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Corum group: Paris Presentation

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M&A briefing

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Corum group: Paris Presentation

  1. 1. MERGE BRIEFING Paris MB: 28 March
  2. 2. 2 Corum Speakers  Founder & owner of 4 software companies  Served on advisory boards for Microsoft, IBM, DEC, Comdex and Apple, and as board member/founding investor for Blue Coat, Bright Star and Sabaki.  Founder of the WTIA, the nation’s most active regional technology trade association.  Chosen as one of the 200 most influential individuals in the IT community in Europe.  A graduate with Distinction from Harvard Business School, written 3 books on business models for success Bruce Milne CEO  20 years of international entrepreneurial and business experience growing software and business services companies  CEO of The Seasam Group, digital marketing and IoT company for intelligent transportation systems and digital signage solutions  Director level positions in Cisco leading Nordic sales  Investor and board member of a number of startups and young companies in a diverse range of sectors  BBA in International Business and MBA in Finance and Marketing, Swedish School of Economics Julius Telaranta Vice President
  3. 3. 3 Partial Co-Sponsor List
  4. 4. 4 Global Presence – 60% of transactions cross border
  5. 5. 5 Research Education Valuation World Tech M&A Leaders…
  6. 6. 6 Unsurpassed Buyer Access Corum Buyer Knowledgebase Engagements Internal Research External Research Education Outside Events Transactions Outside Advisors (WTC)
  7. 7. 7 Detailed, professional process Team approach Most senior dealmakers World Technology Council Sold more software-related firms than anyone Achieving an Optimal Outcome
  8. 8. 8 Hong Kong / Canada Italy / Austria Ireland / Finland Australia / Australia Japan / USDenmark / Finland UK / China US / Germany Recent Corum Transactions
  9. 9. 9 Agenda  Market Perspective  Top 10 Disruptive Technology Trends  M&A Activity & Valuations  Factors Driving Tech M&A  Achieving an Optimal Outcome  Avoiding Deal Disasters  Closing Thoughts
  10. 10. 10 TOP TEN DISRUPTIVE TRENDS
  11. 11. 11 Leveraging Corum’s Unique Position Top 10 Disruptive Technology Trends 1000s of Buyer Interactions (Deals) 1000s of companies (Education) 1000s of industry transactions (Research)
  12. 12. 12 Why worry about these trends? 1. Trends create change 2. Change drives strategic imperative 3. Strategic imperative drives acquisitions 4. Well-positioned companies get sold Are you part of any of these trends?
  13. 13. 13 Corum Top Ten Technology Trends 2017 AI Enablement IoT Software Visual Intelligence Systems Digital Currency Flow Data Science Monetization Online Exchanges Omni-channel Sales Connected Health Focused IT Services Data Security CORECONTOUR
  14. 14. 14 Putting AI to work by means of big data and feedback #1: AI Enablement  Nascent AIs and other machine learning platforms need data.  Need tasks that provide data, benefit from improving expertise, then provide feedback to improve the platform.  Business cases emerging rapidly across all sectors.  Significant stores of unique data can short-circuit “build vs. buy” debates in M&A. Corum Top Ten Disruptive Technology Trends 2017
  15. 15. 15 Emerging platforms, standards & analytics #2: IoT Software  Internet of Things (IoT) growth brings us into its first full software cycle.  Each “Thing” needs platforms, communication, analytics, etc.  Competing platforms and associated ecosystems beginning to coalesce.  IoT software often, but not always, inextricably enmeshed with hardware.  Compatibility-driven, as in other cycles of disruption. Corum Top Ten Disruptive Technology Trends 2017
  16. 16. 16 Intersection of AI, computer vision & analytics #3: Visual Intelligence Systems Corum Top Ten Disruptive Technology Trends 2017  Evolution of Positioning Intelligence beyond GPS required computer vision.  Drones and self-driving cars driving advanced vision tech with even larger implications.  Retail, security, energy, agriculture, advertising are all being impacted.  Companies creating practical solutions with this tech— especially utilizing analytics— are in high demand.
