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WWW.THECFIGROUP.COM | SOFTWARE AND IT SERVICES M&A PULSE JANUARY 2017 | 1

SOFTWARE AND IT SERVICES M&A PULSE2016 YEAR IN REVIEW

I N S I D E T H I S I S S U E

CASE STUDIES OF SUCCESFUL CROSS-BORDER DEALS PAGE 3-4

SECURITY SOFTWARE AND SERVICES SHOW HIGHEST VALUATIONS PAGE 5

M&A ACTIVITY AND VALUATION PER SUB-CATEGORY PAGES 6–14

2016 RECORDED THE HIGHEST LEVEL OF BUY-OUTS IN YEARS PAGE 16WWW.THECFIGROUP.COM

Amsterdam ● Budapest ● Cardiff ● Chicago ● Detroit ● Düsseldorf ● Lisbon ● London ● Madrid ● Milan ● Mumbai ● Munich ● Paris ● Riga ● Rio de Janeiro

Santiago de Chile ● São Paulo ● Shanghai ● Tallinn ● Tel Aviv ● Tokyo ● Toronto ● Vancouver ● Vilnius ● Warsaw ● Zurich


Corporate Finance International (‘CFI’) is pleased to present the

inaugural issue of our Software and IT Services M&A Pulse for

January 2017. This report provides commentary and analysis on

current trading market trends, and merger and acquisition

dynamics within the Software and IT Services sector.

We hope you find this edition informative and we would encourage

you to reach out to our European sector specialists, Ramon

Schuitevoerder , Clément Barbot or Nicolas Gutbrod , if you

would like to discuss our perspective on current sector trends and

M&A opportunities or our relevant sector and transaction

experience.

I N T R O D U C T I O N

CFI is a group of middle-market investment banks and corporate

finance advisory boutiques with over 200 bankers specializing in

cross-border acquisitions, divestitures, capital raising, and related

services all over the world. CFI focuses exclusively on middle

market transactions, with deal sizes ranging from €10 million to

€500 million. In 2016, CFI completed 70 M&A transactions,

involving parties in 19 countries and 4 continents.

Our Software and IT Services team is dedicated to providing best-

in-class, cross-border merger & acquisition advisory services to

family and entrepreneurially owned companies, private equity

funds and financial sponsors, and publicly traded companies. Our

extensive sector knowledge and transaction experience spans the

Infrastructure & IT Management, Security, BI/Data Analytics,

Horizontal and Vertical Enterprise Software, Fintech, Adtech &

Martech, IT Services, Managed Services/ISP & Hosting, and

Near- and Offshoring domains.

Our professionals have global relationships with leading

technology companies and financial investors. Thoughtful advice,

deep experience and sector focus that supports in-depth

understanding of trends and developments impacting our clients,

and years of experience structuring and negotiating complex

transactions have resulted in a relevant track record, with many

long-term relationships with clients who are seeking extraordinary

value.

Ramon Schuitevoerder

Amsterdam, Netherlands

T +31 88 20 60 346

M +31 6 21 22 49 02

E [email protected]

Clément Barbot

Paris, France

T +33 1 44 13 88 18

M +33 6 32 56 88 74

E [email protected]

Nicolas Gutbrod

Stuttgart, Düsseldorf and Munich, Germany

T +49 89 459 29 400

M +49 170 70 23 889

E [email protected]

S E L E C T I O N O F 2 0 1 6 T R A N S A C T I O N S

acquires

Sell-side

acquires

Sell-side

acquires

Sell-side

exits

Sell-side

has recapped with

Sell-side

acquires

Buy-side

acquires

Sell-side

acquires

Sell-side

acquires

Sell-side

acquires

Sell-side

acquires

Sell-side

Infrastructure/

IT Management

Tech

Enabled Services

Enterprise

Software

Martech Infrastructure/

IT Management

Managed Print/

IT Services

Fintech Infrastructure/

IT Management

Application

Development

Enterprise

Software

Infrastructure/

IT Management

acquires

Buy-side

Enterprise

Software


C A S E S T U D Y ( I )

acquires

Sell-side

COMPANY OVERVIEW

With operations and about 140 employees in the Netherlands, Belgium and Germany, Login

Consultants is an international IT services company dedicated to supporting the entire end user

computing lifecycle, with expertise in managing all aspects of the transition to a VDI compute

environment. Login Consultants helps design, build, migrate and maintain end user computing

solutions in an optimal balance between business demand, cost and IT control . It has extensive

experience and expertise working with technologies from leading VDI solutions vendors such as

Microsoft, Citrix and VMware. Furthermore, i t has a track record in creating business relevant add-

ons for industry VDI standards, and recently developed its own Desktop-as-a-Service (DaaS) cloud

solution. Login Consultants is widely viewed as a subject matter expert ahead of the pack in

advising enterprises through the transition to a VDI platform, including the requirements around

data migration, desktop deployment and application delivery.

MARKETING HIGHLIGHTS

• The multi-billion dollar VDI software and services market is expected to grow at a 36% CAGR

until 2019, with Western Europe expected to be a major area for adoption*.

• “Sticky” business model with repeat sales from existing customers representing over 80% of

total revenue and average commercial relationship tenure of 5+ years.

• Partnerships with top-tier technology vendors, including vast experience onboarding to Citrix,

Microsoft and VMWare.

• Team leverages proprietary expertise, supporting products and templates with its own best

practices framework.

BUYER

Orange S.A. is one of the main telecom operators in the world, with annual sales amounting to €40

billion in 2015 and is listed on the Euronext Stock Exchange in Paris, France. At the end of year

2015, the Orange Group served 263 million customers around the world. Orange stands amongst

the world leaders of communication services to multinational corporations. Orange is also a leading

provider of global IT and telecommunication services to multinational companies, under the brand

Orange Business Services (‘OBS’).

PROCESS HIGHLIGHTS

• CFI acted as the lead corporate finance advisor to the sellers, with the Dutch and French teams

seamlessly coordinating and executing important aspects of the transaction, which resulted in

CFI exceeding our clients' expectations.

*Source: Gartner, TechNavio. Visiongain

ELECTED BEST DEAL AT THE DUTCH

TRANSACTION DETAILS TEAM

Transaction type:Sell-side M&A

Sector:Infrastructure / IT Management

Deal Value:Undisclosed

Ramon SchuitevoerderNetherlands

Clément BarbotFrance

Pieter de VriesNetherlands

Lara SouhokaNetherlands


C A S E S T U D Y ( I I )

COMPANY OVERVIEW

Dürr AG is one of the leading global players in mechanical and plant engineering with an expertise

in automation processes. The public listed firm operates in 28 countries with a workforce of circa

14,700 people. Dürr offers products, systems and services, that enable efficient manufacturing

processes in various industries. The company generated more than €3.6 billion revenue in 2015,

from which approximately 60% from accounts for automobile manufacturers and related suppliers.

Further, the company’s market segments include mechanical engineering and chemical &

pharmaceutical industries.

