THE PREMIER PROVIDER OF M&A SERVICES TO SOFTWARE / IT COMPANIES

AN M&A UPDATE

Software M&A Sizzles - The Market

Roars Back

Corum Group Ltd.

www.corumgroup.com
 THE PREMIER PROVIDER OF M&A SERVICES TO SOFTWARE / IT COMPANIES

Agenda

• Opening Remarks - Corum

• M&A Market Overview
• Market Trends
• Public Markets
• IPO Market
• Venture Capital
• Top Buyers & Active Sectors
• Valuations
• Corum Q3 M&A Briefing Release
 THE PREMIER PROVIDER OF M&A SERVICES TO SOFTWARE / IT COMPANIES

Corum Group
• M&A specialists since 1985
• Software and IT experts – mostly former CEOs
• Dominant North American and European presence
• 200+ transactions completed
• $6 Billion in wealth created
• 55+% cross border transactions
• Recognized industry leaders/experts
• Sponsor of Selling Up Selling Out conferences
• Sponsor of World Financial Symposiums Conferences
• Publisher of industry leading M&A research
 THE PREMIER PROVIDER OF M&A SERVICES TO SOFTWARE / IT COMPANIES

M&A Volumes Out Pace Previous Year – Again

Deal Drivers:
• Enormous liquidity in the market
• Strong stock market
• Wall Street is receptive to smart, strategic deals
• Need for global presence
• Companies stimulate growth via acquisition
• Greater competition for deals
• Private Equity firms driving M&A activity – recaps
• Converging market sectors
 THE PREMIER PROVIDER OF M&A SERVICES TO SOFTWARE / IT COMPANIES

Industry Wide Technology M&A Activity

% Deals By Sector
45.00%
40.00%
35.00%
30.00%
25.00%
20.00%
15.00%
10.00%
5.00%
0.00%

s
re

es

s
ia

ns

ity
et
g

t
s
in

ke
ed

tu

rn

le
tio

r
ic
am

cu
c

te

ar
ire
lM

ru

er

Se
In

M
lic

W
st

S
ita

al
fra

IT
Ap
ig

tic
In
D

r
e

Ve
e
is

is
pr

pr
er

er
t
En

t
En

2005 % Deal Volume 2006 YTD % Deal Volume

 THE PREMIER PROVIDER OF M&A SERVICES TO SOFTWARE / IT COMPANIES

Industry Wide Technology M&A Activity (continued)

% Deal Value By Sector

60.00%
50.00%
40.00%
30.00%
20.00%
10.00%
0.00%
e

es
t

ts
ns

y
ur
ia

s
ne

rit

s
in

ke
ed

ct
io

vic

le
er

cu
am
tru
at

ar
ire
M

r
t

Se
In

Se
ic

M
G
s

W
l

pl
ta

fra

al
IT
Ap
i
ig

In

c
rti
D

Ve
ris

ris
rp

rp
te

te
En

En

2005 % Deal Value 2006 YTD % Deal Value

 THE PREMIER PROVIDER OF M&A SERVICES TO SOFTWARE / IT COMPANIES

Industry Wide Deal Volume Past 8 Quarters

14.00%
*
12.00%

10.00%
% Deal Volume

8.00%

6.00%

4.00%

2.00%

0.00%
Q1:05 Q2:05 Q3:05 Q4:05 Q1:06 Q2:06 Q3:06 Q4:06

• Cumulative look at % deal volume per quarter over

the past 8 quarters YTD
• Q3 historically weaker than Q4
• 1st half stronger then 2nd half
* Projected % deal volume assuming deal levels maintain momentum
through close of 2006
 THE PREMIER PROVIDER OF M&A SERVICES TO SOFTWARE / IT COMPANIES

Is it 1998?

• M&A levels are strong, but justified

• Valuations are strategic, while sensible
• New technology is pervasive and real
• Sellers are optimistic, but rational
• Buyers are opportunistic, yet cautious
 THE PREMIER PROVIDER OF M&A SERVICES TO SOFTWARE / IT COMPANIES

M&A Is the Primary Source of Liquidity

In Dollar Volume – US dollar volume all industries

$1,700
$1,600
$1,500
$1,400
$1,300
$1,200
$1,100
In Billions

$1,000
$900
$800
$700
$600
$500
$400
$300
$200
$100
$0
1990 1992 1994 1996 1998 2000 2002 2004 YTD:06

M&A Dollar Volume IPO Amount Raised

 THE PREMIER PROVIDER OF M&A SERVICES TO SOFTWARE / IT COMPANIES

Why Does M&A Dominate?

