1 MERGERS & ACQUISITIONS • CAPITAL RAISES • FINANCIAL & STRATEGIC ADVISORY MARKETING TECH TRADING MULTIPLES MAJOR INDICES & RATES MARKETING TECH NEWS & TRENDS MARKETING TECHNOLOGY MARKET UPDATE – Q3 & Q4 2017 The second half of 2017 continued the trend of a healthy market for M&A and capital raises in Marketing Technology. The outlook is positive in 2018 for quality technology companies to pursue a sale of business or capital raise. Strategic buyers and private equity firms have record amounts of cash to deploy and valuations remain attractive. All indications are positive for healthy M&A market in 2018 despite public market volatility as investors adjust to new reality of higher economic growth combined with inflation. Some notable activity within Marketing Technology: ▪ We advised DSG, which provides sales enablement services, in its recapitalization with Stone-Goff Partners in Q4. ▪ CallRail raised $75 million at $160 million valuation in Q3 from Sageview Capital and Leaders Fund. CallRail based in Atlanta, is a phone call tracking and analytics platform used to understand which marketing campaigns drive leads and conversions. ▪ Our index of sales and marketing technology public companies was up a whopping 54% in 2018 driving up the revenue valuation multiple to 4.5 times. ▪ Salesforce.com stock price is up 32% since the end of Q2. Shares of the cloud-based software company have gained on the back of impressive top line growth across different business segments. We will be attending the MarTech conference at San Jose Convention Center from April 23 to 25 th so let me know if interested in meeting while there. Our 9 th annual conference, CHILDSConnect, will be on May 10th in Atlanta at The St. Regis. Last year over 400 owners, executives, and investors interested in middle market growth opportunities were in attendance. You can learn more and register at www.childsadvisorypartners.com/childsconnect. I hope to see you all there! Scott Rhodes Managing Director Enterprise Value LTM Revenue LTM EBITDA Sales & Marketing Tech 4.49x 9.2x Product & Supply Chain 4.65x 20.5x % Change 3 Month 12 Month Sales & Marketing Tech 169,191.03 11.9% 54.3% Product & Supply Chain 101,467.29 2.3% 36.2% Dow Jones 23,860.46 10.3% 25.1% NYSE 12,270.65 4.9% 15.8% NASDAQ 6,777.16 6.3% 28.2% AMEX 2,496.07 0.8% 15.3% S&P 500 2,581.00 6.1% 19.4% Russell 2000 1,463.79 3.0% 13.1% USD/Euro 0.83 (1.6%) (12.1%) USD/Yen 112.64 0.0% (3.5%) USD/Pound 0.74 (0.8%) (8.7%) U.S. Prime Rate 4.500% 25.00 Bps 75.00 Bps U.S. Treasury - 10 Year 2.400% 7.00 Bps (5.00 Bps) LIBOR - 3 month 1.694% 36.04 Bps 69.64 Bps Fed Funds Overnight Rate 1.330% 27.00 Bps 78.00 Bps Close as of 12/31/2017
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The second half of 2017 continued the trend of a healthymarket for M&A and capital raises in Marketing Technology.The outlook is positive in 2018 for quality technologycompanies to pursue a sale of business or capital raise.Strategic buyers and private equity firms have recordamounts of cash to deploy and valuations remain attractive.All indications are positive for healthy M&A market in 2018despite public market volatility as investors adjust to newreality of higher economic growth combined with inflation.
Some notable activity within Marketing Technology:
▪ We advised DSG, which provides sales enablementservices, in its recapitalization with Stone-Goff Partners inQ4.
▪ CallRail raised $75 million at $160 million valuation in Q3from Sageview Capital and Leaders Fund. CallRail basedin Atlanta, is a phone call tracking and analytics platformused to understand which marketing campaigns driveleads and conversions.
▪ Our index of sales and marketing technology publiccompanies was up a whopping 54% in 2018 driving upthe revenue valuation multiple to 4.5 times.
