EMEA 2019 - Barcelona M&A ACTIVITY: WHAT YOU NEED TO KNOW - An - PowerPoint PPT Presentation

Presentation at Canalys EMEA 2019 - Barcelona “M&A ACTIVITY: WHAT YOU NEED TO KNOW - An Insight into the Mergers and Acquisitions Activities of Technology Industries " Pradip Somaia, Partner Regent Assay Limited October 2019

Regent Assay Profile

3 Regent Assay Profile 30 Years of Service to the World’s TMT Industries Disposals Fundraising 2 − Company sale and divestment − Financing and Fundraising for lead advisory growth − Acquisition funding − Valuation − Negotiation − Recapitalisations and liquidity − Deal Structuring 1 MBO/MBI Acquisitions 3 − Vendor assistance − Buyer positioning − Management team assistance − Financial Modelling − Raising funds required to − Due Diligence support transaction − Cultural fit and commercial review 4

4 Sample of our TMT Sector Clients

Acquisition Trends

6 European Technology M&A Transactions 4000 IT Services 3500 9% 9% 9% 9% 8% Software 7% 7% 6% 6% 7% 7% 3000 IT Distribution 5% 6% 4% 6% 7% 7% Computer Hardware 8% 24% 25% 5% Number of transactions 5% 2500 29% 29% 28% 6% Comms Services 7% 30% 30% 1% 31% 1% 28% Comms Equipment 5% 5% 2000 30% 1% 1% 3% 1% 2% 30% 5% 5% 7% 4% Content & Media 1% 4% 2% 1% 3% 3% 6% 1% 4% 6% 8% 2% 5% 5% 6% 1500 4% Applied Technology 5% 2% 4% 8% 4% 5% 18% 20% 6% 8% 7% 5% 6% 15% 7% Internet Services 4% 16% 15% 7% 7% 14% 1000 15% 14% 13% 14% 11% 500 29% 27% 27% 26% 26% 26% 24% 24% 25% 26% 25% 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Source: Regent Assay

7 European Technology M&A and IPO Trends Number of Transactions in Europe - Quarterly Trend Acquisitions IPOs 2011 2012 2013 2014 2015 2016 2017 2018 2019 1200 45 40 1000 35 800 30 25 600 20 400 15 10 200 5 0 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Number of Acquisitions Number of IPOs Source: Regent Assay

8 Cross-Border Transactions In 2018, 47% of European transactions were cross-border Europe buying Europe buying in the in the US: 253 rest of the world: 113 The US buying The rest of the world in Europe: 434 buying in Europe: 148 Intra-European transactions: 799 Domestic Only transactions: 1933 Source: Regent Assay

9 Buyer Activity by Country Trend Analysis by Country of Buying Company 250 UK & Ireland 200 France Number of Acquisitions North America Scandinavia 150 Germany Benelux E. Europe 100 Rest of World Greece, Turkey, Israel Italy 50 Spain & Portugal Austria & Switz - Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 Source: Regent Assay

10 Number of M&A Transactions in Europe - 2018 Source: Regent Assay

Valuation Trends

12 European Technology M&A Valuations Quarterly P/EBITDA & P/S Ratios of European Technology Acquisitions P/EBITDA P/S 12 4 3.5 10 3 8 2.5 6 2 1.5 4 1 2 0.5 0 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 14 15 16 17 18 19 Price to EBITDA Ratio (P/EBITDA) Price to Sales Ratio (P/S) Source: Regent Assay

Value Components

14 Valuation Regent Assay is equipped with probably the most extensive research capability in the TMT industry in Europe to be able to determine company valuations. We have been tracking all of the acquisition transactions in the sector for over 20 years and can draw on a large database of deals to identify the leading valuation parameters and the underlying trends. Any investor will be buying the future earning potential of its portfolio company. In this industry, five factors combine to represent that potential. 1. The prospective financial performance of the company 2. The strength and potential of the customer base 3. The capabilities of the management team 4. The quality and positioning of the company's products and services 5. The prevailing sentiment about the sector and its growth prospects

