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Morgan Partners 2014 Q2

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Morgan Partners 2014 Q2 QUARTERLY FINANCIAL TECHNOLOGY MARKET EXECUTIVE BRIEFING Analysis Through Q2 2014 July 7, 2014 Private and Confidential This communication is provided for informational purposes only, is not a formal confirmation of any particular transaction, and should not be regarded as an offer to sell or solicitation to buy any financial instrument or service. Morgan Partners LLC accepts no liability whatsoever arising directly or indirectly from the use of this document, and offers no warranty in relation to the accuracy or completeness off its contents. Unauthorized distribution without prior consent from Morgan Partners LLC is strictly prohibited. Morgan Partners LLC is a broker-dealer registered with the Securities and Exchange Commission and is a FINRA / SIPC member firm. M ORGANP ARTNERS. COM T HE FINANCIAL TECHNOLOGIES INVESTMENT BANK Contents Overall Market Performance 3 Sub-sector Comparison 6 Sub-sector Analyses 7 - 15 Capital Markets Technology 7 Insurance Technology 9 Data & Analytics 11 Service Providers 13 Technology-led Traditional Financial Institutions 15 Contact Information 16 M ORGANP ARTNERS. COM 2 B OSTON ✜ CHARLOTTE Fintech Sub-sector Performance: Trailing Year1 70% 60% 50% 40% 30% 31% 28% 26% 21% 20% 20% 17% 10% 0% -10% S&P 500 Capital Markets Technology Insurance Technology Data & Analytics Service Providers Technology-led Financial Institutions ! Excluding Insurance Technology, financial technology has notably outperformed the broader market in the last year ! Traditional financial institutions have slightly lagged the broader market and closely tracked the S&P 500 1 Capital Markets Technology, Insurance Technology, Data & Analytics, Service Provider, and Technology-led Financial Institution performance reflects the constituents on pages 7, 9, 11, 13, and 15 of this briefing, respectively, and are calculated as the market cap-weighted daily percentage price change from the base value for each constituent. Constituents must have pricing data for the entire measurement period for inclusion in the aggregate. Source: S&P CapitalIQ M ORGANP ARTNERS. COM 3 B OSTON ✜ CHARLOTTE Fintech Sub-sector Performance: Year to Date1 15% 10% 7% 5% 3% 3% 2% 0% 1% -5% -10% -10% -15% -20% S&P 500 Capital Markets Technology Insurance Technology Data & Analytics Service Providers Technology-led Financial Institutions ! Financial technology companies in general have underperformed the market year-to-date in 2014 ! Volatility in Insurance Technology is due to significant price swings for Quindell PLC, which has traded between roughly $3 and $11 per share during 2014 1 Capital Markets Technology, Insurance Technology, Data & Analytics, Service Provider, and Technology-led Financial Institution performance reflects the constituents on pages 7, 9, 11, 13, and 15 of this briefing, respectively, and are calculated as the market cap-weighted daily percentage price change from the base value for each constituent. Constituents must have pricing data for the entire measurement period for inclusion in the aggregate. Source: S&P CapitalIQ M ORGANP ARTNERS. COM 4 B OSTON ✜ CHARLOTTE Corporate Cash and Technology M&A Activity S&P 500 Total Cash Balance ($ billions) vs. Tech M&A Volume $1,800 1000 $1,600 900 800 $1,400 700 $1,200 600 $1,000 500 $800 400 $600 300 $400 200 $200 100 $0 0 S&P 500 Cash (left axis) All Tech Quarterly M&A Volume (right axis) ! Large cap US corporate cash balances are up 51% since 2008 levels, from $1 trillion in January 2008 to $1.5 trillion in March 2014 ! Corporate cash balances are a leading indicator of M&A activity ! In the current low interest rate environment, we expect that acquisitions will continue to be a use of these excess balances Source: S&P CapitalIQ. S&P 500 constituents as of June 2014 M ORGANP ARTNERS. COM 5 B OSTON ✜ CHARLOTTE Sub-sector Comparison Enterprise Value / LTM Revenue1 Data & Analytics 4.3X Capital Markets Technology 3.1X Service Providers 2.1X Financial Technology Technology Financial Insurance Technology 1.9X Tech-led Traditional Financial Institutions 2.3X S&P 500 2.5X Enterprise Value / LTM EBITDA1 Capital Markets Technology 13.6X Data & Analytics 13.2X Service Providers 10.5X Financial Technology Technology Financial Insurance Technology 7.6X Tech-led Traditional Financial Institutions 13.3X S&P 500 11.3X ! Within fintech, the Capital Markets Technology and Data & Analytics sub-sectors are trading at the most favorable multiples 1 Enterprise value, revenue and EBITDA are universe medians drawn from publicly traded companies as of June XX, 2014, where the constituents of each sub-sector are those on pages 7 – 11 of this briefing. LTM