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About Firmex                  Firmex focused on providing the best virtual data room solution                  for managin...
@Firmex, #FirmexWebinarTrends in Technology M&AAnd Outlook for the Remainder of 2012 Firmex Webinar Series                ...
About Firmex                  Firmex is focused on providing the best virtual data room                  solution for mana...
Cyrus Lam               Cyrus Lam is a Managing Director with KPMG Corporate Finance LLC in New York with a               ...
CORPORATE FINANCETrends in Technology M&AAn Outlook for the Remainder of 2012Cyrus F. LamKPMG Corporate Finance LLCApril 1...
Important noticeThis presentation is confidential and does not carry any right of publication or disclosure to any other p...
M&A Market LandscapeTechnology M&A LandscapeDeal ManagementQuestions
Global and U.S. M&A activity                   Global M&A activity                                                        ...
M&A volume by sector            Consumer Discretionary                                        Consumer Staples            ...
Average M&A multiples by sector               Consumer Discretionary                                             Consumer ...
M&A volume by deal size                           Global M&A volume by deal size                                  6,000   ...
Average M&A multiples by deal size                                     Global M&A multiples by deal size                  ...
Abundance of available investable capital                        The market is flush with capital that needs to be deploy...
Increased leverage capability for M&A                                Middle Market LBO Credit Statistics                  ...
Factors impacting M&A in 2012                                                                                             ...
Knowledge @ Wharton/KPMG survey                                                                                           ...
KPMG M&A Predictor                                                                                                 KPMG‟s ...
M&A Market LandscapeTechnology M&A LandscapeDeal ManagementQuestions
General technology M&A activity                   Global technology M&A activity                                          ...
Global technology M&A – valuations and deal size                         Average enterprise software deal value and       ...
Top ten recent technology M&A transactions                     Large Precedent Technology M&A Transactions (in $USD millio...
Public enterprise software company comparables  Enterprise software comparables for select application software, infrastru...
Technology m&a trends 2012
Technology m&a trends 2012
Technology m&a trends 2012
Technology m&a trends 2012
Technology m&a trends 2012
Technology m&a trends 2012
Technology m&a trends 2012
Technology m&a trends 2012
Technology m&a trends 2012
Technology m&a trends 2012
Technology m&a trends 2012
Technology m&a trends 2012
Technology m&a trends 2012
Technology m&a trends 2012
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Technology m&a trends 2012

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  •  2012 deal environment still murky, with two-thirds of respondents expecting the recovery in 2013 or later Companies that survived the economic downfall are leaner and better prepared to weather uncertain conditions U.S. election cycle, tax uncertainty and European economic woes will have significant impact on how companies pursue transactions Conquering due diligence issues continues to challenge dealmakers Interest in emerging markets still present, but stability of developed markets continues to hold allure
  • Have picture of report with a link and have a few bullet points
  • Enterprise SoftwareThe market has seen a few robust deal values in the enterprise software industry since Q2-11, as evident by the sporadic peaks in Q3-11 and Q1-12Average revenue multiples have gradually increased from 1.7x in Q4-10 to 2.4x for Q1-12, while average EBITDA multiples have increased dramatically from 8.2x in Q3-10 to 21.4x in Q3-11, until receding in Q1-12The largest recent software transaction was Hewlett-Packard’s acquisition of Autonomy in August 2011 for ≈$11bBPO and IT ServicesThe market has seen relatively sustained deal values in the BPO and IT services industry with a few robust quartersAverage revenue multiples have been less volatile than the software industry, remaining between 1.2x in Q4-09 to 1.7x Q1-12, while average EBITDA multiples have gradually decreased during 2011
  • 1The company said that its purchase of NDS would complement its Videoscape entertainment delivery platform, taking it into emerging markets including China and India where NDS has existing customers2Transaction will increase Quest’s flexibility to drive innovation across its product lines and execute its long-term strategyInsight's track record of success with leading infrastructure software companies ensures it will be a strong partner and will increase value to all stakeholders3Taleo’s expertise in SaaS-based talent management solutions enhances Oracle’s cloud platformCreates a comprehensive cloud offering for companies to manage their HR operations, optimize costs and enhance cross functional collaboration4Vista plans to combine the British company, with Turaz, one of its existing companies that makes trade and risk-management softwareThe combination of Misys and Turaz, creates the global leader in core banking, treasury management, capital markets and enterprise risk management software5Accelerate SAP’s momentum as a provider of cloud apps, platforms & infrastructureTransaction establishes an advanced end-to-end offering of cloud and on-premise solutions for managing all business processes6Re-positions HP as a leader in the large growing enterprise information management spaceInherent value of unstructured and structured data is an exploding growth opportunity7As a result of the combination, current and future customers will benefit from a broader portfolio of products and services as well as collaboration, creativity and sharing of best practices across an expanded global community of education professionals8Blackboard’s experience as a leader in education focused solutions complements Providence Equity Partners’ extensive education industry portfolio investmentsBlackboard will utilize Providence Equity Partners’ deep understanding of the intl education marketplace & will provide educational facilities with cutting edge technology9Telvent’s strong positioning in infrastructures and best-in-class software & IT capabilities fits particularly well with Schneider Electric energy and process management expertise and global presence10With the addition of Savvis, CenturyLink will achieve global scale as a managed hosting and colocation provider and will accelerate its ability to deliver quality managed hosting and cloud capabilities to its business customers. The combination of CenturyLink's hosting and network assets with Savvis' proven solutions in colocation, managed hosting and cloud services substantially enhances CenturyLink's capabilities and provides the company with a solid platform for future growth
