Technology, ommunications, & edia (“T”)...Technology, ommunications, & edia (“T”) Market...

MOSS ADAMS CAPITAL LLC

Technology, Communications, & Media (“TCM”)

Market Monitor

Spring 2017

2 Technology, Communications & Media MOSS ADAMS CAPITAL LLC

Top-Line Takeaway

Life is good for technology companies of all sizes, and for buyers looking to get into the industry. Strong stock prices indicate a confident market, and other trend lines signpost optimism nearly across the board. The “Trump bump” pushed technology, communications, and media (TCM) stocks up as well as the S&P. After the election, stock growth for communications companies has normalized, but software and media companies continue to climb in value, with valuations following the same trend. Revenue growth across media, software, and communications companies tracked by Moss Adams Capital LLC is expected to outpace the S&P over the next 12 months. Middle-market PE firms in the United States raised $164 billion in 2016, sitting alongside dry powder stockpiles of $852 billion globally. This amount of resources could cause the technology sector’s digital demand to start setting off some sparks.

Bumps, Slumps, and the Drive for Digital Keep Technology Dynamic

Par for the Course

Valuations for software and media companies remain incredibly high, and are overvalued compared to other sectors of the market. Large merger and acquisitions (M&A) events—many market-defensive—over the past year likely contributed to the surge, as companies look to the cash flow from legacy business lines to fund further innovation. However, in an age when every company is a tech company—or, at least, so many are positioning themselves that way—and innovation holds as much currency as cash, getting used to big valuations wouldn’t be the worst idea. There’s nothing wrong with ambition. Digital security companies showed the highest valuations among all sectors tracked, reflecting the new reality that, when it comes to security, having less than the best is no longer acceptable. In today’s environment, corporate buyers have little choice but to invest in improved digital security. This offers incentive to digital security companies to innovate new product lines and service models, knowing their customers have a vested interest in continued upgrades as new threats of cyberterrorism and increasing complexities in their own digital operations don’t show signs of slowing.

Industry Update


Investing in Innovation

Innovation deserves its own comment, especially in software and media, the two sectors with the strongest stock performance over the period tracked. The reasons for the lag in communications stock values are relatively obvious—uncertainty over corporate tax rates, repatriation of funds, net neutrality, and other regulatory issues—the question is why are software and media companies’ stocks surging? The answer is the demand for digital, which is pragmatically customer-driven and psychological. As cloud computing drives costs down, businesses shift to x-as-a-service (XaaS), also known as anything as a service, operating models and subscription structures. This allows companies to hold on to more cash, so more money is reinvested into research and development (R&D)—particularly digital R&D. With enterprise software remaining a huge hot button, IPOs returning to strength, and recent unicorn companies bringing more liquidity to the market, nobody wants to miss out on what’s next. As more companies from outside what would traditionally be considered the technology sector turn toward digital transformation, the drive for businesses to reinvent themselves for the modern age is very real.

An Interesting Anomaly

With the overall media sector swinging upward, the fact that the total number of US middle-market media mergers and acquisitions (M&A) transactions was down 19 percent in 2016 versus 2015 is somewhat surprising. Consumer time and spending has dramatically shifted toward digital. This means acquirers will likely continue their attempts to grow through inorganic means as content producers not only compete for the attention of consumers, but also to reduce the cost of their content. General economic uncertainty, future corporate tax cuts, net neutrality, regulation on TV station ownership, and restriction on Chinese foreign investment could all be contributing to the pull back. It may also simply be a short-term stall. Don’t forget that the past few years were strong.

Industry Update


Exits, Acquisitions, and Capitalizing on Value

With high valuations in software and media, and ongoing uncertainty in communications, deal flow may slow. Sellers looking for exits and buyers looking for acquisitions may be inclined to sit on the sidelines for now. However, if a good company comes to market in any of these sectors, it will assuredly generate interest and a competitive process. With large corporate entities flush with cash and a significant amount of private entity dollars looking for a return, liquidity looks good, both for acquisitions and strategic investments. Of course, there’s never a sure thing, but the digital dream and overall outlook for companies across the technology industry continues to make it a smart place to look for opportunity.

Taft Kortus Industry Group Leader Technology, Communications & Media Moss Adams

Industry Update


Media

18.1x

Software

18.1x

S&P 500

12.0x

Communications

7.2x

5.0x

7.0x

9.0x

11.0x

13.0x

15.0x

17.0x

19.0x

21.0x

23.0x

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Trading multiples for Software and Media companies are at 18.1x EBITDA, while the S&P 500 is trading at 12.0x EBITDA. The Communications sector lags both the Software/Media sectors, and that of the S&P 500, trading at 7.2x EBITDA.

