Rise in Valuations - December M&A Flash Report

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USA Switzerland Germany France United Kingdom Canada Norway Brazil

www.corumgroup.com

M&A Flash ReportM&A Flash Report Dec. 2009Dec. 2009Software and IT Industry Market Update

Thursday, December 3, 200910:00 am PT


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Monthly M&A Flash Report

Bruce MilneCEOCorum Group Ltd.

Mark ReedExecutive Vice PresidentCorum Group Ltd.

Corum Group Presentation 2

>> For todays presentation or more information, contact Pat Sultan([email protected], +1 425-455-8281 ext. 248)

ruce ne, an oun er o orum, as overseen more ransac ons an anyone n e wor

over the past 25 years, generating over $6 Billion in wealth for clients in 24 countries.He has founded or owned four software companies, including AMI, the worlds largest vertical marketsoftware firm, and was a founding investor in some of the most innovative firms in their field, includingBlue Coat, Bright Star and Sabaki.

A recognized industry expert, he has served as a personal advisor to Bill Gates on operating systems,Apple on the development of the Mac, and as one of top 10 industry advisors to IBM. He has served onthe board of Washington Technology Center at the University of Washington, and is the founder of theWTIA, the nations leading regional technology trade association.

Outside the U.S. he worked with the Canadian government to found SoftWorld, and he was recentlychosen as one of the 200 most influential individuals in the IT community in Europe. He is also the only

juror from North America for the Tornado 100 Awards in Europes.

A Deans List graduate in International Business from the UW, and a graduate With Distinction fromHarvard Business School, Mr. Milne has written three book, including Power Planning, How To StructureYour Software Company For Success.

Dougan MilneDirector of ResearchCorum Group Ltd.

Tomoki YasudaAnalystCorum Group Ltd.


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Valuations Up Time to Sell?

AGENDAOverview of Current MarketMarket and Valuation Analysis

-



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Asia - East

Dubai World restructuring $26 Billion in debt...nonebacked by GovernmentIndia Growth Shatters Forecasts Up 7.9%Tokyo Moves To Break Deflationary Spiral


Wen Labels Renmindi Pressure UnfairChina Grows At A Faster PaceEmergency Meeting As Yen Drops Most in 7 Months


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Europe Zone

EU Consumer Prices Up - First Time In 7 MonthsBritish House Prices Climb For 4 th Month2010 U.K Recovery Prediction Too OptimisticEurozone Inflation Turns Positive


U.K. Business Numbers Up As Jobs Are Lost Necessity Entrepreneurs!U.K. Write-Offs Hit Record

Eurozone Unemployment At 11 Yr. High


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Currencies

Swiss Franc Chosen CurrencyAustralia Raises Key Rates to 3.7%Brazilian Real Best Performing Currency


ana a s urrency ts 18 o. g Dollar Resumes SlideGold Soars Past $1200


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North America

U.S. Business Activity Accelerates in NovemberCanadas Recovers, but less than expected0.4%Chip Sales Rise 5.1% in October


Steelmakers Downsizing Once AgainU.S. Manufacturing Expands 4 th MonthADP Job Losses Exceed ExpectationsFed Sees Subdued Economic Rebound


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Housing

Lenders Face Sanctions For Failed LoanModifications 650,000 Trial Revisions NotConverted


HoldingsHome Sales Unexpectedly Climb 3.7%

U.S. Commercial Mortgage Default 3.4% -16 Yr. High


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Retail

Cyber Monday Online Retail Sales Increase16%More Shoppers Hit Stores, Spend LessEach...Favor Low Price Items


Holiday Shopping Losing Meaning as U.S.Economic Barometer


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Valuations Are UP Why?

Buoyant Financial MarketsPent up buyer demandCurrency fluctuations Dollar on sale!


uyers are acCash available


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Rise in Valuations Fuel Sales

Divestitures are upVenture Capitalists are moving portfolioSellers are responding to buyer overtures


ega ea s are e ng oneEven smaller transactions are happening


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Recent Transactions Closed



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Recent Transactions Closed



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Firms in Letter Of Intent (LOI)

Vertical market Financial ServicesMobile search applicationsVertical market Healthcare (SaaS)


etwor secur ty so ut onsIT ServicesMobile messaging solutions


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Current Offers

Network management solutionsVertical market - Wholesale DistributionApplication development tools


nterpr se ontent anagementCRMVertical market Insurance

Enterprise Application Integration


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Tomoki YasudaAnalystCorum Group Ltd.

