SCM & Logistics Technology M&A
•Download as PPTX, PDF•
2 likes•829 views
Supply Chain Management and Logistics technologies prove to be key weapons in the battle of retailers against Amazon and other e-commerce giants. With tools that facilitate ease of supplier relationships, forecasting, improved business processes and integration, SCM and Logistics software providers deliver value to their customers and are rewarded with growth outpacing the rest of the software sector, with valuations nearly 7x revenue. Join WFS on October 1 as we examine how these trends impact M&A for SCM and Logistics technology providers. With the top 5 vendors accounting for less than half of the market, will we see a wave of consolidation for the smaller players and point solution providers? This complimentary webcast is for CEOs, investors, private equity firms and acquirers who want to enhance their strategic planning with a better understanding of the SCM and logistics landscape, and the current demand for supply chain and logistics technology in today’s M&A market.
Recommended
More Related Content
What's hot
What's hot (20)
Viewers also liked
Viewers also liked (10)
Similar to SCM & Logistics Technology M&A
Similar to SCM & Logistics Technology M&A (20)
More from World Financial Symposiums
More from World Financial Symposiums (9)
Recently uploaded
Recently uploaded (20)
SCM & Logistics Technology M&A
- 2. World Financial Symposiums WFS is an international organization dedicated to educating technology leaders through monthly, Market Spotlight webcasts and day-long Growth and Exit Strategies for Software and IT Companies conferences. Upcoming Events: Growth and Exit Strategies for Software and IT Companies - New York, October 22, 2015 - London, December 5, 2015 The Nordic Report: Growth and Exits Among Scandinavian Tech Companies - Coming soon at www.thenordicreport.com www.wfs.com
- 3. Nat Burgess Nat joined Corum in 1996 and brings a diverse background in technology M&A and law. While with the Enforcement Division of the U.S. Securities and Exchange Commission, Nat helped identify and build cases against securities fraud schemes. With the Strategic Development Division of Morgan Stanley's M&A group, Nat worked on cross-border acquisitions of U.S. and European companies by Japanese firms, and on financings by large Japanese public companies. Nat moved to Morgan Stanley's Tokyo office, where he reported directly to the President of Morgan Stanley, Japan Ltd. and focused exclusively on cross-border M&A. After Morgan Stanley, Nat co-founded Postcard Software, a creator of advertiser-driven bilingual (English and Japanese) Internet content. At Activision, Nat led the company's on-line business development. Nat earned an undergraduate degree in Japanese literature from Yale College and a law degree from UCLA. While in law school, Nat wrote articles for the International Forum at Yale, Tokyo Journal. President
- 4. Agenda • Introduction • SCM & Logistics Technology M&A Report • Buyer Interviews • Matt Grabow, Director, Corporate Development M&A – Infor • Ed Gardner, EVP, Corporate Development – Descartes • Q&A
- 5. Yasmin Khodamoradi Yasmin joined Corum Group in 2015 as a research analyst. Previously she worked as a finance and operations coordinator at a financial technology startup and provided writing services to an institutional investment advisory firm. Yasmin graduated from the Foster School of Business at the University of Washington, specializing in Finance and International Business. Research Analyst
- 6. SCM Public Company Multiples 1.50 x 2.50 x 3.50 x 4.50 x 5.50 x 6.50 x 7.50 x 8.50 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 22.00 x 24.00 x 26.00 x EV/SEV/EBITDA Sep-14 Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 EV/EBITDA 19.81 x 20.53 x 22.05 x 20.66 x 23.63 x 22.98 x 20.61 x 20.51 x 20.10 x 21.45 x 23.85 x 24.68 x 25.01 x EV/S 5.69 x 6.14 x 6.49 x 6.24 x 6.86 x 7.27 x 7.38 x 6.95 x 6.92 x 7.02 x 7.49 x 7.01 x 7.22 x Source: Capital IQ