Trading multiples for Media and Software sectors are relatively flat over the last year, while EBITDA multiples for Software companies have risen more than 58% over the same time period driven by the return of a healthy IPO marketplace in early 2017 for Software companies.

TCM – Valuations Vary Across Industry Sector

Note: As of 4/20/2017. The Software, Communications, and Media indices are composed of the public companies included on pages 8-11. Estimated growth is based on the median estimates of Wall Street analysts.

Source: S&P Capital IQ, WSJ.

The outlook for the overall TCM industry group remains positive, with the revenue growth rate for all three of the industry niches expected to significantly outpace the S&P 500 over the next 12 months.

Expectations for the Software and Media niches continue to be the most promising, with greater than 10.0% revenue growth expected for both sectors over the next 12 months.

Technology Companies vs. S&P Next 12 Months: Estimated Sales Growth


TCM – Recent Stock Performance by Sector

Over the past year, shares of the publicly traded companies in two of the three niches tracked in the MAC Technology, Communications, and Media Industry Group have outperformed the overall S&P 500 index.

Software (+16.4%) and Media companies (+20.4%) have outperformed the S&P 500 index (+12.7%) Over the last 12 months .

12-Month Indexed Stock Price Performance

Percent (%) Change:

April ’16 - Present

Source: S&P Capital IQ, WSJ.

Media - 20.4%

Software - 16.4%

S&P 500 Index - 12.7%

Communications - 0.4%

-15%

-10%

-5%

0%

5%

10%

15%

20%

25%

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Median Public Multiples, by Sub-Sector (as of 4/21/17)

Median Revenue Multiples, by Sector

Median EBITDA Multiples, by Sector


Software Valuation Metrics

($US in millions, except per share amounts) 4/21/17 TTM Data EV Multiple

Company Name

Share

Price

52 Week

High - Low

Market

Cap

Enterprise

Value Sales EBITDA

EBITDA

Margin Sales EBITDA

TTM

Sales

TTM

EBITDA

NTM

Sales

NTM

EBITDA

SaaS

LogMeIn, Inc. $107.05 $110.10 - $50.80 $5,640 $5,497 $336 $41 12.2% 199.1% NM NM NM 5.5x 16.2x

j2 Global, Inc. 84.76 90.88 - 60.00 4,085 4,768 874 370 42.3% 31.9% 30.5% 5.5x 12.9x 4.1x 9.9x

Zendesk, Inc. 28.24 31.88 - 11.06 2,779 2,567 312 (84) NA 34.7% NA 8.2x NA 6.1x NM

RingCentral, Inc. 29.50 29.95 - 17.92 2,199 2,061 380 (11) NA 28.4% NA 5.4x NA 4.2x NM

New Relic, Inc. 39.66 40.10 - 23.55 2,093 1,899 243 (54) NA 33.0% NA 7.8x NA 5.9x NA

Callidus Software Inc. 20.13 21.55 - 15.15 1,283 1,115 207 (7) NA 17.8% NA 5.4x NA 4.6x 33.7x

LivePerson, Inc. 7.10 8.85 - 5.43 414 366 223 9 4.0% (7.9%) 106.3% 1.6x NM 1.8x 19.8x

Bazaarvoice, Inc. 4.55 6.14 - 3.30 377 330 202 (8) NA 1.7% NA 1.6x NA 1.6x 20.1x

Jive Software, Inc. 4.58 4.59 - 3.50 362 252 204 (0) NA (0.3%) NA 1.2x NA 1.2x 11.0x

ServiceSource International, Inc. 3.65 6.25 - 3.50 323 272 253 (6) NA 0.5% NA 1.1x NA 1.1x 20.6x

ChannelAdvisor Corporation 11.68 15.91 - 10.20 306 247 113 (6) NA 9.3% NA 2.2x NA 2.0x 37.9x

Zix Corporation 5.40 5.41 - 3.61 289 256 60 12 19.8% 9.1% 53.6% 4.3x 21.5x 3.9x 14.0x

Tangoe, Inc. 5.25 10.39 - 4.50 207 175 219 10 4.4% 8.2% 172.8% 0.8x 18.2x 0.7x 6.7x

