2007 Software M&A Outlook

July 12, 2007

www.corumgroup.com
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Speakers

Mark S. Reed
Executive Vice President

Ward Carter
President

Miro Parizek
Managing Director International

Ryan Blakely
Vice President, Research

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Agenda

Opening Remarks - Corum

M&A Market Overview

Market Trends

IPO Market

International

Public Markets

Valuations

Top Buyers & Active Sectors

Corum Q2 M&A Briefing Release

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Corum Group

M&A specialists since 1985

Software and IT experts – mostly former CEOs

Dominant North American and European presence

200+ transactions completed

$6 billion in wealth created

58% cross-border transactions

Host of Selling Up Selling Out conferences

Sponsor of World Financial Symposiums conferences

Publisher of industry-leading M&A research

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Headlines tell the story
“Can M&A’s Best Times Get Better?”
Wall Street Journal, January 2007
“Money is Everywhere – But for How
Long?”
Wall Street Journal, January 2007
“Stock Surge + Bond Boom = M&A
Magic”
Wall Street Journal, April 2007
“As Deal Barriers Fall, Takeover Bids
Multiply”
Wall Street Journal, May 2007
“M&A – The Best Investment Game
in Town”
Moneyextra.com UK, May 2007
“Greed Keeps Fear in Check”
Wall Street Journal, June 2007
“Market Pressures Test Resilience
of Buyout Boom”
Wall Street Journal, June 2007
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Surge in M&A Continues

M&A
M&AMarket
Market––All
AllIndustries
Industries
First
Firsthalf
half2007
2007––
M&A
M&AMarket
Market––Software
Softwareand
andIT
IT
M&A
M&Aup up53%53%worldwide
worldwide
$2.5
$2.5 trillion in worldwideM&A
trillion in worldwide $350
M&A $350billion
billioninin2007
2007YTD
YTD

Europe
Europe–– Q2:07
Q2:07transaction
transactionvolumes
volumesoutpacing
outpacing
$1.02
$1.02trillion
trillioninin2007
2007YTD volumes
YTD volumesfrom
fromQ2:06
Q2:06
U.S.
U.S.––
$1.03
$1.03trillion
trillioninin2007
2007YTD
YTD

2006
2006––
$3.7
$3.7trillion
trillionininworldwide
worldwideM&A
M&A

Source: Thomson Financial

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Software and IT M&A Activity

Number of Transactions by Sector

50.00%
45.00%
40.00%
35.00% 2005 % Deal
30.00% Volume

25.00%
2006 % Deal
20.00% Volume
15.00%
10.00% 2007%Deal
Volume YTD
5.00%
0.00%

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Software and IT M&A Activity

Number of Transactions by Sector

50.00%
45.00%
40.00%
Q3:06
35.00%
30.00%
25.00% Q4:06

20.00%
15.00% Q1:07
10.00%
5.00%
Q2:07
0.00%

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 M&A is the Primary Source of Liquidity
In Dollar Volume – U.S. dollar volume all industries

$1,700
$1,600
$1,500
$1,400
$1,300
$1,200
$1,100
In Billions

$1,000
$900
$800
$700
$600
$500
$400
$300
$200
$100
$0
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
YTD

M&A Dollar Volume IPO Amount Raised

Source: Dealogic, IPO Central

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 U.S. IPO Market

2007
2007poised
poisedto
tobe
bethe
thebest
bestyear
yearfor
forIPOs
IPOssince
since2000
2000


Broad
Broadmarket
marketrally
rallypushing
pushinghigh
highvolume
volumeofofnew
newfilings
filings


Venture-backed
Venture-backedtechnology
technologydeals
dealsreturn
returnto
tothe
theIPO
IPOscene
scene


Technology
TechnologyIPOs
IPOsrepresent
representapproximately
approximately30%
30%of ofall
allIPOs
IPOs
…meaning
…meaningmore
moretech
techfirms
firmsare
arereturning
returningto
tothe
thepublic
publicmarkets
markets
The Numbers – All Industries
The Numbers – All Industries

