corum group: paris presentation
TRANSCRIPT
MERGE BRIEFING
Paris MB: 28 March
2
Corum Speakers
Founder & owner of 4 software companies
Served on advisory boards for Microsoft, IBM,
DEC, Comdex and Apple, and as board
member/founding investor for Blue Coat,
Bright Star and Sabaki.
Founder of the WTIA, the nation’s most active
regional technology trade association.
Chosen as one of the 200 most influential
individuals in the IT community in Europe.
A graduate with Distinction from Harvard
Business School, written 3 books on business
models for success
Bruce Milne
CEO
20 years of international entrepreneurial and
business experience growing software and
business services companies
CEO of The Seasam Group, digital marketing
and IoT company for intelligent transportation
systems and digital signage solutions
Director level positions in Cisco leading
Nordic sales
Investor and board member of a number of
startups and young companies in a diverse
range of sectors
BBA in International Business and MBA in
Finance and Marketing, Swedish School of
Economics
Julius Telaranta
Vice President
3
Partial Co-Sponsor List
4
Global Presence – 60% of transactions cross border
5
Research
Education
Valuation
World Tech M&A Leaders…
6
Unsurpassed Buyer Access
Corum Buyer
Knowledgebase
Engagements
Internal Research
External Research
EducationOutside Events
Transactions
Outside Advisors (WTC)
7
Detailed, professional process
Team approach
Most senior dealmakers
World TechnologyCouncil
Sold more software-related firms than anyone
Achieving an Optimal Outcome
8
Hong Kong / Canada
Italy / Austria Ireland / Finland Australia / Australia
Japan / USDenmark / Finland
UK / China
US / Germany
Recent Corum Transactions
9
Agenda
Market Perspective
Top 10 Disruptive Technology Trends
M&A Activity & Valuations
Factors Driving Tech M&A
Achieving an Optimal Outcome
Avoiding Deal Disasters
Closing Thoughts
10
TOP TEN
DISRUPTIVE TRENDS
11
Leveraging Corum’s Unique Position
Top 10 Disruptive Technology Trends
1000s of Buyer
Interactions (Deals)
1000s of companies
(Education)
1000s of industry
transactions (Research)
12
Why worry about these trends?
1. Trends create change
2. Change drives strategic imperative
3. Strategic imperative drives acquisitions
4. Well-positioned companies get sold
Are you part of any of these trends?
13
Corum Top Ten Technology Trends 2017
AI Enablement IoTSoftware
Visual Intelligence
Systems
Digital Currency Flow
Data Science Monetization
Online Exchanges
Omni-channel Sales
Connected Health
Focused IT Services
DataSecurity
CORE
CONTOUR
14
Putting AI to work by means of big data and feedback
#1: AI Enablement
Nascent AIs and other machine learning platforms need data.
Need tasks that provide data, benefit from improving expertise, then provide feedback to improve the platform.
Business cases emerging rapidly across all sectors.
Significant stores of unique data can short-circuit “build vs. buy” debates in M&A.
Corum Top Ten Disruptive Technology Trends 2017
15
Emerging platforms, standards & analytics
#2: IoT Software
Internet of Things (IoT) growth brings us into its first full software cycle.
Each “Thing” needs platforms, communication, analytics, etc.
Competing platforms and associated ecosystems beginning to coalesce.
IoT software often, but not always, inextricably enmeshed with hardware.
Compatibility-driven, as in other cycles of disruption.
Corum Top Ten Disruptive Technology Trends 2017
16
Intersection of AI, computer vision & analytics
#3: Visual Intelligence Systems
Corum Top Ten Disruptive Technology Trends 2017
Evolution of Positioning Intelligence beyond GPS required computer vision.
Drones and self-driving cars driving advanced vision tech with even larger implications.
Retail, security, energy, agriculture, advertising are all being impacted.
Companies creating practical solutions with this tech—especially utilizing analytics—are in high demand.
17
Decreasing friction in payments & exchange
#4: Digital Currency Flow
Currency flow moving towards fewer barriers, reduced regulation and less friction on transactions globally.
Banks face competition from nimbler mobile and web point solutions.
