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Market Update M&Amarlin & Associates Investment Banking and Strategic Advisory to the Technology, Information and Healthcare Industries

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Market Update M&Amarlin & Associates Investment Banking and Strategic Advisory to the Technology, Information and Healthcare Industries NOVEMBER 2016 MARKET UPDATE M&AMARLIN & ASSOCIATES INVESTMENT BANKING AND STRATEGIC ADVISORY TO THE TECHNOLOGY, INFORMATION AND HEALTHCARE INDUSTRIES New York San Francisco Washington, D.C. Toronto www.MarlinLLC.com © Marlin & Associates Holdings LLC, All Right Reserved DEAR CLIENTS AND FRIENDS, Deals and Trump keep moving forward. Our November 2016 General Market Update Dear Clients and Friends: The report found below is our latest update on the m&a values and trends in the dozen+ sectors of the information technology industry that we follow and sometimes lead. What a time in which we live. We’re busy – advising clients and closing deals; the Chicago Cubs became World Series Champions for the first time in 108 years; my Marines celebrated the Corp’s 241st birthday, while fighting in every clime and place they could; Bob Dylan won the Nobel Prize in literature (how cool!); Leonard Cohen died (he and Dylan have long been among my favorites); and in between, Donald Trump was elected President of the United States and to the further shock of many, the bull market roared higher. My friends around the world keep writing to me asking what will happen next - as if I know. After a few days of reflection, I’ll take the advice of people smarter than me and say this: Cleveland will have another chance at the Series; Leonard Cohen’s music will live forever; the wars will end; and this country will continue to thrive. We remain an entrepreneurial, can-do country that fights for rights and freedoms for all - and doesn’t quit. The bulk of our leaders have the best interest of the country at heart, even if they operate in a dysfunctional environment. As you will see from our report found HERE, it’s a busy time for us and for the industry that we serve. A few of the more interesting deals this month include: • TD Ameritrade (Nasdaq:AMTD) acquired Scottrade for • Paysimple (Denver, CO) raised $115mm led by $4bn in cash and stock, Providence Strategic Growth, • Cardtronics (Nasdaq:CATM) acquired DirectCash • Broadridge (NYSE:BR) acquired M&O Systems for an Payments for $460mm, undisclosed sum. Marlin & Associates acted as exclusive • Criteo Corp (NASDAQ:CRTO) acquired HookLogic for strategic and financial advisor to M&O Systems. $250mm, • Wolters Kluwer (ENXTAM:WKL) acquired Emmi Solutions for $170mm, valuing the company at an implied 5.9x revenue, Please see our November 2016 General Market Update below. Sincerely, Kenneth B. Marlin | Managing Partner Marlin & Associates | www.marlinllc.com PS: Recently I was interview by Alexis Christoforous on Yahoo Finance about What Wall Street can learn from the Marine Corps, and it may be of interest to you. Please watch the original video here. Marlin & Associates is one of the most active firms advising buyers and sellers of U.S. and international middle-market firms that provide software, data, and related services. The firm is based in New York City, with offices in San Francisco, CA, Washington, D.C., and Toronto, Canada. It has been the recipient of numerous awards including “Boutique Investment Bank of the Year,” “Middle-Market Investment Bank of