Symposiums Welcome to the World Financial London... · technology companies President and CEO of...

Welcome to the World Financial SymposiumsLondon, 27 September 2018

▪ Executive leader with 30+ years of expertise in serving high technology companies

▪ President and CEO of The PowerTech Group

▪ President and CEO of Microserv Technology Services

▪ President and COO of Traveling Software

▪ Vice president roles in sales, marketing and business development for technology companies

▪ Background includes strong ability to successfully integrate strategies and tactics into well executed operating plans, building strong teams and achieving excellent results

▪ Holds a BA in business from San Francisco State University

Jon Scott, Managing DirectorCorum Group International

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World Financial Symposiums: Agenda

8:45 – 9:15

9:15 –9:45

9:45 - 10:30

10:30 - 11:15

11:15 – 12:00

12:00 – 13:00

13:00 – 14:00

Registration and Breakfast Buffet

Chairman's Welcome: 2018 Top Ten Disruptive Tech TrendsJon Scott, Managing Director - Corum Group Intl.

Private Equity Panel: How you can benefit from Private Equity’s record cash▪ Zakary Ewen, Vice President - Battery Ventures ▪ Jonas Samlin, Technology Investor - HgCapital▪ Edoardo Bounous, European Director, Business Dev. - STG Partners

INTRODUCTIONS / NETWORKING BREAK

Buyers’ Panel: What does it take to be Acquired?▪ Mudit Ravindrakumar, Managing Director, Corp. Dev. - Accenture ▪ Jon Koplin, Managing Director - Cisco Investments▪ Andrew Binstead, Vice President Group M&A & Strategy - IFS

NETWORKING LUNCH

Keynote: Inside the Deal: Hear from the Buyer, Seller and M&A Advisor▪ Asli Gurler Aras, Senior Dir., Strategy & Corp Dev. M&A - Agilent Technologies▪ Frederik Decouttere, Former-CEO - Genohm▪ Jon Scott, Managing Director - Corum Group Intl.

World Financial Symposiums: Agenda

14:00 – 14:30

14:30 – 15:15

15:15 -15:30

15:30 -16:00

16:00 – 16:45

16:45 – 17:15

17:15 – 17:30

17:30 – 18:30

HFW: The GDPR and Tech M&AAnthony Woolich, Partner - Holman Fenwick Willan LLP

Sellers’ Panel: Advice from CEOs who sold - What to expect and how to prepare for an exitFred Herman, Former-CEO - Every Angle (acquired by Magnitude)

NETWORKING BREAK

Mythbusting IPOsJames Clark, Head of Tech & Lifesciences, Equity Primary MarketsLondon Stock Exchange Group

Venture Capital Panel: Share Strategies that can help Tech companies get funded▪ Vinoth Jayakumar, Principal - Draper Esprit▪ Risto Rautakorpi, Managing Partner - Gorilla Capital▪ Tom Wilson, Investment Partner - Seedcamp

Valuations & Process: What are you worth and how do you get it?Allan Wilson, Sr. Vice President - Corum Group Ltd.

Chairman’s Closing Comments

COCKTAIL NETWORKING RECEPTION

6

TOP TEN

DISRUPTIVE TRENDS

7

Leveraging Corum’s Unique Position

Top 10 Disruptive Technology Trends

1000s of Buyer

Interactions (Deals)

1000s of companies(Education)

1000s of industry

transactions (Research)

8

Why worry about these trends?

1. Trends create change

2. Change drives strategic imperative

3. Strategic imperative drives acquisitions

4. Well-positioned companies get sold

Are you part of any of these trends?

9

Corum Top Ten Technology Trends 2018

AI Enablement

Composite Commerce

IoT Software

Digital Currency Flow

Data Science Monetization

Focused IT Services

Smart Logistics

Connected Health

Regtech Systems DataSecurity

CORE

CONTO

UR

10

#1: AI EnablementPutting AI to work by means of big data and feedback

▪ Machine learning systems need data & feedback loops.

▪ Major AI platforms have prioritized foundational loops: search, language, images, speech, etc.

▪ Significant value lies in unexploited feedback loops and unique datasets.

▪ Use cases exist across all sectors, with deeper, defensible niches more valuable.

