Tech-Enabled Services Monthly July 2013 - TM Capital Corp. · Services IT StaffingTransaction Processing Info Services VAR LTM EBITDA Margin LTM Gross Margin Tech-Enabled Services

Tech-Enabled Services Market Commentary

TEV / EBITDA Multiples Over Time

July proved to be another exciting month for M&A activity in the Tech-Enabled Services sector. The data center and hosting services sector remained red hot with two notable acquisitions in the month. First, Cinven Ltd., a London-based private equity firm, acquired hosting services provider Host Europe for $668 million. Second, 365 Main, Inc., a data center operator, purchased Evocative, Inc., a colocation and managed services provider operating a data center facility located in Emeryville, California. This marks the 17th data center acquisition for 365 Main, who rounded up 16 data center facilities last fall. On the IT Services front, Accenture’s federal IT consulting practice acquired ASM Research, Inc., an IT consulting firm focused on the government vertical, in a move that will strengthen Accenture’s opportunities with the Department of Defense and Veterans Affairs. Deloitte acquired Quattro Integration Group, an SAP consulting firm, for an undisclosed amount, further enhancing the Company’s SAP and business transformation services. Stefanini IT Solutions acquired RCG Global Services, an IT staffing firm, to strengthen its presence in the U.S. This marks Stefanini’s third recent U.S. acquisition, on the heels of its purchase of TechTeam Global and Code X. As evidenced by the amount and quality of deals announced in July, there continues to be substantial M&A activity in the TES sector and we expect this trend to continue as we enter the second half of the year.

TEV / Revenue TEV / EBITDA

1-Year Revenue Growth LTM Gross & EBITDA Margins

7.0x

10.5x

9.1x 8.6x

10.1x

11.5x

6.6x

3.0x

5.0x

7.0x

9.0x

11.0x

13.0x

15.0x

Q1 '10 Q2 '10 Q3 '10 Q4 '10 Q1 '11 Q2 '11 Q3 '11 Q4 '11 Q1 '12 Q2 '12 Q3 '12 Q4 '12 Jun '13

TEV

/ EB

ITD

A

ITS Offshore ITS Hosting Services IT Staffing Transaction Processing Info Services VAR

0.6x

1.5x

2.3x

0.3x

2.7x

3.2x

0.2x

0.0x

0.5x

1.0x

1.5x

2.0x

2.5x

3.0x

3.5x

ITS OffshoreITS

HostingServices

IT Staffing TransactionProcessing

InfoServices

VAR

TEV

/ Rev

enue

3.3%

18.5%

10.7%

3.0% 2.9%

7.7%

(1.1%)

(5%)

0%

5%

10%

15%

20%

ITS Offshore ITS HostingServices

IT Staffing TransactionProcessing

InfoServices

VAR

1-Ye

ar R

even

ue G

row

th

28.8% 33.5%

52.7%

20.3%

33.1%

61.9%

9.0% 10.7%

18.9%

29.6%

4.7%

23.3% 25.9%

2.8% 0%

10%

20%

30%

40%

50%

60%

70%

0%

10%

20%

30%

40%

50%

60%

70%

ITS OffshoreITS

HostingServices

IT Staffing TransactionProcessing

InfoServices

VAR

LTM EBITD

A M

argin LTM

Gro

ss M

argi

n

Tech-Enabled Services Monthly July 2013

7.0x

10.5x

9.1x 8.6x

10.1x

11.5x

6.6x

0.0x

2.0x

4.0x

6.0x

8.0x

10.0x

12.0x

14.0x

ITS Offshore ITS HostingServices

IT Staffing TransactionProcessing

InfoServices

VAR

TEV

/ EBI

TDA

New York641 Lexington Avenue30th FloorNew York, NY 10022Tel: 212.809.1360

Boston200 Clarendon Street25th FloorBoston, MA 02116Tel: 617.259.2200

Atlanta15 Piedmont Center NE Suite 1010Atlanta, GA 30305 Tel: 404.995.6230

www.tmcapital.com

About TM Capital TM Capital’s Tech-Enabled Services ContactsTM Capital Corp. is a partner-owned investment banking firm based in New York, Boston

and Atlanta, which has completed over 250 transactions with a combined value in excess

of $13.5 billion. Since 1989, we have advised clients navigating a full range of critical

transactions, including complex mergers, acquisitions, debt and equity financings,

minority and majority recapitalizations, restructurings, and advisory services including

takeover defense, fairness and solvency opinions, valuations, as well as litigation support.

We have built deep industry expertise in key sectors and our team regularly publishes

research highlighting current and emerging trends in targeted industries and markets.

TM Capital is a member firm of M&A International Inc., the world’s leading alliance of mid-

market investment banks with over 600 M&A professionals in 40 countries. Members

have closed over 1,300 transactions totaling more than $75 billion in value over the past

five years. For more information, visit www.tmcapital.com.