  17. 17. 17 Decreasing friction in payments & exchange #4: Digital Currency Flow  Currency flow moving towards fewer barriers, reduced regulation and less friction on transactions globally.  Banks face competition from nimbler mobile and web point solutions.  Includes alternative currencies— from blockchain/bitcoin to in- game currencies to Starbucks payments.  Software & systems that speed or harness payment flow have significant potential. Corum Top Ten Disruptive Technology Trends 2017
  18. 18. 18 Maximizing return with real-time analytics #5: Data Science Monetization  In a world of freemium, free-to- play & declining ad effectiveness, turning users or viewers into dollars is a premium capability.  Robust analytic tools are no longer optional, especially for consumer-facing companies.  Gaming companies are leading the way, deriving value from their analytic capabilities as much as entertainment.  Video ads are close behind with opportunities in e-commerce, brick & mortar, B2B and beyond. Corum Top Ten Disruptive Technology Trends 2017
  19. 19. 19 Connecting creators & consumers #6: Online Exchanges  Uber & others recharging the concept that created online commerce, putting unused capacity to work.  Not just connecting buyers & sellers, but creating previously non-existent opportunities on both sides.  Disruptive opportunities include:  Personalization  Real-time commerce  Financial disintermediation Corum Top Ten Disruptive Technology Trends 2017
  20. 20. 20 Purchasing decisions anywhere, any platform #7: Omni-Channel Sales  Consumer platforms & devices continually fragmenting.  Marketing keeping pace – next challenge is sales, both decision points and actual purchase.  Point at which money changes to product must be immediately with customer, moving closer by being on their favorite device.  Persuasion must move there as well, taking new forms as it does.  Consumer brands leading the way, but enterprise is not far off. Corum Top Ten Disruptive Technology Trends 2017
  21. 21. 21 Linking people to their health data & services #8: Connected Health  Technological, regulatory and demographic changes converging to create significant opportunity.  Leveraging new tech: smartphones, trackers, connected medical devices, genomics, remote monitoring.  Improved self-care and remote care/diagnosis.  Makes healthcare more patient-centric by enabling healthcare consumerism. Corum Top Ten Disruptive Technology Trends 2017
  22. 22. 22 Differentiation drives new value in a sleepy sector #9: Focused IT Services  New and more pervasive technologies creating new needs for maintenance, extension and utilization.  Teams that provide customer value around a specific technology, sector or problem are seeing increased value.  Buyers seeing more value in purpose-built IP emerging out of services firms.  Services on the edge of key trends seeing particular interest. Corum Top Ten Disruptive Technology Trends 2017
  23. 23. 23 Building barriers in an age of blurred lines #10: Data Security  New technologies creating new risks from freer flowing data.  High impact breaches (DNC, Yahoo, Dyn DNS, Oracle Micros) drive broad recognition of security needs.  Key trends include security analytics, rapid detection & in-process threat response.  Internet of Things opening a new front in this fight – the Dyn DDoS attach came from infected IoT devices. Corum Top Ten Disruptive Technology Trends 2017
  24. 24. 24 MARKET OVERVIEW VALUATIONS
  25. 25. 25 $3 Trillion $1 Trillion Cash Available for Acquisitions Strategic Tech Buyers Private Equity