Corum Top Ten Disruptive Technology Trends 2018

11

A new generation of online/offline convergence #2: Composite Commerce


▪ Technology and traditional in-person commerce has been coalescing for decades.

▪ Amazon/Whole Foods exemplified the phenomenon, sparking new levels of awareness—and deals.

▪ Force multiplier for:▪ Online exchanges▪ Omnichannel sales/marketing▪ Visual intelligence systems▪ Smart Logistics ▪ AR/VR▪ Much more

12

Emerging platforms, standards & analytics#3: IoT Software

▪ Even in the Internet of Things, the value of code outstrips the value of hardware.

▪ Each ‘thing’ needs integrated platforms, communication, analytics, AI, security, etc.

▪ Competing platforms and associated ecosystems are beginning to coalesce.

▪ Defensible solutions to critical problems provide a path to significant M&A value.


13

Decreasing friction in payments & exchange#4: Digital Currency Flow

▪ Blockchain is grabbing headlines, but the key to the trend is decreasing transaction friction.

▪ Includes alternative currencies; not just crypto, but in-game tokens, Starbucks cards, airline miles, other loyalty programs, etc.

▪ Digital transformation is driving major consolidation in payments space from megadeals on down.

▪ Small efficiency improvements with potential to scale make attractive M&A targets.


14

Maximizing return with real-time analytics#5: Data Science Monetization

▪ Proactive monetization is a more valuable use of data science than cost cutting & efficiency gains.

▪ Robust analytic tools are no longer optional, especially for consumer-facing companies.

▪ Game companies are leading the way, with video ads close behind and new opportunities in retail, B2B value pricing, and beyond.

▪ In a world of freemium, free-to-play and declining ad effectiveness, proven ability to turn users into dollars is a valued asset.


15

Differentiation drives new value in a sleepy sector#6: Focused IT Services

▪ Service firms specializing in a technology, sector or problem are seeing increased value.

▪ Intricate platforms require particular expertise for application, maintenance, and extension of tech stacks.

▪ Buyers value deep domain knowledge as a driver of defensible long-term customer relationships.

▪ Firms on the forefront of key trends & high-value verticals seeing particular interest.


16

Moving things & people with a new level of efficiency

#7: Smart Logistics

▪ Movement of physical objects must increasingly keep pace with the movement of data.

▪ At the convergence of trends in AI, latent capacity utilization, ecommerce, consumer demand.

▪ Impact beyond traditional SCM, in multiple verticals including:▪ Transportation▪ Manufacturing▪ Construction▪ Agriculture


17

Linking people to their health services & data#8: Connected Health

▪ Technical, regulatory and demographic changes drive shift from system-centric to patient-centric health IT.

▪ Patients demand consumer-grade connections to data and providers.

▪ Providers need tools that help them compete.

▪ Notable demand for telemedicine, patient engagement, mobility & transparency solutions.


18

Letting computers keep up with compliance#9: Regtech Systems

▪ The complexity of dealing with regulatory change is increasing.

▪ Rules in software becoming intrinsic to laws, mandates & agreements.

▪ Solution sets backed by legal requirements draw significant acquirer interest.

▪ Interconnected regulatory systems make consolidation of point solutions particularly attractive.


19

Building barriers in an age of blurred lines#10: Data Security

▪ New technologies creating new risks from freer flowing data.

▪ High impact breaches & attacks (Equifax, Uber, WannaCry) drive broad recognition of security needs.

▪ Dominant trend is anti-malware, especially automation and AI-enabled tools.

▪ The Internet of Things opened a new front, from IoT botnets to hijacked smart speakers.


