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2011 World Tech M&A Report

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  • 1. 2011World Tech M&A Report www.corumgroup.com
  • 2. IntroductionDeal volume, transaction size and valuations for software, Traditional technologies in Enterprise, Horizontal, VerticalIT and related technologies have rebounded. 2011 has and Infrastructure markets will see continued consolidation.started with momentum. Mobile, Tablets, and Apps, unknown a few years ago, will be a large source of transactions. Of course there are firmsThe recovery trend will continue as global financial markets that just need to re-invent, or they will fall by the wayside.remain strong, IPO’s are up, with cash reserves at recordlevels. Major strategic acquirers are being pressed to solidify The Corum Group Annual World Tech M&A Reporttheir positions in Cloud, Gaming and Social Networking follows. It is prepared by Corum’s research staff, and coversagainst Private Equity, which has returned to the market, the basic drivers of tech M&A including financial markets,accounting for many of the largest deals last year. In leading buyers, cash reserves, and overall M&A metricsaddition, there are other bidders emerging, including newly in the Corum Index. Notable transactions are detailed, asminted public companies from the East, as well as many are trends for 26 market segments in six major categorieswell-funded private firms such as Facebook. - Horizontal, Vertical, Consumer, Infrastructure, Internet and IT Service as detailed below. Major Category Market Segment Business Intelligence (BI) Human Resource/Capital (HR and HCM) Communications (Horizontal) Supply Chain Management (SCM) Horizontal Application Software Content Management (CM) Enterprise Resource Planning (ERP) Customer Relationship Management (CRM) Other Horizontal A/E/C (Architecture, Engineering, Construction) Government Vertical Application Software Energy and Environment Healthcare Financial Services Other Vertical Consumer Application Software Digital Content Video Games Communications (Infrastructure) Storage Development Tools Systems Management Infrastructure Software Legacy / Software Oriented Architecture (SOA) Virtualization Network Management Security Internet Infrastructure Pure Play IT Services and BPO (No subsectors)Page 1
  • 3. Markets Up for 2011Markets Percentage Change in Markets in 2010The technology industry is trading The technology trading 35% 2010at 30% above its value since 2007, at 30% above 2007, NASDAQ S&P TECH 500 DOW JONES NASDAQ S&P TECH 500 DOW JONESoutperforming the overall Dow and outperforming and 30%Nasdaq as reflected in the market Nasdaq as market 25%chart. Tech took off in Q2 2010, chart. Tech 2010,riding out a market downturn in riding out in 20%August, then accelerating through the August, then theend of 2010 into 2011. end of 2010 15% 10%Tech Stock MoversTech 5%The Tech Stock Movers tableThe Tech tablehighlights the percentage of pricehighlights price 0% JAN FEB MAR APR MAY JUNE JULY AUG SEP OCT NOV DEC Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10changes in select companies with overchanges in over -5%$1 billion market capitalization.$1 billion -10%Netflix, the largest mover in stock Netflix, the stockvalue, has become the preferred value, has preferredstreaming content vendor across streaming acrossa wide array of platforms. Netflix a wide array Netflix Amazon Amazon 36.31% % Price Change NetSuite Inc. Inc. NetSuite 55.88% 2010 Stock Moversnow spans beyond PC and mobile to now spans to Apple Inc. Inc. Apple 56.39% 2010 Stock Movementinclude gaming consoles like Xbox include gaming Xbox VanceInfo Technologies Inc. Inc. VanceInfo Technologies 81.31%360 and PS3. 360 and PS3. salesforce.com, inc. Inc. salesforce.com, 85.17% VMware, Inc. Inc. VMware, 119.37%Considering its sector, IT Services,Considering Services, LogMeIn LogMeIn 122.30%VanceInfo’s move is a surprise.VanceInfo’s surprise. Baidu.com, Inc. Inc. Baidu.com, 142.52%VanceInfo is representative of a newVanceInfo new F5 F5 Networks, Inc. Networks, Inc. 153.60%breed of Chinese competitor.breed of OpenTable Inc Inc. OpenTable 177.49% Netflix Netflix 226.40%Nokia declined more than 20 percent. Nokia declined percent. Nokia Nokia -20.30%The company stood out as a flop The company flop Hewlett-Packard Company Hewlett-Packard Company -17.03% Company Year Ago Cash Current Cash %Changeamong 2010 smartphone competitors, among 2010 competitors, Cisco Cisco -15.50% MSFT $29,910 $43,250 44.6%battered down by continued pressure battered down pressure Adobe Systems Incorporated Adobe Systems Incorporated -14.93% CSCO $35,000 $38,920 11.2%from Apple and Android. from Apple Microsoft Corporation Microsoft Corporation -8.20% GOOG $19,340 $33,380 72.6% DellDell Inc. Inc. -4.67% AAPL $24220 $25,620 5.8% Google Inc. Inc. Google -2.52%Keep an eye on Microsoft–rumor has Keep an eye has ORCL $12,620 $23,640 87.3% Yahoo! Inc. Inc. Yahoo!it they may put their OS into the new it they may new -0.18% IBM $12,530 $11,100 -11.4%Nokia phone release. Nokia phone HPQ $13,590 $10,930 -19.6% EMC $7,260 $6,650 -8.4% SAP $2,703 $3,740 38.4% YHOO $3,880 $2,820 -27.3%Cash UpCash CA $1,275 $2,540 99.2% SYMC $2,220 $2,260 1.8%Companies with cash either need to engage in stockCompanies need to engage in stockbuybacks, issue dividends or make acquisitions. Thus, 2011buybacks, acquisitions. Thus, 2011 Cash Reserves (in millions)should be a banner year for M&A with record coffersshould be M&A with record coffersamong the high tech leaders who are also the major buyers.among the are also the major buyers. them to pick up the pace of acquisitions inin 2011. Cisco is a them to pick up the pace of