Technology MARKET UPDATE - marlinllc.com · in Dotcard for PLN 255mm (~$85mm), • LendingPoint (Kennesaw, GA) raised $53mm in a debt ... and bring the work ethic to get the deal

Fina

ncia

l Tec

hnol

ogy

M&AM A R L I N & A S S O C I A T E S

F i n a n c i a l Te c h n o l o g yM A R K E TU P D A T E

INVESTMENT BANKING AND STRATEGIC ADVISORY TO THE FINANCIAL TECHNOLOGY AND INFORMATION SERVICES INDUSTRIES

www.MarlinLLC.com © Marlin & Associates Holdings LLC, All Right Reserved

July 2018

Toronto

Washington, D.C.

New York

Dear Clients and Friends,

Our latest FinTech m&a report can be found below. It highlights m&a trends and transactions in the seven segments of the FinTechworld that we follow and sometimes lead.

Recently Capgemini, the consulting, technology and outsourcing services company, in collaboration with Efma, a global non-profitorganization, issued its second annual World FinTech Report. The authors may not have intended their report to call the “End of the Beginning” of consumer FinTech, but that is what they have done – and we agree. The Beginning is over. The Future is before us.

Consumer-oriented Fintech isn’t new. We started replacing human bank tellers with technology in the 1960s (ATMs); stock brokers in the 1980s (E*TRADE and other on-line brokers); PayPal was founded almost 20 years ago. Betterment and other robo-advisors began replacing wealth managers a decade ago; 15 years ago Prosper, Funding Circle and other Peer-to-Peer lenders did the same to bankers.

A few things are new: one is the sheer number of consumer FinTech apps that have proliferated - combined with the speed of adoption, both of which surprised many in the industry. Another is the aggressive (if belated) response by many “traditional” firms. Suddenly, the “hunted” are becoming the hunters, as firms like American Express, Citi, Goldman Sachs, JP Morgan, MasterCard, Visa and others invest in technology, acquire, integrate and offer the sorts of “…quick, convenient, seamless … efficient, portable, and delightful…” financial services that consumers – and businesses - have come to expect. And to them we now add BigTech firms like Alibaba, Facebook, Google, Oracle, TenCent, and WeChat. As Capgemini noticed – and we talked about in our October 2017 Report- FinTech is increasingly BigTech. All this has given new impetus to companies that sell “tools” to allow clients to compete in this brave new world.

The disrupters are far from dead and the incumbents are far from safe. There is plenty of room for both. And both are finding growth more expensive and profitability more challenging than they had assumed. (See for example CAN Capital, OnDeck and Lending Club – or, if you prefer, try to find Beepi, Dealstruck, or Pay By Touch.) The smart ones (old and new) have realized that success requires more than technology. It also requires knowledge of pain points, trust building, brand building, customer centricity, a sustainable organization – and a lot of money. This is certainly not the beginning of the end for the innovators in Consumer FinTech; but it’s is clearly the End of the Beginning.

We provide unbiased expert counsel to those who would buy, sell, raise capital or invest in excellent middle-market FinTech firms. It’s a good place to be. Many recent transactions are discussed in the report found below. A few of the more interesting onesinclude:

DEAR CLIENTS AND FRIENDS,

FinTech: The End of the Beginning - Our July 2018 Fintech Market Update

Marlin & Associates is one of the most active firms advising buyers and sellers of U.S. and international middle-market firms that provide software, data, and related services.The firm is based in New York City, with offices in Washington, D.C., and Toronto, Canada. It has been the recipient of numerous awards including “Boutique Investment Bankof the Year,” “Middle-Market Investment Bank of the Year,” "Middle-Market Financing Agent of the Year – Equity," and “TMT Advisory Bank of the Year.” Marlin & Associates'team of professionals has advised over 200 information-technology transactions.

• PayPal (NASDAQ:PYPL) agreed to acquire HyperWallet for $400mm,

• Dataminr (New York, NY) raised $392mm in funding at an implied valuation of $1.6bn from new investors including Morgan Stanley,

• Deutsche Börse (XTRA:DB1) agreed to acquire GTX ECN from GAIN Capital Holdings for $100mm, valuing the company at an implied 4.35x LTM revenue,

• Nets (Ballerup, Denmark) agreed to acquire a majority stake in Dotcard for PLN 255mm (~$85mm),

• LendingPoint (Kennesaw, GA) raised $53mm in a debt funding round from Paragon Outcomes.

Kenneth B. Marlin | Managing PartnerMarlin & Associates | www.marlinllc.com

Sincerely,

Please see our July Fintech M&A Update below.

https://www.capgemini.com/news/capgeminis-world-fintech-report-2018-highlights-symbiotic-collaboration-as-key-to-future-financial-services-success/

https://www.marlinllc.com/_media/_data/MarlinNewsletter/2017-fintech-nl-october.pdf

http://www.marlinllc.com/

https://www.linkedin.com/company/marlin-&-associates/

https://www.linkedin.com/company/marlin-&-associates/

MARLIN & ASSOCIATES: FINTECH MARKET UPDATE

Marlin & Associates3

Sector Analyses10

Banking Software & Processors10

Capital Markets Software & Services11

Data & Analytics – Financial Services12

Insurance Technology13

Payment Technology14

Securities Exchanges15

Technology-Enabled Financial Institutions16

Sector Comparison9

Case Studies17

Events8

Financial Technology is a complex industry that serves a wide range of customers, includingretail, commercial, merchant and investment banks; asset managers; insurance companies;securities exchanges; corporations (treasurers and CFO’s); merchants (payments); and a host ofother financial services industry participants, consumers and intermediaries who interface withthese financial institutions.