20

MARKET OVERVIEW

BUYERS AND VALUATIONS

21

$3Trillion

$1Trillion

Cash Available for Acquisitions

Strategic Tech Buyers

Private Equity

22

Top Strategic Acquirers – 2017

23

Top Private Equity Acquirers – 2017

24

Horizontal Application Software MarketPublic Valuation Multiples

25

Subsector Sales EBITDA Examples

Business Intelligence 4.49x 24.75x

Marketing 5.06x 19.06x

CRM 6.88x 54.02x

ERP 4.87 19.38x

HumanResources 8.40x 49.58x

SCM 6.56x 33.48x

Payments 5.27x 26.65x

Other 3.28x 22.34x

Horizontal Application Software Valuations

26

Vertical Application Software MarketPublic Valuation Multiples

27


A/E/C 10.06x 34.82x

Automotive 4.36x 16.47x

Energy & Environment 3.18x 16.54x

FinancialServices 5.95x 23.53x

Government 2.29x 15.29x

Healthcare 4.07x 32.68x

Real Estate 7.36x 33.44x

Vertical Other 3.34x 16.18x

Vertical Application Software Valuations

28

Consumer Application Software MarketPublic Valuation Multiples

29


Casual Gaming 3.30x 19.92x

Core Gaming 3.16x 9.99x

Other 1.89x N/A

Consumer Application Software Valuations

30

Internet MarketPublic Valuation Multiples

31


Diversified Internet 4.62x 19.73x

eCommerce 0.72x 30.98x

Social Network 8.75x 17.92x

Travel & Leisure 6.87x 24.42x

Internet Application Software Valuations

32

Infrastructure Software MarketPublic Valuation Multiples

33


Endpoint 3.95x 18.08x

IT Services Management 7.48x 14.45x

Network Management 4.88x 14.90x

Security 7.54x 40.32x

Storage& Hosting 4.26x 58.10x

Other 4.72x 12.09x

Infrastructure Software Market

34

IT Services – Developed MarketsPublic Valuation Multiple

35

IT Services – Emerging MarketsPublic Valuation Multiples

36


Developed 1.34x 12.87x

Emerging 3.70x 22.04x

IT Services Valuations

37

1. Disruptive trends – Strategic imperative to buy

2. Cash – Strategic & financial buyers

3. Low cost debt for leveraged buyouts

4. Many new buyers (IPOs, non-tech)

5. Strong financial markets

5 Reasons Tech M&A Will Remain Strong

38

M&A Follows Cycles

1995 2000 2005 2010 2018

THE GDPR AND TECH M&A: KEY ISSUES WFS LONDON 2018

27 SEPTEMBER 2018

ANTHONY WOOLICH

[email protected]

+44 (0) 207 264 8033

AGENDA

THE GDPR AND TECH M&A

• GDPR recap

• Enforcement

• Which transactions raise issues?

• Data protection through a transaction

GDPR RECAP

DATA PROTECTION

• EU General Data Protection Regulation – 25 May 2018

• Applies to non-EEA organisations in some circumstances

• Why should you care?

– Fines (4% global turnover or 20 million euros – whichever is greater)

– Claims from individuals

– Reputational damage

– Criminal penalties set by national law

• 7 key principles – including accountability

WHICH TRANSACTIONS RAISE ISSUES?

DATA PROTECTION

• In reality – almost all transactions

• Why?

– Definition of ‘personal data’ is very broad: any information relating to an identified or identifiable natural person

– Includes: name, location data, cookies, economic or social identifiers

– Automated or manual filing system

• High risk transfers?

– Employees’ data

– Customer databases

– Sending data abroad

DATA PROTECTION THROUGH A TRANSACTION

DATA PROTECTION

Pre-signing

• NDA

• Data room

• Due diligence

Signing

• Drafting the SPA

• Other contractual provisions

• Ancillary agreements

Pre-closing

• Pre-closing integration

Post-closing

• Data uses and integration

• Post-closing restructuring

THE GDPR PRINCIPLES

DATA PROTECTION

Lawfulness, fairness and transparency

Purpose limitation

Data minimisation

Accuracy

Storage limitation

Integrity and confidentiality

Accountability

LAWFUL, FAIR AND TRANSPARENT PROCESSING

DATA PROTECTION

• Lawful ground for processing?

– Legitimate interest/consent

– Note: Special Categories of personal data

• Fair processing?

– Reasonable

– Expected

– Privacy notice

• Transfer assets or shares?

• Transparency is key

ANONYMISATION & MINIMISATION

• What steps can be taken if data must be exchanged?

– Seller: anonymisation or pseudonymisation can prevent sharing of personal data in the transaction

– Seller: minimise the volume of data

– Both : sign a confidentiality agreement

DATA PROTECTION

PURPOSE LIMITATION

• What about if the buyer wants to process data for different or additional purposes?