- 7. SCM M&A Activity (2012-2015) 0 5 10 15 20 25 30 35 40 0 1 2 3 4 5 6 7 H1 H2 H1 H2 H1 H2 H1 2012 2012 2013 2013 2014 2014 2015 Total Disclosed Deal Value ($B) Total Deal Count Source: Capital IQ & 451 Research
- 8. Geographic Distribution of Sellers 2014 Europe United States and Canada Africa / Middle East Asia / Pacific Latin America and Caribbean 2015 Europe United States and Canada Africa / Middle East Asia / Pacific Latin America and Caribbean Source: Capital IQ & 451 Research
- 9. Number of Deals by Transaction Size 0 2 4 6 8 10 12 14 <$10M $10-50M $50-100M $100-500M $500M-$1B $1B+ 2012 2013 2014 2015 (thru. Q3) Source: Capital IQ & 451 Research
- 10. Top Buyers by Deal Value (2015 Q1-Q3) Millions Source: Capital IQ & 451 Research 0 100 200 300 400 500 600 700 800 Infor Pitney Bowes Insight Venture Partners Stamps.com
- 11. Sold to Target: GT Nexus [USA] Acquirer: Infor [USA] Transaction value: $675M ‒ Cloud-based supply chain management software for manufacturers and retailers ‒ Accelerates Infor’s shift to the cloud and helps strengthen their position as the retail industry moves toward contract-based manufacturing
- 12. Sold to Target: Borderfree [USA] Acquirer: Pitney Bowes Inc. [USA] Transaction value: $448M ‒ Cross-border e-commerce platform ‒ Complements and expands Pitney Bowe’s existing e-commerce capabilities and helps reduce complexity of cross-border ecommerce
- 13. 0 2 4 6 8 10 12 Descartes Systems Group Trimble Navigation Perfect Commerce Accenture Top Buyers by Deal Count (2012-2015 YTD) Source: Capital IQ & 451 Research
- 14. Sold to Target: BearWare [USA] Acquirer: Descartes [Canada] Transaction value: $11.2M ‒ Mobile tracking system to enable better collaboration between retailers and logistics service providers ‒ Complements Descartes’ Airclic product, a cloud-based mobile automation solution Source: Capital IQ & 451 Research
- 15. Sold to Target: Trimble [USA] Acquirer: Fifth Element Oy [Finland] ‒ Forestry and transportation logistics SaaS ‒ Enhances capabilities of Trimble’s Connected Forest and expands forestry presence in Northern Europe. Source: Capital IQ & 451 Research
- 16. Sold to Target: HubWoo [France] Acquirer: Perfect Commerce [USA] Transaction value: $30M ‒ E-procurement and SCM SaaS ‒ Extends suite of procurement and sourcing solutions in new vertical and geographic markets Source: Capital IQ & 451 Research
- 17. Sold to Target: Accenture [USA] Acquirer: Gapso [Brazil] ‒ Brazilian SCM analytics software ‒ Extends the reach of Accenture Analytics in the Brazilian natural resources and agribusiness sectors Source: Capital IQ & 451 Research
- 18. Sold to Target: SeeControl [USA] Acquirer: Autodesk [USA] ‒ Enterprise Internet of Things platform ‒ Should enhance capabilities of Autodesk PLM360 suite Sold to Target: TierConnect [USA] Acquirer: Mojix Inc. [USA] ‒ SCM RFID tracking systems ‒ Adds expertise in big data and bridges gap between its RFID platform and IoT Source: Capital IQ & 451 Research
- 19. SCM M&A Revenue Multiples 0 2 4 6 8 10 12 <2.5 x 2.5-4 x >4 x Frequency EV/S Multiples Commodity Commercial Execution Breakout Commodity: • Niche & Regional Players • Generally less than $10M in TTM revenue Commercial Execution: • Purchased for scale • SaaS income, highly recurring revenues • Generally $20-100M TTM revenue Breakout: • No disclosed transactions in this range since 2013 • SAP/Ariba megadeal falls into this category Source: Capital IQ & 451 Research
- 20. Matt Grabow Matt Grabow leads the M&A group at Infor, including transaction execution and integration of acquired assets. Matt joined Infor in 2008, and previously as an M&A and research associate at Piper Jaffray. He holds an MBA from the University of St. Thomas, and a degree in Economics from Gustavus Adolphus. Director Corporate Development M&A
- 21. Infor – History Small-time ERP grows out of the four walls of manufacting and moves into retail with the assistance of acquisitions like Lawson and GT Nexus.