Includes alternative currencies—from blockchain/bitcoin to in-game currencies to Starbucks payments.
Software & systems that speed or harness payment flow have significant potential.
Corum Top Ten Disruptive Technology Trends 2017
18
Maximizing return with real-time analytics
#5: Data Science Monetization
In a world of freemium, free-to-play & declining ad effectiveness, turning users or viewers into dollars is a premium capability.
Robust analytic tools are no longer optional, especially for consumer-facing companies.
Gaming companies are leading the way, deriving value from their analytic capabilities as much as entertainment.
Video ads are close behind with opportunities in e-commerce, brick & mortar, B2B and beyond.
Corum Top Ten Disruptive Technology Trends 2017
19
Connecting creators & consumers
#6: Online Exchanges
Uber & others recharging the concept that created online commerce, putting unused capacity to work.
Not just connecting buyers & sellers, but creating previously non-existent opportunities on both sides.
Disruptive opportunities include:
Personalization
Real-time commerce
Financial disintermediation
Corum Top Ten Disruptive Technology Trends 2017
20
Purchasing decisions anywhere, any platform
#7: Omni-Channel Sales
Consumer platforms & devices continually fragmenting.
Marketing keeping pace – next challenge is sales, both decision points and actual purchase.
Point at which money changes to product must be immediately with customer, moving closer by being on their favorite device.
Persuasion must move there as well, taking new forms as it does.
Consumer brands leading the way, but enterprise is not far off.
Corum Top Ten Disruptive Technology Trends 2017
21
Linking people to their health data & services
#8: Connected Health
Technological, regulatory and demographic changes converging to create significant opportunity.
Leveraging new tech: smartphones, trackers, connected medical devices, genomics, remote monitoring.
Improved self-care and remote care/diagnosis.
Makes healthcare more patient-centric by enabling healthcare consumerism.
Corum Top Ten Disruptive Technology Trends 2017
22
Differentiation drives new value in a sleepy sector
#9: Focused IT Services
New and more pervasive technologies creating new needs for maintenance, extension and utilization.
Teams that provide customer value around a specific technology, sector or problem are seeing increased value.
Buyers seeing more value in purpose-built IP emerging out of services firms.
Services on the edge of key trends seeing particular interest.
Corum Top Ten Disruptive Technology Trends 2017
23
Building barriers in an age of blurred lines
#10: Data Security
New technologies creating new risks from freer flowing data.
High impact breaches (DNC, Yahoo, Dyn DNS, Oracle Micros) drive broad recognition of security needs.
Key trends include security analytics, rapid detection & in-process threat response.
Internet of Things opening a new front in this fight – the Dyn DDoS attach came from infected IoT devices.
Corum Top Ten Disruptive Technology Trends 2017
24
MARKET OVERVIEW
VALUATIONS
25
$3
Trillion
$1
Trillion
Cash Available for Acquisitions
Strategic Tech Buyers
