Investment banking services are provided by Harris Williams LLC, a registered broker-dealer and member of FINRA and SIPC, and Harris Williams & Co. Ltd, which is a private limited company incorporated under English law with its registered office at 5th Floor, 6 St. Andrew Street, London EC4A 3AE, UK, registered with the Registrar of Companies for England and Wales (registration number 7078852). Harris Williams & Co. Ltd is authorized and regulated by the Financial Conduct Authority. Harris Williams & Co. is a trade name under which Harris Williams LLC and Harris Williams & Co. Ltd conduct business. www.harriswilliams.com TECHNOLOGY, MEDIA, & TELECOM QUARTERLY SOFTWARE SECTOR REVIEW │ 3Q 2017
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Investment banking services are provided by Harris Williams LLC, a registered broker-dealer and member of FINRA and SIPC, and Harris Williams & Co. Ltd, which is a private limited company incorporated under English law with its registered office at 5th Floor, 6 St. Andrew Street, London EC4A 3AE, UK, registered with the Registrar of Companies for England and Wales (registration number 7078852). Harris Williams & Co. Ltd is authorized and regulated by the Financial Conduct Authority. Harris Williams & Co. is a trade name under which Harris Williams LLC and Harris Williams & Co. Ltd conduct business.
Receipt Bank is a leading provider of small business-focusedbookkeeping and accounting software that enables automaticreceipt and invoice information processing, cutting down on timelost due to manual bookkeeping practices.
Receipt Bank’s solutions are used by more than 3,600 accountingbookkeeping partners, from the Big 4 accountants to small firms,and the company has been revolutionizing the bookkeepingprocess by using award-winning AI and automation since 2010.
Insight’s $50 million strategic growth investment will supportcontinued product development and accelerate globalexpansion efforts.
HW&Co.’s TMT Group advised Receipt Bank Ltd. (“Receipt Bank”) on its investment from InsightVenture Partners (“Insight”).
As automation technologies and artificial intelligence continue to disrupt the traditional bookkeeping process, Receipt Bank is well-positioned as a pivotal provider bringing the accounting function out of the back office.
Frontline Education provides administrative and HR software solutions to more than 12,000 K-12 educational institutions andmillions of educators.
The company’s products include digital record-keeping, credential tracking, onboarding, strategic insights, and analytics tohelp drive the decision-making process.
Post-acquisition, Thoma Bravo’s capital and executive resources will further support the company’s growth both organicallyand inorganically through strategic acquisitions.
September 18, 2017
Ent. Value: $1,140M
Revenue: NA
EV / Revenue: NA
EV / EBITDA: NA
Schneider Electric’s pending merger with AVEVA
AVEVA provides engineering, design, and information management software to a broad mix of process industries includingmanufacturing, energy & power, and marine.
The company’s products allow customers to manage production schedules, improve cost efficiency, ensure quality, andmaximize the output of their asset delivery processes.
The combined company is expected to benefit from increased geographic scale and significant revenue and cost synergiesarising from an enhanced product portfolio and expanded sales and distribution channels.
Ent. Value: $2,455M
Revenue: $266M
EV / Revenue: 9.2x
EV / EBITDA: 35.8x
Pending
Nasdaq’s pending acquisition of eVestment Alliance
eVestment provides a suite of cloud-based solutions that help the institutional investing community identify global investmenttrends, select and monitor investment managers, and enable asset managers to better market their funds worldwide.
The company’s proprietary database provides screening, analytics, and insight tools delivered through a diverse set ofspecialized applications to financial advisors, banks, consultants, and asset managers.
Post-acquisition, eVestment will strengthen Nasdaq’s Global Information Services business by broadening its reach to buy-sideinvestors and diversifying its existing exchange services.
Ent. Value: $705M
Revenue: $72M
EV / Revenue: 9.8x
EV / EBITDA: NA
October 23, 2017
TCV’s majority investment in EtQ
EtQ provides compliance and quality management software solutions that adapt to a broad set of industries and companysizes.