▪ Salesforce.com stock price is up 32% since the end of Q2.Shares of the cloud-based software company have gainedon the back of impressive top line growth across differentbusiness segments.
We will be attending the MarTech conference at San JoseConvention Center from April 23 to 25th so let me know ifinterested in meeting while there.
Our 9th annual conference, CHILDSConnect, will be on May10th in Atlanta at The St. Regis. Last year over 400 owners,executives, and investors interested in middle market growthopportunities were in attendance. You can learn more andregister at www.childsadvisorypartners.com/childsconnect. Ihope to see you all there!
Scott Rhodes
Managing Director
Enterprise Value
LTM Revenue LTM EBITDA
Sales & Marketing Tech 4.49x 9.2x
Product & Supply Chain 4.65x 20.5x
% Change
3 Month 12 Month
Sales & Marketing Tech 169,191.03 11.9% 54.3%
Product & Supply Chain 101,467.29 2.3% 36.2%
Dow Jones 23,860.46 10.3% 25.1%
NYSE 12,270.65 4.9% 15.8%
NASDAQ 6,777.16 6.3% 28.2%
AMEX 2,496.07 0.8% 15.3%
S&P 500 2,581.00 6.1% 19.4%
Russell 2000 1,463.79 3.0% 13.1%
USD/Euro 0.83 (1.6%) (12.1%)
USD/Yen 112.64 0.0% (3.5%)
USD/Pound 0.74 (0.8%) (8.7%)
U.S. Prime Rate 4.500% 25.00 Bps 75.00 Bps
U.S. Treasury - 10 Year 2.400% 7.00 Bps (5.00 Bps)
Provider of outsourced sales training and enablement services
Enterprise Value: NDEV/Revenue: NDEV/EBITDA: ND
has acquired
Provider of omnichannel commerce technology
Enterprise Value: $820EV/Revenue: NDEV/EBITDA: ND
has acquired
3
Provider of account-based B2B marketing solutions for businesses worldwide
Amount Raised: $65.0MM
Investors:
MARKETING TECH NOTABLE CAP RAISES
CHILDS Advisory Partners
Provider of a content marketing automation platform
Provider of an online content marketing platform allowing B2B marketers to create, publish and measure interactive content
Provider of an online solution that enables product and support teams to understand the customer experience
Provider of an account-based marketing platform for B2B marketers
Amount Raised: $11.0MM
Investors:
Amount Raised: $10.2MM
Investors:
Amount Raised: $15.0MM
Investors:
Amount Raised: $10.3MM
Investors:
Provider of cloud-based software solutions for automated customer acquisition and behavioral marketing
Investors:
Amount Raised: $31MM
4
2.40x
2.49x 2.49x
2.26x
2.50x
2.40x
2.00x
2.10x
2.20x
2.30x
2.40x
2.50x
2.60x
2012 2013 2014 2015 2016 2017
EV/LTM Revenue
M&A ACTIVITY AND TRENDS
CHILDS Advisory Partners
EV/Revenue
SOFTWARE M&A VALUATIONS
Sources: Capital IQ, Gartner, Forrester, CHILDS proprietary database
U.S. MIDDLE MARKET SOFTWARE M&A ACTIVITY – QUARTERLY TRENDS
▪ M&A activity in the United States for middle marketsoftware companies slightly softened in Q3 and Q4 2017with 814 deals announced.
▪ Represents a 13% volume decline over theprevious 6 months and a 7% decline from thesame period last year.
▪ We expect the Tax Cuts and Jobs Act 2017 tohave an uncertain impact on the M&A market.On the positive side we expect an increase inGDP growth and there is no change in long termcapital gains rate. On the negative side, debtfinancing losing some tax advantage with newlimitations on the deductible of interestexpense.
▪ Opportunity for high quality growth deals to bewell received by buyers.
▪ Note, we define middle market as deals withenterprise value less than $1 billion.
▪ Valuations for publicly traded technology companiescontinue to increase.
▪ Revenue multiples for public MarketingTechnology companies increased slightly from4.24x to 4.49x. from Q2 to Q4.
