tech m&a update – key m&a trends in software & tech-enabled … › wp-content ›...
TRANSCRIPT
1
September 2015
I N DEPEN DENT I NVESTMENT BAN KI NG FOR GLOBAL TECHNOLOGY, MEDIA, MARKETING & INFORMATION
since 1987
Tech M&A Update – Key M&A Trends in Software & Tech-Enabled ServicesThis month’s letter is written by Adam Gross, Chief Marketing Officer, [email protected]
Mergers and acquisitions across the media, information, marketing, software and tech-enabled services sectors saw robust activity through August 2015, with 1,554 transactions announced at a total value of $92 billion year to date. Both deal volume and value showed solid gains over the same time period in 2014, which saw 1,444 deals totaling $80.8 billion. The M&A market is consistently rising, with M&A activity inching closer to a level not seen since the pre-recession period, in 2007.
Later this week, JEGI Founder & CEO Wilma Jordan will present an M&A up-date highlighting several key trends, as well as her annual forecast, at this year’s Outsell Signature Event, which is being held at Pinehurst Resort in North Carolina. The full program is available here: http://www.outsellinc.com/pinehurst2015_program. Wilma’s presentation will be available next week on JEGI’s website.
software & tech-enabled services Software & Tech-Enabled Services was the most active sector by far, accounting for more than half of the deal volume and value, with 958 transactions total-ing $50.5 billion. The chart below on the left shows a breakdown of deal volume by sub-sector within this red-hot sector.
Application software was the most active sub-sector, accounting for one-third of the Software & Tech-Enabled Services sector deals. Other active sub-sectors were IT services & distribution (17% of the deals), mobility (12%), and both IT out-sourcing and information management (9% for each).
The chart below on the right shows a further breakdown of the segments within the application software sub-sector. Vertical applications accounted for the highest deal volume (31%), followed by enterprise resource planning (19%), cus-tomer relationship management (14%) and business intelligence (12%).
JEGI Tech M&A Update - September 2015
2
noteworthy transactions
The Software & Tech-Enabled Services sector saw several noteworthy transactions during this time period, including the:
• Cox Automotive acquisition of DealerTrack Technologies, provider of web based marketing solutions to the automo-tive retail industry, for $4.5 billion;
• Sterling Partners, Longview Asset Management and Permira acquisition of eBay Enterprise, provider of commerce technologies, omnichannel operations and marketing solutions, for $925 million;
• Vista Equity acquisition of a majority stake in Mediaocean, an advertising software company that enables users to bridge traditional and digital media, that valued Mediaocean at a reported $720 million;
• Silver Lake acquisition of Cast & Crew Entertainment Services, provider of tech-enabled payroll, production account-ing and related services to the entertainment industry, for $700 million;
• Infor acquisition of GT Nexus, a cloud-based platform for trade and logistics supply chain management, for $675 million;
• MasterCard acquisition of Applied Predictive Technologies, provider of cloud-based predictive analytics software, for $600 million;
• Twitter acquisition of TellApart, an online predictive marketing platform for shoppers with cross-device retargeting and promotions, for $533 million;
• Advance Publications acquisition of 1010data, provider of big data discovery and data sharing solutions for business and technical users, for $500 million;
• Pitney Bowes acquisition of Borderfree, provider of cross-border e-commerce solutions, for $465 million; and
• Francisco Partners acquisition of ClickSoftware Technologies, provider of workforce management and enterprise resource planning software, for $438 million.
key trends
With overall M&A activity booming, the Software & Tech-Enabled Services sector is leading the charge. Given the rapid advances in global technology, coupled with the increasing convergence of media, marketing, data and technology, companies are investing heavily in growing their software and technology capabilities through M&A.
Cloud Offerings Over the past few years, a large majority of technology acquisitions have targeted cloud-based solu-tions and services providers. As enterprise software continues to move away from on-premise servers, many companies across a variety of industries are looking to acquire SaaS offerings in order to keep up with the transformation, as well as expand their offerings. Recent examples include: Evestnet’s $660 million acquisition of Yodlee, financial account management SaaS; Solera Holdings’ $595 million acquisition of Identifix, automotive diagnostics and repair SaaS; and Cisco’s acquisition of MaintenanceNet, contract renewal management SaaS, for $139 million.