As regulations become more complex, the company’s solutions provide insights into operational risks and give managementteams the tools required to minimize risk and drive operational efficiencies.
TCV will be the company’s first institutional investor and will leverage its experience with leading software companies toaccelerate and maximize EtQ’s growth potential.
Ent. Value: $130M
Revenue: NA
EV / Revenue: NA
EV / EBITDA: NA
August 17, 2017
RealPage’s acquisition of On-Site Manager
On-Site provides an online leasing platform for property managers and renters that assimilates leads from any source andconverts them into signed leases for both the multi-family and single-family housing segments.
The company’s platform encompasses screening and document management as well as prospect and resident portals andonline leasing, payment processing, and eSignature lease execution solutions.
The acquisition adds approximately 700,000 new units to the RealPage platform, presenting significant cross-sell opportunity,and offers the potential for significant operating synergies given the scale and overlap of the combined organization.
MOST ACTIVE STRATEGIC ACQUIRERS OF SOFTWARE ASSETS BY VOLUME1
GLOBAL STRATEGIC ACQUIRER SOFTWARE M&A ACTIVITY BY VOLUME1
The 10 most active strategicsoftware acquirers registered 41acquisitions through the first threequarters of 2017.
Google remained the most activeacquirer in 3Q 2017 with fiveacquisitions in the quarter and 10year-to-date. The recent acquisitionsof Bitium and Upthere highlightGoogle’s commitment tostrengthening its position relative toAmazon and Microsoft within thecloud services market.
Global strategic software M&A registered 384 acquisitions in 3Q2017, representing a 17% increaseover 2Q 2017 and the most activequarter since 1Q 2016.
As “digital disruption” continues toimpact all facets of the economy,both large technology incumbentsand non-traditional industryconsolidators (i.e., Siemens,Schneider, GE, Honeywell, etc.)continue to view software M&A asan attractive means to drivinginnovation and recurring revenuegrowth.
MOST ACTIVE PRIVATE EQUITY BUYERS OF NEW SOFTWARE PLATFORMS BY VOLUME1
GLOBAL NEW PLATFORM PRIVATE EQUITY SOFTWARE M&A ACTIVITY BY VOLUME1
The 10 most active softwareinvestors completed 39 newplatform investments in 2017 YTD.Among this group, the top softwareinvestors are on track to surpass thenumber of transactions closed in2016.
Vista Equity remains the most activesoftware investor in 2017, withnotable deals including The AdvisoryBoard’s Education segment ($1.6billion), DH Corp. ($3.4 billion), andXactly ($546 million).
Globally, private equity registered80 new software platforminvestments in 3Q 2017, a slightdecrease from the prior quarter, butstill among the most active quarterssince 2013.
Private equity investment across thesoftware sector continues to exhibitstrong momentum driven by recordlevels of private equity dry powderand favorable debt marketconditions.
Note: Includes control new platform investments only. Excludes add-on acquisitions.
PAGE | 6
TECHNOLOGY, MEDIA, & TELECOM
QUARTERLY SOFTWARE SECTOR REVIEW │ 3Q 2017
DATE
CLOSED ACQUIRER TARGET DESCRIPTION
ENTERPRISE
VALUE (MM)
REVENUE
MULTIPLE
APPLICATION SOFTWARE – M&A MARKET SUMMARY
APPLICATION SOFTWARE M&A VOLUME1 (GLOBAL)
NOTABLE APPLICATION SOFTWARE M&A TRANSACTIONS1,5
Application Software M&A registered 337 transactions in3Q 2017, representing a 13%year-over-year increase andthe most active quarter in thelast four years.
Median reported ApplicationSoftware transaction multiples continued an upward trend, reaching 2.7x revenue.
