Quarterly Software Report Q4 2017
STOCKHOLM OSLO HELSINKI NORDHAVEN STOCKHOLM OSLO HELSINKI NORDHAVEN STOCKHOLM OSLO HELSINKI NORDHAVEN STOCKHOLM OSLO HELSINKI STOCKH 21 TRANSACTIONS IDENTIFIED IN Q4/17 (19 IN Q4/16) – TOTAL OF 95 TRANSACTIONS IN 2017 (80 IN 2016)
NASDAQ OMX TECHNOLOGY INDEX: Jan 14 – Dec 17 EXECUTIVE SUMMARY 1,700 ▪ As we projected after the disappointing Q3, the market did return to a growth path in Q4 1,600 with a total of 21 software transactions, 2 more than Q4/16. ▪ This brought the total for the year to 95 transactions, up 20 % from the previous year. 1,500 ▪ Also this year the OMX Nordic 40 index ended the year on a sad note. The root cause is 1,400 again to be found outside of the software space, with companies like Nokia dropping about 20 % and Acando being down about 10 %, while software companies did a much 1,300 better showing with f.ex. Basware being up 15 %. 1,200 ▪ As a result of the limited impact of software in the Nordic Tech Index, Nordhaven has decided to introduce our own Nordic software index, which will be launched in the 1,100 Q1/2018 report. ▪ Quite surprisingly (and probably by chance…) there were no deals announced in Denmark 1,000 in the quarter, while Sweden again topped the list with 10 deals. Norway had 8 and 900 Finland 3. Jan. 14 Jun. 14 Dec. 14 Jun. 15 Dec. 15 jun. 16 dec. 16 jun. 17 dec. 17 ▪ Private equity buyers were back in the drivers seat in the quarter, completing 12 of the 21 deals. ▪ Nordic buyers dominated in Q4 with 15 of the 21 deals, partially driven by private equity. DEVELOPMENT IN NUMBER OF IDENTIFIED TRANSACTIONS
▪ DISCOUNT GAP: As we have projected, the discount gap between the traditional and the cloud-born companies has now been closed, as both categories are now priced at 6.1 x Revenue. Consequently, we will merge the international software companies going forward into one group. ▪ The Nordic discount is now 40 % compared with international software companies. This should imply transaction willingness among industry trade buyers, or upside potential for PE in taking the Nordic companies “outside their comfort zone”… 33 28 25 ▪ Please do not hesitate to provide us with feedback on this report and interesting 22 24 perspectives on the Nordic software players. 21 21 21 20 20 21 18 18 17 19 13 ▪ We wish all of you good luck in the Olympic Games! Our estimate is that there will be more Norwegian medals in the Olympics than the number of software transactions in Q1/2018. If the opposite is true, the software M&A market will be very busy… Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17
2 OVERVIEW OF Q4 2017 NORDIC SOFTWARE TRANSACTIONS
COMMENTS BREAKDOWN OF DEALS BY EXIT TYPE
▪ Nordhaven has identified 21 Nordic Software transactions in Q4 2017 PE - add-on 5 ▪ Approximately 40% of the companies were acquired by industrials which is lower than the historical average 9 Industrial ▪ Strong activity from Private Equity, with platforms investments representing 1/3 of the deals and add-on investments 1/4 of the deals
▪ Nearly 50% of the targets were based in Sweden and nearly 40% were based in Norway – modest activity in Finland and no deals announced in Denmark
▪ Nearly 3/4 of the companies are sold to entities in the Nordics, thus limited 7 activity from companies outside of Europe PE - platform
BREAKDOWN OF DEALS BY TARGET’S COUNTRY BREAKDOWN OF DEALS BY ACQUIROR’S REGION Denmark Finland Rest of world 0 3 Rest of Europe 0 5 Norway 8
US / Canada 1
10 15 Sweden Nordics
3 Source: Merger Market and Nordhaven analysis QUARTER-BY-QUARTER DEVELOPMENT IN NORDIC SOFTWARE TRANSACTIONS
BREAKDOWN OF DEALS BY EXIT TYPE BREAKDOWN OF DEALS BY TARGET’S COUNTRY 0% 6% 12% 25% 25% 24% 25% 28% 21% 33% 22% 32% 38% 36% 42% 42% 46% 48% 17% 14% 52% 33% 22% 26% 30% 42% 0% 38% 29% 21% 72% 38% 22% 31% 58% 61% 62% 25% 38% 21% 18% 43% 27% 42% 36% 4% 29% 28% 15% 20% 17% 16% 18% 9% 8% 14% Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17
PE - add-on PE - platform Industrial Sweden Denmark Norway Finland
BREAKDOWN OF DEALS BY ACQUIROR’S REGION NUMBER OF TRANSACTIONS
46% 46% 55% 58% 58% 69% 68% 71% 33 25% 28 15% 11% 6% 31% 24 0% 20 19 21 5% 17 30% 25% 21% 25% 21% 25% 8% 13 24% 15% 8% 11% 4% 5% 6% 4% 6% 0% Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Nordics US / Canada Rest of Europe Rest of World
4 Source: Merger Market and Nordhaven analysis ANNUAL DEVELOPMENT IN NORDIC SOFTWARE TRANSACTIONS
BREAKDOWN OF DEALS BY EXIT TYPE BREAKDOWN OF DEALS BY TARGET’S COUNTRY
9% 16% 17% 25% 31% 30% 30% 24% 42% 25% 24% 35% 28% 30% 33% 20% 67% 60% 24% 18% 51% 48% 26% 25% 20% 17% 14% 13%
2014 2015 2016 2017 2014 2015 2016 2017
PE - add-on PE - platform Industrial Sweden Denmark Norway Finland
BREAKDOWN OF DEALS BY ACQUIROR’S REGION NUMBER OF TRANSACTIONS
41% 49% 54% 62%
88 95 30% 77 80 29% 16% 15% 24% 23% 19% 18% 6% 3% 8% 5% 2014 2015 2016 2017 2014 2015 2016 2017 Nordics US / Canada Rest of Europe Rest of World
5 Source: Merger Market and Nordhaven analysis NOTABLE TRANSACTIONS DURING Q4 2017
TARGET ACQUIROR REVENUE (MEUR) SELLER
Document sharing software 9
Enterprise software Founders 6
Financial reconciliation software 8
Finance and payment solution Founders software 4
Music software 0.1
Application manager for Founders Freight Forwarders 4
Mobile parking and payment solutions 33
Micro-life insurance products for mobile operators 1
Software solutions for 3D 5 Founders simulation
Source: Merger Market and Nordhaven analysis 6 SELECTED SOFTWARE TRANSACTION MULTIPLES (EV / SALES) – LAST 12 MONTHS
Q1 2017 5,8x Software for telecom expense management
Q2 2017 5,7x Software for strategic sourcing
Q4 2017 4,6x Software for document sharing
Q4 2017 4,0x Software for customs clearance and freight forw.