Median $366 $223 ($6) 12.2% 9.3% 79.9% 3.2x 18.2x 3.9x 18.0x

Large Enterprise Software

Microsoft Corporation $66.31 $66.35 - $48.04 $512,413 $472,754 $85,688 $27,738 32.4% 17.3% 36.1% 5.5x 17.0x 4.7x 12.5x

Oracle Corporation 44.47 46.99 - 37.62 182,959 178,250 37,429 14,535 38.8% 2.5% 17.9% 4.8x 12.3x 4.6x 10.4x

Adobe Systems Incorporated 131.29 131.99 - 90.35 64,947 62,250 6,153 1,984 32.3% 21.8% 55.1% NM 31.4x 8.3x 20.2x

Salesforce.com, inc. 83.75 86.42 - 66.43 59,253 59,966 8,392 505 6.0% 21.3% NM 7.1x NM 5.9x 27.0x

Intuit Inc. 118.31 128.45 - 99.20 30,262 30,765 4,852 1,411 29.1% 8.4% 42.5% 6.3x 21.8x 5.8x 15.3x

Median $62,250 $8,392 $1,984 32.3% 17.3% 39.3% 5.9x 19.4x 5.8x 15.3x

NTM Est. Growth


Software Valuation Metrics (continued)


Company Name

Share

Price

52 Week

High - Low

Market

Cap

Enterprise

Value Sales EBITDA

EBITDA

Margin Sales EBITDA

TTM

Sales

TTM

EBITDA

NTM

Sales

NTM

EBITDA

Human Capital & HR

Paychex, Inc. $59.01 $63.03 - $51.06 $21,199 $20,721 $3,107 $1,338 43.1% 5.9% 6.5% 6.7x 15.5x 6.3x 14.5x

WageWorks, Inc. 73.23 80.50 - 52.81 2,716 2,273 365 64 17.6% 31.9% 121.1% 6.2x 35.4x 4.7x 16.0x

Insperity, Inc. 88.80 90.55 - 51.39 1,865 1,698 2,941 120 4.1% 12.1% 35.7% 0.6x 14.2x 0.5x 10.4x

Benefitfocus, Inc. 28.60 44.98 - 24.55 878 917 233 (21) NA 14.0% NA 3.9x NA 3.4x NM

Halogen Software Inc. 9.21 13.09 - 7.75 197 216 72 6 8.8% 6.7% 52.7% 3.0x 34.1x 2.8x 22.3x

Median $1,698 $365 $64 13.2% 12.1% 44.2% 3.9x 24.8x 3.4x 15.3x

Software Infrastructure

VMware, Inc. $90.80 $93.05 - $54.44 $37,160 $31,109 $7,093 $1,850 26.1% 6.7% 50.5% 4.4x 16.8x 4.1x 11.2x

Red Hat, Inc. 87.14 88.05 - 68.54 15,535 14,871 2,412 418 17.3% 13.8% 77.9% 6.2x 35.6x 5.4x 20.0x

Micro Focus International plc 31.53 25.55 - 14.08 7,236 6,982 1,325 500 37.7% 4.8% 32.7% 5.3x 14.0x 5.0x 10.5x

Commvault Systems, Inc. 50.35 57.55 - 41.33 2,270 1,882 637 17 2.7% 5.6% NM 3.0x NM 2.8x 21.0x

Progress Software Corporation 29.59 32.47 - 23.98 1,423 1,288 407 120 29.5% (3.4%) 14.4% 3.2x 10.7x 3.3x 9.4x

Median $6,982 $1,325 $418 26.1% 5.6% 41.6% 4.4x 15.4x 4.1x 11.2x

Financial Technology

Fiserv, Inc. $118.04 $118.30 - $92.81 $25,152 $29,360 $5,505 $1,720 31.2% 4.8% 18.8% 5.3x 17.1x 5.1x 14.4x

SS&C Technologies Holdings, Inc. 36.65 37.48 - 26.15 7,473 9,898 1,481 514 34.7% 12.9% 36.5% 6.7x 19.3x 5.9x 14.1x

Jack Henry & Associates, Inc. 95.39 95.68 - 79.00 7,405 7,402 1,394 493 35.4% 4.9% 5.2% 5.3x 15.0x 5.1x 14.3x

ACI Worldwide, Inc. 21.48 22.96 - 15.11 2,520 3,207 1,006 119 11.8% 1.3% 112.6% 3.2x 27.1x 3.1x 12.7x

Sapiens International Corporation N.V. 12.89 15.98 - 10.86 631 558 216 30 13.8% 27.2% 27.6% 2.6x 18.6x 2.0x 14.6x

