HW&Co. Landscape Industry Reader Template

TECHNOLOGY, MEDIA, & TELECOM QUARTERLY SOFTWARE SECTOR REVIEW │ 3Q 2016 <a href="/goto?url=http://www.harriswilliams.com" target="_blank">www.harriswilliams.com </a>Investment banking services are provided by Harris Williams LLC, a registered broker-dealer and member of FINRA and SIPC, and Harris Williams & Co. Ltd, which is authorised and regulated by the Financial Conduct Authority. Harris Williams & Co. is a trade name under which Harris Williams LLC and Harris Williams & Co. Ltd conduct business. TECHNOLOGY, MEDIA, & TELECOM QUARTERLY SOFTWARE SECTOR REVIEW │ 3Q 2016 HARRIS WILLIAMS & CO. OVERVIEW CONTENTS <a href="#3_0">. </a><a href="#3_0">DEAL SPOTLIGHT </a>HARRIS WILLIAMS & CO. (HW&CO.) GLOBAL ADVISORY PLATFORM <a href="#4_0">. </a><a href="#4_0">M&A TRANSACTIONS </a><a href="#4_0">– </a><a href="#4_0">2Q 2016 </a><a href="#5_0">. </a><a href="#5_0">SOFTWARE M&A ACTIVITY </a><a href="#7_0">. </a><a href="#7_0">SOFTWARE SECTOR OVERVIEWS </a>KEY FACTS . 25 year history with over 120 closed transactions in the last 24 months <a href="#11_0">. </a>SOFTWARE PRIVATE PLACEMENTS <a href="#11_0">OVERVIEW </a> <a href="#13_0">. </a>SOFTWARE PUBLIC COMPARABLES <a href="#13_0">OVERVIEW </a>. Approximately 250 professionals across seven offices in the U.S. and Europe <a href="#15_0">. </a><a href="#15_0">TECHNOLOGY IPO OVERVIEW </a><a href="#17_0">. </a><a href="#17_0">DEBT MARKET OVERVIEW </a><a href="#21_0">. </a><a href="#21_0">APPENDIX: PUBLIC COMPARABLES DETAIL </a>. Strategic relationships in TMT CONTACTS HW&Co. Office Network Office India and China UNITED STATES . 10 industry groups Jeff Bistrong Managing Director <a href="mailto:[email protected]" target="_blank">[email protected] </a>HW&CO. TECHNOLOGY, MEDIA & TELECOM (TMT) GROUP FOCUS AREAS Sam Hendler Managing Director <a href="mailto:[email protected]" target="_blank">[email protected] </a><ul style="display: flex;"><li style="flex:1">SOFTWARE / SAAS </li><li style="flex:1">INTERNET & DIGITAL MEDIA </li></ul>. Digital Media and Content . eCommerce . Mobile . IT and Tech-enabled . Enterprise Software . Data and Analytics . Infrastructure and Security Software . AdTech and Marketing Solutions Mike Wilkins Managing Director <a href="mailto:[email protected]" target="_blank">[email protected] </a>Services . Data Center and Managed Services . Consumer Internet EUROPE Thierry Monjauze TMT VERTICAL FOCUS AREAS Managing Director <a href="mailto:[email protected]" target="_blank">[email protected] </a><ul style="display: flex;"><li style="flex:1">. Education </li><li style="flex:1">. Fintech </li><li style="flex:1">. Manufacturing </li><li style="flex:1">. Public Sector and Non-Profit </li></ul><ul style="display: flex;"><li style="flex:1">. Energy, Power, and </li><li style="flex:1">. Healthcare IT </li><li style="flex:1">. Professional Services </li><li style="flex:1">. Supply Chain, Transportation, </li></ul>TO SUBSCRIBE PLEASE EMAIL: <ul style="display: flex;"><li style="flex:1">Infrastructure </li><li style="flex:1">and Logistics </li></ul><a href="mailto:*[email protected]" target="_blank">*[email protected] </a>SELECT RECENT HW&CO. TMT TRANSACTIONS Baarsma B2C trades as: has received a majority investment from has been recapitalized by has been recapitalized by <ul style="display: flex;"><li style="flex:1">has been acquired by </li><li style="flex:1">has acquired </li><li style="flex:1">has been acquired by </li><li style="flex:1">has been acquired by </li><li style="flex:1">has been acquired by </li><li style="flex:1">has been acquired by </li><li style="flex:1">has been acquired by </li><li style="flex:1">has been acquired by </li><li style="flex:1">has been acquired by </li></ul>PAGE | 1 TECHNOLOGY, MEDIA, & TELECOM QUARTERLY SOFTWARE SECTOR REVIEW │ 3Q 2016 CASE STUDY: DAXKO HW&Co.’s TMT Group advised Pamlico Capital and its portfolio company, Daxko, on a majority recapitalization transaction led by GI Partners. Date Closed: . Leading provider of SaaS-based software and services to member-based health and wellness centers, offering end- 9/22/2016 to-end solutions for club and member management, including engagement and payments solutions. Relevant Sectors: a portfolio company of  SaaS / Application . Charlotte-based private equity firm targeting investments Software across the business & technology services, communications, and healthcare industries, and currently investing out of its $650 million Pamlico Capital III fund.  