  • Investment banks:451 Research Group, Corum Group“Convergence between hardware, software and services will continue to add products to the same sales chains,” said Bozdog, who is based in Palo Alto, California. (Source: http://www.bloomberg.com/news/2012-02-06/most-takeovers-since-2007-seen-spurred-by-data-torrent-tech.html)2) “Most established companies are worried about disruptive technologies,” said Chris McCabe, co-head of investment banking and head of technology, media and telecommunications banking at Cowen. “They want to make sure their company captures that growth through M&A rather than seeing that growth go to a start-up.”(Source: http://www.forbes.com/sites/thestreet/2012/01/30/bankers-bullish-on-tech-ma-for-2012/)3) “Big data, mobile and cloud technologies will drive “bold investments and fateful decisions,” market researcher IDC said in a recent report. The volume of digital information may balloon from 2.7 zettabytes this year -- the equivalent of filling 2.7 billion of Apple Inc. (AAPL)’s priciest desktop iMacs to capacity -- to 8 zettabytes by 2015, according to IDC.” (Source: http://www.bloomberg.com/news/2012-02-06/most-takeovers-since-2007-seen-spurred-by-data-torrent-tech.html)4) Signal Hill 2012 M&A Outlook - Impact of social media on enterprise software solutions - We expect there will be expanded focus on social enterprisesolution providers. Smaller firms will be acquired by larger, less agile companies looking to remain relevant and enter the social media space (Radian6/Salesforce.com, Everyday Hero/Blackbaud);Industry Research:1) “Volume last year was much higher than in 2010, and we expect this year to be the same or slightly larger”, said Jon Woodruff, co-head of technology investment banking, Goldman Sachs Group-“This year’s technology deal volume could be bigger than last year’s and 2007’s,” said Chet Bozdog, global head of technology investment banking at Bank of America Corp. Industry takeovers in 2007 reached $264.4 billion, the biggest year since 2000’s record high of $585.2 billion, data compiled by Bloomberg show. “Convergence between hardware, software and services will continue to add products to the same sales chains,” said Bozdog, who is based in Palo Alto, California. (Source: http://news.businessweek.com/article.asp?documentKey=1377-aKE1QOeolAX4-5S0JK32RO1ASKBJ48SUVEAKOK3)-Corum Group Research on 2012 M&A Outlook: Predicts M&A deal $ volume of $250 billion2) 451 Research Group, Bloomberg interview on Tech M&A in 2012 (Source: http://www.ustream.tv/recorded/19431481)3) Source: Corum Group Research on 2012 M&A Outlook4) Signal Hill 2012 M&A Outlook - Increased interest in vertically focused solutions - Historically, larger entities looking to gain domain expertise in newindustries have reached for vertical application targets. We expect companies will look to these acquisitions in 2012 as customers continue to demand vertical functionality “out-of-the-box” (Cúram and DemandTec/IBM).
  • “Volume last year was much higher than in 2010, and we expect this year to be the same or slightly larger”, said Jon Woodruff, co-head of technology investment banking, Goldman Sachs Group (Source: http://news.businessweek.com/article.asp?documentKey=1377-aKE1QOeolAX4-5S0JK32RO1ASKBJ48SUVEAKOK3)-“This year’s technology deal volume could be bigger than last year’s and 2007’s,” said Chet Bozdog, global head of technology investment banking at Bank of America Corp. Industry takeovers in 2007 reached $264.4 billion, the biggest year since 2000’s record high of $585.2 billion, data compiled by Bloomberg show. “Convergence between hardware, software and services will continue to add products to the same sales chains,” said Bozdog, who is based in Palo Alto, California. (Source: http://news.businessweek.com/article.asp?documentKey=1377-aKE1QOeolAX4-5S0JK32RO1ASKBJ48SUVEAKOK3)-Cloud computing, which allows companies to access information over the Internet from external data centers, and desktops’ shift to mobile devices, will continue to be “huge multiyear trends,” said Drago Rajkovic, head of technology mergers and acquisitions at JPMorgan Chase & Co. (Source: http://news.businessweek.com/article.asp?documentKey=1377-aKE1QOeolAX4-5S0JK32RO1ASKBJ48SUVEAKOK3)-2012 has a perfect storm of trends in disruptive technology, tax changes, industry consolidation, new buyers, and record cash reserves held by major technology companies, all of which will make it best year since the dot-com era for M&A in software, Internet, IT and related technologies,” said Bruce Milne, Corum CEO and ‘Selling Up Selling Out’ Conference Chair. (Source: http://www.datasite.com/2012-perfect-storm-technology-mergers-acquisitions042.htm, http://www.prweb.com/releases/techma/sandiego/prweb9209150.htm)-” Big data, mobile and cloud technologies will drive “bold investments and fateful decisions,” market researcher IDC said in a recent report. The volume of digital information may balloon from 2.7 zettabytes this year -- the equivalent of filling 2.7 billion of Apple Inc.’s priciest desktop iMacs to capacity -- to 8 zettabytes by 2015, according to IDC. -IBM, Mark Loughridge (CFO): “I do think the acquisition play is a good one, and I do think the market’s in a more reasonable position.”, “Our focus on key growth initiatives and investments in innovation are enabling us to expand into new markets, and capitalize on trends like analytics and cloud” (Source: http://seekingalpha.com/article/320777-international-business-machines-management-discusses-q4-2011-results-earnings-call-transcript?part=qanda)-BMC, 10K report (May-11): We continue to invest in our technology leadership, including in the areas of cloud computing, virtualization and software-as-a-service. In addition to our ongoing product development efforts, we consummated two strategic acquisitions within our ESM segment during fiscal 2011, by acquiring GridApp Systems and the software business of Neptuny S.r.l. The former expands our ESM offerings to include advanced database automation for physical, virtual and cloud environments while the latter expands our capabilities in capacity management, enhancing our ESM portfolio and cloud management capabilities.
