FEBRUARY 2017 Enterprise Data & Analytics Data & Analytics 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 Enterprise DEAR CLIENTS AND FRIENDS, Big Data, Analytics, and Politics. Our February 2017 Enterprise Data & Analytics Update Please see our latest update on m&a trends for the four segments of the Enterprise Data and Analytics sector that we follow, and sometimes lead, below. In December we wrote a blog post on why Data & Analytics failed the pundits predicting the outcome of the Brexit referendum and our recent Presidential Election. A few weeks ago, in our Fintech Market Update, we noted that, in spite of the fears raised by many of these same pundits, following both events, interest rates did not skyrocket – they fell; and securities markets did not crater; they rose. The sky has not fallen...yet… There are many drivers of this continued growth. Among them, we note three: The first is simply optimism. We meet with buyers, sellers, and investors every day and it is clear that in the aggregate, most are willing to bet that our institutions and sanity will prevail regardless of the breathless pronouncements of politicians and pundits. I hope they are correct. If that optimism should fail – watch out for falling objects from the sky. The second driver of growth is the abundance of cash. There is over $1 trillion of committed, unspent capital available for m&a transactions out there - and a lot of people whose job is to spend it as long as the values are rising…. The third driver of growth is the continued impact of innovation – particularly the continued refinement, expansion, and adoption of software tools that take advantage of advances in Artificial Intelligence and Machine Learning, and then combine those with Big Data analytic capabilities to offer disruptive solutions to real problems. This is where our current market report shines its brightest light. As you will see from the report that follows, in a market characterized by optimistic buyers with plenty of cash and debt capacity who are chasing the few truly innovative firms that have reached scale, transaction values have continued to be strong – particularly among the growing Enterprise Data and Analytics companies with market values below $500 million. And that’s our world. At the same time, we note that this is not a rising tide that lifts all boats. It is a discriminating tide that is lifting those boats that are proven and sturdy. Or, to mix a metaphor, lifting values for those technology-based firms that have reached scale, are growing rapidly, addressing unmet needs of large markets, with a proprietary, defensible product. The report that follows notes many of these firms as well as recent m&a values and trends. Some recent interesting transactions include: • Gartner (NYSE:IT) acquired Corporate Executive Board (“CEB”) • Verisk Analytics (NasdaqGS:VRSK) acquired Arium Limited for an for $2.6bn in cash, implying an enterprise value of $3.3bn and undisclosed sum, valuing the company at an implied 3.5x LTM Revenue and 17x • Parabellum Capital (London, United Kingdom) acquired Razor LTM EBITDA, Risk from TMX Group for an undisclosed sum, • Atlassian (London, UK) acquired Trello for $425mm, • A company owned by Pierre Feligioni, one of QuantHouse’s • Affiliates of The Carlyle Group (NasdaqGS:CG) and the Indian original founders, acquired QuantHouse from S&P Global for an Hill Group acquired Claritas from Nielsen (NYSE:NLSN) for an undisclosed sum. undisclosed sum, Sincerely, Kenneth B. Marlin | Managing Partner Marlin & Associates | www.marlinllc.com Author | The Marine Corps Way to Win on Wall Street 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. FEBRUARY 2017 MARLIN & ASSOCIATES: MARKET UPDATE Enterprise Data & Analytics Enterprise Data & Analytics is a broad industry containing several sectors that encompass the large and growing data assets used and generated by businesses, along with the related analytics that enhance insight and drive better business decisions. 