acquisitions 2011. Cisco is a similar scenario. similar scenario.Microsoft, as seen in the Cash Reserves chart, is sitting Microsoft, Reserves chart, is sittingon the largest war chest (over $43 billion) -- part of which on the largest billion) part of which Google isiscash rich and should continue its sizzling pace asas Google cash rich and should continue its sizzling pacewas raised in convertible debt in 2010 when interest rates was raised 2010 when interest rates the M&A leader. HP’s cash stores were depleted inin 2010 due the M&A leader. HP’s cash stores were depleted 2010 duewere low. As Microsoft sat at the bottom of the acquisition were low. bottom of the acquisition to multiple big deals, including the acquisitions ofof 3PAR, to multiple big deals, including the acquisitions 3PAR,leader board for 2010, with a flat stock price, we expect leader board stock price, we expect ArcSight and Palm, but HP should not be counted out. ArcSight and Palm, but HP should not be counted out. Page 2 2 Page
  • 4. Total Deal Volume vs. Total Deal Value $457b $457b $432b $432b Software M&A - 2002-2011 $373b 4500 4500 $373b The M&A market returned in 2010 - as seen in 4029 4029 $301b $301b $225b $225b 4000 4000 $226b $226b 3640 3640 $150b $200b $200b this chart, the last 8 years were mapped for both $150b 3212 3500 3500 deal volume (vertical bars) and annual deal value 3500 3500 3040 3040 3015 3015 3008 3212 3008 (line chart). 3000 3000 $83b $83b $62b $62b 2081 2081 2500 2500 1921 1921 With stock prices rising, cash reserves at record levels, 2000 2000 1508 1508 and heated global competition, volume and value will 1500 1500 continue to trend up in 2011. 1000 1000 500 500 Expect Strategic deals to lead the way, with Mega 0 2002 2003 2003 2004 2004 2005 2005 2006 2006 2007 2007 2008 2008 2009 2009 2010 2010 2011 Deals setting the pace due to the resurgence of 2002 2011 Private Equity after a hiatus in 2008/09. Deal Volume Deal Volume Dollar Volume Dollar Volume Top Acquirers: 2010 26 15 11 9 8 8 6 6 5 5 5 2 3 3 While this list isn’t definitive (CA and EMC are missing), IBM had their highest volume year on record with 15 deals, what’s notable is that there are new entrants to the M&A though Google led the pack with a record 26 acquisitions leader board, private firms Facebook, Zynga, and Twitter. for 2010. Most remarkable for Google–transactions were often small and fairly far-ranging technology. They are Facebook is comfortable staying private and they are continuing this trend into 2011 with three acquisitions in making acquisitions: 11 in 2010, most of which were the first month. completed in the latter half of 2010. With the cash they are generating, Facebook started 2011 by immediately making On the opposite end of the spectrum, Microsoft has sat acquisitions. Additionally, watch out for Groupon; with a on the sidelines with only 2 acquisitions in Q4, the lowest war chest of $950 million, they may move to consolidate the number from them in a single year. “mass discount” market in 2011. Page 3
  • 5. The Annual Corum Index of Tech M&A Metrics shows The transactions that led the market last year were Intelthat we are up in volume, number of deals, and Mega Deals acquiring McAfee for $7.6B, the acquisition of Sybase bythis past year. Mega Deals are important as they lead the SAP for around $6B, and EMC buying Isilon Systems formarket; we refer to them as a “ripple” indicator. When the around $2.3B.strategic and private equity giants do $1B+ acquisitions, itsends a clear message to the small and mid-market players One of the most important aspects of 2010 was the re-that it’s safe to be doing deals and spending money. emergence of Private Equity (PE) which had been very active prior to the recession. Carlyle Group 2009 2009 2010 2010 Change Change spent $6.5B in telecom infrastructure with acquisitions of CommScope and Syniverse.# of Transactions 3008 3212 6.8% Other major transactions were SkillSoft,# of Mega Deals 32 41 28.1% Vertafore, and Novell. We expect PE toLargest Deal $6,400 $7,680 20.0% be an even bigger factor in 2011 as there is nearly $500 billion in uncommitted funds,% Sub-$100m 24% 19% -20.8% not counting sovereign equity.Private Equity Deals 97 119 22%Private Equity Value $13,318 $25,793 93%# VC backed Exits 398 474 19.1% Corum IndexAll Cash (announced) 44% 58% M&A Metrics% Targets were Public 18% 13%% Public Buyers 47% 51% Aggregate Growth (six markets) Q4:08 Q1:09 Q2:09 Q4:09 Q1:10 Q2:10 Q3:10 Q3:11 EV/EBITDA 6.63x 5.99x 8.07x 10.13x 10.55x 9.87x 10.48x 11.48x Q4:08 Q1:09 Q2:09 Q4:09 Q1:10 Q2:10 Q3:10 Q3:11 EV/S 1.28x 1.08x 1.37x 1.77x 1.77x 1.76x 2.23x 3.23x EV/EBITDA 6.63x 5.99x 8.07x 10.13x 10.55x 9.87x 10.48x 11.48x EV/S 1.28x 1.08x 1.37x 1.77x 1.77x 1.76x 2.23x 3.23xCorum divides the tech industry into six broad markets: the charts will show show a bump-up the higher multiples of the charts will a bump-up due to due to the higherHorizontal, Vertical, Consumer, Infrastructure, Internet, in the East. the East. multiples inand IT Services, which are further broken down into 26sub-sectors. The major groupings are represented by the After the trough of the recession in late ‘08/early ‘09, we6 logos on the left of the chart. Multiples in this report are came back dramatically with EV/S multiples of 2.7x andin median values, not averages. EV/EBITDA multiples currently trading at a healthy 12.5x. From the bottom in Q1 ’09, both multiples more thanNote that the most recent numbers include the newly public doubled, and we expect that they will continue back up incompanies in Asia as they are aggressive global competitors 2011 as they are still short of the peaks registered in 2007.and buyers. With the recent addition ofof these firms, some buyers. With the recent addition these firms, some of Page 4