Median $7,402 $1,394 $493 31.2% 4.9% 27.6% 5.3x 18.6x 5.1x 14.3x

Security

Palo Alto Networks, Inc. $108.08 $165.69 - $107.31 $9,947 $9,175 $1,567 -$160 NA 21.6% NA 5.9x NA 4.8x 20.9x

Fortinet, Inc. 39.23 39.03 - 28.51 6,877 5,666 1,275 96 7.5% 15.9% NM 4.4x NM 3.8x 19.4x

FireEye, Inc. 12.37 18.73 - 10.35 2,200 1,967 714 (296) NA 1.3% NA 2.8x NA 2.7x NM

CyberArk Software Ltd. 51.87 59.28 - 38.20 1,786 1,510 217 42 19.6% 24.1% 52.9% 7.0x 35.6x 5.6x 23.3x

VASCO Data Security International, Inc. 12.90 19.30 - 12.05 514 362 192 16 8.4% (3.6%) (2.7%) 1.9x 22.3x 2.0x 23.0x

Median $1,967 $714 $16 8.4% 15.9% 25.1% 4.4x 29.0x 3.8x 21.9x

NTM Est. Growth


Communications Valuation Metrics


Company Name

Share

Price

52 Week

High - Low

Market

Cap

Enterprise

Value Sales EBITDA

EBITDA

Margin Sales EBITDA

TTM

Sales

TTM

EBITDA

NTM

Sales

NTM

EBITDA

Communications Equipment

Cisco Systems, Inc. $32.83 $34.53 - $25.81 $164,408 $127,490 $48,570 $14,670 30.2% 0.4% 17.6% 2.6x 8.7x 2.6x 7.4x

Ciena Corporation 21.88 26.84 - 15.62 3,092 3,386 2,649 317 12.0% 8.0% 36.6% 1.3x 10.7x 1.2x 7.8x

NETGEAR, Inc. 52.00 60.82 - 38.70 1,711 1,345 1,328 150 11.3% 3.9% 19.3% 1.0x 9.0x 1.0x 7.5x

Infinera Corporation 9.72 15.71 - 7.23 1,424 1,253 870 46 5.3% (8.1%) (67.9%) 1.4x 27.4x 1.6x NM

ADTRAN, Inc. 19.85 23.75 - 17.06 959 861 665 52 7.8% 5.8% 21.9% 1.3x 16.7x 1.2x 13.7x

Median $1,345 $1,328 $150 11.3% 3.9% 19.3% 1.3x 10.7x 1.2x 7.7x

Communications Infrastructure

Nokia Corporation $5.28 $5.43 - $3.66 $30,075 $23,273 $24,928 $1,927 7.7% (6.6%) 41.1% 0.9x 12.1x 1.0x 8.6x

Zayo Group Holdings, Inc. 34.33 35.65 - 25.19 8,380 12,414 1,997 890 44.6% 26.1% 38.9% 6.2x 13.9x 4.9x 10.0x

Cogent Communications Holdings, Inc. 44.60 44.75 - 34.23 1,991 2,418 438 135 30.9% 12.4% 26.8% 5.5x 17.9x 4.9x 14.1x

Lumos Networks Corp. 17.83 17.87 - 10.67 427 824 207 84 40.7% 4.6% 19.9% 4.0x 9.8x 3.8x 8.2x

Internap Corporation 3.13 3.86 - 0.80 248 611 298 64 21.5% (5.5%) 32.0% 2.0x 9.5x 2.2x 7.2x

Median $2,418 $438 $135 30.9% 4.6% 32.0% 4.0x 12.1x 3.8x 8.6x

Communications Services

Telephone and Data Systems, Inc. $27.17 $32.98 - $24.12 $2,994 $5,146 $5,104 $917 18.0% (0.4%) 13.8% 1.0x 5.6x 1.0x 4.9x

Consolidated Communications Holdings, Inc. 24.28 30.23 - 21.85 1,229 2,599 743 263 35.4% (8.6%) 13.1% 3.5x 9.9x 3.8x 8.7x

ATN International, Inc. 70.67 87.82 - 62.70 1,141 1,151 457 148 32.4% 13.4% 12.0% 2.5x 7.8x 2.2x 6.9x

Iridium Communications Inc. 10.35 11.54 - 6.80 1,008 2,255 434 226 52.1% 1.8% 14.9% 5.2x 10.0x 5.1x 8.7x

