Tech M&A Monthly: What Happens If You Don’t Sell?

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Tech M&A Monthly
What Happens if You Don't Sell
June 14, 2018

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Timothy joined Corum in 2011, and oversees the company’s marketing efforts globally from the headquarters near
Seattle. Chief among these is Corum's extensive conference schedule, “Selling Up, Selling Out,” the Merge Briefing,
the Tech M&A Monthly webcast and Corum's platinum sponsorship of the World Financial Symposiums' live events
and Market Spotlight series. Through these events, Corum Group serves as the world’s leading educator in
technology mergers and acquisitions.
Prior to joining Corum, Timothy served as marketing and product manager for GIS software startup Depiction, Inc.,
and previously worked in marketing for VizX Labs, a pioneering SaaS startup delivering DNA analysis tools. In
addition to marketing for software startups, Tim has worked for a US Senate campaign and taught science in Rio de
Janeiro.
Timothy graduated Magna Cum Laude from Bethel University in St. Paul, Minnesota, with degrees in History and
Biology.
Welcome
Timothy Goddard
EVP, Marketing
Corum Group Ltd.

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Agenda
 Welcome
 Event Report: E3
 June 2018 Research Report
 Special Report: What Happens When Deals Fail?
 Q&A

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The Highlights:
 Microsoft acquires 4 studios to fuel
“The Initiative”
 It’s time to be “all-in on esports”
 VR Hardware goes wireless
Event Report: E3
Jim Perkins
Executive Vice President

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Corum Research Report
Elon Gasper
EVP, Research
Patrick Cunningham
Analyst
Amber Stoner
Director of Research

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Public Markets
USA May 2018
S&P Tech 5%
NASDAQ 5%
Dow Jones 1%
Asia May 2018
HANG SENG -1%
SSE Composite 0%
Nikkei -1%
Europe May 2018
CAC 40 7%
DAX 4%
FTSE 100 6%
Jan Mar May Jul Sep Nov Jan Mar May Jun
2017 2018

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2018: The Peaks Keep Coming
S&P Tech
June
2018
NASDAQ
June
2018
Hang Seng
January
2018
Dow
January
2018
Nikkei
January
2018
SSE
Composite
June 2015
DAX
January
2018
FTSE
May
2018
CAC 40
May
2018

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Corum Index – Tech M&A
Market
Transactions
May 2018May 2017
311 285
Mega Deals
4 9
Largest Deal $2.5B $16B
Pipeline
Private Equity
Platform Deals
32 45
VC-Backed Exits
5150
Attributes
37%
Cross Border
Transactions 41%
Start-Up
Acquisitions 11%14%
17 yrs15 yrs
Average Life
of Target
May 2017 May 2018
May 2017 May 2018
0%
41%
125%
540%
8%
2%

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2018 Mega Deals – YTD
INTERNET
$43B
IT SERVICES
$12B
$6.8B
$5.1B
HORIZONTAL
$19B
INFRASTRUCTURE
$30B
VERTICAL
$21B$9.5B
CONSUMER
Financial Markets
Business
Healthcare IT assets
$4.7B
$1.1B
$3.7B
$17B
$3.4B
$5.4B
$1.2B
$16B
$1.9B
$2.1B
$5.4B
$1.4B
$1.2B
$1.2B
$1.1B
$3.0B
$2.1B
Digital Farming
division
$1.9B
$3.5B
$2.4B
$1.1B
$2.6B
$2.8B
$2.2B
$1.1B
$1.7B
$1.0B
$6.6B
$2.0B
$3.4B
$1.4B
$8.3B
$7.5B
$1.6B

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INTERNET
$43B
IT SERVICES
$12B
$6.8B
$5.1B
HORIZONTAL
$19B
INFRASTRUCTURE
$30B
VERTICAL
$21B$9.5B
CONSUMER
Financial Markets
Business
$4.7B
$1.1B
$3.7B
$17B
$3.4B
$5.4B
$1.2B
$16B
$1.9B
$2.1B
$5.4B
$1.4B
$1.2B
$1.2B
$1.1B
$3.0B
$2.1B
Digital Farming
division
$1.9B
$3.5B
$2.4B
$1.1B
$2.6B
$2.8B
$2.2B
$1.1B
$1.7B
$1.0B
$6.6B
$2.0B
$3.4B
$1.4B
$8.3B
$7.5B
$1.6B
Target: GitHub [USA]
Acquirer: Microsoft Corporation [USA]
Transaction Value: $7.5B
- World’s leading development platform for version control and source management
Sold to

