Q1 2015 Software Industry Update - For more information, visit the Vistapoint Advisors' Website.
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Founded Accusoft (Pegasus Imaging) in 1991 and has been CEO ever since.
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1 │ Software Industry Update Q1 2015
Mergers & Acquisitions ï¼ Capital Raising ï¼ Strategic Advisory
Software Industry Update
Q1 2015
2 │ Software Industry Update Q1 2015
Vista Point Advisors Overview
Unconflicted Advice
Deep Technology
Domain Expertise
Differentiated Negotiation
Framework
Vista Point exclusively provides sell-
side M&A and Capital Raising advisory
services to technology businesses
removing the conflict of interest
associated with working both sides of
the table.
Vista Point bankers are industry
specialists that focus exclusively on
core technology markets allowing us
to provide relevant insights into our
client’s business and create the
strategic framework to optimize
valuation.
The firm utilizes a unique negotiation
framework to increase the
competitiveness of the transaction
process, and ultimately yield higher
valuations at better terms for clients.
Vista Point Advisors was founded on the principle that founder-led technology companies in the emerging and
middle markets are unique and require specialized attention and advice when considering investment and exit
opportunities. Our unique focus on sell-side processes provides our clients with unconflicted advice that assures
our interests are completely aligned with the entrepreneur. VPA is focused exclusively on working with founder-
owned and operated businesses to deliver the most favorable transactions at premium valuations.
3 │ Software Industry Update Q1 2015
Representative Vista Point Advisors Transactions
*Completed by VPA professionals while at another investment bank
has been acquired by
April 2014
has been acquired by
March 2014
received investment from
March 2013
has been acquired by
January 2013
has been acquired by
November 2013
has been acquired by
August 2014
received investment from
December 2014
has been acquired by
February 2015
received investment from
November 2014
has been acquired by
November 2014
received investment from
January 2013
has been acquired by*
October 2010
has been acquired by*
December 2010
has been acquired by
March 2012
has been acquired by
March 2015
4 │ Software Industry Update Q1 2015
• There were 265 reported software M&A transactions in Q1 2015 totaling $15 billion in transaction value
─ Notable strategic deals include:
o
SS&C Technologies' $2.6 billion acquisition of Advent Software
o Hewlett-Packard’s $2.4 billion acquisition of Aruba Networks
o D+H’s $1.3 billion acquisition of Fundtech
o
Lexmark’s $955 million acquisition of Kofax
o Autodesk’s acquisition of Tweak Software
• The software IPO market continues to be active with 2 major IPOs pricing in Q1 2015
─ Box (NYSE:BOX), a cloud-based enterprise content collaboration solution, raised $175 million and has traded up 39%
─ MaxPoint Interactive (NYSE:MXPT), a digital advertising services provider, raised $75 million and has traded down 17%,
reflecting continued trouble for publically traded ad-tech assets
•
In on-going public market performance, results have been positive in the last 3 months:
─
Financial Technology traded up 17.2%
─ CRM traded up 10.1%
─
Supply Chain Management traded up 6.0%
─ Human Capital Management traded up 5.9%
Q1 2015 Software Industry Overview
5 │ Software Industry Update Q1 2015
Most Active Acquirers (Since 2010)
