Harris Williams & Co. Ltd is a private limited company incorporated under English law having its registered office at 5th Floor, 6 St. Andrew Street, London EC4A 3AE, UK, registered with the Registrar of Companies for England and Wales under company number 7078852. Directors: Mr. Ned Valentine, Mr. Paul Poggi, Mr. Thierry Monjauze and Mr. Aadil Khan, authorised and regulated by the Financial Conduct Authority. Harris Williams & Co. Ltd Niederlassung Frankfurt (German branch) is registered in the Commercial Register (Handelsregister) of the Local Court (Amtsgericht) of Frankfurt am Main, Germany, under registration number HRB 96687, having its business address at Bockenheimer Landstrasse 33-35, 60325 Frankfurt am Main, Germany. Permanent Representative (Ständiger Vertreter) of the Branch Niederlassung: Mr. Jeffery H. Perkins. www.harriswilliams.de TECHNOLOGY, MEDIA, & TELECOM QUARTERLY SOFTWARE SECTOR REVIEW │ 3Q 2016
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Harris Williams & Co. Ltd is a private limited company incorporated under English law having its registered office at 5th Floor, 6 St. Andrew Street, London EC4A 3AE, UK, registered with the Registrar of Companies for England and Wales under company number 7078852. Directors: Mr. Ned Valentine, Mr. Paul Poggi, Mr. Thierry Monjauze and Mr. Aadil Khan, authorised and regulated by the Financial Conduct Authority.
Harris Williams & Co. Ltd Niederlassung Frankfurt (German branch) is registered in the Commercial Register (Handelsregister) of the Local Court (Amtsgericht) of Frankfurt am Main, Germany, under registration number HRB 96687, having its businessaddress at Bockenheimer Landstrasse 33-35, 60325 Frankfurt am Main, Germany. Permanent Representative (Ständiger Vertreter) of the Branch Niederlassung: Mr. Jeffery H. Perkins.
Leading provider of SaaS-based software and services tomember-based health and wellness centers, offering end-to-end solutions for club and member management,including engagement and payments solutions.
Charlotte-based private equity firm targeting investmentsacross the business & technology services, communications,and healthcare industries, and currently investing out of its$650 million Pamlico Capital III fund.
San Francisco-based private equity firm targetinginvestments in the software, tech-enabled services, ITinfrastructure, and healthcare sectors, and activelyinvesting out of its $2 billion GI Partners Fund IV fund.
HW&Co.’s TMT Group advised Pamlico Capital and its portfolio company, Daxko, on a majorityrecapitalization transaction led by GI Partners.
Positions Daxko well to meet the increasingly complex needs of multi-site and multi-purpose health and wellness facilityoperations and gives GI Partners the ability to leverage Daxko’s market leadership, scale, and history of successful strategicacquisitions as a platform for further industry consolidation.
EQT’s pending take-private of Press Ganey Press Ganey provides patient-experience measurement, performance analytics, and strategic advisory software and services
for healthcare organizations across the continuum of care.
Partnering with more than 26,000 healthcare organizations, Press Ganey leads the industry in using data and analytics to helptransform and advance patient-centered care in the US and internationally.
Post acquisition, EQT will leverage its deep platform and healthcare expertise to support Press Ganey’s expansion bothorganically and through strategic acquisitions on a global basis.
Ent. Value: $2,284.5M
Revenue: $344.3M
EV / Rev: 6.6x
EV / EBITDA: 21.4x
Announced
Verizon’s pending acquisition of Fleetmatics Fleetmatics provides SaaS-based mobile workforce and fleet management software that allows service-based businesses of all
sizes to improve the productivity of their mobile workforces.
Serving approximately 38,000 customers and 757,000 subscribed vehicles worldwide, the company’s solutions provide fleetoperators visibility into vehicle location, fuel usage, and other insights that allow clients to increase revenue and reduce costs.
Verizon Telematics plans to combine Fleetmatics with recently acquired Telogis to become a global leader in fleet and mobileworkforce management.
