Autotech M&A Overview 1H2019

THE RACE FOR INNOVATION

At first glance, the stable autotech deal volumes witnessed over the past year tell a benign story. These unexceptional numbers, however, conceal a seismic shift in the makeup of investors and buyers in the race to own the vehicle of the future. Now, new faces such as Apple and Uber abound, while Tier 1 suppliers – previously highly active in the space – have reduced their deal-making activity, at least temporarily. In addition, many corporates are hedging their bets It is not just the core technologies that are at stake earlier by extending their corporate venture capital here. Supporting industries are also growing as a operations to automotive technology. result: for instance, as electric vehicle adoption grows, so too do supporting industries such as automotive Fundamentally, the picture that emerges is one of research and development, battery testing systems, identity: every year, more OEMs expand their product battery rehabilitation and electrification of gas stations. portfolios to fashion themselves as mobility providers in addition to being car manufacturers. They acquire Unsurprisingly, in 1H2019 autonomous vehicle companies that aid the development of complete systems were especially sought-after targets in the solutions, instigating an increasingly competitive M&A market. As far as the winning technology and landscape and driving the development of critical standards go, the future is wide open, making this race future technologies, such as electric vehicles, driverless all the more important to watch over the short- to technology, and new modes of mobility. mid-term.

Total number of Autotech M&A deals 2014-2019

0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

2014 2015 2016 2017 2018 2019

1 | 11 Automotive Technology M&A Overview 2H 2019 M&A SUMMARY

Stable deal volumes In line with the march toward future technologies, In the first half of 2019, the number of deals remained around 10 per cent of recorded deals were linked to stable, with just under 50 transactions recorded in autonomous vehicle technology, either embedded in total. So too did valuation metrics, with the median the car itself or in the form of supporting data sales and EBITDA multiples trending relatively management solutions for autonomous driving. consistently at 1.8x and 15.5x respectively. Meanwhile, ever the pioneer in EV development, Tesla Most activity came from the enterprise application and acquired additional battery know-how by snapping up mobility and fleet management sub-sectors, with 17 Maxwell Technologies, thus strengthening its leading deals each. The largest deal was closed by Uber, as it position in this crucial growth market. acquired the Middle Eastern ride hailing app Careem for $3.1 billion.

60 15.5x 15.5x 13.4x 15.5x 50 13.4x

Transaction volume Transaction 4.7x 2.0x 10 2.1x 1.7x 1.8x

0 1H 2017 2H 2017 1H 2018 2H 2018 1H2019

Our Autotech report covers the two-and-a-half-year period between January 2017 and June 2019. All totals and median values refer to the entire period unless otherwise stated. Median multiples plotted in the graphs refer to the 30-month period prior to and including the half year.

2 | 11 Automotive Technology M&A Overview 2H 2019 TOP ACQUIRERS

236 44

Number of active acquirers Number of acquirers who during the past 30 months made >1 acquisition

Acquisitions Acquirers Three most recent acquisitions in 30 months

Clearplan automotive repossession management SaaS 5 CarsOnTheWeb European online B2B car auctions STRATIM Systems fleet management SaaS

Torc Robotics autonomous driving sensors & software 5 Transvoco French ride sharing mobile app Flinc GmbH ride-sharing mobile app

Quantum Signal robotic & autonomous vehicle system 4 Journey Holding automatic vehicle location SaaS Skinny Labs electric scooter sharing services & app

ELEAD1ONE automotive CRM SaaS 3 Progressus Media mobile marketing SaaS Dasboard Dealership Enterprise dealership analytics reporting SaaS

Thermeon Worldwide trucking hauling scale management SaaS 3 Profit Tools TMS trucking & transportation software & SaaS Creative Information Systems truck hauling scale management SaaS

RedCap Technologies automotive customer logistics SaaS 3 Colimbra data management software & services Autodata UK online automotive technical reference content

Wabco brake manufacturer for commercial vehicles 3 Simi Reality Motion Systems 3D motion detection & analysis software 2getthere autonomous electric passenger & cargo transport vehicles

Sea Pine Technologies vehicle insurance advertising enablement software 2 Bright Box telematics systems & software

3 | 11 Automotive Technology M&A Overview 2H 2019 TRENDS IN AUTOMOTIVE TECHNOLOGY

• Tech giants continue to penetrate • Micromobility solutions embellish autonomous and electric vehicle space urban environments, as providers receive billion-dollar valuations

• Tire manufacturers enter the M&A • Cost of sensors decreases, especially for race, as illustrated by both Bridgestone’s LIDAR technology, as players are closing and Michelin’s respective acquisitions of large fundraises and the market becomes telematics assets ever more competitive