Source: Capital IQ as of 3/31/2015
Notable Recent Transactions
Deals <$1bn
Deals >$1bn
Acquirer
Target
Date
02/02/15
02/09/15
03/02/15
03/24/15
03/30/15
EV
$2,550m
N/A
$2,360m
$955m
$1,250m
EV / LTM Rev
6.4x
N/A
2.9x
3.2x
4.8x
EV / LTM EBITDA
24.8x
N/A
29.2x
43.0x
21.0x
Active Acquirers and Notable Transactions
$4.7
$3.9
$14.1
$0.7 $0.0
$16.4
$4.2
$4.0
$1.2
$1.3
$0.4
$15.1
$4.4
$2.5
$0.3
$0.0
$10.0
$20.0
R
e
p
o
rt
e
d
V
al
u
e
(
$
b
n
)
47
35
33
23
21
20
20
20
20
15
15
14
14
13
13
1
2
5
1
2
2
1
3
1
1
0
10
20
30
40
50
N
u
m
b
e
r
o
f
Tr
an
sa
ct
io
n
s
6 │ Software Industry Update Q1 2015
Quarterly Software M&A Value and Deal Count (Since 2010)
Source: Capital IQ as of 3/31/2015
Software M&A Market Overview
344
334
327
336
337
340
366
363
368
349
363
322
299
286
207
304
324
308
345
250
265
0
100
200
300
400
Q
1
'1
0
Q
2
'1
0
Q
3
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0
Q
4
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0
Q
1
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1
Q
2
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1
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3
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1
Q
4
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1
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2
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3
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2
Q
4
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2
Q
1
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3
Q
2
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3
Q
3
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3
Q
4
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3
Q
1
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4
Q
2
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4
Q
3
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4
Q
4
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4
Q
1
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5
N
u
m
b
e
r
o
f
Tr
an
sa
ct
io
n
s
$8
$24
$22
$14
$6
$15
$31
$13
$18
$19
$17
$17
$5
$22
$22
$18
$15
$23
$48
$9
$15
$0
$10
$20
$30
$40
$50
$60
Tr
an
sa
ct
io
n
V
al
u
e
(
$
b
n
)
7 │ Software Industry Update Q1 2015
69%
9%
8%
5%
5%
4%
Q4 '14
60%
10%
8%
10%
3%
10%
Q1 '15
Transactions by Reported Value
Transactions by Target Funding
Total: $9B
Total: $15B
50M+
$30 - $50M
$10 - $30M
$0.1 - $10M
Undisclosed
No Funding
$500M - $1B
>$1B
$250M - $500M
$100M - $250M
$50M - $100M
<$50M
Source: Capital IQ as of 3/31/2015
Software M&A Market Overview
72%
65%
66%
65%
66%
68%
72%
73%
71%
70%
65%
71%
67%
67%
64%
64%
64%
66%
62%
66%
65%
0%
20%
40%
60%
80%
100%
Q
1
'1
0
Q
2
'1
0
Q
3
'1
0
Q
4
'1
0
Q
1
'1
1
Q
2
'1
1
Q
3
'1
1
Q
4
'1
1
Q
1
'1
2
Q
2
'1
2
Q
3
'1
2
Q
4
'1
2
Q
1
'1
3
Q
2
'1
3
Q
3
'1
3
Q
4
'1
3
Q
1
'1
4
Q
2
'1
4
Q
3
'1
4
Q
4
'1
4
Q
1
'1
5
8 │ Software Industry Update Q1 2015
35
44
23
25
17
17
18
13
17
14
12
11
8
8
12
7
9
5
5
3
62
45
30
27
22
22
15
17
12
12
13
10
12
9
4
9
6
10
9
10
84
66
40
50
51
30
23
22
30
29
29
11
23
16
9
9
10
23
19
10
181
155
93
102
90
69
56
52
59
55
54
32
43
33
25
25
25
38
33
23
0
50
100
150
200
Investments Made
Within last 6 months
Within 6-12 months
Within 12-24 months
13
4
4
6
6
3
6
2
1
3
4
9
4
2
4
4
1
3
18
7
3
1
9
4
4
7
4
3
4
3
4
4
1
10
1
2
29
11
9
8
12
8
7
7
6
5
5
12
7
6
7
5
4
10
8
3
60
22
16
15
27
15
17
16
11
11
13
24
15
6
13
5
9
24
10
8
0
15
30
45
60
Portfolio Exits
Within last 6 months
Within 6-12 months
Within 12-24 months
Source: Capital IQ as of 3/31/2015
Despite High Valuations, Investments Lead Exits 3:1