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INTERNET
$43B
IT SERVICES
$12B
$6.8B
$5.1B
HORIZONTAL
$19B
INFRASTRUCTURE
$30B
VERTICAL
$21B$9.5B
CONSUMER
Financial Markets
Business
$4.7B
$1.1B
$3.7B
$17B
$3.4B
$5.4B
$1.2B
$16B
$1.9B
$2.1B
$5.4B
$1.4B
$1.2B
$1.2B
$1.1B
$3.0B
$2.1B
Digital Farming
division
$1.9B
$3.5B
$2.4B
$1.1B
$2.6B
$2.8B
$2.2B
$1.1B
$1.7B
$1.0B
$6.6B
$2.0B
$3.4B
$1.4B
$8.3B
$7.5B
$1.6B
Sold to
Target: BMC Software [USA]
Acquirer: KKR [USA]
Transaction Value: $8.3B (reported)
- Business service management software and SaaS

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Infrastructure Software Market
4.9x
17.1x
Public Valuation Multiples
EV
Sales
Corum Analysis
EV
EBITDA
Holding near peak Q1
levels…
…with EBITDA multiples
climbing back toward
January highs
Since Q1 May 2018

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Deal Spotlights: Endpoint Security
Sold to
Sold to
Target: Secdo [Israel]
Acquirer: Palo Alto Networks [USA]
Transaction Value: $100M (reported)
- Incident investigation and response platform
Target: Bradford Networks [USA]
Acquirer: Fortinet [USA]
Transaction Value: $17M
- Network access control solutions
Sold to
Target: LogRhythm [USA]
Acquirer: Thoma Bravo [USA]
- Security intelligence and analytics platform

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Deal Spotlights: Identity Verification
Sold to
Sold to
Target: iovation [USA]
Acquirer: TransUnion [USA]
- SaaS for fraud prevention and authentication of online businesses
Target: Confyrm [USA]
Acquirer: Capital One [USA]
- Online service for identity security alerts
Sold to
Target: Dealflo Limited [United Kingdom]
Acquirer: VASCO Data Security International [USA]
Transaction Value: $54.5M
- Agreement automation services to the financial sector

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Deal Spotlights: Network Monitoring
Sold to
Sold to
Target: Sumerian Europe [United Kingdom]
Acquirer: ITRS Group [TA Associates] [United Kingdom]
- Capacity planning software, transforming data into business-focused IT intelligence
- Complements ITRS’ monitoring tools for the financial industry
Target: Lumeta Corporation [USA]
Acquirer: FireMon [Insight Venture Partners] [USA]
- Network situational awareness visualization solutions
- Improves FireMon’s network policy management capabilities

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3.3x
16.9x
EV
Sales
Corum Analysis
EV
EBITDA
Consumer Software Market
Dropped to year lows
amid volatile sector
conditions…
…with EBITDA metrics
continuing to track
closely
Since Q1 May 2018

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Consumer Application Software Market
Deal Spotlight: Education
Sold to
Sold to
Target: ICS Learn [United Kingdom]
Acquirer: Primary Capital Partners [United Kingdom]
- Operates online learning courses
- Further optimizes ICS’ student-focused delivery model
Target: WriteLab [USA]
Acquirer: Chegg [USA]
- AI-driven grammar and style feedback platform
- Bolsters Chegg’s existing offerings in writing

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Deal Spotlights: Gaming
Sold to
Sold to
Target: Grinding Gear Games [New Zealand]
Acquirer: Tencent [China]
- Path of Exile, a competitive online action RPG
- Part of Tencent’s ongoing M&A strategy spanning hundreds of startups
Target: Gram Games [UK & Turkey]
Acquirer: Zynga [USA]
Transaction Value: $250M, 2-3x revenue (reported)
- iOS and Android mobile free-to-play games
- Adds to Zynga’s live services franchise expertise