Brad Adams Managing Director

(617) 259-2203 [email protected]

Select Tech-Enabled Services Transactions Announced in July

Select TM Capital Tech-Enabled Services Experience

Jarrad Zalkin Principal

(617) [email protected]

Andrew Redmond Vice President

(617) [email protected]

Annc. Date Sector Acquirer Target Target Description

Transaction Value Comments

05/30/13 IT Services Deloitte & Touche LLP

Vigilant, LLC Vigilant, LLC provides managed, threat intelligence, and IT risk consulting services. The company’s solutions enable IT security teams to defend and enable businesses by refining and extending their security monitoring capabilities.

NA Vigilant's expertise in cyber threat management complements Deloitte's market-leading security consulting practice and enhances Deloitte's cyber threat offerings.

05/28/13 Offshore ITS Winterhawk Consulting, LLC

AuditSAP AuditSAP provides audit, consulting, and SAP implementation services. It offers SAP implementations for projects in the United States, Australia, Singapore, Malaysia, the Philippines, and Indonesia.

NA Acquisition of AuditSAP provides Winterhawk Consulting a global presence in the GRC, Security, and BPO stage.

05/23/13 Hosting Services TeraGo Networks, Inc.

Data Centers Canada, Inc.

Data Centers Canada Inc. develops and manages colocation facilities and disaster recovery solutions for enterprises in the real estate market in Canada and internationally. It offers shared rack solutions, private rack and cabinet collocation, and private cages and suites to provide a secure hosting solution for enterprises.

$9.5 Acquisition of Data Centers Canada's 16,000 square foot data center facility and additional synergies between the companies supports TeraGo's strategic plan in enhancing its value proposition to businesses and enterprise customers.

05/17/13 IT Services Perficient, Inc. Clear Task, Inc. Clear Task, Inc. provides revenue consulting services based on the Salesforce.com product suite.

$11.6 Perficient has been very aggressive in expanding its efforts into new markets. Clear Task provides the firm cloud service capabilities built around products from IBM, Microsoft, Oracle, and Salesforce.

05/17/13 IT Services Accenture Holdings B.V.

Acquity Group Ltd. Acquity Group Limited provides brand e-commerce and digital marketing services in the United States. It offers digital strategy services, multi-channel digital marketing services, and brand e-commerce technology services.

$284.9 Acquity enables Accenture to further expand its digital marketing solution, Accenture Interactive, with chief marketing officers designated as the target demographic.

05/16/13 Hosting Services Upland Software, Inc. Marex Group, Inc. Marex Group, Inc. designs, develops, and markets on-site, on-demand, and express document management solutions. �

NA This acquisition is part of Upland's strategy to build a family of cloud products that address a comprehensive range of needs from strategic planning to work execution.

05/15/13 IT Services The SI Organization, Inc.

Applied Communication Sciences

Applied Communication Sciences (ACS) provides communications research, consulting, and engineering services in the areas of cyber security, wireless and mobile applications, advanced software methodologies, and information analytics to governments, enterprises, operators, and equipment makers worldwide.

NA ACS's range of technologies and depth of expertise correlates with the SI Organization's strategy for diversified growth, as it has a 40-year history as a leading provider of systems engineering and integration to the U.S. Intelligence Communication, Department of Defense and other agencies.

05/14/13 Info Services Havas Media UK Ltd. ElisaDBI ElisaDBI operates as a data analytics consultancy company. It offers digital solutions, and Web analytics and conversion optimization solutions.

NA Improves Havas Media's digital and media capabilities to offer clients improved methods of collecting and organizing data.

05/13/13 Info Services Guidewire Software, Inc.

Millbrook, Inc. Millbrook, Inc. provides business intelligence, data warehousing, and software-as-a-service solutions for the property and casualty insurance industry. It offers data solutions, such as data integration, data warehousing, conversion and migration, and implementation services.

NA Enables customers to accelerate replacement of their legacy core systems and improves management of operational data in their policy, billing, and claims functions.

05/07/13 Hosting Services Telecity Group plc SadeceHosting SadeceHosting provides Internet and infrastructure services. The company’s Internet services include domain name, Web hosting, email hosting, among other services. Its infrastructure services include datacenter design and installation, network design and installation, and Web hosting-security system design and installation.

$44.8 SadeceHosting offers a range of hosting services and operates an expansive data center in a fast-developing market. Entry into this market enhances Telecity's growth potential, bringing management expertise and a strong customer base in an exciting region.

05/07/13 IT Services Haystax Technology, Inc.

FlexPoint Technology, LLC

FlexPoint Technology operates as an information technology company that provides collaboration solutions to government customers. It offers application development, identity management, infrastructure management, and secure collaboration solutions.

