In this Webinar, Tech M&A Expert Ed Bryant, President, and CEO of Sampford Advisors Shares: -What factors contribute to high valuations for technology companies -How technology companies can build value to prepare for a successful acquisition -Insight into today’s tech M&A activity and predictions to how long this robust market will last

1. Tech M&A: Unlocking Key Factors that
Influence Valuation
Presented by Ed Bryant, President and CEO of Sampford Advisors

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Meet the Presenter
● President and CEO of Sampford Advisors, an M&A
advisory firm for Canadian technology companies with
offices in Ottawa, ON and Austin, TX.
● 25 years of experience, including over 21 years in
investment banking with Deutsche Bank, Morgan
Stanley, and Sampford in Hong Kong, Singapore, and
New York, and now Canada.
● Raised in excess of $20 billion in equity and debt capital
and completed over $10 billion in M&A transactions.
Ed Bryant
President & CEO at Sampford Advisors

5. © 2021 All rights reserved
© 2021 All rights reserved
Tech M&A: Unlocking Key
Factors that Influence Valuation
Presented by Ed Bryant, President and CEO of Sampford Advisors
Tuesday, May 25, 2021

6. 6
• Tech-focused mergers and acquisitions advisory
• Founded in Canada, expanding in the U.S.
• Focused on medium-sized technology clients, with emphasis on software
• 40+ years of investment banking experience
‐ In major financial hubs of NewYork, London,Toronto, Hong Kong and Singapore
Sampford Advisors Overview

7. 7
Leading Mid-Market M&A Advisor to Canadian Tech Companies
4
4
4
4
5
5
6
9
10
19
Canadian Boutique 6
American Boutique 2
Big Four Accounting 1
American Boutique 1
Canadian Boutique 5
Canadian Boutique 4
Canadian Boutique 3
Canadian Boutique 2
Canadian Boutique 1
Sampford Advisors
Technology: 2017 – 21 YTD
1
1
1
2
2
2
2
3
3
11
Canadian Boutique 5
American Boutique 4
American Boutique 3
American Boutique 2
Canadian Boutique 4
Canadian Boutique 3
American Boutique 1
Canadian Boutique 2
Canadian Boutique 1
Sampford Advisors
Technology: 2020 – 21 YTD
Source: PitchBook, all transactions below US$75mm or with
undisclosed values from 1/1/2017 – 2/28/2021
• Since 2017 we
have
dominated
Canadian mid-
market tech
M&A
• Gap has
widened since
the pandemic

8. 8
Past & Current Clients
Recently Completed (Since July 2020) Pending
8
Sales of
technology
companies
16
3 Buyside
technology
mandates

9. Factors that InfluenceValuation

10. 10
Technology M&A Activity is Increasing
Source: PitchBook, all Canada and US Technology M&A
transactions, 01/01/14 – Present
$148.1
$176.7
$344.6
$210.7
$192.1
$296.2
$340.0
$531.4
2,021
2,272
2,202
2,313
2,527
2,368
2,246 2,558
2014 2015 2016 2017 2018 2019 2020 2021 YTD
Dollars invested ($bn) Annualized # of Transactions
• Technology M&A activity has
increased significantly
• Especially Dollars Invested –
driven by larger transactions
• Number of deals also
increasing after 2 year
decline
Technology M&A Transactions

11. 11
Software has been a big driver
Software as a % of Technology Transactions
Source: PitchBook, all Canada and US Software / SaaS M&A
transactions, 01/01/11 – Present
59.1% 59.2%
59.6%
63.0%
58.7%
63.9%
67.1%
67.6% 67.7%
66.1%
69.0%
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 YTD
• Software is increasingly
driving deal activity, up 10
percentage points in 10 years
• Lots of PE money chasing
software deals
• The growth of larger
software strategics is also
helping

12. 12
Large Deals driving Seller Expectations
Source: PitchBook, all Canada and US Software / SaaS M&A
transactions, 01/01/20 – Present
EV: $27,700mm
EV/Revenue: 33.2x
EV: $5,000mm
EV/Revenue: 10.2x
EV: $1,800mm
EV/Revenue:16.4x
EV: $1,380mm
EV/Revenue: 13.8x
EV: $715mm
EV/Revenue: 14.3x
EV: $16,000mm
EV/Revenue: 11.4x
EV: $2,250mm
EV/Revenue: 16.1x
EV: $1,600mm
EV/Revenue: 9.6x
EV: $1,200mm
EV/Revenue: 12.0x
EV: $555mm
EV/Revenue: 11.1x