Ent. Value: $2,183.4M
Revenue: $310.7M
EV / Revenue: 7.0x
EV / EBITDA: 25.9x
Announced
Vista Equity Partners’ acquisition of Regulatory DataCorp Regulatory DataCorp provides counterparty risk and financial regulatory compliance data and software solutions to financial
institutions and technology companies worldwide.
The company’s solutions are used by Fortune 100 companies across a range of industries and combine comprehensive data, ascalable platform, and tailored analytics to provide precise risk alerts and ongoing monitoring.
Vista Equity Partners’ deep focus on software, data, and tech-enabled businesses will allow Regulatory DataCorp to increasecapital investment in risk and compliance software at a time of significant growth in the industry.
Ent. Value: NA
Revenue: NA
EV / Revenue: NA
EV / EBITDA: NA
August 31, 2016
Thoma Bravo’s take-private of Imprivata Imprivata provides cloud-based, single sign-on and access-management security software for the healthcare sector that
provides improved workflows, increased data security, and compliance with government regulations.
The company’s mission-critical solutions allow hospitals to identify patients at registration and allow providers to convenientlyaccess patient health information (“PHI”), communicate PHI across devices, and transact PHI for important clinical workflows.
Leveraging its deep experience in both security and healthcare IT, Thoma Bravo bolsters Imprivata’s ability to expand its marketpresence organically by providing additional high-value products and inorganically through strategic acquisitions.
September 16, 2016
Ent. Value: $442.5M
Revenue: $131.1M
EV / Revenue: 3.4x
EV / EBITDA: NA
GE Transportation’s acquisition of ShipXpress ShipXpress provides cloud-based software solutions that enable transportation, industrial, and commodity trading businesses to
operate efficiently and collaborate with their supply chain partners.
The company works with major North American railroads and Fortune 500 companies to deliver customized transportationmanagement solutions that help businesses manage data, simplify manual processes, and improve analysis.
Post acquisition, GE Transportation will deliver one of the industry’s most advanced and scalable cloud-based solutions bycombing ShipXpress’ software products with GE’s existing sensing technology platform, Predix.
MOST ACTIVE STRATEGIC ACQUIRERS OF SOFTWARE ASSETS BY VOLUME
GLOBAL STRATEGIC ACQUIRER SOFTWARE M&A ACTIVITY BY VOLUME
The 10 most active strategic software acquirers registered 66 acquisitions in YTD 2016, with Google and IBM being the most active with 25 between them.
Google has been actively pursuing assets that enhance its enterprise cloud business, while IBM focuses on its stated strategic imperatives – big data and analytics, cloud platform expansion, mobile, social, and security.
Global strategic software M&A registered 359 transactions in 3Q 2016, a slight uptick from a slow 2Q, and demonstrating promising momentum going into 4Q 2016.
Despite M&A volumes being down relative to 2015, both large tech and non-traditional software buyers continue to view M&A as a core growth initiative. However, recent M&A activity suggests that strategics are focusing on bolt-onsrather than large, transformational deals.
MOST ACTIVE PRIVATE EQUITY BUYERS OF NEW SOFTWARE PLATFORMS BY VOLUME
GLOBAL NEW PLATFORM PRIVATE EQUITY SOFTWARE M&A ACTIVITY BY VOLUME
The 10 most active softwareinvestors completed 42 platforminvestments YTD 2016, with VistaEquity and Thoma Bravo outpacingtheir peers with 12 and 7 newplatform investments, respectively.
Private equity remains attracted tothe software sector as they look toconsolidate niche vertical softwaremarkets and capitalize on theongoing shift to the cloud.
Globally, private equity softwareM&A registered 74 new platformacquisitions in 3Q 2016, representinga 34% increase over 3Q 2015 and a21% increase over the priorquarter’s strong results.
With private equity dry powder atrecord high levels and the lendingmarket continuing to exhibit stronginterest in high quality softwarecredits, both incumbent softwareinvestors and newcomers to thesector are rapidly deploying capitalacross a broad range of softwaresectors.