▪ Former Corp. Dev. executive for two S&P 500 companies, Equifax and Waste Management, and CEO of PE-backed business sold to strategic buyer
▪ 14 years of investment banking experience including Robinson Humphrey and Bank of America
▪ Executed over 80 M&A and capital markets transactions
▪ MBA from Kellogg School at Northwestern University (Beta Gamma Sigma) and BA from UNC Chapel Hill (Phi Beta Kappa)
▪ 20 years of investment banking experience executing M&A transactions and raising capital
▪ Co-founder of Bulger Capital Partners
▪ Co-head of East Coast Services and Software for Needham & Company
▪ MBA from F.W. Olin School of Business at Babson College and a B.A. from Hobart College
▪ 9 years of investment banking experience including Morgan Stanley and KPMG
▪ Executed 15 M&A and capital markets transactions (over $15 billion in value)
▪ MBA from Darden School of Business at the University of Virginia and undergraduate from the University of Virginia
CHILDS Advisory Partners
FIRM OVERVIEW
CORE COVERAGE
Sales
Marketing
Content
Product
Supply Chain
Marketing
Human Resources
Vertical SaaS
Data & Analytics
Healthcare
SOFTWARE MARKETING TECH
• 45 professionals across four offices in U.S. with headquarters in Atlanta
• 83 transactions closed since 2014
• Over 450 transactions completed in the middle market (Enterprise Value less than $1.0 billion)
• 60% transactions since 2013 have involved a strategic buyer; 40% a financial sponsor
• Named 2016 U.S. Boutique Investment Bank of the Year by The M&A Advisor
SERVICE OFFERINGSQUICK FACTS
CAPITAL RAISES
MERGERS & ACQUISITIONS
FINANCIAL & STRATEGIC ADVISORY
Industrial Services
Human Capital Management
Technology
Services
Software
BUSINESS
SERVICESHEALTHCARE TECHNOLOGY
IT & Professional Services
ATLANTA | BOSTON | LOS ANGELESwww.childsadvisorypartners.com
SENIOR SOFTWARE TEAM
9
CHILDS Advisory Partners
TEAM’S EXTENSIVE EXPERIENCE IN MARKETING TECHNOLOGY
Currently raising growth capital
Provider of recruiting and CRM software for staffing industry
Provider of marketing services and solutions for the technology channel
has received an investment from
Provider of web-based retail ticketing, RFID, and software solutions
has been recapitalized by
Kepware develops software solutions to bridge the communication gap between diverse hardware and software applications
has acquired
Provider of business acceleration services for the digital economy
has been acquired by
Cloud-based channel data management solution
has been acquired by
Leading enterprise mobile application development provider
has been acquired by
Provider of SaaS CRM software and sales automation solutions
has been acquired by
Counterpoint Systems is a provider of rights and royalty management software
has acquired
Hawkeye Channel is a provider of sales and marketing solutions
has acquired
Cloud based RFID and data solutions to automate retail supply chains
has been recapitalized by
has been recapitalized by
Provider of outsourced sales training and enablement services
Project Apollo
YOU’RE INVITED - REGISTER TODAY!
“As a past client of CHILDS, I knew the confer-ence would be great. CHILDSConnect provides a very efficient way to meet people and network while still giving attendees valuable and relevant content.”Dan Campbell, CEO at Hire Dynamics
“CHILDSConnect is a staple on my annual calendar and has proven to be a great place to meet middle market executives/owners. It is one of the only conferences I’ve been to with a professional yet casual vibe creating the perfect environment for relationship building.” Sean Barrette, Partner at L Squared Capital Partners
CHILDSConnect’s sector updates and networking opportunities were fantastic as CHILDS Advisory Partners’ professionals are incredibly knowledge-able about the interconnection between business services, technology and healthcare. They are able to connect the right people to inform meaningful dialogue, something that Ankura values. Julie Colasacco, Managing Director, Aegis Compliance & Ethics Center