Private Equity
26
Corum Index
Market
Transactions
20162015
4307 3914
Mega Deals59 80
Largest Deal $63B $39.2B
Pipeline
2015 2016
Private Equity Deals232 320
VC Backed Exits657648
Attributes
20162015
34%Cross Border
Transactions 35%
Start-Up
Acquisitions 12%13%
15 yrs14 yrsAverage Life
of Target
38%
36%
7.7%
9.1%
2.9%
38%
1.4%
7.1%
27
24
2120
1514
1312 12
11 1110 10 10 10
Top Strategic Acquirers – 2016
28
39
21 2119 19
16 1615
1413 13
1211 11 11
Top Private Equity Acquirers – 2016
29
Vertical Application Software MarketPublic Valuation Multiples
1.50 x
2.00 x
2.50 x
3.00 x
3.50 x
4.00 x
4.50 x
5.00 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
EV/SEV/EBITDA
Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17
EV/EBITDA 15.93 x 17.11 x 16.70 x 17.21 x 17.12 x 18.38 x 17.27 x 17.64 x 17.16 x 16.30 x 16.76 x 16.40 x 17.82 x
EV/S 4.06 x 4.30 x 4.38 x 4.37 x 4.47 x 4.70 x 4.66 x 4.72 x 4.39 x 4.50 x 4.57 x 4.61 x 4.70 x
30
Subsector Sales EBITDA Examples
A/E/C 5.72x 22.35x
Automotive 5.01x 20.05x
Energy &
Environment4.78x 19.73x
Financial Services 5.08x 16.28x
Government 1.95x 13.06x
Healthcare 3.90x 19.81x
Real Estate 6.99x 23.93x
Vertical Other 4.48x 13.70x
Vertical Application Software Valuations
31
Horizontal Application Software MarketPublic Valuation Multiples
1.50 x
2.00 x
2.50 x
3.00 x
3.50 x
4.00 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
EV/SEV/EBITDA
Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17
EV/EBITDA 16.98 x 17.06 x 17.55 x 19.25 x 18.93 x 18.73 x 18.18 x 18.93 x 17.70 x 18.19 x 18.39 x 17.98 x 17.31 x
EV/S 3.29 x 3.58 x 3.49 x 3.45 x 3.57 x 3.52 x 3.70 x 3.83 x 3.75 x 3.46 x 3.47 x 3.70 x 3.83 x
32
Subsector Sales EBITDA Examples
Business
Intelligence3.61x 18.85x
Marketing &
Ad Tech1.84x 15.66x
CRM 1.61x 45.82x
ERP 4.21x 21.64x
Human Resources 6.29x 31.66x
SCM 5.68x 20.17x
Payments 3.83x 15.93x
Other 3.46x 16.62x
Horizontal Application Software Valuations
33
salesforce.comUltimate Software Concur
EloquaOpenTable
athenahealth
Medidata
ExactTargetLivePerson
Kenexa
Informatica
DealerTrack VocusLogMeIn
Callidus Saba
Websense Constant Contact
0.00 x
1.00 x
2.00 x
3.00 x
4.00 x
5.00 x
6.00 x
7.00 x
8.00 x
0% 5% 10% 15% 20% 25% 30% 35% 40% 45%
TTM Revenue Multiple
Revenue Growth YoY
High SaaS Growth Tracks Valuation
34
Consumer Application Software MarketPublic Valuation Multiples
1.00 x
1.20 x
1.40 x
1.60 x
1.80 x
2.00 x
2.20 x
2.40 x
5.00 x
7.00 x
9.00 x
11.00 x
13.00 x
15.00 x
17.00 x
19.00 x
EV/SEV/EBITDA
Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17
EV/EBITDA 13.73 x 12.98 x 13.60 x 14.42 x 16.03 x 15.89 x 15.68 x 16.21 x 17.32 x 17.80 x 14.73 x 14.82 x 15.82 x 17.52 x
EV/S 1.83 x 1.88 x 1.83 x 1.76 x 2.05 x 1.96 x 2.15 x 2.09 x 2.31 x 2.16 x 2.12 x 2.04 x 2.27 x 2.18 x
35
Subsector Sales EBITDA Examples
Casual Gaming 3.47x 24.95x
Core Gaming 2.44x 10.99x
Other 1.65x N/A
Consumer Application Software Valuations
36
Public Valuation Multiples
Internet Market
1.00 x
1.50 x
2.00 x
2.50 x
3.00 x
3.50 x
4.00 x
4.50 x
5.00 x
7.00 x
9.00 x
11.00 x
13.00 x
15.00 x
17.00 x
19.00 x
21.00 x
23.00 x
25.00 x
EV/SEV/EBITDA
Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17