  • Transcript of "Technology m&a trends 2012"

    1. 1. About Firmex Firmex focused on providing the best virtual data room solution for managing corporate transactions and financial compliance Who uses Firmex?JoelLessemCEO • Firmex community includesFirmex over 200,000 users worldwide • Conducted over 10,000 deals in the last 18 months Why offer a Webinar Series? • As part of our value-added service, we believe it is important to offer educational resources to our expanding community ©COPYRIGHT 2012. FIRMEX. ALL RIGHTS RESERVED
    2. 2. @Firmex, #FirmexWebinarTrends in Technology M&AAnd Outlook for the Remainder of 2012 Firmex Webinar Series Cyrus Lam April 17th, 2012 KPMG Corporate Finance LLC Managing Director 1:00 p.m. to 2:00 p.m. 757 3rd Avenue New York, NY 10017 212-872-5540 clam3@kpmg.com kpmgcorporatefinance.com©COPYRIGHT 2012. FIRMEX. ALL RIGHTS RESERVED
    3. 3. About Firmex Firmex is focused on providing the best virtual data room solution for managing corporate transactions and financial complianceJoelLessem Who uses Firmex?CEOFirmex • Firmex community includes over 200,000 users worldwide • Conducted over 10,000 deals in the last 18 months Why offer a Webinar Series? • As part of our value-added service, we believe it is important to offer educational resources to our expanding community ©COPYRIGHT 2012. FIRMEX. ALL RIGHTS RESERVED
    4. 4. Cyrus Lam Cyrus Lam is a Managing Director with KPMG Corporate Finance LLC in New York with a technology focus specializing in IT Services, BPO, and Enterprise Software sectors. He has over 14 years of cross-border M&A experience, acting on buy-side and sell-side, as well as assisting on private placements (debt and equity). Cyrus holds a Masters Degree and a Bachelor of Commerce degree in Business and Accounting from the University of Mumbai, India. He is also a Chartered Accountant and is a Fellow of the Institute of Chartered Accountants, India. Cyrus has been with KPMG for over 16 years, having started in India as an accountant and later transitioning to the Indian Corporate Finance Practice. In October 2000, Cyrus joined KPMG Corporate Finance in London, and subsequently moved to the U.S. Corporate Finance team in December 2006. Cyrus specializes in the technology and support services vertical with a focus on: • Information technology services • Enterprise software (including both vertically and horizontally focused software companies) • Business process outsourcing During his time with KPMG, Cyrus has developed significant cross-border transaction experience, having worked on M&A deals in India, the U.S., the U.K., Sweden, Germany, France, Spain and the Netherlands.©COPYRIGHT 2012. FIRMEX. ALL RIGHTS RESERVED
    5. 5. CORPORATE FINANCETrends in Technology M&AAn Outlook for the Remainder of 2012Cyrus F. LamKPMG Corporate Finance LLCApril 17, 2012ADVISORY
    6. 6. Important noticeThis presentation is confidential and does not carry any right of publication or disclosure to any other party. This presentation is incompletewithout reference to, and should be viewed solely in conjunction with, the oral briefing provided by KPMG Corporate Finance LLC. Neither thispresentation nor any of its contents may be used for any other purpose without the prior written consent of KPMG Corporate Finance LLC.The information in this presentation is based upon publicly available information and reflects prevailing conditions and our views as of thisdate, all of which are accordingly subject to change and such changes may be material. In preparing this presentation, we have relied upon andassumed, without independent verification, the accuracy and completeness of all information available from public sources or which wasotherwise reviewed by us.The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity.Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the dateit is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional adviceafter a thorough examination of the particular situation.While the information presented and views expressed in this presentation and the oral briefing have been prepared in good faith, KPMGCorporate Finance LLC accepts no responsibility or liability to any party in connection with such information or views.©2012 KPMG Corporate Finance LLC, a Delaware limited liability company, is a member of FINRA and SIPC and is registered as a broker-dealer with the SEC. KPMG Corporate Finance LLC is also registered as a municipal advisor with the SEC and MSRB. KPMGCorporate Finance LLC is a subsidiary of KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights 5reserved.
