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MERGE Webinar – Oct. 2009

Software and IT Industry Market Update:
Is an international buyer in your future?

Thursday, October 1, 2009

10:00 am PT

www.corumgroup.com
 Mark Reed
Executive Vice President
Corum Group Ltd.

Bruce Milne
CEO & Chairman
Corum Group Ltd.
Bruce Milne, the founder of Corum, is one of the true leaders in the software industry.  He built the largest vertical market
software company in the world before founding Corum, where he has overseen more mergers than anyone in history,
generating over $6 Billion in wealth for the owners of privately held firms.  Along the way, in addition to publishing
Miro Parizek
extensively, he has owned three other software companies (Rosesoft, Dataword, Insider Edition) and been a seed investor
Managing Director
in some of the leaders in our industry (Blue Coat, Bright Star, Sabaki). He founded the largest regional tech association
Corum Group Ltd.
(Washington Software Association), and, as a recognized leader, has served on numerous advisory boards including
Comdex, DEC, Apple, IBM, and personally advised Bill Gates at Microsoft.  He has been a tech cabinet advisor to two
Governors, a Congressman and U.S. Senator on issues related to the future of the software industry. For his expertise, he
was commissioned by the U.S. government to write the definitive high tech business guide for the SBA.  The Canadian
Government had him conduct research which led to the establishment of SoftWorld, and he was recently voted one of the
most influential people in the European software community for his work during the last market decline.

Dougan Milne
>> For today’s presentation or more information, contact Pat Sultan Research
(pats@corumgroup.com, +1 425-455-8281 ext. 248) Corum Group Ltd.
Corum Group Presentation ■ 2
Agenda

 Overview of Current Market

 International Update
 Market and Valuation Analysis

 Closing Comments - Q&A

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Recovery – Is Now the Time?

“Stocks Have Best Quarter Since 1998”

“IMF raises global 2010 growth forecast to 3.1% from 2.5%”

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Recovery – Is Now the Time?

 Corum M&A Activity High

 Six Companies Sold in Q3 
 Six More in LOI During Q3

 Six More Weighing Offers

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U.S. Economy

 “U.S. Interest Rates Steady”

 “Consumer Confidence Unexpectedly Drops”

 “Pimco’s Bill Gross Buying Treasuries Amid Deflation
Concerns”
 “Unemployment – Threatened Chronic Job Loss”

 “Fed Rescue - $11.6 Trillion Bill!”

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U.S. Real Estate

 “Home Prices Climb Most Since 2005”

 “Vacation Timeshares Plunge”

 “Industrial Real Estate Won’t Bottom Until 2010”
 “Time to Drop $8000 1st  Time Buyer Credit”

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International Economies

 “Trichet Says Too Early to Withdraw Stimulus”

 “Spanish Inflation Rate Remains Negative”
 “Pace of Eurozone Recovery Slows”

 “Banks Call on Economists over Lending Drought”

 “WB Pres: Global Economy ‘Far From’ Secure”

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International Interest Rates

 “Russia Cuts Bank Rate by Half Point to Stimulate”

 “Israel Springs Interest Rate Rise”
 “Negative Interest Rates in Sweden”

 “ECB Leaves Interest Rates at 1%”

 “Brazil to Cut Interest Rate”

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Stock Markets

 “Stock Climb Continues Since March”

 “Europe IPO Market Thawing From Deep Freeze”
 “Global Rally Shows Signs of Running Out of Steam”

 “U.S. Stocks Close Higher on M&A Boost”

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Mega Deals

 Xerox  ACS:  $6.4b; 1.3x

 Adobe  Omniture:  $1.8b;  5.2x

 SilverLake  Skype:  $2b;  5.1x

 Dell  Perot Systems:  $3.9b;  1.4x

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Tech M&A

“People are finally putting their

money where their mouth is.”

- Thompson Phillips Jr.

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Presenter

Miro Parizek, Managing Director

Corum Group International - Zurich

 University of Pennsylvania, Computer Science

 Wharton School of Business
 Software Industry since 1983
 Founder of three software and IT service companies
 Exited North American Software and MediaGold
 12 years M&A Advisor with the Corum Group
 Led on dozens of M&A transactions in virtually all software
and IT related sectors including
 Datacenter Infrastructure
 Vertical software
 Horizontal solutions
 IT Services
 Enterprise Appplications
 Web Commerce

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International M&A

 Challenges
 Cultural differences
 Integration across borders
• Establishing clear organization structures
• Fostering teamwork

 Benefits
 Economies of scale
 Growth for top (and hopefully) bottomline
 Higher service levels for international customers
 Access to “rare” domain expertise
 Global leadership position

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International versus Domestic

Source: Thomson Financial

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European Public Markets

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Equity Valuations Not in Bubble Territory

Source: Datastream

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International Buyers of U.S. Companies

