M&A ACTIVITY IN THE NORDIC SOFTWARE SECTOR
Quarterly report
Q4 2016 QUARTERLY SOFTWARE REPORT – Q4 2016 19 TRANSACTIONS IDENTIFIED IN Q4/16 (17 IN Q4/15) – TOTAL OF 82 TRANSACTIONS IN 2016 (77 IN 2015)
EXECUTIVE SUMMARY NASDAQ OMX TECHNOLOGY INDEX: Jan 14 – Dec 16
n There were 19 transactions in the software space in the Nordics in Q4/16 vs. 18 in the previous quarter. Thus, we met our expectation of an increase qtr/qtr, although only by 1 1,700 transaction. As in the previous two years, we believe Q1 will be slightly higher. 1,600 n Although we did issue a caveat regarding the the US as a buying territory in the event Mr. Trump won the election*, we actually do not believe that this accounts for the significant 1,500 drop in US buyers in Q4. The observation that Nordic buyers are now in majority is interesting, but should not be expected to be permanent. 1,400
n The OMX Nordic 40 index ended the year on a sad note, and the index is now back to the 1,300 level of January 2014. The good news is that this is not impacting the software -0.1% companies. Our analysis shows that the drop in Q4 is mainly due to Ericsson and Hexagon, 1,200 who both had a dramatic drop during Q4, although for different reasons. In general, Ericssons impact on the tech index during the 3-year period is a big contributor to the 1,100 poor performance of the index. 1,000 n Denmark was by far the most active country in Q4 with 8 transactions, while Norway and Sweden were both at 4. Finland had 3 transactions in the quarter. In Q3/16, the 900 geographic distribution of the deals was very even with Sweden and Finland at 5 deals Jan. 14 Jun. 14 Dec. 14 Jun. 15 Dec. 15 Sep. 16 Dec. 16 each, and Denmark and Norway both at 4.
n During the quarter, Clairfield in Denmark (Nordic M&A) advised the owners of Keepfocus in the sale to private investors. DEVELOPMENT IN NUMBER OF IDENTIFIED TRANSACTIONS n As we predicted in the last newsletter, the PE add-on acquisitions returned with a total of 6 transactions during the quarter. As a result, PE again outnumbered the industrials.
n CHANGE IN METHODOLOGY: To better reflect the emergence of SaaS/cloud models as the prominent platform for any modern software company, and given that many of these are high growth companies, we have decided to stop comparing EBITDA multiples. In addition, we have revised the list of Nordic companies and divided the list of international listed companies into traditional and SaaS/cloud companies for the comparison of revenue multiples. We apologize to those who are enamoured with earnings multiples… 25 24 21 21 21 22 21 n DISCOUNT GAP: As announced in our last edition, The EV/Revenue multiple gap between 20 19 the Nordic and Traditional International listed players is now at 13 %. The gap between 18 17 18 Traditional International players and SaaS/cloud players is at 32 %, while the same gap towards Nordic players is at a full 41 %. It should be noted that most of the listed Nordic players are traditional or hybrid players.
n Please do not hesitate to provide us with feedback on this report and interesting perspectives on the Nordic software players. Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 Q3 16 Q4 16 n We wish all of you a happy 2017! Source: MergerMarket, Factset and Steinvender
* As far as we know, the results in this report have not Page 2 been influenced by Russian hackers… QUARTERLY SOFTWARE REPORT – Q4 2016 OVERVIEW OF Q4 2016 NORDIC SOFTWARE TRANSACTIONS
COMMENTS BREAKDOWN OF DEALS BY EXIT TYPE
n Steinvender has identified 19 Nordic software transactions in Q4 2016
n Approximately 40% of the companies were acquired by industrials which is in line with the historical average PE - add-on 6 n Private equity add-on’s represented 1/3 of the deals which is the highest quarterly shares of transactions since we started recording in 2015. We 8 Industrial expect this to continue to be a significant factor in Nordic software M&A.
n More than 40% of the targets were based in Denmark, whereas Norway, Sweden and Finland experienced more modest activity
n Nearly 60% of the companies are sold to entities in the Nordics, only 2 companies sold to US / Canada 5 PE - platform
BREAKDOWN OF DEALS BY TARGET’S COUNTRY BREAKDOWN OF DEALS BY ACQUIROR’S REGION
Finland Rest of world 3 2
8 Denmark Rest of Europe 4 Sweden 4
11 Nordics
2 4 US / Canada Norway Source: MergerMarket, Factset and Steinvender. Only included deals exceeding MergerMarket size criteria.