TARGET

iTAC Software AG was founded in 1998 as a spin-off of Bosch’s telecommunications division. Over

the years, the company has equipped 140 factories worldwide in a wide scale of industries, with

cloud-based MES software iTAC.MES.Suite. iTAC’s customer base includes original equipment

manufacturers (OEMs), automotive component suppliers and major manufacturers in the segments

telecommunications, electronics and medical technology. In 2015, iTAC generated a revenue of

circa €15 million.

ACQUISITION RATIONALE

• The acquisition allows Dürr to extend its current activities in the field of Manufacturing

Execution Systems (MES) – the central component of Industry 4.0 and industrial Internet of

Things (IoT). Together with iTACm, Dürr will further develop the existing Dürr MES

software EcoEMOS. MES software integrates machinery and plant production lines with

intelligent networks.

PROCESS HIGHLIGHTS

• iTAC was acquired during an international M&A auction process, whereby CFI acted as the lead

corporate finance advisor to Dürr. Due to CFI’s outstanding effort and extensive experience,

our client has successfully acquired all shares from numerous venture firms, including, TVM

Capital, Co-Investor, SAP Ventures and Pari Group.

TRANSACTION DETAILS TEAM

Transaction type:Buy-side M&A

Sector:Enterprise Software

Deal Value:Undisclosed

Nicolas GutbrodGermany

acquires

Buy-side

Enterprise

Software

ELECTED BEST DEAL MAKER


2 0 1 6 S U M M A R Y

Trading multiples per sub-category

0x

2x

4x

6x

8x

10x

12x

14x

16x

18x

EV/Sales EV/EBITDA

0%

20%

40%

60%

80%

100%

120%

Cross-border Domestic

Type of deals Type of buyers

0%

20%

40%

60%

80%

100%

120%

Financial Strategic


I N F R A S T R U C T U R E / I T M A N A G E M E N T T R A N S A C T I O N A C T I V I T Y

SELECT TRANSACTIONS IN INFRASTRUCTURE / IT MANAGEMENT 2016

# TRANSACTIONS BY BUYER TYPE # CROSS BORDER TRANSACTIONS AND COUNTRIES OF ORIGIN

STOCK MARKET VALUATIONS

Announced

date

Buyer Target Target description Enterprise

Value (‘EV’)

EV/

Revenues

EV/

EBITDA

Dec-16 CA Technologies Automic Software GmbH Provides business automation software. EUR 600m

Oct-16 Akamai Technologies Soha Systems Provides cloud-based third-party access control SaaS to IT businesses, enabling access to applications

that are hosted in data centers and to Microsoft SharePoint on enterprise networks.

USD 60m

Oct-16 Enea AB Qosmos SA Provides IP traffic classification and network intelligence software used in physical, SDN and NFV

architectures.

EUR 53m 3.7x

Sep-16 Micro Focus International Hewlett Packard

Enterprise

HPE's software business division, which provides systems management, security, content management,

application delivery, and analytic software for enterprises.

EUR 7,767m 2.8x 13.5x

Jul-16 Riverbed Technology Aternity Provides SaaS and mobile APM software tools, enabling the monitoring of applications. USD 55m 1.8x

Jul-16 Thoma Bravo LLC Imprivata Inc. Provides single sign-on (SSO) and password management software, as well as appliance-based

authentication and employee access management systems for hospitals and healthcare providers.

USD 544m 4.4x

Jul-16 Orange Login Consultants Provides virtual desktop infrastructure software and solutions. CFI DEAL - CONFIDENTIAL

Jun-16 Fortinet Inc. AccelOps Inc. Provides hybrid on-premises and hosted data center, and cloud monitoring software and SaaS for

businesses.

USD 28m 4.7x

May-16 Micro Focus International Serena Software Provider of application lifecycle management (ALM) software. EUR 482m 3.2x 6.5x

Feb-16 Silver Lake Partners &

Thoma Bravo

SolarWinds Inc. Enterprise-class IT and infrastructure management software. USD 4,217m 8.7x

30%

29%

41%

Same sector Financials Different sector

TRENDS IN M&A

• On the back of increased cloud adoption, BYOD trends and

more complex hybrid cloud offerings, IT managers have to

build out networks that need to have capacity, perform, and

offer secure corporate IT access.

• The ever rising spend on cloud – both SaaS and IaaS – will

ignite deal making with both strategic and financial buyers.

• In 2016, strategic buyers have increasingly engaged in M&A to

complete their Infrastructure/IT Management offering,

including notable cross-border transactions of CA

Technologies (Automic) and Orange (Login).

• Most strategic (listed) companies in this sector showed double

digit (topline) growth in 2015-2016, which is reflected in

healthy trading multiples.

52%

10%

11%

27%

Others India

United Kingdom United States

67%

33%

Domestic Cross border

Company NameCountry

HQRevenues

FY2015

Revenues

2016F

EBITDA

FY2015

Market cap EV/Revenues EV/EBITDA

(current)

EV/EBITDA

(3 year avg)

EV/EBITDA

(next FY)

Akamai Technologies Inc United States of America 1,946.2 2,201.0 794.7 10,991.7 5.6x 12.2x 10.6x 11.2x

Arista Networks Inc United States of America 754.4 1,051.5 224.9 6,462.6 7.8x 26.1x 15.0x 15.9x

Brocade Communications Systems Inc United States of America 2,207.2 2,439.6 584.7 4,826.5 2.3x 7.8x 6.1x 7.4x

CA Inc United States of America 3,523.0 3,829.2 1,618.4 12,626.9 3.4x 7.6x 6.8x 7.6x

Citrix Systems Inc United States of America 3,007.6 3,223.9 914.6 13,249.6 4.5x 12.4x 10.3x 11.8x

CommVault Systems Inc United States of America 517.7 589.9 68.3 2,214.5 3.6x 24.3x 19.7x 19.5x

F5 Networks Inc United States of America 1,829.1 2,019.6 702.1 8,991.2 4.5x 10.7x 9.1x 9.5x

Micro Focus International PLC United Kingdom 1,119.8 1,311.6 491.8 5,864.1 6.1x 11.2x 9.1x 10.5x

NetApp Inc United States of America 4,972.7 5,143.9 863.4 9,238.6 1.3x 6.6x 6.1x 6.1x

NetScout Systems Inc United States of America 898.5 1,140.0 236.8 2,743.8 3.0x 9.6x 7.8x 8.8x

Pegasystems Inc United States of America 619.5 751.4 114.2 2,613.7 3.9x 19.2x 13.9x 16.4x

Software AG Germany 873.1 875.7 273.4 2,724.3 3.1x 9.7x 8.0x 9.4x

Progress Software Corp United States of America 380.0 390.0 122.1 1,475.8 3.6x 11.5x 8.7x 10.7x

Radware Ltd Israel 195.1 187.6 37.2 612.6 2.5x 41.1x 29.2x 43.6x

Red Hat Inc United States of America 1,830.1 2,275.8 476.4 11,907.0 6.3x 19.0x 19.4x 16.6x

ServiceNow Inc United States of America 923.2 1,308.5 150.1 11,632.2 12.3x 45.8x 41.7x 30.7x

VMware Inc United States of America 6,115.6 6,665.9 2,123.5 30,821.3 4.1x 10.6x 9.6x 9.9x

Mean 4.6x 16.8x 13.6x 14.5x

Median 3.9x 11.5x 9.6x 10.7x

(in EUR millions)

Market Capitalization and Enterprise Value as of 1 January 2017


S E C U R I T Y T R A N S A C T I O N A C T I V I T Y



SELECT TRANSACTIONS IN SECURITY 2016

Announced

date

Buyer Target Target description Enterprise Value

(‘EV’)

EV/

Revenues

EV/

EBITDA

Dec-16 Kohlberg Kravis Roberts

& Company L.P

Optiv Security, Inc. Provides of end-to-end cyber security solutions. USD 1,850m 12.0x

Oct-16 Proofpoint Inc FireLayers Provides cloud application control (CAC) software for enterprises. USD 55m

Sep-16 ESW Capital, LLC Wave Systems

Corporation

Developer of enterprise security software solutions. USD 7m 0.7x

Aug-16 Securelink Nebulas Solutions UK-based independent cybersecurity service provider.