23% 22% FRANCE

GERMANY
19% 19% UK
NORDIC
8% 21% BENELUX
OTHER

Source: 451 Group

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 Top Non-U.S. Buyers

 Europe  IT Services  Asia

 SAP - DE  Bull - FR  China Security
 Siemens - DE  Thales Group - FR  Kingdee International
 Software AG - DE  Cegedim - FR  CDC
 Pearson - UK  Atos Origin - FR  TrendMicro
 Autonomy - UK  
Capgemini - FR NTT
 Sage - UK  Steria - FR  Fujitsu
 Thomson Reuters - UK
 Logica - UK  Namco Bandai
 Dassault - FR
 Computacenter - UK  NEC
 Ubisoft - FR
 Getronics - BE  Sony
 Wolters Kluwer - NED

 Canada  LAM  India

 Research in Motion  Datasul SA - BR  Wipro
 OpenText  BuscaPe.com - BR  TaTa
 CGI  Hildebrando SA - MX  Infosys
 Satyam
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Related Cross-Border Transactions

Buyer U.S. Target Details

• Skydata creates business mobile applications
for RIM, Windows and iPhone
• Terms undisclosed
• Provides Ticker data management for
financial service companies
• Terms undisclosed
• Provides subscription-based automotive
GPS devices and software for consumers
• Estimates $124m in cash
• SaaS, enterprise manufacturing intelligence
software
• Transaction valued at $3.2m

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 “Lesser Known” Non-U.S. Buyers
 Australia
• Computershare Ltd - 7 deals; $4m - $120m
 Canada
• Constellation Software – 18 deals;
$1m - $25m
• Softchoice Corp. - 3 deals; $3m - $50m
• Tucows Inc. - 5 deals; $1m – $20m
 France
• ILOG Inc. - 2 deals; $2m - $15m
• Ubisoft - 3 deals; $10m - $100m (est.)
• Business Objects - 7 deals, $4m - $100m
 India
• HCL Technologies – 3 deals; $10m - $50m
• 3i Infotech – 5 deals; $4m – $80m
 Israel
• Ness Technologies – 3 deals; $10m - $80m
• NICE Systems – 5 deals; $10m - $300m
 U.K.
• SDL International - 3 deals; $15 - $60m
• Misys PLC – 3 deals; $13m - $330m
 Philippines
• IPVG Corp. – 2 deals; $10m - $15m
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 Field Update

John Melotte
Regional Director
Bruce Lazenby United Kingdom
Regional Director
Canada

Jerome Fougerat
Regional Director
France

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 Dougan Milne
International Research
Corum Group Ltd.

Dougan is a Research Analyst who has worked for 3 years with Corum's international
group headquartered in Zürich, Switzerland. Prior to joining Corum's team in 2005, Dougan
spent three years working in the banking industry with Bank of America, and Citigroup's
Private Wealth business unit. Before entering finance and investment banking, Dougan
founded the successful garment distribution business, Billions Apparel. Dougan has a
Bachelors degree in Business Economics from the University of San Diego.

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 Public Markets

Nasdaq S&P Tech Dow

120.00

110.00

100.00

90.00

80.00

70.00

60.00

50.00

40.00
Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09

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 M&A Activity – September

Number of Software and IT M&A Transactions

255

239

276
September
350

2005

2004

0 50 100 150 200 250 300 350 400

2009 2008 2007 2006 2005 2004

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Corum Index – M&A Statistics

Sep-08 Sep-09
# of Transactions 242 255
# of Mega Deals >$1B 1 6
Largest Deal $2,000 $6,400
Average Deal Value $99 $381
Median Seller Revenue $28 $112
# VC backed Exits 17 33
% Terms Undisclosed 64% 77%
All Cash (announced) 59% 47%
% Targets Public 16% 13%
% Buyers Public 49% 45%

$ values in millions

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 Horizontal Application Software Market

Public Valuations Deal Spotlight:

Sector: Supply Chain
Target: LS Retail + To-Increase
Buyer: Microsoft
Date: September 2009
Transaction Value: $5 million
Horizontal Structure: Cash
Application
Software
Comments:
 Microsoft Dynamics
Feb-09 Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09  Vertical expansion
EV/EBITDA 5.85 x 6.82 x 9.23 x 9.39 x 9.99 x 11.06 x 11.06 x 12.67 x  2 Nordic companies
EV/S 1.12 x 1.12 x 1.16 x 1.35 x 1.50 x 1.58 x 1.93 x 2.41 x

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 Vertical Application Software Market

Public Valuations Deal Spotlight:

Sector: Public
Target: FKI Logistex
Buyer: Lyngsoe AS
Date: September 2009
Transaction Value: n/a
Vertical
Application
Software
Comments:
 Gains libraries
 International expansion
Feb-09 Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09  Domain expertise
EV/EBITDA 6.19 x 6.53 x 7.26 x 7.99 x 8.17 x 8.91 x 9.01 x 9.32 x  Client base
EV/S 1.01 x 1.14 x 1.31 x 1.40 x 1.51 x 1.51 x 1.66 x 1.80 x

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 Consumer Application Software Market

