Deal Origination in the UK Technology Mid Market
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This presentation shares with you our approach to deal origination in the UK Technology Mid Market. Claim your Free Six Minute Strategist Six Minute Audit at http://jbdcolley.com ...

This presentation shares with you our approach to deal origination in the UK Technology Mid Market. Claim your Free Six Minute Strategist Six Minute Audit at http://jbdcolley.com
If you would like to discuss with me how we can assist your business, please email me at john.colley@iafcapital.com or call me on my UK cell phone +44 7813 672 612
I hope you enjoy the presentation.

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Deal Origination in the UK Technology Mid Market Presentation Transcript

  • 1. Deal  Origina+onin  the  UK  Technology  Mid   Market
  • 2. Its  all  in  the  Cloud...
  • 3. We  understand  the  Deal  Origina+on  Process
  • 4. Deal  Screening  and  Origina+on  is  complex... • Sector  Exper+se  and  Understanding  -­‐  Technology,  Telecoms  and  Media • Clear  understanding  of  Sub  Sectors  and  their  cons+tuent  companies • Companies  -­‐  Public,  Private,  PE  Backed,  Subsidiaries • Financial  Hurdles  and  Analysis • Geography  -­‐  Company  Loca+ons • Business  Model • Management  Team  Quality • Other  Factors:  company  age,  owners  age,  Death/Divorce/Disease,  Management  Succession • Deal  Types:  MBO,  MBI,  P2P,  2BO,  3BO,  Growth • Need  for  a  Deal  and  Timing;  need  for  capital • Process  -­‐  Approach,  Discuss,  Meet,  Nego+ate,  Terms,  Close
  • 5. Deal  Mo+va+on  is  important... Strategy Ability Ability Sectors Zone ofAcquirors Intent Confluence Intent Targets Scale Money Money Stage
  • 6. Profile  of  an  Investee  Company • Strong  IP  or  other  sustainable  advantage • Addressing  a  large  poten+al  market   • Like  to  exhibit  upper  quar+le  growth • Strong  management  with  shareholder  value  orienta+on • High  Gross  Margins  >50% • Product  service  is  “need  to  have”  with  clearly  differen+ated  market  posi+on • Clear  routes  to  market • Low  capital  intensity • Geographical  loca+on  may  be  a  factor • Financial:  Revenues,  Profits,  Growth,  Margins,  Cash  Genera+on,  Revenues  per  employee,  Return   on  Capital  Employed
  • 7. Private  Equity  Deals  vary... • Trade  Carve  Out  deals  (Acquisi+ons) • Trade  Infill  Deals  (Divestments) • Buy  and  Build  Placorms • Secondary  (or  Ter+ary)  Deals • Public  to  Private  Transac+ons • Filling  the  IPO  Gap • MBO/MBI  Founder  Exits • Turnaround/Recapitalisa+on • Growth  Investment
  • 8. We  have  done  it  before... • IAF  Capital  have  proven  deal  origina+on  capability Financial Advisor to Financial Advisor to CIBER Europe Limited CIBER Europe Limited on its€66.3m acquisition of on its $41m acquisition of Novasoft Group AG Ascent Technology Group from 3i plc Pall Mall Capital originated the transaction August 2004 May 2004
  • 9. But  its  a  Compe++ve  Market  for  Buyout  Investors...
  • 10. We  understand  the   UK  M&A  Market
  • 11. M&A  Ac+vity  con+nued  in  2012... • M&A  in  the  European  Technology   Sector  was  consistent  with  the  level  of   ac+vity  in  2011 • There  were  234  PE  and  VC  exits  in   2012,  down  from  281  in  2011 • Financial  investors  accounted  for  14%   of  the  deals  done  in  2012 • In  the  UK  of  190  completed  buyouts,   79  were  in  the  range  of  £10-­‐£100m,  of   which  18  were  in  the  TMT  sector • There  were  37  UK  exits  in  2012
  • 12. But  Deal  Origina+on  is  compe++ve... • The  number  of  UK  listed  technology  companies   con+nued  to  decline  with  the  acquisi+ons  of  Aegis,   Misys,  Logica,  C&W,  Torex,  Psion,  Kewill,  Tikit,   Netbenefit,  SHL,  Maxima  and  Atlan+c  Global • One  of  the  most  significant  developments  was  the   ac+vity  of  overseas  buyers  who  accounted  for  36%   of  all  deals • The  key  focus  for  investors  in  2012  was  somware   companies  -­‐  mainly  in  niche  ver+cals  such  as   warehouse  management  and  vo+ng  somware • IT  Managed  services  accounted  for  19%  of  deals   but  the  sector  remains  very  fragmentedM&A   Ac+vity  con+nued  in  2012...