EV/EBITDA 21.93 x 23.52 x 23.08 x 22.58 x 23.49 x 23.13 x 20.76 x 22.21 x 20.40 x 19.07 x 18.57 x 20.12 x 21.80 x
EV/S 3.76 x 3.75 x 3.60 x 3.50 x 3.71 x 4.00 x 4.54 x 4.76 x 4.32 x 4.11 x 3.81 x 4.16 x 4.14 x
37
Subsector Sales EBITDA Examples
Diversified
Internet5.29x 19.48x
eCommerce 1.18x 30.12x
Social Network 4.14x 19.24x
Travel & Leisure 5.81x 21.11x
Internet Valuations
38
Infrastructure Software Market
Public Valuation Multiples
2.00 x
2.20 x
2.40 x
2.60 x
2.80 x
3.00 x
3.20 x
3.40 x
3.60 x
3.80 x
6.00 x
8.00 x
10.00 x
12.00 x
14.00 x
16.00 x
18.00 x
EV/EBITDA EV/S
Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17
EV/EBITDA 13.42 x 13.68 x 13.71 x 13.62 x 13.45 x 13.78 x 14.03 x 13.89 x 15.38 x 15.17 x 15.20 x 15.66 x 15.50 x
EV/S 3.36 x 3.37 x 3.31 x 3.30 x 3.19 x 3.46 x 3.36 x 3.45 x 3.20 x 3.42 x 3.32 x 3.32 x 3.54 x
39
Subsector Sales EBITDA Examples
Endpoint 3.64x 16.35x
IT Services
Management4.63x 29.59x
Network
Management2.76x 9.27x
Security 3.63x 18.42x
Storage & Hosting 2.71x 12.89x
Other 5.24x 13.50x
Infrastructure Software Market
40
IT Services – Developed Markets
Public Valuation Multiples
0.40 x
0.60 x
0.80 x
1.00 x
1.20 x
1.40 x
1.60 x
5.00 x
6.00 x
7.00 x
8.00 x
9.00 x
10.00 x
11.00 x
12.00 x
EV/SEV/EBITDA
Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17
EV/EBITDA 10.14 x 10.35 x 10.40 x 10.69 x 10.21 x 10.68 x 11.08 x 11.13 x 10.90 x 10.89 x 11.14 x 10.86 x 11.03 x
EV/S 0.98 x 1.06 x 1.08 x 1.17 x 1.16 x 1.14 x 1.26 x 1.32 x 1.27 x 1.21 x 1.30 x 1.37 x 1.25 x
41
Public Valuation Multiples
IT Services – Emerging Markets
0.40 x
0.90 x
1.40 x
1.90 x
2.40 x
2.90 x
3.40 x
3.90 x
5.00 x
7.00 x
9.00 x
11.00 x
13.00 x
15.00 x
17.00 x
19.00 x
EV/SEV/EBITDA
Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17
EV/EBITDA 13.94 x 14.76 x 14.80 x 17.40 x 15.24 x 15.48 x 15.12 x 14.69 x 12.93 x 13.01 x 13.52 x 13.38 x 14.25 x
EV/S 2.98 x 3.14 x 3.15 x 3.13 x 3.12 x 3.43 x 3.09 x 3.15 x 2.91 x 2.77 x 2.70 x 2.70 x 2.95 x
42
Subsector Sales EBITDA Examples
Developed 1.25x 11.03x
Emerging 2.95x 14.25x
IT Services Valuations
43
French Targets – Brief Overview
Last 12 months
101 announced Tech Deals
Deal size ranges from €0.6M - €250M; Median is €61M
Revenue multiples range from 0.4x - 5.6x for disclosed amounts
17% of Targets had VC funding
Markets ranging from ERP & BI software, to Datamanagement, to Internet content & commerce,to Mobility, to IT & Hosted Services.
44
Largest Deal
Enablon [France] acquired by Wolters KluwerLegal & Regulatory Solutions [Netherlands]
Risk & energy management software
May 2016
€250M Deal Value
• 5.6x Sales
Top EHS provider Enablon will operate as a unit of Wolters Kluwer’s division adding domain knowledgefor its customers.
The acquisition is considered as one of the largest European venture capital exits this year.
45
Deal Spotlight
Ketchapp Games [France] acquired by UbisoftEntertainment SA [dba Ubisoft] [France]
Mobile game development
September 2016
With the purchase of a small startup, Ubisoftfurthers a strategy to become the biggest gamepublisher on the planet and tries to stayindependent from Vivendi which has alreadyapproached them.
Ubisoft also bought Racing videogames softwaredeveloper Ivory Tower in October 2015.