    7. 7. M&A Market LandscapeTechnology M&A LandscapeDeal ManagementQuestions
    8. 8. Global and U.S. M&A activity Global M&A activity U.S. M&A activity 1,000 13,233 14,000 1,000 14,000 12,879 12,641 12,478 900 11,505 900 10,971 12,000 12,000 10,716 10,717 10,675 800 10,315 800 700 10,000 700 10,000 8,517 718 Deal Volume Deal VolumeDeal Value ($ b) Deal Value ($ b) 8,148 677 600 661 600 7,442 621 8,000 8,000 605 569 500 525 550 554 537 500 6,000 6,000 400 427 451 400 396 3,854 3,820 3,810 3,714 300 4,000 300 3,159 3,224 3,284 3,478 3,232 4,000 3,033 2,004 2,228 2,440 266 200 200 255 226 223 235 219 2,000 207 203 2,000 195 188 167 100 100 150 100 - - - - Q1-09 Q2-09 Q3-09 Q4-09 Q1-10 Q2-10 Q3-10 Q4-10 Q1-11 Q2-11 Q3-11 Q4-11 Q1-12 Q1-09 Q2-09 Q3-09 Q4-09 Q1-10 Q2-10 Q3-10 Q4-10 Q1-11 Q2-11 Q3-11 Q4-11 Q1-12 Deal Value Deal Volume Deal Value Deal Volume  2012 was expected to be a robust M&A year, but Q1 volumes have disappointed  Q1-12 global deal volume is the lowest since Q1-10  However, there has been a recent surge in the number of IPOs over the past 6 months  Private equity firms are using buoyant equity markets to take more of their portfolio companies public  There have been 36 private equity backed IPOs in Q1-12 representing 35% of global IPOs deals, the most since 2000 Source: Capital IQ and Financial Times ©2012 KPMG Corporate Finance LLC, a Delaware limited liability company, is a member of FINRA and SIPC and is registered as a broker-dealer with the SEC. KPMG Corporate Finance LLC is also registered as a municipal advisor with the SEC and MSRB. KPMG Corporate Finance LLC is a subsidiary of KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights 7 reserved.
    9. 9. M&A volume by sector Consumer Discretionary Consumer Staples Energy Financials Healthcare 700 15 700 15 700 15 700 15 700 15 600 600 600 600 600 Deal Volume (000s)Deal Value ($ b) 500 500 500 500 500 10 10 10 10 10 400 400 400 400 400 300 300 300 300 300 5 5 5 5 5 200 200 200 200 200 100 100 100 100 100 - - - - - - - - - - 2009 2010 2011 2012* 2009 2010 2011 2012* 2009 2010 2011 2012* 2009 2010 2011 2012* 2009 2010 2011 2012* Deal Value Deal Volume Industrials Information Technology Materials Telecommunications Utilities 700 15 700 15700 15 700 15 700 15 600 600 600 600 600 Deal Volume (000s)Deal Value ($ b) 500 500 500 500 500 10 10 10 10 10 400 400 400 400 400 300 300 300 300 300 5 5 5 5 5 200 200 200 200 200 100 100 100 100 100 - - - - - - - - - - 2009 2010 2011 2012* 2009 2010 2011 2012* 2009 2010 2011 2012* 2009 2010 2011 2012* 2009 2010 2011 2012* Deal Value Deal Volume Source: Capital IQ Note: *2012 deal value and deal volume are annualized based on Q1-12 ©2012 KPMG Corporate Finance LLC, a Delaware limited liability company, is a member of FINRA and SIPC and is registered as a broker-dealer with the SEC. KPMG Corporate Finance LLC is also registered as a municipal advisor with the SEC and MSRB. KPMG Corporate Finance LLC is a subsidiary of KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights 8 reserved.
    10. 10. Average M&A multiples by sector Consumer Discretionary Consumer Staples Energy Financials Healthcare 14.0x 14.0x 14.0x 14.0x 14.0x 12.1x 12.0x 12.0x 12.0x 12.0x 12.0xEnterprise Value Multiple 9.7x 9.9x 10.0x 9.0x 10.0x 10.0x 10.0x 10.0x 8.0x 8.0x 8.0x 7.0x 8.0x 8.0x 6.0x 6.0x 6.0x 6.0x 6.0x 3.6x 4.0x 4.0x 4.0x 2.9x 4.0x 4.0x 2.3x 1.2x 1.2x 2.0x 2.0x 2.0x 2.0x 2.0x 0.0x 0.0x 0.0x 0.0x 0.0x 2009 2010 2011 Q1-12 2009 2010 2011 Q1-12 2009 2010 2011 Q1-12 2009 2010 2011 Q1-12 2009 2010 2011 Q1-12 EV/Revenue EV/EBITDA Industrials Information Technology Materials Telecommunications Utilities 14.0x 14.0x 14.0x 14.0x 14.0x 12.0x 12.0x 12.0x 12.0x 10.1x 12.0xEnterprise Value Multiple 10.1x 9.8x 9.2x 10.0x 10.0x 8.9x 10.0x 10.0x 10.0x 8.0x 8.0x 8.0x 8.0x 8.0x 6.0x 6.0x 6.0x 6.0x 6.0x 4.0x 4.0x 4.0x 4.0x 4.0x 2.2x 2.0x 1.3x 1.7x 1.1x 2.0x 2.0x 2.0x 2.0x 2.0x 0.0x 0.0x 0.0x 0.0x 0.0x 2009 2010 2011 Q1-12 2009 2010 2011 Q1-12 2009 2010 2011 Q1-12 2009 2010 2011 Q1-12 2009 2010 2011 Q1-12 EV/Revenue EV/EBITDA Source: Capital IQ ©2012 KPMG Corporate Finance LLC, a Delaware limited liability company, is a member of FINRA and SIPC and is registered as a broker-dealer with the SEC. KPMG Corporate Finance LLC is also registered as a municipal advisor with the SEC and MSRB. KPMG Corporate Finance LLC is a subsidiary of KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights 9 reserved.