NA Extends Haystax products and services in defense and intelligence markets and complements their existing capabilities in big data analytics and mobile solutions.

05/06/13 Info Services Employer Flexible HR, Inc.

Channel Dynamix, LLC

Channel Dynamix provides business analytics, Website development, and infrastructure support services. It also builds, designs, maintains, and codes custom Websites and applications; and provides assistance in the areas of design, network architecture, workflow, project management, and others.

NA Expands the firm's portfolio of service offerings with tools that maximize business data, making Employer Flexible a stronger business solutions company.

05/06/13 Hosting Services Dell, Inc. enstratius, Inc. enstratius, Inc. develops Enstratius, a cloud infrastructure management solution for organizations worldwide. The company’s cloud infrastructure management solution deploys and manages enterprise-class applications in public, private, and hybrid clouds.

NA Further enhances Dell's end-to-end solutions strategy, bringing key capabilities to deliver cloud-management solutions to its customers.

05/03/13 IT Services LDD Group Ltd Compubyte Systems Ltd.

Compubyte Systems Ltd. provides information technology (IT) maintenance and installation services to primary schools in West Yorkshire/Lancashire areas. Its maintenance and support services include rectifying hardware/network faults, updating SIMS, installing software, and PCs/laptops/printers configuration services.

NA Complements LDD's focus on providing excellent customer service and strengthens its existing portfolio of services for the education sector.

05/02/13 IT Services Ubiquitous Systems Ltd.

DevelopIQ Ltd. DevelopIQ provides mobile application development, cloud, and mobile device management services. The company develops native applications for BlackBerry, Android, and Apple mobile platforms. It serves private and public organizations, as well as consumers.

$3.0 DevelopIQ's experience with mobile solutions and specific focus on the healthcare sector is complementary to Anoto and strengthens the firm's market position in the UK.

05/02/13 IT Services Perficient, Inc. TriTek Solutions, Inc. TriTek Solutions, Inc., a computer consulting and software development company, provides customized enterprise content management (ECM) and business process management (BPM) solutions.

$18.5 TriTek brings substantial services expertise and increases Perficient's market presence in the northeastern US. Additionally, this acquisition adds client relationships with several Fortune 500 and Global 2000 enterprise customers.

Notes: USD in millionsSource: Capital IQ, Company SEC Filings, industry research and TM Capital estimates

Annc. Date Sector Acquirer Target Target DescriptionEnterprise

Value Comments07/31/13 IT Services Accenture Federal Services, LLC ASM Research, Inc. ASM Research, Inc. provides information technology solutions and analytical services to

government clients. It offers systems engineering solutions and services, including design,integration, maintenance, and upgradation of systems.

NA Acquisition of ASM Research will expand Accenture's capabilities and opportunities with the Department ofDefense and Veterans Affairs. Moreover, Accenture's U.S. federal health capabilities will be strengthened.

07/30/13 IT Services DataBank IMX, LLC eDocument Resources, LLC

eDocument Resources, LLC is an information technology consulting company that providesenterprise content management and document workflow solutions. The company offersbusiness and technology consulting services, as well as project management,implementation, and support for a variety of technologies related to content management.

NA eDocument will provide DataBank an impressive client roster, management team, and solutions capabilitiesparticularly within the State and Local Government, Insurance, and Healthcare markets. This acquisition alsoextends DataBank's geographic footprint.

07/26/13 IT Services EarthBend, LLC East River Technologies, Inc.

East River Technologies, Inc. offers technology consulting, sales, and services. It offersbusiness technology consulting, hardware, software and supply sales, network monitoringand management, cloud based continuous data backup and storage, and hosted servers forapplications.

NA This acquisition will support EarthBend's focus on supporting its Midwest customer base through anexpanded capability and solutions offering. East River's team will further enhance the sales and technicalexperience at EarthBend.

07/24/13 Info Services Penton Media, Inc. Aviation Week Aviation Week publishes magazines and market briefings in the areas of commercialaviation, business aviation, maintenance/repair/overhaul, defense, and space.

NA Acquisition of Aviation Week will make Penton Media the largest targeted marketing platform for companiesand executives in the aviation industry. Penton's marketing services and data product development will spurfurther growth for Aviation Week.

07/22/13 VAR LogicsOne, Inc. Qoncert, LLC Qoncert, LLC distributes and markets Cisco’s communications equipment such as routers,switches, and wireless and business equipment. The company also offers IT consulting andmonitoring and support services.

NA LogicsOne will provide Qoncert a marketing and technical engineering staff that augments its UnifiedCommunications & Collaboration, Wireless, and Security practices. The Company also provides an extensiveportfolio of IT products and services.