46
Deal Spotlight
OCTO Technology [France] acquired byAccenture Ltd. [Ireland]
Technology consulting & SI
September 2016
€115M Deal Value
With presence in 5 countries OCTO got access tosubstantial resources by joining Accenture Digitalwhile Accenture penetrated digital marketingsphere in French market to compete with giants:IBM, Dell and Deloitte.
47
Deal Spotlight
StickyADS.tv [France] acquired by FreeWheelMedia Inc. [Comcast] [USA]
Online video ad exchange
May 2016
€100.8M Deal Value
After StickyADS.tv joined FreeWheel’s “PreferredPartners” Initiative the partnership resulted into thedeal and combined offering for a new ecosystemof TV publishers.
48
Deal Spotlight
News Republic Inc. [France] acquired byCheetah Mobile Inc. [China]
News aggregation mobile application
August 2016
€50.8M Deal Value (Reported)
News Republic will benefit of increasing trafficwhile Cheetah will be able to target a different setof users.
The transaction followed Cheetah’s purchase ofFrench mobile advertising SaaS providerMobPartner for €55M back in March 2015.
49
Deal Spotlight
Talentsoft SA [France] acquired by GoldmanSachs [USA]
Workforce management SaaS
October 2016
€25M Deal Value
Talentsoft teamed with Goldman Sachs continuing tosuccessfully compete with Oracle and SAP in thetalent management software market.
The transaction is a breakthrough on the globalfinancial scene as Talentsoft is about to accelerateR&D and gain scale geographically (Europe).
of
50
Deal Spotlight
Norskale France SAS [France] acquired byCitrix Systems Inc. [USA]
Desktop & application virtualization SaaS
September 2016
Driven by demand for business mobility by end-users Citrix filled the gap in the area by addingNorskale with its excellent reputation in UserEnvironment Management industry.
51
Deal Spotlight
Nextperf [fka Next Performance] [France]acquired by Rakuten Marketing [Rakuten] [USA]
AI-based marketing retargeting software
July 2016
With Nextperf’s programmatic technology beingprovided throughout Europe, Brazil, North AmericaRakuten will expand into its strategic market,Europe.
52
Deal Spotlight
AlephD SA [France] acquired by AOL Inc.[Verizon] [USA]
Advertising pricing optimization SaaS
January 2016
AlephD’s yield management tools will be build intoa unified publisher platform called ONE by AOL.
53
1. Disruptive trends – Strategic imperative to buy
2. Cash – Strategic & financial buyers
3. Low cost debt for leveraged buyouts
4. Many new buyers (IPOs, non-tech)
5. Strong financial markets
5 Reasons Tech M&A Will Remain Strong
54
1. Geopolitical Disruption
2. Currency Crisis
3. Inflation Increasing
4. Rising Interest Rates
5. Stock Market Adjustment
6. M&A Cycle Ends
6 Global M&A Concerns
55
1. Consolidation of Market Segment
2. Game-changing Tech Paradigm Shift
3. Personal/Partner/Management Health
4. Conflict – Founders/Investors/Personal
5. Litigation/Negligence/Criminal Acts
6. Death or Incapacitation
6 Personal/Company M&A Concerns
56
M&A Follows Cycles
57
ACHIEVING AN
OPTIMAL OUTCOME
58
Buyer Seller
The Inherent Problem in M&A
Price
Structure
Liabilities
Taxes
Non Competes
You will be diametrically opposed on everything……while negotiating with your future boss
59
More time - regulatory environment (SOX)
More tasks than people realize
Busy buyers – reviewing 100s of opportunities
Tougher outside professionals
More complex due diligence required
Deal fatigue – Letter of Intent (LOI) to close
The M&A Process is Tougher…
60
Your Goal: an Optimal Outcome
61
Valuation
Maximization
6262
Creating the best transaction
structure
63
Minimizingpersonal liability/risk
64
Reducing taxliability and holdbacks
65
Structuring ideal
employment/non-competes
66
Providing for
proper integration
67
1
8 Stages for an
Optimal Outcome
IntegrationClosingDue
DiligenceNegotiationDiscoveryContactResearchPreparation
68
1
Set tasks, timeline
Allocate staff resources
Conduct internal due diligence
Compile business/marketing plan
Ready financials/projections
Ready presentation materials
Begin collecting due diligence materials
Stage 1: Preparation
IntegrationClosingDue
DiligenceNegotiationDiscoveryContactResearchPreparation
69
1
Stage 2: Research
Prepare buyers list (A&B level, financial, non tech)
Perform strategic analysis on each buyer
Prepare preliminary valuation
Determine proper contact (Execs, EA’s, advisors)
Outside advisor/board/investor influencers
Prepare position statement for each buyer
IntegrationClosingDue
DiligenceNegotiationDiscoveryContactResearchPreparation
70
1
Stage 3: Contact
Create introductory correspondence
Draft/customize executive summary
Execute NDAs and non-solicitations
Screen initial interest, valuation expectations
Establish log on all communications
Refine position/process based on feedback
IntegrationClosingDue
DiligenceNegotiationDiscoveryContactResearchPreparation
71
1
Stage 4: Discovery
Coordinate conference calls, site visits, and meetings
Establish technology review process
Prepare formal valuation report
Develop synergy and contribution analysis
Set up NDA with customers, contractors, etc.
