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USA Switzerland Germany France United Kingdom Canada Norway Brazil

MERGE Webinar – Oct. 2009


Software and IT Industry Market Update:
Is an international buyer
y in y
your future?

Thursday, October 1
Thursday 1, 2009
10:00 am PT

www.corumgroup.com
Mark Reed
Executive Vice President
Corum Group Ltd
Ltd.

Bruce Milne
CEO & Chairman
Corum Group Ltd.
Bruce Milne, the founder of Corum, is one of the true leaders in the software industry. He built the largest vertical market
software company in the world before founding Corum, where he has overseen more mergers than anyone in history,
generating over $6 Billion in wealth for the owners of privately held firms. Along the way, in addition to publishing
extensively, he has owned three other software companies (Rosesoft, Dataword, Insider Edition) and been a seed investor Miro Parizek
Managing Director
in some of the leaders in our industry (Blue Coat, Bright Star, Sabaki). He founded the largest regional tech association
Corum Group Ltd.
(Washington Software Association),
Association) and,
and as a recognized leader,
leader has served on numerous advisory boards including
Comdex, DEC, Apple, IBM, and personally advised Bill Gates at Microsoft. He has been a tech cabinet advisor to two
Governors, a Congressman and U.S. Senator on issues related to the future of the software industry. For his expertise, he
was commissioned by the U.S. government to write the definitive high tech business guide for the SBA. The Canadian
Government had him conduct research which led to the establishment of SoftWorld, and he was recently voted one of the
most influential people in the European software community for his work during the last market decline.

Dougan Milne
>> For today’s presentation or more information, contact Pat Sultan Research
(pats@corumgroup.com, +1 425-455-8281 ext. 248) Corum Group Ltd.
Corum Group Presentation ■ 2
Agenda
g

 Overview of Current Market

 International Update

 Market and Valuation Analysis

 Closing Comments - Q&A

Corum Group Presentation ■ 3


Recovery
y – Is Now the Time?

“St k H
“Stocks Have B
Bestt Q
Quarter
t SiSince 1998”

“IMF raises global 2010 growth forecast to 3.1% from 2.5%”

Corum Group Presentation ■ 4


Recovery
y – Is Now the Time?

 Corum M&A Activity High

 Six Companies Sold in Q3

 Six More in LOI During Q3

 Six
Si More Weighing Offers

Corum Group Presentation ■ 5


U.S. Economy
y

 “U
U.S.
S Interest Rates Steady”
Steady

 “Consumer Confidence Unexpectedly Drops”

 “Pimco’s Bill Gross Buying Treasuries Amid Deflation


Concerns”

 “Unemployment – Threatened Chronic Job Loss”

 “Fed
“F d Rescue
R - $11.6
$11 6 Trillion
T illi Bill!”

Corum Group Presentation ■ 6


U.S. Real Estate

 “Home
Home Prices Climb Most Since 2005”
2005

 “Vacation Timeshares Plunge”

 “Industrial Real Estate Won’t Bottom Until 2010”

 “Time
Time to Drop $8000 1st Time Buyer Credit”
Credit

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International Economies

 “Trichet Says Too Early to Withdraw Stimulus”

 “Spanish Inflation Rate Remains Negative”

 “Pace of Eurozone Recovery Slows”

 “Banks Call on Economists over


o er Lending Dro
Drought”
ght”

 “WB Pres: Global Economy ‘Far From’ Secure”

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International Interest Rates

 “Russia Cuts Bank Rate by Half Point to Stimulate”

 “Israel Springs Interest Rate Rise”

 “Negative Interest Rates in Sweden”

 “ECB Lea
Leaves
es Interest Rates at 1%”

 “Brazil to Cut Interest Rate”

Corum Group Presentation ■ 9


Stock Markets

 “Stock Climb Continues Since March”

 “Europe IPO Market Thawing From Deep Freeze”

 “Global Rally Shows Signs of Running Out of Steam”

 “U.S.
“U S Stocks Close Higher on M&A Boost”

Corum Group Presentation ■ 10


Mega
g Deals

 Xerox  ACS: $6.4b; 1.3x

 Adobe  Omniture: $1.8b;


$1 8b; 5.2x
5 2x

 SilverLake  Skype: $2b; 5.1x

 Dell  Perot Systems: $3.9b; 1.4x

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Tech M&A

“People are finally putting their


money where their mouth is is.”

- Thompson Phillips Jr.

