On October 23rd, 2014, we updated our
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2Cloud Services Will Continue to be an Active Sector in 2013 Strong growth outlook: The pace of Cloud / SaaS enterprise adoption has increased rapidlyand previously held reservations from CTOs (security issues, integration headaches, etc.) havelargely evaporated Large Opportunity for systems integrators and consultants: With 84% of new softwareexpected to be SaaS in the coming years, a large market has been created for systemsintegrators and consultants to help enterprises integrate their disparate legacy systems withCloud applications Highly fragmented market beginning to consolidate: The Cloud services market is highlyfragmented though a wave of consolidation has recently begun- Global systems integrators (GSIs) snapping up companies to grow/improve their Cloudservices offerings (e.g. Dell launching a salesforce.com practice)- Increased appetite by GSIs to acquire pure-play Cloud services providers (e.g. NTTacquiring Centerstance)We expect the level of investment and transaction activity in Cloud services toaccelerate in the coming year
3Strong growth potential and rapid corporate adoption will continue to attractinvestment and transaction activity in the Cloud services marketCloud Services Market Gaining MomentumCHANGING GLOBAL MIX OF IT SERVICESTRENDS / DRIVERS IN CLOUD SERVICES MARKET IT BUDGETS MOVE TO THE CLOUD ~$110 billion market expected to grow to$207 billion by 2016 (17%+ CAGR)- Cloud services spending to outpaceoverall IT spending in the coming years SaaS, the second largest component of theCloud services market was estimated toreach $14.5 billion in spending in 2012 The CRM market in particular, a marketbehind much of the momentum in adoptionof Cloud services, is expected to grow to $14billion by 2015 Salesforce.com has emerged as the SaaSCRM solution of choice and serves as a keybeachhead in the Cloud landscapeSource: IDC, Forrester Research, Gartner, Wall Street Research
4Market MapConsulting/ServicesApps/Solutions DevelopmentTargetsAcquirers= Global Systems Integrators (“GSIs”) = Salesforce.com (SFDC) Platinum Partners
5Cloud Services Companies Appeal to Financial & Strategic BuyersSource: SEC Filings, Company Press Releases, Wall Street Research, CapitalIQ, PitchBookAcquired byOctober 2012Acquired bySeptember 2012Investment fromSeptember 2012Acquired byAugust 2012Acquired byApril 2012Investment from andMarch 2012Investment from To acquireMarch 2012Investment fromFebruary 2012Recapitalized byRiordan, Lewis &HadenMay 2012Acquired byOctober 2012Workday ServicesInvestment fromNovember 2012Acquired byDecember 2011Investment fromDecember-January 2012To acquireAcquired by To be merged withSeptember 2012
6Falvey Partners OverviewFOCUS SELECT TRANSACTION EXPERIENCEDecember 2011Has acquiredJuly 2012Has beenacquired bySeptember 2011Series DConvertiblePreferred StockLed bySeptember 2012Has beenacquired byA portfolio company ofJuly 2011Has been acquiredby a portfoliocompany ofApril 2011Has beenacquired byJuly 2011Has beenacquired byFebruary 2011Growth equityinvestment fromJuly 2011Has beenacquired byMarch 2011Has divestedits diagnosticsolutions unitNovember 2010Has received aninvestment fromA portfolio company ofOctober 2010PGI Notify and Sendplatforms acquired byAugust 2010Two divisions have beenacquired by a portfoliocompany ofApril 2010Has beenacquired byAugust 2010Series CConvertiblePreferred StockLed bySERVICES Sell-side or buy-side M&A Growth capital raising Board and corporate advisorySECTOR Software / SaaS Tech-enabled business services IT services Internet / digital mediaCOMPANY TYPE $50M - $250M in enterprise value Growing, with established scale Profitable or near-term path to profitabilityFalvey Partners is a leading advisory firm servingmid-market clients across technology sectors Founded in 2012 by Peter Falvey and key members of the Morgan Keegan / Revolution Partners team Falvey Partners professionals have closed dozens of software transactions representing billions ofdollars in transaction value
7Astadia is a leading consultancy, implementation and integration partner enabling thedeployment of Cloud computing solutions for large enterprises. The company is among themost experienced Cloud solutions providers, having completed more than 6,000 projects forover 2,500 customers. This experience produced valuable vertical expertise in the industriesdriving migration to the Cloud, such as telecom, media, high-tech, and healthcare/life sciences.The company has also completed significant engagements in several other verticals, includingfinancial services, energy, construction, education and retail/consumer. This industryexperience is complemented by rapid project delivery methodologies that match the time tomarket and rapid business transformation needs of Cloud computing implementations. Astadiahas deep functional experience delivering solutions for Cloud-based Customer RelationshipManagement (CRM) applications, Call Center applications (service Cloud), CompensationManagement, and Marketing Automation applications. The company is headquartered inDallas, Texas with regional offices across the United States, United Kingdom and India.Client Situation Solutions Results Developed Astadia’s “multivertical/multi Cloud technologydeployment with blue-chip customerbase” expertise methodology andcrafted growth story around thisthesis Identified and approached mostrelevant potential financial investorsand/or buyers and ran a timedisciplined multi-city roadshow Structured comparative analysis toevaluate offers objectively based ondeal structure, terms and long-termequity participation VC investors were looking for an exitafter a nearly five-year hold period andventure lenders were looking forliquidity Company and a competing IB firm hadrun a limited but unsuccessful saleprocess exclusively targeting strategicbuyers Company had grown nicely but lackedoperating profitability Growth capital required to takeadvantage of unique marketopportunity in the Cloud Servicessector Sale of Company to Gores Group –combined with recently acquiredmobile network and IT solutionsassets from Adecco Received multiple LOIs andnegotiated with interested partiessimultaneously in order to create acompetitive process and drivevaluation VC investors provided liquidity andpotential significant upside fromretained minority ownership incombined entityCase Study: Astadia – Sale to The Gores GroupHas been acquired bySeptember 2012To be merged with