Fairpoint Communications, Inc. 17.55 19.60 - 12.81 475 1,349 824 444 53.9% (3.4%) (44.1%) 1.6x 3.0x 1.7x 5.4x

Median $2,255 $743 $263 35.4% (0.4%) 13.1% 2.5x 7.8x 2.2x 6.9x

Large, Diversified Communications

AT&T Inc. $40.36 $43.89 - $36.10 $247,874 $370,210 $163,786 $49,740 30.4% 0.5% 6.6% 2.3x 7.4x 2.2x 7.0x

Verizon Communications Inc. 48.41 56.95 - 46.01 197,355 311,138 123,623 42,685 34.5% 0.7% 5.8% 2.5x 7.3x 2.5x 6.9x

Orange S.A. 15.13 15.66 - 12.38 40,242 66,326 43,194 12,926 29.9% (4.7%) (0.9%) 1.5x 5.1x 1.6x 5.2x

CenturyLink, Inc. 25.49 33.45 - 22.33 13,991 33,457 17,470 6,488 37.1% (2.6%) (4.9%) 1.9x 5.2x 2.0x 5.4x

Frontier Communications Corporation 1.92 5.71 - 1.84 2,262 19,678 8,896 3,472 39.0% 3.5% 7.7% 2.2x 5.7x 2.1x 5.3x

Median $66,326 $43,194 $12,926 34.5% 0.5% 5.8% 2.2x 5.7x 2.1x 5.4x

NTM Est. Growth


Media Valuation Metrics


Company Name

Share

Price

52 Week

High - Low

Market

Cap

Enterprise

Value Sales EBITDA

EBITDA

Margin Sales EBITDA

TTM

Sales

TTM

EBITDA

NTM

Sales

NTM

EBITDA

Broadcasting, Publishing, Movies, Entertainment

The Walt Disney Company $114.79 $115.00 - $90.32 $181,511 $202,232 $55,172 $16,784 30.4% 4.9% 8.5% 3.7x 12.0x 3.5x 11.1x

Charter Communications, Inc. 335.59 341.50 - 214.06 90,239 160,678 29,003 10,728 37.0% 44.6% 45.0% 5.5x 15.0x 3.8x 10.3x

CBS Corporation 68.67 70.10 - 48.88 27,989 36,805 13,166 3,095 23.5% 1.5% 3.1% 2.8x 11.9x 2.8x 11.5x

Sirius XM Holdings Inc. 5.07 5.53 - 3.74 23,777 29,412 5,017 1,741 34.7% 6.5% 17.1% 5.9x 16.9x 5.5x 14.4x

Pearson plc 8.05 9.90 - 5.52 6,564 6,384 5,620 709 12.6% (16.2%) 1.8% 1.1x 9.0x 1.4x 8.8x

The New York Times Company 14.80 16.35 - 10.60 2,386 2,079 1,555 213 13.7% 1.7% 3.8% 1.3x 9.7x 1.3x 9.4x

Median $33,108 $9,393 $2,418 27.0% 3.3% 6.2% 3.2x 12.0x 3.1x 10.7x

Digital Media

Facebook, Inc. $143.80 $143.44 - $106.31 $416,641 $387,192 $27,638 $14,835 53.7% 36.7% 59.4% NM 26.1x 10.2x 16.4x

Netflix, Inc. 141.18 148.29 - 84.50 60,848 62,872 9,510 645 6.8% 24.1% 63.3% 6.6x NM 5.3x NM

Twitter, Inc. 14.65 26.20 - 13.73 10,616 8,528 2,530 62 2.4% (6.7%) NM 3.4x NM 3.6x 14.6x

Pandora Media, Inc. 10.85 14.98 - 8.58 2,553 2,658 1,385 (239) NA 17.3% NA 1.9x NA 1.6x NA

Shutterstock, Inc. 42.41 65.16 - 38.64 1,464 1,184 494 64 12.9% 11.5% 69.7% 2.4x 18.6x 2.1x 10.9x

Median $8,528 $2,530 $64 9.8% 17.3% 63.3% 2.9x 22.3x 3.6x 14.6x

Advertising & Marketing Media

Alphabet Inc. $860.08 $874.42 - $672.66 $594,676 $505,884 $90,272 $29,860 33.1% 17.5% 44.3% 5.6x 16.9x 4.8x 11.7x

Yahoo! Inc. 47.67 47.88 - 35.05 45,657 40,095 5,409 261 4.8% (34.9%) NM 7.4x NM 11.4x NM