  • 6. g-10 Sep-10 Oct-10 Nov-10 Dec-10 Horizontal Appl 69 x 27 x 2.94 x 10.74 x 3.07 x 11.89 x 2.99 x 12.41 x 3.37 x 17.17 x Horizontal Applicatio Horizontal Application Software Horizontal Application Software Market Horizontal Application Software Horizontal Application Softwa Horizontal Application Software Horizontal Application Softwa Business Intelligence Huma Business Intelligence Human Resources Horizontal Application Software Ma EV/S EV/S 4.21 x 4.21 x EV/S EV/S EV/EBITDA 20.39 x EV/EBITDA EV/EBITDA 20.39 x EV/EB Horizontal Application Informatica Corp.Software Ma Horizontal Application Market Corp   Software Horizontal Intelligence ApplicationResources Inc. MarketSCM   Horizontal   Software Business Application Software Market   Kenexa Human  MicroStrategy Corp. InformaticaSoftware Market Horizontal   Taleo Corp. Business Intelligence Human Resources SCM EV/S   MicroStrategy Inc. x Application EV/S Business Intelligence 4.21 x Human Resources 3.89 EV/S   SCMSoftware Market Software EV/S 4.21 x Business Intelligence EV/S 3.89 x Human Resources EV/S 2.68 x SCM Communications ERP EV/EBITDA Intelligence Business Business Intelligence EV/S 20.394.21 x EV/EBITDA Resources x Human EV/S 30.393.89 x x SCM SCM EV/EBIT EV/S EV/EBITDA 20.39 x EV/S EV/EBITDA 4.21 x x 30.39 EV/SHuman Resources EV/EBITDA EV/S x 13.42 3.90 3.89 x EV/S EV/S EV/S EV/S 4.214.21 x x EV/S Resources Communications EV/S EV/EBITDA 3.89 x 3.89 x 17.17 x 30.39 x EV/S EV/EBITDA EV/S ERP  EV/EBITDA HumanCorp. 20.39 x Resources  EV/EBITDA Commerce30.39 x EV/EBITDA   EV/E EV/EBITDA Business IntelligenceHuman Resources EV/EBITDA EV/EBITDA Informatica Resources Human 20.39 x 20.39 x EV/EBITDA Kenexa Corp. 30.39 Inc. x EV/EBIT Human SCM SPn Software Market Business Intelligence SCM   Informatica Corp. Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 x Business IntelligenceBusiness IntelligenceEV/S Corp.   Kenexa 4.21 x EV/EBITDA SCMSPS    EV/EBITDA xn Software Market 20.39 x 30.39 xLawson EV/E SCM 4.21 EV/S 3.89 x EV/S Amdocs Ltd.EV/S 3.89 x 3.90 EV/S   2.68 xEV/S Soft g-10 Sep-10 Oct-10 Dec-09 Jan-10 Feb-10 Mar-10 Nov-10 Dec-10 EV/S MicroStrategy Inc. EV/S EV/S   InformaticaInformatica EV/EBITDA xx  EV/EBITDA Corp.Corp.2.68 x    4.21Informatica Corp.  TaleoEV/EBITDA x EV/S Corp. EV/EBITDA Taleo x Corp. 30.39 x   EV/SManhattan Associates   SPS Comme   Kenexa EV/EBITDA   Ma x   Inc. 2.68 x SP Kenexa Communications 17.17 xOraclexEV/EB EV/EBITDA 11.67 x 10.76 x 11.16 x Inc. 12.07 x 11.39EV/EBITDA 10.49 x 9.27 x   10.74 x 11.89 x 12.41 x 17.17 x  x MicroStrategy EV/S x Corp. x x EV/S 4.21 x 20.39 Corp. 20.393.89 3.89 x    Kenexa Corp.   Nuance 30.39 EV/S EV/EBITDA   Corp 13.42 2.25 12.71 x 11.95 x EV/EBITDA Informatica Corp. Inc.30.39 x EV/EBITDA 60 x 1.95 x 1.90 1.98 x x EV/EBITDA   MicroStrategy Inc. 20.39 x 20.39   MicroStrategy EV/EBITDA 2.23 x  2.49 x 2.69 x Informatica 2.99 x Kenexa   Taleo Corp. Corp.   Kenexa   Taleo Corp. 13.42 x EV/EBITDA x 30.39 EV/EBITDA 13.42   Manhattan A     69 x 9.90 x EV/S x 10.15 x x 11.41 x   MicroStrategy Inc.x Corp. 3.37 x Corp.Taleo Corp.   SPS Commerce SPS Comme 2.419.502.48 x 2.42 x 2.11 x 2.24 x 2.12 x   Informatica Corp.   2.94 x 3.07       Kenexa Corp.   Inc.   Ma SCM   Informatica Corp.   MicroStrategyCorp.   Taleo Corp. Content Mgmt. Corp.   Informatica Corp. Communications Inc.   MicroStrategy   Kenexa Inc.   MicroStrategy Inc. ERP Taleo   Kenexa Corp.   TaleoCommerceSPS Commerce Manhattan   SPS Corp. Ltd. Amdocs   Manhattan Associates Inc. As   Inc.   Inc. CRM Communications   MicroStrategy ERP MicroStrategy   Taleo Corp.   Taleo Corp. CRM Inc. Inc. Communications ERP Manhattan Associates Inc. Associates Inc.     Manhattan CRM 3.90 x 3.90 x ERPERP Nuance Communications CRM   EV/S 2.82 x3.89 x EV/S 2.68 x EV/S Communications EV/S EV/SEV/S  2.55 x2.55 x EV/S EV/S CRM SCM EV/S SCM 3.90 x Communications EV/S Communications Communications ERP2.55 x EV/EBITDA EV/S ERP CRM 9.28 x 3.62 x CRM0.39 x EV/EBITDA 13.42 x Communications EV/EBITDA EV/EBITDA ERP 17.17 x EV/EBITDA 17.173.90 x x ERP x EV/EBITDA 11.86 x EV/EBITDA CRM 3.90 EV/S CRM OpenxText Corp. 2.5511.862.55 x x EV/EBIT SCM Communications Communications ERP CRM3.89 3.89 x x EV/S EV/EBITDA EV/S 2.68 x 2.68 x17.17 x EV/S EV/S EV/S EV/EBITDA EV/S 3.90 x 3.90 x x 11.86 EV/S EV/S 2.55 EV/S EV/EBITDA   EV/S x2.55 x EV/S 38.25 3.62 x EV/S EV/S 3.89 x EV/S 2.68 x EV/S EV/S EV/S x 3.90 3.90 x Ltd. EV/S Amdocs EV/S3.90 x x 17.17 x 2.55 2.55 x Software 11.86 x x EV/SLawson EV/S EV/S Inc.3.62 3.62 x EV/S 2.55 xRightNow Te 30.39 x EV/EBITDA 13.42 x   17.17 EV/EBITDA x   11.86 EV/EBITDA Mgmt. EV/EBITDA Content x   38.25 EV/EBITDA x  EV/EBITDA EV/EBITDA x Communications  EV/EBITDA Corp.EV/EBITDA Inc.11.86 xInc.   EV/E EV/EBITDA EV/EBITDA x 17.170.39 x x 30.39 EV/EBITDA Commerce Inc.EV/EBITDA   SPS Amdocs13.42 x 13.42 x EV/EBITDA EV/EBITDA EV/EBITDAAmdocs Ltd.17.17 17.17 x 11.86 x EV/EBITDA x Software 11.86 x   xSalesforce.c Lawson Rig EV/EBIT     SPS Commerce Inc. Ltd.   Lawson Amdocs Ltd.EV/EBITDA EV/EBITDA   Software Inc. x SoftwareOracle Software Inc. 17.17 x   Amdocs Ltd.   Nuance 17.17   Lawson   RightNow Technologies 38.25 x EV/E 11.86 EV/EBITDA   Lawson EV/EBITDA   EV/S Inc. 38.25 x 11.86 x 2.82 RightNow Tec     RightNow Technologies Inc.   Manhattan Associates Inc.  Inc.   SPS CommerceAssociates Amdocs Ltd.   Amdocs CommunicationsCommunicationsSoftwareRightNow Technologies Inc.9.28 x OtherRig   Manhattan Inc.   SPS Commerce Inc. Amdocs Communications Nuance   Nuance   Nuance Communications   Nuance Ltd. Content Mgmt. Software Inc. Corp.EV/EBITDACorp.  Salesforce.com Salesforce.co   AmdocsLawson   OracleLtd.   