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Presenter

Miro Parizek, Managing Director


Corum Group International - Zurich

 University of Pennsylvania, Computer Science


 Wharton School of Business
 Software Industry since 1983
 Founder of three software and IT service companies
 Exited North American Software and MediaGold
 12 years M&A Advisor with the Corum Group
 Led on dozens of M&A transactions in virtually all
software and IT related sectors including
 Datacenter Infrastructure
 Vertical software
 Horizontal solutions
 IT Services
 Enterprise Appplications
 Web Commerce

Corum Group Presentation ■ 13


International M&A

Corum Group Presentation ■ 14


International M&A

 Challenges
C
 Cultural differences
 Integration across borders
• Establishing clear organization structures
• Fostering teamwork

 Benefits
 Economies of scale
 Growth for top (and hopefully) bottomline
 Higher service levels for international customers
 Access to “rare”
rare domain expertise
 Global leadership position
Corum Group Presentation ■ 15
International versus Domestic

Source: Thomson Financial

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European Public Markets

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Equity
y Valuations Not in Bubble Territory
y

Source: Datastream

Corum Group Presentation ■ 18


International Buyers
y of U.S. Companies

23% 22% FRANCE


GERMANY
19% 19% UK
NORDIC
8% 21% BENELUX
OTHER

Source: 451 Group

Corum Group Presentation ■ 19


Top Non-U.S. Buyers
y

 Europe  IT Services  Asia


 SAP - DE  Bull - FR  China Security
 Siemens - DE  Thales Group - FR  Kingdee International
 Software AG - DE  Cegedim - FR  CDC
 Pearson - UK  At Origin
Atos O i i - FR  T dMi
TrendMicro
 Autonomy - UK  Capgemini - FR  NTT
 Sage - UK
 Steria - FR  Fujitsu
 Thomson Reuters - UK
 Logica - UK  Namco Bandai
 Dassault - FR
 Computacenter - UK  NEC
 Ubisoft - FR
 Getronics - BE  Sony
 Wolters Kluwer - NED

 Canada  LAM  India


 Research in Motion  Datasul SA - BR  Wipro
 OpenText  BuscaPe.com
BuscaPe com - BR  TaTa
 CGI  Hildebrando SA - MX  Infosys
 Satyam
Corum Group Presentation ■ 20
Related Cross-Border Transactions

Buyer
y U.S. Target
g Details
• Skydata creates business mobile applications
for RIM, Windows and iPhone
• Terms undisclosed
• Provides Ticker data management for
financial service companies
• Terms undisclosed
• Provides subscription-based automotive
GPS devices and software for consumers
• Estimates $124m in cash
• SaaS, enterprise manufacturing intelligence
software
• Transaction valued at $3
$3.2m
2m

Corum Group Presentation ■ 21


“Lesser Known” Non-U.S. Buyers
y

 Australia  India
• Computershare Ltd - 7 deals; $4m - $120m • HCL Technologies – 3 deals; $10m - $50m
• 3i Infotech – 5 deals; $4m – $80m
 Canada
• Constellation Software – 18 deals;
 Israel
$1m - $25m • Ness Technologies – 3 deals; $10m - $80m
• Softchoice Corp. - 3 deals; $3m - $50m • NICE Systems – 5 deals; $10m - $300m
• Tucows Inc. - 5 deals; $1m – $20m
 U.K.
 France • SDL International - 3 deals; $15 - $60m
• ILOG Inc. - 2 deals; $2m - $15m • Misys PLC – 3 deals; $13m - $330m
• Ubisoft - 3 deals; $10m - $100m (est.)
 Philippines
pp
• Business
B siness Objects - 7 deals
deals, $4m - $100m
• IPVG Corp. – 2 deals; $10m - $15m

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Field Update
p

John Melotte
Regional Director
Bruce Lazenby United Kingdom
Regional Director
Canada

Jerome Fougerat
Regional Director
France

Corum Group Presentation ■ 23


Dougan Milne
I
International
i lRResearch
h
Corum Group Ltd.

Dougan is a Research Analyst who has worked for 3 years with Corum
Corum'ss international group
headquartered in Zürich, Switzerland. Prior to joining Corum's team in 2005, Dougan spent
three years working in the banking industry with Bank of America, and Citigroup's Private
Wealth business unit. Before entering finance and investment banking, Dougan founded the
successful garment distribution business, Billions Apparel. Dougan has a Bachelors degree
in Business Economics from
f the University off San
S Diego.