• Seller:

– Make clear the scope of permitted processing

– Limit liability for subsequent data processing activities

• Buyer:

– Obtain consent for any additional processing activities

– Limit liability for historic non-compliance

DATA PROTECTION

DUE DILIGENCE

• More emphasis on target’s internal data protection systems and processes

– Is the target GDPR compliant, or on its way to being so?

• New obligations on data processors

– Do contracts with sub-contractors and processors comply with the GDPR?

• Increased need for a data audit

– Understand how a target collects, stores, uses, or transfers personal data

– Provides opportunity to assess risk

• Existing liabilities

– Likely to attract any fines for historic non-compliance?

DATA PROTECTION

BUYERS’ CONSIDERATIONS

• Use of data: can the data in the transfer be used in the way the buyer intends?

– Consider the lawful basis for processing, including consent

– Article 14(5) GDPR

• Deletion: departing staff can require their data to be removed from the system (unless there is an obligation to retain e.g. for statutory purposes)

• Special category (sensitive) data: big data businesses will need to take extra precautions

• DPO: will be mandatory where activities involve ‘large scale processing of sensitive data’ or the ‘regular and systematic monitoring of data subject on a large scale’

• Subject Access Requests: may increase, can no longer charge (usually), response within a month

DATA PROTECTION

SELLERS’ CONSIDERATIONS

• Due diligence: limit sensitive and personal information disclosed as part of DD review

• Non-disclosure agreements: may help control access to personal data

• Risk taking to get the deal done: waiving data protection obligations to progress a deal (e.g. buyer wants to understand workforce and customers, even though this may be unauthorised processing of data) will be more risky given the potential penalties

DATA PROTECTION

TAKE HOME POINTS

CONCLUSION

• Plan ahead and be pre-emptive

• GDPR: Data processing needs to be considered at every stage of a transaction (especially during the due diligence and disclosure stages). What do you plan to do with acquired data?

© 2018 Holman Fenwick Willan LLP. All rights reserved

Whilst every care has been taken to ensure the accuracy of this information

at the time of publication, the information is intended as guidance only.

It should not be considered as legal advice.

Beirut Brussels Dubai Geneva Hong Kong Houston Jakarta Kuwait London Melbourne Paris Perth Piraeus Riyadh São Paulo Shanghai Singapore Sydney

Mythbusting IPOs

James Clark

Head of Tech and Lifesciences

London Stock Exchange Plc

September 2018

@mr_james_c #MythbustingIPOs

“A lie can travel halfway around the world

before the truth can get its boots on.”

“I’m not a unicorn, so why IPO?”

IntegraFin Holdings Ltd

IPO date: 02/03/18

Market Cap at IPO: $908.8m

Change of Price Since IPO: +84%

TruFin Plc

IPO date: 21/02/18

Market Cap at IPO: $256m


“I need to have $100m ARR to IPO”

Cerillion Technologies Ltd

IPO date: 18/03/16



LoopUp Group Plc

IPO date: 24/08/16



“I need to IPO in the US to get the best

valuation”

Sophos Group Plc

IPO date: 26/06/15

Market Cap at IPO: $1.6bn


Worldpay Group Plc

IPO date: 13/10/15

Market Cap at IPO: $7.4bn


“I can’t access US investors from London”

Purplebricks Group Plc

IPO date: 17/12/15



Softcat Plc

IPO date: 13/11/15



“No one has heard of me, so who’d invest?”

Sensyne Health Plc

IPO date: 17/08/18

Market Cap at IPO: $287m


FreeAgent Holdings Plc

IPO date: 16/11/16



“I can’t IPO because I’ll need to raise more

in the future”

Blue Prism Plc

FO date: 25/01/18Type: Accelerated BookbuildMarket Cap at IPO: $69.7mMarket Cap at FO: $1.3bnChange of Price Since IPO: +2,656%

Just Eat Plc

FO #8 date: 02/11/17Type: Accelerated BookbuildMarket Cap at IPO: $2.4bnMarket Cap at FO: $7.0bnChange of Price Since IPO: +163%

“I’ll have to do quarterly reporting”