Ltd. Corp. OracleLawson   RightNow Horizontal   Sa     Oracle Corp. Software Inc.    Lawson   Lawson Software Inc. Technologies Inc.   Oracle   Inc.   Salesforce.com       Manhattan Associates Inc.   AmdocsOracle Corp.   Oracle Corp.   Salesforce.com Salesforce.com   Nuance Communications   Nuance Communications   Ltd.   Nuance Communications   Oracle Corp.   Lawson Software Inc.         Manhattan Associates Inc.   Nuance Communications2.82 x   Oracle Corp. EV/S   Sa CRM CRM   Nuance Communicationsx Horizontal OtherHorizontal Other Content Mgmt. EV/S Content Mgmt. Content Mgmt. EV/EBITDA 9.28   Oracle Corp. Other Horizontal Other Text Corp. Open Horizontal Horizontal Other EV/EBITDA   Horizont CRM Content Mgmt. 3.62 x Content Mgmt. Content Mgmt. EV/S EV/S 3.81 x 2.55 x EV/S EV/S 2.82 x EV/S 2.82 x EV/S EV/S 3.81 x EV/S EV/EBITDA x Hori 3.81 Horizont2.55 2.55 x x x EV/S EV/S 3.62 x 3.62 x EV/S EV/S Content 2.82 x EV/S 2.82 x Mgmt. Open x2.82   9.28 Text Corp. 9.28 x EV/EBITDA Mgmt. EV/EBITDA x EV/S EV/EBITDA 3.81 x 24.07 x Navi   Trimble g-10 x Sep-10 11.86 11.86 CRM Oct-10 EV/EBITDA EV/S EV/EBITDA Nov-10 38.25 xDec-10 38.25 x 2.82 x Content EV/EBITDA 9.28 x EV/EBITDA EV/EBITDA 24.07 x EV/EBIT24.07 x Hori1.86 x EV/EBITDA Content Mgmt. 9.28 x 24.07 xConcur Tech   EV/S 69 x re Inc.2.55 x 0.72 EV/EBITDA Technologies Inc. 3.62 x 9.28 x EV/S 0.70 x x   RightNow EV/EBITDA0.87 x 38.25 2.53 x x EV/EBITDA EV/S   9.28 x   Open Text Corp. Open Text Corp.x x EV/S 2.822.82 EV/EBITDA EV/S   Trimble Navigation Ltd. Navig   Trimble re Inc. 10.29 x   RightNow Technologies Inc. x  Open Text Corp.Open Text Corp.   EV/S EV/S   Trimble Navigation Ltd. Techn   Trimble Navigation Ltd. Technologies EV/EBIT 80 x   Salesforce.com x 10.04 x 5.54 7.58 2.82 x   Concur   Concur EV/E Inc. c.1.86 x   Salesforce.com Text Corp. xInc.   RightNow Technologies EV/EBITDA   Open 38.25  EV/EBITDA EV/EBITDA Text Corp. Open EV/EBITDA 9.289.28 x x 9.28 x   Trim   Concur Technologies Inc. EV/E   Concur Technologies Inc.   Trimble Navigation Ltd. c.   Salesforce.com HorizontalTechnologies Avid Other   RightNow Technologies Inc. Horizontal Other   Open Text Corp.   Open Text Corp.   Concur Technologies Inc.   Co     Trim EV/S 3.81 x   Open Text Corp.       Salesforce.com EV/S EV/EBITDA 3.81 x 24.07 x   Co Corum Group Presentatio Corum Group Presentation ■ 26 Group Presentatio Corum g-10 Sep-10 Horizontal OtherNov-10 Oct-10 EV/EBITDA 24.07 xDec-10 The Horizontal Application Software Market is one of the Concur, the enterprise travel expense management solution,   20 x 2.50 EV/S 2.67 x Navigation Ltd. 2.87 x x x   Trimble 11 x top performers. 2.71 x are a large number of There x   TrimblexNavigation Inc. 12.18 3.81 10.67Horizontal Other 12.46 xLtd. 13.57 x SaaS companies is currently the second highest valued pure SaaS company.   Concur Technologies in Concur   this group with subscription, recurring revenue streams, EV/EBITDA Technologies Inc. 24.07 x Concur has been among the deal laggards theCorum Group Presentation last few ■ 2 EV/S 3.81 x predictable revenue streams, or web-delivered solutions. years, but started 2011 with the acquisition of Tripit–a EV/EBITDA 24.07 x   Trimble Navigation Ltd. 26 Corum Group Presentation ■ brilliant strategic move. At Concuris SalesForce.com–they have set the bar and the top   Trimble Technologies Inc. Corum Group Presentation ■ 26   Navigation Ltd. escalated the whole SaaS trend while completely changing This section cannot be reviewed without mentioning SAP. theConcur Technologies Inc. that end, they acquired   landscape of the CRM space. To SAP maintains strong multiples and a favorable market Jigsaw in 2010 as part of their Cloud 2 strategy. On their position relative to their big stateside competitors. SAP had heels is RightNow who started the year by acquiring Q-Go Corum Group Presentation ■ 26 the second largest tech deal of last year, spending $6.1B in the Netherlands. on Sybase, adding a complementary unit to their enterprise Corum Group Presentation ■ 26 offering to manage and analyze a broad array of enterprise Recently, the biggest SaaS growth story has been in the data, but, more importantly, to provide a mobile outlet for broad HR world, especially by SuccessFactors and Taleo. data access and updates in real time. SuccessFactors acquired Inform for its Business Execution Suite, and Taleo bought Learn.com to move into the SaaS Moving down the ERP food chain, there are 10 or 12 learning space. Both firms will be making more acquisitions mid-tier public players. It’s crowded with a lot of vertical this year, further challenging the traditional license model differentiation in their product portfolios: Lawson, Epicor, companies. CDC, NetSuite, and QAD among them. We expect to see continued consolidation in this space in 2011, especially as the top-tier players like Microsoft and Oracle have such huge cash reserves. Page 5