The need to buy is stronger than ever

• Acquisitions add more growth

• Counter takeover attempts
• Consolidation
• Speed up time to market
• Buy talent and domain expertise
• Fill product gaps
• Get ahead of a technology curve
• Tap into emerging consumer markets
• Cost of being public and complying with SOX
 THE PREMIER PROVIDER OF M&A SERVICES TO SOFTWARE / IT COMPANIES

Global Market Place

58% of Corum’s transactions have been cross-border – A

trend we seeing throughout the industry

Domestic
42%

Cross Border
58%

Data represents transactions since January 2005

 THE PREMIER PROVIDER OF M&A SERVICES TO SOFTWARE / IT COMPANIES

Momentum Continues
• Stability – strong stock market and Euro will enable more
overseas buyers
• Expansion - US firms will go international for acquisitions –
need to capitalize on growing IT markets/opportunities
• Fear – recent deal activity increases pressure on all to keep
pace; acquire or be acquired
• Innovation – small start-ups developing the most cutting
edge solutions
• Resources – friendly capital markets & high cash balances
coupled with improved revenue growth
 THE PREMIER PROVIDER OF M&A SERVICES TO SOFTWARE / IT COMPANIES

Slower IPO Market Pushes M&A

IPO data all industries
• October most active in more than a year
• 50% of October offerings closed with double digit gains

Q3:05 Q3:06 % Change

# of IPO Pricings 63 31 -50.79%

Total Value $9,200.00 $6,100.00 -33.70%

Average Value $146.00 $197.00 34.93%

Values are in millions

Software IPO’s during Q3:06 = 3

Software IPO filings during Q4:06 = 5
Source: D&B
 THE PREMIER PROVIDER OF M&A SERVICES TO SOFTWARE / IT COMPANIES

VC’s Are Actively Backing the Next Generation

of Tech Companies
Total Investment in Software Industry

$1,600 270

$1,400 240

210
$1,200
180

# of Investments
$1,000
$ Invested

150
$800
120
$600
90
$400
60

$200 30

$0 0
04

04

04

04

05

05

05

05

06

06
1:

2:

3:

4:

1:

2:

3:

4:

1:

2:
Q

Q
Source: PricewaterhouseCoopers/Venture Economics/NVCA/MoneyTree survey
 THE PREMIER PROVIDER OF M&A SERVICES TO SOFTWARE / IT COMPANIES

Top Buyers in 2006 Year To Date

Strategic Buyers Active Private Equity Firms*
Microsoft 15 Accel-KKR
IBM 12 Apax Partners
Oracle 11 Carlyle Group
EMC 9 Francisco Partners
L-3 Communications 7 Golden Gate Capital
Sage Group 7 Silver Lake Partners
Cisco Systems 6 Symphony Technology Group
Jupitermedia 6 Thoma Cressey
NeoMedia Technologies 6
Accenture 5
Google 5 * Partial List
Kronos 5
Motorola 5
VeriSign 5

70+ Strategic buyers with 2 to 4 transactions

 THE PREMIER PROVIDER OF M&A SERVICES TO SOFTWARE / IT COMPANIES

What Do Buyers Really Buy?

Vision Marketing Channels
Research Alliances
Management Competitive Position
Business Model Technology
Planning R&D Process Sales Process
Patents Capital Structure
Documentation Accounting Policies
Pricing Growth
Support Profitability
Market Share Domain Expertise
Staff
User Base >> Don’t forget the intangibles
 THE PREMIER PROVIDER OF M&A SERVICES TO SOFTWARE / IT COMPANIES

Active Sectors

• Wireless technologies and infrastructure

• Enterprise infrastructure and systems management
• Convergence companies as the lines between the Internet,
television, and telecommunications disappear – Digital Media
• Security companies
• Internet and E-commerce especially the “small but growing”
category
• Vertical market applications especially financial services and
niche market technologies
• Mature, profitable companies with strong balance sheet and
install base but slowing growth as targets for consolidation or
private equity (acquisition)
 THE PREMIER PROVIDER OF M&A SERVICES TO SOFTWARE / IT COMPANIES

Corum Transactions

Sectors where Corum has recently completed

transactions
• Digital Media
• Enterprise Applications
• Enterprise Infrastructure
• Security
• Vertical Markets

With an exceptionally strong first half complete,

we look forward to a similar close to 2006
• 6+ companies currently under LOI or term sheets
 THE PREMIER PROVIDER OF M&A SERVICES TO SOFTWARE / IT COMPANIES

Current Activity

With an exceptionally strong first half complete,

we look forward to a similar close to 2006:

6+ companies currently under LOI or term sheets

Enterprise Applications
Enterprise Infrastructure
Gaming and Entertainment
Vertical Markets
• Manufacturing
• Financial Services
 THE PREMIER PROVIDER OF M&A SERVICES TO SOFTWARE / IT COMPANIES