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Deal Spotlight: Cloud Gaming
Sold to
Target: GameFly (cloud gaming technology and personnel of subsidiary)
Acquirer: Electronic Arts
- Tech assets behind GameFly's cloud streaming services
- Appeals to EA’s Origin Access and EA Access subscription services
- Increases EA's footprint in the streaming arena
Subsidiary Assets

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Deal Spotlight: Fantasy Sports
Sold to
Target: FanDuel [USA]
Acquirer: Paddy Power Betfair [Ireland]
- Online fantasy sports platform, former “unicorn”
- Builds on the acquisition of Draft, a US fantasy sports site, last year
- Just days after the U.S. Supreme court ruled in favor of sports betting

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IT Services Software Market
1.3x
12.2x
EV
Sales
Corum Analysis
EV
EBITDA
…with EBITDA value
metrics holding its
highs for ten months
Remaining just below
the multi-year highs
set last autumn…
Since Q1 May 2018

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IT Services – Developed Markets
Deal Spotlights: Microsoft SI
Target Acquirer
Target
Country
Acquirer
Country
Description
Canada USA
IT consulting in the Microsoft Datacenter and Azure
technologies
Switzerland Germany Microsoft Analytics and Cloud Solutions
United
Kingdom
United
Kingdom
Microsoft network solutions and Office 365 SI
Canada Canada
Microsoft Dynamics-based consulting and workflow
management support services
Canada
Channel
Islands
Microsoft CRM services

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Deal Spotlights: CRM SI
Sold to
Sold to
Target: RelationEdge [Tide Rock Ventures] [USA]
Acquirer: Rackspace US [Apollo Global] [USA]
- Salesforce-based business process engineering services
Target: PlanetPro [USA]
Acquirer: Kellton Tech Solutions [USA]
- Salesforce, analytics and custom program services

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Deal Spotlights: Security Services
Sold to
Sold to
Sold to
Target: Ntsika ICT Security [South Africa]
Acquirer: 4Sight Holdings [Mauritius]
- Multifactor authentication and early warning threat detection solutions
Target: Red Sky Solution [USA]
Acquirer: Presidio [USA]
Transaction Value: $40.8M
- Cybersecurity managed services
Target: Sage Data Security [Knob Hill Partners] [USA]
Acquirer: Tyler Technologies [USA]
- Threat detection, incident response support and compliance reporting services

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INTERNET
$43B
IT SERVICES
$12B
$6.8B
$5.1B
HORIZONTAL
$19B
INFRASTRUCTURE
$30B
VERTICAL
$21B$9.5B
CONSUMER
Financial Markets
Business
$4.7B
$1.1B
$3.7B
$17B
$3.4B
$5.4B
$1.2B
$16B
$1.9B
$2.1B
$5.4B
$1.4B
$1.2B
$1.2B
$1.1B
$3.0B
$2.1B
Digital Farming
division
$1.9B
$3.5B
$2.4B
$1.1B
$2.6B
$2.8B
$2.2B
$1.1B
$1.7B
$1.0B
$6.6B
$2.0B
$3.4B
$1.4B
$8.3B
$7.5B
$1.6B
Target: Adaptive Insights [USA]
Acquirer: Workday [USA]
Transaction Value: $1.6B
- Business planning cloud software
Sold to

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Corum Research Report
Elon Gasper
EVP, Research
Patrick Cunningham
Analyst
Amber Stoner
Director of Research

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What Happens
When Deals Fail?

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Prior to Corum, he founded or owned four software/IT/internet related firms, including the largest vertical market
software company in its time, AMI. This Inc. 500 firm, at its peak, was rated by IDC as the fastest growing computer-
related company in the world. He has also been at the vanguard of creative financing and, at one point, raised more
venture capital in a single closing than anyone in history without a lead investor. Through Corum, he has helped
execute over $1 billion in financings/recapitalizations with VC and PE firms in the U.S. and Europe.
As a recognized expert in software, he has served on numerous advisory boards including Bill Gates at Microsoft, IBM,
and Apple. He was founding investor in a number of firms, including Blue Coat, Bright Star and Sabaki, as well as
advisor to two governors, a senator, and the Canadian Government. He was a board member of the Washington
Technology Center, and founded the WTIA, the nation’s most active regional technology trade association.
Bruce Milne
CEO
Corum Group
What Happens When Deals Fail?