Q2:06 Q2:07 % Change

# of IPO Pricings 42 56 33.33%

Total Value $9,300 $15,400 65.59%

Average Value $221 $274 24.05%

Values are in millions

Source: IPO Central 10

Surge in M&A – Deal Drivers

Enormous liquidity (equity and debt)

Strong stock markets

Recovery in IPO market

Analysts favorable to acquisitions

Private Equity in 25% of deals

Converging market sectors

Heavy competition for market leadership

Strength of Euro / British Pound

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M&A Dominant Corporate Strategy

Support for acquisitions is stronger than ever:

Immediate impact on top/bottom line

Stimulate growth in new or existing markets

Counter takeover attempts

Speed time to market

Forestall competitive threats

Gain talent, brand and domain expertise

Fill product and technology gaps

Tap into emerging markets

Provide pathway to a global presence

Gain access to innovation

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Global M&A Activity

Cross-border transactions increasing

During the 1H:07 Europe equaled the U.S. in deal volume for the first time in four years

European deal activity up 73% in 1H:07

Britain continues to have the most aggressive European buyers, completing

approximately $175 billion in M&A transactions (all industries)

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Global Marketplace

Currently almost 60% of Corum’s recent transactions are cross-border

Intra-Country
42%
Cross Border
58%

A trend we are seeing throughout the industry

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 International IPO & VC Market
Popularity growing for less regulated European exchanges

London Stock Exchange AIM

Over 50 U.S. companies listed – and increasing

Approximately 35 foreign companies have voluntarily delisted from U.S. exchanges

Emerging Equity Markets poised for growth

Irish Stock Exchange

Slovenian Stock Exchange

Nordic exchanges

Venture Capital

Fundraising up in general and static in the tech market

Start-up and seed investments have more than doubled

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 Corum Transactions 2007

HR information
systems for middle
market enterprises
Human capital
management solutions
BPO Management
Services – U.S.
Stepstone - Norway
Human Resource
ExecuTRACK - Germany
Microsystems – U.S.

Networking and Electronic invoicing

lobby services for and legal spend
game publishers & management
developers solutions

Activision – U.S. DataCert – U.S.

DemonWare - Ireland CorpraSoft – U.S.

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Corum Transactions 2007

Value-added
Provider of distributor of voice,
estimating and earth data and converged
measuring software communications
for contractors solutions

Maxwell – U.S. Westcon – U.S.

Quest – U.S. CRANE – U.K.

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Corum Transactions 2007

March 2006 – The Carlyle Group (U.K.) acquired UC4, an enterprise job scheduling
vendor based in Austria

March 2007 – UC4, with a follow-on investment from Carlyle, acquired AppWorx, an
event-driven business application automation and batch integration technology
vendor based in the U.S.

Creating a global provider of IT process automation and optimization solutions

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Current Corum Activity

With a strong start to 2007, optimism remains high

Flurry of new closings early in Q3, in addition to four companies

currently under Letter of Intent:

IT Services

Vertical Markets

Specialty services

Government

Financial services

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Public Markets – Reaching New Heights

NASDAQ London AIM Stockholm Shanghai

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Public Valuation Multiples
Sector Q2:06 Q3:06 Q4:06 Q1:07 Q2:07 Y on Y Q to Q
Digital Media 2.82 x 2.74 x 2.59 x 1.92 x 2.07 x