  26. 26. 26 Corum Index Market Transactions 20162015 4307 3914 Mega Deals 59 80 Largest Deal $63B $39.2B Pipeline 2015 2016 Private Equity Deals 232 320 VC Backed Exits 657648 Attributes 20162015 34% Cross Border Transactions 35% Start-Up Acquisitions 12%13% 15 yrs14 yrs Average Life of Target 38% 36% 7.7% 9.1% 2.9% 38% 1.4% 7.1%
  27. 27. 27 24 21 20 15 14 13 12 12 11 11 10 10 10 10 Top Strategic Acquirers – 2016
  28. 28. 28 39 21 21 19 19 16 16 15 14 13 13 12 11 11 11 Top Private Equity Acquirers – 2016
  29. 29. 29 Vertical Application Software Market Public Valuation Multiples 1.50 x 2.00 x 2.50 x 3.00 x 3.50 x 4.00 x 4.50 x 5.00 x 6.00 x 8.00 x 10.00 x 12.00 x 14.00 x 16.00 x 18.00 x 20.00 x EV/SEV/EBITDA Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 EV/EBITDA 15.93 x 17.11 x 16.70 x 17.21 x 17.12 x 18.38 x 17.27 x 17.64 x 17.16 x 16.30 x 16.76 x 16.40 x 17.82 x EV/S 4.06 x 4.30 x 4.38 x 4.37 x 4.47 x 4.70 x 4.66 x 4.72 x 4.39 x 4.50 x 4.57 x 4.61 x 4.70 x
  30. 30. 30 Subsector Sales EBITDA Examples A/E/C 5.72x 22.35x Automotive 5.01x 20.05x Energy & Environment 4.78x 19.73x Financial Services 5.08x 16.28x Government 1.95x 13.06x Healthcare 3.90x 19.81x Real Estate 6.99x 23.93x Vertical Other 4.48x 13.70x Vertical Application Software Valuations
  31. 31. 31 Horizontal Application Software Market Public Valuation Multiples 1.50 x 2.00 x 2.50 x 3.00 x 3.50 x 4.00 x 6.00 x 8.00 x 10.00 x 12.00 x 14.00 x 16.00 x 18.00 x 20.00 x EV/SEV/EBITDA Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 EV/EBITDA 16.98 x 17.06 x 17.55 x 19.25 x 18.93 x 18.73 x 18.18 x 18.93 x 17.70 x 18.19 x 18.39 x 17.98 x 17.31 x EV/S 3.29 x 3.58 x 3.49 x 3.45 x 3.57 x 3.52 x 3.70 x 3.83 x 3.75 x 3.46 x 3.47 x 3.70 x 3.83 x
  32. 32. 32 Subsector Sales EBITDA Examples Business Intelligence 3.61x 18.85x Marketing & Ad Tech 1.84x 15.66x CRM 1.61x 45.82x ERP 4.21x 21.64x Human Resources 6.29x 31.66x SCM 5.68x 20.17x Payments 3.83x 15.93x Other 3.46x 16.62x Horizontal Application Software Valuations
  33. 33. 33 salesforce.comUltimate Software Concur EloquaOpenTable athenahealth Medidata ExactTargetLivePerson Kenexa Informatica DealerTrack Vocus LogMeIn Callidus Saba Websense Constant Contact 0.00 x 1.00 x 2.00 x 3.00 x 4.00 x 5.00 x 6.00 x 7.00 x 8.00 x 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% TTM Revenue Multiple Revenue Growth YoY High SaaS Growth Tracks Valuation
  34. 34. 34 Consumer Application Software Market Public Valuation Multiples 1.00 x 1.20 x 1.40 x 1.60 x 1.80 x 2.00 x 2.20 x 2.40 x 5.00 x 7.00 x 9.00 x 11.00 x 13.00 x 15.00 x 17.00 x 19.00 x EV/SEV/EBITDA Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 EV/EBITDA 13.73 x 12.98 x 13.60 x 14.42 x 16.03 x 15.89 x 15.68 x 16.21 x 17.32 x 17.80 x 14.73 x 14.82 x 15.82 x 17.52 x EV/S 1.83 x 1.88 x 1.83 x 1.76 x 2.05 x 1.96 x 2.15 x 2.09 x 2.31 x 2.16 x 2.12 x 2.04 x 2.27 x 2.18 x
  35. 35. 35 Subsector Sales EBITDA Examples Casual Gaming 3.47x 24.95x Core Gaming 2.44x 10.99x Other 1.65x N/A Consumer Application Software Valuations
  36. 36. 36 Public Valuation Multiples Internet Market 1.00 x 1.50 x 2.00 x 2.50 x 3.00 x 3.50 x 4.00 x 4.50 x 5.00 x 7.00 x 9.00 x 11.00 x 13.00 x 15.00 x 17.00 x 19.00 x 21.00 x 23.00 x 25.00 x EV/SEV/EBITDA Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 EV/EBITDA 21.93 x 23.52 x 23.08 x 22.58 x 23.49 x 23.13 x 20.76 x 22.21 x 20.40 x 19.07 x 18.57 x 20.12 x 21.80 x EV/S 3.76 x 3.75 x 3.60 x 3.50 x 3.71 x 4.00 x 4.54 x 4.76 x 4.32 x 4.11 x 3.81 x 4.16 x 4.14 x
