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Dear Clients and Friends Our October Report on M&A in the FinTech, Data and Analytics Industry DEAR CLIENTS AND FRIENDS: It’s a Global Industry – Embrace It The FinTech, Data and Analytics world in which we live is not defined by national borders and neither are we. It always amazes us how many people have difficulty accepting this fairly simple concept. A few recent examples include Deutsche Börse’s acquisition of Axioma (We advised Goldman Sachs on its minority investment in Axioma); the Hong Kong Exchange’s recent (now aborted) attempt to acquire the London Stock Exchange (LSE); LSE’s agreement to acquire Refinitiv and our work advising UK- based StatPro Group (LSE: SOG) on its sale to Confluence Technologies in a $230 million transaction with backing by TA Associates. We’re not focused on advising cross-border buyers and sellers; it’s just that we don’t confine our thinking to within geographic borders. We try hard to think globally. Over the past 17+ years about half of our transactions have been across borders – involving clients and counterparties from 27 countries. I wrote a book on the right way to Win on Wall Street. There is a full chapter devoted to the need to “Seek Foreign Entanglements.” We’re are happy to advise on US-to-US deals if that’s where the market leads us. (We’ve announced six US deals in the past 12 months.) But we’re working on another six that are international – including three that we’ve announced recently: London- based TradingScreen’s sale of a minority interest in its UK-based subsidiary BidFX to the Singapore Exchange (SGX); the sale of P2Sample to Stockholm-based CINT; and the sale of London-based Prequin Solutions to Dynamo (Boston). Want more examples of our global industry? According to Pitchbook, so far this year, 119 FinTech companies raised $2.1 billion in growth capital out of London – behind San Francisco’s $3 billion; but surpassing New York’s 101 companies that raised $1.9 billion in the same period. Belgium-based FinTech firms raised $881 million and Stockholm firms raised $735 million year to date. As you will see from our report found here, recent m&a transactions in the seven segments of the FinTech, Data and Analytics world that we follow and sometimes lead involved companies all over the globe. It’s a global industry and we’re pleased to be a part of it. • Q2 Holdings (Austin, TX) agreed to buy Lender Performance • Broadridge agreed to acquire Financial Database Services Group (Charlotte, NC) for $510 million (Banking software) (Processing and Compliance Software for broker-dealers) • Verafin (Canada based) raised C$515mm in equity and debt • Bursa Malaysia Berhad acquires remaining 25% stake in funding round led by Spectrum Equity Bursa Malaysia Derivatives that it did not already own from • BharatPe (New Delhi, India) raised $50mm in an equity CME Group funding round led by Ribbit Capital & Steadview Capital • PayPal acquired a 70% stake in GoPay (China based) • Innovid agreed to acquire Herolens (Ad-Tech) • Confluence acquires StatPro (UK based) for $230mm (M&A • NASDAQ agreed to acquire Center for Board Excellence Client) (Compliance solutions) Recently we were the recipients of three awards of which we are particularly pleased: ACQ5 – TMT Advisory Firm of the Year; ACQ5 – Gamechanger of the Year (Ken Marlin); ACQ5 – Middle-Market Investment Bank of the Year. We will be in attendance at the AFP 