Value Enhancers Financial Enhancers Market Enhancers Profits Market Position Growth Intellectual Property Repeat Revenues Customer Relations Cash Generation Brand People Enhancers Employee Skills Management Page 15

16 Valuation Multiple and Key Valuation Drivers Valuation Multiple Every industry has a multiple – an industry norm – a benchmark from which to compare one company against another. There will be some companies that achieve higher multiples than others and some companies that are the best and worst performers. Therefore, if a business looks exactly the same as its competitors then both will get a similar multiple. Key Valuation Drivers The diagram opposite presents the key valuation drivers. If a business can demonstrate strength in a number of these areas than a greater multiple can be applied.

17 Valuation Case Study: SimCorp Acquisition of AIM Software GmbH Provides data management solutions to the buy-side community. AIM’s GAIN suite of business applications Transaction Highlights helps leading financial institutions aggregate, master Consideration: $67.8m USD and report on their market data. Industry: Vertical - FS TECHNOLOGY P/S Multiple: 3.9x Provides integrated, investment management Industry Avg: 2.23x solutions to financial services industry. Their software products support the entire investment value chain. Transaction Details Valuation Drivers • Following the acquisition, AIM software will be Strengthen market share - Market-leading AIM product suite 1 will help increase portfolio of products as data management fully integrated into SimCorp. becomes a growing area of importance to buy-side firms. • AIM Software’s product GAIN will be renamed Customer retention – Acquisition allows SimCorp to offer an SimCorp Gain and become a core component 2 even stronger value proposition to its existing clients by adding of SimCorp’s future data management new capabilities. offering. Synergies – Cross-selling synergies from complimentary • Revenue expected to increase by 3 products and shared target client base. Cost synergies expected approximately 2% from combining two office locations.

18 The Valuation Ramp Price to historic EBITDA ratio Example Sectors Value Criteria Market Dominance SaaS 11 High Growth Software Products Long Term Contracts Hosting/Data Centres 10 Unique IPR Managed Services Strong Recurring Revenue Information Services 9 Scalability Cloud Integration 8 Vertical Solutions Outsourcing 7 Systems Integration One-off Contracts IT/Telco Services 6 Consolidating Market Business Services Few Barriers to Entry Distributors 5 Product Sales Resellers

19 Technology Valuations in 2018 Median Valuations Internet Services Media & Content Communications Services Communications Equipment Embedded Technology Systems & Components Distribution Channel Software & Services 0 0.2 0.4 0.6 0.8 1 1.2 1.4 1.6 1.8 2 2.2 2.4 Source: Regent Assay Price to Sales Ratio

20 Technology Valuations in 2018 Median Valuations Internet Services Media & Content Communications Services Communications Equipment Embedded Technology Systems & Components Distribution Channel Software & Services 0 2 4 6 8 10 12 14 16 18 Source: Regent Assay Price to EBITDA Ratio

21 Selected Recent Transaction History HAS DIVESTED ITS HAS DIVESTED ITS SUBSIDIARY SUBSIDIARY HAS BEEN ACQUIRED BY HAS BEEN ACQUIRED BY HAS BEEN ACQUIRED BY HAS RECEIVED FUNDING HAS BEEN ACQUIRED BY FROM TO TO PA Group’s divisions: HAS DIVESTED ITS SUBSIDIARY HAS BEEN ACQUIRED BY HAS ACQUIRED HAS BEEN ACQUIRED BY HAS BEEN ACQUIRED BY HAS DIVESTED ITS UK TAX SYSTEMS PLC FORECAST OPERATIONS MANAGED BY TO TO HAS BEEN ACQUIRED BY

Summary IPOs remain volatile • Institutions hold all the aces • Very expensive to test the process Refinancing remains a viable option • Private equity firms remain cash rich • Opportunities to select the appropriate partner Numbers of Acquisitions are high and steady • Buyers are looking at their development options • Plenty of corporate cash available • Valuations are at their long-term norm

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