Pending Apex Technology & PAG Asia Capital Lexmark International, Inc. Printing, imaging, document workflow, and content management software and serv ices. $3,409 1.0x
Pending NICE Systems Ltd. inContact, Inc. Contact and data center software solutions for security-sensitive organizations. $864 3.7x
Pending Informa Plc Penton Business Media, Inc. Information, data, and marketing software and serv ices. $1,557 NA
Pending Silver Lake Partners Cegid Group ERP and business management software for midsized companies. $719 2.3x
Pending Genesys Telecommunications Interactive Intelligence Group, Inc. Enterprise -grade business communication and customer engagement software. $1,303 3.2x
Pending Permira Advisers LLP P&I Personal & Informatik AG Human resource management, payroll accounting, and time management software. $852 6.3x
10/21/16 EQT Partners AB Press Ganey Holdings, Inc. Patient experience and performance software analytics for healthcare organizations. $2,285 6.6x
10/18/16 Vista Equity Partners GovDelivery Holdings, Inc. Government-to-citizen communication software and serv ices. $153 NA
10/03/16 Dassault Systèmes SA CST Computer Simulation Technology AG High performance software for the simulation of electromagnetic fields. $242 NA
09/30/16 Document Technologies LLC EPIQ Systems, Inc. eDiscovery solutions and other technology-based legal serv ices. $1,008 1.8x
09/26/16 The Carlyle Group LP exocad GmbH Digital dentistry software that aids in dental restorations. $123 8.5x
09/19/16 TA Associates Radixx International Cloud-based passenger serv ices system software for the airline industry. NA NA
09/16/16 Vista Equity Partners Granicus, Inc. Technology and software platform for creating, managing, and distributing media. NA NA
09/14/16 ATOS SE Anthelio Healthcare Solutions, Inc. IT solutions and BPO software and serv ices for the healthcare industry. $275 NA
09/01/16 KKR Epicor Software Corp. Industry-specific business software, including ERP, HCM, and SCM. $3,300 NA
08/31/16 Sumeru Equity Partners Telesoft Corp. Expense management serv ices for the telecommunications industry. NA NA
08/16/16 Nuance Communications, Inc. TouchCommerce, Inc. Omni-channel engagement software and analytics solutions. $195 NA
08/01/16 Nemetschek SE Design Data Corp. Steel detailing software for the steel industries. $49 NA
07/26/16 Eco City Vehicles Plc Tax Computer Systems Ltd. Software to manage and automate corporation tax compliance processing. $98 5.7x
$785 3.7x
HW&CO. CONFIDENTIAL
DATECLOSED ACQUIRER TARGET DESCRIPTION
ENTERPRISEVALUE (MM)
REVENUEMULTIPLE
APPLICATION SOFTWARE – M&A MARKET SUMMARY
APPLICATION SOFTWARE M&A VOLUME (GLOBAL)
NOTABLE APPLICATION SOFTWARE M&A TRANSACTIONS
Application Software M&A registered 298 transactions in 3Q 2016, representing a 6% increase over the previous quarter, falling in line with historical averages.
3Q 2016 median reported Application Software M&A revenue multiples were slightly below 2015 and 1H 2016 multiples, though remain in line with historical four year averages.
MEDIAN M&A REVENUE MULTIPLES (REPORTED)
2.4x
1.3x
1.4x 1.5x
1.6x
2.5x2.5x
2.1x
2.3x2.3x
1.4x
2.5x
2.3x
2.5x2.4x
2.5x
2.3x
Private equity continues to be active in Application Software, leading some of the largest sector transactions in 2016.
Notable private equity deals in 3Q 2016 include KKR’s $3.3 billion acquisition of Epicor Software, EQT’s pending $2.3 billion take-private acquisition of Press Ganey, and Silver Lake’s $719 million pending acquisition of Cegid.
