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Technology, Media & TelecomQuarterly Software Sector Review Q2 2020
HW Software IntroductionHARRIS WILLIAMS (“HW”)HW TECHNOLOGY, MEDIA & TELECOM (“TMT”) GROUP 25 years and more than 1,000 closed transactions 35 dedicated TMT professionals 350 professionals across eight offices globally TMT offices include Boston, San Francisco, and London 170 closed transactions in the last 24 months 10 industry groupsKEY TMT THEMES SaaS / Cloud Data & Analytics Digital Transformation A.I. / Machine LearningFOCUSED ADVISORY SERVICESHORIZONTAL FOCUS SECTORSVERTICAL FOCUS SECTORS Mergers and acquisitions (M&A)Capital raisesCorporate divestituresCONSISTENT RECOGNITION FOR QUALITYApplication SoftwareCloud Managed Services and Hosting SolutionsCompliance SolutionsCRM and Marketing AutomationHuman Capital ManagementInfrastructure and Security SoftwareIT and Tech-Enabled ServicesMarketing, Research, and Insights SoftwareArchitecture, Engineering, and Construction SoftwareEducation Technology and ServicesEnergy TechnologyFacilities and Real Estate SoftwareFinancial Technology and PaymentsGovernment TechnologyHealthcare ITIndustrial and Supply Chain TechnologyInternet and eCommerceRetail TechnologyHW SOFTWARE TEAMTECHNOLOGY, MEDIA & TELECOMTyler DewingSam HendlerThierry MonjauzeErik SzyndlarMike WilkinsManaging Directortdewing@harriswilliams.comOffice: (617) 654-2133Managing Directorshendler@harriswilliams.comOffice: (617) 654-2117Managing Directortmonjauze@harriswilliams.comOffice: 44 20 7518 8901Managing Directoreszyndlar@harriswilliams.comOffice: (415) 217-3418Managing Directormwilkins@harriswilliams.comOffice: (415) 217-3411SELECT HWSOFTWAREEXPERIENCEhas been acquired byhas acquiredhas acquiredhas received a majorityinvestment fromhas been acquired byhas made a strategicinvestment inhas received aninvestment fromhas been acquired byhas beenrecapitalized byhas acquired1
HW Current Market Observations and InsightsHW TECHNOLOGY, MEDIA AND TELECOM MID-YEAR REVIEWLATEST HW MARKET INSIGHTSFor access to HW’s latest insights and perspective,email us at insights@harriswilliams.com or visitwww.harriswilliams.com/news-insightsRecent Publications:COVID-19: ConsumerInsights, New NormalTrends, & InvestmentImplicationsM&A Learnings from PastEconomic DisruptionsThe Impact of 5G onTelecomDeep Sector Expertise Across Key TMT Focus AreasFor access to HW’s Optimizing the Outcome: Dealmakingin TMT During COVID-19, visit TMT Mid-Year Review Architecture, Engineering, and Construction Education Technology and Services Financial Technology and Payments Healthcare IT Industrial and Supply Chain Technology and moreFor access to HW’s TMT content, email us atTMT Insights@harriswilliams.com2
Case Study: SuperOfficeHW’s TMT Group advised SuperOffice on its majority investment from Axcel.TRANSACTION OVERVIEWClosed April 14, 2020Headquartered in Oslo, Norway, SuperOffice is a leading provider of cloud-based CRM software forSMBs in Europe. The Company was founded in 1990 and provides a complete range of missioncritical CRM solutions to improve the efficiency of administrative, sales, marketing, and servicefunctions.has received a majorityinvestment fromSuper Office has a high-quality and diversified customer base with over 5,500 primarily SMBcustomers. The Company offers an intuitive solution interface that enables its customers toseamlessly communicate with consumers.Founded in 1994, Axcel is a Nordic private equity firm focusing on mid-market companies and has abroad base of both Nordic and international investors. Axcel has raised six funds with totalcommitted capital of just over EUR 2.5 billion. These funds have made 55 platform investments,with almost 100 major add-on investments and 43 exits. Axcel currently owns 12 companies withcombined annual revenue of more than EUR 1.3 billion and more than 5,000 employees.RELEVANT SUB-SECTORSSAASCRMHORIZONTALHW DEAL CONTACTSThierry MonjauzeSylvain NobletManaging Directortmonjauze@harriswilliams.com 44 20 7518 8901Directorsnoblet@harriswilliams.com 44 20 7518 89173
