John Hill Senior Managing Director [email protected](813) 383-0205 John McDonald Senior Managing Director [email protected](813) 383-0206 Keith Hodgdon Managing Director [email protected](813) 383-0208 Jami Gold Vice President [email protected](813) 383-0203 Michael Mariani Vice President [email protected](813) 597-2649 Charlie Hendrick Associate [email protected](813) 383-0207 George Garoufalidis Senior Analyst [email protected](813) 574-1182 Tim Knerr Senior Analyst [email protected](813) 514-1063 Technology M&A Report Q4 2014 HYDE PARK CAPITAL Member FINRA/SIPC Investment Banking | Mergers & Acquisitions | Capital Raising Hyde Park Capital Advisors, LLC 701 N. Franklin Street Tampa, FL 33602 Tel: 813-383-0202 www.hydeparkcapital.com
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MedianChange in Stock Price Enterprise Value / LTM
90%100%110%120%130%
Dec-13 Mar-14 Jun-14 Sep-14 Dec-14S&P Global Information Technology Index Nasdaq S&P 500
($ in millions)
Public Market Performance (LTM)
Select Technology Public Offerings (Q4 2014)
Market Performance by Sector
Source: S&P Capital IQ 2
Capital Markets Overview
As of December 31, 2014 the major market indices including theS&P 500, Nasdaq and S&P Global Information Technology indexexperienced positive performance; led by the S&P GlobalInformation Technology index (up 15%), the Nasdaq (up 14%) andthe S&P 500 (up 12%).The table on the right illustrates select public equity offeringscompleted in Q4 2014. Data storage solutions provider WesternDigital Corp. (NasdaqGS:WDC), raised $522 million in the largestoffering of the quarter.The Software-as-a-Service and Enterprise Software sectors were theindustry’s leaders with respect to valuation during the 4th quarter,trading at revenue multiples of 4.4x and 4.1x, respectively.
Commentary
12.4%
15.4%
14.3%
Offer Date Issuer Industry SectorTransaction
Type Transaction
Value11/06/14 Western Digital Corp. Technology Hardware Secondary $52212/02/14 CDW Corp. Technology Hardware Secondary $49901/14/15 SunEdison Semiconductor Ltd. Technology Hardware Secondary $22811/21/14 Endurance Intl. Group Holdings, Inc. Enterprise Software Secondary $18901/14/15 Paycom Software, Inc. Software-as-a-Service Secondary $12612/11/14 New Relic, Inc. Software-as-a-Service IPO $11511/11/14 TrueCar, Inc. Internet Secondary $10912/11/14 Workiva, Inc. Enterprise Software IPO $10112/11/14 Hortonworks, Inc. Enterprise Software IPO $10012/05/14 GTT Communications, Inc. Infrastructure Software Secondary $45
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Deal Size Volume Value Volume Value Volume Value Less than $100M 178 $5.2 211 $7.0 19% 34%$100 - $499M 66 $16.5 90 $20.3 36% 23%$500 - $1,000M 20 $15.2 23 $19.4 15% 28%Total Middle Market 264 $36.9 324 $46.7 23% 27%
% of Total MarketLess than $100M 67% 14% 65% 15%$100 - $499M 25% 45% 28% 43%$500 - $1,000M 8% 41% 7% 42%Total Middle Market 100% 100% 100% 100%
2013 2014 % Change
Middle Market M&A Transactions by Deal Size – Technology
U.S. Middle Market M&A Activity – Annual Trends: VOLUME U.S. Middle Market M&A Activity – Annual Trends: VALUE
Annual Middle Market M&A Activity – Technology
3
As detailed in the table on the right, Middle Market M&A activityincreased across all segments of the Technology industry during2014 compared to 2013.Overall U.S. Middle Market Technology deal volume increased 23%during 2014 to 324 closed transactions, up from 264 deals duringthe prior year. Deals valued between $100 - $499 million saw thelargest increase in volume, increasing 36% to 90 transactions.The total value of completed Middle Market M&A transactions inthe Technology sector rose 27% to $46.7 billion. The total value oftransactions less than $100 million increased 34% over 2013,accounting for 15% of the total deal value during 2014.
Commentary
Source: S&P Capital IQ (middle market includes all closed deals with disclosed deal value between $10 million and $1 billion)Less than $100M $100 - $499M $500 - $1,000MLess than $100M $100 - $499M $500 - $1,000M
Total Transac
tion Volume
Total Transac
tion Value ($ i
n bi
llion
s)
($ in billions)
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Deal Size Volume Value Volume Value Volume Value Less than $100M 57 $1.7 45 $1.6 (21%) (10%)$100 - $499M 29 $6.9 27 $6.1 (7%) (11%)$500 - $1,000M 10 $8.7 6 $5.0 (40%) (42%)Total Middle Market 96 $17.3 78 $12.7 (19%) (27%)
% of Total MarketLess than $100M 60% 10% 57% 12%$100 - $499M 30% 40% 35% 51%$500 - $1,000M 10% 50% 8% 37%Total Middle Market 100% 100% 100% 100%
Middle Market M&A Transactions by Deal Size – Technology
($ in billions)
4
Commentary
The total volume of completed Middle Market Technology dealsdecreased 19% during Q4 2014 to 78 transactions, down from 96during Q4 2013.The total value of completed Middle Market Technologytransactions fell 27% during the 4th quarter of 2014 to $12.7billion, down from $17.3 billion in the prior year period.Although Middle Market Technology M&A activity decreasedcompared with Q4 2013, deal volume and the total value ofcompleted transactions both increased compared with Q3 2014.