  • 7. Vertical Applica Vertical Application Vertical Application Software Vertical Application Software M Vertical Application Software M A/E/C A/E/C EV/S EV/S 2.48 x Government Go 2.48 x EV/S EV Vertical Application Software Mark Vertical Application Software Market EV Vertical Application Software Marke 17.02 EV/EBITDA EV/EBITDA 17.02 x EV/EBITDA x Vertical   Autodesk Inc.   Harris C   Autodesk Inc.ware Market Application   Parametric Technology   Lockhee Software A/E/C   Parametric Technology Government H EV/S 2.48 x EV/S 0.65 x Eware Market A/E/C A/E/C A/E/C A/E/C Government Government GovernmentFinancial Services Government Healthcare Healthcare H Healthcare Energy & Enviro EV/EBITDA 17.022.48 x xEV/S EV/EBITDA 5.83 x EV/S E tware Market tware Market EV/S EV/S EV/S EV/EBITDA EV/EBITDA EV/EBITDA EV/EBITDA EV/S 2.48 x 17.02 x 17.02 x x x   Autodesk Inc. 17.02 17.02 Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 2.48 x 2.48 x EV/S Financial EV/EBITDA EV/EBITDA EV/EBITDA 0.65 x EV/EBITDA EV/EBITDA Services x 5.83 EV/S EV/S EV/S 0.65 x x 0.65 x EV/S 0.65 2.95 xEV/S EV/S EV/EBITDA En 12.09 xEV/EBITDA EV/EBITDA 5.83 x   Harris Corp. 5.83 x 2.95 x x EV/EBITDAEV 5.83 E E EV/S EV/EBITDA 9.54 x 9.37 x 10.30 x 11.15 x 11.51 x 12.53 x   Autodeskx Autodesk Inc.    Inc. 10.15 11.35  10.89 x 9.69 Autodesk Inc. 9.50 x 11.41 x   x Parametricx Technology   Autodesk Inc. x Technology 9.90 Harris Software Inc.   Harris   LockheedCorp. Harris   AdventCorp. Martin Corp.   Corp. Corp.   Harris Corp. Cerne   Cerner  Cerner Itron Inc. EV/S Healthcare 2.01 x 1.90 x 1.92 x 1.95 x 2.22 x 1.86 x   x Parametric 1.98 x 2.25 x   Parametric 1.95 x 1.90 xTechnology   Technology 1.79 x 1.88 x 1.60 Parametric Lockheed LockheedMartin Corp. 12.09 x    AllScrip EV/EBITDA Corp.   Lockheed Martin Corp.  AllScripts AllScri Martin   Fiserv Inc. Schlumb EV Health   Parametric Technology   Lockheed Martin Corp. 65 x EV/S 3.05 x   Advent Software Inc.  83 x EV/EBITDA Healthcare 15.69 x 0.65 x Healthcare Healthcare EV/S 3.05 x ServicesServices Financial Financial Financial Services Financial Services   Fiserv Inc. Energy & Environment Environment Energy && Environment Energy & Energy Environment Vertical Other V Vertical Othe Vertical Other EV/S EV/S 2.95 x 2.95 x EV/S 3.05 x EV/S 65 5.83 xx x 0.65   Cerner EV/S EV/S EV/EBITDA Corp. x 15.69 xx 3.05 3.05 EV/S EV/S 2.95 x EV/S 2.95 x EV/S EV/S 3.05 x 3.05 EV/S x 3.05 x EV/S E Financial Services EV/EBITDA EV/EBITDA EV/EBITDA 12.09 x 12.09 EV/EBITDA EV/EBITDA Environment 17.87 EV/EBITDA EV/EBITDA V 12.09 x x Energy & EV/EBITDA 17.87 x 17.87 x x EV/EBITDA 5.83 x EV/EBITDA 15.69 x EV/EBITDA 12.09 x EV/EBITDA 17.87 x E rp. x 83 EV/EBITDA   Cerner Corp. 15.69 x   AllScripts Healthcare Inc. EV/S 2.95 x EV/S 3.05 x BlackB E Advent Software Inc.   BlackBoard Inc.   BlackB Corp.   Cerner Corp.    Itron Inc. EV/EBITDA   Advent Software Inc. x   Itron Inc. Itron Inc.   Advent Software Inc. n Corp.   AllScripts Corp.   AllScripts Healthcare Inc.   Cerner Healthcare Inc.   Advent Fiserv Inc. Inc.Software Inc.   Fiserv   Fiserv Inc. 12.09 EV/EBITDA   Itron Inc. Ltd. Schlumberger   Schlumberger Ltd.   Schlumberger Ltd. 17.87 x   Autom   Rockw   RockwellRockwe E rp.   AllScripts Healthcare Inc.   Fiserv Inc.   Schlumberger Ltd. Consumer Other VerticalOther   Advent Software Inc.   Itron Inc. Vertical Application   Fiserv Inc.   Schlumberger Ltd. 05 3.05 x x EV/S Vertical Other EV/S Software 2.33 x 2.33 x 87 x xx 3.05 17.87 EV/S EV/EBITDA EV/EBITDA 11.58 xx 2.33 11.58 x 17.87 x Vertical Other EV/EBITDA 11.58 x   BlackBoard Inc. 05 x   BlackBoard Inc. EV/S   BlackBoard Inc.   Rockwell Automation Inc. 2.33 x . x 87 EV/EBITDA Dec-09 Automation Inc. d.    Rockwell Jan-10 Feb-10 Mar-10 x 11.58 Apr-10 Rockwell Automation Inc. May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 EV/EBITDA 4.91 x 4.89 x 4.67 x 6.25 x 7.96 x 10.99 x 8.57 x 7.08 x 6.80 x 10.29 x 10.04 x 5.54 x 7.58 x BlackBoard Inc. x 0.77 x 0.93 x 0.82 x 0.71 x 0.74 x 0.69 x  EV/S 0.70 x 0.66 x 0.73 0.72 x 0.70 x 0.87 x 2.53 x Corum Gr   Rockwell Automation Inc. In the Vertical Market Software space, the SaaS business U.S. but in Asia with the emergence of India and China into model is not quite as prevalent, but we’re starting to see the education space. more — it is definitely driving value. Energy and Environment is also on the march, particularly At the bottom of the spectrum is the Government sector, for China as they have been able to take over half the wind which will continue to hurt due to budget cuts. At the other power market. Software for power management and smart end, the HealthcareGroupPresentation ■■ 28 Corum Group Corum and Energy sectors are outperforming. Presentation 28 grid utilization will increase as energy costs rise. One market of note is online learning, particularly in the Software is also relevant on the flip side of alternative K-12 space. Blackboard hasPresentation ■ 28 into collaboration Corum Group made a push energies, where we have the old world titans, oil and gas solutions for education with the acquisitions in 2010 of companies, scrambling to get their governance, risk and Elluminate and Wimba. Thoma Bravo, the big PE firm, Corum Group Presentation ■ 28 compliance (GRC) management solutions in order due has been pushing the education space hard with their to legislation resulting from the Deepwater Horizon PLATO Learning acquisition to complement their existing Incident. We have seen firms like IHS double-down portfolio with Excelligence and Porter Chester. In general, on environmental GRC through acquisitions, picking up we expect to see high-value education deals in 2011 as both Syntex Management and Atrion International. more of the delivery and infrastructure of education is being built through technology platforms, not just in the Page 6