  37. 37. 37 Subsector Sales EBITDA Examples Diversified Internet 5.29x 19.48x eCommerce 1.18x 30.12x Social Network 4.14x 19.24x Travel & Leisure 5.81x 21.11x Internet Valuations
  38. 38. 38 Infrastructure Software Market Public Valuation Multiples 2.00 x 2.20 x 2.40 x 2.60 x 2.80 x 3.00 x 3.20 x 3.40 x 3.60 x 3.80 x 6.00 x 8.00 x 10.00 x 12.00 x 14.00 x 16.00 x 18.00 x EV/EBITDA EV/S Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 EV/EBITDA 13.42 x 13.68 x 13.71 x 13.62 x 13.45 x 13.78 x 14.03 x 13.89 x 15.38 x 15.17 x 15.20 x 15.66 x 15.50 x EV/S 3.36 x 3.37 x 3.31 x 3.30 x 3.19 x 3.46 x 3.36 x 3.45 x 3.20 x 3.42 x 3.32 x 3.32 x 3.54 x
  39. 39. 39 Subsector Sales EBITDA Examples Endpoint 3.64x 16.35x IT Services Management 4.63x 29.59x Network Management 2.76x 9.27x Security 3.63x 18.42x Storage & Hosting 2.71x 12.89x Other 5.24x 13.50x Infrastructure Software Market
  40. 40. 40 IT Services – Developed Markets Public Valuation Multiples 0.40 x 0.60 x 0.80 x 1.00 x 1.20 x 1.40 x 1.60 x 5.00 x 6.00 x 7.00 x 8.00 x 9.00 x 10.00 x 11.00 x 12.00 x EV/SEV/EBITDA Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 EV/EBITDA 10.14 x 10.35 x 10.40 x 10.69 x 10.21 x 10.68 x 11.08 x 11.13 x 10.90 x 10.89 x 11.14 x 10.86 x 11.03 x EV/S 0.98 x 1.06 x 1.08 x 1.17 x 1.16 x 1.14 x 1.26 x 1.32 x 1.27 x 1.21 x 1.30 x 1.37 x 1.25 x
  41. 41. 41 Public Valuation Multiples IT Services – Emerging Markets 0.40 x 0.90 x 1.40 x 1.90 x 2.40 x 2.90 x 3.40 x 3.90 x 5.00 x 7.00 x 9.00 x 11.00 x 13.00 x 15.00 x 17.00 x 19.00 x EV/SEV/EBITDA Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 EV/EBITDA 13.94 x 14.76 x 14.80 x 17.40 x 15.24 x 15.48 x 15.12 x 14.69 x 12.93 x 13.01 x 13.52 x 13.38 x 14.25 x EV/S 2.98 x 3.14 x 3.15 x 3.13 x 3.12 x 3.43 x 3.09 x 3.15 x 2.91 x 2.77 x 2.70 x 2.70 x 2.95 x
  42. 42. 42 Subsector Sales EBITDA Examples Developed 1.25x 11.03x Emerging 2.95x 14.25x IT Services Valuations
  43. 43. 43 French Targets – Brief Overview Last 12 months  101 announced Tech Deals  Deal size ranges from €0.6M - €250M; Median is €61M  Revenue multiples range from 0.4x - 5.6x for disclosed amounts  17% of Targets had VC funding  Markets ranging from ERP & BI software, to Data management, to Internet content & commerce, to Mobility, to IT & Hosted Services.
  44. 44. 44 Largest Deal Enablon [France] acquired by Wolters Kluwer Legal & Regulatory Solutions [Netherlands] Risk & energy management software  May 2016  €250M Deal Value • 5.6x Sales  Top EHS provider Enablon will operate as a unit of Wolters Kluwer’s division adding domain knowledge for its customers.  The acquisition is considered as one of the largest European venture capital exits this year.
  45. 45. 45 Deal Spotlight Ketchapp Games [France] acquired by Ubisoft Entertainment SA [dba Ubisoft] [France] Mobile game development  September 2016  With the purchase of a small startup, Ubisoft furthers a strategy to become the biggest game publisher on the planet and tries to stay independent from Vivendi which has already approached them.  Ubisoft also bought Racing videogames software developer Ivory Tower in October 2015.
  46. 46. 46 Deal Spotlight OCTO Technology [France] acquired by Accenture Ltd. [Ireland] Technology consulting & SI  September 2016  €115M Deal Value  With presence in 5 countries OCTO got access to substantial resources by joining Accenture Digital while Accenture penetrated digital marketing sphere in French market to compete with giants: IBM, Dell and Deloitte.