    11. 11. M&A volume by deal size Global M&A volume by deal size 6,000 264 231 193 197 5,000 176 184 208 234 152 1,301 1,163 1,234 1,118 4,000 1,039 166 137 941 1,022 120 1,031 Deal Volume 847 713 835 566 3,000 104 444 2,413 2,214 2,285 2,000 2,052 2,214 1,729 1,958 1,928 1,924 1,356 1,437 1,029 1,591 1,000 1,321 1,534 1,475 1,764 1,639 1,648 1,582 1,832 1,640 1,832 1,800 1,907 1,415 - Q1-09 Q2-09 Q3-09 Q4-09 Q1-10 Q2-10 Q3-10 Q4-10 Q1-11 Q2-11 Q3-11 Q4-11 Q1-12 $0m - $5m $5m - $50m $50m - $500m > $500m Source: Capital IQ Note: Chart represents only transactions with disclosed values©2012 KPMG Corporate Finance LLC, a Delaware limited liability company, is a member of FINRA and SIPC and is registered as a broker-dealer with the SEC. KPMG Corporate Finance LLC is also registered as a municipal advisor with the SEC and MSRB. KPMGCorporate Finance LLC is a subsidiary of KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights 10reserved.
    12. 12. Average M&A multiples by deal size Global M&A multiples by deal size 14.0x EV/ EBITDA 12.0x 11.4x 10.0x 10.0x 9.6x Enterprise Value Multiple 8.0x 8.0x 6.0x 4.0x EV/ Revenue 2.7x 1.9x 2.0x 1.7x 1.0x 0.0x Q1-09 Q2-09 Q3-09 Q4-09 Q1-10 Q2-10 Q3-10 Q4-10 Q1-11 Q2-11 Q3-11 Q4-11 Q1-12 $0m - $5m $5m - $50m $50m - $500m > $500m Source: Capital IQ Note: Chart represents only transactions with disclosed values©2012 KPMG Corporate Finance LLC, a Delaware limited liability company, is a member of FINRA and SIPC and is registered as a broker-dealer with the SEC. KPMG Corporate Finance LLC is also registered as a municipal advisor with the SEC and MSRB. KPMGCorporate Finance LLC is a subsidiary of KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights 11reserved.
    13. 13. Abundance of available investable capital  The market is flush with capital that needs to be deployed; financial investors have over $400b in dry powder  Strategic acquirers (made up of the S&P 500) are holding an additional $1.7 trillion in investable cash  The M&A markets should benefit from the nearly $2.1 trillion of “dry powder” PE Investors Sitting on $425b of Dry Powder S&P 500 Companies Cash Balance $600 1,800 1,687 Cash and equivalents ($b) 521 1,494 1,559 478 477 1,500 $500 Capital Overhang ($b) 439 425 $400 1,200 1,005 1,045 333 916 $300 257 900 197 $200 600 $100 300 $- 0 2004 2005 2006 2007 2008 2009 2010 2011 2006 2007 2008 2009 2010 2011 Source: Private Equity Growth Capital Council and Capital IQ©2012 KPMG Corporate Finance LLC, a Delaware limited liability company, is a member of FINRA and SIPC and is registered as a broker-dealer with the SEC. KPMG Corporate Finance LLC is also registered as a municipal advisor with the SEC and MSRB. KPMGCorporate Finance LLC is a subsidiary of KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights 12reserved.
    14. 14. Increased leverage capability for M&A Middle Market LBO Credit Statistics Representative Debt Pricing 6.0x Tranche Pricing (bps) 5.0xMultiple of EBITDA 4.0x Revolver L + 350 - 450 3.0x Senior Term A L+ 550 - 650 2.0x 1.0x Senior Term B L+ 650 - 700 0.0x Jan-10 Jan-11 Jan-12 May-10 May-11 Dec-10 Nov-11 Nov-10 Dec-11 Mar-10 Mar-12 Mar-11 Oct-10 Oct-11 Jun-11 Jun-10 Jul-11 Jul-10 Feb-11 Feb-12 Feb-10 Mezzanine 13% - 14% current pay & Sep-10 Sep-11 Apr-10 Apr-11 Aug-10 Aug-11 3% - 4%PIK First Lien Debt/EBITDA Second Lien Debt/EBITDA Actual pricing varies by size, ABL vs. cash flow and credit rating Other Sr. Debt/EBITDA Sub Debt/EBITDA  Leverage on M&A transactions has remained stable, Total Leveraged Loan Volume 160 and is currently above 4.0x EBITDA 140  Total loan volumes in Q1 2012 have increased since 120 Q4 2011, but are still below Q2 2011 levels $ in billions 100 80  2011 total leverage on middle market transactions 60 reached $374 billion, compared to $236 billion in 2010 40  However, the volatility in Q4 2011 has put deal pricing 20 43.4 65.9 54.2 72.7 141.2 119.0 53.1 60.8 109.8 under some pressure - 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 3Q12 Source: LCD and Capital IQ ©2012 KPMG Corporate Finance LLC, a Delaware limited liability company, is a member of FINRA and SIPC and is registered as a broker-dealer with the SEC. KPMG Corporate Finance LLC is also registered as a municipal advisor with the SEC and MSRB. KPMG Corporate Finance LLC is a subsidiary of KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights 13 reserved.