  • 8. Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 EV/EBITDA 9.54 x 9.37 x 10.30 x 11.15 x 11.51 x 12.53 x 11.35 x 10.89 x 9.69 x 9.90 x 10.15 x 9.50 x 11.41 x EV/S 2.01 x 1.90 x 1.92 x 1.95 x 2.22 x 1.86 x 1.79 x 1.88 x 1.60 x 1.95 x 1.90 x 1.98 x 2.25 x Consumer Application Software Digital Content Digital Content Video Video Game EV/S EV/S 4.02 x EV/S EV/S 4.02 x EV/EBITDA EV/EBITDA 13.05 x 13.05 x EV/EBITDA EV/EB   Apple Computer Inc. Apple Computer Inc.   Elect  Consumer   Adobe Systems Inc.   ShanApplication   Adobe Systems Inc.  Software Digital Digital Content Content VideoGames Video Games EV/S EV/S 4.02 x x 4.02 EV/S EV/S 2.14 x 2.14 x Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 EV/EBITDA EV/EBITDA Sep-10 Oct-10 Nov-10 Dec-10 x Aug-10 13.05 13.05 x EV/EBITDA EV/EBITDA 6.32 x 6.32 x EV/EBITDA 4.91 x 4.89 x 4.67 x 6.25 x 7.96 x 10.99 x 8.57 x   Applex Computer 5.54 Inc. x 7.08 x   Apple Computer x 7.58 6.80 10.29 x 10.04 x Inc.   Electronic Arts Inc.   Electronic Arts Inc. EV/S 0.70 x 0.66 x 0.73 x 0.77 x 0.93 x 0.82 x 0.71 x 0.74 x   AdobexSystems Inc. 0.69 x 0.72 0.70 x 0.87 x 2.53 x   Shanda Games Ltd.   Adobe Systems Inc.   Shanda Games Ltd. Corum Group Co For Consumer Application Software, Corum included the Aside from the sale of the apps and games, an increasing new breed of public Chinese gaming companies. Gaming part of the value is being derived from the data captured companies have been independent of our standard index from the users and players. In the light speed growth for awhile, but are now merged into our primary index, of casual and social gaming, user data generated from mostly in the consumer space. Companies like DangDang, these games is becoming important to the growing and in the gaming space Changyou, Giant Interactive, and social graph phenomenon–some games register over 100 Perfect World, will be of growing importance as China is million users online, generating terabytes, even petabytes investing heavily in software and internet technologies to of user data. supplement their leadership in manufacturing. 2011 started off strong in gaming following a banner year One of those Chinese manufacturing companies, Foxconn, in 2010. We saw nearly 80 transactions in the gaming space assembles a significant amount of consumer electronics, for 2010–the highest volume of any sector for the year. including the iPhone and iPad for Apple. This has spawned While transaction values are generally small to mid-sized a major new growth sector over the past few years in apps in this space, premiums are being paid for studios that can and content. As app stores from Apple, Google, Microsoft, produce addictive games with the potential for recurring Amazon – and nearly every other consumer vendor – have revenue, virtual goods sales, or high availability for ad hit stride, this form of application and content delivery is placement. the de facto standard for end users to purchase tools for productivity, utility and fun. What makes the gaming sector increasingly interesting is the global breadth and acceptance of certain games–a In 2011, watch for more deals in the app store factor that has led to a high number of cross-border deals, ecosystem concerning analytics, development, payments particularly between the U.S., China and Japan. Expect to and targeting… not to mention, plenty of new apps see another significant year in this sector for 2011; there is and games. room for consolidation in this quickly evolving market. Page 7
  • 9. Infrastructure M Infrastructure Ma Infrastructure Software Infrastructure Market Infrastructure Market Infrastructure Market Infrastructure Market Infrastructure Market InfrastructureComm. Infrastructure Comm. Network N Infrastructure Market Infrastructure Market EV/S EV/S EV/EBITDA 2.52 x 10.27 x 2.52 x EV/S EV/EBIT EV EV/EBITDA 10.27 x EV   BroadSoft Inc.   C Infrastructure   BroadSoftSystems Inc.   Openwave Inc.   N Software Infrastructure Comm.   Openwave Network Mgmt. Systems Inc. St S EV/S Infrastructure Comm. Infrastructure Comm. 2.52 x EV/S Network Mgmt. Development Tools 2.64 x EV E S Security InfrastructureComm. Infrastructure Comm. Network Mgmt. Mgmt. Network Network Mgmt. Storage Network Mgmt. St Infrastructure Comm. Infrastructure Comm. Network Network Mgmt. Mgmt. Storage Storage Storage EV/EBITDAInfrastructure Comm. 10.27 x EV/EBITDA Storage EV/S EV/S EV/S 2.52 x EV/S 2.52 x 2.52 x EV/S 2.642.64 x 11.47 x 2.81 x x EV/S EV EV/S E EV/S EV/S EV/S EV/S EV/S EV/S Development Tools 2.64 x 2.64 x xEV/S EV/S EV EV/S EV/S 2.52 x x 2.52 EV/S 2.52 x 2.52 x EV/S 2.64 EV/S EV/S Se 2.64 x 2.64 x EV/EBITDA EV/EBITDA 13.68 x x EV/EBIT EV/EBITDA EV/EBITDA EV/EBITDA 10.27 x10.27 x 10.27 x x EV/EBITDA EV/EBITDA EV/S EV/EBITDA 10.27 EV/EBITDA 11.47 x x 11.47 x EV/EBIT 11.47 Inc.2.81 EV/EBITDA EV EV/EBITDA Cisco Systems x11.47 x xEV/EBITDA EV 11.47 x11.47 E EV/EBIT   BroadSoft Inc. 10.27 x10.27 x EV/EBITDA EV/EBITDA EV/EBITDA Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 10.27 x  EV/EBITDA EV/EBITDA 11.47 EV/EBIT   BroadSoft Inc.   OpenwaveInc. 12.18 12.46 13.57   9.11 x Systems Inc. BroadSoft Inc.   BroadSoft10.67 Inc. Compuware Corp.   Cisco EV/EBITDA Systems Inc. 13.68 x S   E EV Cisco Systems Inc. Inc. Inc.   NetScoutInc. Inc. Systems EMCEM   C   EV/EBITDA 11.61 x 10.26 x 9.83 x 10.33 x 11.02 x 10.47 x 9.62 x   BroadSoft   BroadSoftInc. x Inc. xInc. xInc. x BroadSoft Inc. 9.27 x BroadSoft       Cisco Systems Inc.   Cisco Systems Cisco Systems Cisco SystemsSoftware Corp.   Cisco Systems Inc. Progress Systems   NetScout Systems Inc.     EMCE C   Ve   Q   Openwave Systems Inc. Openwave Systemsx Inc. xInc.   Compuware Inc. Inc. NetScout Systems Inc. Inc.   Q Qlogic EV/S 2.37 x 2.30 x 2.24 x 2.39 x 2.57 x 2.21 x   2.14 x Openwave Systems     Openwave 2.67   Openwave Systems Inc.2.87 x   2.20 x 2.16 x Openwave Systems 2.71   Openwave2.50 x Systems Systems Inc.     NetScout Systems NetScout Systems Corp. Inc.   NetScout Systems NetScout   NetScout Systems Inc.     