This document summarizes a presentation by Frank Berger of Corum Group on M&A recommendations. The presentation discusses when the time is right for a company to start an M&A project, focusing on factors like personal needs, market conditions, and the situation of the company. It also outlines the M&A process, including preparation, contacting potential buyers, negotiations, and closing. Biggest mistakes are identified as only contacting one buyer, lack of leverage, hiding issues, and not qualifying buyers properly. Corum Group is introduced as an international M&A consultant that has completed over 200 transactions totaling $6 billion.

1. USA Switzerland Germany France United Kingdom Canada Norway Brazil
E-Business Forum
Prague October 6th, 2009
“How to run your M&A – some Recommendations”
www.corumgroup.com

2. The Presenter
Frank Berger
Director
Corum Group International
Berlin * , Dipl.-Math.@TUB, Stanford GSB
> 30 years management in IT Industry
Founder & Seller IQproducts GmbH
3 years Consultant to the Software Industry
3 years M&A Advisor with the Corum Group
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3. The Corum Group
Worldwide M&A Consultant since 1985
Only M&A, only Software and IT Services
Middle Market Focus (3 to 100 M$ Revenues)
Project Managers are mostly former CEOs in SW- and IT Services Firms
Offices in Europe, Canada, Latin America and United States
200+ transactions completed
$6 billion in wealth created
60% cross-border transactions
Host of Selling Up Selling Out conferences & multi-national Merge Briefings
Sponsor of World Financial Symposiums conferences
Publisher of industry-leading M&A research
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4. Agenda Today
The M&A Project - Why and When?
The M&A Project - What and What Not?
Closing with Langara
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5. As an Entrepreneur - What Are Your Options?
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6. Why Sellers Sell
Insure company’s success
Growth/ Opportunity Cannot make it as a small company
Technological threat/ change
Age / Burnout
Fatigue
Health – what if something happened?
Management challenges – aiming at something new
Conflict Partners, Employees, Family, Board/Investors
Funding the enterprise
Money
Personal liquidity – hard work but no money in the bank
M&A is the primary source of liquidity!
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7. M&A Activity vs. IPO Activity
U.S. dollar volume all industries
$1,700
$1,600
$1,500
$1,400
$1,300
$1,200
$1,100
$1,000
In Billions
$900
$800
$700
$600
$500
$400
$300
$200
$100
$0
M&A Dollar Volume IPO Amount Raised
Sources: Dealogic, IPO Central, Corum
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8. Timing for an M&A Project
The ideal starting-point is determined by FOUR key parameters:
• Your Personal Needs, Plans, THE TRIGGER !
Wishes…
• The M&A market in general, trends IMPORTANT
in valuations etc:
The situation and trends in your MORE IMPORTANT
company’s market segment:
The market position, performance
MOST IMPORTANT
and future of your company:
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9. Signs of Recovery
IMF Raises Global Growth 2010 to 3.1%
World Bank Sees True Global Recovery
GY: Exports rise by 7% (July)
U.S. Productivity Up 6.6% in Q2
Goldman Sachs Revises China Growth to 8.3%
Clear recovery in Real Estate
Worldwide Growth of Stock Markets
…..
…..
However: Uncertainty remains
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10. Public Markets
Nasdaq S&P Tech Dow
120.00
110.00
100.00
90.00
80.00
70.00
60.00
50.00
40.00
Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09
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11. European Public Markets
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12. …and the M&A Market is doing well
Sep-08 Sep-09
# of Transactions 242 255
# of Mega Deals >$1B 1 6
Largest Deal $2,000 $6,400
Average Deal Value $99 $381
Median Seller Revenue $28 $112
# VC backed Exits 17 33
% Terms Undisclosed 64% 77%
All Cash (announced) 59% 47%
% Targets Public 16% 13%
% Buyers Public 49% 45%
CORUM Index
$ values in millions
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13. Mega Deals Are Up
Xerox ACS : $6.4b ; 1.3x
Adobe Omniture : $1.8b ; 5.2x
SilverLake Skype : $2b ; 5.1x
Dell Perot Systems : $3.9b ; 1.4x
CISCO Tandberg: $ 3.0b
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14. Corum Transactions Are Up
Six Companies Sold In Q3
Six More In LOI During Q3
Five More Weighing Offers
Corum New Client - and Project Activity High
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15. Market Trends e-Commerce (1)
Online Retail
• Amazon continues to Wal-Murder online retail
• Mid-tier vendors: innovate, expand, sell, or perish
• Verticalization becomes a necessity to survival
• International and US e-commerce laws getting closer
• Security still a concern
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16. Market Trends e-Commerce (2)
e-Commerce Infrastructure
Consolidation continues :
Logistics
Hosting
Payment / cart / billing
Security
Innovation begins to plateau:
Advertising / Marketing
Innovation continues to excel:
Customer intelligence
Search
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17. Internet Market
Public Valuations Deal Spotlight:
Sector: e-Commerce
Target: BuscaPe.com (Brasil)
Buyer: Naspers (SA)
Date: September 2009
Transaction Value: $342m
Internet
Comments:
Geographic expansion
Dominant regional player
Feb-09 Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Favorable Demographics
EV/EBITDA 6.05 x 7.54 x 9.80 x 11.78 x 11.81 x 13.32 x 13.02 x 15.80 x
EV/S 1.36 x 1.60 x 2.11 x 2.26 x 2.30 x 2.48 x 2.60 x 2.70 x
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18. Recent E-Commerce Transactions (Retail)
GoAdv acquires LeGuide.com (February 2009)
GoAdv, of Ireland, operates a network of retail and search-focused
websites for consumers globally.