Market Valuation Analysis


Tomoki is currently an analyst working at Corums headquarters in Bellevue, WA. At Corum,Tomoki is responsible for conducting research and market analysis on companies,economy, and valuations. He is a contributor to the Merger and Acquisitions Quarterly andhas been responsible for updating the internal processes for Corum.


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Public Markets

90.00

100.00

110.00

120.00

Nasdaq S&P Tech Dow


40.00

50.00

60.00

70.00

80.00

Feb-09 Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09


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M&A Activity November

Number of Software and IT M&A Transactions

233

267


2004

2005

319

247

0 50 100 150 200 250 300 350

November

2009 2008 2007 2006 2005 2004


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Corum Index M&A Statistics

# of Transactions# of Mega DealsLargest DealAverage Deal Size

Nov-08

2333

$5,352$209

Nov-09

2679

$5,200$356


$ values in millions

Median Seller Size# VC backed Exits% Terms UndisclosedAll Cash (announced)% Targets were Public

% Public Buyers

$1322

68%43%15%

51%

$2334

66%44%16%

49%


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Horizontal Application Software Market

Public Valuations Deal Spotlight:

Sector: SCMTarget: i2 Technologies, Inc.Buyer: JDA Software Group, Inc.Date: November 2009Transaction Value: $556.1 millionTransaction Multi le: 1.7x


Structure: Cash & Stock

Comments:Formerly stalled dealStrengthening key verticalsExpanded product portfolio

Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09

EV/EBITDA 6.82 x 9.23 x 9.39 x 9.99 x 11.06 x 11.06 x 12.67 x 12.26 x 11.66 x

EV/S 1.12 x 1.16 x 1.35 x 1.50 x 1.58 x 1.93 x 2.41 x 2.21 x 2.29 x

ApplicationSoftware


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Public Valuations

Vertical Application Software Market

Deal Spotlight:

Sector: HealthcareTarget: IMS Health, Inc.Buyer: TPG Capital/CPPInvestment BoardDate: November 2009Transaction Value: $5.2 billionVertical


Transaction Multiple: 2.4xStructure: Cash

Comments:Healthcare verticalPositioned for long-term growthPrivate equity megadealMar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09

EV/EBITDA6.53 x 7.26 x 7.99 x 8.17 x 8.91 x 9.01 x 9.32 x 8.42 x 8.96 x

EV/S 1.14 x 1.31 x 1.40 x 1.51 x 1.51 x 1.66 x 1.80 x 1.57 x 1.82 x

ApplicationSoftware


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Public Valuations

Consumer Application Software Market

Deal Spotlight:

Sector: GamingTarget: Playfish, Ltd.Buyer: Electronic Arts, Inc.Date: November 2009Transaction Value: $275 millionTransaction Multiple: 5.5x


Structure: Cash w/additional earn-out of up to $100m through 2011.

Comments:Change in gaming dynamicSocial gaming going mainstreamClient baseMar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09

EV/EBITDA 2.74 x 3.81 x 2.83 x 4.47 x 4.57 x 4.27 x 5.88 x 5.23 x 5.71 xEV/S 0.64 x 0.69 x 0.50 x 0.53 x 0.53 x 0.59 x 0.83 x 0.60 x 0.61 x

Consumer

ApplicationSoftware


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Infrastructure Market


Sector: SecurityTarget: Guardium, Inc.Buyer: IBM CorporationDate: November 2009Transaction Value: $232 millionTransaction Multi le: 6.1x


Structure: Cash

Comments:Latest in a string of acquisitions

by IBMFocus on application

infrastructure security

Streamline complianceMar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09

EV/EBITDA 6.98 x 8.46 x 8.29 x 8.74 x 9.59 x 10.92 x 10.46 x 10.81 x 9.76 x

EV/S 1.43 x 1.55 x 1.52 x 1.72 x 1.95 x 2.02 x 2.14 x 2.20 x 2.27 x

InfrastructureSoftware


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Internet Market


Sector: Mobile AdvertisingTarget: AdMob, Inc.Buyer: Google, Inc.Date: November 2009Transaction Value: $750 millionTransaction Multi le: 37.5x


Structure: Stock

Comments:Strengthening Googles presence

in the mobileInteractive marketing abilitiesTechnology and TalentMar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09

EV/EBITDA7.54 x 9.80 x 11.78 x 11.81 x 13.32 x 13.02 x 15.80 x 11.81 x 13.03 x

EV/S 1.60 x 2.11 x 2.26 x 2.30 x 2.48 x 2.60 x 2.70 x 2.19 x 2.45 x

Internet


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IT Services Market


Sector: IT ServicesTarget: CFC Information SystemesBuyer: Adesso AGDate: November 2009Transaction Value: N/A


Comments:Geographic expansionDomain expertise

Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09

EV/EBITDA 5.32 x 5.76 x 5.51 x 5.24 x 5.56 x 5.67 x 6.66 x 6.10 x 6.16 xEV/S 0.56 x 0.60 x 0.61 x 0.63 x 0.68 x 0.68 x 0.73 x 0.73 x 0.63 x

IT Services


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Dougan MilneDirector of ResearchCorum Group Ltd.