Public Markets – Reaching New Highs

 THE PREMIER PROVIDER OF M&A SERVICES TO SOFTWARE / IT COMPANIES

Looking Back – Valuation Multiples

Valuations are up 13% from 2005

 THE PREMIER PROVIDER OF M&A SERVICES TO SOFTWARE / IT COMPANIES

Public Multiples ─ Differ Dramatically by Sector

5x

4x

Software as a
Service
3x
3.90x – 9.49x

2x

Security Financial Services

1x Software
Niche 1.50x – 4.00x
Applications 1.39x – 7.83x

1.00x – 2.50x
0
TTM EV/Sales Range
 THE PREMIER PROVIDER OF M&A SERVICES TO SOFTWARE / IT COMPANIES

Public Valuation Multiples

 THE PREMIER PROVIDER OF M&A SERVICES TO SOFTWARE / IT COMPANIES

Corum Q3 Briefing Sample

Vertical Market Technology

The Vertical Market applications sector continued to demonstrate strength during the quarter. Total deal
count YTD is up over 40% from the total for all of 2005, with a traditionally strong fourth quarter still to
come. In part, this activity demonstrates the competitive pressure to build market share and fill out
product suites with the necessary functionality that drives companies to be acquisitive. Along with
acquired technology come customer bases and recurring support revenue, loads of domain expertise,
brand name recognition and distribution channels. None of these resources would be present if the
decision was made to build versus buy, so the market for these specialized solutions companies
continues to thrive.

Some notable transactions that reflect this include:

First Data, a significant player in electronic commerce payments, acquired Peace Software, which
develops advanced software for managing utility billing and customer care. This represents a new market
for First Data, allowing them to expand beyond their traditional market servicing merchant payments and
credit card issuers, and facilitating a broad range of consumer financial transactions. Peace offers highly
specialized technology, a broad multi-national user base, and significant knowledge of the market.

Softbrands, a leader in software solutions for manufacturing and hospitality industries worldwide, acquired
MAI Systems and its subsidiary, Hotel Information Systems. Softbrands has been on an aggressive path
the past two years in an effort to build girth in the applications space, and the addition of $23 million in
revenue from MAI takes Softbrands over the $100 million revenue mark. The acquisition also moves
Softbrands into a number two position worldwide in the hospitality space. The two firms are also highly
complementary building on the other’s relative strength in Europe vs North America, and in chains vs
independents. Strategic fit is everything when it comes to making these deals come together.

If you are a specialized solutions vendor in a niche market, there is quite possibly a buyer for your
software company. That is especially true if you are a leader or near-leader in your market, can
demonstrate growth along with growth opportunities in your sector, are profitable, and have solid, state of
the art technology.
 THE PREMIER PROVIDER OF M&A SERVICES TO SOFTWARE / IT COMPANIES

Corum Q3 Briefing Sample (continued)

Other Vertical Markets

Public Peer Group (In $U.S. millions – except share prices)

Stock Stock Market Enterprise Trailing Multiple Forward Multiple
Symbol Company Price Value Value P/E EV/EBITDA EV/S P/E EV/S
DRTE Dendrite International Inc. $9.78 $427.6 $352.0 40.75 x 7.36 x 0.81 x 22.74 x 0.78 x
EPIQ EPIQ Systems Inc. $14.71 $285.4 $355.9 38.71 x 7.91 x 2.33 x 14.56 x 2.01 x
JDAS JDA Software Group Inc. $15.42 $450.2 $326.1 110.14 x 12.58 x 1.55 x 15.58 x 0.89 x
MFLO Moldflow Corporation $11.91 $134.5 $74.9 132.33 x 10.11 x 1.14 x - -
RLRN Renaissance Learning Inc. $14.31 $421.8 $422.2 23.08 x 13.39 x 3.49 x 19.08 x -
ROK Rockwell Automation Inc. $58.10 $10,220.0 $10,610.0 18.50 x 9.73 x 1.95 x 15.25 x 1.82 x
Median Valuation Multiples 39.73 x 9.92 x 1.75 x 15.58 x 1.35 x
M&A Transactions

NIIT to Acquire Element K

NIIT Global to acquire Element K, a leading provider of learning solutions in North America. Element K's
learning solutions business leverages its renowned technology KnowledgeHub, and an award-winning
suite of more than 3,500 courses. Its learning solutions are enhanced through custom content
development and strategic learning services to address specific business challenges. Together, NIIT and
Element K will emerge as the leading global provider of comprehensive Learning Solutions, with more
than 3,000 employees, over US$250 million in revenue, and a presence in 32 countries. This acquisition
is strategic for NIIT and consistent with its stated plans for accelerated growth.

Announcement Date: July 2, 2006

Deal Value: Undisclosed
 THE PREMIER PROVIDER OF M&A SERVICES TO SOFTWARE / IT COMPANIES

Contact Information

Corum Group Ltd.

10500 NE 8th Street, Suite 1500
Bellevue, WA 98004
USA
(425) 455-8281

Corum Group International S.a.r.l

General Guisan – Quai 30
CH-8002 Zurich
Switzerland
+41 1 251 82 65

www.corumgroup.com