The Trade Desk, Inc. 36.23 46.21 - 22.00 1,418 1,310 203 60 29.3% 33.2% 21.1% 6.5x 22.0x 4.8x 18.2x

Rocket Fuel Inc. 4.30 5.61 - 1.70 199 201 456 (11) NA 2.3% NA 0.4x NA 0.4x 20.7x

YuMe, Inc. 4.08 4.36 - 3.11 139 78 160 (1) NA (7.8%) NA 0.5x NA 0.5x 5.5x

Median $1,310 $456 $60 29.3% 2.3% 32.7% 5.6x 19.5x 4.8x 15.0x

Online Media Content

IAC/InterActiveCorp $76.74 $77.46 - $45.55 $5,966 $6,324 $3,140 $420 13.4% (1.4%) 37.3% 2.0x 15.1x 2.0x 11.0x

j2 Global, Inc. 85.32 90.88 - 60.00 4,112 4,768 874 370 42.3% 31.9% 29.8% 5.5x 12.9x 4.1x 9.9x

XO Group Inc. 17.44 20.99 - 14.99 442 336 152 20 13.3% 8.1% 53.8% 2.2x 16.6x 2.0x 10.8x

Leaf Group Ltd. 8.20 8.35 - 5.10 165 114 113 (24) NA 7.2% NA 1.0x NA 0.9x NA

Median $2,552 $513 $195 13.4% 7.7% 37.3% 2.1x 15.1x 2.0x 10.8x

NTM Est. Growth


Annual U.S. M&A Middle Market Transactions by Sector

Annual U.S. Media Transactions Annual U.S. Software Transactions

Annual U.S. Communications Transactions Annual U.S. Technology Hardware Transactions

Middle Market M&A includes transactions with EV < $600mm, and transactions with undisclosed EV. (Source: Capital IQ)


Selected, Recent and Disclosed M&A Transactions $ in millions Transaction

Announced Acquirer/Investor Target Target Sector Value Metric

04/17/17 AMETEK, Inc. MOCON, Inc. Technology Hardware and Equipment $187.5 2.8x Rev; 18.6x EBITDA

04/12/17 Enghouse Systems Limited Tollgrade Communications, Inc. Technology Hardware and Equipment $17.3 1.0x Rev

04/13/17 Windstream Holdings, Inc. Broadview Networks Holdings, Inc. Telecommunication Services $227.5 0.7x Rev; 4.5x EBITDA

04/13/17Apollo Global Management, LLC; GSO Capital Partners LP;

Arbiter Partners Capital Management, LLCMood Media Corporation Media $646.6 1.4x Rev; 7.9x EBITDA

04/10/17 Uniti Group Inc. Southern Light, LLC Telecommunication Services $699.1 8.3x Rev; 17.2x EBITDA

04/10/17 Harland Clarke Holdings Corp. RetailMeNot, Inc. Software and Services $684.6 1.7x Rev; 15.0x EBITDA

04/03/17 Mercury Systems, Inc. Delta Microwave, Inc. Technology Hardware and Equipment $40.5 3.2x Rev; 17.2x EBITDA

03/02/17 Informa plc Yachting Promotions Inc. Media $133.0 11.5x EBITDA

01/20/17 Tucows Inc. eNom Inc. Software and Services $83.5 0.5x Rev

12/19/16 Automated Systems Holdings Limited Grid Dynamics International, Inc. Software and Services $118.0 2.97x Rev

11/21/16 Mycronic AB (publ) Automation Engineering Inc. Technology Hardware and Equipment $62.0 3.0x Rev

11/17/16 GTT Americas, LLC Onyx NewCo LLC Telecommunication Services $28.0 0.7x Rev

11/11/16 Belden Inc. Digi International Inc. Technology Hardware and Equipment $380.9 0.7x Rev

11/09/16 Adobe Systems Incorporated TubeMogul, Inc. Software and Services $628.8 2.6x Rev

11/01/16 SpeedCast International Limited Harris CapRock Communications, Inc. Telecommunication Services $425.0 1.2x Rev; 7.1x EBITDA

10/21/16 Ziff Davis, LLC Everyday Health, Inc. Software and Services $489.4 1.8x Rev; 15.1x EBITDA

10/21/16 Midco WOW! Lawrence Telecommunication Services $215.0 4.7x Rev; 9.2x EBITDA

10/20/16 Wipro Limited Appirio Inc. Software and Services $500.0 2.6x Rev

10/17/16 Standex International Corporation Horizon Scientific, Inc. Technology Hardware and Equipment $31.0 1.1x Rev

