Quarterly Enterprise Software Market Review Q1 2020 Boston San Francisco 200 Clarendon Street, Floor 45 601 Montgomery Street, Suite 2010 Boston, MA 02116 San Francisco, CA 94111 Peter M. Falvey Michael H.M. Shea Christopher J. Pingpank Michael S. Barker Managing Director Managing Director Managing Director Managing Director 617.896.2251 617.896.2255 617.896.2218 415.762.8101 [email protected] [email protected] [email protected] [email protected] Jeffrey G. Cook Brad E. McCarthy William Broughton Misha Cvetkovic Principal Principal Vice President Vice President 617.896.2252 617.896.2245 617.896.2248 415.762.8104 [email protected] [email protected] [email protected] [email protected] www.sheaco.com Member FINRA & SIPC Copyright ©2020 Shea & Company Overview About Our Firm 1 2 26 $10Bn+ 15+ 80+ Firm focused exclusively on Offices in Boston and San Professionals focused on the Advised transaction value in Average years of experience Transactions completed enterprise software Francisco software industry last 12 months amongst our senior bankers representing billions of dollars in value Mergers & Acquisitions, Private Placements & Capital Raising Shea & Company has advised on important transactions representing billions of dollars in value across the strategic acquirer and financial investor landscape with clients in the U.S. as well as Canada, Europe and Israel. has been acquired by has made a majority investment in has been acquired by has acquired has been acquired by has received an investment from has been acquired by Shea & Company served as the exclusive Shea & Company served as a financial Shea & Company served as the exclusive Shea & Company served as the exclusive Shea & Company served as the exclusive Shea & Company served as the financial Shea & Company served as the financial financial advisor to XebiaLabs advisor to Vitruvian financial advisor to Kofile financial advisor to SmartBear financial advisor to Pondera advisor to Perforce and Clearlake advisor to Rogue Wave Public Sector & Healthcare has been acquired by have been merged with has acquired has acquired has acquired has been acquired by has been acquired by Shea & Company served as the exclusive Shea & Company served as the exclusive Shea & Company served as the exclusive Shea & Company served as the exclusive Shea & Company served as the exclusive Shea & Company served as the exclusive Shea & Company served as the exclusive financial advisor to Aptean, Superion and financial advisor to BC Partners financial advisor to Clearlake financial advisor to EQT financial advisor to Gurobi financial advisor to BriefCam financial advisor to YourCause Vista Equity Partners has received an investment from has received an investment from has been acquired by has received an investment from has been acquired by has received an investment from has been acquired by Shea & Company served as the exclusive Shea & Company served as the exclusive Shea & Company served as the exclusive Shea & Company served as the exclusive Shea & Company served as the exclusive Shea & Company served as the exclusive Shea & Company served as the exclusive financial advisor to Granicus and its owner financial advisor to Sovos Compliance and financial advisor to MRI Software and its financial advisor to MRI Software and its financial advisor to Bronto financial advisor to Mimecast financial advisor to ProfitLogic owner GI Partners K1 Investment Management its owner Vista Equity Partners owner Vista Equity Partners 1 Quarterly Enterprise Software Market Review Contents M&A Activity Software M&A Summary: 2014 – Q1 2020 p. 3 Software Acquisitions: 3-Year Trend Analysis p. 4 Publicly Available Software M&A Transaction Data: Q1 2020 p. 5 Announced Software Acquisitions: Q1 2020 p. 6 Most Active Software Acquirers: 2014 – Q1 2020 p. 11 Public Equity Market Valuations LTM Relative Performance of Shea & Company Software Indices p. 17 Price Performance and Valuation Metrics by Segment p. 18 Equity Trading Multiples by Growth Tranche p. 19 Price Performance and Valuation Metrics of Selected Software Vendors p. 20 Equity Trading Multiples by Segment p. 21 Equity Trading Multiples by Comparable Subset p. 29 Equity Financing Activity Software IPOs: H2 2019 p. 33 Software IPO Pricing & Performance Data p. 34 Software IPO Pipeline p. 35 Software Private Capital Raise Activity: Q1 2020 p. 36 2 M&A Activity Software M&A Summary: 2014 – Q1 2020 NASDAQ $100 $82.1 $80 $73.1 $56.6 $60 $49.1 $48.0 $37.8 $36.3 $40 $32.0 $35.3 $28.4 $26.2 $29.1 $21.4 $19.9 $20.8 $17.7 $18.0 $14.1 $16.5 $16.2 $20 $12.2 $12.4 $11.7 $9.7 $6.0 $- Announced Deal Value ($ billions) ($ Value Deal Announced Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2014 2015 2016 2017 2018 2019 2020 Transaction Count