  • 13. Top  Valua+ons  for  UK  Technology  M&A  Deals
  • 14. What  is  the  Outlook  for  2013? • The  IPO  market  is  likely  to  remain  quiet,  so   M&A  is  the  only  prac+cal  way  for  vendors  to   realise  their  equity • Overseas  trade  acquirers  are  ac+vely  looking   for  deals  and  pay  compe++ve  prices • Businesses  in  demand  need  to  be  well  run   and  scalable • Some  UK  PLCs  have  raised  addi+onal  capital   • Mobile  Phones  overtake  PCs  for  web  access in  2012;  Digital  Barriers,  Capita,  Quindell   • Mobile  apps  on  a  variety  of  architectures Porcolio  and  Cupid • Personal  cloud  for  storage • Enterprise  app  stores Gartner • Sectors  in  demand  are  likely  to  include:  e-­‐ • Communica+on  of  intelligent  devices commerce,  informa+on  management,   • Cloud  services Top FinTech,  cloud/managed  services,  niche   • Big  Data  -­‐  informa+on  management somware,  business  intelligence/analy+cs  and   • Analy+cs  and  simula+on Predic+ons • In  Memory  Compu+ng IT  Security • Integrated  ecosystems for  2013 • Internet  of  Things
  • 15. We  understand  the  UK  Technology  Sector
  • 16. Who  are  the  UK  Players... • UK  Market  players  break  down  into  Six   Categories: • Public  Companies Public Companies VC/PE   Funded • VC/PE  Funded  Companies • Private  Companies • Subsidiaries Early Stage UK  Technology Private • Foreign  Owned/Compe+tors <£5m Companies • Early  Stage  =  <£5m  Revenues Foreign Owned Subsidiaries Compe+tors
  • 17. Who  are  the  Deal  Ecosystem  Players... • US  Technology  Companies,  seeking  cross   border  deals  in  UK  -­‐  Top  500 • European  Technology  Companies,  seeking   US  Technology European Technology cross  border  deals  in  UK  -­‐  Top  100 Companies Companies • VC/PE  Funds,  including  secondary  and  ter+ary   deals  -­‐  Top  200 • Indian/Asian  Technology  Companies,  seeking   Do UK  Technology VC/PE cross  border  deals  in  the  UK  -­‐  Financially  strong   Nothing Companies Funds but  limited  in  number • UK  Domes+c  Technology  Companies,  seeking   to  consolidate  the  market;  any  exis+ng  market   UK  Domes+c Indian/Asian players Technology Technology • There  is  always  the  Do  Nothing  Scenario Companies Companies
  • 18. Sector  Complexity  is  nothing  new... • Adver+sing   • Energy  &  U+li+es •  BioTech • Engineering •  CleanTech • • FinTech  Banking •  Consumer  Electronics/Devices • FinTech  Insurance •  Consumer  Web • FinTech  Other  FS Legal  &  Professional  Services• •  eCommerce • Media  &  Marke+ng IT  &  Business  Services •  Educa+on • Other  PS•  Somware •  Enterprise • • Other  Ver+cals •  Games,  Video  and   • PharmaTech•  Hardware  &  Electronics Entertainment • PS  Educa+on PS  Healthcare•  Telecoms •  Legal • Retail  and  Hospitality •  Mobile/Wireless • Telco  Somware•  Digital  Media  &  Internet •  Network/Hos+ng • Travel  &  Transport •  Consul+ng • Built  Environment  Somware •  Communica+ons • Communica+on  &  CEM • Data  &  Content  Management •  Search • ERP •  Security • Human  Capital  Management •  Semiconductor • Logis+cs  and  WMS •  Somware • Other  Business  Applica+ons • Security
  • 19. Broad  Knowledge  of  the  Global  Somware  Sector...