ZF Friedrichshafen acquisitive in 2019 With its strategic acquisition of 2getthere, a next- This transaction was followed two months later by generation provider of autonomous vehicle ZF’s acquisition of Simi, a provider of biokinetic technology & systems, ZF intends to strengthen its perception software used to track passenger foothold in the growth markets of Mobility as a movements,. which it will Service (MaaS), autonomous transportation systems, employ to actively and. vehicle autonomy monitor occupant safety. software. 2getthere’s Finally, ZF’s $7 billion 13 May applications range from offer for Wabco further ACQUIRED driverless electric underlines the acquirer’s 19 Mar transport systems at commitment to scaling its ACQUIRED airports, industrial parks, business across all vehicle and theme parks to classes. dedicated urban transport infrastructure.

4 | 11 Automotive Technology M&A Overview 2H 2019 GEOGRAPHICAL BREAKDOWN

Headquarters of Autotech Headquarters of acquirers targets of European targets RoW Europe 10% 66%

North North America America 29% 56% Europe 34% RoW 5%

of European targets were acquired by European buyers in the last 30 66% months, compared to 29 per cent of targets snapped up by North American investors. This accounts for the majority of deals involving European autotech targets and reflects Europe’s historical strength in the sector. Nevertheless, targets from North America dominated the charts, accounting for just over half of all acquisitions, with Rest of World (mostly Japan) rounding out the total with around one tenth of all deals.

Financial sponsor deal share normalises Private equity transaction share of autotech M&A In 2018, financial sponsors played an outsized role in autotech M&A markets, as 100% almost one quarter of all activity was driven by a private equity. So far this year, this trend has declined slightly, with five autotech 50% transactions being consummated by PE, though the growing maturity of the 0% autotech market coupled with increasingly 2015 2016 2017 2018 1H2019

competitive bids from financial buyers will Private Equity Strategic Buyers PE Share (%) drive further activity.

5 | 11 Automotive Technology M&A Overview 2H 2019 SUB-SECTOR BREAKDOWN

Mobility & Fleet Enterprise Enterprise Applications Management Applications Customer retention & CRM, dealership 29% 31% management systems, automotive PLM software.

Internet Commerce & Content Online vehicle classifieds, vehicle auction websites.

Embedded Software & Systems ADAS, connected car systems, self-driving software. Embedded Internet Mobility & Fleet Management Software & Commerce Ride sharing & hailing, e-mobility, parking Systems & Content applications, fleet management systems. 27% 13%

Tech giants vs traditional auto companies LARGEST DISCLOSED DEALS In February, Amazon led a $700 million financing OF 1H2019 round into the Michigan-based electric vehicle start-up Rivian, that had previously collected money from Ford $3.1 billion Uber Technologies acquires 26 Mar Careem and, most recently, Cox Automotive.

This demonstrates yet again two significant trends: the $1.0 billion Bridgestone acquires TomTom notable market shift to electric driving in general, and 22 Jan (telematics business) the market penetration by tech giants, as Apple, (6.5x EV/S) Dyson, and Google all develop their own autonomous and electric vehicles. Amazon appears to be betting on $320 million Lear acquires Xevo Inc [fka 02 Apr UIEvolution] Rivian to scale up and become a serious competitor to Tesla. $300 million Getaround acquires Drivy This also follows on Amazon’s significant bet on 24 Apr autonomous vehicles as it participated in the $530 million funding round into Aurora, a self-driving car $218 million Tesla acquires Maxwell technology unicorn. Uber, on the other hand, has 04 Feb Technologies been strengthening its geographic reach with the acquisition of Careem for $3.1 billion, the largest $186 million I.D. Systems acquires Pointer 13 Mar Telocation [fka Nexus autotech deal recorded so far in 2019. Telecommunications Systems]

6 | 11 Automotive Technology M&A Overview 2H 2019 ENTERPRISE APPLICATIONS

A challenging market environment aftermarket CRM SaaS, to expand its portfolio for Enterprise applications that support all stages of car service businesses and consumers. ownership continue to gain importance against a Financial investors’ activity on the rise backdrop of declining passenger car sales. Solutions The first half of 2019 recorded three transactions by addressing the customer journey from marketing to private equities, indicating a growing trust in the sale, through to Finance & Insurance and retention, are viability of the market and its ability to generate being pursued by OEMs, software providers and consistent positive cashflows. There is also ample financial investors. For example, in April, Thoma Bravo opportunity for potential “buy and build” strategies, acquired Autodata Solutions, a SaaS and software given the relatively fragmented state of the automotive provider for auto marketing automation and sales enterprise application competitive landscape. management. Thoma Bravo is looking to leverage its expertise to help drive Autodata’s growth (not to be NOTABLE TRANSACTIONS OF 1H2019 confused with Solera’s Autodata). ACQUIRED Insurance companies are also increasingly turning to 05 Jun autotech inorganic growth opportunities, as exemplified by Zurich’s acquisition of Sea Pine 30 Apr Technologies, an advertising enablement software for vehicle insurance providers. This is not the first time 30 Apr Zurich has acquired an autotech company, having last year moved for Bright Box, a connected car software 22 Apr provider, to strengthen its usage-based insurance practice. 25 Feb Given the growing need for aftermarket solutions, Epicor acquired MechanicNet, an automotive .