Case Study: EclipseHW’s TMT Group advised Eclipse Legal Systems on its acquisition by Access.TRANSACTION OVERVIEWClosed June 30, 2020Eclipse is a leading mid-market case, matter, and practice management software provider operatingprimarily in the UK legal market. Eclipse’s core product, Proclaim, is in use by over 25,000professionals in a vast range of sectors. Clients range from household-name commercialorganizations and heavyweight law firms, through to niche market operators and sole practitioners.The Company’s fully integrated, end-to-end platform with unparalleled flexibility, scalability, andconfigurability enables customers to review statuses, view and upload documents, and more.a division ofhas been acquired byAccess, a portfolio company of HG Capital and TA Associates, has been recognized in The SundayTimes Tech Track 100 in 2019 and is a leading provider of business software to mid-sized UKorganizations. It helps more than 35,000 customers across commercial and not-for-profit sectorsbecome more productive and efficient. Its innovative Access Workspace cloud platform transformsthe way business software is used, giving every employee the freedom to do more. Founded in1989, Access employs more than 2,600 staff.RELEVANT SUB-SECTORSSAASLEGAL TECHVERTICAL SOFTWAREHW DEAL CONTACTSThierry MonjauzeMatthew TsuiManaging Directortmonjauze@harriswilliams.com 44 20 7518 8901Vice Presidentmtsui@harriswilliams.com 44 20 7518 89264
Case Studies: FMG Suite and FlightdocsHW’s TMT Group advised on two notable buyside transactions.RELEVANT SUB-SECTORSClosed June 19, 2020RELEVANT SUB-SECTORSClosed June 18, 2020SAASSAAShas acquiredhas acquiredMARKETING TECHAVIATIONFINTECHDATA ANALYTICSTRANSACTION OVERVIEWTRANSACTION OVERVIEWFMG Suite is a leading, cloud-based marketing automation platform forfinancial professionals, broker dealers, insurance agents, and enterprises.The Company serves more than 40,000 financial professionals every day toengage with clients and prospects to grow their businesses.Flightdocs is a leading provider of cloud-based maintenance tracking,inventory management, and flight operations software to the aviationindustry.ATP is a global information services and software solutions company focusedon making flying safer and more reliable. ATP Information Services is thegeneral and business aviation industry's source for aircraft technicalpublications and real-time regulatory information. ATP Software Solutions isthe leading provider of maintenance tracking, flight operations, inventorymanagement, repetitive defect analysis, and troubleshooting software.Aurora Capital Partners is a leading private equity firm managing funds withtotal capital commitments of over 3 billion. Aurora focuses principally oncontrol investments in middle-market companies with leading marketpositions, stable industry dynamics, attractive business model characteristics,and actionable opportunities for growth in partnership with management.HW DEAL CONTACTSMike WilkinsErik SzyndlarJake LinManaging Directormwilkins@harriswilliams.com 1 415-217-3411Managing Directoreszyndlar@harriswilliams.com 1 (415) 217-3418Vice Presidentjlin@harriswilliams.com 1 (415) 217-34475
