We have researched the M&A activity in the European and found that there is a growing number of active buyers. Similar to other sub sectors, Private Equity has found the software market as yet another market to consolidate. In the report we have identified a number consolidation platforms that are looking for add-on acquisitions. We also analyzed the most recent deals and finally we provide some insights in how these Private Equity deals are structured.

1. PE IN SOFTWARE: A EUROPEAN PERSPECTIVE
September 2017
Esteban Barnhardt
Analyst
+31 (0)73 – 623 87 74
esteban.barnhardt@capitalmind.com
Paris office
T: +33 1 48 24 63 00
F: +33 1 48 24 63 02
62 rue La Boétie
75008 Paris
France
Ron Belt
Managing Partner
+31 (0)73 – 623 87 74
ron.belt@capitalmind.com
’s–Hertogenbosch office
T: +31 (0)73 – 623 87 74
F: +31 (0)73 – 623 87 75
Reitscheweg 49
5232 BX ’s–Hertogenbosch
The Netherlands

2. Strictly private and confidential
Strong growth potential in the software market makes it a highly attractive market for Private Equity
Capitalmind PE in software presentation | September 2017 | page 2
1. MAIN FINDINGS OF OUR RESEARCH
1.1 Main findings
Main findings
Increasing number of Private Equity investing in European Software companies1
A large proportion of the European Software deals with PE buyers are cross-border (2016: 34%)2
The proportion of US buyers has been growing significantly in the past years (CAGR2012-2016: 18%)3
The majority of European Software companies acquired by PE are active in B2B (Average2012-2016: 88%)4
Majority of the deals are within the ERP space (Average2012-2016: 22%)5
Transaction analysis shows high multiples being paid by Private Equity6
Top 5 target countries are: UK (28%), FR (18%), DE (15%), ES (9%) and the Benelux (6%)7
Several corporates have also spent much effort in building platforms in the Software space8

3. Strictly private and confidential Capitalmind PE in software presentation | September 2017 | page 3
2. TRANSACTION CHARACTERISTICS
2.1 M&A targets and Private Equity buyers
Overview of European Software targets acquired by PE per
country in the last 5 years*
*Excluding Add-ons
*Over 2.200 transactions
Key investors in the Software market
Overview of PE-buyer countries investing in European Software
companies in the last 5 years
Besides European PE’s, also intercontinental investors have commenced investing in European Software companies

4. Strictly private and confidential
The majority of the European transactions have been performed in Great Britain, France and Germany
Capitalmind PE in software presentation | September 2017 | page 4
▪ What can be seen when analysing the transactions performed by PE in European targets, is that
there are several countries which are highly interesting target countries. The following countries
represent close to 75% of the total number targets:
– Great Britain (25%)
– France (18%)
– Germany (15%)
– Spain (9%)
– Benelux (6%)
▪ When analysing the locations in which the buyers are headquartered, we initially see a similar picture
as the targets. Great Britain, France, Germany, Spain and the Benelux also represent the most
present buyers among the transactions analysed. However, what can further be seen is that the
United States also represents a significant proportion of the buyers (12%)
▪ As depicted in the graph below, the proportion of US buyers has been growing significantly in the
past years with a CAGR of 18%
2. TRANSACTION CHARACTERISTICS
2.2 Target and buyer characteristics
Private Equity buyers per country2012-2016
Proportion of Software targets per European country2012-2016
GB
22%
FR
17%
DE
12%
US
12%
ES
7%
Benelux
5%
SE
4%
IE
4%
FI
3%
DK
2%
Other
12%Growth in proportion of US buyers2012-2016
9% 10%
11%
12%
17%
2012 2013 2014 2015 2016
CAGR2012-2016: 18%
GB
25%
FR
18%
DE
15%
ES
9%
Benelux
6%
SE
6%
IE
5%
FI
4%
Other
12%
Geographic characteristics