Jul-16 AVAST Software a.s. AVG Technologies NV Provides anti-virus, anti-malware, anti-spam, firewall, mobile device and endpoint security software for

consumers and businesses globally.

USD 1,395 3.2x

Jun-16 Blue Coat Inc. Symantec Corp. Web security and wide area network (WAN) optimization software. USD 6,299m 10.5x

Apr-16 Smiths Group plc Morpho Detection Inc.

[Safran Group]

Provides secure identification, identity management, fraud detection and illegal substance detection

hardware and software, as well as secure e-document smartcards and related software.

USD 710 2.2x 10.1x

Apr-16 Experian plc CSIdentity Corporation Provides enterprise consumer identity management, identity theft protection and fraud detection software. USD 360 3.5x

Jan-16 FireEye Inc. iSIGHT Partners Provides cybersecurity threat intelligence, detection and management SaaS. USD 200m 5.0x

26%

30%

44%


75%

25%


10%

44%

13%

23%

10%

Australia Other

Sweden United Kingdom

United States

TRENDS IN M&A

• M&A continues to be a priority for strategic acquirers and

financial investors alike in an attempt to drive revenue growth

and maintain or grow market positions.

• IT security proves to be a high-growth sector and is

undergoing significant disruption as best-of-breed threat

detection and response techniques continue to evolve.

• Such dynamics have positively impacted the valuation of

security vendors and services companies alike, as can be

derived from the median EBITDA multiple for stock-listed.

• Security companies, which is the highest among all categories

in this report with valuations of approximately 17x EBITDA

(next FY).

• Brexit’s long-term impact on M&A activity remains to be seen,

but U.K.-based buyers remained the most active acquirers in

cross-border security transactions in 2016.

• Most domestic activities took place in North America, where

the majority of strategic buyers are located.

Company NameCountry

HQRevenues

FY2015

Revenues

2016F

EBITDA

FY2015


(current)

EV/EBITDA

(3 year avg)

EV/EBITDA

(next FY)

Barracuda Networks Inc United States of America 283.4 332.6 52.3 1,066.2 3.3x 14.0x 16.1x 12.3x

Check Point Software Technologies Ltd Israel 1,490.2 1,637.3 850.3 14,051.3 8.6x 15.1x 13.4x 13.6x

SecureWorks Corp United States of America 397.9 812.6

Cyberark Software Ltd Israel 142.0 207.3 39.5 1,452.9 8.7x 21.6x 20.5x 18.4x

FireEye Inc United States of America 550.3 687.0 -110.2 1,936.7 2.7x 50.9x

Fortinet Inc United States of America 922.8 1,193.9 147.9 4,957.6 4.5x 20.9x 20.4x 16.2x

Guidance Software Inc United States of America 94.5 102.8 -0.3 216.5 2.1x 55.1x 21.6x

Intercede Group PLC United Kingdom 14.1 11.7 -2.2 33.2 1.9x 75.9x

F-Secure Oyj Finland 147.6 157.0 28.2 551.4 3.5x 21.1x 15.1x 17.5x

Palo Alto Networks Inc United States of America 1,237.3 1,711.1 244.6 10,905.9 8.2x 24.6x 25.8x 17.8x

Proofpoint Inc United States of America 242.7 353.7 4.2 2,855.6 11.5x 86.1x 80.2x 60.7x

Qualys Inc United States of America 146.7 187.9 50.6 1,074.5 6.2x 14.5x 15.1x 12.3x

Imperva Inc United States of America 211.0 243.4 10.3 1,199.5 4.5x 82.7x

Sophos Group PLC United Kingdom 427.3 507.4 57.4 1,418.6 3.9x 21.5x 19.9x 17.6x

Symantec Corp United States of America 3,164.8 3,833.2 1,089.2 14,166.7 3.4x 7.1x 7.8x 5.6x

Verisign Inc United States of America 935.7 1,037.4 633.4 7,566.8 8.0x 10.3x 10.3x 10.0x

Varonis Systems Inc United States of America 112.4 155.2 -8.3 672.7 5.1x

Trend Micro Inc Japan 988.8 1,066.2 312.0 4,744.3 3.7x 10.4x 9.7x 9.5x

VASCO Data Security International Inc United States of America 216.7 182.8 50.9 521.9 1.9x 17.9x 17.7x 15.8x

Zix Corp United States of America 49.1 55.2 13.3 252.0 4.6x 15.2x 13.9x 13.9x

Mean 5.1x 21.4x 22.7x 26.2x

Median 4.5x 16.5x 16.1x 16.9x

(in EUR millions)



B I / D A T A A N A L Y T I C S T R A N S A C T I O N A C T I V I T Y

SELECT TRANSACTIONS IN BUSINESS INTELLGENCE / DATA ANALYTICS 2016



Announced

date


(‘EV’)

EV/

Revenues

EV/

EBITDA

Dec-16 Descartes Systems

Group

Datamyne Provides of cloud-based trade data content solutions USD 53m

Dec-16 Affecto Plc Bigdatapump Oy Big data and cloud analytics company EUR 6.5m 2.0x

Aug-16 Salesforce BeyondCore Data analytics company USD 110m

Aug-16 S&P Dow Jones Indices

LLC

Trucost PLC UK-based company that provides environmental data to investors, companies and governments EUR 18m 3.8x (15.8x)

Jul-16 Luxoft Holding, Inc. INSYS Group, Inc. Provides predictive analytics, digital marketing, and enterprise information management USD 71m 1.3x

Jun-16 Francisco Partners/Elliott

Management

Dell Software Group Provides BI analytics and corporate performance management, database management, identity and

access

USD 2,200m 1.6x

Jun-16 Thomas Bravo LLC QlikTech Inc. Provides on-premise and cloud-based business intelligence (BI) analytics and reporting software USD 2,615m 4.1x

Jun-16 Oracle Corp. Opower, Inc. SaaS customer engagement and data analytics solutions for the utility industry USD 491m 3.2x

May-16 Quintiles Transnational IMS Health Holdings Inc. Data analytics software and services for the healthcare industry USD 12,912m 4.2x

Mar-16 Guidewire Software Inc. EagleEye Analytics Provides predictive analytics, risk scoring data and pricing and underwriting information SaaS USD 42m

Jan-16 Tyco International plc ShopperTrak RCT Corp Business analytics software for the retail industry USD 175m 2.3x

25%

33%

42%


72%

28%


19%

38%10%

33%


Japan Other

TRENDS IN M&A

• BI and (big) data analytics init iatives are a key driver of

infrastructure spending as the transformation to data-driven

enterprises continues.