Qlogic   Q Storage Development Tools   Progress Software Corp. Security Legacy/SOA SystemsVi V Storage Development Tools Tools Development Tools Development Development Tools Security Security Security Security Virtualiz Virtualization Virtualiz Virtualization.64 x EV/S Storage Storage 2.27 x EV/S Development Tools Development Tools 2.81 x Security EV/S Security EV/S 3.26 x 2.53 x x Virtualiz EV/S EVE V 2.64 x EV/S 2.27 x EV/S EV/S EV/S Development Tools EV/S EV/S 2.81 x 2.81 x 2.81 x 2.81 x 2.81 x EV/S EV/S Security EV/S EV/S EV/S 3.26 3.26 x20.41 x 3.26 3.26 x 3.26 x EV/S EV/S Vi EV/S EV/S EV/S.47 x x 2.64.64 x x EV/S EV/EBITDA EV/S 2.27 x x 13.43 EV/EBITDA EV/S EV/EBITDA 13.68 x x 2.81 x EV/EBITDA EV/EBITDA EV/S 13.403.26 x 13.40 x EV/EBITEV E 11.47 EV/EBITDA 13.43 x x 2.27 EV/EBITDA EV/EBITDA EV/S EV/EBITDA EV/EBITDA 13.68 x13.68 x 13.68 2.81 x 13.68 x13.68 x EV/EBITDA Legacy/SOA EV/EBITDA EV/EBITDA EV/S EV/EBITDA x 13.40 x13.40 x EV/EBIT 3.26 EV/EBITDA Sy 13.40 x13.40 x xEV/EBITDA EV EV/EBIT 11.47 x EV/EBITDA 13.43 x EV/EBITDA EV/EBIT EV/EBITDA.47 x EV/EBITDA   EMCCorp.Corp. 13.43 x   Compuware Corp. x   Compuware Corp.13.68 13.68 EV/EBITDA Compuware Corp. x   Compuware Corp. EV/EBITDA 13.40 x 2.53 x Symantec Corp. Solutions Ltd. BluePhoenix EV/S Symantec EV/EBITDA Corp. Corp. 13.40 x   Symantec Corp.   Symantec Corp.   Symantec Corp. E B EV   C   EV CitrixCSc. c.   EMC Corp.   EMC     Compuware Corp.   Compuware Corp.     Symantec Software Inc. 20.41 x   Tibco     CitrixC   CSnc.s Inc.   QlogicCorp. Qlogic Corp.    EMC Corp. Qlogic Corp.   ProgressSoftware Corp.Corp.   Progress Software   Compuware Corp. Corp. Progress Software Corp.   Progress Software Corp.   Progress Software     Verisign Inc. EV/EBITDA   Verisign Inc. Verisign Inc. Inc.Corp. Symantec Verisign Inc. Inc.Corp.   Verisign     V VMwar EV V   VM VMwar s Inc.   Compuware Corp. Corp.   Progress Software     Verisign   Symantec    nc.   Qlogic Corp.   Progress Software Corp.   Progress Software Corp. Verisign Inc.   Verisign Inc. Solutions Ltd.   BluePhoenix Legacy/SOA Systems Mgmt. Mgmt. Systems Mgmt. Internet Virtualization Virtualization Virtualization Legacy/SOA Legacy/SOA Legacy/SOA Legacy/SOA Legacy/SOA   Tibco Software Inc. Systems Systems Mgmt. Mgmt. Systems Mgmt. Systems 3.26 x EV/S 9.92 x EV/S EV/S EV/S EV/S EV/S 2.53 x 2.53 x 2.53 x 2.53 x 2.53 EV/S EV/S EV/S EV/S EV/S 2.78 x 2.78 x 2.78 x 2.78 x.26 x x 3.26 EV/S EV/S Virtualization 9.92 x x 9.92 EV/S EV/EBITDA Legacy/SOA 20.41 x20.41 x 2.53 x x 20.41 20.41 x20.41 x EV/S Systems Mgmt. EV/EBITDA 2.78 x 2.78 x 9.82 x 13.40 x EV/EBITDA 49.92 x EV/EBITDA EV/EBITDA Legacy/SOA EV/EBITDA 20.41 x EV/EBITDA EV/EBITDA Systems Mgmt. EV/EBITDA 9.82 x 9.82 x 9.82 x.40 x x 13.40 EV/EBITDA EV/EBITDA 49.92 x x 49.92 EV/EBITDA EV/EBITDA EV/EBITDA EV/EBITDA 9.82 x 9.82 x.26 x EV/S 9.92 x EV/EBITDA EV/S 2.53 x EV/EBITDA EV/S 9.82 2.78 x EV/S BluePhoenix Solutions Ltd. Ltd.   BluePhoenix Solutions Ltd. 20.41 x 2.53 x EV/S BMC Software Inc. BMCBMC Software Inc. 2.78 x  .40 x   Citrix Systems Inc.   Citrix EV/EBITDA Systems Inc.   BluePhoenix Solutions   BluePhoenix Solutions Ltd.   EV/EBITDA BluePhoenix Solutions Ltd.   20.41 x       Software Inc. BMCBMC Software Inc. 9.82 x   Software Inc. EV/EBITDA   Citrix Systems Inc. 49.92 x   VMware Inc. EV/EBITDA Tibco Software Inc. Ltd.   BluePhoenix Solutions   Software Inc.   TibcoTibco Software Inc.     TibcoTibco Software Inc.   EV/EBITDA Software Inc. 9.82 x CA  BMC  Inc. Inc.   CA Inc. CA   VMware Inc.   Software Inc.   CA  CA Inc. Inc.   Citrix Dec-09Inc. Feb-10 Mar-10 VMware Jan-10 Inc.   Tibco Software Inc. Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10   CA Inc. Systems EV/EBITDA 15.13 x 14.40 x 14.52 x 15.89 x 15.82 x 13.31 x   xBluePhoenix Solutions xLtd. 11.29 BluePhoenix Solutions Ltd. x 11.60 x 10.97 x 12.66 x 14.38 x 14.61 16.63 BMC Software Inc.   BMC Software Inc.   VMwarexInc. x 2.36 x 2.54 x EV/S 2.55 2.34 2.74 x 2.42 x   Tibco Software 2.82 x   Tibco 2.14 x 2.53 x Inc. 2.14 x 2.02 x Software Inc. 2.94 x 3.04 x   CA Inc.   CA Inc. 2.78 x 2.78 x 9.82 x The idea of data loss prevention and security in the Cloud add-ons, plus CA had a host of acquisitions with 3Tera for.78 x x 9.82 is being established as a top priority. We saw a long list their platform, Nimsoft for their software, along with otherc. x c. x .82 .78 of deals in 2010, which will continue through 2011 and integration and security deals to create a complete unit that.82 x beyond. Just look at the significance of Google, Facebook, spans the enterprise and SMB sector. and Twitter, not to mention the rise in the smartphone and mobile industry which, by all accounts, has less security Virtualized environments have created a changing than the aforementioned web companies. Much happened Corum Group Presentation ■ 31 Corum Group Presentation ■ 31 demand for enterprise infrastructure that can be platform last year, with McAfee being the largest transaction in IT Services agnostic, or at least capable of running through various 2010. VeriSign closed a $1B+ deal when it sold off its environments. Cisco, IBM, and HP have put a big focus on Corum Group Presentation ■ 31 identity and authentication business to fellow security giant their unified computing capabilities, those private/hybrid Symantec. These types ofGroup Presentation ■ 31 as witnessed Corum deals will continue Clouds for the enterprise. As many are calling 2011 “The by Dell’s recent announcement to buy SecureWorks for Year of the Cloud”, we expect transactions to continue. $500M at a rich 4.4x multiple. Mar-10 Apr-10 May-10 Jun-10 Jul-10 Dec-09 Jan-10 Feb-10 Aug-10 Sep-10 the BMC–Cisco recently announced platform alliance Will Oct-10 Nov-10 Dec-10 EV/EBITDA 6.60 x 6.44 x 6.37 x 6.97 x 7.33 x 6.49 x 6.41 x 6.09 x 6.04 x 6.52 x theirx “Integrated Cloud Delivery Platform” lead to for 7.12 7.17 x 8.50 x Virtualization0.67 x 0.81 x richx dealsx in terms of 0.73 x 0.75 x EV/S has seen 0.64 0.83 0.85 x 0.74 x multiples. 0.48 x 0.76 x 0.80 x bigger,1.32 x something 0.78 x maybe Cisco buying BMC? Cisco has the VMware had a few $100M+ deals, and Citrix had three cash to do it. Page 8