Enterprise Applications 4.27 x 4.35 x 4.43 x 3.87 x 3.98 x

Business Intelligence 2.15 x 2.87 x 3.03 x 3.13 x 3.25 x

Enterprise Content Management 1.46 x 1.89 x 2.15 x 2.07 x 2.37 x

Supply Chain Management 1.58 x 1.60 x 1.89 x 2.10 x 2.29 x

Enterprise Infrastructure 2.36 x 2.40 x 2.77 x 2.86 x 2.88 x

Legacy Extension / SOA 2.59 x 1.36 x 1.70 x 2.18 x 2.56 x

Software Development Tools 1.44 x 1.88 x 1.71 x 2.00 x 2.22 x

Storage 2.43 x 2.66 x 2.98 x 3.68 x 3.29 x

Gaming 1.44 x 2.25 x 2.47 x 2.54 x 2.24 x

Internet Infrastructure 3.57 x 4.03 x 3.63 x 3.83 x 3.91 x

Internet Pure Play 3.34 x 4.00 x 3.78 x 3.41 x 3.23 x

IT Services 0.78 x 0.84 x 0.80 x 0.80 x 0.89 x

Security 3.00 x 2.94 x 3.36 x 3.15 x 3.69 x
TTM EV/S Multiples
Wireless 2.28 x 2.07 x 2.34 x 1.46 x 1.75 x
Vertical Market - Engineering 2.71 x 2.69 x 3.06 x 3.40 x 3.29 x
Decreased
Vertical Market - Financial Services 3.26 x 3.53 x 3.17 x 3.28 x 3.12 x
Vertical Market - Government 1.21 x 1.24 x 1.13 x 1.16 x 1.15 x
Increased
Vertical Market - Healthcare 1.98 x 2.69 x 2.36 x 2.28 x 2.53 x
Vertical Market - Other 2.63 x 1.75 x 2.02 x 1.19 x 2.71 x
Unchanged
Vertical Market - Telecom 2.02 x 2.12 x 2.10 x 1.33 x 1.52 x

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Public Multiples Vary Dramatically

5x

4x
Software as a
Service
3.90x – 9.50x
3x

2x

Security Software Financial Services

Niche
1x Applications
1.80x – 6.90x 1.90x – 5.10x

1.50x – 3.5x

0
TTM EV/Sales Range

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 Looking Back – Valuation Multiples

M&A Transaction Multiples – Software Industry

7.00
6.7
6.00

5.00
P/S Multiple

4.00
2.9 3.0 3.11
2.7 2.7
2.6 2.9 2.95
3.00 2.3 2.0 1.6 1.8 2.1 2.3 2.2 2.5
1.5 1.5
2.00

1.00

0.00
1H:98

2H:98

1H:99

2H:99

1H:00

2H:00

1H:01

2H:01

1H:02

2H:02

1H:03

2H:03

1H:04

2H:04

1H:05

2H:05

1H:06

2H:06

1H:07
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 Top Buyers 1H:07

Strategic Buyers Active Private Equity Firms*

Google 8 Battery Ventures
Cisco Systems 7 Carlyle Group
Oracle 5 Hellman & Friedman
Sungard Data Systems 5 Kohlerg Kravis Roberts & Co.
Bentley Systems 4 Francisco Partners
CDC Software 4 Vector Capital
Domin-8 Enterprise Solutions 4
First Data Corporation 4 *Partial List
Microsoft Corporation 4
Nuance Communications 4
SAP AG 4

75+ strategic buyers with 2 or 3 transactions

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Market Consolidation – Fewer Buyers

Tougher to find buyers for smaller companies

Example: Enterprise Applications Software Sector

AccountMate Software Harper and Shuman PeopleSoft

ACCPAC Infor Global Red Pepper
Activant Infinium PWA Group
Baan Intentia Ross Systems
Best Software Invensys Real World
Brain International JD Edwards SAGE Group
CDC Software Lawson SAP
Consona Macola SBT Accounting
Daamgard Maxwell Business Systems Scala
Epicor Microsoft Sesam
Exact Myob Limited Softbrands
Geac Navision Soloman
Great Plains Oracle State of the Art
Halo Holdings PeachTree Software

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Sector Consolidation & Evolution
Legacy Extension / EAI - Past and Present

Past Present:
Focus: Legacy extension, application Focus: Software Oriented Architecture,
integration, mainframe connectivity Web services

Players: Players:

Attachmate
Attachmate

Candle
BEA

Iona
Candle

Jacada
Iona

NEON
Jacada

NetManage
NEON

Seagull Software
NetManage

SeeBeyond
Seagull Software

Tarantella
SeeBeyond

Tibco
Software AG

Vitra
Tarantella

WRQ
Tibco

Vitra
EV/S Multiple Q2:05 - 1.31 x
Webmethods

WRQ

EV/S Multiple Q2:07 - 2.56 x

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Private Buyers

Number of private buyers increasing

Relatively flat IPO market and high cost of being public

Cash and credit available to Private Equity

Financial buyers comfortable with technology deals

Notable companies that have gone private

2006 2007

Freescale Semiconductor
Acxiom

Intergraph Corp.
Alliance Data Systems

John H. Harland
Avaya

Open Solutions
Ceridian

Sabre Holdings
Embarcadero

WatchGuard Technologies
First Data

Kronos, Inc.

SafeNet, Inc.

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Transaction Highlights – Private Equity

Buyer Seller Value (Millions $) Sector

Kohlberg Kravis First Data $25,600 Financial Services

Roberts & Co. Corporation
Silver Lake Avaya Inc. $8,200 Enterprise
Partners and Infrastructure
TPG, Inc.
Silver Lake Acxiom $3,000 IT Services
Partners and Corporation
ValueAct Capital
Battery Quovadx, Inc. $136.70 Vertical Market
Ventures
Carlyle Group RMI Undisclosed Vertical Market

Observations

Fundraising at record highs

Strong focus on technology

Tier two PE firms looking at smaller opportunities

Substantial prior investment in tech, and many deals are synergistic adding to current portfolio

Look more like strategic buyers

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Transaction Highlights – Strategic

Buyer Seller Value Sector

(Millions $)
Google, Inc. DoubleClick $3,100 Internet Infrastructure
Corporation
Infor Global Workbrain $227 Enterprise Applications
Solutions Corporation
Eniro AB Krak $72.30 Internet Infrastructure

SonicWall, Inc. Aventail $25 Security

Corporation
Sage Group plc Snowdrop £17 Enterprise Applications
Systems Limited

Observations

Willing to pay high valuations, for the right deal

Product expansion through complementary technology acquisition

Market convergence

Broaden customer mix (i.e. SMB to enterprise)

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Transaction Highlights – International

Buyer Seller Value Sector

(Millions $)
WPP Group PLC 24/7 Real Media, $649 Internet Infrastructure
Inc.
Software AG webMethods, $546 SOA
Inc.
Websense, Inc. SurfControl plc $400 Security

UC4 Software AppWorx Undisclosed Enterprise Infrastructure

SAP AG OutlookSoft Undisclosed Business Intelligence

Corporation

Observations

Global expansion

Local domain expertise

Desire to get into the U.S. markets

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Active Sectors

Sectors with strong transaction volumes

Enterprise Infrastructure

Internet – Infrastructure and Pure Plays

IT Services

Vertical market applications

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 Corum Briefing - Sample
Vertical Market – Financial Services

Public Peer Group (In $U.S. millions – except share prices)

Stock Stock Market Enterprise Trailing Multiple Forward Multiple
Symbol Company Price Value Value P/E EV/EBITDA EV/S P/E EV/S
ADVS Advent Software Inc. $32.55 $884.6 $865.9 12.15 x 30.42 x 4.60 x 87.97 x 3.65 x
EPAY Bottomline Technologies Inc. $12.35 $302.7 $242.7 N/A 29.45 x 2.17 x 23.75 x 1.87 x
CKFR CheckFree Corporation $40.20 $3,530.0 $3,310.0 29.34 x 11.97 x 3.59 x 19.05 x 2.85 x
FISV Fiserv Inc. $56.80 $9,550.0 $10,250.0 22.27 x 10.41 x 2.19 x 17.26 x 1.95 x
JKHY Jack Henry & Associates Inc. $25.75 $2,310.0 $2,340.0 23.62 x 11.59 x 3.61 x 20.28 x 3.16 x
ORCC Online Resources Corp. $10.98 $287.2 $340.4 N/A 14.54 x 3.22 x 21.96 x 2.26 x
SONE S1 Corporation $7.99 $492.6 $422.7 25.77 x 22.66 x 2.15 x 22.83 x 1.95 x
TSS Total System Services Inc. $29.51 $5,830.0 $5,450.0 22.70 x 9.64 x 3.03 x 20.78 x 3.03 x
Median Valuation Multiples 23.16 x 13.25 x 3.12 x 21.37 x 2.56 x