Fintech / Payments  Non-Profit Software  Health & Wellness has been recapitalized by . San Francisco-based private equity firm targeting investments in the software, tech-enabled services, IT infrastructure, and healthcare sectors, and actively investing out of its $2 billion GI Partners Fund IV fund. THE DEAL . Positions Daxko well to meet the increasingly complex needs of multi-site and multi-purpose health and wellness facility operations and gives GI Partners the ability to leverage Daxko’s market leadership, scale, and history of successful strategic acquisitions as a platform for further industry consolidation. HW&CO. DEAL CONTACTS Jeff Bistrong Managing Director Tyler Dewing Director Priyanka Naithani Vice President <a href="mailto:[email protected]" target="_blank">[email protected] </a>Office: (617) 654-2102 <a href="mailto:[email protected]" target="_blank">[email protected] </a>Office: (617) 654-2133 <a href="mailto:[email protected]" target="_blank">[email protected] </a>Office: (617) 654-2115 PAGE | 2 TECHNOLOGY, MEDIA, & TELECOM QUARTERLY SOFTWARE SECTOR REVIEW │ 3Q 2016 SELECT SOFTWARE M&A TRANSACTIONS – 3Q 2016 EQT’s pending take-private of Press Ganey Announced . Press Ganey provides patient-experience measurement, performance analytics, and strategic advisory software and services for healthcare organizations across the continuum of care. . Partnering with more than 26,000 healthcare organizations, Press Ganey leads the industry in using data and analytics to help transform and advance patient-centered care in the US and internationally. Ent. Value: $2,284.5M Revenue: $344.3M EV / Rev: 6.6x EV / EBITDA: 21.4x . Post acquisition, EQT will leverage its deep platform and healthcare expertise to support Press Ganey’s expansion both organically and through strategic acquisitions on a global basis. Verizon’s pending acquisition of Fleetmatics Announced . Fleetmatics provides SaaS-based mobile workforce and fleet management software that allows service-based businesses of all sizes to improve the productivity of their mobile workforces. . Serving approximately 38,000 customers and 757,000 subscribed vehicles worldwide, the company’s solutions provide fleet operators visibility into vehicle location, fuel usage, and other insights that allow clients to increase revenue and reduce costs. Ent. Value: $2,183.4M Revenue: $310.7M EV / Revenue: 7.0x EV / EBITDA: 25.9x . Verizon Telematics plans to combine Fleetmatics with recently acquired Telogis to become a global leader in fleet and mobile workforce management. Thoma Bravo’s take-private of Imprivata September 16, 2016 . Imprivata provides cloud-based, single sign-on and access-management security software for the healthcare sector that provides improved workflows, increased data security, and compliance with government regulations. . The company’s mission-critical solutions allow hospitals to identify patients at registration and allow providers to conveniently access patient health information (“PHI”), communicate PHI across devices, and transact PHI for important clinical workflows. Ent. Value: $442.5M Revenue: $131.1M EV / Revenue: 3.4x EV / EBITDA: NA . Leveraging its deep experience in both security and healthcare IT, Thoma Bravo bolsters Imprivata’s ability to expand its market presence organically by providing additional high-value products and inorganically through strategic acquisitions. Vista Equity Partners’ acquisition of Regulatory DataCorp August 31, 2016 . Regulatory DataCorp provides counterparty risk and financial regulatory compliance data and software solutions to