deal origination in the uk technology mid market
DESCRIPTION
This presentation shares with you our approach to deal origination in the UK Technology Mid Market. Claim your Free Six Minute Strategist Six Minute Audit at http://jbdcolley.com If you would like to discuss with me how we can assist your business, please email me at [email protected] or call me on my UK cell phone +44 7813 672 612 I hope you enjoy the presentation.TRANSCRIPT
Deal Origina+onin the UK Technology Mid
Market
Its all in the Cloud...
We understand the Deal Origina+on Process
• Sector Exper+se and Understanding -‐ Technology, Telecoms and Media
• Clear understanding of Sub Sectors and their cons+tuent companies
• Companies -‐ Public, Private, PE Backed, Subsidiaries
• Financial Hurdles and Analysis
• Geography -‐ Company Loca+ons
• Business Model
• Management Team Quality
• Other Factors: company age, owners age, Death/Divorce/Disease, Management Succession
• Deal Types: MBO, MBI, P2P, 2BO, 3BO, Growth
• Need for a Deal and Timing; need for capital
• Process -‐ Approach, Discuss, Meet, Nego+ate, Terms, Close
Deal Screening and Origina+on is complex...
Acquirors Targets
Ability Ability
MoneyMoney
Intent Intent
Strategy
Sectors
Scale
Stage
Zone of
Confluence
Deal Mo+va+on is important...
• Strong IP or other sustainable advantage
• Addressing a large poten+al market
• Like to exhibit upper quar+le growth
• Strong management with shareholder value orienta+on
• High Gross Margins >50%
• Product service is “need to have” with clearly differen+ated market posi+on
• Clear routes to market
• Low capital intensity
• Geographical loca+on may be a factor
• Financial: Revenues, Profits, Growth, Margins, Cash Genera+on, Revenues per employee, Return on Capital Employed
Profile of an Investee Company
• Trade Carve Out deals (Acquisi+ons)
• Trade Infill Deals (Divestments)
• Buy and Build Placorms
• Secondary (or Ter+ary) Deals
• Public to Private Transac+ons
• Filling the IPO Gap
• MBO/MBI Founder Exits
• Turnaround/Recapitalisa+on
• Growth Investment
Private Equity Deals vary...
• IAF Capital have proven deal origina+on capability
We have done it before...
Financial Advisor to
CIBER Europe Limited
on its $41m acquisition of Ascent Technology Group from 3i plc
May 2004
Financial Advisor to
CIBER Europe Limited
on its $41m acquisition of Ascent Technology Group from 3i plc
May 2004
Financial Advisor to
CIBER Europe Limited
on its €66.3m acquisition of Novasoft Group AG
Pall Mall Capital originated the transaction
August 2004
Financial Advisor to
CIBER Europe Limited
on its €66.3m acquisition of Novasoft Group AG
Pall Mall Capital originated the transaction
August 2004
But its a Compe++ve Market for Buyout Investors...
We understand the UK M&A Market
• M&A in the European Technology Sector was consistent with the level of ac+vity in 2011
• There were 234 PE and VC exits in 2012, down from 281 in 2011
• Financial investors accounted for 14% of the deals done in 2012
• In the UK of 190 completed buyouts, 79 were in the range of £10-‐£100m, of which 18 were in the TMT sector
• There were 37 UK exits in 2012
M&A Ac+vity con+nued in 2012...
• The number of UK listed technology companies con+nued to decline with the acquisi+ons of Aegis, Misys, Logica, C&W, Torex, Psion, Kewill, Tikit, Netbenefit, SHL, Maxima and Atlan+c Global
• One of the most significant developments was the ac+vity of overseas buyers who accounted for 36% of all deals
• The key focus for investors in 2012 was somware companies -‐ mainly in niche ver+cals such as warehouse management and vo+ng somware
• IT Managed services accounted for 19% of deals but the sector remains very fragmentedM&A Ac+vity con+nued in 2012...
But Deal Origina+on is compe++ve...
Top Valua+ons for UK Technology M&A Deals
• The IPO market is likely to remain quiet, so M&A is the only prac+cal way for vendors to realise their equity
• Overseas trade acquirers are ac+vely looking for deals and pay compe++ve prices
• Businesses in demand need to be well run and scalable
• Some UK PLCs have raised addi+onal capital in 2012; Digital Barriers, Capita, Quindell Porcolio and Cupid
• Sectors in demand are likely to include: e-‐commerce, informa+on management, FinTech, cloud/managed services, niche somware, business intelligence/analy+cs and IT Security
What is the Outlook for 2013?
• Mobile Phones overtake PCs for web access• Mobile apps on a variety of architectures• Personal cloud for storage• Enterprise app stores• Communica+on of intelligent devices• Cloud services• Big Data -‐ informa+on management• Analy+cs and simula+on• In Memory Compu+ng• Integrated ecosystems• Internet of Things
GartnerTop
Predic+onsfor 2013
We understand the UK Technology Sector
Who are the UK Players...
UK TechnologyCompanies
PublicCompanies
VC/PE Funded
PrivateEarlyStage<£5m
SubsidiariesForeignOwned
Compe+tors
• UK Market players break down into Six Categories:
• Public Companies
• VC/PE Funded Companies
• Private Companies
• Subsidiaries
• Foreign Owned/Compe+tors
• Early Stage = <£5m Revenues
Who are the Deal Ecosystem Players...