Market Valuation Analysis


Dougan is the head of Corums research team serving as the Director of Research. Duringhis time with Corum, Dougan spent three years working with Corum's international groupheadquartered in Zrich, Switzerland. Prior to joining Corum's team in 2005, Dougan spentthree years working in the banking industry with Bank of America, and Citigroup's PrivateWealth business unit. Before entering finance and investment banking, Dougan founded thesuccessful garment distribution business, Billions Apparel and the advertising firm, ModoMarketing. Dougan has a Bachelors degree in Business Economics from the University ofSan Diego.


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Nat BurgessExecutive Vice PresidentCorum Group Ltd.

ChairmanWorld Financial Symposiums

World Financial Symposiums


Nat joined Corum in 1996 and brings a diverse background in technology M&A and law. While with the Enforcement Division of

the U.S. Securities and Exchange Commission, Nat helped identify and build cases against securities fraud schemes. With the

Strategic Development Division of Morgan Stanley's M&A group, Nat worked on cross-border acquisitions of U.S. and European

companies by Japanese firms, and on financings by large Japanese public companies. Nat moved to Morgan Stanley's Tokyo

office, where he reported directly to the President of Morgan Stanley, Japan Ltd. and focused exclusively on cross-border M&A.

After Morgan Stanley, Nat co-founded Postcard Software, a creator of advertiser-driven bilingual (English and Japanese) Internet

content. At Activision, Nat lead the company's on-line business development.

Nat earned an undergraduate degree in Japanese literature from Yale College and a law degree from UCLA. While in law school,

Nat wrote articles for the International Forum at Yale, Tokyo Journal. Nat is frequently quoted in industry publications, a highly

sought speaker at industry conferences, and Chairman of the World Financial Symposiums.


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Corum Group Presentation 29London November 17


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Partial Speaker List

December 15, New York [email protected]


David Virnelli

IBM

Jeff Brennan

Pitney Bowes

Jeff Hoffmeister

Morgan Stanley NY

Arun PrakashVirgo Capital

Ryan ZieglerEdison Ventures

Peter CoffeeSalesforce.com

Greg OsinoffRenewData


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www.worldfinancialsymposiums.comGrowth and Exit Strategies

Staging for RecoveryThe Future of M&A, VC, Private Equity and Public Offerings in the New Tech Landscape

December 15 2009 New York


Attend this conference to learn about:

Raising capital in the current environmentThe new rules of global tech M&AThe role of private equity in a credit-starved market

The IPO windowCreative transaction structuresFinding value and opportunity in the cloudAcquisition multiples, VC tactics and more


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Upcoming Corum Events

December 3: Flash Webinar (Intl)

December 8: London SUSO

December 10: Flash Webinar (Nordic)

December 15: New York City WFS

Januar 7: Flash Webinar Intl

January 21: Flash Webinar (Nordic)

January 25-27: Miami Progress Conference

January 28: Flash Webinar (DACH)

February 4: Flash Webinar (Intl)

Februar 16: Dallas MB


January 12: Toronto MB & SUSO

January 14: Flash Webinar (France)

January 14: Ottawa MB

January 15: Montreal MB

January 19: Calgary MB

Merge Briefing (MB)Selling Up Selling Out (SUSO)World Financial Symposium (WFS)

February 18: Bellevue SUSO

March 2: Houston MB

March 4: Flash Webinar (Intl)

March 28: Oslo SUSO

March 21: San Francisco MB


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Contact Information

Corum Group Ltd.

Bruce Milne, [email protected]

Dougan Milne, Director of [email protected] Corum Grou International S..r.l.


Research and Conferences:www.corumgroup.com

10500 NE 8th Street, Suite 1500Bellevue, WA 98004USA

+1 425-455-8281

Beim ParadeplatzBasteiplatz 78001 ZrichSwitzerland

+41 44 251 82 65

Documents

Rise in Valuations - December M&A Flash Report