07/19/13 Hosting Services Cinven Ltd. Host Europe WVS Ltd. Host Europe WVS Ltd. provides enterprise hosting, managed dedicated servers, sharedvirtual server hosting, server co-location, domain name registration, and a range of e-services primarily to the small to medium sized enterprise community.

$668.0 Private Equity firm Cinven Group announced it will acquire Host Europe Group nearly three years afterMontagu Private Equity acquired the Company for $344 million. The acquisition marks a string of high-profilepurchases for Cinven, who purchased CeramTech, a ceramics company, for $2 billion.

07/17/13 Managed Services Arcadia Asia Company Ltd. A-HOST Company Ltd. A-HOST Company Ltd., an application service provider, provides managed services forOracle E-Business Applications in Thailand. It offers implementation services and on-goingsupport services.

$3.8 A-HOST will bolster Arcadia's managed services offerings. A-HOST's team of experienced IT professionals andimpressive partnerships with Oracle and IBM will strengthen Arcadia's presence in the IT Services space inThailand.

07/17/13 Managed Services Warner Connect, Inc. HeatSeeker Technology Partners, Inc.

HeatSeeker Technology Partners, Inc. builds and manages technology. It provides managedinformation technology (IT) and communications solutions customized to meet theindividual needs of businesses.

NA Through the merging of Warner Connect and HeatSeeker, the combined entity will provide a comprehensivecloud platform and multiple data centers throughout the Midwest.

07/16/13 Managed Services StarPoint Advantage, Inc. Balti Group Consulting Balti Group Consulting provides managed outsourced information technology, dataprotection, hosting, vendor management, and voice over Internet protocol solutions.

NA Balti Group will broaden StarPoint's market share and add new capabilities that complement the Company'sexisting service offering.

07/11/13 Hosting Services 365 Main, Inc. Evocative, Inc. Evocative, Inc. provides colocation and managed services to small and mid-sized businessesin the United States. Its data center provides cabinet collocation services and network andmanaged services.

NA This acquisition will build on 365 Main's presence in San Francisco, where the Company is based, throughEvocative's facility in Emeryville, California. This will be the Company's 17th data center, following its purchaseof 16 data centers from Equinix last fall.

07/09/13 Hosting Services The Stephens Group, LLC Bay Area Internet Solutions, Inc.

Bay Area Internet Solutions, Inc., also known as BAIS, operates as a facilities-based co-location, managed IT solutions, and high speed access provider in California. The companyoffers datacenter co-location services, hosted solutions, managed services, and Internetaccess services.

NA Bay Area Internet Solutions complements the specific value drivers of the Stephens Group's business and willprovide the Company increased power solutions through high performance platforms such as cloud services.

07/09/13 Hosting Services intergenia AG internet24 GmbH internet24 GmbH operates as an Internet service provider (ISP). The Company offersdomain reservation, web hosting, dedicated servers, server housing, and implementation ofprojects.

NA Acquisition of internet24 will strengthen intergenia's managed hosting services position in the Germanmarket. Internet24 currently has 20,000 customers including a number of global ecommerce companies,which will bolster intergenia's clientele roster.

07/08/13 IT Services Deloitte Quattro Integration Group

Quattro Integration Group offers SAP consulting services. It offers SAP implementation,optimization, maintenance, support, and advisory services to medium and large businessesin the energy and resources sector in Alberta, Canada.

NA The combined talent and capabilities of Deloitte and Quattro will allow Deloitte to provide its clients withenhanced SAP and business transformation strategies, processes, tools, guidance, and implementationservices to compete in an increasingly difficult market.

07/08/13 IT Staffing Stefanini IT Solutions RCG Global Services, Inc., RCG Staffing

RCG Global Services, Inc., RCG Staffing comprises a division providing IT staffing andsolutions.

NA RCG marks Stefanini's third recent U.S. acquisition, following its purchase of TechTeam Global and Code X.Acquisition of RCG will strengthen Stefanini's recruiting capability by adding a second offshore recruitingcenter in the Asia-Pacific region.

07/03/13 IT Services Atos (Australia) Pty Ltd. Windowlogic Pty Ltd. Windowlogic Pty Ltd., a technology consulting company, provides information managementsystems and services to blue chip clients in Australia and New Zealand. The companyspecializes in Autonomy, EMC, Microsoft, and Open Text solutions.

NA Atos acquired WindowLogic to expand its geographic and market presence across the Asia-Pacific and NewZealand territories. The acquisition is a complementary fit in terms of customer type and business offerings.

07/02/13 IT Services Tribridge, Inc. Intelladon Corporation Intelladon Corporation offers consulting and system integration services in the area ofhuman capital management.

NA This acquisition will provide Intelladon greater access to capital and operational resources. Moreover, theacquisition will provide the companies a shared opportunity for expansion.