    15. 15. Factors impacting M&A in 2012 Low borrowing cost Anticipated 2013 U.S. 2012 capital gains/ Presidential dividends tax election year increase Oil prices and China and Middle East Eurozone instability uncertainty©2012 KPMG Corporate Finance LLC, a Delaware limited liability company, is a member of FINRA and SIPC and is registered as a broker-dealer with the SEC. KPMG Corporate Finance LLC is also registered as a municipal advisor with the SEC and MSRB. KPMGCorporate Finance LLC is a subsidiary of KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights 14reserved.
    16. 16. Knowledge @ Wharton/KPMG survey  KPMG and Knowledge@Wharton, The Wharton School of the University of Pennsylvania, have teamed to conduct the 2012 M&A Outlook Survey  Survey is based on 875 executives‟ insights and opinions with 70% of executives expecting to complete an acquisition in 2012  One-third of respondents remain optimistic for 2012 M&A  However deal environment still murky, with two-thirds of respondents expecting full recovery in 2013 or later  Companies that survived the economic downfall are leaner and better prepared to weather uncertain conditions  U.S. election cycle, tax uncertainty and European economic woes will have significant impact on how companies pursue transactions  Interest in emerging markets still present, but stability of developed markets continues to hold allure  Due diligence issues continues to challenge dealmakersKPMG Link:http://www.kpmg.com/US/en/IssuesAndInsights/ArticlesPublications/Pages/executives-show-guarded-optimism.aspxSource: KPMG International and The Wharton School©2012 KPMG Corporate Finance LLC, a Delaware limited liability company, is a member of FINRA and SIPC and is registered as a broker-dealer with the SEC. KPMG Corporate Finance LLC is also registered as a municipal advisor with the SEC and MSRB. KPMGCorporate Finance LLC is a subsidiary of KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights 15reserved.
    17. 17. KPMG M&A Predictor KPMG‟s M&A Predictor is a forward-looking tool that helps clients forecast worldwide trends in mergers and acquisitions. The Predictor was established in 2007. It looks at the appetite and capacity for M&A deals by tracking and projecting important indicators 12 months forward.  Despite still being up on the dark days of 2009, the first six months of 2012 look set to be challenging  Confidence dips in global market  Lack of confidence will restrict deal flow  Consumer staples, technology, and healthcare sectors are predicted to fare better than others  Forward P/E ratios down 5% since June 2011KPMG Link:http://www.kpmg.com/global/en/issuesandinsights/articlespublications/ma-predictor/Pages/default.aspxSource: KPMG International©2012 KPMG Corporate Finance LLC, a Delaware limited liability company, is a member of FINRA and SIPC and is registered as a broker-dealer with the SEC. KPMG Corporate Finance LLC is also registered as a municipal advisor with the SEC and MSRB. KPMGCorporate Finance LLC is a subsidiary of KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights 16reserved.
    18. 18. M&A Market LandscapeTechnology M&A LandscapeDeal ManagementQuestions
    19. 19. General technology M&A activity Global technology M&A activity U.S. technology M&A activity 45 1,200 45 1,200 40 973 991 971 40 962 948 902 906 1,000 1,000 895 35 871 35 831 30 728 800 30 800 Deal Volume Deal Volume Deal Value ($ b)Deal Value ($ b) 643 645 25 25 600 600 20 20 426 418 413 411 396 415 393 362 380 15 349 400 15 400 298 242 232 10 10 200 200 5 5 13.2 10.8 28.9 12.4 8.2 28.6 38.6 22.6 23.4 26.4 33.1 17.5 31.0 8.8 3.7 20.4 8.2 4.7 21.9 27.8 14.5 14.1 15.7 13.6 12.4 8.9 - - - - Q1-09 Q2-09 Q3-09 Q4-09 Q1-10 Q2-10 Q3-10 Q4-10 Q1-11 Q2-11 Q3-11 Q4-11 Q1-12 Q1-09 Q2-09 Q3-09 Q4-09 Q1-10 Q2-10 Q3-10 Q4-10 Q1-11 Q2-11 Q3-11 Q4-11 Q1-12 Deal Value Deal Volume Deal Value Deal Volume ■ In Q1-12 global technology M&A deal values have had a good start, however, deal volumes are lower than Q4 2011 ■ U.S. technology deal values have declined since Q3-10, while deal volume has been relatively consistent ■ Quarterly technology deal values are impacted by the timing of large deals ■ Scientific Atlanta - NDS in Q1 2012 ■ HP – Autonomy in Q3 2011 Source: Capital IQ ©2012 KPMG Corporate Finance LLC, a Delaware limited liability company, is a member of FINRA and SIPC and is registered as a broker-dealer with the SEC. KPMG Corporate Finance LLC is also registered as a municipal advisor with the SEC and MSRB. KPMG Corporate Finance LLC is a subsidiary of KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights 18 reserved.
