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M&A Flash Report – Dec. 2009


Software and IT Industry Market Update

Thursday, December 3, 2009


10:00 am PT

www.corumgroup.com
Monthly M&A Flash Report

Bruce Milne
CEO Mark Reed
Corum Group Ltd. Executive Vice President
Corum Group Ltd.

Bruce Milne, CEO and founder of Corum, has overseen more M&A transactions than anyone in the world
over the past 25 years, generating over $6 Billion in wealth for clients in 24 countries.

He has founded or owned four software companies, including AMI, the world’s largest vertical market
software firm, and was a founding investor in some of the most innovative firms in their field, including
Dougan Milne
Blue Coat, Bright Star and Sabaki. Director of Research
Corum Group Ltd.
A recognized industry expert, he has served as a personal advisor to Bill Gates on operating systems,
Apple on the development of the Mac, and as one of top 10 industry advisors to IBM. He has served on
the board of Washington Technology Center at the University of Washington, and is the founder of the
WTIA, the nation’s leading regional technology trade association.

Outside the U.S. he worked with the Canadian government to found SoftWorld, and he was recently
chosen as one of the 200 most influential individuals in the IT community in Europe. He is also the only
juror from North America for the Tornado 100 Awards in Europe’s. Tomoki Yasuda
Analyst
A Deans List graduate in International Business from the UW, and a graduate “With Distinction” from Corum Group Ltd.
Harvard Business School, Mr. Milne has written three book, including “Power Planning, How To Structure
Your Software Company For Success”.

>> For today’s presentation or more information, contact Pat Sultan


(pats@corumgroup.com, +1 425-455-8281 ext. 248)

Corum Group Presentation ■ 2


Valuations Up – “Time to Sell?”

AGENDA
 Overview of Current Market
 Market and Valuation Analysis
 Closing Comments - Q&A

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Asia - East

 “Dubai World restructuring $26 Billion in debt...none


backed by Government”
 “India Growth Shatters Forecasts – Up 7.9%”
 “Tokyo Moves To Break Deflationary Spiral”
 “Wen Labels Renmindi Pressure ‘Unfair’”
 “China Grows At A Faster Pace”
 “Emergency Meeting As Yen Drops Most in 7 Months”

Corum Group Presentation ■ 4


Europe Zone

 “EU Consumer Prices Up - First Time In 7 Months”


 “British House Prices Climb For 4th Month”
 “2010 U.K Recovery Prediction ‘Too Optimistic’”
 “Eurozone Inflation Turns Positive”
 “U.K. Business Numbers Up As Jobs Are Lost –
‘Necessity Entrepreneurs!’”
 “U.K. Write-Offs Hit Record”
 “Eurozone Unemployment At 11 Yr. High”

Corum Group Presentation ■ 5


Currencies

 “Swiss Franc Chosen Currency”


 “Australia Raises Key Rates to 3.7%”
 “Brazilian Real Best Performing Currency”
 “Canada’s Currency Hits 18 Mo. High”
 “Dollar Resumes Slide”
 “Gold Soars Past $1200”

Corum Group Presentation ■ 6


North America

 “U.S. Business Activity Accelerates in November”


 “Canada’s Recovers, but less than expected
 0.4%”“Chip Sales Rise 5.1% in October”
 “Job Cuts Loom As Construction Stimulus Fades”
 “Steelmakers Downsizing Once Again”
 “U.S. Manufacturing Expands 4th Month”
 “ADP – Job Losses Exceed Expectations”
 “Fed Sees Subdued Economic Rebound”

Corum Group Presentation ■ 7


Housing

 “Lenders Face Sanctions For Failed Loan


Modifications – 650,000 Trial Revisions Not
Converted”
 “Wealthy Investors Raise Real Estate
Holdings”
 “Home Sales Unexpectedly Climb 3.7%”
 “U.S. Commercial Mortgage Default 3.4% -
16 Yr. High”

Corum Group Presentation ■ 8


Retail

 “Cyber Monday Online Retail Sales Increase


16%”
 “More Shoppers Hit Stores, Spend Less
Each...Favor Low Price Items”
 “Holiday Shopping Losing Meaning as U.S.
Economic Barometer”

Corum Group Presentation ■ 9


Valuations Are UP – Why?

 Buoyant Financial Markets


 Pent up buyer demand
 Currency fluctuations – Dollar on sale!
 PE buyers are back
 Cash available

Corum Group Presentation ■ 10


Rise in Valuations Fuel Sales

 Divestitures are up
 Venture Capitalists are moving portfolio
 Sellers are responding to buyer overtures
 Mega Deals are being done
 Even smaller transactions are happening

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Recent Transactions Closed

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Recent Transactions Closed

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Firms in Letter Of Intent (LOI)

 Vertical market – Financial Services


 Mobile search applications
 Vertical market – Healthcare (SaaS)
 Network security solutions
 IT Services
 Mobile messaging solutions

Corum Group Presentation ■ 14


Current Offers

 Network management solutions


 Vertical market - Wholesale Distribution
 Application development tools
 Enterprise Content Management
 CRM
 Vertical market – Insurance
 Enterprise Application Integration

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Market Valuation Analysis

Tomoki Yasuda
Analyst
Corum Group Ltd.