JULY 2018

Note: Not a complete list

Ken Marlin

Founder and Managing Partner of M&A• Twice named to II’s Tech 50• Member Market Data Hall of Fame• MD Veronis Suhler Stevenson• CEO of Telesphere Corporation • CEO of Telekurs (NA)• EVP Bridge Information systems• SVP at Dun & Bradstreet• BA from the University of California (Irvine)• MBA from UCLA, post-MBA from New

York University Jason Panzer

Chief Operating Officer of M&A• 20+ years of M&A experience advising

technology and PE firms, globally• VP Business Development at FactSet• M&A attorney of Skadden, Arps, Slate,Meagher and Flom

• CFO of JCF Group• MBA from Columbia Business School• J.D. from Fordham Law School• CFA Charterholder

• 18+ years of investment banking andprivate equity experience

• Named twice to Dealer’s Digest and recently M&A Advisor’s “40-Under-40”

• Founded Marlin & Associates with Ken Marlin

• Formerly at Veronis Suhler Stevenson, Morgan Stanley, and American International Group

• BS from Binghamton University

MARLIN AND ASSOCIATES: WHO WE ARE

OUR SENIOR TEAM BRINGS EXTENSIVE DEPTH, BREADTH AND INDUSTRY EXPERTISE TO OUR CLIENTS

Michael Maxworthy

JULY 2018

"The Marlin & Associates team was a highly valued player in completing our transaction. Their professional expertise and commitment to the process, preparation, positioning, presentation, and leadership got us to the finish line. They’re smart, available whenever needed, and bring the work ethic to get the deal done.”

Roman BrunnerCEO, QuoVadis

Tom Selby

• 18+ years of M&A experience • VP of Business Development at

SunGard• Founder of software company sold to

SunGard • Started career designing trading software

for TD Bank• BaSC, Engineering from University of

Toronto

Sam Levy

• 10+ years of technology investment banking experience

• Experience working with both large corporations and entrepreneurial technology-based companies

• Formerly at BNPParibas,• MBA, NYU Stern, MS from

CentraleSupelec

Tom Selby

Anup Agarwal

• 18+ years of investment banking experience

• Formerly at Lehman Brothers, Bear Stearns and Houlihan Lokey

• MBA, University of Virginia (Darden); BS, Birla Institute of Technology & Science

OUR FOUNDING PARTNER HAS FIVE TIMES BEEN RECOGNIZED AS ONE OF THE MOST INFLUENTIAL PEOPLE IN FINANCIAL TECHNOLOGY

“Deal making is as integral to the evolution of the financial technology industry as thetechnologies themselves and Ken Marlin has been in the thick of it...”

– Institutional Investor 2014

In 2011, Institutional Investor, the international publisher focused primarily oninternational finance, has named M&A’s Founding Partner, Ken Marlin, as one ofInstitutional Investor’s Tech 50, which honored the 50 most “disruptive” figures in thefinancial technology sector

Institutional Investor calls these 50 people disrupters because they're changing theway Wall Street does business

Ken was the only investment banker included on the list

In 2014, Institutional Investor again named Ken as one of the 50 most influentialpeople in financial technology

Ken was, again, the only investment banker included on the list

In 2015, 2016, and 2017 Institutional Investor named Ken one of the “35 MostPowerful Dealmakers of 2016”

Institutional Investor calls these 35 people the influential financiers that acceleratefinancial start-up’s paths to commercialization

Candidates were evaluated by four primary sets of attributes: achievements andcontributions over the course of a career; scope and complexity ofresponsibilities; influence and leadership inside and outside the organization;and pure technological innovation.

JULY 2018

M&A Award USA TMT Advisory Firm of the Year (2012, 2015, 2017) – Acquisition International

• Financial Technology Deal of the Year (2012, 2011)• North America Small Mid Markets Corporate Deal of the Year (2013)• Corporate M&A Deal of the Year (2010)• Technologies Deal of the Year (2010)* Firm-wide Awards

• Cross-Border Deal of the Year (2017)*• Cross-Border Boutique Investment Banking Firm of the Year (2016)*• Boutique Investment Banking Firm of the Year (2014, 2015, 2016)*• Advisory Firm of they Year (2015)*• Middle Market International Professional Services (B-to-B) Deal of the Year (2013)• Financial Services Deal of the Year (2013, 2012 and 2011)• Information Technology Deal of the Year (2011)• Middle Market Deal of the Year <$25M (2011)• Corporate and Strategic Acquisition of the Year (2011)• Middle Market Financial Services Deal of the Year (2011 and 2010)• Middle Market Information Technology Deal of the Year (2011 and 2010)• Middle Market International Financial Services Deal of the Year (2013 and 2010)• Middle Market International Information Technology Deal of the Year (2010)• Middle Market Financial Services Turnaround Deal of the Year (2009)• Middle Market Information Technology Turnaround Deal of the Year (2009)• Middle Market International Deal of the Year(2008)• Middle Market Financial Services Deal of the Year (2008)• Middle Market Technology Deal of the Year (2008)• Middle Market Investment Banking Firm of the Year (2008 and 2007)*• Middle Market International/Cross Border Deal of the Year (2007, Below $100M)• Middle Market Financial Services Deal of the Year (2007, Below $100M)• Middle Market Financing Agent of the Year – Equity (2007)*

PEER AND INDUSTRY GROUP RECOGNITION

Boutique Investment Banking Firm of the Year(2014, 2015, 2016) - The M&A Advisor

The M&A Advisor and The M&A Forum have recognized Marlin & Associates for excellence in multiple deal categories including:

The Global M&A Network has recognized Marlin & Associates for excellence in multiple deal categories through its M&A Atlas Awards:

TMT Advisory Firm of the Year (2016)

Boutique Investment Banking Firm of the

Year(2016)

– ACQ5 (Acquisition Finance

Magazine)

“We are always grateful to be recognized for our hard work, but we are more pleased that we areable to help our clients achieve the results that they seek.”

Ken MarlinFounder and Managing Partner

Note: Not a complete list.

JULY 2018


CLIENTS CHOOSE M&A TO ADVISE THEM ON THEIR IMPORTANT STRATEGIC MOVES

JULY 2018

“The team at Marlin & Associates was critical to our completion of this important strategic transaction, providing invaluable guidance throughout every step of the process. Their expertise in financial technology, SaaS, and the Salesforce ecosystem helped us to prepare effectively and best position Tier1CRM to potential investors. Their knowledge of the market helped us to identify the ideal investors as we move into the next phase of growth at Tier1. We could not have closed this transaction without their steady hand throughout,” Mark Notten, CEO, Tier1CRM

has received an equity investment from

Marlin & Associates acted as exclusive strategic and financial advisor to Investment Metrics

has been acquired by

Marlin & Associates acted as exclusive strategic and financial advisor to OptionsCity Software

Toronto, Canada

Atlanta, GA

Marlin & Associates acted as exclusive strategic and financial

advisor to TMX Group

has sold the Atrium wireless and extranet infrastructure

businesses to

a portfolio company of

Hamilton, Bermuda

Marlin & Associates acted as exclusive strategic and financial advisor to QuoVadis and ABRY


London, UKreceived an investment

from


advisor to OpenGamma

New York City, NY




advisor to Advise Technologies, LLC

New York City, NY

Lake Success, NY

Marlin & Associates acted as exclusive strategic and financial advisor to M&O Systems, Inc.