Market Headlines:

“Mobile Banking Catching On in US Slowly”

3.12 x Computerworld - May 2007

“Online Back Security Worsens”

Techworld - June 2007

“Banking, Fin Sectors Leaders In IT Spend”

Economic Times India – June 2007

“Banking Solutions Chase $ Dream”

Economic Times India – June 2007

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Corum’s Q2 Briefing Sample (cont.)
Vertical Market – Financial Services

M & A T ran sa ct io n s

T N S Ac qu ires D ia le c t P a ym e n t Te ch no lo g ie s
T ran s ac tio n N et w or k S er vic es , a g lo ba l c o m m un ic at io ns a nd n et w ork se rv ic es p ro vide r, ha s ac q uired
D ia le c t P ay m en t T e ch no lo g ies , a priva te ly o w n ed in te rn ation a l p a ym e nts p ro ce s s in g t ec h no lo gy c om pa ny
h ea dq ua rte re d in A u st ralia . D ia lec t P a ym e nt T e c hn olog ie s ’ p re m ie r In te rne t p a ym e nt g ate w a y gi ve s T N S
e ntr y int o the larg e ‘c a rd no t p re se nt ’ ( Int ern e t a nd c al l c en ter tra ns ac t io ns ) m a rk et , w h ic h is c ur ren tl y
e xp erie nc in g sign if ic an t g ro w th w o rld w id e . T his elec tro nic tra ns a ct io ns e ng in e ad d s a k e y elem e nt to
T N S ’ s e rv ic es s u ite th at is us ab le i n all g eo g rap hi es . T h rou g h t he a cq u is ition , T N S also e nt ers
re la tio ns h ip s w it h n e w k e y c u st om e rs pr im a ril y i n t he A sia/ P ac if ic re g io n, in clud in g c red it, d eb it an d A T M
c ard p rov ide rs an d re ta ile rs .

A n no un c em e nt D at e: J u ne 1 9, 20 0 7
D e al V a lu e: $ 4. 2 m illio n

C yb er So u rce to Ac q uire A u th oriz e .N e t

C y be rS o ur ce C o rp ora tion , lea d ing p ro vide r o f elec tro nic pa ym e nt a nd risk m an ag em e nt s olu tion s is
a cq ui rin g A ut ho rize .N e t H ol din g s, In c. , a lea ding p ro vide r o f IP -b as ed p a ym e nt so l ution s . T he a cq u is it ion
join s tw o h ig hly co m p lem en tar y b u sine s se s , p os it io ning C y be rS ou rce t o f ur the r c a pit al iz e on th e gr ow ing
w e b-b as e d pa ym e n t o pp ort un it y. B o th c om p an ie s ar e lea de rs in e n ab li ng e -c om m erc e b us in es s es t o
a cc e pt on line p ay m en ts f or go od s an d se rv ic es . C o lle c tiv e ly , t he c om p an ie s p roc e ss e d ap pro x im a tel y 1. 1
b ill io n t ra ns ac tion s in 2 00 6 , re pr es en ting $ 65 b illio n of e -c om m e rc e. T he a c qu is iti on w ill en a ble
C y be rS o ur ce to p ro vide lea ding p a ym en t so lu tion s to a ll se g m en ts o f th e e-c o m m e rc e in du st ry .

A n no un c em e nt D at e: J u ne 1 8, 20 0 7
D e al V a lu e: $ 56 5 m il lio n (S to c k an d c as h)
S e ller R ev e nu e: $ 98 .5 m illi on T T M

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Contact Information

Corum Group International S.à.r.l

General Guisan – Quai 30

CH-8002 Zurich Corum Group Ltd.
Switzerland
10500 NE 8th Street, Suite 1500
+41 44 251 82 65 Bellevue, WA 98004
USA

+1 425-455-8281

www.corumgroup.com

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