MEDIAN M&A REVENUE MULTIPLES1 (REPORTED)
1.6x
2.5x2.5x
2.1x
2.3x2.3x
1.4x
2.5x
2.3x
2.5x2.4x
2.5x
2.3x
2.7x
2.3x
2.4x
2.7x
Vertical-specific softwarecompanies remain highlysought-after as evidenced bythe pending merger ofSchneider Electric and AVEVA(AEC), Apax’s pendingacquisition of ECi Software(manufacturing), Berkshire’sacquisition of Accela (publicsector), Genstar’s acquisitionof PDI (retail petroleum), andRealPage’s acquisition of On-Site (real estate).
252 251
227
282 271
289
272
319 320 316 314
281
298 307
291 288
337
MEDIAN
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
4Q '1
6
1Q '1
7
2Q '1
7
3Q '1
7
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
4Q '1
6
1Q '1
7
2Q '1
7
3Q '1
7
Application Software
Pending Schneider Electric AVEVA Business management software for the engineering and construction industries. $2,455 9.2x
Pending Partners Group Civ ica Group Ltd. Specialist software, digital solutions, and outsourcing serv ices. $1,370 3.9x
Pending Leonard Green & Partners CPA Global Ltd. Intellectual property management software for corporations and law firms. $3,103 NA
Pending Apax Partners ECi Software Solutions, Inc. Industry-specific business operations and integrated supply chain software. NA NA
Pending Dassault Systèmes SA Exa Corp. Simulation software and related serv ices for vehicle manufacturers. $349 4.8x
09/28/17 Berkshire Partners Accela, Inc. Regulatory management software for government agencies. NA NA
09/26/17 RealPage, Inc. On-Site.com End-to-end real estate leasing platform. $250 5.0x
09/18/17 Thoma Bravo Frontline Education Workforce management platform for educators and administrators. $1,140 NA
09/14/17 Berkshire Partners Curriculum Associates LLC K-12 educational assessment and instructional platform. NA NA
06/30/17 Castik Capital Partners Wolters Kluwer Transport Serv ices On-demand transport management software for connecting transport communities. $87 2.1x
$195 4.9x
PAGE | 8
TECHNOLOGY, MEDIA, & TELECOM
QUARTERLY SOFTWARE SECTOR REVIEW │ 3Q 2017
NOTABLE DATA AND ANALYTICS M&A TRANSACTIONS1
74
64 67
72 76
99
89
105
112
102
82
87
97 100
105 106 107
DATA AND ANALYTICS – M&A MARKET SUMMARY
DATA AND ANALYTICS M&A VOLUME1 (GLOBAL)
Data and Analytics M&A volume continued its upwardmomentum, with 107transactions registered in 3Q2017, representing the sixthconsecutive growth quarter.
In 3Q 2017, median reportedsector transaction multiples increased to 3.1x revenue, largely driven by heightened interest from large technology incumbents.
Data and Analytics continuesto represent a key focus areafor strategic acquirers,particularly among establishedproviders looking tosupplement growth throughacquisitions.
Recent examples includeVerint’s pending acquisition ofeg solutions, Oracle’s pendingacquisition of Moat, Verisk’spending acquisition of Sequel,Nasdaq’s acquisitions ofeVestment Alliance andSybenetix, and IHS Markit’sacquisition of AutomotiveMastermind.