2019 Treasury & Finance Annual Conference in Boston, MA October 20th - 23rd, 2019, The Futures and Options Expo in Chicago October 29th – 31st and Money 2020 in Las Vegas October 27th – 29th., if you would like to arrange a meeting at any of these upcoming events, please contact Natalie Goins ([email protected]). See below for our latest FinTech, Data and Analytics M&A Update. Sincerely, Ken Marlin| Managing Partner Marlin & Associates | www.marlinllc.com Marlin & Associates is one of the most active investment banking and strategic advisory firms providing counsel to worldwide buyers and sellers of middle-market Financial Technology; Data and Analytics firms. Headquartered in New York City, with offices in Washington, D.C., Chicago, and Toronto, Marlin & Associates has won numerous awards including the “Middle-Market Investment Bank of the Year” “Boutique Investment Bank of The Year”; Capital Raising Advisory Firm of the Year”; “Middle-Market Financing Agent of the Year – Equity”; and “TMT Advisory Bank of the Year.” OCTOBER 2019 Banking Software & Processors Public Market Data 5 Year LTM Revenue & EBITDA Multiples 5 Year M&A Banking Software Index vs. S&P 500, base = 100 6. 9x 41x 270 6. 2x 37x 240 5. 5x 33x 210 4. 8x 29x 180 4. 1x 25x 150 EV / EBITDA EV / Revenue EV 3. 4x 21x 120 2. 7x 17x 90 2. 0x 13x 60 Oct-14 Oct-15 Oct-16 Oct-17 Oct-18 Oct-19 Oct-14 Oct-15 Oct-16 Oct-17 Oct-18 Oct-19 EV / LTM Revenue EV / LTM EBITDA M&A Banking Software Index S&P 500 Company Market Enterprise EV / Revenue EV / EBIT DA Revenue Growth EBITDA M ar gin (USD millions) Cap Value CY2018A CY2019E CY2018A CY2019E CY2018A CY2019E CY2018A CY2019E A DP 70,411 70,716 5.1x 4.9x 21.9x 19.4x 8% 5% 23% 25% Intuit 69,144 66,840 10.7x 9.5x 37.6x 26.7x 11% 13% 29% 35% FIS 43,413 52,195 6.2x 5.0x 21.9x 11.9x (3%) 24% 28% 42% Fiserv 41,395 47,063 8.1x 4.6x 24.8x 12.0x 2% 76% 33% 38% Temenos 12,186 12,747 15.2x 12.7x 52.7x 32.1x 14% 19% 29% 40% Jack Henry & Associates 11,263 11,169 7.0x 7.0x 22.8x 21.6x 10% 1% 31% 32% Black Knight 4,164 5,476 4.9x 4.6x 15.1x 9.4x 6% 6% 33% 49% Oracle Financial Services 3,838 3,359 5.0x 4.7x 12.1x na 7% 6% 41% na ACI Worldw ide 3,721 5,055 5.0x 3.8x 30.0x 13.9x (1%) 31% 17% 27% Q2 Holdings 3,547 3,377 14.0x 10.7x na nm 24% 30% na 6% Bottomline Technologies 1,645 1,657 4.0x 3.9x 39.8x 16.9x 13% 4% 10% 23% Virtusa 1,114 1,458 1.2x 1.1x 15.8x 11.9x 24% 9% 8% 9% Aptitude Softw are Group 404 322 3.8x 4.6x 15.7x 21.8x 12% (18%) 24% 21% NCR Corporation 300 4,482 0.7x 0.7x 5.5x 4.2x (2%) 4% 13% 16% Trim Mean 16,320 17,906 6.2x 5.3x 23.4x 15.6x 9% 16% 24% 28% Median 4,001 5,266 5.1x 4.6x 21.9x 13.0x 9% 8% 28% 27% Recent Activity Date Acquirer(s) / Investor(s) Target / Issuer Description Announced Q2 Holdings, Inc. (Austin, TX) has agreed to buy Lender Performance Group QuantGroup (Beijing, China) raised $72mm in a Series C round of funding led by new (Charlotte, NC) , which is known as PrecisionLender. The deal is valued at $510 investor Sunshine Insurance Group, and including participation from Guosen 10/1/1911/28/16 million. Lender Performance Group is backed by Insight Venture Partners and Hongsheng Investment Co., Fosun Capital, and other undisclosed investors. Georgian Partners and provides a pricing and profitability platform for commercial QuantGroup provides online financial services in China. banks. LendingTree (NASDAQ:TREE) acquired Iron Horse Holdings (dba: CompareCards) Continuity Engine (New Haven, CT) acquired