• As such, BI / Data Analytics is one of the hottest sectors

globally for financial investments, with significant growth in

venture capital and growth capital activity. The amount of

transactions related to financial buyers was around 33% in

2016.

• Some of the world’s leading funds have been the most active

investors in Big Data Analytics companies. Notable among the

most active investors include Fransisco Partners/Elliot

• Management and Thomas Bravo, with their respective

acquisition of Dell Software Group and QlikTech in 2016.

• However, accounting for almost two thirds of the transactions

in 2016, BI and Data Analytics companies are garnering strong

interest from strategic buyers as they seek to acquire

disruptive emerging companies to remain competitive and

bolster their solutions suites through inorganic growth.

• Most cross-border appetite originates from United-States-

based buyers, with about 38% of all international BI / Data

Analytics transactions in 2016.

Company NameCountry

HQRevenues

FY2015

Revenues

2016F

EBITDA

FY2015


(current)

EV/EBITDA

(3 year avg)

EV/EBITDA

(next FY)

Datawatch Corp United States of America 27.5 30.8 -7.3 62.4 1.4x

Hortonworks Inc United States of America 108.1 170.6 -75.6 480.3 3.6x

Inovalon Holdings Inc United States of America 396.8 410.1 137.6 1,440.5 2.6x 10.8x 10.2x 10.0x

MicroStrategy Inc United States of America 486.5 472.9 142.5 2,146.4 3.5x 13.9x 11.3x 12.3x

Open Text Corp Canada 1,650.1 2,022.5 607.6 7,722.4 5.1x 11.7x 10.0x 11.0x

Splunk Inc United States of America 606.5 879.9 32.4 6,600.4 9.3x 75.4x 77.6x 49.7x

Tableau Software Inc United States of America 583.2 762.7 81.3 3,050.8 4.0x 37.8x 63.8x 40.9x

Mean 4.2x 29.9x 34.6x 24.8x

Median 3.6x 13.9x 11.3x 12.3x

(in EUR millions)



E N T E R P R I S E S O F T W A R E T R A N S A C T I O N A C T I V I T Y

SELECT TRANSACTIONS IN ENTERPRISE SOFTWARE 2016



Announced

date


(‘EV’)

EV/

Revenues

EV/

EBITDA

Oct-16 Enghouse Systems Presence Technology SL Provides on-premise and cloud-based multi-channel contact center software. 1.3x

Sep-16 Carlyle Group Exocad GmbH Designs, develops and markets computer-aided design and manufacturing software for dental market. EUR 110m

Sep-16 Symphony Technology

Group

Bond Provider of staffing and recruiting software. GBP 19m 1.2x 9.1x

Sep-16 EQT Press Ganey Associates Provides process and performance improvement patient survey SaaS. USD 2,350 6.8x

Aug-16 Ideagen plc Covalent Software Ltd Provider of cloud performance and governance management software. GBP 4m 1.9x 16.4x

Jul-16 Dassault Systemes CST - Computer

Simulation Technology

German IT Software vendor specialised in electromagnetic and electronics simulation. EUR 220m 4.7x

Jul-16 Oracle Corporation NetSuite Inc Provides ERP, e-commerce, CRM, SCM, and business intelligence (BI) analytics software. 10.8x

Jul-16 Nemetschek AG Design Data Corporation Provides steel modeling and fabrication software and SaaS for the construction and engineering sectors. USD 46m 4.6x

Jul-16 Lyceum Capital Partners

LLP

Sabio Ltd Provides enterprise customer contact center SaaS and related call center managed communications.

services

USD 65m 1.2x

Jul-16 Kohlberg Kravis Roberts

& Co. L.P.

Epicor Software

Corporation

Provides ERP, CRM and SCM software and SaaS for businesses globally.

Jul-16 Wolters Kluwer NV Enablon SA Sustainability and performance management software for all industries. USD 278m 5.6x

Jun-16 Kion Group AG Dematic Group Provides automated logistics systems integration services and related SCM software the manufacturing

industry.

USD 3,250m 1.8x

May-16 Accel-KKR Company SciQuest Inc. Provides procurement, SCM, contract and inventory management, and accounts payable automation

SaaS.

USD 373m 3.5x

Mar-16 Aconex Ltd. CONJECT Holding GmbH Provides construction management SaaS. USD 71.8m 2.7x

Mar-16 Basware, Inc. Verian Technologies, Inc. Purchasing and invoice processing software. USD 36m 3.4x

Feb-16 Verint Systems Inc. Contact Solutions LLC Provides inbound call and web chat-based customer service automation software. USD 67m 1.4x

Jan-16 Dürr AG iTac Software AG Provides industrial Internet of Things (IoT) and cloud-based manufacturing execution software CFI DEAL - CONFIDENTIAL

25%

27%

49%

Same sector Finance Different sector

62%

38%


54%

6%

39%

Other United Kingdom

United States

TRENDS IN M&A

• Private equity continues to exhibit a strong appetite for large

enterprise software buyouts, accounting for approximately 27%

of 2016’s Enterprise Software transactions.

• Vertically-focused software assets are receiving significant

attention from private equity, some of the more notable

transactions include: Carlyle/Exocad (dental market), Lyceum

Capital/Sabio (call center market) and EQT/Press Ganey

Associates (healthcare market).

• In horizontal software we see interesting M&A dynamics in

MES software, as it is a growth market and a key basis of

Industry 4.0. SaaS companies in general with defensible

market positions and substantial recurring revenue continue to

be highly sought after acquisition targets.

• From all sub-sectors evaluated in this report, Enterprise

Software is most prone to cross-border transactions with an

impressive 39% being initiated by buyers from the USA.