10/13/16 GN Netcom A/S VXi Corporation Technology Hardware and Equipment $35.0 1.1x Rev; 8.8x EBITDA

09/14/16 AVI Partners, LLC YuMe, Inc. Software and Services $160.0 0.7x Rev

09/08/16 Google Inc. Apigee Corporation Software and Services $630.1 6.1x Rev

08/09/16 Randstad North America, LP Monster Worldwide, Inc. Software and Services $486.1 0.6x Rev; 6.8x EBITDA

08/08/16 Quarto Publishing Group USA Inc. Becker & Mayer LLC Media $12.1 0.6x Rev

08/03/16 Vector Capital Sizmek Inc. Media $113.6 0.4x Rev; 8.5x EBITDA


Selected, Recent and Disclosed M&A Transactions... Continued

$ in millions Transaction Announced Acquirer/Investor Target Target Sector Value Metric

08/03/16 Vector Capital Sizmek Inc. Media $113.6 0.4x Rev; 8.5x EBITDA

08/02/16 WideOpenWest Finance, LLC HC Operating Company, LLC Telecommunication Services $53.0 6.3x EBITDA

06/27/16 Gannett Co., Inc. ReachLocal, Inc. Software and Services $170.5 0.5x Rev

06/10/16 Axel Springer SE eMarketer, Inc. Media $242.0 5.7x Rev; 19.3x EBITDA

06/01/16 UBM plc Z Squared Media, LLC Media $17.6 2.0x Rev

05/13/16 CLX Communications AB (publ) mBlox, Inc. Software and Services $117.0 0.8x Rev; 17.0x EBITDA

05/05/16 Bankrate, Inc. NextAdvisor, Inc. Software and Services $112.3 1.5x Rev; 7.3x EBITDA

05/04/16 B. Riley Financial, Inc. United Online, Inc. Software and Services $168.6 0.5x Rev; 4.7x EBITDA

05/03/16Winnebago Cooperative Telecom Association; Mutual

Telephone Company Of Sioux Center, IowaConsolidated Communications of Iowa Telecommunication Services $22.5 3.2x Rev

05/02/16 Oracle Corporation OPOWER, Inc. Software and Services $552.0 3.2x Rev

04/28/16 Oracle Corporation Textura Corporation Software and Services $698.3 6.7x Rev

04/22/16 UBM Americas Business Journals, Inc. Media $69.0 1.7x Rev

03/24/16 Entertainment One Ltd. Renegade 83, Inc. Media $23.0 1.0x Rev; 6.8x EBITDA

03/08/16 Superior Uniform Group, Inc. Bamko Inc. Media $26.9 0.9x Rev

03/07/16 Sykes Enterprises, Incorporated Clear Link Technologies, LLC Media $207.0 1.7x Rev

Deal Revenue EBITDA

Size Multiple Multiple

Transactions Represented 39 37 19

Median $160 1.5x 8.8x

Mean $244 2.2x 11.0x

High $699 8.3x 19.3x

Low $12 0.4x 4.5x

M&A Transactions in the table above include those with EV between $10 million and $600 million, with reported deal metrics. Sources: S&P, Capital IQ.


Overview of M&A Transaction Activity

Announced Middle-Market Technology, Communications, and Media M&A Transactions

* YTD figures represent total year-to-date M&A as of

April 24, 2016 & 2017. Middle market M&A includes transactions with EV <

$600mm, and transactions with undisclosed EV.

23812460

2598

2379

27272675

2422

824754

0

500

1000

1500

2000

2500

3000

2010 2011 2012 2013 2014 2015 2016 2016YTD*

2017YTD*

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Axel Springer SE (DB:SPR) acquires eMarketer, inc. (New York, NY) June 10, 2016

On June 10, 2016, Berlin, Germany based Axel Springer SE (“Axel”), one of the largest digital publishing houses in Europe, announced the acquisition of eMarketer, inc. (“eMarketer” or the “Company”), for $242 million (5.7x Revenue; 19.3x EBITDA). The deal expands Axel’s presence in the U.S. and gives eMarketer expanded penetration into European and other international markets.

eMarketer is a market research company that provides insights and trends related to digital marketing, media, and commerce.

The acquisition of eMarketer continues the German publisher’s push into digital businesses in English-speaking markets, while looking to further drive growth after Axel’s acquisition of U.S. based Business Insider in 2015. Commenting on the acquisition, Mathias Dopfner, CEO of Axel, said, “As more and more industries are facing the challenge of digitization, the smart creation, processing, and presentation of relevant market information is becoming increasingly important.”