Phoenix, AZ

Boston, MA and San Francisco, CA


advisor to BillingTree

has completed a majority recapitalization with


advisor to Tier1CRM

has received an equityinvestment from

Marlin & Associates acted as exclusive strategic and

financial advisor to MSCI Inc.

New York, NY

has sold Financial Engineering Associates, Inc. to

A portfolio company ofDallas, TX

Marlin & Associates acted as strategic and financial

advisor to empow

Boston, MA

received a series B investment led by

Boston, MA

New York, NY

has acquired

New York, NY

Marlin & Associates acted as exclusive strategic and financial advisor to Aquiline Holdings LLC


CLIENTS CHOOSE M&A TO ADVISE THEM ON THEIR IMPORTANT STRATEGIC MOVES

JULY 2018

“Throughout this process, the team at Marlin & Associates provided great financial and strategic advice. They served as a true strategic partner and integral part of the team as they guided the complex cross-border carve-out project. Marlin & Associates unique industry expertise played a critical role in bringing this project to a successful conclusion for all stakeholders." Eric SinclairPresident, TMX Datalinx



financial advisor to Alacra, Inc.

Palo Alto, CA

New York, NYParis, France

Palo Alto, CA


financial advisor to Everteam.

has acquired the Business Process Management

business from

Campbell, CA

received an investment from


advisor to Trunomi.

Boston, MA

Windsor, CT

Marlin & Associates acted as exclusive strategic and financial advisor to Varden Technologies.


New York, NY

Dublin, Ireland

Marlin & Associates acted as financial advisor to Aquiline

Capital Partners.

has invested in

has sold the assets of

to

Marlin & Associates acted as exclusive strategic and financial advisor to CNO Financial Group.

Dublin, Ireland

London, United KingdomMarlin & Associates acted as

exclusive strategic and financial advisor to Information Mosaic.

has been acquired bySan Francisco, CA

has led a $60 million investment in

New York, NY

Marlin & Associates acted as exclusive financial advisor

Francisco Partners.

Brentwood, TN


Marlin & Associates acted as strategic and financial advisor to Agilum Healthcare Intelligence

has been acquired bySan Mateo, CA


financial advisor to Xignite.

received a strategicinvestment from

Tokyo, Japan


Port Talbot, United Kingdom

London, United Kingdom


financial advisor to Vizolution.

Salt Lake City, UT

Chicago, IL

Marlin & Associates acted as exclusive strategic and financial advisor to iTransact Group, LLC


2018 Fintech Events:

ConferenceDate Location Website

London, UK Details

JULY 2018

September 12, 2018 Empire Startups Fintech ConferenceRunning for over 16 years, The European Financial Information Summit is the leading event for financial data, regulatory and technology professionals. This year’s agenda has been carefully designed to offer advice on how to prepare your data to embrace the potential of data science and AI, make more informed decisions on your technology investments and develop a data strategy to both monetize your data and respond to regulatory demands.

July 11- 12, 2018New York, NY Details

August 20 – 23, 2018 Gartner Catalyst ConferenceDiscover the answers and hands-on advice you need at Gartner Catalyst Conference 2018. Understand the latest technology trends and master the skills that digital business transformation demands. This is the must-attend event for technical professionals.

San Diego, CA Details

October 10, 2018

InvestNow in its third year, InVest has grown to be the industry’s leading wealth-tech event. In 2017, we expect to attract 1,000+ executives—buyers and sellers—from all facets of the wealth management. This event shares robust content that covers all aspects of the changing industry and features an exhibit hall that showcases the future of wealth management technology from the perspective of both the endemic players in the industry and the upstart competitors disrupting the status quo.

New York, NY

October 21 - 24, 2018

Las Vegas, NY Details

Lend360At LEND360, more than 850 online lending professionals from across the globe connect for three days to share insights, solve industry challenges and create business solutions. As a FinTech epicenter connecting every angle of the online lending industry, this is your chance to learn the trends and information needed to move your business forward.

Details

Money2020Money20/20 is where the Payments, FinTech and Financial Services ecosystem unites to create and explore the disruptive ways in which consumers and businesses manage, spend and borrow money. It’s the premier event where leaders –representing every sector of the industry – come to seize new business opportunities, build connections and learn about the latest disruptions.

November 13, 2018 Empire Start UpsHear from those forging new trails in payments, blockchain, lending, robo-advisors, insurance tech, real estate and more. In addition to attracting hundreds of FinTech entrepreneurs, this conference also plays host to the investors and service providers that help accelerate startups. The audience can also look forward to keynotes, panels and demo updates from some of the top FinTech startups in the world.

San Francisco, CA Details

http://www.financialinformationsummit.com/eu/venue

https://www.financial-planning.com/conference/invest-2017/about

https://www.gartner.com/en/conferences/na/catalyst-us

https://us.money2020.com/overview

http://www.lend360.org/about-lend360/

https://www.empirefintechconference.com/pages/ny2019

Sources: Marlin & Associates, Capital IQ and Public sources. All market and operating data is sourced as of 6/29/18. These companies are asample of firms in the sector as M&A defines it, and do not comprise a comprehensive list of all firms in the sector. M&A calculates mean andmedian multiples using data from a set of firms that it believes to be reasonable and which may not be identical to the set reflected above.

Enterprise Value / Revenue

Enterprise Value / EBITDA

FINANCIAL TECHNOLOGYSector Comparison Snapshot:

0x 2x 4x 6x 8x 10x

Technology-Enabled Financial Institutions*

Capital Markets Software & Services

Payment Technology

Insurance Software

Banking Software & Processors

Data & Analytics - Financial Services

Securities Exchanges

2017E EV/Revenue 2018E EV/Revenue

0x 6x 12x 18x 24x 30x

Securities Exchanges

Payment Technology

Data & Analytics - Financial Services

Insurance Software

Technology-Enabled Financial Institutions*



2017E EV/EBITDA 2018E EV/EBITDA

*Tech-Enabled Financial Institutions multiples calculated using Market Cap / Revenue and Market Cap / EBT

JULY 2018

Source: Marlin & Associates, Capital IQ and Public sources. All market and operating data is sourced as of 6/29/18. These companies are a sampleof firms in the sector as M&A defines it, and do not comprise a comprehensive list of all firms in the sector. M&A calculates mean and medianmultiples for the sector using data from a set of firms that it believes to be reasonable and which may not be identical to the set reflected above.