Company NameCountry

HQ

Revenues

FY2015

Revenues

2016F

EBITDA

FY2015


(current)

EV/EBITDA

(3 year avg)

EV/EBITDA

(next FY)

AVEVA Group PLC United Kingdom 264.6 251.5 70.5 1,410.5 4.8x 19.4x 16.6x 17.4x

Cegid Group SA France 282.1 306.8 76.8 567.0 2.2x 7.4x 5.9x 6.9x

Constellation Softw are Inc Canada 1,652.1 1,988.0 400.4 9,157.4 5.6x 18.3x 15.6x 16.2x

Dassault Systemes SE France 2,839.5 3,043.2 884.9 18,621.9 6.1x 17.1x 15.6x 15.5x

Enghouse Systems Ltd Canada 221.8 236.7 62.5 1,066.1 4.6x 16.2x 15.1x 14.0x

International Business Machines Corp United States of America 74,949.6 73,396.4 16,364.0 150,130.1 2.4x 9.8x 9.1x 9.8x

Intuit Inc United States of America 4,152.9 4,790.5 1,556.2 27,981.3 6.7x 15.3x 13.0x 13.6x

Micro Focus International PLC United Kingdom 1,119.8 1,293.3 491.8 5,864.1 6.1x 11.2x 9.1x 10.5x

Microsoft Corp United States of America 83,443.5 90,137.1 31,355.6 459,582.1 4.9x 11.9x 9.9x 10.6x

Oracle Corp United States of America 33,018.9 35,305.7 14,841.9 150,038.0 4.2x 8.7x 8.8x 8.3x

SAP SE Germany 22,062.0 23,692.9 6,417.0 101,732.4 4.9x 13.8x 12.3x 12.8x

Sage Group PLC United Kingdom 1,853.6 2,112.7 573.4 8,301.5 4.7x 13.9x 13.4x 13.0x

Mean 4.8x 13.6x 12.0x 12.4x

Median 4.8x 13.8x 12.7x 12.9x

(in EUR millions)



F I N T E C H T R A N S A C T I O N A C T I V I T Y

SELECT TRANSACTIONS IN FINTECH 2016

TRENDS IN M&A

• Traditionally, financial sponsors have viewed the Fintech

sector from the perspective of investing primarily in either

financial companies or technology companies. Recently,

however, more funds are developing cross-functional

expertise.

• The Financial buyers were the most active acquirers of Fintech

businesses in 2016, accounting for 39% of total transactions,

the highest among all sub-categories evaluated in this report.



Announced

date


(‘EV’)

EV/

Revenues

EV/

EBITDA

Oct-16 IRESS Financial Synergy Provides superannuation and investment software, administration services and products for the wealth

management industry.

USD 90m

Oct-16 Providence Equity Paysimple Provides cloud-based platform that enables businesses to market services, accept payments and retain

customers using one end-to-end solution.

USD 115m

Oct-16 Just-Eat plc Flypay Limited Hospitality payment app. GBP 3.5m

Oct-16 Prime Ventures iWoca Tech-enabled small-business lender. USD 3m

Sep-16 Paysafe Group Plc Ecom Access (digital) Provides campaign management, analytics and data management, and commission payments.

Jun-16 Broadridge Financial

Solutions

4Sight Financial Software Provider of securities finance and collateral management systems. EUR 36m 3.3x

Jun-16 Capita Trustmarque Solutions Microsoft licensing and managed services provider. EUR 74m 0.3x 9.0x

Jun-16 Blackboard Higher One Provides software that simplifies and automates electronic payments across campus. EUR 260m 1.7x

May-16 Ingenico SA Nera Payments Solutions Distributes point-of-sales payment terminals and develops electronic payment solutions. EUR 57m 2.6x

May-16 Adesso AG Smarthouse Media GmbH Provider of digital information and marketing platforms for the financial sector. EUR 24m 1.5x

May-16 HPE Growth Capital Aevi Provides a global gateway for payment transactions. EUR 30m

Jan-16 MCI EuroVentures Mobiltek SA Provides online and mobile payments. CFI DEAL - CONFIDENTIAL

• In general, the buyer community values Fintech companies

handsomely, as the median EV/revenues in Fintech is among

the highest of the sub-categories evaluated in this report

(alongside security) with about 4.5x.

• In the cross-border domain, the buyer landscape remains

rather scattered, with buyers originating from a multi tude of

countries (with 61% the highest among all sub-categories in

this report)

19%

10%

5%

5%

61%

United States Israel

Russia Austria

Other

21%

40%

40%


59%

41%


Company NameCountry

HQRevenues

FY2015

Revenues

2016F

EBITDA

FY2015


(current)

EV/EBITDA

(3 year avg)

EV/EBITDA

(next FY)

Bango PLC United States of America 4.1 3.1 -4.6 51.3 8.7x

Basware Oyj Finland 143.4 148.9 11.9 521.6 3.4x 41.2x 93.9x 70.9x

Bottomline Technologies (DE) Inc United States of America 304.3 319.1 66.5 964.6 3.3x 15.3x 14.3x 13.8x

Dalenys SA Belgium 70.3 67.0 1.2 118.4 1.5x

Earthport PLC United Kingdom 25.6 35.7 -15.0 120.8 4.1x 20.0x

Fidelity National Information Services Inc United States of America 5,841.1 8,928.1 1,800.2 23,615.6 5.7x 12.0x 9.2x 11.1x

Fiserv Inc United States of America 4,813.1 5,222.3 1,612.3 21,943.1 5.3x 14.1x 12.0x 13.1x

Ingenico Group SA France 2,197.3 2,291.3 508.0 4,665.5 2.2x 10.7x 12.3x 9.8x

Jack Henry & Associates Inc United States of America 1,201.4 1,337.2 418.4 6,595.5 5.4x 13.8x 11.9x 13.4x

Monitise PLC United Kingdom 77.7

PayPoint plc United Kingdom 162.0 140.3 73.5 799.0 4.5x 10.3x 10.5x 9.9x

Paysafe Group PLC Isle of Man 546.6 929.8 136.0 2,133.9 4.6x 9.1x 7.7x 8.1x

Qiwi PLC Cyprus 129.9 166.6 71.6 733.9 3.9x 5.2x 7.1x 5.2x

Simcorp A/S Denmark 277.9 291.0 74.2 1,917.8 6.8x 26.8x 22.2x 25.2x

Temenos Group AG Switzerland 481.9 590.9 179.6 4,610.8 10.1x 22.5x 16.1x 20.0x

Worldline SA France 1,227.0 1,311.7 235.3 3,531.9 2.6x 12.6x 10.3x 9.9x

Worldpay Group PLC United Kingdom 1,267.5 1,301.9 524.3 6,334.0 6.5x 15.6x 13.3x 13.8x

Mean 4.9x 16.1x 18.5x 17.5x

Median 4.5x 13.8x 12.0x 13.3x

(in EUR millions)



A D T E C H A N D M A R T E C H T R A N S A C T I O N A C T I V I T Y

SELECT TRANSACTIONS IN ADTECH AND MARTECH 2016

TRENDS IN M&A

• New technologies are driving customer adoption of both

Adtech and Martech as marketing departments emerge as a

competitive differentiator for enterprises.

• New categories of buyers continue to emerge, including

marketing agencies adopting technology, data providers

levering their data assets into new markets, telcos and media,

which are included in below 37% bracket representing buyers

from a ‘different sector’.

• Private equity is becoming more active and paying strategic

multiples with Vista Equity’s acquisition of Marketo, EQT’s

acquisition of Sitecore and Marlin Equity’s acquisition of

Teradata’s marketing applications business as prime

examples.

• The Adtech and Martech domain exhibits primarily domestic

M&A representing 82% of all 2016 transactions.

• Domestic transactions in – and cross-border transactions

originated from – the United States prove to be the dominant

level playing field.



Announced

date


(‘EV’)

EV/

Revenues

EV/

EBITDA

Dec-16 CRM Partners brightONE Netherlands Provides customer engagement software and solutions. CFI DEAL - CONFIDENTIAL

Nov-16 JMI Equity AutomotiveMastermind Operates as a SaaS digital marketing company that provides predictive analytics and marketing

automation software for the automotive industry.