LeGuide.com, of France, is an online shopping portal to consumers in
Europe, enabling users to search, compare and purchase a wide variety of
products online.
The acquisition further strengthens GoAdv’s consumer goods market
position in Europe. Both companies are publicly traded on the Euronext.
Transaction valued at $56.75m; 2.2x TTM revenues
Amazon.com acquires Zappos.com (July 2009)
Amazon.com is the world’s largest online marketplace, an aggregate
for online retailers of consumer goods and other proprietary goods.
Zappos.com operates as an online retailer of shoes and apparel for
the consumer market.
Amazon gains considerable market-share and ,more importantly,
considerable market penetration to verticalized consumer apparel
segments.
Transaction valued at $847m; 1.3x TTM revenues
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19. Recent E-Commerce Transactions (Infrastructure)
Timberline Interactive acquires CommerceV3 (September 2009)
Timberline provides e-commerce website design and online marketing
services to retailers. Also provides e-commerce shopping cart software.
CommerceV3 provides e-commerce software-as-a-service (SaaS) that
enables online retailers to build and maintain Web stores.
The acquisition brings together two e-commerce companies capable of
delivering two pieces: the online marketing services to drive traffic, and
the online store or shopping cart technology to convert it to sales.
Transaction value undisclosed.
WebTrends [Francisco Partners] acquires Widemile, Inc. (July 2009)
WebTrends provides web-based and hosted CRM customer analytics
software-as-a-service (SaaS) and related managed services to
enterprises.
Widemile provides testing and site optimization SaaS and web
analytics services to online marketers and interactive agencies.
The acquisition was a technology buy for Webtrends. Adding new
testing capabilities will help WebTrends compete with Omniture’s broader
portfolio.
Transaction value undisclosed.
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20. Is the time right to start an M&A Project ?
There are good arguments FOR it:
Be in Sync with the Recovery
Close a transaction before the Next Recession comes ??
Strategic buyers and PE have lots of Cash, PE starting to invest again
Consolidation Activity is Strong
Get Active before the Market for your Company Narrows
M&A Market is very active again
Valuations improved significantly
“Wealth Effect” - What is the value of a €, $, CZK gained today?
The “Value Added” by the Process
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21. Insight from over 200 M&A Transactions
A professional, global M&A Project is “Adding Value”
M
Model – You will develop a better model from the process
M
Market Feedback – You gain immeasurably from buyer feedback
R
Research – You learn a great deal from these proprietary databases
R
Relationships – Not everyone is a buyer, but you open many doors
Sale of your company, or significant recapitalization
S
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22. Agenda Today
The M&A Project - Why and When?
The M&A Project - What and What Not?
Closing with Langara
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23. The M&A Process: Characteristics
The M&A process takes time
Nine to twelve months is a reasonable expectation
In the extremes, a few weeks to years
Time and success depend on careful planning and
proper execution of the process
The M&A process requires patience
Sarbanes Oxley, Foreign Corruption Practices Act Audit, thorough
due diligence, volatile markets, management changes, buyers own
timelines….