  • 10. Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 EV/EBITDA 11.61 x 10.26 x 9.83 x 10.33 x 11.02 x 10.47 x 9.62 x 9.27 x 9.11 x 10.67 x 12.18 x 12.46 x 13.57 x EV/S 2.37 x 2.30 x 2.24 x 2.39 x 2.57 x 2.21 x 2.16 x 2.14 x 2.20 x 2.50 x 2.67 x 2.71 x 2.87 xInternet Software InternetInfrastructure Internet Infrastructure Interne Internet Pure P EV/S EV/S 3.43 x EV/S 3.43 x EV/S EV/EBITDA EV/EBITDA 21.3421.34 x EV/EBITDA x EV/EB   Akami Technologies Inc.   AmazoInternet   Akami Technologies Inc.     Juniper Networks Inc.   Googl   Juniper Networks Inc.   Internet Infrastructure Internet Infrastructure Internet Pure Play Internet Pure Play EV/S EV/S 3.43 x 3.43 x EV/S EV/S 3.04 x 3.04 x Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10EV/EBITDA Sep-10 Oct-10 Nov-10 21.34 x Jul-10 Aug-10 EV/EBITDA Dec-10 21.34 x EV/EBITDA EV/EBITDA 14.05 x14.05 x   Akami Technologies Inc. EV/EBITDA 15.13 x 14.40 x 14.52 x 15.89 x 15.82 x 13.31 x 11.29 x 11.60 x 10.97 x 12.66 x 14.38 x 14.61 x 16.63 x   Amazon.com   Akami 2.53 x 2.82 x 2.94 x 3.04 x Technologies Inc.   Amazon.com EV/S 2.55 x 2.34 x 2.36 x 2.54 x 2.74 x 2.42 x 2.14 x   Juniper Networks Inc. 2.02 x 2.14 x   Google Inc.   Juniper Networks Inc.   Google Inc. Corum GrouThe Internet Market performed well, both the Infrastructure Cloud computing initiative. 2011 is going to be a great yearside and Corum’s web pure players. for Amazon as they have lined up a number of objectives that keep the company fresh. They just announced thatThe Infrastructure side was explosive: Akamai and they will be launching a Google App market competitor, andIT ServicesDigital River for content delivery, and the more pure for a company delivering content through a proven websiteinfrastructure companies like Citrix and Juniper. Our Pure and knows how to handle digital downloads, we think theyPlay web companies are also doing very well: Google, will be successful.Ancestry.com, Baidu (out of China), Amazon, Sohu – allat high multiples. Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Dec-09 If Amazon were to buy Netflix, wags might call it a Sep-10 Oct-10 Nov-10 Dec-10 EV/EBITDA 6.60 x 6.44 x 6.37 x 6.97 x 7.33 x 6.49 x 6.41 x 6.09 x 6.04 x “blockbuster deal”. Netflix will probably rebuff the offer 6.52 x 7.12 x 7.17 x 8.50 xAt EV/S bottom 0.81 x the x bracket are 0.74 x 0.73 x 0.75 like x the 0.67 x of 0.64 0.83 x 0.85 x companies x 0.48 0.76 as 0.80 x 0.78 x 1.32 x fastest growing technology stock in x they were theRealNetworks, who will need to figure out a new strategy 2010; web streaming and video have become more of amoving forward, and others like InterActiveCorp and consumer product and cord cutters more prevalent. Thus,Infospace; they are not performing as well as they could. 2011 is poised to be Netflix’s biggest year growing on their own terms.The biggest Achilles heel of any company that primarilyoperates in the web is their inability to monetize their Another key strategy of Amazon is their investment ofhuge web traffic. Companies are continually unable to $175M into LivingSocial, a Groupon competitor, possiblyturn over profit relative to their size, and have to start for a potential acquisition in the future. Amazon haslooking towards M&A to ground themselves from the synergies with the coupon companies.Cloud and have tangible assets that anchor them. Onetech company that has done a terrific job is Amazon. Two other hot companies, Groupon and Zynga, eachAmazon has been able to combine old world technology purchased a third of all Facebook ads served, plus all the hotof packaging, logistics, and general infrastructure with game makers pay a 30% fee for use of their credits system.a blend of new technologies, anything from retail This really shows that Facebook taxes all the hot platformproducts like the Kindle to Amazon Web Services, their add-ons whether in advertising, virtual currency, gaming, or whatever may be the next great revenue generator.Page 9
  • 11. Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 EV/EBITDA 15.13 x 14.40 x 14.52 x 15.89 x 15.82 x 13.31 x 11.29 x 11.60 x 10.97 x 12.66 x 14.38 x 14.61 x 16.63 x EV/S 2.55 x 2.34 x 2.36 x 2.54 x 2.74 x 2.42 x 2.14 x 2.02 x 2.14 x 2.53 x 2.82 x 2.94 x 3.04 xIT Services IT Services Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 EV/EBITDA 6.60 x 6.44 x 6.37 x 6.97 x 7.33 x 6.49 x 6.41 x 6.09 x 6.04 x 6.52 x 7.12 x 7.17 x 8.50 x EV/S 0.67 x 0.81 x 0.64 x 0.83 x 0.85 x 0.74 x 0.73 x 0.75 x 0.48 x 0.76 x 0.80 x 0.78 x 1.32 xWe move onto our last market, IT Services, and we are back Tata, and Infosys. But the storm coming out of China isto the topic of East vs. West. We have added a number of VanceInfo and other newly minted public companies suchsmaller service players here from the international as hiSoft.markets over the past few months, and that is pushingthe value we see. We expect to see some significant transactions from offshore companies expanding their footprint for marketFrom the West, our big players are Accenture, CGI, and share in the Western world. Look for our upcoming reportCSC; their Eastern counterparts are companies like Wipro, “China Rising”.Data was compiled by the Corum Group research department based on the work done in the last 12 monthly webcast reports, available onour website www.corumgroup.com under the M&A Monthly webcasts. Corum Group is the leading global provider of M&A services toprivately held software and IT companies, and has sold more such firms than anyone else in the last 25 years. For further information, pleasecontact Dougan Milne, V.P. Research at +1 425 455 8281, or douganm@corumgroup.com. ©2011 Corum Group Ltd. All Rights Reserved. Page 10
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