Select Software M&A Transactions – 2Q 2020Closed July 7, 2020Closed June 25, 2020Closed June 25, 2020Enterprise Value: 330MEV / Revenue: 8.7xThoma Bravo’s acquisition of Exostar Exostar is a provider of cloud-based secure collaboration and information-sharing solutions for highly regulated industries. The company’s software solutions enable more than 150,000 organizations, across the aerospace and defense, life sciences, andhealthcare verticals, to manage the complexity and mitigate the risks involved with sharing information with third-party partners. Post-acquisition, Thoma Bravo plans to leverage its experience in identity and access management and security software to rapidlyaccelerate the company's growth trajectory while continuing to support its customer base through product innovation.Carlyle’s acquisition of Unison Unison is a provider of procurement, supply chain, and contract management software to federal government agencies and governmentcontractors. The company’s cloud-based solutions enable its customers to efficiently navigate the complex rules and compliance requirementsmandated by the federal government for procurement, grants, and contract lifecycle management programs. Following the acquisition, Carlyle will leverage its deep operational expertise and experience investing in leading industry-specificvertical software companies to continue to accelerate growth and new product development.Keysight Technologies’ acquisition of Eggplant Eggplant is a provider of an artificial intelligence and analytics test execution and automation software platform. The company’s SaaS solution enables organizations to test, monitor, analyze, and report on the quality and responsiveness of softwareapplications across interfaces, devices, and layers. The acquisition of Eggplant will enhance Keysight's existing software testing capabilities and create a highly differentiated solution thatprovides customers with a comprehensive automated testing platform across physical, protocol, and application layers.Revenue: 38MClosed June 16, 2020Announced May 7, 2020Enterprise Value: 715MAKKR’s growth equity investment in PINC PINC is a provider of a cloud-based yard and supply chain management software solutions for the manufacturing and retail industries. The company’s solution delivers real-time visibility and workflow orchestration to enable clients to identify, locate, and manageinventory throughout the supply chain predictably and cost-effectively. Following the acquisition, AKKR will leverage its deep supply chain management expertise to support PINC’s growth through focusedinternal innovations and accretive strategic acquisitions.Apttus’ (Thoma Bravo) pending merger with Conga Conga is a provider of an intelligent document automation and CRM optimization software platform. The combined company will offer solutions for Quote-to-Cash, CLM, document generation, and process automation enabling more than10,000 enterprise and mid-market customers to streamline workflows and deliver documents more effectively throughout theirorganizations. Following the merger, the combined company, operating under the Conga brand, will offer customers a complete digital transformationsolution focused on commercial excellence.6
Software Acquisition Activity – Strategic AcquirersMost Active Strategic Acquirers of Software Assets by Volume1(# of Transactions)1H 2020› The 10 most active strategic software2019acquirers registered 24 acquisitions in 1H2020. M&A activity among large strategicsoftware acquirers lagged the pace set in2019 as the deal environment felt theimpacts of the COVID-19 pandemic.20185201711› Apple was the most active strategicacquirer in 1H 2020, with six acquisitionsincluding Fleetsmith, Dark Sky, Inductiv,and Voysis.33117› Other notable 2Q 2020 strategic software236753663121069785312267transactions include Microsoft’s acquisitionof CyberX and VMware’s acquisition ofLastline.52424112542Global Strategic Acquirer Software M&A Activity by Volume1› Globally, strategic software M&A(# of Transactions)registered 410 acquisitions in 2Q 2020, adecrease from 540 in 1Q 2020.› The COVID-19 pandemic temporarilyslowed M&A activity as strategics focusedinternally on assessing potential near-termand long-term implications of the virus.3583503483233Q '164Q '161Q '172Q '173804023943803Q '174Q '171Q '182Q '184103Q '184514Q '184915045125275404101Q '192Q '193Q '194Q '191Q '202Q '20Note: Includes control investments only.7