USD 45m

Oct-16 Criteo Hooklogic Provider of a performance marketing exchange for consumer brand manufacturers. EUR 223m 1.9x

Oct-16 Salesforce.com Inc Krux [aka Krux Digital] Provides real-time audience data management and targeting SaaS for marketers, publishers & agencies. USD 768m 14.8x

Aug-16 Vector Capital Sizmek Inc Provides digital marketing analytics and advertising management SaaS. 0.5x

Aug-16 Zeta Interactive LLC Acxiom Digital, Inc. Provides integrated digital marketing solutions. USD 50m 1.2x

Aug-16 Vector Capital Sizmek Inc. Provider of campaign management software solutions. USD 85m 0.5x 9.5x

Aug-16 Blackhawk Network

Holdings Inc.

Grass Roots Group

Holdings Ltd.

Provides customer and employee engagement CRM software and digital marketing services. USD 118m

Jul-16 Monotype Imaging Olapic Inc. Provides marketing automation, customer analytics, and sales management SaaS for retailers. USD 130m

May-16 Vista Equity Partners Marketo Provides marketing automation SaaS for businesses. USD 1,790 7.9x

Apr-16 EQT Sitecore Provides customer experience management software. USD 1,131 5.2x

Mar-16 Advantage Smollan Selsoft Provides sales optimisation software. CFI DEAL - CONFIDENTIAL

Feb-16 Telenor ASA Tapad Inc. Provides cross-screen, targeted advertising software, customer analytics and advertising delivery

software.

USD 360m 6.3X

31%

32%

37%


82%

18%


28%

17%

11%

44%

United States United Kingdom

Hong Kong Other

Company NameCountry

HQRevenues

FY2015

Revenues

2016F

EBITDA

FY2015


(current)

EV/EBITDA

(3 year avg)

EV/EBITDA

(next FY)

Adgorithms Ltd Israel 19.6 1.9 13.0 0.9x

Bazaarvoice Inc United States of America 179.2 188.8 1.1 385.1 1.9x 31.1x 17.7x

Brightcove Inc United States of America 119.0 144.6 7.0 258.7 2.0x 32.9x 24.0x 23.0x

Criteo SA France 473.3 688.3 127.8 2,491.5 4.6x 10.5x 10.0x 8.2x

HubSpot Inc United States of America 161.2 254.1 -15.8 1,591.9 9.3x

Marin Software Inc United States of America 97.7 90.8 -7.1 86.4 0.6x 22.4x

Matomy Media Group Ltd Israel 241.1 242.0 22.9 131.1 0.6x 9.4x 9.4x 7.5x

New Relic Inc United States of America 159.5 244.8 -46.2 1,400.6 7.7x

RhythmOne PLC United States of America 171.3 -9.3 183.3 33.4x 9.7x

Rocket Fuel Inc United States of America 419.2 237.3 0.1 74.1 0.2x 6.6x 51.0x 46.6x

Taptica International Ltd Israel 67.6 110.2 6.6 122.3 1.6x 5.1x 5.1x 4.8x

Rubicon Project Inc United States of America 206.3 245.0 54.0 346.1 1.2x 3.8x 7.5x 4.2x

Mean 3.0x 11.4x 19.2x 16.0x

Median 1.7x 8.0x 10.0x 9.7x

(in EUR millions)



26%

31%

43%


I T S E R V I C E S T R A N S A C T I O N A C T I V I T Y

SELECT TRANSACTIONS IN IT SERVICES 2016



Announced

date


(‘EV’)

EV/

Revenues

EV/

EBITDA

Sep-16 Atos Anthelio Healthcare

Solutions

Provides healthcare technology solutions. EUR 245m 1.3x

Sep Accenture Octo Technology SA Provides digital transformation and software development EUR 107m 2.8x 23.8x

Jul-16 OMERS Private Equity,

Harvest Partners, LP

Epiq Systems, Inc. Provides integrated technology and services for the legal profession. USD 1,000m 1.9x 8.5x

Jun-16 Randstad Holding NV Ausy SA Technical system integrator EUR 420m 1.2x 14.7x

Apr-16 Apax; Neuberger Engineering Provider of IT services including system integration, apps development and IT outsourcing. EUR 664m 0.8x 8.9x

Mar-16 Careerbuilder Aurico Provider of tech-enabled background check, screening, and testing services. CFI DEAL - CONFIDENTIAL

Mar-16 Unitcom Uptime Systems OU Provider of IT infrastructure services. CFI DEAL - CONFIDENTIAL

Feb-16 Pinnacle Document

Solutions

Fast Technology Provider of multi-vendor print equipment and solutions. CFI DEAL - CONFIDENTIAL

Jan-16 Wherewithal Partners Coreio Inc. (MicroAge

Toronto)

Provides strategic IT counsel and services in IT infrastructure and IT operations. CFI DEAL - CONFIDENTIAL

66%

34%


56%

7%

8%

11%

18%

Other Germany

India United Kingdom

United States

TRENDS IN M&A

• While some uncertainty remained in the market in 2016,

including lingering difficulties in continental Europe and the

Brexit, the M&A market for IT services companies continue to

be dynamic as the hunt for (scarce) IT professionals and the

rapid adoption of new (cloud) technologies are forcing

strategic buyers to engage with inorganic options for sustained

growth.

• The IT Services domain is the most international of all sub-

• sectors covered in this report, with ‘only’ 66% of the

transactions in 2016 registered as domestic.

• Most of the international buyer arena consists of acquiring

companies from the United States, the United Kingdom and

India.

• Valuations are lagging behind (via-à-vis other sub-categories

in this report), as the exposure to (one-off) projects typically

increases in this business model.

Company NameCountry

HQRevenues

FY2015

Revenues

2016F

EBITDA

FY2015


(current)

EV/EBITDA

(3 year avg)

EV/EBITDA

(next FY)

Accenture PLC Ireland; Republic of 29,304.8 32,781.6 4,936.7 72,411.5 2.3x 12.4x 10.6x 11.5x

Acando AB Sweden 223.2 228.9 19.1 272.2 1.2x 13.9x 8.5x 9.5x

Atea ASA Norway 2,928.9 3,416.6 97.0 920.2 0.3x 8.7x 8.4x 8.0x

Atos SE France 10,686.0 11,698.4 1,200.4 10,502.2 1.0x 7.2x 5.6x 6.6x

Bechtle AG Germany 2,831.3 3,066.1 155.9 2,075.2 0.7x 11.3x 9.8x 10.3x

Cap Gemini SA France 11,915.0 12,575.6 1,526.0 13,750.9 1.3x 9.3x 7.7x 8.8x

Capita PLC United Kingdom 5,921.7 5,571.0 930.3 4,156.8 1.2x 8.6x 12.2x 8.7x

Computacenter PLC United Kingdom 3,940.3 3,797.7 152.2 1,151.7 0.3x 7.1x 7.4x 6.9x