03 Sector Comparison Snapshot 04 Sector Analyses 04 Data Analytics - Services (DAS) 05 Enterprise Software & Data Analytics (ESDA) 06 Business Intelligence Software (BIS) 07 Data & Analytics – Financial Services (DAFS) 08 Capital Raising Activity Trends 09 Merger & Acquisition Activity Trends Source: Marlin & Associates, Capital IQ and Public sources. All market and operating data is sourced as of 4/30/14. 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 above 02 FEBRUARY 2017 ENTERPRISE DATA & ANALYTICS Sector Comparison Snapshot: Enterprise Value / Revenue DAS ESDA BIS DASF 0x 2x 4x 6x 2016E EV/Revenue 2017E EV/Revenue Enterprise Value / EBITDA DAS ESDA BIS DASF 0x 5x 10x 15x 20x 25x 30x 2016E EV/EBITDA 2017E EV/EBITDA Source: Marlin & Associates, Capital IQ and Public sources. All market and operating data is sourced as of 1/31/17. 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 using data from a set of firms that it believes to be reasonable and which may not be identical to the set reflected above. 03 FEBRUARY 2017 Data Analytics - Services Public Market Data 5 Year LTM Revenue & EBITDA Multiples 5 Year M&A Info & Mkt Research Index vs. S&P 500, base = 100 4.0x 18x 190 170 3.5x 16x 150 3.0x 14x 130 EV / EBITDA EV / Revenue 2.5x 12x 110 2.0x 10x 90 Feb-12 Feb-13 Feb-14 Feb-15 Feb-16 Feb-17 Feb-12 Feb-13 Feb-14 Feb-15 Feb-16 Feb-17 EV / LTM Revenue EV / LTM EBITDA M&A Info & Mkt Research Index S&P 500 Company Market Enterprise EV / Revenue EV / EBIT DA Revenue Growth EBITDA M ar gin (USD millions) Cap Value CY2016E CY2017E CY2016E CY2017E CY2016E CY2017E CY2016E CY2017E Reed Elsevier (RELX Group) 36,003 40,637 4.8x 4.5x 13.7x 12.2x 13% 8% 35% 36% Nielsen 14,751 22,463 3.6x 3.5x 11.7x 11.4x 2% 1% 30% 31% Wolters Kluw er 11,183 13,151 2.8x 2.7x 10.9x 10.2x 2% 5% 26% 27% Gartner 8,340 8,626 3.5x 3.2x 21.1x 16.9x 13% 11% 17% 19% Pearson 6,296 6,841 1.2x 1.2x 7.3x 7.1x (1%) 3% 17% 17% Informa 5,291 6,609 3.9x 3.0x 11.8x 8.9x 13% 29% 33% 33% UBM 3,880 3,937 3.7x 3.2x 13.1x 10.7x 10% 16% 28% 30% Euromoney Institutional Investor 1,768 1,729 3.4x 3.3x 13.1x 12.5x 1% 3% 26% 26% comScore 1,323 1,209 2.3x 2.1x 10.1x 7.9x 41% 13% 23% 26% Forrester Research 752 617 1.9x 1.8x 15.3x 13.6x 4% 6% 12% 13% Trim Mean 6,604 8,071 3.1x 2.8x 12.5x 10.9x 7% 8% 25% 27% Median 5,793 6,725 3.5x 3.1x 12.5x 11.0x 7% 7% 26% 26% Recent Activity Date Acquirer(s) / Investor(s) Target / Issuer Description Announced VeriskChina OceanwideAnalytics (NasdaqGS:VRSKHoldings (Beijing,) acquiredChina) and The IDG GeoInformation Capital GroupGroup (Beijing, for China)an undisclosedacquired International sum. The DataGeoInformation Group (“IDG”)Group for offersan undisclosed large-scale sum. mapping IDG is services a leading 11/14/161/19/17 anddata geospatialand marketing data companyand analytic that solutions also runs to venture a broad capital set of firmcompanies IDG Ventures. and more thanUpon 300 closing public of sectorthe transaction, organizations. China The Oceanwide acquisitionwill bolsters become Verisk’s the controlling presence in theshareholder United Kingdom of IDG with as a IDG data Capital and analytics taking a provider minority across stake. multiple markets. GartnerAffiliates (NYSE:IT)of The Carlyle acquired Group Machina (NasdaqGS:CG Research) andfor an the undisclosedIndian Hill Groupsum. Machina acquired ResearchClaritas from provides Nielsen market (NYSE:NLSN) intelligence for and an undisclosedstrategic insight sum. on Claritas Internet offers of Things 11/9/161/5/17 (consumerIoT), Machine segmentation-to-Machine insights (M2M), that and provide big data marketers opportunities. with a Thecomprehensive acquisition isview Indian Hill Group partinto consumerof Gartner’s behavior strategy patterns of investing through further proprietary in IoT capabilities. segmentation analysis. Gartner (NYSE:IT) acquired Corporate Executive Board (“CEB”) for $2.6bn in cash, 20/20 Research (Nashville, TN) acquired iModerate for an undisclosed sum. implying an enterprise value of $3.3bn and valuing the company at an implied 3.5x 10/17/161/5/17 iModerate offers online qualitative market research services and fits strategically LTM Revenue and 17x LTM EBITDA. CEB is a leading provider of best practice with 20/20’s QualBoard discussion and QualMeeting interview platforms.