Software Acquisition Activity – Private EquityMost Active Private Equity Buyers of New Software Platforms by Volume1(# of Platform Transactions)› The 10 most active software investors1H 2020completed 22 new platform investments in1H 2020.2019› Thoma Bravo remained the most activesoftware private equity firm in 1H 2020,completing five platform acquisitionsincluding Command Alkon, Exostar, andSyntellis Performance Solutions.201815201792918› Other notable 2Q 2020 private equity1583110platform acquisitions include Carlyle'sacquisition of Unison and FranciscoPartners’ acquisition of Consignor.6115697621535348631765563312Global Private Equity New Software Platforms M&A Activity by Volume1› Globally, private equity buyers registered(# of Platform Transactions)63 new software platform investments in2Q 2020, a 28% decrease from 1Q 2020.› New platform activity was meaningfullylower than in previous quarters as privateequity investors focused on managingtheir existing portfolio companies throughthe initial stages of the COVID-19shutdown. Following an initial period ofinternal focus and cost cutting within theirportfolios, private equity investors havenotably turned their attention to acquiringsmaller companies on behalf of theirexisting portfolio.723Q '16824Q '161029380721Q '178390100951051079610788632Q '173Q '174Q '171Q '182Q '183Q '184Q '181Q '192Q '193Q '194Q '191Q '202Q '20Note: Includes control new platform investments only. Excludes add-on acquisitions.8
Application Software – M&A Market SummaryApplication Software M&A Volume1 (Global)Median M&A Revenue Multiples1 (Reported)› Application Software 5x2913.6x3.4x404400307298Software M&A transactionmultiples decreased to 2.3xrevenue in 2Q 2020.390346336› Median reported Application3943803.5x4Qregistered 404 transactions in 2Q2020, representing a 12%decrease from the prior quarter.413460Notable Application Software M&A Transactions1,4,5› Application Software transactionvolume slowed in 2Q 2020, asboth strategic and financialbuyers focused internally onbusiness operations andnavigating the pandemic.› Notable 2Q 2020 vertical-specificsoftware transactions includeAccelya Solutions’ (Vista) pendingacquisition of Farelogix (Travel),Advent's acquisition ofConservice (Utilities), andAccess's acquisition of EclipseLegal Systems ISEVALUE (MM)REVENUEMULTIPLEApplication SoftwarePendi ngAppl eVoys i sProvi der of a cons umer a nd enterpri s e fa ci ng voi ce AI pl a tform.NANAPendi ngAccel ya Sol utions (Vi s ta)Fa rel ogi xProvi der of a i rl i ne commerce ga tewa y di s tri bution s ol utions .NANAPendi ngFOG Softwa reOptiTexProvi der of fa s hi on des i gn s uppl y cha i n a nd workfl ow ma na gement s oftwa re.NANAPendi ngPa na s oni c Corpora tionBl ue Yonder GroupProvi der of end-to-end i ntegra ted s uppl y cha i n a nd retai l ma na gement s oftwa re s ol utions .6/30/2020Acces s (TA As s oci a tes ; HG)Ecl i ps e Lega l Sys tems6/29/2020The Ca rl yl e Group6/19/2020Ri dgemont Equi ty Pa rtners6/19/2020 5,500NAProvi der of l ega l ca s e, ma tter, a nd pra ctice ma na gement s oftwa re. 57HW CONFIDENTIAL3.7xUni s on Softwa reProvi der of procurement, s uppl y cha i n, a nd contra ct ma na gement s oftwa re.NANAAmeri ca n Sa fety Counci lProvi der of onl i ne cours es for tra ffi c s chool , workpl a ce s a fety, a nd continui ng educa tion.NANAAurora Ca pi talFMG Sui teProvi der of a utoma ted ma rketing s ol utions for fi na nci a l profes s i ona l s .6/16/2020Accel -KKRPINC Sol utionsProvi der of ya rd ma na gement a nd s uppl y cha i n ma na gement s ol utions .NANA6/16/2020Da i ry.comOrbi s MESProvi der of a s ma rt ma nufa cturi ng execution pl a tform for i nforma tion control a nd a na l ytics for the F&B i ndus try.NANA6/08/2020Ori on Sys tems Integra tors (OEP)Zodi a c Sys temsProvi der of i ntera ctive medi a s oftwa re to vi deo s ervi ce del i very provi ders .NANA5/19/2020Standa rd Cogni tionCheckout Technol ogi esProvi der of retai l s hoppi ng a rtifi ci a l i ntel l i gence (AI) ba s ed checkout a utoma tion s ol utions .NANA5/15/2020Appl eNextVRProvi der of a vi rtua l rea l i ty pl a tform for l i ve a nd recorded experi ences . 