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24. The M&A Process: Overview
Decision
Decision
SELL UP SELL OUT
SELL UP SELL OUT
Preparation
Preparation
INTERNAL DUE DILIGENCE
Research INTERNAL DUE DILIGENCE Presentation
Research Presentation
POTENTIAL PARTNERS EXECUTIVE SUMMARY
POTENTIAL PARTNERS EXECUTIVE SUMMARY
Contact
Contact
INFORMATION EXCHANGE
INFORMATION EXCHANGE
Follow-up
Follow-up
CONFERENCE CALLS & VISITS
CONFERENCE CALLS & VISITS
Valuation
Valuation
Structure
Structure
LETTER OF INTENT
LETTER OF INTENT
Due Diligence
Due Diligence
Final Negotiations
Final Negotiations
CONTRACT
CONTRACT
Closing
Closing
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25. A Professionally Executed M&A Project will include:
700 to 1,000
communications of various kinds (email, voicemail, letters,
conference calls, etc.)
10 to 30
expressions of interest
15 to 20
NDAs
8 to 10
qualified parties
1 to 2
offers
*On average, based on a global search
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26. What Buyers Are Looking For
Consolidation (market leaders)
Tuck-ins with positive EBITDA
Growth
Client Base
Geographical expansion
Recurring revenue
Small IP acquisitions with a Laser focus
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27. Targets
(a) Strategic Buyers
Firms selling to the same customer
Companies Interested in diversification
Firms with complementary products
Technology partners/acquirers
Competitors, Users, Dealers/OEMs
(b) Financial Buyers
Over $400 billion in uncommitted funds
Primarily concerned with ROI
No strategic leverage
Price paid may be lower than strategic buyers, but is in cash
Due diligence is tough
Will try to keep management (as shareholders)
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28. Presenting Your Company
You Will Need at Least
Researched buyers list incl. contact names and EAs (A, B & Special)
Strategic analysis per buyer
Introductory Letter (s)
Executive Summary
Transaction NDA
Financial Memorandum (history, 3 years projections…)
Corporate Presentation (verbal / PPT)
Valuation
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29. Biggest Mistakes in The Process
Dealing with only one buyer Unable to portray value
Credibility in valuation is imperative
No leverage in negotiation
Incomplete due diligence preparation
Improper research of potential buyers
“A,” “B,” financial, international This will prolong the process
Contact at wrong level, wrong person Hiding of Critical Issues
Not knowing the buyer well enough The M&A process requires total openness
Not orchestrating/ synchronizing all
Not understanding buyer’s process
parties properly
Timeline, decision-makers This is the tough part!
Not qualifying buyer properly Lack of clearly defined closing conditions
Ability, interest, needs etc. Don’t be greedy & avoid “circular
negotiations”
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30. Is the time right to start an M&A Project ?
There are good arguments FOR it:
Be in Sync with the Recovery
Close a transaction before the Next Recession comes ??
Strategic buyers and PE have lots of Cash, PE starting to invest again
Consolidation Activity is Strong
Get Active before the Market for your Company might be Closed
M&A Market is very active again
Valuations have improved significantly
“Wealth Effect” - What is the value of a €, $, CZK gained today?
The “Value Added” by the Process
Ultimately, the deciding factors are your personal needs
& wishes and the situation your company is in!
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31. Corum’s Annual Client Celebration
Aug. 29 – Sept. 1
A tradition for 22 years
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36. Upcoming Corum Events
October 5: Prague -- SUSO October 22: Grenoble -- MB
October 6: Boston -- MB October 23: Munich -- MB
October 8: Lyon – MB October 27: Frankfurt – MB
October 8: Washington DC -- MB October 27: Dublin – SUSO
October 13: Scotland -- MB November 5: MERGE Webinar (Int’l)
October 13: Austin -- SUSO November 10: MERGE Webinar (France)
October 14: Ireland -- MB November 11: MERGE Webinar (DACH)
October 20: Stockholm -- MB/SUSO November 17: London – WFS
October 22: Denmark -- MB/SUSO November 18: Ft. Lauderdale -- MB
Merge Briefing (MB)
Selling Up Selling Out (SUSO)
World Financial Symposium (WFS)
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37. Contact Information
Corum Group Ltd.
10500 NE 8th Street, Suite 1500
Bellevue, WA 98004
USA
+1 425-455-8281
Corum Group International S.à.r.l.
Frank Berger, Regional Director
frankb@corumgroup.com
Basteiplatz 7
8001 Zürich
Research and Conferences Switzerland
www.corumgroup.com
+41 44 251 82 65
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