Public Valuations Deal Spotlight:

Sector: Consumer Finance
Target: MINT.com
Buyer: Intuit
Date: September 2009
Transaction Value: $170m
Consumer Structure: Cash
Application
Software
Comments:
 SaaS
Feb-09 Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09  Connected services strategy
EV/EBITDA 2.40 x 2.74 x 3.81 x 2.83 x 4.47 x 4.57 x 4.27 x 5.88 x  Evolving business model
EV/S 0.58 x 0.64 x 0.69 x 0.50 x 0.53 x 0.53 x 0.59 x 0.83 x  Consumer

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 Infrastructure Market

Public Valuations Deal Spotlight:

Sector: Security
Target: Vericept
Buyer: TrustWave
Date: September 2009
Transaction Value: $20m
Infrastructure Revenue Multiples: 2.0x
Software
Structure: Stock (est.)

Comments:
Feb-09 Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09  Critical data classification
EV/EBITDA 6.32 x 6.98 x 8.46 x 8.29 x 8.74 x 9.59 x 10.92 x 10.46 x  SaaS offering in the future
EV/S 1.31 x 1.43 x 1.55 x 1.52 x 1.72 x 1.95 x 2.02 x 2.14 x

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 Internet Market

Public Valuations Deal Spotlight:

Sector: e-Commerce
Target: BuscaPe.com
Buyer: Naspers
Date: September 2009
Transaction Value: $342m
Internet
Comments:
 Geographic expansion
 Dominant regional player
Feb-09 Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09  Favorable demographics
EV/EBITDA 6.05 x 7.54 x 9.80 x 11.78 x 11.81 x 13.32 x 13.02 x 15.80 x
EV/S 1.36 x 1.60 x 2.11 x 2.26 x 2.30 x 2.48 x 2.60 x 2.70 x

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 IT Services Market

Public Valuations Deal Spotlight:

Sector: IT Services
Target: eVisory
Buyer: IQ Business Group
Date: September 2009
IT Services Transaction Value: N/A

Comments:
 Geographic expansion
 Cultural expansion
Feb-09 Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09  Domain expertise
EV/EBITDA 5.27 x 5.32 x 5.76 x 5.51 x 5.24 x 5.56 x 5.67 x 6.66 x
EV/S 0.55 x 0.56 x 0.60 x 0.61 x 0.63 x 0.68 x 0.68 x 0.73 x

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 Market and Valuation Summary

 Transaction volumes back up!

 Continue to see month on month increases in public
valuations
 Good valuations for strategic opportunities
 Active buyer universe: Public, Private and PE
 Private equity putting dollars to work: Buyout,
Roll-up, etc.
 Mega Deals are back.

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Corum Group Presentation ■ 34
London – November 17
 Partial Speaker List

November 17, London – info@worldfinancialsymposiums.com

Jenny Rosberg Frank Boenke Andrew Tsao Pelle Hjortblad Kristof de Spiegeleer
NASDAQ Wellington Partners Silicon Valley Bank ProjectPlace SUN (Q-Layer)

Ashley Ward Anil Hansjee Bernard Dalle Mike Peplow Gustavo Garcia
European Leadership Google Index Ventures Banctec BuyVIP
Programme

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www.worldfinancialsymposiums.com

Growth and Exit Strategies

Staging for Recovery
The Future of M&A, VC, Private Equity and Public Offerings in the New Tech Landscape

November 17, 2009  London

Attend this conference to learn about:
 Raising capital in the current environment
 The new rules of global tech M&A
 The role of private equity in a credit-starved market
 The IPO window
 Creative transaction structures
 Finding value and opportunity in the cloud
 Acquisition multiples, VC tactics and more

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 Upcoming Corum Events

October 5: Prague – SUSO October 23: Munich – MB

October 6: Boston – MB October 27: Frankfurt – MB
October 8: Lyon – MB October 27: Dublin – SUSO
October 8: Washington DC – MB November 3: Houston – SUSO
October 13: Scotland – MB November 5: MERGE Webinar (Int’l)
October 13: Austin – SUSO November 10: MERGE Webinar (France)
October 14: Ireland – MB November 11: MERGE Webinar (DACH)
October 20: Stockholm – MB/SUSO November 17: London – WFS
October 22: Denmark – MB/SUSO November 18: Ft. Lauderdale – MB
October 22: Grenoble – MB November 19: Tampa – MB

Merge Briefing (MB)

Selling Up Selling Out (SUSO)
World Financial Symposium (WFS)
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Contact Information

Corum Group Ltd.

Bruce Milne, CEO

Dougan Milne, Research

Douganm@corumgroup.com
Corum Group International S.à.r.l.
10500 NE 8th Street, Suite 1500
Bellevue, WA 98004
USA Miro Parizek, Managing Director
Mirop@corumgroup.com
+1.425.455.8281
Beim Paradeplatz
Basteiplatz 7
8001 Zürich
Switzerland

+41.44.251.82 65
Research and Conferences:
www.corumgroup.com

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