Page 3 QUARTERLY SOFTWARE REPORT – Q4 2016 QUARTER-BY-QUARTER DEVELOPMENT IN NORDIC SOFTWARE TRANSACTIONS
BREAKDOWN OF DEALS BY EXIT TYPE BREAKDOWN OF DEALS BY TARGET’S COUNTRY
6% 17% 14% 12% 20% 25% 20% 24% 21% 33% 22% 32% 33% 32% 28% 35% 42% 17% 23% 24% 17% 35% 17% 40% 33% 22% 42% 26% 24% 38% 36% 38% 22% 67% 72% 64% 65% 58% 33% 15% 24% 29% 21% 45% 42% 27% 4% 29% 25% 28% 17% 12% 19% 17% 16% 5% Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016
PE - add-on PE - platform Industrial Sweden Denmark Norway Finland
BREAKDOWN OF DEALS BY ACQUIROR’S REGION NUMBER OF TRANSACTIONS
41% 50% 50% 46% 55% 57% 61% 58%
35% 25% 24 28% 20% 32% 14% 11% 11% 22 21 20 19 18 17 18 21% 21% 17% 20% 24% 22% 18% 24% 8% 11% 6% 5% 0% 0% 5% 6% Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Nordics US / Canada Rest of Europe Rest of World Source: MergerMarket, Factset and Steinvender. Only included deals exceeding MergerMarket size criteria.
Page 4 QUARTERLY SOFTWARE REPORT – Q4 2016 ANNUAL DEVELOPMENT IN NORDIC SOFTWARE TRANSACTIONS
BREAKDOWN OF DEALS BY EXIT TYPE BREAKDOWN OF DEALS BY TARGET’S COUNTRY
9% 16% 25% 30% 30% 30% 24% 25% 24% 27% 30% 33%
67% 60% 23% 51% 26% 18% 17% 14% 20% 3% 2014 2015 2016 2014 2015 2016
PE - add-on PE - platform Industrial Sweden Denmark Norway Finland Iceland
BREAKDOWN OF DEALS BY ACQUIROR’S REGION NUMBER OF TRANSACTIONS
41% 49% 54%
30% 88 29% 14% 77 80
24% 23% 19% 6% 3% 8% 2014 2015 2016 2014 2015 2016 Nordics US / Canada Rest of Europe Rest of World Source: MergerMarket, Factset and Steinvender. Only included deals exceeding MergerMarket size criteria.
Page 5 QUARTERLY SOFTWARE REPORT – Q4 2016 NOTABLE NORDIC SOFTWARE TRANSACTIONS ANNOUNCED DURING Q4 2016
TARGET ACQUIROR DEAL VALUE EV / SALES EV / EBITDA
N/A N/A N/A
N/A N/A N/A
€58m 3.3x 7.0x
€25m 5.4x 21.8x
(TV Business) €110m 3.7x N/A
€64m 8.5x N/A
N/A N/A N/A
N/A N/A N/A
Private Investors N/A N/A N/A
Source: MergerMarket and Steinvender
Page 6 QUARTERLY SOFTWARE REPORT – Q4 2016 OBSERVED TRADING MULTIPLES - CLOUDBASED SOFTWARE CONTINUES TO TRADE AT A SIGNIFICANT PREMIUM
MEDIAN EV / SALES (CURRENT FINANCIAL YEAR) NORDICS Source: Factset and Steinvender
Median: 4.1x
6,3x 5,9x 4,7x 4,4x 4,3x 4,2x 3,8x 3,5x 3,0x 2,9x 2,5x
SimCorp Tobii Micro Hexagon Cxense HMS Network Vitec Basware CLX F-Secure Comptel Systemation Software INTERNATIONAL – «TRADITIONAL SOFTWARE»
Median: 4.7x
8,7x 7,9x 7,7x 6,4x 5,6x 4,7x 4,7x 4,7x 4,2x 4,1x 4,0x
Adobe Autodesk Check Point Intuit Dassault SAP Sage Group Microsoft Oracle Citrix Systems Symantec
INTERNATIONAL – CLOUDBASED/SAAS
Median: 6.9x 10,4x 8,8x 7,9x 7,7x 7,1x 6,9x 6,0x 5,5x 4,9x 4,1x 3,5x
Ultimate ServiceNow Workday GuideWire Atlassian LogMeIn salesforce.com CornerStone J2 Global AthenaHealth PegaSystems Software
Page 7 QUARTERLY SOFTWARE REPORT – Q4 2016 SELECTED SOFTWARE TRANSACTION MULTIPLES – LAST 12 MONTHS
Q4 2016 8,5x User interface software for car infotainment
Q3 2016 6,7x Secure access and identity management
Q4 2016 5,4x Software for planning and BIM collaboration tool
Q4 2016 5,0x Advanced analytics, machine learning and IOT
Q1 2016 5,0x Customer experience management software
4,4x Q2 2016 SaaS ERP Solutions
Q2 2016 4,3x Game development company
Q2 2016 3,3x Design and management of public tenders (SaaS)
Q2 2016 2,4x Narrowband mesh network solutions (IoT)
Q3 2016 2,2x Software for financial services
Q1 2016 2,0x Golden Brick Web browser software for mobile handsets
Q1 2016 1,6x Software for EAM and ESM
Source: Factset and Steinvender
Page 8 QUARTERLY SOFTWARE REPORT – Q4 2016 LIST OF IDENTIFIED NORDIC SOFTWARE TRANSACTIONS IN Q4 2016