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Public Markets

Nasdaq S&P Tech


S&P Tech Dow
120.00

110.00

100.00

90.00

80 00
80.00

70.00

60.00

50.00

40.00
Jan‐09 Feb‐09 Mar‐09 p
Apr‐09 May‐09
y Jun‐09 Jul‐09 Aug‐09
g Sep‐09
p

Corum Group Presentation ■ 25


M&A Activity
y – September

Number of Software and IT M&A Transactions

255

239

276
September
350

2005

2004

0 50 100 150 200 250 300 350 400

2009 2008 2007 2006 2005 2004

Corum Group Presentation ■ 26


Corum Index – M&A Statistics

Sep-08
Sep 08 Sep-09
Sep 09
# of Transactions 242 255
# of Mega Deals >$1B 1 6
Largest Deal $2 000
$2,000 $6 400
$6,400
Average Deal Value $99 $381
Median Seller Revenue $28 $112
# VC backed Exits 17 33
% Terms Undisclosed 64% 77%
All Cash (announced) 59% 47%
% Targets Public 16% 13%
% Buyers Public 49% 45%

$ values
l iin millions
illi

Corum Group Presentation ■ 27


Horizontal Application Software Market

Public Valuations Deal Spotlight:


Sector: Supply Chain
Target: LS Retail + To-Increase
Buyer: Microsoft
Date: September 2009
Transaction Value: $5 million
Horizontal Structure: Cash
Application
Software
Comments:
 Microsoft Dynamics
Feb‐09 Mar‐09 Apr‐09 May‐09 Jun‐09 Jul‐09 Aug‐09 Sep‐09  Vertical expansion
EV/EBITDA 5.85 x 6.82 x 9.23 x 9.39 x 9.99 x 11.06 x 11.06 x 12.67 x  2 Nordic companies
EV/S 1.12 x 1.12 x 1.16 x 1.35 x 1.50 x 1.58 x 1.93 x 2.41 x

Corum Group Presentation ■ 28


Vertical Application Software Market

Public Valuations Deal Spotlight:


Sector: Public
Target: FKI Logistex
Buyer: Lyngsoe AS
Date: September 2009
Transaction Value: n/a
Vertical 
Application
Comments:
Software
 Gains libraries
 International expansion
Feb‐09 Mar‐09 Apr‐09 May‐09 Jun‐09 Jul‐09 Aug‐09 Sep‐09  Domain expertise
EV/EBITDA 6.19 x 6.53 x 7.26 x 7.99 x 8.17 x 8.91 x 9.01 x 9.32 x  Client base
EV/S 1.01 x 1.14 x 1.31 x 1.40 x 1.51 x 1.51 x 1.66 x 1.80 x

Corum Group Presentation ■ 29


Consumer Application Software Market

Public Valuations Deal Spotlight:


Sector: Consumer Finance
Target: MINT.com
Buyer: Intuit
Date: September 2009
Transaction Value: $170m
Consumer  Structure: Cash
Application
Software
Comments:
 SaaS
Feb‐09 Mar‐09 Apr‐09 May‐09 Jun‐09 Jul‐09 Aug‐09 Sep‐09  Connected services strategy
EV/EBITDA 2.40 x 2.74 x 3.81 x 2.83 x 4.47 x 4.57 x 4.27 x 5.88 x  Evolving business model
EV/S 0.58 x 0.64 x 0.69 x 0.50 x 0.53 x 0.53 x 0.59 x 0.83 x  Consumer

Corum Group Presentation ■ 30


Infrastructure Market

Public Valuations Deal Spotlight:


Sector: Security
Target: Vericept
Buyer: TrustWave
Date: September 2009
Transaction Value: $20m
Infrastructure  Revenue Multiples: 2.0x
Software
Structure: Stock (est.)