denotes latest 12 months. Source: S&P CapitalIQ M ORGANP ARTNERS. COM 6 B OSTON ✜ CHARLOTTE Capital Markets Technology: Public Company Statistics Median Revenue and EBITDA Multiples 4.5x 16.0x 4.0x 14.0x 3.5x 12.0x 3.0x 10.0x 2.5x 8.0x 2.0x 6.0x 1.5x 4.0x 1.0x 0.5x 2.0x 0.0x 0.0x Enterprise Value / LTM Revenue (left axis) Enterprise Value / LTM EBITDA (right axis) $ in millions except per share data LTM Performance Revenue Growth EV / Revenue EV / EBITDA YTD Price Enterprise EBITDA Company Chg Value Revenue EBITDA Margin 2014 E 2013 LTM 2014 E LTM 2014 E Fidelity National Information Services, Inc. 4% 19,967 6,113 1,578 26% 5% 5% 3.3x 3.1x 12.7x 10.3x Fiserv, Inc. 5% 18,574 4,896 1,423 29% 5% 9% 3.8x 3.7x 13.1x 11.3x Wolters Kluwer NV 4% 11,436 4,909 1,227 25% 0% 4% 2.3x 2.3x 9.3x 9.4x Informa plc -12% 6,323 1,876 610 32% 4% 4% 3.4x 3.2x 10.4x 10.3x SS&C Technologies Holdings, Inc. 2% 4,318 725 287 40% 8% 29% 6.0x 5.6x 15.0x 13.5x DST Systems Inc. 3% 4,188 2,660 425 16% -25% 3% 1.6x 2.1x 9.8x 9.0x Advent Software, Inc. -3% 1,926 387 72 19% 4% 7% 5.0x 4.8x 26.8x 14.1x Envestnet, Inc. 23% 1,613 274 29 10% 38% 54% 5.9x 4.8x 56.1x 30.5x SimCorp A/S -12% 1,354 311 76 24% 7% 12% 4.4x 4.1x 17.9x 15.8x IRESS Limited -7% 1,347 225 58 26% 44% 4% 6.0x 4.2x 23.1x 13.3x Fidessa group plc 1% 1,278 462 90 19% 5% 2% 2.8x 2.6x 14.2x 9.7x Investment Technology Group Inc. -16% 608 534 50 9% 0% 5% 1.1x 1.2x 12.0x 5.3x First Derivatives plc -22% 349 117 15 12% 23% 26% 3.0x 2.6x 23.8x 14.5x Linedata Services SA 0% 288 221 48 22% 0% 16% 1.3x 1.3x 6.0x 5.3x Brady plc 10% 95 49 3 6% 16% 6% 2.0x 1.7x 34.3x 9.6x StatPro Group plc 11% 95 54 9 16% 3% 3% 1.8x 1.7x 10.9x 11.6x Mean 4,610 1,488 375 21% 8% 12% 3.3x 3.1x 18.5x 12.1x Median 1,484 425 74 21% 5% 6% 3.1x 2.9x 13.6x 10.8x Source: S&P CapitalIQ M ORGANP ARTNERS. COM 7 B OSTON ✜ CHARLOTTE Capital Markets Technology: Select Transactions Q2 2014 Transactions ($ millions) Target Statistics Announced Transaction Purchase Implied Acquirer Target Revenue EBITDA Date Type Price Ent. Value 6/20/2014 Genstar Capital, LLC Asset International, Inc. Merger/Acquisition 6/18/2014 SR Labs, Inc. NYSE Technologies, Inc., Wombat Merger/Acquisition Financial Software 5/29/2014 Morningstar Inc. HelloWallet, LLC Merger/Acquisition 39.0 5/5/2014 FIS Wealth Management Services, Reliance Financial Corporation Merger/Acquisition 110.0 110.0 Inc. 4/16/2014 Fair Isaac Corporation Karmasphere Inc. Merger/Acquisition 4/16/2014 Wellington; Sands Capital; LendingClub Corporation Private Placement 120.5 BlackRock; T. Rowe Price 4/14/2014 Goldman Sachs; Blackstone Ipreo Holdings LLC Merger/Acquisition 4/9/2014 Edison Venture Fund TraderTools Inc. Private Placement 4/4/2014 Pico Quantitative Trading, LLC SpryWare LLC (nka:Pico Merger/Acquisition Technology Solutions) 4/1/2014 Morningstar Inc. ByAllAccounts, Inc. Merger/Acquisition 28.0 28.0 4/1/2014 FolioDynamix, Inc. GlobalBridge, Inc. Merger/Acquisition Notable Transactions 6/18/2014: SR Labs buys Wombat Financial from Intercontinental Exchange Wombat is a global leader in high performance financial market data management solutions offering customers comprehensive, end-to-end solutions for electronic trading and connectivity management • SR Labs, Inc. provides low latency market data and exchange connectivity solutions for the financial industry • Wombat’s consolidated data feeds, managed services, and DART entitlements are a natural complement to SR Labs’ global exchange coverage, market data cache, and low latency and institutional software solutions • NYSE Euronext previously bought Wombat for $200M in 2008 4/1/2014: Morningstar buys ByAllAccounts from Castile Ventures and Commonwealth Capital Ventures ByAllAccounts provides innovative data aggregation technology for financial applications • Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia • Morningstar expect this acquisition to enhance many of its key solutions across its core customer groups, particularly bolstering offerings that support an advisor’s workflow • ByAllAccounts has about 60 employees based primarily in Massachusetts. James Carney, president and CEO, will continue to lead the business Source: S&P Capital IQ and publicly available records M ORGANP ARTNERS. COM 8 B OSTON ✜ CHARLOTTE Insurance Technology: Public Company Statistics Median Revenue and EBITDA Multiples 3.0x 16.0x 14.0x 2.5x 12.0x 2.0x 10.0x 1.5x 8.0x 6.0x 1.0x 4.0x 0.5x 2.0x 0.0x 0.0x Enterprise Value / LTM Revenue (left axis) Enterprise Value / LTM EBITDA (right axis) $ in millions except per share data LTM Performance Revenue Growth EV / Revenue EV / EBITDA YTD Price Enterprise EBITDA Company Chg Value Revenue EBITDA Margin 2014 E 2013 LTM 2014 E LTM 2014 E Solera Holdings Inc.
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