UK TechnologyCompanies
US TechnologyCompanies
EuropeanTechnologyCompanies
VC/PEFunds
DoNothing
Indian/AsianTechnologyCompanies
UK Domes+cTechnologyCompanies
• US Technology Companies, seeking cross border deals in UK -‐ Top 500
• European Technology Companies, seeking cross border deals in UK -‐ Top 100
• VC/PE Funds, including secondary and ter+ary deals -‐ Top 200
• Indian/Asian Technology Companies, seeking cross border deals in the UK -‐ Financially strong but limited in number
• UK Domes+c Technology Companies, seeking to consolidate the market; any exis+ng market players
• There is always the Do Nothing Scenario
• IT & Business Services
• Somware
• Hardware & Electronics
• Telecoms
• Digital Media & Internet
• Adver+sing • BioTech• CleanTech• Consumer Electronics/Devices• Consumer Web• eCommerce• Educa+on• Enterprise• Games, Video and
Entertainment• Legal• Mobile/Wireless• Network/Hos+ng• Consul+ng• Communica+ons• Search• Security• Semiconductor• Somware
• Energy & U+li+es• Engineering• FinTech Banking• FinTech Insurance• FinTech Other FS• Legal & Professional Services• Media & Marke+ng• Other PS• Other Ver+cals• PharmaTech• PS Educa+on• PS Healthcare• Retail and Hospitality• Telco Somware• Travel & Transport• Built Environment Somware• Communica+on & CEM• Data & Content Management• ERP• Human Capital Management• Logis+cs and WMS• Other Business Applica+ons• Security
Sector Complexity is nothing new...
Broad Knowledge of the Global Somware Sector...
What are their Op+ons?
UK SomwareCompanies
Sale
VC/PEFunded
ExternalGrowthFunding
P2P
ExternalGrowthFunding
P2P
Private
Acquisi+on
Buyout
Acquisi+on
Buyout
Sale
IPO
Subsidiaries
Acquisi+on
Buyout
ForeignOwned
Compe+tors
EarlyStage<£5m
Acquisi+on
Buyout
ExternalGrowthFunding
P2P
ExternalGrowthFunding
P2P
Sale
IPO
Sale
IPO
Acquisi+on
Buyout
SaleAcquisi+on
IPO
Sale
ExternalGrowthFunding
P2P
ExternalGrowthFunding
P2P
EarlyStage<£5m
PublicCompanies
VC/PEFunded
Private
ForeignOwned
Compe+tors
IPO
PublicCompanies
• Strategic Op+ons are limited
• IPO
• P2P
• External Growth Funding
• Sale
• Acquisi+on
• Buyout
• But Strategic Op+ons depend on circumstances
Subsidiaries
IPO
Buyout
Where are the Deals to be found?
UK SomwareCompanies
Sale
VC/PEFunded
ExternalGrowthFunding
P2P
ExternalGrowthFunding
P2P
Private
Acquisi+on
Buyout
Acquisi+on
Buyout
Sale
IPO
Subsidiaries
Acquisi+on
Buyout
ForeignOwned
Compe+tors
EarlyStage<£5m
Acquisi+on
Buyout
ExternalGrowthFunding
P2P
ExternalGrowthFunding
P2P
Sale
IPO
Sale
IPO
Acquisi+on
Buyout
SaleAcquisi+on
IPO
Sale
ExternalGrowthFunding
P2P
ExternalGrowthFunding
P2P
EarlyStage<£5m
PublicCompanies
VC/PEFunded
Private
ForeignOwned
Compe+tors
IPO
PublicCompanies
• Buyside Deals
• Playing to our strengths in deal origina+on
• Sell Side Deals
• Depth of market knowledge and interna+onal grasp of compe+ng companies makes this an aqrac+ve deal area
• Deal Areas of least aqrac+on
• These do not play to our strengths and are to be avoided
Subsidiaries
IPO
Buyout
• Electronic Document Management
• eServices
• Internet Infrastructure Somware
• Legal Sector
• Payments Systems
• EDI
• Pensions Administra+on
• Accoun+ng
• Road Traffic Technology
• Supply Chain Management
• Manufacturing
• Security
• Retail Solu+ons
And Deep Somware Sector Knowledge...
• Energy & U+li+es• Engineering• FinTech Banking• FinTech Insurance• FinTech Other FS• Legal & Professional Services• Media & Marke+ng• Other PS• Other Ver+cals• PharmaTech• PS Educa+on• PS Healthcare• Retail and Hospitality• Telco Somware• Travel & Transport• Built Environment Somware• Communica+on & CEM• Data & Content Management• ERP• Human Capital Management• Logis+cs and WMS• Other Business Applica+ons• Security
Just some of our Databases...
UK Mid Market Technology Companies £5m -‐ £100m
We can advise on Deal Origina+on
So, how can we work together?
Former Regular Army Officer
25 Years Investment Banking Experience
Strong Deal Originator
Over $150 millon in Technology Sector Deals since 2001
This summary memorandum has been prepared from internally developed data, informa+on in the public domain and other sources believed to be reliable. No representa+on, warranty or undertaking (express or implied) is given and no responsibility is accepted by IAF Capital Limited (“IAFC”) or by any of their officers, employees or agents for the completeness or accuracy of any informa+on contained in, or of any omissions from, this summary memorandum or any supplementary informa+on made available to any interested party or its advisors, and any liability in respect of such informa+on or omissions is hereby expressly disclaimed.
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