Human Capital Management (HCM) Technology As companies continue to improve technology offerings for clients, they are also starting to focus on improving internal technology systems, such as payroll, benefits and recruiting. Silver Lake’s $700 million acquisition of Cast & Crew and Francisco Partners’ $438 million acquisition of ClickSoftware Technologies are mentioned above. Other recent HCM technology transactions include: Vector Capital’s acquisition of Saba Software, pro-vider of a cloud-based talent management solution, for $268 million; and Towers Watson’s acquisition of Acclaris, provider of SaaS-based technology and services for consumer-driven health care and reimbursement accounts, for $140 million.
Commerce & Customer Engagement Technology With the continued growth of tech-enabled solutions, B2B market-ers are now able to continuously engage with customers through numerous channels, leading all the way up to the point of purchase. In addition to the $925 million acquisition of eBay Enterprise by an investor group and Pitney Bowes’ $465 million acquisition of Borderfree, other notable commerce and customer engagement technology transactions in 2015 YTD include: HGGC’s acquisition of Selligent, an international SaaS platform delivering omnichannel audience en-gagement (JEGI and its UK investment banking partner, Clarity, advised Selligent); and NetSuite’s acquisition of Bronto Software, a cloud-based marketing platform for online retailers, multi-channel merchants and other commerce-driven organizations worldwide, for $200 million.
JEGI Tech M&A Update - September 2015
3
Supply Chain Management (SCM) Software There has also been an uptick in M&A activity for goods and services before the point of purchase through SCM software. In addition, Infor’s $675 million acquisition of GT Nexus, other notable transactions in 2015 include: Insight Venture Partners’ acquisition of E2open, provider of cloud-based solu-tions for collaborative planning and execution across global trading networks, for $273 million; and Amber Road’s acquisition of ecVision, a cloud-based provider of global sourcing and collaborative supply chain software solutions (JEGI advised ecVision).
Mobile Payments Another key trend across the technology landscape is the explosion of mobile payments, spearhead-ed by Apple Pay and Google’s recently released Android Pay. Earlier this year, Google acquired the technology and IP assets of Softcard, which formed from a collaboration of the US wireless carriers, for an estimated $100 million. Other notable mobile payments transactions in 2015 include PayPal’s acquisition of Paydiant for an estimated $280 million, and Samsung’s acquisition of LoopPay for approximately $250 million.
JEGI Tech M&A Update - September 2015
4
Private Company Spotlight – etouchesEach issue, we spotlight one later-stage private company for our audience. As experienced tech investment bankers, we will point out the characteristics that enable these companies to be emerging market leaders and ultimately become compel-ling acquisition targets for strategic companies, as well as later-stage growth equity and private equity investors.
This month, our Private Company Spotlight centers on etouches, a leading provider of in-cloud event management software. The Company’s multi-lingual, multi-currency software offers registration, event website creation, survey, email marketing, scheduling, speaker/
exhibitor/sponsor management, seating, project management, budgeting, venue selection, booth purchasing, social networking and mobile app creation. etouches is headquartered in Norwalk, CT, with global offices across Europe, Asia Pacific and the Middle East.
We recently sat down with etouches’ CEO Oni Chukwu, to get his perspective on the event management software in-dustry and how etouches differentiates itself in this highly competitive market.
What is the “elevator pitch” that speaks to the main problem(s) etouches is trying to solve?
Events and conferences are a big deal. Companies spend upwards of 5% of their overall budget (or more than 30% of their total marketing budget) on external events. Done well, the returns for companies from these events are huge. And that’s where we come in!
etouches provides companies and organizations globally with comprehensive technology tools and solutions they need to manage all aspects of their events, while optimizing their return on this huge and important investment.
How do you define and size this market? How big of an opportunity is it for etouches?
etouches is solving an $11 billion market problem that affects companies big and small. This market is split between Event Management Software ($7 billion) and Hotel Venue/Hospitality ($4 billion). etouches is a top-three provider in this space.
What “secret sauce” differentiates etouches from other vendors, big and small, that would position themselves as competitors?
First, our unwavering focus on innovation is a key differentiator. We are determined to lead our industry in innovation – especially with new cutting-edge, intuitive and user-friendly products. We have a comprehensive, fully-integrated suite of products, comprised of 15 key modules, for managing all of a corporation’s or association’s event needs.