    20. 20. Global technology M&A – valuations and deal size Average enterprise software deal value and Average BPO and IT services deal value and multiples multiples 350 25.0x 350 25.0x 21.4x 300 300 20.0x 20.0x 250 250 Enterprise Value Multiple Enterprise Value Multiple 16.4xDeal Value ($ m) Deal Value ($ m) 13.1x 15.0x 14.0x 15.0x 200 13.2x 12.9x 200 11.9x 12.3x 11.0x 11.1x 10.8x 10.4x 10.1x 10.3x 10.2x 150 9.4x 150 9.6x 8.4x 8.2x 10.0x 8.3x 8.5x 10.0x 8.3x 7.6x 8.3x 6.3x 100 5.7x 100 5.0x 5.0x 50 2.4x 2.7x 2.6x 2.4x 50 1.9x 1.8x 2.0x 1.7x 1.7x 2.0x 2.0x 1.2x 1.6x 1.7x 1.6x 1.7x 1.3x 1.5x 1.2x 1.2x 1.2x 1.4x 1.3x 1.3x 1.2x 1.5x 17 100 72 51 36 82 118 100 105 153 281 147 255 123 136 112 130 99 187 199 127 105 143 169 132 210 - 0.0x - 0.0x Q1-09 Q2-09 Q3-09 Q4-09 Q1-10 Q2-10 Q3-10 Q4-10 Q1-11 Q2-11 Q3-11 Q4-11 Q1-12 Q1-09 Q2-09 Q3-09 Q4-09 Q1-10 Q2-10 Q3-10 Q4-10 Q1-11 Q2-11 Q3-11 Q4-11 Q1-12 Average Deal Value Average EV/ Revenue Average EV/ EBITDA Average Deal Value Average EV/ Revenue Average EV/ EBITDA ■ Enterprise software deals values were at their ■ BPO and IT services industry has seen relatively lowest point in the 6 quarters ending Q2 10 sustained deal values ■ Q1-12 average enterprise value/ revenue and ■ Q1-12 average enterprise value/ revenue and EBITDA multiples are 2.4x and 11.0x, respectively EBITDA multiples are 1.7x and 10.2x, respectively ■ The largest software transaction was Hewlett- ■ Average enterprise value/ EBITDA multiples have Packard‟s acquisition of Autonomy in August 2011 gradually decreased during 2011 for ≈$11b Source: Capital IQ Note: All charts represent only transactions with disclosed values and multiples ©2012 KPMG Corporate Finance LLC, a Delaware limited liability company, is a member of FINRA and SIPC and is registered as a broker-dealer with the SEC. KPMG Corporate Finance LLC is also registered as a municipal advisor with the SEC and MSRB. KPMG Corporate Finance LLC is a subsidiary of KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights 19 reserved.
    21. 21. Top ten recent technology M&A transactions Large Precedent Technology M&A Transactions (in $USD millions unless otherwise noted) Announcem ent Enterprise EV / EV / Date Status Buyers/Investors Target Value Revenue EBITDA Mar-12 Announced Scientific-Atlanta, LLC NDS Group Ltd. 4,965 5.0x 17.5x Mar-12 Announced Insight Venture Partners Quest Softw are Inc. 1,947 2.3x 12.7x Feb-12 Announced Oracle Corporation Taleo Corp. 1,805 5.7x 60.9x Feb-12 Announced Vista Equity Partners Misys plc 2,042 3.2x 16.1x Dec-11 Closed SAP Am erica, Inc. SuccessFactors, Inc. 3,516 12.0x NM Aug-11 Closed Hew lett-Packard Com pany Autonomy Corp. plc 10,301 11.1x 25.2x Aug-11 Closed Datatel, Inc. SunGard Higher Education, Inc. 1,775 - - Jun-11 Closed Providence Equity Partners LLC Blackboard Inc. 1,767 3.7x 22.3x May-11 Closed Schneider Electric España, S.A. Telvent Git S.A. 1,917 1.8x 11.4x Apr-11 Closed CenturyLink, Inc. Savvis, Inc. 2,963 3.0x 12.9x■ In the past 12 months there have been 20 technology transactions with values in excess of $1billion■ PE has been relatively active in the >$1bn value range■ Average enterprise value/revenue and EBITDA multiples were 5.3x and 22.4x, respectively Source: Capital IQ and company filings;©2012 KPMG Corporate Finance LLC, a Delaware limited liability company, is a member of FINRA and SIPC and is registered as a broker-dealer with the SEC. KPMG Corporate Finance LLC is also registered as a municipal advisor with the SEC and MSRB. KPMGCorporate Finance LLC is a subsidiary of KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights 20reserved.
