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

Europe
Europe–– Q2:07
Q2:07transaction
transactionvolumes
volumesoutpacing
outpacing
$1.02
$1.02trillion
trillioninin2007
2007YTD
YTD volumes from Q2:06
volumes from 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

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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

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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 Transactions

TNS Acquires Dialect Payment Technologies

Transaction Network Services, a global communications and network services provider, has acquired
Dialect Payment Technologies, a privately owned international payments processing technology c ompany
headquartered in Australia. Dialect Payment Technologies’ premier Internet payment gateway gives TNS
entry into the large ‘card not present’ (Internet and call center transactions) market, which is currently
experiencing significant growth worldwide. This electronic transactions engine adds a key element to
TNS’ services suite that is usable in all geographies. Through the acquisition, TNS also enters
relationships with new key customers primarily in the Asia/Pacific region, including credit, debit a nd ATM
card providers and retailers.

Announcement Date: June 19, 2007

Deal Value: $4.2 million

CyberSource to Acquire Authorize.Net

CyberSource Corporation, leading provider of electronic payment and risk management solutions is
acquiring Authorize.Net Holdings, Inc., a leading provider of IP-based payment solutions. The acquisition
joins two highly complementary businesses, positioning CyberSource to further capitalize on the growing
web-based payment opportunity. Both companies are leaders in enabling e-commerce businesses to
accept online payments for goods and services. Collectively, the companies processed approximately 1.1
billion transactions in 2006, representing $65 billion of e-commerce. The acquisition will enable
CyberSource to provide leading payment solutions to all segments of the e-commerce industry.

Announcement Date: June 18, 2007

Deal Value: $565 million (Stock and cash)
Seller Revenue: $98.5 million TTM

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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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