Boku Plc

IPO date: 20/11/17



XLMedia Plc

IPO date: 21/03/14



Be part of the world’s most

international market

@mr_james_c #MythbustingIPOs

James ClarkHead of Tech and Lifesciences

Equity Primary Markets

mr_james_c

[email protected]

Contact

Legal Disclaimer

This document has been compiled by London Stock Exchange plc (the “Exchange”). The Exchange has attempted to ensure that the information in this document is accurate, however the information is

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The Exchange does not guarantee the accuracy, timeliness, completeness, performance or fitness for a particular purpose of the document or any of the information in it. The Exchange is not

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www.lseg.com

Valuations & Process

What are you worth and how do you get it?

Allan Wilson

Senior Vice President

Austin, Texas

2

Corum Speaker

▪ Born in Scotland, now lives in Austin, Texas.

▪Over 30 years of executive and entrepreneurial experience

▪Built and sold several software companies in sectors such as

Manufacturing, Supply chain, Healthcare, Big Data and Predictive

Analytics

▪ Expertise in Aerospace, Automotive, High Tech, Healthcare,

Consumer Products and Oil & Gas industries.

▪Extensive international experience

Allan Wilson

Sr. Vice President

3

What is your business worth?

1. What someone is willing to pay for it!

2. You can greatly influence this with

leverage.

3. Create leverage through a disciplined

competitive process.

4

Offices globally – 70% of transactions cross border

5

Research

Education

Valuation

World Tech M&A Leaders…

6

Unsurpassed Buyer Access

Corum Buyer

Knowledgebase

Engagements

Internal Research

External Research

EducationOutside Events

Transactions

Outside Advisors (WTC)

7

Detailed, professional process

Team approach

Most senior dealmakers

World TechnologyCouncil

Sold more software-related firms than anyone

Achieving an Optimal Outcome

8

Recent Corum Transactions

USA / USA USA / USA NETHERLANDS / USA

FINLAND / GERMANY USA / USA USA / USA

9

Recent Corum Transactions

USA / USA

USA / USA

USA / USA

AUSTRALIA / AUSTRALIANETHERLANDS / USA

SPAIN / USA

10

Deal Spotlight

Sold to

Target: Captio [Spain]

Acquirer: Certify [K1 Investment Management] [USA]

- Mobile-first, paperless, expense management SaaS

- Expands Certify’s international presence

- Builds upon Certify’s purchases of nuTravel and Abacus

“There will be a lot of shared technology, such as the online booking tool,

payments and receipt scanning, which are going to be offered through Captio.”

Robert NeveuPresident and CEO, Certify

11

Getting the Highest Valuation

• Timing - when should you sell?

• Process – building the buyer bridge

• Deal Disasters - how to avoid

• Leveraging Bidders - for maximum value

12

Getting the Highest Valuation

Process: Building Buyer Bridges

Optimal Outcome Process

13

1

8 Stages for an

Optimal Outcome

IntegrationClosingDue

DiligenceNegotiationDiscoveryContactResearchPreparation

14

1. Confidentiality—internal/external

2. Loss of staff (non-solicitation)

3. Wear on CEO/management

4. Business drop-off—lack of focus

5. Going to market too late

Top 5 Value Destroyers

15

1. Disruptive trends – Strategic imperative to buy

2. Cash – Strategic & financial buyers ($3 trillion )

3. Low cost debt for leveraged buyouts

4. Many new buyers (IPOs, non-tech)

5. Strong financial markets

5 Reasons Tech M&A Will Remain Strong

16

5 Major Benefits of a Professional Process

Model

The

preparation

process will

help forge a

better

business

model for

your firm

1

Research

Your

strategic

position will

improve from

the research/

positioning

process

2

Market

Feedback

Invaluable

data/insights

straight from

the top will

help improve

your value

3

Relation-

ships

70% of

parties that

go under

NDA may not

be able to

buy—but

could

partner,

adding value

4

Exit

The merger,

asset sale, or

financial

recap of your

company

5

16

17

Key elements of the Optimal Outcome

1. Both buyer and seller feel it was a good

deal.

2. Deal structure as important as deal

value.

3. On going liabilities are minimal.

4. All stakeholders (including employees)

are excited about the future

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