TraceRisk (Lebanon, Ohio) for an for $130mm. CompareCards is an online platform enabling consumer credit card undisclosed sum. TraceRisk caters to risk management problem of community banks 9/30/1911/16/16 comparisons, and providing credit education and credit health management solutions. and provides a 360-degree view to analyze risk with multiple perspectives, along with The transaction consideration consists of $85mm cash at closing and up to $45mm of 3000+ key risk indicators and 68+ risk subjects. earn-out payments paid during 2017 and 2018. Meta Financial Group (NASDAQ:CASH) acquired Specialty Consumer Services (SCS)Minsait for (Alcobendas, $54mm. SCS Spain) offers acquired a loan management Afterbanks (Madrid, platform Spain) and a forproprietary an undisclosed 9/25/1911/10/16 underwritingsum. Afterbanks’ model technology that are primarily allows data used from to deliver different consumer banks to tax be advancesretrieved andand otheraggregated consumer quickly credit and services. payments The to transactionbe initiated. consideration consists of approximately $15mm at closing, with potential for additional contingent payments. Sources: Marlin & Associates, Capital IQ, and public sources. All market and operating data are as of 10/1/19. These companies are only a sample of firms in the sector as M&A defines it. M&A calculates Trim Mean and Median multiples for the sector over time using data from a set of companies that M&A believes to be reasonable and may not be identical to the set reflected above. Trim Mean excludes the highest and lowest 02 multiple of the data set. OCTOBER 2019 Capital Markets Software & Services Public Market Data 5 Year LTM Revenue & EBITDA Multiples 5 Year M&A Capital Markets Index vs. S&P 500, base = 100 5. 5x 28x 195 5. 0x 25x 180 4. 5x 165 4. 0x 22x 150 3. 5x 135 3. 0x 19x EV / EBITDA EV / Revenue EV 2. 5x 120 16x 2. 0x 105 1. 5x 13x 90 Oct-14 Oct-15 Oct-16 Oct-17 Oct-18 Oct-19 Oct-14 Oct-15 Oct-16 Oct-17 Oct-18 Oct-19 EV / LTM Revenue EV / LTM EBITDA M&A Capital Markets Index S&P 500 Company Market Enterprise EV / Revenue EV / EBITDA Revenue Growth EBITDA Margin (USD millions) Cap Value CY2018A CY2019E CY2018A CY2019E CY2018A CY2019E CY2018A CY2019E IHS Markit 27,481 32,425 8.1x 7.3x 24.5x 18.4x 6% 5% 33% 40% Broadridge 14,658 15,855 3.7x 3.6x 19.5x 16.7x 1% 2% 19% 21% SS&C Technologies 13,728 21,595 6.3x 4.7x 19.6x 12.0x 2% 2% 32% 39% Computershare 5,926 7,363 3.2x 3.2x 11.9x 11.0x 5% 0% 27% 29% SimCorp 3,550 3,550 8.4x 7.1x 30.3x 23.3x 11% 18% 28% 31% Envestnet 3,004 3,630 4.5x 4.0x 41.7x 18.9x 19% 10% 11% 21% IRESS 1,355 1,527 4.9x 4.5x 20.6x 17.3x 8% 9% 24% 26% First Derivatives 763 780 3.0x 2.7x 25.3x 15.0x 19% 12% 12% 18% Linedata Services 220 319 1.7x 1.7x 8.0x 6.7x (3%) (1%) 21% 25% Trim Mean 6,141 7,757 4.8x 4.3x 21.7x 15.6x 7% 6% 23% 28% Median 3,550 3,630 4.5x 4.0x 20.6x 16.7x 6% 5% 24% 26% Recent Activity Date Acquirer(s) / Investor(s) Target / Issuer Description Announced OpenGammaConfluence (Pittsburgh, (London, UK)PA) raisedagreed £7.6 to acquire mm in StatProgrowth funding(London, roundUK) ledfor $230mm,by Dawn Capitalvaluing LLP,the company and that atincluded an implied return 3.4x investors LTM revenue CME Ventures, and 28.1x Accel, LTM EBITDA.and angel StatPro provides a comprehensive range of portfolio management solutions including portfolio 9/20/194/3/19 investor Cristóbal Conde.
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