Finish due diligence on buyer
IntegrationClosingDue
DiligenceNegotiationDiscoveryContactResearchPreparation
72
1
Stage 5: Negotiation
Organize and host final visits
Provide structure & valuation guidance
Create an auction environment
Negotiate with top bidder(s)
Sign Letter of Intent (L.O.I.)
Inform other bidders of No Shop
IntegrationClosingDue
DiligenceNegotiationDiscoveryContactResearchPreparation
73
1
Stage 6: Due Diligence
Verification of financial statements/projections
Determine if outside advisors/opinions needed
Establish confidential data room
Technical/Legal/Ownership due diligence
Written explanation of business model/methodologies
Complete definitive agreement/ attachments
IntegrationClosingDue
DiligenceNegotiationDiscoveryContactResearchPreparation
74
1
Stage 7: Closing
Final reps & warranties
Determine escrow hold-backs
Final opinion(s)
Sign contracts
Arrange payment/distribution
Regulatory filings
Disclosure schedules
IntegrationClosingDue
DiligenceNegotiationDiscoveryContactResearchPreparation
75
1
Stage 8: Integration
Advanced planning – during negotiation
Determine synergies
Best practices analysis
Interim transition team
Employee retention plan
Set up monitoring/reporting
IntegrationClosingDue
DiligenceNegotiationDiscoveryContactResearchPreparation
76
1 to 5+offers1 to 5+
20 to 200global buyer candidates20 to 200
3 to 8qualified parties
5 to 15NDAs
Optimal Outcome by the numbers
700 to 1000communications of various kinds700 to 1000
10 to 30expressions of interest10 to 30
5 to 15 3 to 8
77
With a Professional Global Search
9 – 12 monthsrequired to complete because of workload, Sarbanes-Oxley (SOX) and buyer due diligence (DD) considerations
…you can generate interest very quickly, but buyers
are constrained in how fast they can move.
78
Resell/License
Do you want to buy
my company?
J.V./Alliance
M&A Uniquely Allows Entry to Top Execs
CEO
MKTFIN MANF
DIVDIV DIVDIVDIV
DIVDIVDIVDIV
The only time you can go straight to the top
79
5 Major Benefits of a Professional Process
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
79
Any of these benefits will
justify the time and expense
of a global partner search.
80
81
Sold again in 2 years for $100 million (6x)
82
Sold for $56M (.6x) – missed the windowMarket consolidated—Company A bought Company B!
83
AVOIDING THE
DEAL DISASTERS
84
Lessons From Experience
This M&A process workload and pitfall analysis is based on data supplied by the World Technology Council (WTC), Corum’s 500-member advisory board of past sellers, industry experts, buyers and investors.