100NA5/14/2020Advent Interna tiona lCons ervi ceProvi der of util i ty ma na gement a nd bi l l i ng s oftwa re. 2,500NA5/07/2020Ri ght Networks (BV)RootworksProvi der of a ccounting s oftwa re tha t ma na ges , orga ni zes , a nd a utoma tes tas ks .NANA5/06/2020Brega l Sa gemountCorcentri cProvi der of technol ogy-ena bl ed proces s a utoma tion, procurement, a ccounts pa ya bl e, a nd bi l l i ng s ol utions .NANA5/05/2020Sovos Compl i a nce (Hg)Ta xweb Softwa reProvi der of enterpri s e tax determi na tion ERP s oftwa re.NANA4/16/2020AccuTi tleCl os ers ’ Choi ceProvi der of rea l es tate property cl os i ng a nd title s oftwa re.NANA4/06/2020Koch Equi tyInforProvi der of a n enterpri s e pl a nni ng progra m crea ted to provi de cl oud-ba s ed i ndus try-s peci fi c bus i nes s a ppl i ca tions .NANA3/31/2020MRI Softwa re (GI; Ha rves t)Orcha rd Informa tion Sys temsProvi der of property ma na gement s ol utions for hous i ng bus i nes s es a nd publ i c s ector orga ni za tions .NANA 1754.3xMEDIAN 175 HW CONFIDENTIAL 4.9x9
SaaS – M&A Market SummarySaaS M&A Volume1 (Global)Median M&A Revenue Multiples1 (Reported)5.6x› SaaS M&A volume registered 345.4x68transactions in 2Q 2020, a strongdecrease from previous quarters.5.0x4.8x› Median reported SaaStransaction revenue multiplesincreased slightly to 4.6x in '161Q4Q'163Q2Q1Q'1634Notable SaaS M&A Transactions1,4,5› Cloud adoption continues todrive sector consolidation withboth public and PE-backedstrategics seeking to bolster theircloud capabilities and fortify theirpositions in key vertical markets,even during the COVID-19pandemic.› Notable 2Q 2020 SaaStransactions include Apttus’(Thoma Bravo) pending mergerwith Conga, Thoma Bravo’sacquisition of Exostar, andFrancisco Partners’ acquisition ERPRISEVALUE (MM)REVENUEMULTIPLESaaSPendi ngApttus (Thoma Bra vo)CongaProvi der of a cl oud-ba s ed document genera tion a nd reporting a utoma tion pl a tform. 715NA7/07/2020Thoma Bra voExos tarProvi der of a cl oud pl a tform for i nforma tion s ha ri ng a cros s hi ghl y regul a ted i ndus tri es .NANA7/02/2020Ki na xi sRubi kl oud Technol ogi esProvi der of a cl oud-ba s ed enterpri s e da ta a nd AI s oftwa re pl a tform for retai l ers . 60NA6/23/2020Intermedi a te Ca pi tal GroupGl oboforceProvi der of cl oud-ba s ed s oci a l recogni tion a nd performa nce ma na gement s oftwa re s ol utions . 1,2002.1x6/18/2020Ai rcra ft Techni ca l Publ i s hersFl i ghtdocsProvi der of ma i ntena nce tra cki ng s oftwa re a nd s ol utions for a i rcra ft opera tors . 94HW CONFIDENTIAL 6.3x6/15/2020Fra nci s co Pa rtnersCons i gnorProvi der of a n i ntegra ted a nd s us tai na bl e del i very ma na gement s oftwa re s ol ution.NANA6/08/2020Vi truvi a n Pa rtnersScri veProvi der of a n onl i ne e-s i gni ng pl a tform for documents .NANA6/03/2020Bentley Sys temsNoteVa ul tProvi der of voi ce-ba s ed fi el d a utoma tion s ol utions for da i l y reporting i n the cons truction i ndus try.NANA6/03/2020Spectrum Equi tyCINC Sys temsProvi der of cl oud-ba s ed a s s oci a tion ma na gement pl a tform for ma na gement compa ni es .NANA5/15/2020SS&C Technol ogi esInnoves t Sys temsProvi der of Sa a S a ccounting a nd wea l th ma na gement pa yment a nd ful fi l l ment s oftwa re s ol utions . 120NA5/13/2020Serra vi ew (JMI)Spa ceIQProvi der of web-ba s ed workpl a ce ma na gement s oftwa re a nd opera tions da ta s ol utions .NANA5/11/2020Omni tra cs (Gol dma n Sa chs )Vi s Tra
Flightdocs is a leading provider of cloud-based maintenance tracking, inventory management, and flight operations software to the aviation industry. ATP is a global information services and software solutions company focused on making flying