Public Market Data

[1] Q2 Holdings (QTWO) added to the index as of IPO 3/20/14

Recent Activity

JULY 2018

90

120

150

180

210

240

270

300

330

Jul-13 Jul-14 Jul-15 Jul-16 Jul-17 Jul-18

5 Year M&A Banking Software Index[1] vs. S&P 500, base = 100

M&A Banking Software Index S&P 500

8x

11x

14x

17x

20x

23x

26x

3.0x

3.5x

4.0x

4.5x

5.0x

5.5x

6.0x


EV /

EBIT

DA

EV /

Reve

nue

5 Year LTM Revenue & EBITDA Multiples[1]

EV / LTM Revenue EV / LTM EBITDA

Company Market Enterprise(USD millions) Cap Value CY2017A CY2018E CY2017A CY2018E CY2017A CY2018E CY2017A CY2018E

FIS 35,414 43,709 4.8x 5.1x 17.4x 13.9x (1%) (6%) 27% 37%Fiserv 31,236 35,400 6.2x 6.0x 19.8x 16.3x 3% 3% 31% 37%Temenos 11,051 11,306 15.4x 13.4x 56.7x 35.8x 16% 15% 27% 37%Jack Henry & Associates 10,109 10,156 6.9x 6.5x 22.3x 18.7x 6% 7% 31% 35%Oracle Financial Services 5,083 4,618 7.0x 6.7x 17.3x 15.9x 1% 5% 41% 42%Ellie Mae 3,697 3,466 8.3x 6.9x 49.2x 26.5x 16% 20% 17% 26%ACI Worldw ide 2,853 3,461 3.4x 3.3x 19.4x 13.4x 2% 1% 17% 25%Q2 Holdings 2,406 2,287 11.8x 9.6x na nm 29% 23% na 10%Bottomline Technologies 1,911 1,959 5.3x 4.8x 46.9x 20.8x 6% 11% 11% 23%Polaris Consulting & Services 701 596 1.7x 1.4x 13.8x 10.2x 23% 21% 12% 14%Sw ord Group 395 372 1.8x 1.6x 13.2x 10.9x 8% 12% 14% 15%Microgen 383 371 4.5x 4.1x 20.4x 16.7x 46% 11% 22% 24%Gresham Technologies 183 171 6.0x 5.6x 35.2x 22.3x 26% 8% 17% 25%

Trim Mean 6,348 6,727 6.0x 5.5x 26.2x 17.5x 12% 10% 22% 27%Median 2,853 3,461 6.0x 5.6x 20.1x 16.5x 8% 11% 20% 25%

EV / Revenue EV / EBITDA Revenue Growth EBITDA Margin

DateAnnounced Acquirer(s) / Investor(s) Target / Issuer Description

11/28/16

QuantGroup (Beijing, China) raised $72mm in a Series C round of funding led by new investor Sunshine Insurance Group, and including participation from GuosenHongsheng Investment Co., Fosun Capital, and other undisclosed investors. QuantGroup provides online financial services in China.

11/16/16

LendingTree (NASDAQ:TREE) acquired Iron Horse Holdings (dba: CompareCards) for $130mm. CompareCards is an online platform enabling consumer credit card comparisons, and providing credit education and credit health management solutions. The transaction consideration consists of $85mm cash at closing and up to $45mm of earn-out payments paid during 2017 and 2018.

11/10/16

Meta Financial Group (NASDAQ:CASH) acquired Specialty Consumer Services (SCS) for $54mm. SCS offers a loan management platform and a proprietary underwriting model that are primarily used to deliver consumer tax advances and other consumer credit services. The transaction consideration consists of approximately $15mm at closing, with potential for additional contingent payments.


6/25/18

(Collateral Mgmt Corporation)

Teranet (Toronto, Canada) agreed to acquire D+H Collateral Management Corporation from Finastra for an undisclosed sum. D+H Collateral Management Corporation provides services in Canadian lien registration and search, asset recovery, and insolvency management.

6/18/18

Finastra (London, United Kingdom) acquired Malauzai for an undisclosed sum. Malauzai provides mobile and internet banking solutions to community banks and credit unions. The two companies have had a partnership since 2015 which has led to more than 130 joint customers.

6/12/18

Thoma Bravo (Chicago, IL) acquired CRIF Lending Solutions from CRIF SpA and MeridianLink, both for an undisclosed sum. The operations of each will be merged and the combined company known as MeridianLink. CRIF SpA and MeridianLink Founder and CEO Tim Nguyen will both be shareholders in the combined enterprise.



Public Market Data

Recent Activity

JULY 2018

12x

15x

18x

21x

24x

2.5x

3.0x

3.5x

4.0x

4.5x


EV /

EBIT

DA

EV /

Reve

nue

5 Year LTM Revenue & EBITDA Multiples


100

140

180

220

260


5 Year M&A Capital Markets Index vs. S&P 500, base = 100

M&A Capital Markets Index S&P 500


IHS Markit 20,822 25,132 7.0x 6.5x 22.5x 16.5x (1%) 8% 31% 39%Broadridge 13,916 14,766 3.4x 3.4x 18.6x 18.2x 24% (0%) 19% 19%SS&C Technologies 11,296 13,209 7.9x 3.9x 21.0x 12.4x 13% 102% 38% 32%Computershare 7,426 8,546 3.8x 3.8x 15.6x 13.1x 10% 2% 25% 29%SimCorp 3,227 3,229 8.1x 7.2x 30.1x 25.5x 16% 11% 27% 28%Envestnet 2,591 2,970 4.3x 3.6x 38.4x 19.4x 18% 19% 11% 19%Fidessa group 1,984 1,863 3.9x 4.0x 21.1x 18.3x 7% (2%) 19% 22%First Derivatives 1,670 1,688 7.2x 6.2x 65.0x 34.0x 23% 16% 11% 18%IRESS 1,536 1,656 5.1x 4.7x 22.3x 17.2x 10% 8% 23% 27%Linedata Services 295 385 1.8x 1.9x 9.5x 8.0x 7% (3%) 19% 24%StatPro Group 149 176 2.7x 2.3x 27.6x 14.9x 31% 14% 10% 16%Cinnober 133 123 2.9x 2.9x na na 7% (1%) na naBrady 73 68 2.2x 2.2x na 16.4x (10%) 3% na 13%




6/27/18

London Stock Exchange (LSE:LSE) acquired a 16% stake in AcadiaSoft for an undisclosed sum. AcadiaSoft provides margin automation solutions for counterparties engaged in collateral management. As part of the transaction, the companies have agreed to partner on new products to automate and standardize the margin process for non-cleared derivatives.