Source: S&P Capital IQ (middle market includes all closed deals with disclosed deal value between $10 million and $1 billion)
Total Transac
tion Volume
Total Transac
tion Value ($ i
n bi
llion
s)
Less than $100M $100 - $499M $500 - $1,000MLess than $100M $100 - $499M $500 - $1,000M
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Recent M&A Activity – Technology
Select Announced M&A Transactions (Q4 2014)
5Source: S&P Capital IQ.
($ in millions)
Announced Date Target Buyer Industry Enterprise
Value ($mm)EV /
RevenueEV /
EBITDA12/29/14 Computech, Inc. NCI Information Systems, Inc. IT Services $55.8 NA NA12/18/14 Datamax-O'Neil Corp. Honeywell Imaging and Mobility, Inc. Technology Hardware $185.0 1.4x NA12/18/14 Xerox Corp. (Information Technology Outsourcing Business) Atos SE IT Services $1,100.0 NA NA12/16/14 DTECH LABS, Inc. Cubic Corp. Technology Hardware $114.5 NA NA12/15/14 Riverbed Technology, Inc. Ontario Teachers' Pension Plan/Thoma Bravo Infrastructure Software $3,468.4 3.2x 18.7x12/11/14 Fotolia, LLC Adobe Systems, Inc. Internet $800.0 NA NA12/11/14 AwesomenessTV, Inc. The Hearst Corp. Internet $325.0 NA NA12/10/14 Rentrak Corp. WPP Luxembourg Gamma Three S.À R.L. SaaS $1,017.2 11.5x NM12/10/14 Industrial Safety Technologies, LLC Scott Health & Safety, Inc. Technology Hardware $329.5 NA NA12/09/14 Tripwire, Inc. Belden, Inc. Enterprise Software $710.0 NA NA12/05/14 Actuate Corp. Open Text Corp. Infrastructure Software $248.5 2.3x NM12/04/14 Solid State Equipment, LLC Veeco Instruments, Inc. Technology Hardware $150.0 NA NA12/03/14 Carbonite, Inc. j2 Global, Inc. Infrastructure Software $333.1 2.8x 37.3x12/01/14 Spansion, Inc. Cypress Semiconductor Corp. Technology Hardware $1,855.5 1.5x 17.3x12/01/14 Freightquote.com, Inc. C.H. Robinson Company, Inc. Internet $365.0 NA NA12/01/14 IPC Systems, Inc. Centerbridge Partners, L.P. Infrastructure Software $1,200.0 NA NA11/24/14 Fifth Gear, LLC Speed Commerce, Inc. Infrastructure Software $74.5 1.5x NA11/19/14 Smarterer, Inc. Pluralsight, LLC Informatics and Data Services $75.0 NA NA11/19/14 Oplink Communications, Inc. Koch Industries, Inc. Technology Hardware $322.1 1.6x 37.7x11/18/14 BinOptics Corp. M/A-COM Technology Solutions, Inc. Technology Hardware $230.0 NA NA
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Recent M&A Activity – Technology
Select Announced M&A Transactions (Q4 2014)
6Source: S&P Capital IQ.