Q2 2017 4,0x Software for 3D simulation and training
Q3 2017 3,8x Software for documentation of chemicals
Q2 2017 3,6x Software for vehicle trip logs / fleet mgmt.
Q1 2017 3,5x Telecom software provider
Q4 2017 3,1x Software for payment solutions
Q1 2017 2,0x Online marketplace for professional services
Q3 2017 1,8x Software for smart grid / customer interaction
Q3 2017 1,2x Open-source software for web design
Source: Merger Market and Nordhaven analysis 7 OBSERVED TRADING MULTIPLES - DISCOUNT GAP FOR TRADITIONAL VS CLOUD ELIMINATED, WHILE NORDIC COMPANIES ARE STILL SIGNIFICANTLY LOWER MEDIAN EV / SALES - CURRENT FINANCIAL YEAR (2018E) NORDICS
Median: 3.6x
5,4x 5,1x 4,4x 4,3x 4,3x 3,0x 2,9x 2,6x 2,5x 1,3x
SimCorp Hexagon HMS Network Basware Micro Vitec Software F-Secure Tobii Cxense CLX Systemation Communication INTERNATIONAL – «TRADITIONAL SOFTWARE» 10,8x 10,0x
7,9x 7,4x 6,4x 6,1x Median: 6.1x 5,0x 4,9x 4,7x 4,5x 4,2x
Adobe Autodesk Check Point Intuit Dassault Microsoft Sage Group Oracle Citrix Systems SAP Symantec
INTERNATIONAL – CLOUDBASED/SAAS
Median: 6.1x 13,5x 9,3x 8,3x 8,2x 6,4x 6,1x 5,4x 4,4x 4,1x 4,1x 3,7x
Ultimate ServiceNow Workday GuideWire salesforce.com Atlassian LogMeIn CornerStone PegaSystems AthenaHealth J2 Global Software 8 Source: Merger Market and Nordhaven analysis LIST OF IDENTIFIED NORDIC SOFTWARE TRANSACTIONS IN Q4 2017
# Target Target Country Bidder Bidder Country Date Exit type
1 Admincontrol Norway Visma Norway October PE - platform 2 FEO Media Sweden MAG Interavtive Sweden October Industrial 3 Computational Industry Technologies Norway DNV Global Norway October Industrial 4 Adfenix Sweden Industrifonden Sweden October PE - platform 5 Adra Software Norway Trintech US November PE - add-on 6 Databyrån for infobehandling Sweden CSAM Health Norway November PE - add-on 7 Konsulent Data & Restaurant Norway OpenSolutions Nordic Sweden November PE - add-on 8 Tacton Systems Sweden Kirk Kapital / GRO Capital Denmark November PE - platform 9 Vidispine Sweden Arvato Systems Germany November Industrial 10 Odin Kapital Norway Melin Medical Norway November Industrial 11 Soundtrap Sweden Spotify Sweden November PE - add-on 12 Digpro Sweden Litorina Sweden November PE - platform 13 IStone Sweden Columbus Denmark November Industrial 14 Propentus Finland Cygate Finland November Industrial 15 Emma Systems Norway Vind Lv Norway December PE - platform 16 Easy Park Norway Vitruvian Partners UK December PE - platform 17 Maritech Systems Norway Broodstock Norway December PE - platform 18 Atollic Sweden STMicrolectronics Netherlands December Industrial 19 Milvik AB (minority stake) Sweden Allianz Germany December Industrial 20 Visual Components Finland KUKA AG Germany December Industrial 21 Finnpos Systems Finland OpenSolutions Nordic Sweden December PE - add-on
9 Source: Merger Market and Nordhaven analysis We are the leading corporate finance advisor in the Nordic market
40 500+ 300+
Professionals at Years of combined Transactions your service experience advised
150+ 34
Equity-based International incentives designed partner offices
10 International network - liste
Nordhaven Corporate Finance has been the exclusive partner of Clairfield International in Sweden, Finland and Norway since 2012.
Through Clairfield International, we have local partners in more than 20 countries around the world.
Together we are stronger.
11 Nordhaven team HELSINKI OSLO STOCKHOLM Eteläranta 12 H. Heyerdahls gate 1 Riddargatan 13A +358 207 613 910 +47 215 070 00 +468 599 226 96
STOCKHOLM OSLO HELSINKI NORDHAVEN STOCKHOLM OSLO HELSINKI NORDHAVEN STOCKHOLM OSLO HELSINKI NORDHAVEN STOCKHOLM OSLO HELSINKI STOCKH