MEDIAN
266
298
244 246 252 251
227
282 271
289
272
319 320 316 314
281
298
3Q '1
2
4Q '1
2
1Q '1
3
2Q '1
3
3Q '1
3
4Q '1
3
1Q '1
4
2Q '1
4
3Q '1
4
4Q '1
4
1Q '1
5
2Q '1
5
3Q '1
5
4Q '1
5
1Q '1
6
2Q '1
6
3Q '1
6
3Q '1
2
4Q '1
2
1Q '1
3
2Q '1
3
3Q '1
3
4Q '1
3
1Q '1
4
2Q '1
4
3Q '1
4
4Q '1
4
1Q '1
5
2Q '1
5
3Q '1
5
4Q '1
5
1Q '1
6
2Q '1
6
3Q '1
6
PAGE | 7
TECHNOLOGY, MEDIA, & TELECOM
QUARTERLY SOFTWARE SECTOR REVIEW │ 3Q 2016
42
55
38
49 47
45 46
60
54 53
65
68 70
55
52 51 52
NOTABLE SAAS M&A TRANSACTIONS
4.9x
5.8x
4.6x
5.3x
4.4x
5.3x
5.6x 5.7x
4.4x
3.5x
3.9x
4.4x4.2x
4.6x4.9x
5.6x5.4x
SAAS – M&A MARKET SUMMARY
SAAS M&A VOLUME (GLOBAL)
SaaS M&A registered 52 acquisitions in 3Q 2016, in line with the past four quarters and down from the quarterly highs of 2015.
Median reported SaaS transaction multiples decreased slightly in 3Q 2016, though remain in line with the upward trend over the past two years, increasing nearly two turns from 4Q 2014 lows.
Both strategic acquirers and private equity firms continue to be active SaaS consolidators, with a particular interest in vertical SaaS applications across a variety of sectors, including Healthcare and Logistics.
In 3Q 2016, Oracle demonstrated its strategic focus on expanding its cloud-based capabilities with the pending $8.7 billion acquisition of NetSuite and the acquisition of Logfire
MEDIAN M&A REVENUE MULTIPLES (REPORTED)
DATECLOSED ACQUIRER TARGET DESCRIPTION
ENTERPRISEVALUE (MM)
REVENUEMULTIPLE
Pending Vista Equity Partners Cvent, Inc. SaaS-based event management and email marketing software. $1,342 6.7x
Pending Oracle Corp. NetSuite, Inc. SaaS-based business management application solutions. $8,759 10.3x
07/20/16 Royal Philips NV Wellcentive, Inc. SaaS-based provider of population health management data analytics solutions. $165 11.0x
07/11/16 SalesForce.com Demandware, Inc. Cloud-based ecommerce solutions for retailers and branded manufacturers. $2,670 10.5x
07/07/16 Thoma Bravo LLC Elemica, Inc. Web-based supply chain operating network for process industries. NA NA
07/01/16 Wolters Kluwer NV Enablon SA Sustainability and performance management software for all industries. $278 5.6x
06/14/16 Oracle Corp. Opower, Inc. SaaS-based customer engagement and data analytics solutions for the utility industry. $491 3.2x
06/10/16 Oracle Corp. Textura Corp. SaaS-based project and workforce management software for the construction industry. $616 6.7x
$424 6.7x
HW&CO. CONFIDENTIAL
HW&CO. CONFIDENTIAL
HW&CO. CONFIDENTIAL
MEDIAN
3Q '1
2
4Q '1
2
1Q '1
3
2Q '1
3
3Q '1
3
4Q '1
3
1Q '1
4
2Q '1
4
3Q '1
4
4Q '1
4
1Q '1
5
2Q '1
5
3Q '1
5
4Q '1
5
1Q '1
6
2Q '1
6
3Q '1
6
3Q '1
2
4Q '1
2
1Q '1
3
2Q '1
3
3Q '1
3
4Q '1
3
1Q '1
4
2Q '1
4
3Q '1
4
4Q '1
4
1Q '1
5
2Q '1
5
3Q '1
5
4Q '1
5
1Q '1
6
2Q '1
6
3Q '1
6
PAGE | 8
TECHNOLOGY, MEDIA, & TELECOM
QUARTERLY SOFTWARE SECTOR REVIEW │ 3Q 2016
NOTABLE DATA AND ANALYTICS M&A TRANSACTIONS
73 74
64
71 74
64 67
72 76
99
89
105
112
102
82
87
99
DATA AND ANALYTICS – M&A MARKET SUMMARY
DATA AND ANALYTICS M&A VOLUME (GLOBAL)
Data and Analytics M&A volume remained robust in 3Q 2016, with 99 reported transactions, a 14% increase over 2Q 2016.