Our differentiated product suite includes: native mobile event apps; responsive registration and design modules; full-function and “industry first” abstract management modules; budgeting and spend management; hotel venue sourcing and RFP systems; and ROI measurement tools. In addition, we offer a full integration suite into third-party software applications, giving our customers the value-added satisfaction that their systems are all in sync and their information is real-time and accurate.
Furthermore, we offer our market a fresh and transparent approach to professional services, and we foster continuing education and industry learning through our pioneering establishment of etouches University.
Second, our post-sales customer support is second to none. In an industry where most users are not very technical, this distinction is much more than skin deep and further extends our customer-centric reputation.
Third, we have the most diversified revenue, customer base and geographical locations among our competitive set. Our product is available in more languages and is in-use in more countries than any competitive product. We have custom-ers in over 50 countries, and our offices are set up in strategic locations to cover the globe.
Above all, our customers most often tell us that we have the most passionate staff in the industry. And that’s not sur-prising, because as we say here at etouches, “events are in our DNA”!
JEGI Tech M&A Update - September 2015
1
We have long been impressed by the number and quality of customers that etouches has been able to win. Can you tell us why they chose etouches and how the Company has added value for them?
etouches has over 1,000 customers in 50 countries, including many leading global brands – Schlumberger, Dell, Coca Cola, and MasterCard, to name a few. Almost all are long-term clients, many of whom have found competitive products lacking or internally-developed products insufficient.
The key value-add of the etouches platform is legion. For all of our clients, we have consolidated their countless sys-tems into one efficient and easy-to-use platform. This powerful platform gives clients one global view of all of their events, and it streamlines reporting; tracks and monitors event budgets in real time; offers live surveys during events for a customized attendee and organizer experience; and provides cross-event analytics and ROI reporting. In all, this results in increased attendance and engagement, significant cost savings, and improved visibility, while providing a better attendee experience and giving our clients more control over their events through the use of real-time analyt-ics and reporting.
Can you share with us some insight into the growth path of the Company in the past and looking forward?
Our market is large, nascent and fast-growing. As a top-three provider in our market, with a focus on INC 5000 compa-nies, our historical growth rates have been approximately 50% year-over-year (YoY). However, as we have extended our products and functionality to include native mobile, hotel sourcing and RFP solutions, we expect YoY growth to reach 75% to 100% in 2015 and beyond.
What excites you when you think about etouches’ future?
Honestly, a lot excites me. First, the huge opportunity that exists in our burgeoning industry to lead the market through building innovative and differentiated products, as well as key global partnerships. The current market has large unmet technology needs and is completely underserved by the current players. Importantly, it is a technology market that sits strategically at the intersection of CRM, ERP and Marketing Automation.
We pay a lot of attention to leading our industry with innovation on all fronts – products, professional services and cus-tomer service. I see very exciting times ahead!
What are the risks? What keeps you up at night?
With huge opportunities come risks. Managing our growth and focusing on what is important to our customers is at the forefront of our thinking. We are extremely mindful about making sure that we do not become the victims of our own success.
5 JEGI Tech M&A Update - September 2015
16 JEGI Tech M&A Update - September 2015
Hey, Did You See This?Jagged Peak – August 6, 2015Jagged Peak, a provider of enterprise-class eCommerce solutions, released StorePoint as the newest extension of its EDGE eCommerce platform powering omnichannel fulfillment. StorePoint is a cloud-based solution with an easy-to-use online portal to manage ship-from-store and in-store pickup logistics. StorePoint will help merchants create a more holistic customer-centric experience while effectively sharing inventory across multiple sales channels.
Livefyre – August 17, 2015Livefyre, a real-time content marketing and engagement platform, announced the ability to integrate ads into com-ment streams through the Livefyre Comments application. Customers will keep 100% of the revenue from ads sold into the comments stream. This allows publishers to connect comments directly to their existing platforms and DFPs, while maintaining control over which ads are being displayed. Livefyre is enabling its clients to capitalize on their com-menters, who are the most active readers, as well as the most likely to become paid subscribers.