financial institutions and technology companies worldwide. . The company’s solutions are used by Fortune 100 companies across a range of industries and combine comprehensive data, a scalable platform, and tailored analytics to provide precise risk alerts and ongoing monitoring. Ent. Value: NA Revenue: NA EV / Revenue: NA EV / EBITDA: NA . Vista Equity Partners’ deep focus on software, data, and tech-enabled businesses will allow Regulatory DataCorp to increase capital investment in risk and compliance software at a time of significant growth in the industry. GE Transportation’s acquisition of ShipXpress August 30, 2016 . ShipXpress provides cloud-based software solutions that enable transportation, industrial, and commodity trading businesses to operate efficiently and collaborate with their supply chain partners. . The company works with major North American railroads and Fortune 500 companies to deliver customized transportation management solutions that help businesses manage data, simplify manual processes, and improve analysis. Ent. Value: NA Revenue: NA EV / Revenue: NA EV / EBITDA: NA . Post acquisition, GE Transportation will deliver one of the industry’s most advanced and scalable cloud-based solutions by combing ShipXpress’ software products with GE’s existing sensing technology platform, Predix. PAGE | 3 TECHNOLOGY, MEDIA, & TELECOM QUARTERLY SOFTWARE SECTOR REVIEW │ 3Q 2016 SOFTWARE ACQUISITION ACTIVITY – STRATEGIC ACQUIRERS MOST ACTIVE STRATEGIC ACQUIRERS OF SOFTWARE ASSETS BY VOLUME (# of Transactions) .The 10 most active strategic software acquirers registered 66 acquisitions in YTD 2016, with Google and IBM being the most active with 25 between them. 13 12 2016 YTD 2015 12 13 2014 .Google has been actively pursuing assets that enhance its enterprise cloud business, while IBM focuses on its stated strategic imperatives – big data and analytics, cloud platform expansion, mobile, social, and security. 92013 83 62012 18 <ul style="display: flex;"><li style="flex:1">28 </li><li style="flex:1">10 </li></ul>69 86<ul style="display: flex;"><li style="flex:1">9</li><li style="flex:1">1</li></ul>4342338 3134910 5758 157<ul style="display: flex;"><li style="flex:1">5</li><li style="flex:1">9</li></ul>5 55 93 92 12 10 8 7GLOBAL STRATEGIC ACQUIRER SOFTWARE M&A ACTIVITY BY VOLUME (# of Transactions) .Global strategic software M&A registered 359 transactions in 3Q 2016, a slight uptick from a slow 2Q, and demonstrating promising momentum going into 4Q 2016. .Despite M&A volumes being down relative to 2015, both large tech and non-traditional software buyers continue to view M&A as a core growth initiative. However, recent M&A activity suggests that 454 437 434 412 <ul style="display: flex;"><li style="flex:1">406 </li><li style="flex:1">402 </li></ul>371 <ul style="display: flex;"><li style="flex:1">359 </li><li style="flex:1">352 </li><li style="flex:1">352 </li></ul><ul style="display: flex;"><li style="flex:1">340 </li><li style="flex:1">341 </li></ul><ul style="display: flex;"><li style="flex:1">333 </li><li style="flex:1">327 </li></ul>324 309 strategics are focusing on bolt-ons rather than large, transformational deals. <ul style="display: flex;"><li style="flex:1">4Q '12 </li><li style="flex:1">1Q '13 </li><li style="flex:1">2Q '13 </li><li style="flex:1">3Q '13 </li><li style="flex:1">4Q '13 </li><li style="flex:1">1Q '14 </li><li style="flex:1">2Q '14 </li><li style="flex:1">3Q '14 </li><li style="flex:1">4Q '14 </li><li style="flex:1">1Q '15 </li><li style="flex:1">2Q '15 </li><li style="flex:1">3Q '15 </li><li style="flex:1">4Q '15 </li><li style="flex:1">1Q '16 </li><li style="flex:1">2Q '16 </li><li style="flex:1">3Q '16 </li></ul>Note: Includes control investments only. PAGE | 4 TECHNOLOGY, MEDIA, & TELECOM QUARTERLY SOFTWARE SECTOR REVIEW │ 3Q 2016 SOFTWARE ACQUISITION ACTIVITY – PRIVATE EQUITY MOST ACTIVE PRIVATE EQUITY BUYERS OF NEW SOFTWARE PLATFORMS BY VOLUME (# of Platform Transactions) ..The 10 most active software investors completed 42 platform investments YTD 2016, with Vista Equity and Thoma Bravo outpacing their peers with 12 and 7 new platform investments, respectively. 