6/19/18

SigFig (San Francisco, CA) has raised $50mm in a Series E funding round led by new investor General Atlantic, and including participation from existing investors Bain Capital Ventures, DCM Ventures, Eaton Vance, New York Life Ventures, Nyca Partners, UBS, and Union Square Ventures. The round brings SigFig’s total capital raised to $117mm.

6/6/18Invesco (NYSE:IVZ) acquired IntelliFlo for an undisclosed sum. Intelliflo, founded in 2004, has grown to become the largest technology platform for financial advisors in the UK. IntelliFlo had been owned by HgCapital since 2013.


Data & Analytics – Financial Services

Public Market Data

JULY 2018

Recent Activity


S&P Global 51,870 55,095 9.1x 8.5x 18.8x 17.3x 7% 7% 48% 49%Moody's 33,174 37,424 8.9x 8.0x 18.8x 16.6x 17% 12% 47% 48%Thomson Reuters 28,707 35,893 6.9x 6.5x 14.2x 27.8x 2% 6% 48% 23%Experian 22,766 26,123 5.7x 5.4x 17.5x 15.6x na 7% 33% 35%Verisk Analytics 18,190 20,819 9.7x 8.7x 21.1x 18.4x 8% 11% 46% 47%MSCI 15,317 16,546 13.0x 11.5x 25.1x 21.0x 11% 13% 52% 55%Equifax 15,176 17,617 5.2x 5.0x 15.8x 15.0x 7% 4% 33% 34%CoStar Group 14,999 14,068 14.6x 11.9x 56.2x 36.4x 15% 23% 26% 33%TransUnion 13,619 15,914 8.2x 7.2x 22.7x 18.6x 13% 14% 36% 39%FactSet Research Systems 7,747 8,078 6.4x 5.9x 18.9x 17.4x 10% 9% 34% 34%FICO 6,051 6,647 7.0x 6.3x 30.8x 25.1x 5% 11% 23% 25%Morningstar 5,502 5,297 5.8x 5.9x 22.6x 20.4x 14% (2%) 26% 29%Dun & Bradstreet 4,575 5,734 3.3x 3.2x 12.5x 10.9x 2% 2% 26% 30%CoreLogic 4,298 5,845 3.2x 3.1x 15.2x 11.9x (5%) 1% 21% 26%



11x

14x

17x

20x

4.0x

5.0x

6.0x

7.0x


EV /

EBIT

DA

EV /

Reve

nue



100

150

200

250


5 Year M&A Data & Analytics Financials Index vs. S&P 500, base = 100

M&A D&A Financial Index S&P 500


6/29/18

Dataminr (New York, NY) raised $392mm in funding at an implied valuation of $1.6bn from new investors Morgan Stanley, Valor Equity Partners and Vulcan Capital. Existing investors Goldman Sachs and Institutional Venture Partners also participated in the round. Dataminr provides real-time information discovery services to corporate, finance and public sector professionals.

6/20/18

Immuta (Annapolis, MD) raised $20mm in Series B funding round from existing investors Drive Capital, and Greycroft. New investors Dell Technologies Capital and Citi Venture Capital also participated in the round. Immuta develops and markets a platform that allows companies to access and secure data.

5/31/18

Fitch (New York, NY) agreed to acquire Fulcrum Financial Data for an undisclosed sum. Fulcrum Financial Data provides unique insights, commentary and data. Fitch plans to integrate Fulcrum Financial Data into the Fitch Solutions division, a leading provider of credit and macro intelligence.


Insurance Software

Public Market Data

[1] Majesco added to the index as of IPO 6/30/15

Recent Activity

JULY 2018

0x

5x

10x

15x

20x

25x

1.0x

2.0x

3.0x

4.0x

5.0x

6.0x


EV /

EBIT

DA

EV /

Reve

nue



100

150

200

250

300


5 Year M&A Insurance Tech Index[1] vs. S&P 500, base = 100

M&A Insurance Tech Index S&P 500


Guidew ire Softw are 6,994 6,302 10.9x 8.9x nm 45.9x 28% 22% 7% 19%Ebix 2,414 2,760 7.6x 6.1x 22.2x 16.4x 22% 25% 34% 37%CorVel 1,030 975 1.8x na 13.8x nm 7% na 13% nmSapiens 489 507 1.9x 1.8x 23.6x 12.5x 25% 5% 8% 14%Majesco 239 244 2.1x na nm nm (6%) na 1% nm

Trim Mean 1,311 1,414 3.8x 6.1x 22.2x 16.4x 18% 22% 9% 19%Median 1,030 975 2.1x 6.1x 22.2x 16.4x 22% 22% 8% 19%



6/27/18 Effective Coverage (Albany, NY) acquired Bungalow for an undisclosed sum. Bungalow provides renters insurance services via its online platform.

6/21/18Verisk (NASDAQ:VRSK) acquired Validus for an undisclosed sum. Validus provides motor claims analysis and management services to insurers, brokers, and self-insured fleet operators.

6/14/18Ethos (San Francisco, CA) raised $11.5mm in a venture funding round led by Sequoia Capital. Ethos uses data intelligence to offer suitable life insurance policies without medical examination.