Tomoki is currently an analyst working at Corum’s headquarters in Bellevue, WA. At Corum,


Tomoki is responsible for conducting research and market analysis on companies,
economy, and valuations. He is a contributor to the Merger and Acquisitions Quarterly and
has been responsible for updating the internal processes for Corum.

Corum Group Presentation ■ 16


Public Markets

Nasdaq S&P Tech Dow


120.00

110.00

100.00

90.00

80.00

70.00

60.00

50.00

40.00
Feb-09 Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09

Corum Group Presentation ■ 17


M&A Activity – November

Number of Software and IT M&A Transactions

267

233

247
November
319

2005

2004

0 50 100 150 200 250 300 350

2009 2008 2007 2006 2005 2004

Corum Group Presentation ■ 18


Corum Index – M&A Statistics

Nov-08 Nov-09
# of Transactions 233 267
# of Mega Deals 3 9
Largest Deal $5,352 $5,200
Average Deal Size $209 $356
Median Seller Size $13 $23
# VC backed Exits 22 34
% Terms Undisclosed 68% 66%
All Cash (announced) 43% 44%
% Targets were Public 15% 16%
% Public Buyers 51% 49%

$ values in millions

Corum Group Presentation ■ 19


Horizontal Application Software Market

Public Valuations Deal Spotlight:


Sector: SCM
Target: i2 Technologies, Inc.
Buyer: JDA Software Group, Inc.
Date: November 2009
Transaction Value: $556.1 million
Horizontal Transaction Multiple: 1.7x
Application Structure: Cash & Stock
Software
Comments:
 Formerly stalled deal
Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09
 Strengthening key verticals
EV/EBITDA 6.82 x 9.23 x 9.39 x 9.99 x 11.06 x 11.06 x 12.67 x 12.26 x 11.66 x
 Expanded product portfolio
EV/S 1.12 x 1.16 x 1.35 x 1.50 x 1.58 x 1.93 x 2.41 x 2.21 x 2.29 x

Corum Group Presentation ■ 20


Vertical Application Software Market

Public Valuations Deal Spotlight:


Sector: Healthcare
Target: IMS Health, Inc.
Buyer: TPG Capital/CPP
Investment Board
Date: November 2009
Vertical Transaction Value: $5.2 billion
Application Transaction Multiple: 2.4x
Software Structure: Cash

Comments:
 Healthcare vertical
 Positioned for long-term growth
Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09
 Private equity megadeal
EV/EBITDA 6.53 x 7.26 x 7.99 x 8.17 x 8.91 x 9.01 x 9.32 x 8.42 x 8.96 x
EV/S 1.14 x 1.31 x 1.40 x 1.51 x 1.51 x 1.66 x 1.80 x 1.57 x 1.82 x

Corum Group Presentation ■ 21


Consumer Application Software Market

Public Valuations Deal Spotlight:


Sector: Gaming
Target: Playfish, Ltd.
Buyer: Electronic Arts, Inc.
Date: November 2009
Transaction Value: $275 million
Transaction Multiple: 5.5x
Consumer Structure: Cash w/additional earn-
Application out of up to $100m through 2011.
Software
Comments:
 Change in gaming dynamic
 Social gaming going mainstream
Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09  Client base
EV/EBITDA 2.74 x 3.81 x 2.83 x 4.47 x 4.57 x 4.27 x 5.88 x 5.23 x 5.71 x
EV/S 0.64 x 0.69 x 0.50 x 0.53 x 0.53 x 0.59 x 0.83 x 0.60 x 0.61 x

Corum Group Presentation ■ 22


Infrastructure Market

Public Valuations Deal Spotlight:


Sector: Security
Target: Guardium, Inc.
Buyer: IBM Corporation
Date: November 2009
Transaction Value: $232 million
Transaction Multiple: 6.1x
Infrastructure Structure: Cash
Software
Comments:
 Latest in a string of acquisitions
by IBM
 Focus on application
Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 infrastructure security
EV/EBITDA 6.98 x 8.46 x 8.29 x 8.74 x 9.59 x 10.92 x 10.46 x 10.81 x 9.76 x
 Streamline compliance
EV/S 1.43 x 1.55 x 1.52 x 1.72 x 1.95 x 2.02 x 2.14 x 2.20 x 2.27 x

Corum Group Presentation ■ 23


Internet Market

Public Valuations Deal Spotlight:


Sector: Mobile Advertising
Target: AdMob, Inc.
Buyer: Google, Inc.
Date: November 2009
Transaction Value: $750 million
Transaction Multiple: 37.5x
Internet Structure: Stock

Comments:
 Strengthening Google’s presence
in the mobile
 Interactive marketing abilities
Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09
 Technology and Talent
EV/EBITDA 7.54 x 9.80 x 11.78 x 11.81 x 13.32 x 13.02 x 15.80 x 11.81 x 13.03 x
EV/S 1.60 x 2.11 x 2.26 x 2.30 x 2.48 x 2.60 x 2.70 x 2.19 x 2.45 x

Corum Group Presentation ■ 24


IT Services Market

Public Valuations Deal Spotlight:


Sector: IT Services
Target: CFC Information Systemes
Buyer: Adesso AG
Date: November 2009
Transaction Value: N/A

IT Services Comments:
 Geographic expansion
 Domain expertise

Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09


EV/EBITDA 5.32 x 5.76 x 5.51 x 5.24 x 5.56 x 5.67 x 6.66 x 6.10 x 6.16 x
EV/S 0.56 x 0.60 x 0.61 x 0.63 x 0.68 x 0.68 x 0.73 x 0.73 x 0.63 x

Corum Group Presentation ■ 25


Market Valuation Analysis

Dougan Milne
Director of Research
Corum Group Ltd.

Dougan is the head of Corum’s research team serving as the Director of Research. During
his time with Corum, Dougan spent three years working with Corum's 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 and the advertising firm, Modo
Marketing. Dougan has a Bachelors degree in Business Economics from the University of
San Diego.

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Unique Opportunity

 Mega Deals
 Divestitures
 Private Equity Buyers
 Venture Portfolio Exits
 Re-Valuations

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World Financial Symposiums

Nat Burgess
Executive Vice President Chairman
Corum Group Ltd. World Financial Symposiums

Nat joined Corum in 1996 and brings a diverse background in technology M&A and law. While with the Enforcement Division of
the U.S. Securities and Exchange Commission, Nat helped identify and build cases against securities fraud schemes. With the
Strategic Development Division of Morgan Stanley's M&A group, Nat worked on cross-border acquisitions of U.S. and European
companies by Japanese firms, and on financings by large Japanese public companies. Nat moved to Morgan Stanley's Tokyo
office, where he reported directly to the President of Morgan Stanley, Japan Ltd. and focused exclusively on cross-border M&A.

After Morgan Stanley, Nat co-founded Postcard Software, a creator of advertiser-driven bilingual (English and Japanese) Internet
content. At Activision, Nat lead the company's on-line business development.

Nat earned an undergraduate degree in Japanese literature from Yale College and a law degree from UCLA. While in law school,
Nat wrote articles for the International Forum at Yale, Tokyo Journal. Nat is frequently quoted in industry publications, a highly
sought speaker at industry conferences, and Chairman of the World Financial Symposiums.
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London – November 17
Partial Speaker List

December 15, New York – info@worldfinancialsymposiums.com

David Virnelli Jeff Brennan Jeff Hoffmeister


IBM Pitney Bowes Morgan Stanley NY

Peter Coffee Arun Prakash Ryan Ziegler Greg Osinoff


Salesforce.com Virgo Capital Edison Ventures RenewData

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www.worldfinancialsymposiums.com
Growth and Exit Strategies
Staging for Recovery
The Future of M&A, VC, Private Equity and Public Offerings in the New Tech Landscape

December 15, 2009  New York


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

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Upcoming Corum Events

December 3: Flash Webinar – (Int’l) January 21: Flash Webinar – (Nordic)


December 8: London – SUSO January 25-27:Miami – Progress Conference
December 10: Flash Webinar (Nordic) January 28: Flash Webinar (DACH)
December 15: New York City – WFS February 4: Flash Webinar – (Int’l)
January 7: Flash Webinar – (Int’l) February 16: Dallas – MB
January 12: Toronto – MB & SUSO February 18: Bellevue – SUSO
January 14: Flash Webinar (France) March 2: Houston– MB
January 14: Ottawa – MB March 4: Flash Webinar – (Int’l)
January 15: Montreal – MB March 28: Oslo – SUSO
January 19: Calgary – MB March 21: San Francisco – MB

Merge Briefing (MB)


Selling Up Selling Out (SUSO)
World Financial Symposium (WFS)
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Contact Information

Corum Group Ltd.

Bruce Milne, CEO


brucem@corumgroup.com

Dougan Milne, Director of Research


douganm@corumgroup.com
Corum Group International S.à.r.l.
10500 NE 8th Street, Suite 1500
Beim Paradeplatz
Bellevue, WA 98004
Basteiplatz 7
USA
8001 Zürich
Switzerland
+1 425-455-8281
+41 44 251 82 65

Research and Conferences:


www.corumgroup.com

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