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What percentage of
self-managed M&A
transactions fail?
Source: Corum Group Research

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80%

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What percentage of
buyer outreach actually
results in a transaction?

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11%

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Entertainment software entrepreneur Jim Perkins is directly responsible for publishing some of the industry’s biggest
franchises, including Unreal, Duke Nukem, Wolfenstein, Doom, Hunting Unlimited, and Driver. A well-known senior
executive with a 22-year track record of publishing such bestselling hits, he founded and grew two highly successful
software publishing companies (FormGen and ARUSH) from start-ups to multi-million dollar enterprises.
His success and extensive experience in software production, marketing and public relations, packaging, online and
retail distribution and software M&A, uniquely qualify him as an expert in building value and realizing wealth. Jim joined
Corum Group, the world’s leading software M&A firm, with a specific focus on educating and helping prospective
sellers maximize the value of their digital media companies.
8 Reasons Deals Fail:
Geopolitical Changes
Jim Perkins
Executive Vice President
Corum Group

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Jaber has over 25 years of experience in the technology sector. He recently was CEO of an IT services firm that he
acquired, restructured and sold. Jaber has also an M&A advisory experience in the Software and IT Services sectors.
He has also invested time and funds into start-ups and young companies over the recent years in a diverse range of
sectors. Earlier in his career, he worked as equity analyst covering Software stocks for ABN-AMRO, and held senior
positions in global accounts management within SAP. Jaber started his career as management consultant with KPMG
Peat Marwick.
Jaber holds an MSc in Computer Sciences from ENSEEIHT and an MBA from INSEAD. He has broad international
experience and is fluent in English, French and Spanish.
Jaber Tannay
Vice President
Corum Group
Major Announcement from an Industry Heavyweight

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Steve joined Corum after 25 years of executive experience in various high-tech industries with both public and private
venture-backed startups. He has extensive global experience, opening international markets and growing sales from
zero to tens of million in revenue. He has been on the forefront of selling several companies and spinning off software
divisions, highlighted by the sale of GetFon to Alestra (AT&T Mexico). He is fluent in Spanish.
Steve was the founding CEO of Solera Networks, a real-time intrusion detection security company. He also co-founded
Auction Trust Network, an eCommerce company for online exchanges; which he sold to MediaForge (Rakuten
Marketing).
Steve is a board member of several software companies and has industry expertise in several areas: enterprise apps
and infrastructure, security, mobile and wireless, media & entertainment, supply chain, and embedded devices/systems
(IoT).
Steve Jones
Senior Vice President
Corum Group
Valuation Misalignment

36
Daniel Bernstein has worked in a number of roles over a twenty year career in high technology, most recently as the
founder and CEO of Sandlot Games Corporation, a leading casual games publisher and developer. Having sold
Sandlot Games to Digital Chocolate in 2011, Daniel started a small games studio and a consulting practice where he
advises larger companies such as RealNetworks and smaller high growth businesses on product development,
strategic initiatives, and M&A opportunities.
Prior to Sandlot Games, Daniel Bernstein held director level positions in companies such as Wild Tangent and
Monolith. An accomplished composer, Daniel also writes music for most of the games he works on.
Daniel holds a BS in Computer Science and an MA in Music Composition from the University of Virginia.
Daniel Bernstein
Corum Group
Buyer Wants Product or Customer Milestones

37
Jeff joined Corum in 2007 as Regional Director in Houston, Texas. He has over 30 years of entrepreneurial and
consulting experience building software and business services companies. He specializes in information technology for
engineering, scientific and business applications. He also understands the energy industry and multinational
operations.
Jeff helped form and was President of Severn Trent Worksuite, a FTSE 100 subsidiary, which became the leading
provider of enterprise and wireless workflow management software. Jeff was Vice President at IntelliGIS, a pioneer in
geographic information systems and wireless computing. Additionally, he launched Western Hemisphere operations for
Simon Petroleum Technology, a provider of petroleum reservoir management software, and was a member of the initial
management team at GeoQuest Systems, which became the leader in petroleum decision support systems.
Jeff began his career on the research staff at Columbia University and is a published author. He holds a degree in
Geology from the State University of NY.
Jeff Brown
Corum Group
Partner Conflict