Top 20 Most Active Investors Across Software & Internet Over the Last 2 Years
9 │ Software Industry Update Q1 2015
Average Price Performance Post IPO
Year
# of IPOs
% Primary vs. Secondary
File to Price Change
1 Day
7 Days
130
Days
Since
IPO
2015
YTD
22.6%
13.5%
12.9%
14.3%
2014
27.1%
25.2%
19.9%
17.5%
2013
26.0%
28.4%
33.9%
16.4%
Source: Capital IQ as of 3/31/2015
IPO Summary
20
12
9
41
0
10
20
30
40
50
Software
Internet
Hardware
84.2%
15.8%
% Primary Shares
% Secondary Shares
90.5%
9.5%
% Primary Shares
% Secondary Shares
100.0%
0.0%
% Primary Shares
% Secondary Shares
33.3%
66.7%
0.0%
Increase
No Change
No Decrease
33.3%
55.6%
11.1%
Increase
No Change
No Decrease
34.1%
51.2%
14.6%
Increase
No Change
No Decrease
26
14
5 45
0
10
20
30
40
50
Software
Internet
Hardware
2
1
3
0
2
4
Software
Internet
Hardware
10 │ Software Industry Update Q1 2015
0%
50%
100%
150%
200%
250%
300%
Apr-12
Jun-12
Aug-12
Oct-12
Dec-12
Feb-13
Apr-13
Jun-13
Aug-13
Oct-13
Dec-13
Feb-14
Apr-14
Jun-14
Aug-14
Oct-14
Dec-14
Feb-15
Apr-15
EV / Revenue
EV / EBITDA
3 Year Public Market Performance
% of 52 Week High
LTM
2015E
LTM
2015E
High Growth Software: AKAM, ATHN, AZPN, CALD, CKSW, CRM, CSLT, CSOD, CYBR, DATA, ELLI, ENV, EPAY, FEYE, FLTX, FTNT, HDP, HSTM, LOGM, MDSO, MOBL, N, NOW, NQ, OTEX, PANW, PCTY, PFPT, QIHU, QLYS, QTWO, SPLK, SWI, TRAK, TSX:CSU, TXTR, ULTI, VDSI, VEEV,
VRNS, VRNT, WDAY, WK, YDLE
All Software: See all bucketed companies
High Margin Software: AKAM, AVG, AZPN, CA, CHKP, EBIX, FDS, FISV, INTU, JKHY, MDAS, MSCI, MSFT, NSR, ORCL, OTEX, PAYX, PRGS, SAP, SWI, TSX:DSG, VRSN
Source: Capital IQ as of 3/31/2015
Software Public Market Performance
Index Performance Over Last 3 Years
High Growth Software (>20% LTM Revenue Growth)
+102%
NASDAQ Composite Index
+57%
All Software
+52%
S&P 500 Index
+46%
High Margin Software (>30% LTM EBITDA Margins)
+33%
91%
96%
87%
80%
85%
90%
95%
100%
All Software
High Margin
High Growth
4.5x
5.4x
7.7x
4.0x
5.0x
6.5x
0.0x
2.0x
4.0x
6.0x
8.0x
10.0x
All Software
High Margin
High Growth
19.5x
14.4x
29.0x
14.4x
12.9x
26.8x
0.0x
10.0x
20.0x
30.0x
40.0x
All Software
High Margin
High Growth
Mergers & Acquisitions ï¼ Capital Raising ï¼ Strategic Advisory
Software Industry Update
Q1 2015
2 │ Software Industry Update Q1 2015
Vista Point Advisors Overview
Unconflicted Advice
Deep Technology
Domain Expertise
Differentiated Negotiation
Framework
Vista Point exclusively provides sell-
side M&A and Capital Raising advisory
services to technology businesses
removing the conflict of interest
associated with working both sides of
the table.
Vista Point bankers are industry
specialists that focus exclusively on
core technology markets allowing us
to provide relevant insights into our
client’s business and create the
strategic framework to optimize
valuation.
The firm utilizes a unique negotiation
framework to increase the
competitiveness of the transaction
process, and ultimately yield higher
valuations at better terms for clients.
Vista Point Advisors was founded on the principle that founder-led technology companies in the emerging and
middle markets are unique and require specialized attention and advice when considering investment and exit
opportunities. Our unique focus on sell-side processes provides our clients with unconflicted advice that assures
our interests are completely aligned with the entrepreneur. VPA is focused exclusively on working with founder-
owned and operated businesses to deliver the most favorable transactions at premium valuations.