3Q 2016 median reported sector transaction multiples decreased, though remain in line with historical averages from the past four years.
Data and Analytics capabilities continues to be a strategic focus area for strategic and private equity backed companies.
In particular, Google was among the most active acquirers, with the acquisitions of Apigee, Speaktoit, and Orbitera highlighting the company‘s increased focus on delivering greater analytics and business intelligence for enterprise clients.
MEDIAN M&A REVENUE MULTIPLES (REPORTED)
0.9x
1.8x
1.1x
0.9x
1.4x
1.3x
1.9x 1.9x
2.7x
3.3x
2.8x
2.0x
2.6x2.6x
1.9x
3.1x
2.4x
DATECLOSED ACQUIRER TARGET DESCRIPTION
ENTERPRISEVALUE (MM)
REVENUEMULTIPLE
MEDIAN
3Q '1
2
4Q '1
2
1Q '1
3
2Q '1
3
3Q '1
3
4Q '1
3
1Q '1
4
2Q '1
4
3Q '1
4
4Q '1
4
1Q '1
5
2Q '1
5
3Q '1
5
4Q '1
5
1Q '1
6
2Q '1
6
3Q '1
6
3Q '1
2
4Q '1
2
1Q '1
3
2Q '1
3
3Q '1
3
4Q '1
3
1Q '1
4
2Q '1
4
3Q '1
4
4Q '1
4
1Q '1
5
2Q '1
5
3Q '1
5
4Q '1
5
1Q '1
6
2Q '1
6
3Q '1
6
Pending Guidewire Software, Inc. EagleEye Analytics, Inc. Predictive analytics software for the property and casualty insurance industry. $42 NA
Pending Intel Corp. Nervana Systems, Inc. Solutions for data analysis, computation, and machine learning. $408 NA
Pending Google, Inc. Apigee Corp. Digital business acceleration and data analytics platform for application management. $470 5.1x
Pending salesforce.com, inc. BeyondCore, Inc. One-click automated business analysis for healthcare and manufacturing companies. NA NA
10/03/16 Quintiles Transnational Holdings, Inc. IMS Health Holdings, Inc. Data analytics software and serv ices for the healthcare industry. $12,895 4.2x
10/03/16 ONEX Corp. Science Info. Business / Thomson Reuters Intellectual property and scientific information software and serv ices. $3,550 3.6x
10/01/16 Inovalon Holdings, Inc. Creehan & Co. Corp. Data and analytics software for pharmacy customer and operations management. $130 4.8x
09/28/16 SAP SE Plat.One, Inc. IoT application enablement, data management, and device management. NA NA
09/20/16 Greenwave Systems, Inc. Predixion Software, Inc. Predictive analytics software for analyzing large volumes of data. NA NA
09/19/16 Google, Inc. Speaktoit, Inc. Human-computer interaction platform based on natural language analytics. NA NA
08/31/16 Vista Equity Partners Regulatory DataCorp, Inc. Risk mitigation, regulatory, and monitoring software and data. NA NA
08/23/16 Syncsort, Inc. Cogito Ltd. Database management system tools. NA NA
08/23/16 FlightGlobal Ltd. FlightStats, Inc. Web and mobile platform for flight data and flight tracking. NA NA
08/22/16 Thoma Bravo LLC Qlik Technologies, Inc. Cloud-based business intelligence and data analytics software. $2,525 4.0x
08/08/16 Google, Inc. Orbitera, Inc. E-commerce, analytics, and cloud technologies for software vendors. $100 NA
08/01/16 Trimble Navigation Ltd. Axio-Net GmbH Data platform for satellite-based surveying and navigation serv ices. NA NA
08/01/16 X.commerce, Inc. RJ Metrics, Inc. Data infrastructure and analytics for online businesses. NA NA
06/07/16 Fortinet, Inc. AccelOps, Inc. Analytics-driven IT operations and cloud management software. $32 NA
06/01/16 Genstar Capital IHS, Inc. (OERM) Sustainability management and optimization software for businesses and governments. NA NA
$408 4.2x
PAGE | 9
TECHNOLOGY, MEDIA, & TELECOM
QUARTERLY SOFTWARE SECTOR REVIEW │ 3Q 2016