by Deal Size > $1bn 3 0 6 4 3 3 4 4 2 10 13 5 4 2 5 5 6 12 11 12 5 5 5 4 6 $500m - $1bn 3 2 3 7 2 3 4 5 3 6 4 8 4 2 5 3 2 0 4 7 9 3 2 3 2 $250m - $500m 2 4 4 6 4 3 3 13 4 6 5 3 6 4 11 5 7 4 6 5 7 8 1 1 3 < $250m 39 65 44 57 38 45 34 48 39 47 34 28 53 61 42 28 53 36 48 46 36 27 33 21 23 No Reported Value 113 153 153 126 157 129 106 144 168 194 172 145 150 167 161 129 164 151 148 164 204 179 192 150 195 Total 160 224 210 200 204 183 151 214 216 263 228 189 217 236 224 170 232 203 217 234 261 222 233 179 229 Notable Transactions: Q1 2020 ($ millions) Acquirer Target Date 1/06/20 1/09/20 1/13/20 1/23/20 2/06/20 2/13/20 2/18/20 2/24/20 2/25/20 3/2/20 Enterprise Value $1,100 $5,000 $375 $700 $1,900 $350 $2,075 $1,395 $1,330 n/a EV / LTM Rev n/a 5.0x n/a n/a 5.6x n/a n/a 5.4x n/a n/a EV / LTM EBITDA n/a n/a n/a n/a nm n/a n/a n/a n/a n/a Sources: Company releases, Wall Street research Note: EV / Revenue multiples greater than 20x and EV / EBITDA multiples greater than 50x are considered to be not meaningful Note: RSA, STG deal was led by STG but also included Ontario Teachers’ Pension Plan Board and Alpine Investors 3 M&A Activity Software Acquisitions: 3-Year Trend Analysis By Transaction Size (2018 – Q1 2020) 200 183 # of Deals $180 Aggregate Deal Value ($ billions) 9.0x Median EV / LTM Rev 2018 $162 7.9x 180 $160 8.0x 7.0x 6.7x 160 2019 $140 7.0x 6.5x 140 117 $120 6.0x 5.4x 2020 120 4.7x $100 5.0x 4.3x 100 $77 3.8x $80 4.0x 80 2.6x $60 3.0x 2.2x 60 41 1.6x 40 $40 2.0x 23 22 19 17 13 17 $11 $11 $13 6 $20 $7 $7 $6 $9 1.0x 20 3 2 $1 $1 $1 n/a 0 $- 0.0x < $250m $250m - $500m $500m - $1bn > $1bn < $250m $250m - $500m $500m - $1bn > $1bn < $250m $250m - $500m $500m - $1bn > $1bn Deal Value (Enterprise Value) Deal Value (Enterprise Value) Deal Value (Enterprise Value) By Target Segment (2018 – Q1 2020) $80 Aggregate Deal Value ($ billions) 7.0x 500 460 # of Deals $75 Median EV / LTM Rev 6.4x 2018 $71 5.9x 450 418 $70 6.0x 5.5x 5.5x 5.3x 5.1x 400 2019 $60 5.0x 350 $50 3.9x 4.0x 2020 300 4.0x 3.6x 3.1x 250 $40 3.1x $29 3.0x $26 2.3x 200 161 $30 $22 144 1.9x 150 113 $16 2.0x 94 103 109 $20 $15 100 92 65 $10 $9 $8 38 34 46 $10 $4 $4 $5 1.0x 50 24 11 $1 $1 n/a n/a 0 $- 0.0x Business IT Security Information Infrastructure Financial Business IT Security Information Infrastructure Financial Business IT Security Information Infrastructure Financial Applications Management Applications Applications Management Applications Applications Management Applications Notes: Business Applications includes: Advertising Technology; Communications; ERP & Business Applications; Marketing Applications; Technical & Embedded Applications Information Management includes: Business Intelligence; Content Management Infrastructure includes: Application Delivery & Network Acceleration; IT Operations Management; IT Security; Platforms, Development Tools & Deployment; Storage Management Sources: Company releases, Wall Street research 4 M&A Activity Publicly Available Software M&A Transaction Data: Q1 2020 ($ millions) Consideration Equity Enterprise EV / Revenue Revenue EV / EBITDA EBITDA Announced Target Acquirer(s) % Cash % Stock Value Value LTM Current yr Fwd yr Growth % LTM Current yr Fwd yr Margin % 03/26/20 Wavy Global Sinch 60% 40% - $116 1.3x - - - 12.4x - - 10% 03/24/20 TrackX FourKites 100% - - $3 - - - - - - - - 03/12/20 Monidee Equiniti - - - $4 - - - - - - - - 03/11/20 iBlocks Tracsis 100% - - $21 5.2x - - - - - - - 03/10/20 Blackboard Inc. Learning Technologies Group - - - $32 - - - - - - - - 03/09/20 XMedius Solutions OpenText 100% - - $75 1.9x - - - - - - - 03/09/20 CNL Software Everbridge - - - $36 - - - - - - - - 03/04/20 Azul Systems Vitruvian Partners - - - $340 - - - - - - - - 03/02/20 ProShip Inc. Fog Software Group - - - $15 - - - - - - - - 02/27/20 Seal Software DocuSign 100% - - $188 - - - - - - - - 02/25/20 Vlocity Salesforce.com 100% - - $1,330 - - - - - - - - 02/24/20 Peoplevox Descartes Systems Group 100% - - $24 - - - - - - - - 02/24/20 Saba Software Cornerstone OnDemand 95% 5% - $1,395 5.4x - - - - - - - 02/18/20 RSA Security Symphony Technology/OTPP 100% - - $2,075 - - - - - - - - 02/17/20 Cloud Explorers TargetEveryOne 80% 20% $6 $9 - - - - - - - - 02/13/20 Docutech First American Financial 100% - - $350 - - - - - - - - 02/11/20 RentPath CoStar Group 100% - - $588 2.6x - - - 12.5x - - - 02/07/20 Char Software Upland Software 100% - - $68 - - - - - - - 45% 02/06/20 ForeScout Technologies Advent International/Crosspoint 100% - - $1,900 5.6x 5.6x 5.0x 12% nm nm nm (7%) 02/06/20 Living Lens Enterprise Medallia 100% - - $26 - - - - - - - - 02/03/20 Askida Alithya Group - - - $16 1.2x - - - - - - - 01/28/20 Passage AI ServiceNow 100% - - $33 - - - - - - - - 01/23/20 Regulatory DataCorp Moodys Corporation - -