  • 20. What  are  their  Op+ons? • IPO P2P IPO P2P Strategic  Op+ons  are  limited • IPO Buyout Public Companies External Growth Funding Buyout VC/PE Funded External Growth Funding • P2P Acquisi+on Sale Acquisi+on Sale • External  Growth  Funding • Public VC/PE Sale IPO P2P Companies Funded IPO P2P • Acquisi+on Buyout Early Stage <£5m External Growth Funding Early Stage <£5m UK  Somware Companies Private Buyout Private External Growth Funding • Buyout Acquisi+on Sale Foreign Owned Subsidiaries Acquisi+on Sale • But  Strategic  Op+ons  depend  on   Compe+tors circumstances IPO P2P IPO P2P Foreign External External Buyout Owned Growth Buyout Subsidiaries Growth Compe+tors Funding Funding Acquisi+on Sale Acquisi+on Sale
  • 21. Where  are  the  Deals  to  be  found? • IPO P2P IPO P2P Buyside  Deals   • Playing  to  our  strengths  in  deal   Buyout Public Companies External Growth Funding Buyout VC/PE Funded External Growth Funding origina+on • Sell  Side  Deals Acquisi+on Sale Acquisi+on Sale • Depth  of  market  knowledge  and   IPO P2P Public Companies VC/PE Funded IPO P2P interna+onal  grasp  of  compe+ng   companies  makes  this  an  aqrac+ve   Buyout Early Stage External Growth Early Stage UK  Somware Private Buyout Private External Growth Companies deal  area <£5m Funding <£5m Funding • Foreign Deal  Areas  of  least  aqrac+on Acquisi+on Sale Owned Compe+tors Subsidiaries Acquisi+on Sale • These  do  not  play  to  our  strengths  and   IPO P2P IPO P2P are  to  be  avoided   Foreign External External Buyout Owned Growth Buyout Subsidiaries Growth Compe+tors Funding Funding Acquisi+on Sale Acquisi+on Sale
  • 22. And  Deep  Somware  Sector  Knowledge... • Energy  &  U+li+es • Engineering Just  some  of  our  Databases... • FinTech  Banking • FinTech  Insurance • Electronic  Document  Management • • FinTech  Other  FS • eServices • Legal  &  Professional  Services Media  &  Marke+ng • Internet  Infrastructure  Somware • Other  PS • Legal  Sector • Other  Ver+cals • Payments  Systems • PharmaTech • PS  Educa+on • EDI • PS  Healthcare • Pensions  Administra+on • Retail  and  Hospitality • Telco  Somware • Accoun+ng • Travel  &  Transport • Road  Traffic  Technology • • Built  Environment  Somware • Supply  Chain  Management • Communica+on  &  CEM Data  &  Content  Management • Manufacturing • ERP • Security • Human  Capital  Management • Retail  Solu+ons • Logis+cs  and  WMS • Other  Business  Applica+ons • Security
  • 23. UK  Mid  Market  Technology  Companies  £5m  -­‐  £100m
  • 24. We  can  advise  on  Deal  Origina+on  
  • 25. So,  how  can  we  work  together?
  • 26. Former  Regular  Army  Officer25  Years  Investment  Banking  ExperienceStrong  Deal  OriginatorOver  $150  millon  in  Technology  Sector  Deals  since  2001
  • 27. This  summary  memorandum  has  been  prepared  from  internally  developed  data,  informa+on  in  the  public  domain  and  other  sources  believed  to  be  reliable.  No  representa+on,  warranty  or  undertaking  (express  or  implied)  is  given  and  no  responsibility  is  accepted  by  IAF  Capital  Limited  (“IAFC”)  or  by  any  of  their  officers,  employees  or  agents  for  the  completeness  or  accuracy  of  any  informa+on  contained  in,  or  of  any  omissions  from,  this  summary  memorandum  or  any  supplementary  informa+on  made  available  to  any  interested  party  or  its  advisors,  and  any  liability  in  respect  of  such  informa+on  or  omissions  is  hereby  expressly  disclaimed.This  summary  memorandum  does  not  cons+tute  an  offer,  invita+on  or  recommenda+on  to  buy,  sell,  subscribe  for  or  issue  any  securi+es  or  a  solicita+on  of  any  such  offer  or  invita+on  and  shall  not  form  the  basis  of  any  contract  with  IAFC.  Opinions  expressed  herein  are  subject  to  change  without  no+ce.  In  providing  this  summary  memorandum,  IAFC  does  not  undertake  any  obliga+on  to  provide  the  recipient  with  access  to  any  further  informa+on  or  to  correct  any  inaccuracies  or  omissions  which  may  become  apparent.  IAFC  and  their  officers,  employees  and  agents  may  own  or  have  posi+ons  in  securi+es  of  companies  or  issuers  men+oned  herein  and  may  also  provide  or  seek  to  provide  financial  advisory,  banking  and  other  services  for  any  such  companies  or  issuers.With  respect  to  recipients  in  the  United  States,  this  Informa+on  Memorandum  is  being  distributed  solely  to  "accredited  investors"  within  the  meaning  of  the  rules  and  regula+ons  promulgated  under  the  Securi+es  Act  of  1933,  as  amended  (the  "Act").    The  Companys  stock  has  not  been  and  will  not  be  registered  under  the  Act,  or  any  applicable  state  or  foreign  securi+es  laws,  nor  has  the  United  States  Securi+es  and  Exchange  Commission  or  any  state  or  foreign  regulatory  authority  passed  upon  the  accuracy  or  adequacy  of  this  Informa+on  Memorandum  or  endorsed  the  merits  of  this  offering,  and  any  representa+on  to  the  contrary  is  unlawful.    The  Companys  stock  is  offered  pursuant  to  exemp+ons  provided  by  Sec+on  4(2)  of  the  Act  and  Regula+on  D  thereunder,  certain  state  securi+es  laws  and  certain  rules  and  regula+ons  promulgated  under  the  Act.    The  Companys  stock  may  not  be  transferred  in  the  absence  of  an  effec+ve  registra+on  statement  under  the  Act  and  any  applicable  state  or  foreign  securi+es  laws  or  an  opinion  of  counsel  acceptable  to  the  Company  and  its  counsel  that  such  registra+on  is  required.