Modo Labs – August 19, 2015Modo Labs, a mobile engagement platform for universities and enterprises that empowers users to create mobile cam-pus apps, introduced an updated release of its app assembly product Kurogo Publisher with the advanced Collage screen type. Collage enables both technical and non-technical users to design unique mobile experiences that drive student engagement and improve workplace communication. The Kurogo Publisher allows customers to develop dynamic, real-time apps without undergoing expensive and time-consuming development projects. Now with the unlimited number of design options available through Collage, Kurogo Publisher will be more versatile and customizable than ever before.
SkillSurvey – July 27, 2015SkillSurvey, a provider of hiring and automated reference checking software and solutions, announced that new book-ings for the first half of 2015 increased 75% over the same period in 2014. SkillySurvey’s solutions enable employers to streamline the communications with applicants and references and make informed data-driven hiring decisions. Two key industries help to fuel SkillSurvey’s strong growth: Healthcare and Staffing & Recruiting.
Vdopia – August 17, 2015 Vdopia, a mobile video advertising firm, released its Q2 2015 Vdopia Mobile Insights report, showing a 172% increase in ad spend from Q1 2015 to Q2 2015, on its programmatic mobile video platform, Chocolate. Chocolate, now serving more than 12 billion mobile video ad auctions monthly, saw the highest growth rate among CPG advertisers at an increase of 3104% from the previous quarter. Overall, the mobile video ad market is seeing rapid growth, and eMarketer forecasts US mobile video ad spend to reach $2.6 billion in 2015 – over one-third the estimate of total digital video ad spend.
WordStream – June 30, 2015WordStream, a provider of search engine marketing software and services, announced a partnership with digital mar-keting firm Constant Contact to help small businesses find new customers and grow relationships through paid search and email marketing. The partnership enables clients to seamlessly integrate new customer leads collected via Word-Stream Advisor with the Constant Contact platform, allowing clients to automatically act on those leads without any extra steps. The two firms, both based in Boston, are dedicated to supporting small businesses.
1
Selected August M&A Transactions in JEGI Tech Coverage
Buyer Seller Target DescriptionEnterprise
Value ($mm)
Carlyle Group, GIC Veritas (Symantec) Storage & information management systems assets $8,000
Fidelity National Information Services
SunGard (Silver Lake Partners) Financial software & services $5,100
IBM Corporation Merge Healthcare Medical imaging software $705
Infor (Golden Gate Capital)
GT Nexus (Warburg Pincus) Trade & logistics SCM SaaS $675
Envestnet Yodlee Financial account management SaaS $660
Advance Publications 1010data Enterprise & retail analytics SaaS $500
Premier CECity Healthcare performance management SaaS $400
Blackbaud Smart Tuition Tuition & financial aid management software $190
CA Technologies Xceedium Access control software provider $100
Premier Healthcare Insights Healthcare financial management SaaS $65
DealerSocket (Vista Equity Partners)
DealerTrack, Inventory+ business Automobile dealer management software $55
Hortonworks Onyara Open source IoT data management SaaS $38
Tradeshift Merchantry Product information management SaaS $30
Synacor Assets of Zimbra Collaboration & messaging software assets $23
LANDesk Software (Thoma Bravo) Xtraction Solutions IT analytics aggregation & reporting SaaS $20
Autodesk SeeControl Supply Chain analytics SaaS
Bit9 VisiTrend Data analytics & visualization SaaS
Carlyle Group Novetta Solutions (Arlington Capital) Network data analytics software
DataMentors Relevate Marketing database management BPO
H.I.G. Capital HelpSystems (Summit Partners) Systems management & job scheduling
Kronos (Hellman & Friedman, JMI)
Kaba Workforce Solutions, AutoTime division Attendance & workforce management systems
7
Deals with Values (by size)
Deals without Announced Values (alphabetical by buyer)
JEGI Tech M&A Update - September 2015
1
Buyer Seller Target DescriptionEnterprise
Value ($mm)
LinkedIn Fliptop Predictive analytics SaaS
Manifest Digital McMURRY/TMG (Wicks) Web design & marketing services Confidential (JEGI deal)
Marlin Equity Partners AdvancedMD Software (ADP) EHR management software
Microsoft Corporation Incent Games Sales team gamification SaaS