MEDIAN M&A REVENUE MULTIPLES1 (REPORTED)
1.4x
1.3x
1.9x 1.9x
2.7x
3.3x
2.8x
2.0x
2.6x2.6x
1.9x
3.1x
2.4x2.5x
2.8x
2.5x
3.1x
DATE
CLOSED ACQUIRER TARGET DESCRIPTION
ENTERPRISE
VALUE (MM)
REVENUE
MULTIPLE
MEDIAN
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
4Q '1
6
1Q '1
7
2Q '1
7
3Q '1
7
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
4Q '1
6
1Q '1
7
2Q '1
7
3Q '1
7
Data and Analytics
Pending Verint Systems eg solutions Plc Back office workforce optimization software. $30 2.2x
Pending E.I. du Pont de Nemours Granular, Inc. Farm management and analytics software. $300 NA
Pending Oracle Corp. Moat, Inc. Cloud-based actionable marketing analytics software. $850 NA
Pending Next Investors LLC Sapience Analytics Enterprise workforce analytics and efficiency software. NA NA
Pending Verisk Analytics, Inc. Sequel Business Solutions Ltd. Complex commercial and specialty insurance software and analysis tools. $321 9.6x
Pending Accesso Technology The Experience Engine, Inc. Consumer engagement platform driven by real-time information. $81 6.4x
10/23/17 Nasdaq, Inc. eVestment Alliance LLC Cloud-based institutional investment data intelligence and analytics platform. $705 9.8x
10/06/17 CGI Nordic Investments Ltd. Affecto Oyj Enterprise information management and business intelligence software. $123 0.9x
09/26/17 IHS Markit Ltd. automotiveMastermind, Inc. Predicitve analytics and marketing automation software for the auto industry. $503 15.8x
09/18/17 Nasdaq, Inc. Sybenetix Ltd. Enterprise behavioral analytics software for surveillance purposes. NA NA
08/22/17 Vestar Capital Partners Quest Analytics Health plan provider network management software. NA NA
08/14/17 Great Hill Partners Zoom Information, Inc. B2B database platform to help companies optimize sales and marketing effectiveness. $240 6.0x
07/12/17 Hansen Technologies Enoro Customer information and meter data management software for energy markets. $76 1.7x
07/10/17 Vela Trading Technologies LLC OptionsCity Software, Inc. Futures and options trading and analytics systems. NA NA
$270 6.2x
PAGE | 9
TECHNOLOGY, MEDIA, & TELECOM
QUARTERLY SOFTWARE SECTOR REVIEW │ 3Q 2017
56 55 53
48
56
47 45
50
36
52
44
57 60
75
63 62
77
1.2x
2.4x2.5x
2.9x
2.4x
2.7x
3.0x
3.2x3.3x
2.6x
2.9x
2.6x2.7x
3.1x
2.6x
2.4x
3.0x
NOTABLE INFRASTRUCTURE SOFTWARE M&A TRANSACTIONS1
INFRASTRUCTURE SOFTWARE – M&A MARKET SUMMARY
INFRASTRUCTURE SOFTWARE M&A VOLUME1 (GLOBAL)
Infrastructure Software M&A registered 77 transactions in3Q 2017, representing a 28%increase over 3Q 2016 levels.
3Q 2017 median reportedInfrastructure Software transaction multiples increased to 3.0x revenue, a valuation level slightly above historical averages.
Both established softwarevendors including Google,Cisco, Open Text, andSymantec, as well as privateequity investors, remain keenon high quality infrastructuresoftware assets.
One year after announcingthe deal, Micro Focus andHPE’s software divisioncompleted their merger. Thecombined entity nowrepresents the world’s seventhlargest pure-play softwarecompany, with revenue inexcess of $4.4 billion.
MEDIAN M&A REVENUE MULTIPLES1 (REPORTED)
DATE
CLOSED ACQUIRER TARGET DESCRIPTION
ENTERPRISE
VALUE (MM)
REVENUE
MULTIPLE
MEDIAN
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
4Q '1
6
1Q '1
7
2Q '1
7
3Q '1
7
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
4Q '1
6
1Q '1
7
2Q '1
7
3Q '1
7
Infrastructure Software
Pending HGGC IDERA Systems and application management software. $1,125 NA
Pending Apax Partners ThoughtWorks, Inc. Software development and digital transformation solutions. NA NA