Payment Technology

Public Market Data

Recent Activity

JULY 2018

10x

12x

14x

16x

18x

20x

1.0x

2.0x

3.0x

4.0x

5.0x

6.0x


EV /

EBIT

DA

EV /

Reve

nue



100

130

160

190

220

250


5 Year M&A Payment Tech Index[1] vs. S&P 500, base = 100

M&A Payment Tech Index S&P 500

Company Market Enterprise(USD millions) Cap Value CY2017E CY2018E CY2017E CY2018E CY2017E CY2018E CY2017E CY2018E

PayPal 101,340 91,829 7.0x 6.0x 37.8x 22.8x 21% 18% 19% 26%Worldpay 25,769 34,189 9.0x 8.8x 20.2x 18.5x 11% 2% 45% 47%Square 24,406 23,831 24.2x 16.1x nm nm 43% 50% 14% 17%Wirecard 19,944 18,755 10.4x 8.2x 40.7x 29.4x 45% 28% 26% 28%First Data 19,800 40,084 4.9x 4.7x 13.9x 12.0x 4% 6% 35% 39%FleetCor Technologies 19,643 23,120 10.3x 9.5x 20.6x 16.9x 23% 8% 50% 56%Global Payments 17,842 21,754 5.5x 5.5x 19.7x 15.7x 5% (1%) 28% 35%Total System Services 15,492 19,086 5.6x 5.1x 19.4x 14.4x 12% 11% 29% 35%Cielo 11,900 13,569 4.6x 4.5x 10.3x 10.1x (6%) 2% 44% 45%Western Union 9,425 11,632 2.1x 2.0x 8.9x 8.3x 2% 4% 24% 24%WEX 8,276 10,346 8.3x 7.0x 23.5x 16.7x 23% 17% 35% 42%Euronet Worldw ide 4,520 4,270 1.9x 1.7x 10.8x 8.9x 15% 13% 18% 19%EVERTEC 1,603 2,140 5.3x 4.9x 15.3x 11.1x 5% 7% 34% 44%PayPoint 846 785 2.8x 4.1x 10.0x 9.6x (0%) (32%) 28% 43%SafeCharge 708 599 5.4x 4.6x 19.1x 16.0x 7% 16% 28% 29%MoneyGram International 443 1,149 0.7x 0.7x 5.2x 4.5x (2%) (4%) 14% 16%



[1] EVERTEC (EVTC) added to the index as of 4/17/13, Blackhawk Network (HAWK) added as of 4/24/13, SafeCharge (SCH) added as of 4/4/14, PayPal (PYPL) added as of 7/7/15, Worldpay (WPG) added as of 10/14/15, First Data (FDC) added as of 10/16/15, Square (SQ) added as of 11/20/15.


6/19/18

Nets (Ballerup, Denmark) agreed to acquire a majority stake in Dotcard for PLN 255mm (~$85mm). The potential acquisition of Dotcard provides ownership of the company’s two subsidiaries, eCard, a provider payment processing, clearing, and settlement solutions, and Dotpay, a provider of internet payment services.

6/19/18

PayPal (NASDAQ:PYPL) agreed to acquire HyperWallet for $400mm. HyperWallet provides a payment platform and settlement network that allows companies to distribute funds across various countries and currencies. The potential acquisition is planned to help PayPal expand its global payout capabilities.

6/6/18

Marqeta (Oakland, CA) raised $45mm in a Series D funding round led by Goldman Sachs and Iconiq. The recent round increases Marqeta’s total funding to $116mm. The company plans to use the funds to expand international growth and increase product offerings.


Securities ExchangesPublic Market Data

JULY 2018

Recent Activity

[1] Euronext (ENX) added to the index as of IPO 6/20/14


CME Group 55,855 57,214 15.9x 13.7x 22.8x 19.4x 1% 15% 69% 71%IntercontinentalExchange (ICE) 43,100 49,497 11.0x 10.1x 17.4x 15.6x 3% 6% 61% 64%Hong Kong Exchange 37,214 3,772 2.7x 1.8x 3.3x 2.5x 18% 23% 69% 75%Deutsche Börse Group 24,845 9,027 3.0x 2.8x 6.1x 4.8x 3% 3% 48% 58%London Stock Exchange (LSE) 20,739 22,222 10.1x 7.9x 20.5x 15.2x 18% 9% 42% 52%The Nasdaq OMX Group 15,424 18,934 5.1x 4.6x 15.0x 14.5x 7% 4% 32% 31%CBOE 11,729 12,698 6.0x 4.9x 19.3x 16.0x 4% 17% 30% 30%BM&F Bovespa 10,890 10,668 17.8x 8.9x 22.0x 12.4x 11% 27% 51% 72%Japan Exchange Group (JPX) 9,782 9,506 9.7x 8.6x 14.0x 13.6x 4% 8% 66% 63%Australian Exchange (ASX) 9,216 8,140 12.0x 13.1x 14.7x 17.1x 5% (13%) 77% 77%Singapore Exchange (SGX) 5,652 5,057 8.7x 7.9x 15.9x 13.8x 3% 6% 53% 58%Euronext 4,448 4,417 7.6x 6.2x 13.1x 10.8x 7% 14% 54% 58%TMX Group 3,654 4,488 7.9x 7.2x 13.2x 12.8x 0% 10% 60% 56%



11x

13x

15x

17x

6.5x

7.5x

8.5x

9.5x


EV /

EBIT

DA

EV /

Reve

nue



100

130

160

190

220


5 Year M&A Sec Exchanges Index[1] vs. S&P 500, base = 100

M&A Sec Exchanges Index S&P 500


6/27/18

London Stock Exchange (LSE:LSE) acquired a 16% stake in AcadiaSoft for an undisclosed sum. AcadiaSoft provides margin automation solutions for counterparties engaged in collateral management. As part of the transaction, the companies have agreed to partner on new products to automate and standardize the margin process for non-cleared derivatives.

5/30/18Deutsche Börse (XTRA:DB1) agreed to acquire GTX ECN from GAIN Capital Holdings for $100mm, valuing the company at an implied 4.35x LTM revenue. GTX ECN is an online platform for trading foreign exchange currencies.

5/29/18

Intercontinental Exchange (NYSE:ICE) agreed to acquire TMC Bonds for $685mm. TMC Bonds operates as a fixed income market alternative trading system that builds customized desktop applications for registered investment professionals and the retail investor public.