17 16 15 14

11 Transaction Transaction volume

1H 2017 2H 2017 1H 2018 2H 2018 1H2019

7 | 11 Automotive Technology M&A Overview 2H 2019 INTERNET COMMERCE & CONTENT

Transaction volume drops backed by Softbank, enters the market of seven The first half of 2019 witnessed a significant dip in European countries with this deal. transaction volume in the internet commerce and Stable trend toward vehicle resale platforms content space. This may be because some deals were In late July, IAA acquired Decision Dynamics, an online announced, but not closed. Examples of this include salvage vehicle auction marketplace. IAA is a global the multi-billion take-over of Scout24, a company that online marketplace connecting vehicle buyers and operates digital marketplaces specialising in the sellers, processing over 2.5 million vehicles annually. automotive and real estate sectors. The offer was placed by the investors Hellman & Friedman and The This deal is in line with transactions from previous Blackstone Group – the same investors that had years, moving away from tools solely focusing on the previously listed the company on the stock market. sale of new vehicles and toward a full solution that also However, this transaction – which, if successful, would addresses used vehicles and the aftermarket. Declining represent the largest take-private the German stock new vehicle sales, an uptick in alternative mobility market had ever seen – did not receive necessary adoption, and other shifting consumer behaviour shareholder approval. necessitates more sophisticated online sales and marketing platforms. Conversely, two successful transactions in this space were both led by American buyers. In February, RumbleOn acquired AutoSport-USA, a pre-owned vehicle distributor. RumbleOn operates a growing online marketplace for the acquisition and 04 Feb 04 Apr redistribution of used car inventory to consumers and ACQUIRED ACQUIRED dealers, with AutoSport providing customers access to stock, staff, and the Florida vehicle market.

Secondly, Getaround acquired the Norwegian car rental startup Nabobil.no for $12 million. Getaround, .

9 9 7

2 Transaction Volume

1H 2017 2H 2017 1H 2018 2H 2018 1H2019

8 | 11 Automotive Technology M&A Overview 2H 2019 EMBEDDED SOFTWARE & SYSTEMS

Surge of deals in autonomous driving supports ZF’s strategy to offer integrated safety After the 2018 spike in demand for connectivity systems from a single source. features, 1H2019 registered numerous acquisitions of Tesla further investing in battery expertise autonomous car systems, demonstrating the critical link Earlier this year, Tesla acquired the supplier of between both technologies. ultracapacitor-based energy storage products, Recently, Apple acquired drive.ai, a provider of Maxwell Technologies, for $218 million. Tesla’s autonomous driving sensors and software, in a reported rationale was to secure the valuable IP held distressed sale. Shortly before staff were expected to by Maxwell, as it continues to target its frontrunner be let go, the troubled startup’s autonomous vehicle status in battery technologies. assets were snapped up by the tech giant. Drive.ai was NOTABLE TRANSACTIONS OF 1H2019 once valued at $200 million and belonged to the more ACQUIRED promising startups in the space but struggled to survive 26 Jun the recent wave of consolidation.

Another notable transaction was Uber’s acquisition of 02 Apr data management SaaS for autonomous vehicles, Mighty AI, fuelling its continuous push into the autonomous vehicle space. Uber’s Advanced 02 Apr Technology Group – the division responsible for $320 million developing its AV efforts – secured further funding 29 Mar from Toyota and Denso earlier this year, valuing the unit in excess of $7 billion. 19 Mar Another acquisitive buyer, ZF, invested in the embedded software space by acquiring Simi, a 13 May computer vision company that tracks passenger movements inside the vehicle. This asset . 17 15 13 13