Mitratech Holdings (Vista Equity Partners)
Economic Analysis Group (CaseTrack) Legal case management SaaS
NAVEX Global (Vista Equity Partners) The Network GRC management software & services
Oracle Corporation Maxymiser Online marketing SaaS & services
PayPal Holdings Modest Mobile contextual e-commerce apps
Shamrock Capital Advisors
Consilio (Symphony Technology Group) eDiscovery & document review BPO
SurveyMonkey (Spectrum Equity, Bain Capital) TechValidate Software Marketing content creation SaaS
Thoma Bravo DigiCert (TA Associates) SSL certification SaaS
Thoma Bravo iPipeline (NewSpring, Volition, TCV) Insurance & finance CRM SaaS
TIBCO Software (Vista Equity Partners) Mashery (Intel) API management software
TPG Capital, Leonard Green Partners
Ellucian Company (Hellman & Friedman) Education software & services
8 JEGI Tech M&A Update - September 2015
1
Wilma Jordan Founder & CEO
Tom Pecht Managing Director
Scott Peters Co-President
David Clark Managing Director
Tolman Geffs Co-President
Joseph Sanborn Managing Director [email protected]
Sam BarthelmeDirector
Richard Mead Managing Director [email protected]
Adam Gross Chief Marketing Officer
Amir Akhavan Managing Director
Tom Creaser Executive Vice President
Bill HitzigChief Operating Officer
Jeff Becker Managing Director
BostonCIC Boston
50 Milk Street Boston, MA 02109
Phone: +1 (617) 294-6555
Atlanta40 Wallace Road Buford, GA 30519
Phone: +1 (770) 932-8700
London (JEGI Affiliate)90 Long Acre
London WC2E 9RA
Phone: +44 20 3402 4900
Bangalore (JEGI Affiliate)Akash Embassy, 3rd Floor, #9, 3rd Cross
Artillery Road, Ulsoor Bangalore 560 008
Phone: +91 80 42036793
New York (Headquarters)150 East 52nd Street
18th Floor New York, NY 10022
Phone: +1 (212) 754-0710
About The Jordan, Edmiston Group, Inc. The Jordan, Edmiston Group, Inc. (JEGI) is the leading independent investment bank for the global software, tech-enabled services, media, marketing and information sectors. Over the past 28 years, the firm has completed nearly 600 M&A transactions, serving global corporations, private companies, entrepreneurs and founders, and private equity and venture capital firms.
JEGI’s senior bankers average nearly 20 years of M&A experience and personally lead each client engagement. Through the firm’s broad network of industry contacts and a deep understanding of the markets that its clients serve, JEGI helps technology companies find their optimal strategic paths via exit or growth capital. The firm often identifies and completes transactions with “outside the box” buyers for its clients by leveraging its unique perspective and extensive high-level relationships across diverse markets. For more information, visit www.jegi.com.
Select Recent JEGI Technology Transactions*
*Some of the transactions highlighted above were completed by JEGI Managing Directors Joseph Sanborn and Jeff Becker, prior to joining the firm.
a leading tech-enabled searchand digital marketing agency
has been sold
to
July 2014
a leading event housing softwareand services provider
has been soldto
October 2014
a subsidiary of
a leading software and dataprovider to the agriculture market
has been sold
to
November 2014
has been sold
to
July 2015
a digital strategy andexperience design �rm
July 2015
has been soldto
an international SaaS platformdelivering omnichannelaudience engagement
has received
a signi�cant investment
from
July 2015
a leading mobile video and brandedcontent advertising platform
July 2015
a leading provider of enterprisesecure �le sharing and collaboration
services for IT business managers
has been soldto
a portfolio company of
has been sold
to
March 2015
a cloud-based provider of globalsourcing and collaborative
supply chain software solutions
a leading provider of mobileworkforce management solutions
for �eld servicehas been sold
to
a portfolio company of
to
has mergedwith
August 2015
and a portfolio company of
the leader in omnichannelcontent creation and delivery
a leader in digital experience design
October 2012
has sold
the leading providerof sales enablement and business
intelligence SaaS solutions
to
&
a portfolio company of
May 2013
a leading provider of shoppingand shopper marketingsoftware and services
has receiveda signi�cant investment
from
March 2014
a pioneer and leading SaaSprovider of talent analytics toHR and C-level professionals
for $52,000,000
has been sold
to
a leading mobile app marketintelligence and analytics provider
has been sold
to
May 2014 May 2012
a pioneer and leader in mobileentertainment services
has been sold
to