Technology-Enabled Financial Institutions

Public Market Data

Recent Activity

[1] Elevate (ELVT) added to the index as of IPO 4/6/17

Company Market Market Cap / Revenue Market Cap / EBT Revenue Growth EBT Margin(USD millions) Cap CY2017A CY2018E CY2017A CY2018E CY2017A CY2018E CY2017A CY2018E

The Charles Schw ab 69,598 8.1x 6.9x 19.1x 13.9x 15% 18% 42% 50%TD Ameritrade 31,219 7.8x 5.6x 19.0x 12.9x 20% 39% 41% 43%E*TRADE 16,372 6.5x 5.7x 14.4x 10.9x 21% 14% 45% 52%MarketAxess 7,496 18.9x 17.1x 37.2x 30.9x 7% 11% 51% 55%BGC Partners 5,422 1.7x 1.4x 32.5x 6.1x 15% 19% 5% 23%NEX Group 5,158 nm 6.4x na 17.8x na na na 36%Interactive Brokers 4,671 3.0x 2.4x 4.4x 2.6x 10% 21% 67% 95%IG Group 4,196 5.9x 5.8x 12.9x 11.5x 3% 2% 46% 50%Monex Group 1,821 4.1x 3.5x 36.2x na 15% 20% 11% naLendingClub 1,585 2.8x 2.3x na 18.6x 15% 20% na 12%Investment Technology Group 711 1.5x 1.4x nm na 4% 5% 1% naOn Deck 518 2.6x 1.4x na 18.8x 40% 93% na 7%Elevate Credit 370 0.5x 0.5x nm 2.7x 16% 19% 0% 17%BinckBank 365 1.9x 2.1x 38.0x na (0%) (13%) 5% naGAIN Capital 344 1.2x 0.9x na 3.6x (27%) 27% na 26%

Trim Mean 6,146 3.9x 3.5x 24.5x 11.7x 12% 18% 28% 33%Median 4,196 2.9x 2.4x 19.1x 12.2x 15% 19% 41% 40%

10x

13x

15x

18x

20x

23x

25x

2.0x

2.8x

3.5x

4.3x

5.0x

5.8x


EV /

EBT

EV /

Reve

nue

5 Year LTM Revenue & EBT Multiples

Market Cap / LTM Revenue Market Cap / LTM EBT

100

130

160

190

220


5 Year M&A Fintech Sector Index vs. S&P 500, base = 100

M&A Tech-enabled Fin Institutions Index S&P 500


11/16/16

LendingTree (NASDAQ:TREE) acquired Iron Horse Holdings (dba: CompareCards) for $130mm. CompareCards is an online platform enabling consumer credit card comparisons, and providing credit education and credit health management solutions. The transaction consideration consists of $85mm cash at closing and up to $45mm of earn-out payments paid during 2017 and 2018.

11/10/16

Intrum Justitia (STO:IJ) acquired 1st Credit for £130mm ($161mm), valuing the Company at an implied 3.9x 2015 EBITDA. 1st Credit provides debt purchase and outsourced debt collection services for banks, credit card providers, utilities, telecoms, and retail companies.


6/28/18

LendingPoint (Kennesaw, GA) raised $53mm in a debt funding round from Paragon Outcomes. Including this round, the company has raised $1.2bn in the past twelve months, including the $600mm credit facility in May 2018. LendingPoint is a direct lender that provides personal loans to customers within 24 hours.

6/26/18

Ezbob (London, UK) raised an undisclosed sum in a Series C funding round led by Honeycomb Investment Trust. In addition to the funding, the company has appointed a new board member, Lindsey McMurray, a highly regarded manager within Honeycomb Investment Trust.

6/8/18 Undisclosed

Strategic Funding (New York, NY) raised $105mm in a debt funding round from undisclosed investors. Strategic Funding plans to use the funds to provide flexibility in business operations. The company provides financing to small- and medium-sized businesses.

JULY 2018

Marlin & Associates advises OpenGamma on multinational strategic investment – includingparticipation from JPX

M&A formed a team of experts to work with management to craft materials that would communicate the complexity and potential of the large and growing market that OpenGamma addresses, the company’s strong value proposition, and its unique approach to penetrate that market. The team at Marlin then worked with the company to identify and reach out to more than a dozen potential partners in four countries. Ultimately the company decided to take in new capital from the Japanese Exchange Group (“JPX”) as well as additional capital from Accel Partners, NEX (formerly known as ICAP), Euclid Opportunities and ex-SunGard CEO Cristóbal Conde.

JPX is a particularly strong new partner for OpenGamma as it provides both needed capital as well as a strong strategic benefit. JPX is a leading exchange group in Asia. Its affiliates include the Japan Securities Clearing Corporation (“JSCC”), a leader in OTC derivatives transactions. JPX’s involvement and investment together with capital from the other investors is expected to facilitate both geographic and product expansion for OpenGamma and help the company address the increasing demand from financial institutionsworldwide for more efficient use of OTC capital.

Ove

rvie

w o

f Tra

nsac

tion

Marlin & Associates acted as OpenGamma’s exclusive strategic and financial advisor for this important transaction, initiated discussions with several parties and worked with the company to negotiate terms, conduct due diligence reviews and complete the transaction. The process involved working with people in the US, UK and Japan as well as OpenGamma’s many stakeholders in disparate locations around the globe which added to the complexity.

M&A

’s R

ole

OpenGamma is a London-based pioneer in open source financial software and a leading provider of innovative, SaaS-based derivatives pricing and risk analytics to some of the world’s largest global banks, central counterparties and buy-side firms. The company was founded in 2009 to bring a better way to price and manage risk associated with the $500 Trillion global Over-The-Counter (“OTC”) derivatives market - offering its pricing and risk models via enterprise software as well as via a flexible and cost-effective API. The company quickly attracted financial backing from some of the world’s premier fintech investors including Accel Partners, Firstmark Capital and ICAP, who appreciated the changes occurring in a market that has historically been privately negotiated and loosely regulated, but also one that is moving to become much more regulated and transparent.

In 2016, management and OpenGamma’s board of directors asked Marlin & Associates to advise the firm in an effort to raise additional capital to continue funding the company’s growth. They wanted a new partner to join with existing investors - one that would understand the business and bring more than just money to the table. They wanted a new partner that also would be strategically positioned to help the company continue to build out its comprehensive portfolio of industry-leading products in this rapidly changing regulatory environment.

Back

grou

nd

CASE STUDIES:



advisor to OpenGamma

London, United Kingdom

Mas NakachiVice Chairman

"Throughout this process, the team at Marlin & Associates acted as our trusted financial and our strategic advisor. With their guidance we were able to navigate a great outcome for all stakeholders. They worked closely with our board and management team to support a complex process involving many parties across multiple geographies. They were invaluable to the process.