- 22. Infor – Representative Deals 2002-2015 GT Nexus Inc. Single Source Systems SSA Global Technologies, Inc. MAPICS, Inc. Saleslogix assets ENXSuite (product line) Systems Union Group plc Mercia Software GRASP Systems International, Inc. Approva Corporation IBS Espana S.L. Lilly Software Associates PeopleAnswers, Inc. Lawson Software, Inc. IBS Danmark A/S IncoDev Software- Entwicklung GmbH TDCI Ltd. Qurius NV IBS France Aperum CERTPOINT Systems Inc. Bridgelogix Datastream Systems Inc. NxTrend Technology, Inc. Orbis Global SoftBrands, Inc. Geac Computer Corporation Ltd Varial Software GmbH Group Laurier ShipLogix, Inc. Alpine Systems daly.commerce Easy RMS Hansen Information Technologies Formation Systems Infor Business Solutions AG RSVP Business Systems Quality Control Solution Workbrain Corporation Hallco 1390 Ltd. Future Three Software, Inc. Local.ly Extensity Inc. Intuita Holdings Ltd. Brain AG, Substantially All Assets
- 23. Infor – M&A Strategy • Gaps in product offerings • Deeper into verticals • Expand horizontal offerings
- 24. Infor – View of the Market • Mature market consolidation • SCM is the first of the edge apps (gives way to HCM and CRM) • Innovative companies in this space still exist
- 25. Infor – M&A desirables • Product fit? Filling a gap? • Different? Need it to keep up with competing products?
- 26. Infor – M&A Red Flags • Old technology/architecture • Bypass “nice to have” opportunities to focus on deals that give existing customers value
- 27. Ed Gardner Ed Gardner is the Executive Vice president of Corporate Development at Descartes Systems Group, Inc. He joined Descartes in 2003 where he first held a number of senior roles within our corporate finance organization. In his current role as Executive Vice President, Corporate Development, Mr. Gardner is responsible for the development and execution of our M&A strategy. Mr. Gardner's previous experience includes both practical logistics experience where he worked in a senior leadership position at a third party logistics provider (3PL) as well as deal execution and integration experience as part of Ernst & Young's Transaction Advisory Services practice in London, England. Executive Vice President Corporate Development
- 28. Descartes – What do we do? Global Logistics Network • 200,000 trading partners • lots of documents, people, processes, assets, parties, countries, etc involved in shipment • Connect Automate Value Added Applications
- 29. Descartes – SCM & Logistics Deals 2012-2015 • Bearwear • MK Data Services LLC • Pentant Limited • e-customs Inc. • Airclic • CUSTOMS Info • Computer Management USA • Impatex Freight Software Ltd • KSD Software Norway AS • Integrated Export Systems • Infodis B.V.
- 30. Descartes - M&A key driving factors • Omni Channel retail influence on customer expectations • The “Amazon effect” • Mobility • Collecting real-time data for use in the field as well as to communicate with customers • Last mile and customer experience
- 31. Descartes - M&A key driving factors Trade Data Content to differentiate “the network” Examples: Customs info MK Data
- 32. Descartes - M&A Red Flags • Adjusted EBITDA and cashflow ratio with high fluctuation • Descartes is proud of its slow and steady 15%/year growth • Skewed EBITDA
- 33. Descartes - M&A Financial Metrics • Recurring revenue trends • EBITDA Margin • Combined company revenue • Making Money Day 1 • Financial, strategic and cultural fit
- 34. Descartes – M&A desirables • Network and connections • New community? • Vertical reach? • Functionality? • Geographic • Cross-border activity will continue
- 35. Nat Burgess Nat joined Corum in 1996 and brings a diverse background in technology M&A and law. While with the Enforcement Division of the U.S. Securities and Exchange Commission, Nat helped identify and build cases against securities fraud schemes. With the Strategic Development Division of Morgan Stanley's M&A group, Nat worked on cross-border acquisitions of U.S. and European companies by Japanese firms, and on financings by large Japanese public companies. Nat moved to Morgan Stanley's Tokyo office, where he reported directly to the President of Morgan Stanley, Japan Ltd. and focused exclusively on cross-border M&A. After Morgan Stanley, Nat co-founded Postcard Software, a creator of advertiser-driven bilingual (English and Japanese) Internet content. At Activision, Nat led the company's on-line business development. Nat earned an undergraduate degree in Japanese literature from Yale College and a law degree from UCLA. While in law school, Nat wrote articles for the International Forum at Yale, Tokyo Journal. President
- 36. Attributes of a Valuable SCM Acquisition 1. Build to Scale 2. Focus on Recurring Revenue 3. Build for Profitability 4. Be Different 5. Global Exchange of Data
- 37. Contact Us For further information or copies of today’s presentation: Visit www.wfs.com -or- Email nburgess@corumgroup.com
Editor's Notes
- Looking at public markets, valuations for SCM providers have remained fairly steady around 6 to 7 times revenue while EBITDA multiples have risen incrementally since May to reach their highest point in twelve months. These high multiples reflect a concentration of high SaaS revenue and fast growth companies in this peer group. When controlling for these factors, sales multiples are actually closer to 4 times sales.