CGI Group Inc Canada 7,297.9 7,442.7 1,339.1 12,418.8 1.8x 9.0x 8.1x 8.6x

Computer Sciences Corp United States of America 6,378.8 7,324.2 972.2 7,958.9 1.5x 7.5x 6.1x 6.9x

Devoteam SA France 485.3 551.0 33.4 471.3 0.9x 8.8x 5.6x 7.9x

Fujitsu Ltd Japan 38,630.9 36,709.6 2,638.8 10,942.6 0.3x 5.3x 4.6x 4.5x

GFI Informatique SA France 894.0 959.5 69.6 543.2 0.6x 7.9x 6.9x 7.2x

Indra Sistemas SA Spain 2,850.4 2,720.1 130.7 1,704.9 0.8x 10.3x 9.8x 8.4x

NEC Corp Japan 22,996.0 22,651.4 1,469.9 6,571.9 0.4x 7.2x 7.0x 6.5x

Neurones SA France 399.4 444.4 542.1 1.1x 9.4x 6.8x 8.5x

Nippon Telegraph and Telephone Corp Japan 94,002.8 94,387.0 25,472.8 83,810.8 1.4x 4.9x 4.4x 4.8x

Ordina NV Netherlands 348.3 355.5 13.8 195.2 0.5x 9.2x 6.2x 6.5x

Reply SpA Italy 705.6 785.8 98.7 1,103.6 1.6x 10.3x 8.8x 9.1x

Sopra Steria Group SA France 3,584.4 3,741.6 283.7 2,209.4 0.8x 8.3x 6.9x 7.5x

Tieto Oyj Finland 1,460.1 1,501.8 207.4 1,916.7 1.3x 9.8x 8.7x 9.4x

Mean 1.0x 8.9x 7.6x 7.9x

Median 1.0x 8.8x 7.4x 8.0x

(in EUR millions)



29%

23%

48%


M A N A G E D S E R V I C E S / H O S T I N G / I S P T R A N S A C T I O N A C T I V I T Y

SELECT TRANSACTIONS IN MANAGED SERVICES / HOSTING 2016



Announced

date


(‘EV’)

EV/

Revenues

EV/

EBITDA

Dec-16 United Internet AG Strato AG Germany-based web hosting company. EUR 600m 4.7x 12.4x

Dec-16 GoDaddy Inc. Host Europe Group Ltd UK-based web hosting company. EUR 1,613m 12.9x

Sep-16 Ensono Attenda UK-based critical applications and hybrid IT managed services provider.

Aug-16 Datapipe (AccelKKR) Adapt Group ** UK-based managed cloud services provider and integrator.

Jul-16 InfraVia European Fund

III

Next Generation Data

Limited

UK-based data centre operator EUR 117m 7.7x 20.6x

Jun-16 Pulsant Onyx Group Provides cloud, co-location, remote and on-site IT management, workplace recovery, applications

management and security services.

EUR 86m 2.5x

May-16 Infratil Canberra Data Centres Provider of outsourced data centre services. USD 588 11.8x

May-16 B. Riley Financial United Online Internet access and services provider. USD 170m 1.2x 11.3x

Jan-16 SPS Commerce Inc. ToolBox Solutions Inc Provides POS system customer analytics and reporting software, web hosting and related consulting

services for retailers and consumer packaged goods suppliers.

USD 22m

** CFI advised on the sale of eLinea to Adapt in 2012

82%

18%


35%

15%

27%

15%

8%

Other United Kingdom

United States Japan

India

TRENDS IN M&A

• The managed services companies post higher valuations

compared to their (generic) IT services peers, due to the

higher level of repeat business from contracts or SLA’s.

• Once the underlying infrastructure is in place, scale is a

relevant driver for M&A.

• Most of the transactions recorded in 2016 originate from

strategic buyers (77%), including notable ones such as United

• Internet (Strato), Datapipe (Adapt), and Godaddy (HOG).

• With approximately 77%, strategic buyers are among the most

active buyers in the managed services and (cloud) hosting

space as players seek scale across global markets.

• In 2016, most cross-border acquirers in the managed services

domain originated from the Unites States, representing about

27% of the transactions.

Company NameCountry

HQRevenues

FY2015

Revenues

2016F

EBITDA

FY2015


(current)

EV/EBITDA

(3 year avg)

EV/EBITDA

(next FY)

Cheops Technology France SA France 41.3

Dada SpA Italy 62.2 64.5 10.5 50.6 1.3x 7.6x 6.6x 6.5x

Endurance International Group Holdings Inc United States of America 672.8 988.4 240.9 1,251.8 3.3x 8.5x 9.1x 7.7x

GoDaddy Inc United States of America 1,444.5 1,676.1 303.2 5,520.5 4.4x 16.8x 11.3x 14.4x

Internap Corp United States of America 286.7 285.5 71.7 85.3 1.4x 5.3x 7.0x 5.2x

InterXion Holding NV Netherlands 386.6 419.4 171.3 2,332.4 7.3x 14.8x 12.3x 13.2x

iomart group PLC United Kingdom 97.7 103.6 41.4 384.1 4.3x 9.6x 8.3x 9.0x

Proact IT Group AB Sweden 7,343.4 7,716.7 2,354.1 19,295.5 3.9x 10.6x 9.5x 10.2x

Level 3 Communications Inc United States of America 98.2 118.9 14.3 129.4 1.8x 9.4x 6.0x 7.6x

Melbourne IT Ltd Australia 142.1

Redcentric PLC United Kingdom 138.6 130.2 32.7 157.1

United Internet AG Germany 3,715.7 3,970.3 771.2 7,604.5 2.5x 10.9x 11.4x 9.8x

Mean 3.4x 10.4x 9.1x 9.3x

Median 3.3x 9.6x 9.1x 9.0x

(in EUR millions)



N E A R - A N D O F F S H O R I N G T R A N S A C T I O N A C T I V I T Y

SELECT TRANSACTIONS IN NEAR- AND OFFSHORING 2016



Announced

date


(‘EV’)

EV/

Revenues

EV/

EBITDA

Dec-16 Atairos Group, Inc TriNet Group, Inc. Tech-enabled BPO in the human resources space. USD 2,028m 0.7x 14.1x

Dec-16 Information Services

Group

Alsbridge Holdings Inc. Provides IT vendor management and digital business transformation services. USD 74m

Dec-16 IQNavigator, Inc. Beeline.com, Inc. Provides procurement solutions and work force vendor management systems. USD 130m

Oct-16 Wipro Limited Appirio Cloud services USD 500m

Oct-16 Cognizant Frontica Norwegian IT and BPO services provider. EUR 115m 0.7x 10.5x

Sep-16 HgCapital Visma (BPO division) Provider of outsourced accounting services. EUR 504m 2.2x

Sep-16 Tieto Oyj Emric AB Provides credit assessment software systems, in addition to outsourced finance processing services to

the finance and leasing industry.

USD 35m

May-16 Tech Mahindra Ltd. Target Group Limited Provides loan and mortgage management software, insurance policy administration software, and related

outsourced services for the financial and insurance sectors globally.