JULY 2018

Marlin & Associates' client, Advise Technologies, acquired by Compliance Solutions Strategies, aportfolio company of CIP Capital

M&A had the advantage of knowing both the governance risk and compliance (“GRC”) sector and the players including both strategic firms as well as financial sponsors that have targeted the GRC industry for investment. M&A organized a dedicated team to work closely with Management to identify strengths and weaknesses of the Company, and to develop materials that would seamlessly communicate Advise’s story, strategy and growth potential.

With Marlin’s assistance, Advise had a tremendous amount of companies who indicated strong interest in partnering with Advise and ultimately received multiple offers. After careful consideration of several alternatives, Advise chose to negotiate final terms with Compliance Solution Strategies (“CSS”) a GRC company financed by through CIP Capital, a growth-oriented, middle-market private equity firm. The CSS platform was enhanced with two other acquisitions, Ascendant Compliance Management and The MoneyMate Group. Together these firms will be in a strong position to offer a global platform that provides a comprehensive regulatory reporting, data management, outsourced compliance management services, compliance workflow tools, shareholding disclosure, trade monitoring, trading analytics and cybersecurity solutions.

Ove

rvie

w o

f Tra

nsac

tion

M&A initiated this transaction, advised the Company through all phases of the process from preparation through negotiations, duediligence reviews and the closing - providing guidance on matters such as partner selection, valuation, structure and key terms. M&A worked diligently with the company to help the company craft materials, identify potential partners, negotiate alternative offers with multiple parties and manage the due diligence review process. Marlin & Associates acted as exclusive strategic and financial advisor to the shareholders and managers of Advise Technologies.

M&A

’s R

ole

Advise provides regulatory reporting solutions to hedge funds and investment managers. The company was founded in 2010 by CEO Doug Schwenk. He and current COO/CFO Jeff Faber had worked together at a multibillion dollar hedge fund, with Doug leading the noninvestment side of the business and Jeff in a tech/ops role. Both saw how advances in technology and increasing regulation were converging to create a business opportunity for the right providers. Doug went on to found Advise Technologies in 2010, with Jeff joining the senior team in 2014.

Based in NYC, with offices in Amsterdam, Paris, and London, Advise’s intuitive, easy to use software platform allows clients investment managers and fund administrators) to manage regulatory reporting such as Form PF, AIFMD, CPO-PQR and Form ADV while maintaining complete transparency, accuracy and reliability required by global regulators and authorities.

After six years of strong growth, Advise determined that partnering with a financial sponsor would a logical next step in the company’s evolution. That’s when Advise’s management team approached M&A for assistance in finding a partner that would understand their business and their culture and join with them to help accelerate the company’s growth.

Back

grou

nd

Jeff FaberCOO and CFO

The senior level attention and focus on execution at M&A was key – M&A knew all the right people in our sector and managed the process exceptionally. The team worked tirelessly to ensure that all of our objectives were achieved.

CASE STUDIES:


New York, NY


advisor to Advise Technologies, LLC


New York, NY

JULY 2018

Marlin & Associates' client, M&O Systems, Inc. acquired by Broadridge Financial Solutions, Inc.

M&A knows the financial technology space, its strategic participants, the financial sponsors that target companies in this industry, and the drivers of their interest and value. With that knowledge, M&A organized a dedicated team to work closely with M&O’s management to develop materials that would seamlessly communicate M&O’s unique value proposition, growth potential, strategy,execution plan and financial projections. Among other things, M&A helped to communicate to potential partners the likely positive impact of the US Department Of Labor (DOL)’s new Fiduciary Rule on financial advisors (M&O’s core target market). M&A then worked with the company’s management to conduct a disciplined sale process – coordinating with each of the potential partners toensure that they fully understood the company’s strengths.

After a careful review of its options, M&O’s shareowners agreed to sell the company to Broadridge Financial Solutions, a leadingprovider of technology-driven solutions for broker-dealers, banks, mutual funds and other corporations. M&O solutions complementBroadridge’s wealth offerings; provide an enhanced career path for M&O’s employees; and offer expanded solutions for M&O’s customers.

Ove

rvie

w o

f Tra

nsac

tion

Marlin & Associates advised the company through all phases of the process from preparation through negotiations, due diligence reviews and the closing providing guidance on matters such as partner selection, valuation, structure and key terms. With a relationship spanning more than 10 years, initially, M&A provided only informal guidance. Once timing was optimal, Marlin & Associates worked diligently to help the company craft materials, initiate conversations, negotiate alternative offers with multiple parties, manage the due diligence process and complete final legal documentation swiftly. Marlin & Associates acted as exclusivestrategic and financial advisor to the shareholders and managers of M&O.

M&A

’s R

ole

Based in New York City, M&O Systems, Inc. (“M&O”) provides compensation management and compliance solutions that help broker-dealers and wealth management firms manage broker/advisor compensation, open accounts, support advisors and service clients.

M&A had an ongoing dialog with M&O’s CEO and co-founder Bob Minningham for many years. When he died, his widow, who inherited control of the business, approached M&A for strategic advice. After reviewing the situation, M&A guided M&O on steps to take to better position the company for a sale process. Over the next few years M&A maintained a dialog with the company’s shareowners and management as the company brought in new management and strengthened the firm. When the shareowners were ready, M&A then guided them through a disciplined process that resulted in expressions of potential interests from 8 parties. Ultimately Broadridge Financial Solutions, Inc. (NYSE:BR) was selected as the right partner for the firm, its employees, its customers and its shareowners.Ba

ckgr

ound

Michael BrodeurPresident

Marlin's advice, consultation and leadership throughout the process directly drove the best outcome for our firm. Their deep industry knowledge and close relationships with prospective acquirers provides unparalleled value as well. They are a principally centered and tireless team of professionals.

CASE STUDIES:

New York City, NY

Lake Success, NY

Marlin & Associates acted as exclusive strategic and financial advisor to M&O Systems, Inc.


JULY 2018

New York | Washington, D.C. | Toronto

www.MarlinLLC.com

INVESTMENT BANKING AND STRATEGIC ADVISORY TO THE FINANCIAL TECHNOLOGY AND

INFORMATION SERVICES INDUSTRIES

Documents

Technology MARKET UPDATE - marlinllc.com · in Dotcard for PLN 255mm (~$85mm), • LendingPoint (Kennesaw, GA) raised $53mm in a debt ... and bring the work ethic to get the deal