    22. 22. Public enterprise software company comparables Enterprise software comparables for select application software, infrastructure software, operating systems and SaaS public companies are presented below, with mean forward revenue and EBITDA multiples of 4.5x and 15.3x. KPMG Corporate Finance LLC - Enterprise Software Public Comparables Enterprise Value / Equity Value Market Enterprise Share % of 52- Chg Cur Qtr Cur Qtr 2012E 2012E 2012E 2013E Com pany Cap (1,2) Value (3) Price (1,2) Wk High Pct 1Yr Rev RR EBITDA(4) RR Revenue EBITDA(4) P/E P/E Application Software A riba Inc. 3,1 8 1 2,953 32.71 88.1% -4.2% 5.9x NM 5.4x 23.3x NM 28.9x Deltek, Inc 684 816 10.66 91.6% 40.3% 2.3x 12.7x 2.2x 9.6x 27.2x 15.9x Info rmatica Co rpo ratio n 5,680 5,078 52.90 84.7% 1.4% 5.6x 20.4x 5.6x 18.7x 38.2x 28.0x JDA So ftware Gro up Inc. 1 69 ,1 1 57 ,1 27.48 78.5% -9.2% 1.7x 5.8x 1.6x 5.9x 12.7x 10.6x Presented application software M anhattan A sso ciates, Inc. 977 879 47.53 94.7% 45.2% 2.6x 12.5x 2.4x 1 x 0.1 21 .3x 1 x 7.1 companies experienced an average M ICROS Systems, Inc. 4,41 9 3,686 55.29 99.2% 1 .9% 1 3.4x 15.9x 3.2x 1 x 3.1 30.1 x 22.9x share price gain of 12.8% in the M icro Strategy Inc. 1 0 ,51 1 0 ,31 140.00 78.4% 4.1% 2.0x 26.4x 2.1x 21 .0x NM 29.0x past year. Mean forward revenue Open Text Co rp. 3,545 3,743 61 6 .1 84.6% -1.9% 2.9x 9.3x 2.9x 9.7x 15.0x 1 .4x 1 and EBITDA multiples are expected P egasystems Inc. 1,443 1,331 38.1 6 80.3% 0.5% 2.9x NM 2.7x 23.5x NM 30.1 x to be 3.5x and 14.3x respectively. Qlik Techno lo gies, Inc. 2,703 2,526 32.00 89.8% 23.1 % 5.8x 23.2x 6.2x NM NM NM Sage Gro up plc 6,206 6,224 4.78 95.5% 7.2% NM NM 2.8x 9.8x 15.7x 1 x 3.1 SA P A G 83,1 97 81,330 69.88 95.6% 1 % 4.1 3.5x 8.0x 3.9x 1 .1 1x 19.2x 15.2x Teradata Co rpo ratio n 1 ,467 1 10,985 68.1 5 97.8% 34.4% 4.1x 1 x 7.1 4.1x 15.8x 29.9x 22.5x A pplic a t io n S o f t wa re M e a n 12 .8 % 3 .6 x 15 .1x 3 .5 x 14 .3 x 2 3 .3 x 2 0 .4 x Infrastructure Software B M C So ftware Inc. 6,595 5,587 40.16 71.0% -19.3% 2.5x 6.6x 2.5x 5.9x 13.5x 1 .4x 1 CA Techno lo gies 13,384 12,343 27.56 98.4% 14.0% 2.4x 6.3x 2.5x 6.7x 1 x 4.1 1 .2x 1 Citrix Systems, Inc. 14,644 13,904 78.91 89.2% 7.4% 5.6x 19.2x 5.5x 17.6x 32.3x 25.3x Co mmVault Systems, Inc. 2,1 94 1,937 49.64 89.9% 24.5% 4.7x NM 4.4x 22.6x NM NM Co mpuware Co rpo ratio n 2,009 2,036 9.19 78.5% -20.4% 2.0x 1 .3x 1 1.9x 8.8x 20.0x 18.4x Presented infrastructure companies F5 Netwo rks, Inc. 10,688 1 31 0,1 134.96 98.9% 31 .6% 7.9x 24.0x 7.0x 17.3x 36.3x 25.4x experienced an average share price OP NET Techno lo gies Inc. 654 557 29.00 60.5% -25.6% 3.0x 1 x 4.1 2.8x 12.0x NM 26.9x Oracle Co rpo ratio n 145,074 130,502 29.16 79.9% -12.8% 3.6x 8.3x 3.4x 6.8x 13.4x 1 .1 1x gain of 4.4% in the past year. Mean P ro gress So ftware Co rp. 1,481 1 66 ,1 23.62 77.7% -18.8% 2.3x 13.5x 2.2x 9.5x 16.4x 16.3x forward revenue and EBITDA Quest So ftware Inc. 1,944 1,874 23.27 89.0% -8.4% 1.9x 6.9x 2.0x 6.7x 17.4x 12.5x multiples are expected to be 4.5x Riverbed Techno lo gy, Inc. 4,423 3,953 28.08 67.1% -25.4% 4.9x 28.8x 4.6x 14.5x 31 .4x 21 .6x and 13.8x respectively. So larWinds, Inc. 2,799 2,647 38.65 91.5% 64.7% 1 .9x 1 24.6x 10.5x 23.3x 38.9x 28.2x TIB CO So ftware Inc. 4,967 4,750 30.50 92.4% 1 .9% 1 5.3x NM 4.4x 14.4x 32.8x 22.2x VM ware, Inc. 47,768 43,705 1 2.37 1 98.8% 37.8% 10.3x NM 9.6x 26.8x NM 36.8x Inf ra s t ruc t ure S o f t wa re M e a n 4 .4 % 4 .9 x 14 .9 x 4 .5 x 13 .8 x 2 4 .2 x 2 0 .6 x Operating Systems M icro so ft Co rpo ratio n 270,644 232,756 32.26 97.9% 27.0% 2.8x 6.7x 3.0x 7.3x 12.5x 10.7x Red Hat, Inc. 1 ,541 1 10,727 59.89 97.1% 31 .9% 9.0x NM 7.9x 28.2x NM NM O pe ra t ing S ys t e m s M e a n 2 9 .5 % 5 .9 x 6 .7 x 5 .5 x 17 .8 x 12 .5 x 10 .7 x Source: Capital IQ and company filings (1) Market Capitalization amounts are in millions, based on closing share prices as of March 31, 2012; (2) Market Capitalization and Share Prices are based on foreign exchange listed securities and converted to $USD (3) Enterprise Value (EV) equals Market Capitalization plus Debt, Preferred Equity, and Minority Interest, minus Cash and Cash Equivalents; (4) EBITDA equals Earnings before Interest, Taxes, Depreciation, and Amortization©2012 KPMG Corporate Finance LLC, a Delaware limited liability company, is a member of FINRA and SIPC and is registered as a broker-dealer with the SEC. KPMG Corporate Finance LLC is also registered as a municipal advisor with the SEC and MSRB. KPMGCorporate Finance LLC is a subsidiary of KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights 21reserved.
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