($ in millions)
Announced Date Target Buyer Industry Enterprise
Value ($mm)EV /
RevenueEV /
EBITDA11/18/14 PayEase, Inc. Mozido, LLC Infrastructure Software $750.0 NA NA11/17/14 ChyronHego Corp. Vector Capital Infrastructure Software $111.5 1.9x 20.6x11/14/14 Move, Inc. REA Group Ltd. Internet $963.2 4.0x 121.3x11/13/14 Appia, Inc. Digital Turbine, Inc. Informatics and Data Services $74.6 2.5x NA11/12/14 Big Fish Games, Inc. Churchill Downs, Inc. Internet $835.0 NA 14.6x11/11/14 Xtime, Inc. Cox Automotive, Inc. Infrastructure Software $325.0 NA NA11/04/14 Elecsys Corp. Lindsay Corp. Technology Hardware $71.0 2.4x 18.3x11/03/14 Sapient Corp. Publicis Groupe SA Informatics and Data Services $3,376.4 2.4x 19.2x11/03/14 bswift, LLC Aetna, Inc. Infrastructure Software $400.0 NA NA11/03/14 StyleHaul, Inc. RTL Group SA Internet $150.1 NA NA10/30/14 PRO Unlimited, Inc. Investcorp Bank B.S.C. SaaS $300.0 NA NA10/28/14 TASC, Inc. Engility Holdings, Inc. Enterprise Software $1,100.0 NA NA10/28/14 SiTime Corp. The Hearst Corp. Technology Hardware $200.0 NA NA10/24/14 Riverbed Technology, Inc.(SteelStore Product Line) NetApp, Inc. Infrastructure Software $80.0 NA NA10/23/14 Digital River, Inc. Siris Capital Group, LLC SaaS $645.8 1.7x 18.1x10/21/14 Perimeter Internetworking Corp. BAE Systems plc SaaS $232.5 NA NA10/20/14 ShoreTel, Inc. Mitel Networks Corp. Enterprise Software $475.5 1.4x 22.3x10/16/14 Kx Systems, Inc. First Derivatives plc Informatics and Data Services $124.1 9.4x NA10/03/14 Bluebeam Software, Inc. Nemetschek AG Infrastructure Software $100.0 4.5x NA10/01/14 MobileSpaces, Inc Pulse Secure, LLC Enterprise Software $100.0 NA NA
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U.S. Middle Market M&A Activity by Technology Sector: VALUE
7Source: S&P Capital IQ (includes all closed deals with disclosed deal value between $10 million and $1 billion). *Includes Enterprise Software and Infrastructure Software industry sectors.
U.S. Middle Market M&A Activity by Technology Sector: VOLUME
2%102%
10%
($ in millions)
0%49%
11%37%
38%
2013 2014
2013 2014
HYDE PARK CAPITALInvestment Banking | Mergers & Acquisitions | Capital Raising0369
1215
Informatics &Data Services EnterpriseSoftware Internet IT Services TechnologyHardware SaaS InfrastructureSoftware
Select Private Equity Transactions (Q4 2014)
Financial Sponsors Industry Transactions
Private Equity Activity – TechnologyNumbe
r of Transactio
ns
8
($ in millions)As detailed in the chart to the right, financial sponsors announcedmany transactions in the Technology industry during Q4 2014.Several notable private equity backed transactions wereannounced during Q4 2014, including: Siris Capital Group’sacquisition of Digital River, Inc. for $646 million; and Vista EquityPartner’s acquisition of TransFirst, LLC.During Q4 2014, financial sponsors were most active in theEnterprise Software and Infrastructure Software sectors,announcing 9 and 5 transactions, respectively.
Commentary
Source: S&P Capital IQ.
Announced Date Target Buyer Industry
Enterprise Value 12/23/14 Reading Room, Inc. Armidale Investment Corp. Ltd. Informatics & Data Services NA
12/22/14 Blue Software, LLC Diversis Capital, LLC SaaS NA12/08/14 Bottlenose, Inc. KPMG Capital Informatics & Data Services NA12/01/14 Presidio Holdings, Inc. Apollo Global Management, LLC Infrastructure Software NA11/21/14 TriTech Software Systems, Inc. Insight Venture Partners Enterprise Software NA11/17/14 Fisher/Unitech, Inc. The Riverside Co. IT Services NA11/12/14 Resolve Systems Lotus Innovations Fund L.P. Infrastructure Software NA11/11/14 Just199 Hosting Cloud Equity Group Internet NA11/11/14 Pegasus Electronic Distribution Services H.I.G. Capital, LLC Technology Hardware NA11/06/14 Integrated Microwave Technologies, LLC Skyview Capital, LLC Technology Hardware NA10/30/14 Metalogix Software US, Inc. Permira Advisers, Ltd. Infrastructure Software NA10/24/14 Radiant Zemax, LLC Arlington Capital Partners Enterprise Software NA10/23/14 Digital River, Inc. Siris Capital Group, LLC SaaS $64610/21/14 NetPlus, Inc. StoneCalibre, LLC Internet NA10/16/14 Insurity, Inc. TA Associates Management Enterprise Software NA10/14/14 NAVEX Global, Inc. Vista Equity Partners Infrastructure Software NA10/14/14 iModules Software, Inc. Leeds Equity Partners, LLC Informatics & Data Services NA10/13/14 TransFirst, LLC Vista Equity Partners Infrastructure Software NA10/10/14 Dialogic, Inc. Novacap IT Services $39
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Industry Sector Overview – Recent Stock Price Performance
Software-as-a-Service (SaaS)
Commentary
9
Enterprise Software
Infrastructure Software
Source: S&P Capital IQ
The charts included on the following pages detail the recent stockprice performance by sector for the leading public companieswithin the Technology industry for the 12-month period endedDecember 31, 2014. The shaded section represents Q4 2014.During the 12-month period ending December 31, 2014, all of theTechnology sector indices except Internet increased, led by theTechnology Hardware and IT Services sectors, which increased18% and 11%, respectively.During the 4th quarter of 2014, six of the seven industry sectorsdelivered positive returns, led by the IT Services (up 12%) andEnterprise Software (up 11%) sectors.
12.4%
5.5%
12.4%
7.1%
12.4%
7.6%
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