5. Strictly private and confidential Capitalmind PE in software presentation | September 2017 | page 5
2. TRANSACTION CHARACTERISTICS
2.3 Transaction analysis
An analysis of recent European Software transactions performed by Private Equity companies was performed
When looking at transactions
performed by Private Equity in the
Software industry we see that the
transaction multiples are higher
than trading multiples, with a
median of 3,5x revenues. Adj.
median of the trading multiples is
3,2x revenues
The multiples paid do, however,
vary considerably based on,
amongst others, (1) EV (2) and
Target country
The higher multiples paid by
Private Equity, indicate the
willingness to pay a slight
premium to obtain a stake in
companies with strong growth
potential
Please note that a broader
geographical perspective was
taken due to a limited number of
recent transactions including
published valuations with
European targets and Private
Equity buyers.
Date Buyer Country Target Country Category EV EV / Revenues
20-12-2016 Moore Frères & Company US Opera TV NO Digital Marketing 110,2 3,6x
25-10-2016 GIMV BE MEGA International FR ERP 160,0 3,7x
19-09-2016 Vista Equity Partners US Infoblox US System and Network Management 1.118,1 3,5x
05-08-2016 LDC GB ByBox GB Supply Chain Management 123,9 1,4x
03-06-2016 Equistone Partners Europe GB ChartCo GB ERP 70,5 1,4x
02-06-2016 Thoma Bravo US Qlik Technologies US Business Intelligence Data 2.343,9 4,2x
31-05-2016 Accel-KKR US SciQuest US ERP 337,5 3,5x
01-04-2016 EQT Partners SE Sitecore DK Digital Marketing 1.000,0 5,0x
23-03-2016 Apax Partners France FR InfoVista FR System and Network Management 300,0 3,1x
15-02-2016 Insight Venture Partners US Diligent Corporation US CRM 522,0 5,9x
15-01-2016 Porthcawl US Jungle Disk US Security Software 24,7 2,3x
30-11-2015 EQT Partners SE Industrial and Financial SystemsSE ERP 939,3 2,6x
06-11-2015 Middelborg Invest SE Techstep NO Business Intelligence Data 0,3 0,1x
13-09-2015 Vista Equity Partners US Solera Holdings US ERP 5.543,3 5,5x
10-09-2015 Siris Capital Group US Premiere Global Services US CRM 868,0 1,7x
08-09-2015 MXC Capital GB Sagacity Solutions GB Business Intelligence Data 34,7 5,3x
30-04-2015 Francisco Partners Management US ClickSoftware Technologies IL ERP 335,5 3,0x
07-04-2015 Microsoft Corporation, Permira AdvisersCA Informatica US Business Intelligence Data 4.463,4 4,6x
Max 5,9x
Min 0,1x
Average 3,4x
Median 3,5x
Financial information (in EUR mln)Deal Information

6. Strictly private and confidential
Private Equity buyers often use a combination of leverage and shares
Offer a more attractive initial price but require reinvestment
2 - 3x EBIT
1 - 2x EBIT
1 - 2x EBIT
1 - 2x EBIT
▪ Paid in shares in TopCo, TopCo is
typically valued at a 20-30% premium
to the target
Target company
▪ Paid in vendor loan (provided by the
sellers), typical 5 year loan that is
subordinated
▪ Paid in cash using bank financing. The
buying company is using its own
earnings plus the earnings of the target
to cover the debt
▪ Paid in cash using newly issued
shares at the Topco. PE plus other
shareholders can participate in the
issue
1
2
▪ Private equity generally pay 6-7x this/last years EBIT and aim to sell at 10x+
▪ They usually use a combination of cash, vendor loans & equity to finance the
acquisitions
▪ Furthermore, they usually use leverage during deals to enhance returns
▪ Private Equity are usually able to secure a significant amount of bankfinancing
at the start
▪ To commence their activities in a given market, PE usually commence with a
‘local’ champion
Notes:
1. Vendor loans are often used as ‘escrow’ for reps & warranties
2. This usually consists of cash proceeds for the sellers
1
2
3. GENERAL PE ACQUISITION PROCESS
3.1 Common financial structure
Capitalmind PE in software presentation | September 2017 | page 6

7. Strictly private and confidential
Using a leveraged acquisition approach can result in significant money multiples
Although slightly less than the PE,
the former founders also profit
significantly from the vendor loans
Due to the leveraged structure, if the
company value doubles, the Private
Equity makes 4x their money
Typically pay 6-7x this/last years
EBIT and aim to sell at 10x+
Bank financing
PE Company
Vendor loan
Equity founders
Money Multiples
4x
~ 2 - 3x
=
=
Platform company
Bank financing
PE Company
Vendor loans
from acquired
founders
Equity from
acquired founders
Offer a more attractive initial price but require reinvestment
3. GENERAL PE ACQUISITION PROCESS
3.2 Resulting money multiples
Capitalmind PE in software presentation | September 2017 | page 7

8. Strictly private and confidential
Selection of PE involvement in European Software market
Capitalmind PE in software presentation | September 2017 | page 8
Private Equity
?
?
?
?
3. GENERAL PE ACQUISITION PROCESS
3.3 Buy & Build cases
Global locations Global locations

9. Strictly private and confidential
Our global reach and deal flow enable us to reach out and find the best business partner for you
Capitalmind PE in software presentation | September 2017 | page 9
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