- At first glance, it may look like deal value in the first half of 2015 is on a downswing, however, the first and second halves of 2012 included a couple deals worth over 4 billion and 2 billion respectively. With that in mind, it’s important to note that total deal value in the first half of 2015 was higher than the first halves of 2013 and 2014 combined- and coupled with a high deal count, it is safe to say that there is plenty of M&A opportunity yet to be had for SCM and logistics providers of all sizes.
- As the North American market becomes increasingly consolidated, buyers have been looking to the fragmented SCM markets abroad for further growth. In just one year, the amount of North American targets has fallen from about 75% of SCM deals to around 50. Europe has seen the most growth, followed by Latin America, Africa and the Middle East, while the number of Asia/Pacific targets has declined slightly.
- Looking at the first three quarters of 2015 compared to previous full years, we have seen quite a few changes. Deals were down in the sub 10 million dollar range in 2015, though it’s important to note that the proportion of disclosed deal values for this year has gone down significantly as well. Midmarket deals from 10-50 million seem to be on par with 2013 levels, and larger deals in the 100m to billion dollar range in 2015 were also on par with previous years. The fact that we have not seen any deals north of a billion since 2012 indicates that continued M&A activity may be concentrated in the middle market.
- The list of top SCM acquirers by deal value includes many new faces in 2015 including Insight Venture Partners with their acquisition of . Infor leads the pack…
- …with its $675M purchase of GT Nexus last month, which should help Infor realize its goal of creating a global commerce cloud and compete more effectively against legacy vendors like Oracle and SAP. We look forward to hearing more about this deal from Infor’s Matt Grabow later in the webcast.
- Another recent addition to the top spender list was Pitney Bowes, which expanded its cross-border e-commerce capabilities by acquiring its long-time partner Borderfree for nearly half a billion dollars back in May.
- Looking at top buyers by deal count over the past 4 years, Descartes is the clear leader, with 11 acquisitions in that period. Trimble comes in at a distant second with 4 acquisitions, while Perfect Commerce and Accenture each picked up 3.
- Descartes most recently bulked up its logistics offerings with its acquisition of carton tracking platform BearWare for just over $11M, complementing its 2014 purchase of SCM SaaS provider Airclic. Descartes’ Ed Gardner will have more details on their M&A strategy shortly.
- Trimble picked up Finnish forestry and transportation logistics SaaS provider, Fifth Element, earlier this spring, which will expand Trimble’s presence in Northern Europe, one of the largest forestry regions globally.
- Another European deal by a top buyer was the acquisition of France-Based e-procurement and SCM SaaS provider HubWoo by Perfect Commerce for $30M. The combination of Hubwoo’s extensive business network and Perfect Commerce’s large independent supplier network should add value in the near-term.
- One of the more prominent emerging market deals this year was Accenture’s purchase of Gapso, a logistics specialist in the Brazilian natural resources and agribusiness sector. Brazil, which spends up to 15% of its GDP on logistics and transportation costs each year, is a significant market for Accenture- or any logistics provider for that matter.
- In the last year, we also saw a couple of SCM deals with a clear internet of things angle. In August Autodesk acquired SeeControl, with the goal of integrating SeeControl’s IoT platform into their PLM solutions for the manufacturing and building industries. We also saw Mojix acquire Tier Connect for its IoT platform, which complements their existing RFID infrastructure and continues their partnership providing IoT solutions to the oil and gas, retail and healthcare verticals.
- If we look for trends in valuations, there isn’t a set pattern for the distribution of enterprise-to-sales multiples, but there are certain factors that make higher multiples more likely. Many companies that sold for under 2.5 times sales generally had less than $10M in revenue, with a few exceptions. Companies in the middle range tended to have between $20M-$100M in TTM revenue, with many SaaS providers falling into this range. Transactions with sales multiples above 4 seem to be the outliers in the group- and it’s important to note that none of these occurred more recently than the end of 2013. So in sum, achieving highly recurring revenues, scale in emerging markets, or expertise in niche areas can make an SCM company very valuable to the right buyer.