3 │ Software Industry Update Q1 2015
Representative Vista Point Advisors Transactions
*Completed by VPA professionals while at another investment bank
has been acquired by
April 2014
has been acquired by
March 2014
received investment from
March 2013
has been acquired by
January 2013
has been acquired by
November 2013
has been acquired by
August 2014
received investment from
December 2014
has been acquired by
February 2015
received investment from
November 2014
has been acquired by
November 2014
received investment from
January 2013
has been acquired by*
October 2010
has been acquired by*
December 2010
has been acquired by
March 2012
has been acquired by
March 2015
4 │ Software Industry Update Q1 2015
• There were 265 reported software M&A transactions in Q1 2015 totaling $15 billion in transaction value
─ Notable strategic deals include:
o
SS&C Technologies' $2.6 billion acquisition of Advent Software
o Hewlett-Packard’s $2.4 billion acquisition of Aruba Networks
o D+H’s $1.3 billion acquisition of Fundtech
o
Lexmark’s $955 million acquisition of Kofax
o Autodesk’s acquisition of Tweak Software
• The software IPO market continues to be active with 2 major IPOs pricing in Q1 2015
─ Box (NYSE:BOX), a cloud-based enterprise content collaboration solution, raised $175 million and has traded up 39%
─ MaxPoint Interactive (NYSE:MXPT), a digital advertising services provider, raised $75 million and has traded down 17%,
reflecting continued trouble for publically traded ad-tech assets
•
In on-going public market performance, results have been positive in the last 3 months:
─
Financial Technology traded up 17.2%
─ CRM traded up 10.1%
─
Supply Chain Management traded up 6.0%
─ Human Capital Management traded up 5.9%
Q1 2015 Software Industry Overview
5 │ Software Industry Update Q1 2015
Most Active Acquirers (Since 2010)
Source: Capital IQ as of 3/31/2015
Notable Recent Transactions
Deals <$1bn
Deals >$1bn
Acquirer
Target
Date
02/02/15
02/09/15
03/02/15
03/24/15
03/30/15
EV
$2,550m
N/A
$2,360m
$955m
$1,250m
EV / LTM Rev
6.4x
N/A
2.9x
3.2x
4.8x
EV / LTM EBITDA
24.8x
N/A
29.2x
43.0x
21.0x
Active Acquirers and Notable Transactions
$4.7
$3.9
$14.1
$0.7 $0.0
$16.4
$4.2
$4.0
$1.2
$1.3
$0.4
$15.1
$4.4
$2.5
$0.3
$0.0
$10.0
$20.0
R
e
p
o
rt
e
d
V
al
u
e
(
$
b
n
)
47
35
33
23
21
20
20
20
20
15
15
14
14
13
13
1
2
5
1
2
2
1
3
1
1
0
10
20
30
40
50
N
u
m
b
e
r
o
f
Tr
an
sa
ct
io
n
s
6 │ Software Industry Update Q1 2015
Quarterly Software M&A Value and Deal Count (Since 2010)
Source: Capital IQ as of 3/31/2015
Software M&A Market Overview
344
334
327
336
337
340
366
363
368
349
363
322
299
286
207
304
324
308
345
250
265
0
100
200
300
400
Q
1
'1
0
Q
2
'1
0
Q
3
'1
0
Q
4
'1
0
Q
1
'1
1
Q
2
'1
1
Q
3
'1
1
Q
4
'1
1
Q
1
'1
2
Q
2
'1
2
Q
3
'1
2
Q
4
'1
2
Q
1
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3
Q
2
'1
3
Q
3
'1
3
Q
4
'1
3
Q
1
'1
4
Q
2
'1
4
Q
3
'1
4
Q
4
'1
4
Q
1
'1
5
N
u
m
b
e
r
o
f
Tr
an
sa
ct
io
n
s
$8
$24
$22
$14
$6
$15
$31
$13
$18
$19
$17
$17
$5
$22
$22
$18
$15
$23
$48
$9
$15
$0
$10
$20
$30
$40
$50
$60
Tr
an
sa
ct
io
n
V
al
u
e
(
$
b
n
)
7 │ Software Industry Update Q1 2015
69%
9%
8%
5%
5%
4%
Q4 '14
60%
10%
8%
10%
3%
10%
Q1 '15
Transactions by Reported Value
Transactions by Target Funding
Total: $9B
Total: $15B
50M+
$30 - $50M
$10 - $30M
$0.1 - $10M