13. 13
Technology Multiples vary Significantly by Sector
Revenue and EBITDA M&A Multiples by Sub-
Sector
Source: PitchBook, all Canada and US Technology M&A
transactions, 01/01/19 – Present
• IT Services and Hardware still
trades at a significant
discount to Software and
Semis
• Although multiples in those
sectors are rising
• Software EBITDA multiple is
deceptive as not many data
points
1.5x 1.3x
5.4x
4.2x
10.9x
9.4x
27.0x
14.3x
IT Services Technology Hardware & Equipment Semiconductors & Equipment Software & Internet
TEV/Revenue TEV/EBITDA

14. 14
Despite Headlines, Software Multiples have held Steady
14
Source: PitchBook, all Canada and US Software / SaaS M&A
transactions, 01/01/14 – Present
2.4x
1.9x
1.3x 1.3x
2.0x 1.9x
1.3x
1.8x
3.6x
3.9x
3.2x
2.6x
3.5x 3.4x 3.4x
4.2x
6.0x
5.7x
6.3x
4.4x
6.2x
6.9x
9.0x
9.4x
2014 2015 2016 2017 2018 2019 2020 2021 YTD
25th Percentile Median 75th Percentile
Revenue and EBITDA M&A Multiples by Sub-
Sector
• Not every software company
trades for >10x
• Median multiple has actually
been pretty steady in the mid
3s
• Spread between 25th and 75th
percentile continues to widen

15. 15
What Factors Influence Valuation?
• Size
• % Recurring revenue
• Growth
• Gross Margin profile
• Profitability
• Retention / Churn
• Addressable Market

16. 16
• Size has always been
important in driving
value
Size Is Increasingly Important…
2.5x
3.6x
4.9x
$1 - $10 $10 - $50 $50 - $100
Revenue (US$mm)
Proven product market
fit with growth potential
Source: PitchBook; March 2018 through March 2021
48.5%
discount

17. 17
But so does Recurring Revenue
SaaS Multiples
Software Multiples (Non-SaaS)
2.0x
2.9x
2.6x
3.3x
2.9x
2017 2018 2019 2020 2021 YTD
4.1x
4.7x
5.0x
4.2x
5.4x
2017 2018 2019 2020 2021 YTD
• Recurring revenue is a key focus of buyers these days

18. 18
Examples of Different Deal Values
Deal #1 Deal #2 Deal #3 Deal #4 Deal #5
Revenue $35mm $25mm $5mm $10mm $5mm
YoY Growth 20% 5% 25% 20% (5%)
EBITDA Margin 30% 15% 25% n/a n/a
Recurring Revenue as
a % of Total Revenue 80% 60% 55% 90% 90%
Multiple of Recurring
Revenue 6x 3x 10x 2x 3x
Commentary
Strong EBITDA margins
resulted in elevated
revenue multiple
Strong proprietary
software product but
large mix of services
and resale revenues
Industry tailwinds and
highly strategic
purchaser lifted
multiple
Strong growth but
small addressable
market
Highly strategic fit
resulted in healthy
multiple despite
declining growth

19. 19
Below
Average (#1)
Average (#2) Strong (#3)
World
Class (#4)
Scale
(LTM Revenue)
<$5mm $5 - $10mm $10-$25mm $25mm+
Growth
(LTM Revenue)
<10% 10-25% 25-50% 50%+
Recurring
Revenue (%)
<50% 50-75% 75-90% 90%+
EBITDA
Margin (%)
<10% 10-25% 25-40% 40%+
Monthly
Churn (%)
3%+ 2-3% 1-2% <1%
Market Size
/ TAM
<$500mm $500-$2bn $2bn-$3bn $3bn+
Typical LTM
Revenue Multiple
1.0x – 2.5x 2.5x – 5.0x 5.0x – 10.0x >10.0x
Important Factors for Software Companies

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Ed Bryant, Sampford Advisors
Phone: +1 (613) 591-1091 x101
ed.bryant@sampfordadvisors.com
www.sampfordadvisors.com