the Year,” "Middle-Market Financing Agent of the Year – Equity," and “TMT Advisory Bank of the Year.” Marlin & Associates' team of professionals has advised over 200 information- technology transactions. NOVEMBER 2016 MARLIN & ASSOCIATES MARKET UPDATE 03 Sector Comparison Snapshot 04 Sector Analyses 04 Application Software 05 B2B E-commerce & Marketing Technologies 06 Banking Software & Processors 07 Business Intelligence Software 08 Capital Markets Software & Services 09 Data & Analytics – Financial Services 10 Healthcare Information Software Systems 11 Information & Market Research 12 Insurance Technology 13 Payment Technology 14 Securities Exchanges 15 Security Software 16 Technology-Enabled Financial Institutions 17 Technology-Enabled Healthcare Services 18 19 18 Merger-and-Acquisition Activity Trends Source: Marlin & Associates, Capital IQ and Public sources. All market and operating data is sourced as of 10/31/16. These companies are a sample of firms in the sector as M&A defines it, and do not comprise a comprehensive list of all firms in the sector. M&A calculates mean and median multiples for the sector using data from a set of firms that it believes to be reasonable and which may not be identical to the set reflected 02 above. NOVEMBER 2016 SECTOR COMPARISON SNAPSHOT: CURRENT REVENUE & EBITDA MULTIPLES Enterprise Value / 2015 Revenue Securities Exchanges Application Software B2B E-commerce & Marketing Technologies Healthcare Info Software Data & Analytics - Financial Services Banking Software & Processors Business Intelligence Software Security Software Payment Technology Tech-enabled Healthcare Services Information & Market Research Capital Markets Software & Services Tech-enabled Financial Institutions * Insurance Technology 0x 2x 4x 6x 8x 10x 12x Enterprise Value / 2015 EBITDA Healthcare Info Software Capital Markets Software & Services Banking Software & Processors Tech-enabled Healthcare Services Data & Analytics - Financial Services Security Software Insurance Technology Securities Exchanges Business Intelligence Software Application Software Payment Technology Information & Market Research B2B E-commerce & Marketing Technologies Tech-enabled Financial Institutions * 0x 5x 10x 15x 20x 25x 30x *Tech-enabled Financial Institutions multiples calculated using Market Cap / Revenue and Market Cap / EBT Source: Marlin & Associates, Capital IQ and Public sources. All market and operating data is sourced as of 10/31/16. These companies are a sample of firms in the sector as M&A defines it, and do not comprise a comprehensive list of all firms in the sector. M&A calculates mean and median multiples for the sector using data from a set of firms that it believes to be reasonable and which may not be identical to the set reflected 03 above. NOVEMBER 2016 Application Software Public Market Data 5 Year LTM Revenue & EBITDA Multiples 5 Year M&A Application Software Index vs. S&P 500, base = 100 7.5x 45x 280 250 6.5x 36x 220 5.5x 190 27x 4.5x 160 EV / EBITDA EV / Revenue 18x 130 3.5x 100 2.5x 9x 70 Nov-11 Nov-12 Nov-13 Nov-14 Nov-15 Nov-16 Nov-11 Nov-12 Nov-13 Nov-14 Nov-15 Nov-16 EV / LTM Revenue EV / LTM EBITDA M&A Application Software Index S&P 500 Company Market Enterprise EV / Revenue EV / EBIT DA Revenue Growth EBITDA M ar gin (USD millions) Cap Value CY2015A CY2016E CY2015A CY2016E CY2015A CY2016E CY2015A CY2016E Oracle 162,171 148,228 4.0x 4.0x 9.7x 8.9x (3%) (0%) 41% 45% SAP 106,346 109,281 4.8x 4.5x 17.3x 13.3x 18% 6% 27% 34% Salesforce 