# Target Target Country Bidder Bidder Country Date Exit type
1 Frontmatec Denmark SAIC Holding Denmark Oct PE - add-on 2 Qualisys Sweden Vatterleden Invest Sweden Oct PE - platform 3 UVdata Denmark KMD Denmark Oct PE - add-on 4 GolfBox Denmark MSL Solutions Limited Australia Nov Industrial 5 Dinero Regnskap Denmark Visma Norway Nov PE - add-on 6 KK Group Denmark Solix Group Sweden Nov PE - platform 7 Consolidated Financial Holdings Denmark Playtech Isle of Man Nov Industrial 8 Greenbird Integration Technology Norway Statkraft Ventures / ETF UK / Germany Nov PE - platform 9 KeepFocus Denmark Private Investors Denmark Des PE - platform 10 Opera Software (TV Business) Norway Moore Freres US Dec Industrial 11 dRofus Norway Nemetschek Germany Dec Industrial 12 Rightware Corporation Finland Thunder Software Tech. China Dec Industrial 13 Movenium Finland Visma Norway Dec PE - add-on 14 Sinch Sweden CLX Communications Sweden Dec Industrial 15 The Eye Tribe Denmark Facebook US Dec Industrial 16 eSmart Systems Norway Kongsberg Gruppen Norway Dec Industrial 17 ILAB Sweden Cambio Healthcare Systems Sweden Dec PE - add-on 18 ValueFrame Finland Visma Norway Dec PE - add-on 19 Greenbyte AB Sweden Korys Belgium Dec PE - platform
Source: MergerMarket, Factset and Steinvender. Only included deals exceeding MergerMarket size criteria.
Page 9 QUARTERLY SOFTWARE REPORT – Q4 2016
OUR NORDIC PARTNERS ENSURE LOCAL COVERAGE AND MARKET ACCESS
Nordic members of Clairfield International ~40 § Established in 1997 § Oslo location Nordic § 9 professionals § Established in 1992 Professionals § More than 125 transactions § Helsinki location since inception § 12 professionals § More than 200 transactions since inception +400 Completed transactions
§ Established in 2008 § Copenhagen location § 6 professionals § Established in 2009 § More than 35 transactions § Stockholm location Most since inception § 12 professionals experienced § More than 30 transactions since inception team in the Nordics
Page 10 QUARTERLY SOFTWARE REPORT – Q4 2016 A SELECTION OF RECENT CLAIRFIELD NORDIC SOFTWARE AND IT SERVICES TRANSACTIONS
2016 2016 2016 2015 2015
Advisor to Advisor to Advisor to Advisor to Advisor to
on the sale to on the sale to on the sale to on the divestment of on the sale to Lean Systems to Private Investors
ERP Solutions ERP Solutions Mobile payment ERP Solutions Wearable technology
2015 2015 2015 2015 2015
Advisor to Advisor to Advisor to Advisor to Advisor to
on the sale to On the sale to on the sale to on the sale to on the acquisition of
Hosting Baggage handling BIM Software SaaS Data collection automation software
2015 2014 2014 2014 2014
Advisor to Advisor to Advisor to Advisor to Advisor to
on the minority on the sale to on the sale of on the sale to on the sale to investment by to
SaaS ERP Solutions ERP Solutions Insurance Software IT solutions to the chemicals industry
Note: Clearfield International
Page 11 QUARTERLY SOFTWARE REPORT – Q4 2016 IMPORTANT NOTICE
DISCLAIMER
This presentation has been prepared by Steinvender AS (referred to below as “Steinvender”).
The information in this presentation has been obtained from public sources, and is to the best of Steinvender’s knowledge reliable and accurate at the time of issuing the document. The information in the presentation should not be considered to be complete without the addition of the oral information provided by Steinvender when giving the presentation. The information should not be regarded as containing any warranties or representations, expressed or implied, as to the present or future legal or financial positions of any of the companies or entities included in this presentation.
Steinvender reserves the right to update or replace the contents of this presentation without informing the recipient. Recipients should conduct their own investigations and analysis of the business, data and properties described in this document.
This presentation does not constitute an offer to purchase shares or to invest in any of the companies or entities mentioned in the presentation, and should not be interpreted as such.
The contact persons at Clairfield are as follow:
Norway: Finland: Denmark: Sweden: Jarle Mørk Juha Raunio Anders W. Eriknauer Victor Mellgren [email protected] [email protected] [email protected] [email protected] +47 99 23 79 39 +358 40 570 5260 +45 20 10 39 99 +46 70 694 4766
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