quarterly software report€¦ · 9 vidispine sweden arvato systems germany november industrial 10...
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STOCKHOLM OSLO HELSINKI NORDHAVEN STOCKHOLM OSLO HELSINKI NORDHAVEN STOCKHOLM OSLO HELSINKI NORDHAVEN STOCKHOLM OSLO HELSINKI STOCKH
Quarterly Software Report
Q4 2017
21 TRANSACTIONS IDENTIFIED IN Q4/17 (19 IN Q4/16) – TOTAL OF 95 TRANSACTIONS IN 2017 (80 IN 2016)
2
DEVELOPMENT IN NUMBER OF IDENTIFIED TRANSACTIONS
EXECUTIVE SUMMARY
▪ As we projected after the disappointing Q3, the market did return to a growth path in Q4
with a total of 21 software transactions, 2 more than Q4/16.
▪ This brought the total for the year to 95 transactions, up 20 % from the previous year.
▪ Also this year the OMX Nordic 40 index ended the year on a sad note. The root cause is
again to be found outside of the software space, with companies like Nokia dropping
about 20 % and Acando being down about 10 %, while software companies did a much
better showing with f.ex. Basware being up 15 %.
▪ As a result of the limited impact of software in the Nordic Tech Index, Nordhaven has
decided to introduce our own Nordic software index, which will be launched in the
Q1/2018 report.
▪ Quite surprisingly (and probably by chance…) there were no deals announced in Denmark
in the quarter, while Sweden again topped the list with 10 deals. Norway had 8 and
Finland 3.
▪ Private equity buyers were back in the drivers seat in the quarter, completing 12 of the
21 deals.
▪ Nordic buyers dominated in Q4 with 15 of the 21 deals, partially driven by private equity.
▪ DISCOUNT GAP: As we have projected, the discount gap between the traditional and the
cloud-born companies has now been closed, as both categories are now priced at 6.1 x
Revenue. Consequently, we will merge the international software companies going
forward into one group.
▪ The Nordic discount is now 40 % compared with international software companies. This
should imply transaction willingness among industry trade buyers, or upside potential for
PE in taking the Nordic companies “outside their comfort zone”…
▪ Please do not hesitate to provide us with feedback on this report and interesting
perspectives on the Nordic software players.
▪ We wish all of you good luck in the Olympic Games! Our estimate is that there will be
more Norwegian medals in the Olympics than the number of software transactions in
Q1/2018. If the opposite is true, the software M&A market will be very busy…
NASDAQ OMX TECHNOLOGY INDEX: Jan 14 – Dec 17
2125
21 2118
2022
1820
24
1721
13
33
28
19
Q1 16Q4 15Q3 15Q2 15Q1 15Q4 14 Q1 17 Q4 17Q3 17Q2 17Q4 16Q3 16Q2 16Q3 14Q2 14Q1 14
1,700
1,600
1,500
1,400
1,300
1,200
1,100
1,000
900Jan. 14 Jun. 14 Dec. 14 Jun. 15 Dec. 15 jun. 16 dec. 16 jun. 17 dec. 17
OVERVIEW OF Q4 2017 NORDIC SOFTWARE TRANSACTIONS
3
BREAKDOWN OF DEALS BY ACQUIROR’S REGION
BREAKDOWN OF DEALS BY EXIT TYPE
BREAKDOWN OF DEALS BY TARGET’S COUNTRY
Source: Merger Market and Nordhaven analysis
COMMENTS
▪ Nordhaven has identified 21 Nordic Software transactions in Q4 2017
▪ Approximately 40% of the companies were acquired by industrials which is
lower than the historical average
▪ Strong activity from Private Equity, with platforms investments representing 1/3
of the deals and add-on investments 1/4 of the deals
▪ Nearly 50% of the targets were based in Sweden and nearly 40% were based in
Norway – modest activity in Finland and no deals announced in Denmark
▪ Nearly 3/4 of the companies are sold to entities in the Nordics, thus limited
activity from companies outside of Europe
10
Finland
Sweden
Denmark
8
03
Norway
5
PE - add-on
PE - platform
7
Industrial9
US / Canada
Nordics
1
5
Rest of Europe
15
Rest of world
0
QUARTER-BY-QUARTER DEVELOPMENT IN NORDIC SOFTWARE TRANSACTIONS
4
NUMBER OF TRANSACTIONS
BREAKDOWN OF DEALS BY TARGET’S COUNTRY
BREAKDOWN OF DEALS BY ACQUIROR’S REGION
Source: Merger Market and Nordhaven analysis
BREAKDOWN OF DEALS BY EXIT TYPE
17%
25%
72%
22%
6%
42%
26%
32%
Q1 16
38%
29%
Q4 17
43%
24%
33%
Q3 17
62%
38%
0%
Q2 17
36%
52%
12%
Q1 17
61%
14%
25%
58%
33%
Q4 16Q3 16Q2 16
PE - platform IndustrialPE - add-on
Q3 17
15%
31%
46%
Q2 17
27%
Q4 17
38%
0%
48%
20% 17%28%
16% 18%9% 8%
14%
Q1 16
25%
30%
25%
21%
42%
Q1 17
18%
29%
36%
Q4 16
21%
42%
21%
Q3 16
22%
22%
28%
Q2 16
4%
38%
42%
NorwayDenmarkSweden Finland
46%
Q2 17
30%
6%
Q4 17
24%
5%
71%
Q3 17
69%
Q2 16
21%
25%
46%
Q1 16
58%
Q1 17
4%
25%
68%
Q4 16
5% 4%11%8% 6% 6%