52,309 53,650 8.0x 6.5x na 33.3x 24% 25% 7% 19% Intuit 27,946 27,866 6.2x 5.8x 21.4x 16.0x 6% 8% 29% 36% Workday 17,095 15,548 13.4x 10.0x na na 48% 34% n/a 8% CA Technologies 12,757 12,261 3.0x 3.0x 9.9x 7.6x (7%) 0% 31% 40% Constellation Softw are 9,986 10,007 5.4x 4.7x 23.4x 18.4x 10% 16% 23% 26% Amdocs 8,738 7,613 2.1x 2.0x 11.0x 10.2x 1% 3% 19% 20% NetSuite 7,556 7,384 10.0x 7.7x na na 33% 29% n/a 9% NICE Sy s tems 4,160 3,770 4.1x 3.8x 16.9x 13.4x 6% 8% 24% 28% Manhattan Associates 3,633 3,522 6.3x 5.8x 20.8x 16.1x 13% 9% 30% 36% Paycom Softw are 3,047 3,003 13.4x 9.2x na 33.8x 49% 46% 19% 27% Softw are AG 2,788 2,685 2.8x 2.8x 9.3x 8.7x 2% 1% 30% 32% Zendesk 2,473 2,262 10.8x 7.3x na na 64% 49% n/a 2% Paylocity 2,228 2,150 11.5x 8.2x na 68.1x 47% 40% n/a 12% Callidus Softw are 1,059 872 5.0x 4.3x na 34.0x 27% 19% 0% 13% Trim Mean 18,647 18,643 6.8x 5.5x 15.3x 18.7x 20% 17% 24% 24% Median 8,147 7,498 5.8x 5.2x 16.9x 16.0x 16% 12% 26% 26% Recent Activity Date Acquirer(s) / Investor(s) Target / Issuer Description Announced Aspen Technology (Nasdaq:AZPN) acquired Mtelligence for $37.4mm. Mtelligence 10/27/16 provides asset performance optimization software to manufacturers and utilities. C3 (Redwood City, CA) raised $70mm in series D funding led by TPG Growth. C3 9/1/16 delivers IoT software to the enterprise market. C3 plans to use the proceeds to accelerate the expansion of its customer service capacity globally. JDA Software (Scottsdale, AZ) completed a $570mm recapitalization from Blackstone 8/19/16 and New Mountain Capital. JDA Software designs and develops end-to-end integrated supply chain and retail management software solutions. Source: Marlin & Associates, Capital IQ and Public sources. All market and operating data is sourced as of 10/31/16. These companies are a sample of firms in the sector as M&A defines it, and do not comprise a comprehensive list of all firms in the sector. M&A calculates mean and median multiples for the sector using data from a set of firms that it believes to be reasonable and which may not be identical to the set reflected 04 above. NOVEMBER 2016 B2B E-commerce & Marketing Technologies Public Market Data 5 Year LTM Revenue & EBITDA Multiples[1] 5 Year M&A eCommerce Index[1] vs. S&P 500, base = 100 11.0x 60x 180 9.0x 48x 160 7.0x 35x 140 EV / EBITDA EV / Revenue 5.0x 23x 120 3.0x 10x 100 Nov-11 Nov-12 Nov-13 Nov-14 Nov-15 Nov-16 Nov-11 Nov-12 Nov-13 Nov-14 Nov-15 Nov-16 EV / LTM Revenue EV / LTM EBITDA M&A eCommerce Index S&P 500 Company Market Enterprise EV / Revenue EV / EBIT DA Revenue Growth EBITDA M ar gin (USD millions) Cap Value CY2015A CY2016E CY2015A CY2016E CY2015A CY2016E CY2015A CY2016E Mercadolibre 7,419 7,253 11.1x 8.7x 40.6x 35.2x 17% 28% 27% 25% Shopify 3,133 2,733 13.3x 7.2x na nm 95% 86% na 0% HubSpot 1,868 1,755 9.6x 6.5x na na 57% 48% na na NeuStar 1,244 2,111 2.0x 1.7x 5.3x 3.9x 9% 15% 38% 44% Focus Technology 1,204 1,057 14.5x 10.6x nm nm (3%) 36% 3% 12% ChannelAdvisor 284 220 2.2x 1.9x na 42.9x 18% 13% na 5% Mediagrif Interactive 208 230 4.3x 3.9x 12.4x 10.4x 2% 10% 34% 37% QuinStreet 132 93 0.3x 0.3x na 7.1x 3% 14% na 4% Trim Mean 1,323 1,351 7.1x 5.0x 12.4x 17.6x 18% 26% 31% 17% Median 1,224 1,406 7.0x 5.2x 12.4x 10.4x 13% 22% 31% 12% [1] Shopify (SHOP) added to the index as of IPO 5/21/15 Recent Activity Date Acquirer(s) / Investor(s) Target / Issuer Description Announced Criteo Corp (NASDAQ: CRTO) acquired HookLogic for $250mm.
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