  47. 47. 47 Deal Spotlight StickyADS.tv [France] acquired by FreeWheel Media Inc. [Comcast] [USA] Online video ad exchange  May 2016  €100.8M Deal Value  After StickyADS.tv joined FreeWheel’s “Preferred Partners” Initiative the partnership resulted into the deal and combined offering for a new ecosystem of TV publishers.
  48. 48. 48 Deal Spotlight News Republic Inc. [France] acquired by Cheetah Mobile Inc. [China] News aggregation mobile application  August 2016  €50.8M Deal Value (Reported)  News Republic will benefit of increasing traffic while Cheetah will be able to target a different set of users.  The transaction followed Cheetah’s purchase of French mobile advertising SaaS provider MobPartner for €55M back in March 2015.
  49. 49. 49 Deal Spotlight Talentsoft SA [France] acquired by Goldman Sachs [USA] Workforce management SaaS  October 2016  €25M Deal Value  Talentsoft teamed with Goldman Sachs continuing to successfully compete with Oracle and SAP in the talent management software market.  The transaction is a breakthrough on the global financial scene as Talentsoft is about to accelerate R&D and gain scale geographically (Europe).
  50. 50. 50 Deal Spotlight Norskale France SAS [France] acquired by Citrix Systems Inc. [USA] Desktop & application virtualization SaaS  September 2016  Driven by demand for business mobility by end- users Citrix filled the gap in the area by adding Norskale with its excellent reputation in User Environment Management industry.
  51. 51. 51 Deal Spotlight Nextperf [fka Next Performance] [France] acquired by Rakuten Marketing [Rakuten] [USA] AI-based marketing retargeting software  July 2016  With Nextperf’s programmatic technology being provided throughout Europe, Brazil, North America Rakuten will expand into its strategic market, Europe.
  52. 52. 52 Deal Spotlight AlephD SA [France] acquired by AOL Inc. [Verizon] [USA] Advertising pricing optimization SaaS  January 2016  AlephD’s yield management tools will be build into a unified publisher platform called ONE by AOL.
  53. 53. 53 1. Disruptive trends – Strategic imperative to buy 2. Cash – Strategic & financial buyers 3. Low cost debt for leveraged buyouts 4. Many new buyers (IPOs, non-tech) 5. Strong financial markets 5 Reasons Tech M&A Will Remain Strong
  54. 54. 54 1. Geopolitical Disruption 2. Currency Crisis 3. Inflation Increasing 4. Rising Interest Rates 5. Stock Market Adjustment 6. M&A Cycle Ends 6 Global M&A Concerns
  55. 55. 55 1. Consolidation of Market Segment 2. Game-changing Tech Paradigm Shift 3. Personal/Partner/Management Health 4. Conflict – Founders/Investors/Personal 5. Litigation/Negligence/Criminal Acts 6. Death or Incapacitation 6 Personal/Company M&A Concerns
  56. 56. 56 M&A Follows Cycles
  57. 57. 57 ACHIEVING AN OPTIMAL OUTCOME
  58. 58. 58 Buyer Seller The Inherent Problem in M&A Price Structure Liabilities Taxes Non Competes You will be diametrically opposed on everything……while negotiating with your future boss
  59. 59. 59  More time - regulatory environment (SOX)  More tasks than people realize  Busy buyers – reviewing 100s of opportunities  Tougher outside professionals  More complex due diligence required  Deal fatigue – Letter of Intent (LOI) to close The M&A Process is Tougher…
  60. 60. 60 Your Goal: an Optimal Outcome
  61. 61. 61 Valuation Maximization
  62. 62. 62 62 Creating the best transaction structure
  63. 63. 63 Minimizing personal liability/risk
  64. 64. 64 Reducing tax liability and holdbacks
  65. 65. 65 Structuring ideal employment/non-competes
  66. 66. 66 Providing for proper integration
  67. 67. 67 1 8 Stages for an Optimal Outcome IntegrationClosing Due Diligence NegotiationDiscoveryContactResearchPreparation
  68. 68. 68 1  Set tasks, timeline  Allocate staff resources  Conduct internal due diligence  Compile business/marketing plan  Ready financials/projections  Ready presentation materials  Begin collecting due diligence materials Stage 1: Preparation IntegrationClosing Due Diligence NegotiationDiscoveryContactResearchPreparation