15%
25% 8%
55%
21%
11%
58%
15%
25%
0%31%
0%
Q3 16
Rest of WorldRest of EuropeUS / CanadaNordics
2024
17 19
2833
13
21
Q4 17Q3 17Q2 17Q1 17Q4 16Q3 16Q2 16Q1 16
ANNUAL DEVELOPMENT IN NORDIC SOFTWARE TRANSACTIONS
5
NUMBER OF TRANSACTIONS
BREAKDOWN OF DEALS BY TARGET’S COUNTRY
BREAKDOWN OF DEALS BY ACQUIROR’S REGION
Source: Merger Market and Nordhaven analysis
BREAKDOWN OF DEALS BY EXIT TYPE
25%
16%
51%
24%
25%
48%
35%
17%
2014
24%
67%60%
9%
201720162015
PE - platform IndustrialPE - add-on
17% 14% 20%13%
2014
24%
28%
31%
2017
25%
20%
42%
2016
18%
33%
30%
2015
26%
30%
30%
NorwayDenmarkSweden Finland
54%
2015
19%
29%
49%
2014 2017
6% 5%3% 8%
24%
41%
18%
15%
62%
30%
23%
16%
2016
Rest of WorldRest of EuropeUS / CanadaNordics
8877 80
95
2017201620152014
NOTABLE TRANSACTIONS DURING Q4 2017
6
Document sharing software
REVENUE (MEUR)TARGET ACQUIROR SELLER
Enterprise software
Financial reconciliation
software
Finance and payment solution
software
Application manager for
Freight Forwarders
Mobile parking and payment
solutions
Micro-life insurance products
for mobile operators
Software solutions for 3D
simulation
Source: Merger Market and Nordhaven analysis
Music software
Founders
Founders
Founders
5
1
33
4
4
8
6
9
0.1
Founders
SELECTED SOFTWARE TRANSACTION MULTIPLES (EV / SALES) – LAST 12 MONTHS
7Source: Merger Market and Nordhaven analysis
5,8x
5,7x
4,6x
4,0x
4,0x
3,8x
3,6x
3,5x
3,1x
2,0x
1,8x
1,2x
Q1 2017
Q2 2017
Q4 2017
Q2 2017
Q3 2017
Q2 2017
Q1 2017
Q4 2017
Q1 2017
Q3 2017
Q3 2017
Software for strategic sourcing
Telecom software provider
Online marketplace for professional services
Software for 3D simulation and training
Software for documentation of chemicals
Software for vehicle trip logs / fleet mgmt.
Software for smart grid / customer interaction
Open-source software for web design
Software for telecom expense management
Software for document sharing
Software for payment solutions
Software for customs clearance and freight forw.Q4 2017
OBSERVED TRADING MULTIPLES- DISCOUNT GAP FOR TRADITIONAL VS CLOUD ELIMINATED, WHILE NORDIC COMPANIES ARE STILL SIGNIFICANTLY LOWER
8Source: Merger Market and Nordhaven analysis
MEDIAN EV / SALES - CURRENT FINANCIAL YEAR (2018E)
NORDICS
INTERNATIONAL – «TRADITIONAL SOFTWARE»
INTERNATIONAL – CLOUDBASED/SAAS
5,1x4,4x 4,3x 4,3x
3,0x 2,9x 2,6x 2,5x1,3x
5,4x
Vitec SoftwareMicro
Systemation
BaswareHMS NetworkHexagonSimCorp CLX
Communication
CxenseTobiiF-Secure
4,2x4,5x4,7x4,9x5,0x6,1x6,4x
7,4x7,9x
10,0x10,8x
MicrosoftDassaultIntuitCheck PointAutodeskAdobe SymantecSAPCitrix SystemsOracleSage Group
9,3x 8,3x 8,2x6,4x 6,1x 5,4x 4,4x 4,1x 4,1x 3,7x
13,5x
Atlassiansalesforce.comGuideWireWorkdayServiceNowUltimate
Software
J2 GlobalAthenaHealthPegaSystemsCornerStoneLogMeIn
Median: 3.6x
Median: 6.1x
Median: 6.1x
LIST OF IDENTIFIED NORDIC SOFTWARE TRANSACTIONS IN Q4 2017
9Source: Merger Market and Nordhaven analysis
# Target Target Country Bidder Bidder Country Date Exit type
1 Admincontrol Norway Visma Norway October PE - platform
2 FEO Media Sweden MAG Interavtive Sweden October Industrial
3
Computational Industry Technologies Norway DNV Global Norway October Industrial
4 Adfenix Sweden Industrifonden Sweden October PE - platform
5 Adra Software Norway Trintech US November PE - add-on
6 Databyrån for infobehandling Sweden CSAM Health Norway November PE - add-on
7 Konsulent Data & Restaurant Norway OpenSolutions Nordic Sweden November PE - add-on
8 Tacton Systems Sweden Kirk Kapital / GRO Capital Denmark November PE - platform
9 Vidispine Sweden Arvato Systems Germany November Industrial
10 Odin Kapital Norway Melin Medical Norway November Industrial
11 Soundtrap Sweden Spotify Sweden November PE - add-on
12 Digpro Sweden Litorina Sweden November PE - platform
13 IStone Sweden Columbus Denmark November Industrial
14 Propentus Finland Cygate Finland November Industrial
15 Emma Systems Norway Vind Lv Norway December PE - platform
16 Easy Park Norway Vitruvian Partners UK December PE - platform
17 Maritech Systems Norway Broodstock Norway December PE - platform
18 Atollic Sweden STMicrolectronics Netherlands December Industrial
19 Milvik AB (minority stake) Sweden Allianz Germany December Industrial
20 Visual Components Finland KUKA AG Germany December Industrial
21 Finnpos Systems Finland OpenSolutions Nordic Sweden December PE - add-on
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11
Nordhaven team
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