Pending Apollo Global Management LLC Rackspace Hosting, Inc. Web hosting serv ices and cloud-based data storage solutions. $4,147 2.0x
Pending Open Text Corp. EMC (Enteprise Content Div ision) Enterprise information management software and serv ices. $1,620 NA
Pending Francisco Partners & Elliott Capital Dell Software, Inc. Security, systems, information management, and data analytics software. $2,000 NA
Pending Cisco Systems, Inc. CloudLock, Inc. Cloud data security software for protection against malware and data security breaches. $293 22.2x
Pending Riverbed Technology, Inc. Aternity, Inc. Application testing serv ices and business activ ity analytics. NA NA
Pending Oracle Corp. Palerra, Inc. Cloud security automation platform. NA NA
Pending TPG Capital Management LP McAfee, Inc. Anti-v irus, data protection and encryption, and database security software. $4,314 NA
Pending Vista Equity Partners Infoblox, Inc. Network infrastructure automation software and security solutions. $1,233 3.4x
Pending Micro Focus International Plc HPE (Software Div ision) Diversified enterprise software, including application lifecycle management and analytics. $6,268 NA
Pending CA, Inc. BlazeMeter Ltd. Enterprise-grade load and performance testing software and serv ices. NA NA
10/06/16 BCE, Inc. Q9 Networks, Inc. Outcourced data center infrastructure solutions. $793 NA
09/30/16 AVAST Software Sro AVG Technologies NV Anti-v irus and internet security software. $1,380 3.2x
09/26/16 Data Intensity, Inc. Red Stack Technology Group Ltd. Database management and business analytics software and serv ices for Oracle platforms. NA NA
09/16/16 Thoma Bravo LLC Imprivata, Inc. Single sign-on and access-management software for the healthcare sector. $443 3.4x
09/14/16 Foxconn Singapore Pte Ltd. SMART Technologies, Inc. Touch-enabled application display and monitoring software. $195 0.6x
08/19/16 SIRIS Capital Group LLC Xura, Inc. Digital communications software for communication serv ice providers. $620 2.1x
08/05/16 Rambus, Inc. Snowbush, Inc. Advanced analog and mixed-signal IP technology for ASSP, ASIC, and SOCs. $32 1.5x
08/01/16 Symantec Corp. Blue Coat, Inc. Web security and wide area network (WAN) optimization software. $6,299 10.5x
$1,306 3.2x
55
67
38
61
56 55 53
48
56
47 45
50
36
52
44
57
60
3.0x
2.3x
1.9x
1.7x
1.2x
2.4x2.5x
2.9x
2.4x
2.7x
3.0x
3.2x3.3x
2.6x
2.9x
2.6x2.7x
NOTABLE INFRASTRUCTURE SOFTWARE M&A TRANSACTIONS
INFRASTRUCTURE SOFTWARE – M&A MARKET SUMMARY
INFRASTRUCTURE SOFTWARE M&A VOLUME (GLOBAL)
Infrastructure Software M&A registered 60 transactions in3Q 2016, the second straightquarter of increased activity.
3Q 2016 median reportedInfrastructure Software M&A revenue multiples increasedslightly from the previousquarter and remain consistentwith historical periods.
As data security breachesbecome increasinglyprevalent, private equityinvestors are acquiring best-of-breed security assets as theyjockey for control of anevolving sector.
Notable security transactionsinclude Vista Equity’s pendingtake-private of Infoblox, TPG’spending acquisition ofMcAfee, and Thoma Bravo’stake-private acquisition ofImprivata.
Seed Series A Series B Series C Series D / or later
PRIVATE PLACEMENT CAPITAL RAISED BY ROUND (AS PERCENTAGE OF TOTAL REPORTED PRIVATE PLACEMENT CAPITAL)
Despite an overall decrease in the number of transactions in 3Q 2016, private placement capital deployed increased to $11.2 billion, continuing an upward trend since the end of 2015.