USD 164m 2.2x

81%

19%


17%

17%

17%

33%

17%


Hong Kong Japan

Israel

52%

10%

4%


TRENDS IN M&A

• Most BPO companies are moving away from commoditised

low-margin service lines to focus on high value add,

technology-based solutions that are delivered through

collaborative working relationships between the client and

service provider.

• Furthermore, Private equity funds are driving high levels of

M&A activity in the sector as portfolio companies look to

• acquire scale and geographic presence, as well as to build

end-to-end capabilities.

• Notable cross-border transaction are characterised by large

Indian groups buying closer to the end-customers in the United

States or in Europe, incuding ISG (Alsbridge), Wipro (Appirio),

and Tech Mahindra (Target).

Company NameCountry

HQRevenues

FY2015

Revenues

2016F

EBITDA

FY2015


(current)

EV/EBITDA

(3 year avg)

EV/EBITDA

(next FY)

Cognizant Technology Solutions Corp United States of America 11,090.7 12,773.5 2,478.8 32,334.8 2.6x 10.5x 10.3x 9.7x

HCL Technologies Ltd India 6,514.6 16,357.2 9.7x 9.4x

Infosys Ltd India 8,305.3 9,659.4 2,271.7 32,337.5 3.4x 10.8x 11.0x 9.8x

Larsen & Toubro Infotech Ltd India 899.8 1,623.5 9.0x 3.0x 9.3x

Persistent Systems Ltd India 308.9 403.5 55.3 690.5 2.0x 9.4x 10.3x 7.7x

Tata Consultancy Services Ltd India 14,463.3 16,521.7 4,072.2 65,254.5 4.3x 13.5x 13.9x 12.4x

Tech Mahindra Ltd India 3,517.2 4,020.1 573.3 6,660.5 1.7x 9.3x 10.6x 8.0x

Wipro Ltd India 6,909.7 7,690.2 1,498.7 16,411.9 2.0x 9.2x 9.9x 8.3x

Mean 2.7x 10.3x 9.8x 9.3x

Median 2.3x 9.4x 10.3x 9.4x

(in EUR millions)



L T M S T O C K P E R F O R M A N C E

0%

20%

40%

60%

80%

100%

120%

140%

1-1-2016 2-1-2016 3-1-2016 4-1-2016 5-1-2016 6-1-2016 7-1-2016 8-1-2016 9-1-2016 10-1-2016 11-1-2016 12-1-2016

IT services Nearshoring MSS Nasdaq Dow Jones S&P Stoxx

0%

20%

40%

60%

80%

100%

120%

140%

1-1-2016 2-1-2016 3-1-2016 4-1-2016 5-1-2016 6-1-2016 7-1-2016 8-1-2016 9-1-2016 10-1-2016 11-1-2016 12-1-2016

Nasdaq Dow Jones S&P Stoxx Infrastructure Security BI Software FinTech AdTech


P R I V A T E E Q U I T Y D E A L S , F U N D I N G A N D L E V E R A G E

741

851 861939

1,019944

807

173213 225

310348 328 345

0

200

400

600

800

1.000

1.200

2010 2011 2012 2013 2014 2015 2016

Number of closed funds Aggregate capital raised ($bn)

Global annual fundraising by geography ($bn)

Global annual private equity fundraising

188110

399

North America Europe Asia Rest of World

Aggregate level of dry powder annually

Observations

• Private equity continues to serve as a significant factor in

Software and IT Services M&A valuations and ongoing

transaction activity in the various sub-sectors.

• 2016 showed the highest number of Software and IT Services

buy-out deals in years with 957 on record (+14% vis-à-vis

2015). About the same number of growth capital transactions

were recorded in 2016.

• While their available leverage is l ikely to be abundant in 2017

due to the low interest rates, ongoing access to debt and

record “dry powder” continue to support an outlook for another

• very active year of private equity deal making.

• As a result of the record distribution levels seen in 2014,

private equity fundraising in 2016 was robust, with over 800

vehicles raising $345bn over the course of the year. While

slightly below 2014 levels, 2016 has been an exciting year for

private equity given the liquidity within the investor community.

• However, the challenge of identifying the best investment

opportunities at attractive entry prices in a competitive market

continue to make it a seller’s market. We are likely to see

further strong exit activity in 2017 as well.

Global development of leverage ratios

5,0x 5,3x 5,4x6,4x 6,6x

5,1x

3,8x4,3x 3,6x

3,6x4,4x

4,0x

8,8x9,6x

9,0x9,9x

11,1x

9,1x

0,0x

2,0x

4,0x

6,0x

8,0x

10,0x

12,0x

2010 2011 2012 2013 2014 2015

Debt/EBITDA Equity/EBITDA Valuation/EBITDA

615 593558

672 687

752

820

0

200

400

600

800

1000

2010 2011 2012 2013 2014 2015 2016

Types of transaction with financial buyers in

Software & IT Services deals 2016

508

734

639

746

891836

957

56 5769

90

71

157

73

0

40

80

120

160

200

0

200

400

600

800

1000

2010 2011 2012 2013 2014 2015 2016

Avera

ge d

eal siz

e in E

UR

m

Tota

l am

ount

of

buyo

ut

deals

Software & IT Services sector buyout deals in 2016

35,8%

36,1%

8,7%

19,4%

Add-on Buyout Other Growth Capital


acquires

Buy-side

acquires

Sell-side

acquires

Buy-side

exits

Sell-side

acquires

Sell-side

raised capital from

Sell-side

acquires

Sell-side

acquires

Buy-side

acquires

Sell-side

acquires

Sell-side Buy-side

Infrastructure/

IT Management

Martech IT Services Infrastructure/

IT Management

Tech

Enabled Services

Enterprise

Software

Managed services/

Hosting

Application

Development

IT Services Digital Services Security/

IT Management

Data centers/

Colocation

Buy-side

acquires

Sell-side

acquires

Sell-side

acquires

Sell-side

acquires

Buy-side

acquires

Sell-side

Managed services/

Hosting

Infrastructure/

IT Management

Digital

Services

Enterprise

Software

Enterprise

Software

Enterprise

Software Reselling

acquires

Sell-side

acquires

Sell-side

acquires

Sell-side

exits

Sell-side

has recapped with

Sell-side

acquires

Buy-side

acquires

Sell-side

acquires

Sell-side

acquires

Sell-side

acquires

Sell-side

acquires

Sell-side

Infrastructure/

IT Management

Tech

Enabled Services

Enterprise

Software

Martech Infrastructure/

IT Management

Infrastructure/

IT Management

Fintech Infrastructure/

IT Management

Application

Development

Enterprise

Software

Infrastructure/

IT Management

acquires

acquires

A group of investors has

acquired a minority

position in

Sell-side

has secured

$83,500,000

of senior financing

Debt advisory

Digital Services


• Thomson Reuters EIKON

• Preqin

• Company reports

• CFI desk research



S O U R C E S

D I S C L A I M E R

This market overview is not an offer to sell or a solicitation of an

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investors as a basis for making an investment decision. This

market overview does not rate or recommend securities of

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Corporate Finance International B.V., its affiliates and/or

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that relevant industry’s sector returns. Index and sector returns

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