1,540.2 $271.7 $3.0 1.1% 5.7x NM 5.1x 84.4x* 9.2% 16.7%
WageWorks, Inc. $27.16 42.8% $1,076.5 $429.0 $461.7 $91.7 19.9% 0.9x * 4.7x 0.9x * 2.9x 0.0% 23.6%
HealthStream, Inc. $24.15 75.8% $780.7 $606.4 $259.8 $31.0 11.9% 2.3x 19.6x 2.4x 15.8x 7.8% 9.4%
DHI Group, Inc. $1.52 46.8% $80.4 $92.3 $161.6 $21.9 13.5% 0.5x * 3.9x 0.6x * 2.7x (22.3%) (14.6%)
Asure Software, Inc. $5.08 25.7% $77.3 $171.2 $79.8 $14.6 18.3% 2.1x 11.7x 1.6x 7.4x 0.0% 43.1%
Mean 69.2% $850.1 $143.3 12.4% 7.2x 11.1x 5.8x 15.1x 12.7% 20.8%
Median 75.2% $439.7 $26.4 11.3% 6.7x 11.7x 5.6x 15.8x 10.4% 23.1%
% of 52Week High
Market Cap.Enterprise
Value3 Year Rev
CAGR
Public Trading StatisticsHR Technology
SaaS
Sales & Marketing
Source: S&P Capital IQ
Market Data Operating Statistics EV as a Multiple of: GrowthStock Price LTM LTM CY2019 17 - '18
Company Name 12/31/18 Revenue EBITDA % Margin Revenue EBITDA Revenue EBITDA Growth
Adobe Inc. $226.24 81.5% $110,435.3 $111,331.2 $9,030.0 $3,186.9 35.3% 12.3x 35.2x * 10.0x 22.2x 23.7% 23.5%
salesforce.com, inc. $136.97 85.0% $104,782.1 $105,723.1 $12,484.0 $1,175.7 9.4% 8.5x 89.9x * 6.6x 26.2x 24.9% 25.6%
Amdocs Limited $58.58 81.7% $8,176.3 $7,700.3 $3,974.8 $724.6 18.2% 1.9x 10.6x 1.9x 8.9x 2.8% 2.9%
HubSpot, Inc. $125.73 77.5% $4,932.7 $4,684.9 $513.0 ($35.4) (6.9%) 9.9x NM 7.2x 59.6x* 36.6% 41.3%
Criteo S.A. $22.72 62.0% $1,530.5 $1,096.4 $2,304.2 $250.4 10.9% 0.5x * 4.4x 1.1x 3.7x 0.2% 19.7%
LivePerson, Inc. $18.86 68.8% $1,196.0 $1,129.7 $241.5 $4.6 1.9% 4.7x 247.8x * 3.9x 100.3x* 14.1% 0.5%
QuinStreet, Inc. $16.23 91.4% $800.0 $729.5 $446.4 $26.3 5.9% 1.7x 29.8x 1.5x 14.0x 34.9% 16.3%
ChannelAdvisor Corporation $11.35 72.6% $310.0 $262.5 $131.2 ($0.8) (0.6%) 2.0x NM 1.9x 19.3x 7.1% 9.3%
Mean 77.6% $3,640.7 $666.5 9.3% 5.9x 14.9x 4.3x 15.7x 18.0% 17.4%
Median 79.5% $1,408.6 $138.3 7.6% 2.0x 4.4x 1.9x 11.4x 18.9% 18.0%
3 Year Rev CAGR
% of 52Week High
Market Cap.Enterprise
Value
Market Data Operating Statistics EV as a Multiple of: GrowthStock Price LTM LTM CY2019 17 - '18
Company Name 12/31/18 Revenue EBITDA % Margin Revenue EBITDA Revenue EBITDA Growth
salesforce.com, inc. $136.97 85.0% $104,782.1 $105,723.1 $12,484.0 $1,175.7 9.4% 8.5x 89.9x * 6.6x 26.2x 24.9% 25.6%
Workday, Inc. $159.68 92.5% $35,129.6 $34,738.3 $2,616.0 ($223.9) (8.6%) 13.3x NM 9.8x 51.3x* 36.1% 34.9%
ServiceNow, Inc. $178.05 86.3% $31,925.3 $31,113.9 $2,457.0 $59.8 2.4% 12.7x NM 9.1x 33.4x* 36.0% 38.9%
The Ultimate Software Group, Inc. $244.87 73.7% $7,656.9 $7,532.4 $1,087.2 $116.3 10.7% 6.9x 64.8x * 5.5x 23.3x 21.2% 22.7%
DocuSign, Inc. $40.08 58.6% $6,623.2 $5,961.7 $650.1 ($335.8) (51.7%) 9.2x NM 6.5x 65.5x* 35.9% ND
Cornerstone OnDemand, Inc. $50.43 85.2% $2,955.8 $2,852.8 $531.6 $0.6 0.1% 5.4x NM 5.1x 23.5x 11.6% 18.4%
Mean 80.2% $3,304.3 $132.1 (6.3%) 9.3x NM 7.1x 23.4x 27.6% 28.1%