  69. 69. 69 1 Stage 2: Research  Prepare buyers list (A&B level, financial, non tech)  Perform strategic analysis on each buyer  Prepare preliminary valuation  Determine proper contact (Execs, EA’s, advisors)  Outside advisor/board/investor influencers  Prepare position statement for each buyer IntegrationClosing Due Diligence NegotiationDiscoveryContactResearchPreparation
  70. 70. 70 1 Stage 3: Contact  Create introductory correspondence  Draft/customize executive summary  Execute NDAs and non-solicitations  Screen initial interest, valuation expectations  Establish log on all communications  Refine position/process based on feedback IntegrationClosing Due Diligence NegotiationDiscoveryContactResearchPreparation
  71. 71. 71 1 Stage 4: Discovery  Coordinate conference calls, site visits, and meetings  Establish technology review process  Prepare formal valuation report  Develop synergy and contribution analysis  Set up NDA with customers, contractors, etc.  Finish due diligence on buyer IntegrationClosing Due Diligence NegotiationDiscoveryContactResearchPreparation
  72. 72. 72 1 Stage 5: Negotiation  Organize and host final visits  Provide structure & valuation guidance  Create an auction environment  Negotiate with top bidder(s)  Sign Letter of Intent (L.O.I.)  Inform other bidders of No Shop IntegrationClosing Due Diligence NegotiationDiscoveryContactResearchPreparation
  73. 73. 73 1 Stage 6: Due Diligence  Verification of financial statements/projections  Determine if outside advisors/opinions needed  Establish confidential data room  Technical/Legal/Ownership due diligence  Written explanation of business model/methodologies  Complete definitive agreement/ attachments IntegrationClosing Due Diligence NegotiationDiscoveryContactResearchPreparation
  74. 74. 74 1 Stage 7: Closing  Final reps & warranties  Determine escrow hold-backs  Final opinion(s)  Sign contracts  Arrange payment/distribution  Regulatory filings  Disclosure schedules IntegrationClosing Due Diligence NegotiationDiscoveryContactResearchPreparation
  75. 75. 75 1 Stage 8: Integration  Advanced planning – during negotiation  Determine synergies  Best practices analysis  Interim transition team  Employee retention plan  Set up monitoring/reporting IntegrationClosing Due Diligence NegotiationDiscoveryContactResearchPreparation
  76. 76. 76 1 to 5+ offers1 to 5+ 20 to 200 global buyer candidates 20 to 200 3 to 8 qualified parties 5 to 15 NDAs Optimal Outcome by the numbers 700 to 1000 communications of various kinds 700 to 1000 10 to 30 expressions of interest 10 to 30 5 to 15 3 to 8
  77. 77. 77 With a Professional Global Search 9 – 12 months required to complete because of workload, Sarbanes-Oxley (SOX) and buyer due diligence (DD) considerations …you can generate interest very quickly, but buyers are constrained in how fast they can move.
  78. 78. 78 Resell/License Do you want to buy my company? J.V./Alliance M&A Uniquely Allows Entry to Top Execs CEO MKTFIN MANF DIVDIV DIVDIVDIV DIVDIVDIVDIV The only time you can go straight to the top
  79. 79. 79 5 Major Benefits of a Professional Process Model The preparation process will help forge a better business model for your firm 1 Research Your strategic position will improve from the research/ positioning process 2 Market Feedback Buyer contact will provide invaluable data/insights to help improve your value 3 Relation- ships Not everyone is a buyer, but you open many doors which will yield business 4 Exit The merger, asset sale, or financial recap of your company 5 79 Any of these benefits will justify the time and expense of a global partner search.
  80. 80. 80
  81. 81. 81 Sold again in 2 years for $100 million (6x)
  82. 82. 82 Sold for $56M (.6x) – missed the windowMarket consolidated—Company A bought Company B!