Top 60 Documents and Projects
Top 6 Value Destroyers
Sellers’ Single Biggest Mistake
Top 10 Deal Killers
85
• Corporate Preparation
• Business Plan
• Marketing Plan
• Org Chart
• Staff Bios
• NDA
• Non Solicitation
• Executive Summary
• Introduction Letter
• Financials (3 years)
• Recast Financials
• Financial Package
• 3 Year Projections
• Pipeline Analysis
• Lead Process
• Pricing Analysis
• Market Research
• Competitive Research
• Buyer Research
• Ind. Buyer Strategy
Top 60 Documents & Projects (1-20)
Items in RED require professional skills, confidential M&A data, inside buyer
knowledge, extensive transaction experience, or outside advisors
86
• Corporate Presentation
• Comparable Transactions
• Industry Comps
• DCF Analysis
• Replacement Cost
• Terminal Value
• Valuation Report
• All Agreements
• All Litigation – Threats
• Shareholder Qualification
• HR Needs
• Audit
• Activity Log
• Terms Sheet(s)
• Synergy Analysis
• Dilution Analysis
• Tax Analysis
• Taxable Assets
• Negotiation
• LOI
Top 60 Documents & Projects (21-40)
Items in RED require professional skills, confidential M&A data, inside buyer
knowledge, extensive transaction experience, or outside advisors
87
• Stand Still Prep.
• Outside Opinions
• DD Checklist
• DD Timeline
• Merger Agreement
• Asset Schedule
• Fairness Opinion
• Employ. Agreement
• Non Competes
• Patent Analysis
• Customer Overview
• Client Sign-off
• Bulk Sale
• Sovereign Approval
• Proxies
• Security Agreements
• Registration
• Shareholder Exp. Distr.
• Announcements
• Integration Process
Top 60 Documents & Projects (41-60)
Items in RED require professional skills, confidential M&A data, inside buyer
knowledge, extensive transaction experience, or outside advisors
88
1. Confidentiality—internal/external
2. Theft of technology
3. Loss of staff (non-solicitation)
4. Wear on CEO/management
5. Business drop-off—lack of focus
6. Going to market too late
Top 6 Value Destroyers
89
They are trying to lock you up
Often demand exclusive negotiations
Don’t want you talking to others
Want to pay less than true value
Remember your fiduciary obligation!
Seller’s biggest single mistake…
…dealing with only one buyer
90
Top 10 Deal Killers
1. Dealing with only one buyer
2. Misalignment: shareholders/empl/mgmt
3. Contact at the wrong level
4. Improper research of potential buyers
5. Misunderstanding buyer process/models
91
Top 10 Deal Killers
6. Inability to portray value properly
7. Improper due diligence preparation
8. Not qualifying buyers properly
9. Not orchestrating all buyers properly
10.Ego – Greed – Arrogance
92
THE MOST IMPORTANT TRANSACTION OF YOUR LIFE
CLOSING THOUGHTS
93
This seller
is serious.
Leverage using a Professional Intermediary
I may not
be the only
bidder.
Potential
AcquirerSeller Intermediary
Wonderful if I buy you, terrible if I
don’t.
94
The most in-depth buyer information in the world
Optimal Outcome – The Corum Buyer Knowledgebase
Approx. $25M investment
Developed over 30 years
Nearly 16 million entries
Proprietary client activity reporting technology
Supplemented by every major research organization
Data updated with world’s largest educational program
95
Corum Proprietary Buyer Knowledgebase –Advantages
Helps to ensure that you get to the right people
Insider strategic knowledge improves getting attention
Proprietary knowledge of buyer valuation metrics
Gives advanced notice of due diligence required
Includes library of buyer contracts, NDAs, etc.
Invaluable aid in negotiation process
96
Tech M&A Guideline Percentages
Buyer solicitations that result in transaction
Average improvement from first offer with an auction process
How often another firm is willing to pay more than the initial bidder
Deals involving only one bidder that are suboptimal
Failure rate in “self-managed” tech M&A
97
After the Deal – Celebration
98
Contact Information
Visit our website at: www.corumgroup.com
Julius Telaranta, Vice
President
Berlin OfficeEmail: [email protected]
Mobile: + 49 172-971-9898
Office: +1 425-460-6250
Corum Group International
S.à.r.l.
Buechenstr. 9
8185 Winkel
Switzerland
+41 43 888 7590
Corum Group Ltd.
19805 North Creek Parkway
Suite 300
Bothell, WA 98011 USA
+1 425-455-8281