PRIVATE PLACEMENT ACTIVITY BY SOFTWARE SECTOR
In 3Q 2016, private investors were more active in late stage fundraising, as evidenced by nearly 70% of private placement capital being invested in series C or later rounds.
Notable late stage transactions included the $760 million investment in Best Logistics Technology, $150 million investment in DraftKings, and the $105 million investment in Sprinklr.
PRIVATE PLACEMENTS BY SOFTWARE SUB-SECTOR AND NEW CAPITAL RAISED
COMPARABLE COMPANY SET MEDIANS CORRELATION WITH EV / REVENUE MULTIPLE
27% 133% 12% 72% - 13%
9% 18% 15% 12% - -
27% 70% 15% 74% 100% -
4% 27% 24% - - 47%
25% 91% 10% 62% - 65%
22% 28% 25% 52% 46% 42%
8% 27% 35% 63% - 85%
21% 65% 13% 90% - 68%
15% 30% 23% 78% 79% 60%
7% 22% 30% 82% 99% 19%
12% 35% 18% 89% 47% -
1% 19% 30% 78% 96% 33%
9% 37% 26% 78% - 63%
3% 19% 19% 78% - 41%
12% 37% 14% 31% 98% 11%
8% 105% 12% 71% - 61%
(5%) (1%) 20% - - 78%
PAGE | 14
TECHNOLOGY, MEDIA, & TELECOM
QUARTERLY SOFTWARE SECTOR REVIEW │ 3Q 2016
SUMMARY OF TECHNOLOGY IPOS
The IPO market showed signs of renewed life in 3Q 2016, with eight technology companies going public.
Notable IPOs included Talend, which raised $94.5 million with a market cap of $503.5 million and priced at $18 at the end of July, and Nutanix, which raised $237.9 million and priced at $16 at the end of September and has registered an impressive 131% growth in share price since listing.
The successful IPO of Nutanix as well as the sustained success of Twilio, which currently trades at over 300% of its offer price, may renew comfort around the IPO market, particularly as venture capital funding slows.
MARKET CAP AT IPO (LTM) REVENUE GROWTH (1YR PRIOR TO IPO)OFFERING SIZE AT IPO (LTM)
RECENT U.S. IPO ACTIVITY (BY OFFERING SIZE)
24%
29%
47%
< 25% 25 - 75% > 75%
6%
44%
17%
33%
$0-50M $50-500M $500M-$1B $1B+
8%
23%
38%
31%
$0 - 50M $50 - 100M $100 - 250M $250M +
(All tech IPOs over the last 12 months) (All tech IPOs over the last 12 months) (All tech IPOs over the last 12 months)
1H 2016 New-Issue LBO Loan Volume: $1.5 billion Percentage of Total Purchase Price
Median middle market LBO loan multiples tightened in YTD 2016 to 4.9x total leverage.
Middle market LBO loan volume in 3Q 2016 remained flat compared to 2Q, with $0.5 billion of issuance.
Technology companies were the third largest recipients of LBO loans in YTD 2016.
The median LBO debt percentage through 3Q 2016 was 52%, continuing the recent trend of lenders requiring larger equity contributions from sponsors as a percent of purchase price.
Defined as Issuers with EBITDA of $50 Million or LessDefined as Issuers with EBITDA of $50 Million or Less
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Harris Williams & Co. Ltd is a private limited company incorporated under English law having its registered office at 5th Floor, 6 St. Andrew Street, London EC4A 3AE, UK, registered with theRegistrar of Companies for England and Wales under company number 7078852. Directors: Mr. Ned Valentine, Mr. Paul Poggi, Mr. Thierry Monjauze and Mr. Aadil Khan, authorised and regulatedby the Financial Conduct Authority.
Harris Williams & Co. Ltd Niederlassung Frankfurt (German branch) is registered in the Commercial Register (Handelsregister) of the Local Court (Amtsgericht) of Frankfurt am Main, Germany,under registration number HRB 96687, having its business address at Bockenheimer Landstrasse 33-35, 60325 Frankfurt am Main, Germany. Permanent Representative (Ständiger Vertreter) of the BranchNiederlassung: Mr. Jeffery H. Perkins.