Uniti Group, Inc. (NasdaqGS:UNIT) acquires Southern Light, LLC (Mobile, AL) April 10, 2017

On April 10, 2017, Uniti Group (“Uniti” or the “Company”) announced the acquisition of Southern Light, LLC (“Southern Light”) for $700 million (8.3x Revenue; 17.1x EBITDA). Southern Light, a Southeast-based fiber provider, had positioned itself as a growing provider of data transport services along the Gulf Coast region, serving 12 Tier II and Tier III markets making it an attractive acquisition candidate for Uniti.

Southern Light’s organization and operations are highly complementary to Hunt Telecommunications (acquired by Uniti in February, 2017) and both will be tightly integrated into the Company. Uniti expects to achieve annual run-rate cost savings related to the acquisition of Southern Light of $10 million within 24 months after closing.

“This acquisition transforms Uniti Fiber into a more competitive provider of fiber infrastructure solutions. Southern Light scales our products and capacity with wireless carriers, enterprise, wholesale, and E-Rate customers across a significantly expanded Uniti Fiber network, and launches us into the important military sector,” said Kenny Gunderman, President and Chief Executive Officer of Uniti

Sources: Company press releases, S&P Capital IQ, Bloomberg.


Leadership through Experience and Results

Moss Adams at a Glance

Moss Adams Capital LLC

• Full-service investment banking and strategic advisor services

• Dedicated industry specialists

• Focus on privately owned and family-held companies

• Mergers and acquisitions

• Private debt & equity placements

• Mezzanine capital

• Due Diligence preparation & advisory

Moss Adams LLP

• 100+ years old – Founded in 1913

• Largest accounting firm headquartered in the western U.S.

• 2,600 employees in 29 locations

• Fully integrated accounting, tax, and business advisory firm

• Middle-market specialists

• The Moss Adams Advantage: Discrete, highly leverageable transaction resources and services

International Presence

• Major market affiliates throughout the U.S. and more than 100 countries around world


Capital Placement – Equity and Debt

Merger and acquisition advisory

Strategic alternatives assessment

Exclusive sales and divestitures

Strategic planning

Management buy-outs

Recapitalizations

Fairness opinions

Restructuring and special situations advisory

Corporate Finance Comprehensive Industry Coverage

Automotive & Dealer Services

Business & Marketing Services

Consumer, Retail & Apparel

Paper, Plastics, & Packaging

Food, Beverage & Agriculture

Healthcare Services & Products

Industrials / Niche Manufacturing

Infrastructure & Construction

Aerospace, Defense &

Government Services

Hospitality, Lodging & Leisure

Technology, Communications,

& Media

Transportation & Logistics

Completed more than 250 transactions

Access to key decision-makers among institutional investor universe

Coverage of relevant strategic partners

Average of 20 years of investment banking experience among senior leaders

Highlights and Accomplishments

Full Service Mid-Market Investment Bank

Moss Adams Capital Overview


Local, National and Global Reach

Our affiliation with CFxB consists of 200+ Corporate Finance Professionals across the U.S. and in over 25 countries.

more than 25 countries

Global M&A Reach Through Local Relationships

Mazars Africa

40 offices

Mazars Asia

25 offices

Mazars Middle East

15 offices

Mazars Europe 140 offices

Mazars M&A 20 offices

Mazars South America

20 offices

Moss Adams Capital 2 locations

Moss Adams LLP 29 locations

MNP Corporate Finance 10 offices

MNP LLP 70 offices

BKD Corporate Finance 4 offices

BKD LLP 33 offices

William Buck CAA

6 offices

Weiser Mazars

6 offices

Mazars Canada

1 office CH Reynolds CF

1 office

https://ecollab.mazars.com/cfxb/

http://www.mossadamscapital.com/

http://www.mnpcorporatefinance.ca/


Harman Wales Managing Director (206) 302-6770 [email protected]

Contributing Authors:

Moss Adams Capital LLC

2040 Main Street Suite 900 Irvine, CA 92614

999 Third Avenue Suite 2800 Seattle, WA 98104

Taft Kortus Partner-Moss Adams (206) 302-6377 [email protected]

Wiley Kitchell Managing Director (206) 302-6780 [email protected]

Richard Anderson Managing Director (949) 221-4006 [email protected]

Daniel Seubert Analyst (206) 302-6775 [email protected]

Harman Wales Managing Director (206) 302-6770 [email protected]

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