7 Transaction Transaction volume

1H 2017 2H 2017 1H 2018 2H 2018 1H2019

9 | 11 Automotive Technology M&A Overview 2H 2019 MOBILITY & FLEET MANAGEMENT

Big deals happening New player I.D. Systems Mobility and fleet management transactions have I.D.Systems, an American company providing vehicle, boomeranged compared to their slight decline late last container and cargo tracking systems, recently year, reaching a record of 17 transactions. Alongside recorded two transactions in this space. In the first, it the recent developments in micromobility, transactions acquired the US-based assets of CarrierWeb Services in the fleet management space continue to proliferate, in January. In the second, it acquired Pointer Telocation with corresponding deal sizes seeing a notable boost. in March. I.D. Systems aims to gain market share in the growing mobile IoT, connected car, and telematics Tire manufacturers participated in the M&A race for markets. fleet management and monitoring solutions. Michelin, an active player in this market, acquired Masternaut, NOTABLE TRANSACTIONS OF 1H2019 while Bridgestone kickstarted its inorganic expansion ACQUIRED into fleet management by acquiring the telematics arm 16 May of TomTom for $1 billion. The remaining TomTom company will now focus on its mapping and 24 Apr autonomous driving efforts. $300 million

The biggest disclosed deal of 1H2019 – the acquisition 26 Mar of Careem by Uber – clocked in at $3.1 billion. Before $3.1 billion its hotly-anticipated IPO, the company caused a stir by 31 Jan taking over all of Careem’s businesses across the greater Middle East region. Uber is aiming to expand 13 Mar and capitalise on the substantial opportunity in the digital mobility markets of the Middle East. The deal is 04 Jan subject to regulatory approval and is expected to close $1 billion in early 2020.

17 16 15

10 Transaction volume

1H 2017 2H 2017 1H 2018 2H 2018 1H2019

10 | 11 Automotive Technology M&A Overview 2H 2019 CONCLUSION & CONTACTS

Autotech funding and M&A remain healthy for quality Furthermore, we are seeing EV tech, in all forms (vehicle assets. We have seen a slow-down in speculative deals, as and infrastructure) thrive. Proven AV tech with skilled acquirers and investors are becoming better educated teams are also continuing to attract investment from and have more clearly defined investment objectives. inside and outside of the main-stream auto sector (e.g. While this may look like things have plateaued, they have Amazon’s investment into Aurora). not. There is still a very robust market for good Despite the clouds in the sky (declining vehicle sales in technology assets, who will always find a good home at several key markets), we do not anticipate any slowdown an exceptional valuation. In many ways, we feel the slow- in autotech M&A for the remainder of this year or into down in deals with very early-stage technology is helpful early 2020. In fact, we see a bright future for those for all in the sector. It helps firms with great technology working in the customer retention and CRM space, as fully realise the value of what they have created while OEM marketing budgets will be searching for great focusing early-stage autotech firms to continue the solutions to retain current customers and attract new development of their tech. The early-stage teams will get leads. their chance at a proper valuation once they have developed and proven their technology.

About the Author David runs Hampleton Partners’ automotive practice and has over 30 years’ experience in the sector, having previously transacted in various roles including working for a global OEM, serving as CEO of a leading content management supplier to OEMs and dealers around the globe, and working with leading T1 suppliers on advanced connectivity solutions.

David has been completing auto-focused deals for more than 25 years – the last several years with Hampleton Partners – focusing on sell-side M&A, buy-side consultancy including divestment and M&A, as well as raising growth capital in the autotech and AI sectors. David advises and sits on the Board of several autotech and AI firms. David Riemenschneider Director If you are interested in speaking to David about our autotech sector, please reach out using Head of Automotive Practice the email address on this page. [email protected]

About Hampleton Partners Hampleton Partners is at the forefront of international Mergers and Acquisitions advisory for companies with technology at their core.

Hampleton’s experienced deal makers have built, bought and sold over 100 fast-growing tech businesses and provide hands-on expertise and unrivalled international advice to tech entrepreneurs and the companies who are looking to accelerate growth and maximise value.

With offices in London, Frankfurt and San Francisco, Hampleton offers a global perspective with sector expertise in: Automotive Tech, IoT, AI, Fintech, Insurtech, Cybersecurity, VR/AR, Healthtech, Digital Marketing, Enterprise Software, IT Services, SaaS & Cloud and E-commerce.

11 | 11 Automotive Technology M&A Overview 2H 2019 Hampleton produces regular reports on M&A activity in the following sectors

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Hampleton provides independent M&A and corporate finance advice to owners of Autotech, Internet, IT Services, Software and High-Tech Industrial companies. Our research reports aim to provide our clients with current analysis of the transactions, trends and valuations within our focus areas.

Data Sources: We have based our findings on data provided by industry recognised sources. Data and information for this publication was collated from the 451 Research database (www.451research.com), a division of The 451 Group. For more information on this or anything else related to our research, please email the address provided below.

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