Median 85.1% $1,772.1 $30.2 1.3% 8.8x NM 6.6x 23.5x 30.4% 25.6%
% of 52Week High
Market Cap.Enterprise
Value3 Year Rev
CAGR
8
Stock Market FundamentalsSubsector Index vs. S&P 500
Valuation Trend Data (TEV / LTM Revenue)
Source: S&P Capital IQ
-
50
100
150
200
250
300
HR Tech Sales & Marketing Tech SaaS S&P 500
3 mos. 12 mos. 3 yrsHR Tech (8.1%) 22.0% 54.5%Sales & Marketing Tech (15.0%) 28.9% 96.0%SaaS (10.4%) 36.6% 79.4%S&P500 (14.0%) (6.2%) 22.6%
-
3.0x
6.0x
9.0x
12.0x
15.0x
HR Tech Sales & Marketing Tech SaaS
3 mos. 12 mos. 3 yrsHR Tech 6.8% 6.3% 7.4%Sales & Marketing Tech (1.4%) 4.9% 10.4%SaaS (14.8%) 2.2% (9.8%)
Bowstring Advisors, a division of Citizens Capital Markets 3550 Lenox Road NE, Three Alliance Center, Suite 1200, Atlanta, GA 30326 404.461.4600 bowstringadvisors.com
Bowstring Core Coverage
Human Capital Management
▪ Staffing / Recruiting
▪ Education & Training
▪ HR Services
▪ BPO / Professional Services
Healthcare
▪ Revenue Cycle Management
▪ Provider Services & Technology
▪ Payer Services & Technology
▪ IT Services
IT & Professional Services
▪ Consulting
▪ Solution Providers
▪ Managed Services
▪ Tech-Enabled Services
Industrial Services
▪ Facility
▪ Distribution / Supply Chain
▪ Environmental
▪ Infrastructure
Software
▪ Human Resources
▪ Marketing
▪ Product / Supply Chain Management
▪ Vertical SaaS
▪ Data & Analytics
We combine sector intelligence with a client-focused approach to realize your company’s true value.We are the next generation middle-market investment bank.
Quick Facts
▪ 29 professionals across three offices in U.S. with headquarters in Atlanta
▪ 90+ transactions closed since 2014
▪ Named U.S. Boutique Investment Bank of the Year by The M&A Advisor
▪ Nationwide coverage provides access to strategic buyers, financial sponsors and family offices
Service Offerings
Mergers & Acquisitions
Capital Raises
Financial & Strategic Advisory
BOSTONATLANTA LOS ANGELES©2019 Citizens Financial Group, Inc. All rights reserved. Banking products and services are offered by Citizens Bank, N.A. Member FDIC. Securities products and services are offered through Citizens Capital Markets, Inc., Member FINRA, SIPC.
Citizens Bank & Citizens Commercial Banking are brand names of Citizens Bank, N.A. Citizens Capital Markets and Bowstring Advisors, a division of Citizens Capital Markets are brand names of Citizens Financial Group, Inc.
Software Team
Chris McGanity
Vice President
Jack Fay
Associate
Scott Rhodes
Managing Director
Taylor Knox
Associate
Tom Donahue
Managing Director
Steve Carr
Director
Justin Bentley
Director
Bowstring Advisors, a division of Citizens Capital Markets 3550 Lenox Road NE, Three Alliance Center, Suite 1200, Atlanta, GA 30326 404.461.4600 bowstringadvisors.com
Bowstring Software Transactions