Undisclosed
No Funding
$500M - $1B
>$1B
$250M - $500M
$100M - $250M
$50M - $100M
<$50M
Source: Capital IQ as of 3/31/2015
Software M&A Market Overview
72%
65%
66%
65%
66%
68%
72%
73%
71%
70%
65%
71%
67%
67%
64%
64%
64%
66%
62%
66%
65%
0%
20%
40%
60%
80%
100%
Q
1
'1
0
Q
2
'1
0
Q
3
'1
0
Q
4
'1
0
Q
1
'1
1
Q
2
'1
1
Q
3
'1
1
Q
4
'1
1
Q
1
'1
2
Q
2
'1
2
Q
3
'1
2
Q
4
'1
2
Q
1
'1
3
Q
2
'1
3
Q
3
'1
3
Q
4
'1
3
Q
1
'1
4
Q
2
'1
4
Q
3
'1
4
Q
4
'1
4
Q
1
'1
5
8 │ Software Industry Update Q1 2015
35
44
23
25
17
17
18
13
17
14
12
11
8
8
12
7
9
5
5
3
62
45
30
27
22
22
15
17
12
12
13
10
12
9
4
9
6
10
9
10
84
66
40
50
51
30
23
22
30
29
29
11
23
16
9
9
10
23
19
10
181
155
93
102
90
69
56
52
59
55
54
32
43
33
25
25
25
38
33
23
0
50
100
150
200
Investments Made
Within last 6 months
Within 6-12 months
Within 12-24 months
13
4
4
6
6
3
6
2
1
3
4
9
4
2
4
4
1
3
18
7
3
1
9
4
4
7
4
3
4
3
4
4
1
10
1
2
29
11
9
8
12
8
7
7
6
5
5
12
7
6
7
5
4
10
8
3
60
22
16
15
27
15
17
16
11
11
13
24
15
6
13
5
9
24
10
8
0
15
30
45
60
Portfolio Exits
Within last 6 months
Within 6-12 months
Within 12-24 months
Source: Capital IQ as of 3/31/2015
Despite High Valuations, Investments Lead Exits 3:1
Top 20 Most Active Investors Across Software & Internet Over the Last 2 Years
9 │ Software Industry Update Q1 2015
Average Price Performance Post IPO
Year
# of IPOs
% Primary vs. Secondary
File to Price Change
1 Day
7 Days
130
Days
Since
IPO
2015
YTD
22.6%
13.5%
12.9%
14.3%
2014
27.1%
25.2%
19.9%
17.5%
2013
26.0%
28.4%
33.9%
16.4%
Source: Capital IQ as of 3/31/2015
IPO Summary
20
12
9
41
0
10
20
30
40
50
Software
Internet
Hardware
84.2%
15.8%
% Primary Shares
% Secondary Shares
90.5%
9.5%
% Primary Shares
% Secondary Shares
100.0%
0.0%
% Primary Shares
% Secondary Shares
33.3%
66.7%
0.0%
Increase
No Change
No Decrease
33.3%
55.6%
11.1%
Increase
No Change
No Decrease
34.1%
51.2%
14.6%
Increase
No Change
No Decrease
26
14
5 45
0
10
20
30
40
50
Software
Internet
Hardware
2
1
3
0
2
4
Software
Internet
Hardware
10 │ Software Industry Update Q1 2015
0%
50%
100%
150%
200%
250%
300%
Apr-12
Jun-12
Aug-12
Oct-12
Dec-12
Feb-13
Apr-13
Jun-13
Aug-13
Oct-13
Dec-13
Feb-14
Apr-14
Jun-14
Aug-14
Oct-14
Dec-14
Feb-15
Apr-15
EV / Revenue
EV / EBITDA
3 Year Public Market Performance
% of 52 Week High
LTM
2015E
LTM
2015E
High Growth Software: AKAM, ATHN, AZPN, CALD, CKSW, CRM, CSLT, CSOD, CYBR, DATA, ELLI, ENV, EPAY, FEYE, FLTX, FTNT, HDP, HSTM, LOGM, MDSO, MOBL, N, NOW, NQ, OTEX, PANW, PCTY, PFPT, QIHU, QLYS, QTWO, SPLK, SWI, TRAK, TSX:CSU, TXTR, ULTI, VDSI, VEEV,
VRNS, VRNT, WDAY, WK, YDLE
All Software: See all bucketed companies
High Margin Software: AKAM, AVG, AZPN, CA, CHKP, EBIX, FDS, FISV, INTU, JKHY, MDAS, MSCI, MSFT, NSR, ORCL, OTEX, PAYX, PRGS, SAP, SWI, TSX:DSG, VRSN
Source: Capital IQ as of 3/31/2015
Software Public Market Performance
Index Performance Over Last 3 Years
High Growth Software (>20% LTM Revenue Growth)
+102%
NASDAQ Composite Index
+57%
All Software
+52%
S&P 500 Index
+46%
High Margin Software (>30% LTM EBITDA Margins)
+33%
91%
96%
87%
80%
85%
90%
95%
100%
All Software
High Margin
High Growth
4.5x
5.4x
7.7x
4.0x
5.0x
6.5x
0.0x
2.0x
4.0x
6.0x
8.0x
10.0x
All Software
High Margin
High Growth
19.5x
14.4x
29.0x
14.4x
12.9x
26.8x
0.0x
10.0x
20.0x
30.0x
40.0x
All Software
High Margin
High Growth