2016 YTD 2015 12 2014 69Private equity remains attracted to the software sector as they look to consolidate niche vertical software markets and capitalize on the ongoing shift to the cloud. 2013 2012 7537 3745 1 434 24279 42332 53 7 3333343333<ul style="display: flex;"><li style="flex:1">6</li><li style="flex:1">4</li></ul>14 422 51<ul style="display: flex;"><li style="flex:1">6</li><li style="flex:1">2</li></ul>2GLOBAL NEW PLATFORM PRIVATE EQUITY SOFTWARE M&A ACTIVITY BY VOLUME (# of Platform Transactions) .Globally, private equity software M&A registered 74 new platform acquisitions in 3Q 2016, representing a 34% increase over 3Q 2015 and a 21% increase over the prior quarter’s strong results. .With private equity dry powder at record high levels and the lending market continuing to exhibit strong interest in high quality software credits, both incumbent software investors and newcomers to the sector are rapidly deploying capital across a broad range of software sectors. 74 61 56 54 50 48 <ul style="display: flex;"><li style="flex:1">47 </li><li style="flex:1">47 </li><li style="flex:1">47 </li><li style="flex:1">46 </li></ul>45 <ul style="display: flex;"><li style="flex:1">44 </li><li style="flex:1">43 </li></ul>41 38 32 <ul style="display: flex;"><li style="flex:1">4Q '12 </li><li style="flex:1">1Q '13 </li><li style="flex:1">2Q '13 </li><li style="flex:1">3Q '13 </li><li style="flex:1">4Q '13 </li><li style="flex:1">1Q '14 </li><li style="flex:1">2Q '14 </li><li style="flex:1">3Q '14 </li><li style="flex:1">4Q '14 </li><li style="flex:1">1Q '15 </li><li style="flex:1">2Q '15 </li><li style="flex:1">3Q '15 </li><li style="flex:1">4Q '15 </li><li style="flex:1">1Q '16 </li><li style="flex:1">2Q '16 </li><li style="flex:1">3Q '16 </li></ul>Note: Includes control investments only. PAGE | 5 TECHNOLOGY, MEDIA, & TELECOM QUARTERLY SOFTWARE SECTOR REVIEW │ 3Q 2016 APPLICATION SOFTWARE – M&A MARKET SUMMARY <ul style="display: flex;"><li style="flex:1">APPLICATION SOFTWARE M&A VOLUME (GLOBAL) </li><li style="flex:1">MEDIAN M&A REVENUE MULTIPLES (REPORTED) </li></ul>..Application Software M&A registered 298 transactions in 3Q 2016, representing a 6% increase over the previous quarter, falling in line with historical averages. <ul style="display: flex;"><li style="flex:1">320 </li><li style="flex:1">319 </li></ul>316 314 <ul style="display: flex;"><li style="flex:1">298 </li><li style="flex:1">298 </li></ul>2.5x 2.5x <ul style="display: flex;"><li style="flex:1">2.5x </li><li style="flex:1">2.5x </li></ul>289 2.5x 2.4x 282 281 2.4x 2.3x <ul style="display: flex;"><li style="flex:1">272 </li><li style="flex:1">271 </li></ul>2.3x <ul style="display: flex;"><li style="flex:1">2.3x </li><li style="flex:1">2.3x </li></ul>266 252 251 246 244 2.1x 227 1.6x 3Q 2016 median reported Application Software M&A revenue multiples were slightly below 2015 and 1H 2016 multiples, though remain in line with historical four year averages. 1.5x 1.4x 1.4x 1.3x <ul style="display: flex;"><li style="flex:1">2</li><li style="flex:1">2</li><li style="flex:1">3</li><li style="flex:1">3</li><li style="flex:1">3</li><li style="flex:1">3</li><li style="flex:1">4</li><li style="flex:1">4</li><li style="flex:1">4</li><li style="flex:1">4</li><li style="flex:1">5</li><li style="flex:1">5</li><li style="flex:1">5</li><li style="flex:1">5</li><li style="flex:1">6</li><li style="flex:1">6</li><li style="flex:1">6</li><li style="flex:1">2</li><li style="flex:1">2</li><li style="flex:1">3</li><li style="flex:1">3</li><li style="flex:1">3</li><li style="flex:1">3</li><li style="flex:1">4</li><li style="flex:1">4</li><li style="flex:1">4</li><li style="flex:1">4</li><li style="flex:1">5</li><li style="flex:1">5</li><li style="flex:1">5</li><li style="flex:1">5</li><li 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HW&Co. Landscape Industry Reader Template

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