Comments:
Feb‐09 Mar‐09 Apr‐09 May‐09 Jun‐09 Jul‐09 Aug‐09 Sep‐09  Critical data classification
EV/EBITDA 6.32 x 6.98 x 8.46 x 8.29 x 8.74 x 9.59 x 10.92 x 10.46 x  SaaS offering in the future
EV/S 1.31 x 1.43 x 1.55 x 1.52 x 1.72 x 1.95 x 2.02 x 2.14 x

Corum Group Presentation ■ 31


Internet Market

Public Valuations Deal Spotlight:


Sector: e-Commerce
Target: BuscaPe.com
Buyer: Naspers
Date: September 2009
Transaction Value: $342m
Internet
Comments:
 Geographic expansion
 Dominant regional player
Feb‐09 Mar‐09 Apr‐09 May‐09 Jun‐09 Jul‐09 Aug‐09 Sep‐09  Favorable demographics
EV/EBITDA 6.05 x 7.54 x 9.80 x 11.78 x 11.81 x 13.32 x 13.02 x 15.80 x
EV/S 1.36 x 1.60 x 2.11 x 2.26 x 2.30 x 2.48 x 2.60 x 2.70 x

Corum Group Presentation ■ 32


IT Services Market

Public Valuations Deal Spotlight:


Sector: IT Services
Target: eVisory
Buyer: IQ Business Group
Date: September 2009
IT Services
Transaction Value: N/A

Comments:
 Geographic expansion
 Cultural expansion
Feb‐09 Mar‐09 Apr‐09 May‐09 Jun‐09 Jul‐09 Aug‐09 Sep‐09
 Domain expertise
EV/EBITDA
/ 5.27 x
5.27 x 5.32 x
5.32 x 5.76 x
5.76 x 5.51 x
5.51 x 5.24 x
5.24 x 5.56 x
5.56 x 5.67 x
5.67 x 6.66 x
6.66 x
EV/S 0.55 x 0.56 x 0.60 x 0.61 x 0.63 x 0.68 x 0.68 x 0.73 x

Corum Group Presentation ■ 33


Market and Valuation Summary

 Transaction volumes back up!


 Continue to see month on month increases in public
valuations
 Good valuations for strategic opportunities
 Active buyer universe: Public,
Public Private and PE
 Private equity putting dollars to work: Buyout,
Roll-up,
Roll up, etc.
 Mega Deals are back.

Corum Group Presentation ■ 34


Corum Group Presentation ■ 35
London – November 17
Partial Speaker List

November 17, London – info@worldfinancialsymposiums.com

Jenny Rosberg Frank Boenke Andrew Tsao Pelle Hjortblad Kristof de Spiegeleer
NASDAQ Wellington Partners Silicon Valley Bank ProjectPlace SUN (Q-Layer)

Ashley Ward Anil Hansjee Bernard Dalle Mike Peplow Gustavo Garcia
European Leadership Google Index Ventures Banctec BuyVIP
Programme

Corum Group Presentation ■ 36


www.worldfinancialsymposiums.com
y p

Growth and Exit Strategies


Staging for Recovery
The Future of M&A,
M&A VC,
VC Private Equity and Public Offerings in the New Tech Landscape

November 17, 2009  London


Attend this conference to learn about:
 Raising capital in the current environment
 The new rules of global tech M&A
 The role of private equity in a credit-starved market
 The IPO window
 Creative transaction structures
 Finding value and opportunity in the cloud
 Acquisition multiples, VC tactics and more

Corum Group Presentation ■ 37


Upcoming
g Corum Events

October 5: Prague – SUSO October 23: Munich – MB


October 6: Boston – MB October 27: Frankfurt – MB
October 8: Lyon – MB October 27: Dublin – SUSO
October 8: Washington DC – MB November 3: Houston – SUSO
October 13: Scotland – MB November 5: MERGE Webinar (Int’l)
October 13: Austin – SUSO November 10: MERGE Webinar (France)
October 14: Ireland – MB November 11: MERGE Webinar (DACH)
October 20: Stockholm – MB/SUSO November 17: London – WFS
O t b 22:
October 22 Denmark
D k – MB/SUSO N
November
b 1818: Ft.
Ft Lauderdale
L d d l – MB
October 22: Grenoble – MB November 19: Tampa – MB

Merge Briefing (MB)


Selling Up Selling Out (SUSO)
World Financial Symposium (WFS)
Corum Group Presentation ■ 38
Contact Information

Corum Group Ltd.

Bruce Milne, CEO

Dougan Milne, Research


D
Douganm@corumgroup.com
@
Corum Group International S.à.r.l.
10500 NE 8th Street, Suite 1500
Bellevue, WA 98004
USA Miro Parizek, Managing
g g Director
Mirop@corumgroup.com
+1.425.455.8281
Beim Paradeplatz
Basteiplatz 7
8001 Zü
Zürich
i h
Switzerland

+41.44.251.82 65
Research and Conferences:
www.corumgroup.com

Corum Group Presentation ■ 39