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Julius joined Corum in 2016 and brings over 20 years of international entrepreneurial and business experience growing
software and business services companies.
Recently, Julius was CEO for Seasam Group, a digital marketing and IoT company that was a leader for intelligent
transportation systems and digital signage solutions. Prior to Seasam Group, Julius held director level positions in
Cisco leading the Nordic sales.
Julius has been involved with startups and young companies over the recent years in a diverse range of sectors as an
investor and a board member.
Julius holds a BBA in International Business and an MBA in Finance and Marketing from the Swedish School of
Economics.
Julius Telaranta
Vice President
Corum Group
Buyer Problems and Delays

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Prior to rejoining Corum, Bruce was the Founding President and CEO of Invest Ottawa for 5 years. During that time he
worked with over 1000 technology start-ups, raising over $300m in venture capital and debt, and created over 4,700
jobs. Prior to joining Invest Ottawa, he was Chairman of the Ottawa Software Cluster for six years and Vice President
in Canada for Corum Group.
Before that he held senior technology executive positions including six years as CEO with FreeBalance Inc. an
enterprise software company where he raised millions of dollars in venture capital and debt financing, and helped grow
the company by 300 per cent while moving into new international markets.
In 2005, he was voted Canada’s Private Sector Technology Leader by the Canadian Advanced Technology Alliance
and in 2016 he received Canadian Community Innovation Leadership Award by the same organization.
Lack of Preparation
Bruce Lazenby
Vice President
Corum Group

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Dave joined Corum in 2015 and has a diverse background in technology and life sciences. As an executive and
entrepreneur, Dave has been operating and investing in companies sitting at the convergence of commerce and
eCommerce as well as innovative life science businesses for over 25 years. Recently, Dave was CEO North America
for Gaxsys, an eCommerce and logistics company that is a leader in last mile logistics and fulfillment for eCommerce
marketplaces.
Dave has been on both sides of the mergers and acquisitions table, having sold a life science technology company,
facilitated sell side and buy side technology transactions and has also scaled multiple technology companies globally in
the eCommerce, life sciences and innovation intelligence markets.
Dave sits on boards of numerous public and private companies, including one that recently filed for an IPO.
Lack of Resources and Focus
David Levine
Corum Group

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Benefits of an M&A Process:
The Use of a Hiatus Period

42
M&A Process Benefits
Rob Schram
Senior VP
Rob Griggs
Vice President
Joel Espelien
Vice President
Jon Scott
Managing Director

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5 Major Benefits of a Professional Process
Model
The
preparation
process will
help forge a
better
business
model for
your firm
1
43

44
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
44

45
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
45

46
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
46

47
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
47

48
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
48
Any of these benefits will
justify the time and expense
of a global partner search.

50
Sold again 2 years later for over $100 million

51
Upcoming Conference Schedule
Selling Up Selling Out (SUSO) - Ready to go to market? During this half-day workshop, learn to prepare, position,
research, value, negotiate, and execute due diligence for maximum price and structure. This is the most attended Tech M&A
event ever – participants have done over $1 trillion in transaction value.
Merge Briefing (MB) - The Merge Briefing is a 90-minute executive briefing providing a current M&A market update (trends,
valuations, etc.), as well as a brief overview of the Tech M&A process: “8 Steps To An Optimal Outcome.”
www.CorumGroup.com/Events
Jun. 14: Cleveland – MB
Jun. 14: Edmonton – MB
Jun. 14: Lille – MB
Jun. 14: Ottawa – SUSO
Jun. 14: San Diego – SUSO
Jun. 19: Mexico City – MB
Jun. 19: Vienna – MB
Jun. 20: Monterrey – MB
Jun. 20: Zurich – MB
Jun. 21: Guadalajara – MB
Jun. 21: Lausanne – MB
Jun. 26: Antwerp – MB
Jun. 26: Seattle – MB
Jun. 28: Paris – MB
Jul. 10: Baltimore – MB
Jul. 17: San Jose – MB

Tech M&A Monthly: What Happens If You Don’t Sell?

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