10/03/17 OMRON Corp. Microscan Systems, Inc. Code scanning and decoding technology for critical automatic identification / verification. $160 2.8x
09/26/17 Google Bitium, Inc. Cloud-based identity management platform. NA NA
09/25/17 Mitel Networks Corp. ShoreTel, Inc. Business communication systems, including unified communications, voice, and SMS. $530 1.5x
09/22/17 Cisco Systems, Inc. Springpath, Inc. Hyperconvergence software designed for enterprise storage and data management. $320 NA
09/21/17 Francisco Partners Sandvine Corp. Network policy control serv ices for cable, fixed wireless, and mobile operators. $442 3.9x
09/14/17 Open Text Corp. Guidance Software, Inc. Forensic-security software that enables increased v isibility across endpoints and networks. $240 2.2x
09/01/17 Micro Focus International Plc HPE (Software Div ision) Diversified enterprise software, including application lifecycle management and analytics. $6,268 NA
08/17/17 Centerbridge Partners Syncsort / Vision Solutions Big data, high availability, and disaster recovery solutions for IBM Power and other systems. $1,260 NA
08/01/17 Cisco Systems, Inc. Viptela, Inc. Cloud-based WAN v irtualization software. $610 6.1x
07/31/17 Symantec Corp. Skycure Ltd. Mobile security software to defend against malware and other network-based threats. $250 NA
07/30/17 Symantec Corp. Fireglass Ltd. Cyber security solutions for web and email with no endpoint agent. $250 NA
07/26/17 Open Text Corp. Covisint Corp. Cloud-based building identity and IoT application development. $67 1.0x
$381 2.5x
PAGE | 10
TECHNOLOGY, MEDIA, & TELECOM
QUARTERLY SOFTWARE SECTOR REVIEW │ 3Q 2017
PRIVATE PLACEMENT CAPITAL RAISED BY ROUND1,4 (AS PERCENTAGE OF TOTAL REPORTED PRIVATE PLACEMENT CAPITAL)
There were 853 privateplacement financings in 3Q2017, which represents a14% increase over 2Q 2017.
Total reported capitalinvested in 3Q 2017 was$10.1 billion, which is downcompared to the priorquarter due to a higher mixof smaller early stage roundsvs. larger late stage rounds.
PRIVATE PLACEMENT ACTIVITY BY SOFTWARE SECTOR
In 3Q 2017, early stagerounds (Series B and earlier)represented 44% of totalprivate capital raised, anincrease from 24% in 2Q2017.
Notable early stage roundsinclude Insight VenturePartners’ $50 million Series Binvestment in Receipt Bankand Georgian Partners,Accomplice, and OakInvestment Partners’ $45million Series B investment inFreshBooks.
PRIVATE PLACEMENTS BY SOFTWARE SUB-SECTOR AND NEW CAPITAL RAISED1,4
COMPARABLE COMPANY SET MEDIANS CORRELATION WITH EV / REVENUE MULTIPLE
18% 64% 23% 75% 68% 28%
27% 104% 16% 44% - 27%
23% 92% 20% 82% 21% -
23% 173% 9% 73% - 81%
11% 16% 35% 62% - 73%
13% 30% 26% 46% - 70%
26% 111% 11% 47% - -
12% 48% 16% 78% 36% 54%
15% 30% 25% 79% 47% 35%
5% 27% 31% 85% 47% 25%
20% 65% 19% 22% - 66%
16% 24% 31% 68% 67% 48%
22% 56% 16% 8% 53% 30%
12% 48% 29% 33% 52% -
20% 145% 17% - - 32%
15% 115% 10% 26% 15% 34%
9% 9% 12% - - 100%
PAGE | 14
TECHNOLOGY, MEDIA, & TELECOM
QUARTERLY SOFTWARE SECTOR REVIEW │ 3Q 2017
SUMMARY OF TECHNOLOGY IPOS
Technology companies’ share of U.S. IPOshas fallen to a seven-year low with just 12IPOs completed year-to-date.
Record valuation levels in the privatemarkets, particularly for high qualitysoftware assets, have presented acompelling alternative to the IPO market asshareholders seek liquidity.
MARKET CAP AT IPO (LTM) 1 REVENUE GROWTH (1YR PRIOR TO IPO) 1OFFERING SIZE AT IPO (LTM) 1
RECENT U.S. TECHNOLOGY IPO ACTIVITY (BY OFFERING SIZE) 1
25%
46%
29%
< 25% 25 - 75% > 75%
38%
33%
29%
$0-50M $50-500M $500M-$1B $1B+
13%
6%
56%
25%
$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)
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