  83. 83. 83 AVOIDING THE DEAL DISASTERS
  84. 84. 84 Lessons From Experience This M&A process workload and pitfall analysis is based on data supplied by the World Technology Council (WTC), Corum’s 500-member advisory board of past sellers, industry experts, buyers and investors. Top 60 Documents and Projects Top 6 Value Destroyers Sellers’ Single Biggest Mistake Top 10 Deal Killers
  85. 85. 85 • Corporate Preparation • Business Plan • Marketing Plan • Org Chart • Staff Bios • NDA • Non Solicitation • Executive Summary • Introduction Letter • Financials (3 years) • Recast Financials • Financial Package • 3 Year Projections • Pipeline Analysis • Lead Process • Pricing Analysis • Market Research • Competitive Research • Buyer Research • Ind. Buyer Strategy Top 60 Documents & Projects (1-20) Items in RED require professional skills, confidential M&A data, inside buyer knowledge, extensive transaction experience, or outside advisors
  86. 86. 86 • Corporate Presentation • Comparable Transactions • Industry Comps • DCF Analysis • Replacement Cost • Terminal Value • Valuation Report • All Agreements • All Litigation – Threats • Shareholder Qualification • HR Needs • Audit • Activity Log • Terms Sheet(s) • Synergy Analysis • Dilution Analysis • Tax Analysis • Taxable Assets • Negotiation • LOI Top 60 Documents & Projects (21-40) Items in RED require professional skills, confidential M&A data, inside buyer knowledge, extensive transaction experience, or outside advisors
  87. 87. 87 • Stand Still Prep. • Outside Opinions • DD Checklist • DD Timeline • Merger Agreement • Asset Schedule • Fairness Opinion • Employ. Agreement • Non Competes • Patent Analysis • Customer Overview • Client Sign-off • Bulk Sale • Sovereign Approval • Proxies • Security Agreements • Registration • Shareholder Exp. Distr. • Announcements • Integration Process Top 60 Documents & Projects (41-60) Items in RED require professional skills, confidential M&A data, inside buyer knowledge, extensive transaction experience, or outside advisors
  88. 88. 88 1. Confidentiality—internal/external 2. Theft of technology 3. Loss of staff (non-solicitation) 4. Wear on CEO/management 5. Business drop-off—lack of focus 6. Going to market too late Top 6 Value Destroyers
  89. 89. 89 They are trying to lock you up Often demand exclusive negotiations Don’t want you talking to others Want to pay less than true value Remember your fiduciary obligation! Seller’s biggest single mistake… …dealing with only one buyer
  90. 90. 90 Top 10 Deal Killers 1. Dealing with only one buyer 2. Misalignment: shareholders/empl/mgmt 3. Contact at the wrong level 4. Improper research of potential buyers 5. Misunderstanding buyer process/models
  91. 91. 91 Top 10 Deal Killers 6. Inability to portray value properly 7. Improper due diligence preparation 8. Not qualifying buyers properly 9. Not orchestrating all buyers properly 10.Ego – Greed – Arrogance
  92. 92. 92 THE MOST IMPORTANT TRANSACTION OF YOUR LIFE CLOSING THOUGHTS
  93. 93. 93 This seller is serious. Leverage using a Professional Intermediary I may not be the only bidder. Potential Acquirer Seller Intermediary Wonderful if I buy you, terrible if I don’t.
  94. 94. 94 The most in-depth buyer information in the world Optimal Outcome – The Corum Buyer Knowledgebase  Approx. $25M investment  Developed over 30 years  Nearly 16 million entries  Proprietary client activity reporting technology  Supplemented by every major research organization  Data updated with world’s largest educational program
  95. 95. 95 Corum Proprietary Buyer Knowledgebase – Advantages Helps to ensure that you get to the right people Insider strategic knowledge improves getting attention Proprietary knowledge of buyer valuation metrics Gives advanced notice of due diligence required Includes library of buyer contracts, NDAs, etc. Invaluable aid in negotiation process
  96. 96. 96 Tech M&A Guideline Percentages  Buyer solicitations that result in transaction  Average improvement from first offer with an auction process  How often another firm is willing to pay more than the initial bidder  Deals involving only one bidder that are suboptimal  Failure rate in “self-managed” tech M&A
  97. 97. 97 After the Deal – Celebration
  98. 98. 98 Contact Information Visit our website at: www.corumgroup.com Julius Telaranta, Vice President Berlin Office Email: juliust@corumgroup.com Mobile: + 49 172-971-9898 Office: +1 425-460-6250 Corum Group International S.à.r.l. Buechenstr. 9 8185 Winkel Switzerland +41 43 888 7590 Corum Group Ltd. 19805 North Creek Parkway Suite 300 Bothell, WA 98011 USA +1 425-455-8281

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