scm & logistics technology m&a
TRANSCRIPT
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World Financial Symposiums WFS is an international organization dedicated to educating
technology leaders through monthly, Market Spotlight webcasts and day-long
Growth and Exit Strategies for Software and IT Companies conferences.
Upcoming Events:Growth and Exit Strategies for Software and IT Companies
- New York, October 22, 2015- London, December 5, 2015
The Nordic Report: Growth and Exits Among Scandinavian Tech Companies- Coming soon at www.thenordicreport.com
www.wfs.com
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Nat Burgess
Nat joined Corum in 1996 and brings a diverse background in technology M&A and law. While with the Enforcement Division of the U.S. Securities and Exchange Commission, Nat helped identify and build cases against securities fraud schemes. With the Strategic Development Division of Morgan Stanley's M&A group, Nat worked on cross-border acquisitions of U.S. and European companies by Japanese firms, and on financings by large Japanese public companies. Nat moved to Morgan Stanley's Tokyo office, where he reported directly to the President of Morgan Stanley, Japan Ltd. and focused exclusively on cross-border M&A.
After Morgan Stanley, Nat co-founded Postcard Software, a creator of advertiser-driven bilingual (English and Japanese) Internet content. At Activision, Nat led the company's on-line business development.
Nat earned an undergraduate degree in Japanese literature from Yale College and a law degree from UCLA. While in law school, Nat wrote articles for the International Forum at Yale, Tokyo Journal.
President
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Agenda• Introduction• SCM & Logistics Technology M&A Report• Buyer Interviews
• Matt Grabow, Director, Corporate Development M&A – Infor• Ed Gardner, EVP, Corporate Development – Descartes
• Q&A
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Yasmin Khodamoradi
Yasmin joined Corum Group in 2015 as a research analyst. Previously she worked as a finance and operations coordinator at a financial technology startup and provided writing services to an institutional investment advisory firm.
Yasmin graduated from the Foster School of Business at the University of Washington, specializing in Finance and International Business.
Research Analyst
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SCM Public Company Multiples
6.00 x
8.00 x
10.00 x
12.00 x
14.00 x
16.00 x
18.00 x
20.00 x
22.00 x
24.00 x
26.00 x
1.50 x
2.50 x
3.50 x
4.50 x
5.50 x
6.50 x
7.50 x
8.50 x
EV/EBITDA EV/S
Source: Capital IQ
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SCM M&A Activity (2012-2015)
H1 H2 H1 H2 H1 H2 H12012 2012 2013 2013 2014 2014 2015
0
1
2
3
4
5
6
7
0
5
10
15
20
25
30
35
40
Total Disclosed Deal Value ($B) Total Deal Count
Source: Capital IQ & 451 Research
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Geographic Distribution of Sellers
2014
EuropeUnited States and CanadaAfrica / Middle EastAsia / PacificLatin America and Caribbean
2015
EuropeUnited States and CanadaAfrica / Middle EastAsia / PacificLatin America and Caribbean
Source: Capital IQ & 451 Research
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Number of Deals by Transaction Size
<$10M $10-50M $50-100M $100-500M $500M-$1B $1B+0
2
4
6
8
10
12
14
2012 2013 2014 2015 (thru. Q3)Source: Capital IQ & 451 Research
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Top Buyers by Deal Value (2015 Q1-Q3)
Mill
ions
Source: Capital IQ & 451 Research
Infor Pitney Bowes Insight Venture Partners Stamps.com0
100
200
300
400
500
600
700
800
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Sold to
Target: GT Nexus [USA]Acquirer: Infor [USA]Transaction value: $675M
‒ Cloud-based supply chain management software for manufacturers and retailers
‒ Accelerates Infor’s shift to the cloud and helps strengthen their position as the retail industry moves toward contract-based manufacturing
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Sold to
Target: Borderfree [USA]Acquirer: Pitney Bowes Inc. [USA]Transaction value: $448M
‒ Cross-border e-commerce platform
‒ Complements and expands Pitney Bowe’s existing e-commerce capabilities and helps reduce complexity of cross-border ecommerce
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Descartes Systems Group Trimble Navigation Perfect Commerce Accenture0
2
4
6
8
10
12
Top Buyers by Deal Count(2012-2015 YTD)
Source: Capital IQ & 451 Research
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Sold to
Target: BearWare [USA]Acquirer: Descartes [Canada]Transaction value: $11.2M
‒ Mobile tracking system to enable better collaboration between retailers and logistics service providers
‒ Complements Descartes’ Airclic product, a cloud-based mobile automation solution
Source: Capital IQ & 451 Research
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Sold to
Target: Trimble [USA]Acquirer: Fifth Element Oy [Finland]
‒ Forestry and transportation logistics SaaS
‒ Enhances capabilities of Trimble’s Connected Forest and expands forestry presence in Northern Europe.
Source: Capital IQ & 451 Research
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Sold to
Target: HubWoo [France]Acquirer: Perfect Commerce [USA]Transaction value: $30M
‒ E-procurement and SCM SaaS
‒ Extends suite of procurement and sourcing solutions in new vertical and geographic markets
Source: Capital IQ & 451 Research
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Sold to
Target: Accenture [USA]Acquirer: Gapso [Brazil]
‒ Brazilian SCM analytics software
‒ Extends the reach of Accenture Analytics in the Brazilian natural resources and agribusiness sectors
Source: Capital IQ & 451 Research
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Sold to
Target: SeeControl [USA]Acquirer: Autodesk [USA]‒ Enterprise Internet of Things platform
‒ Should enhance capabilities of Autodesk PLM360 suite
Sold to
Target: TierConnect [USA]Acquirer: Mojix Inc. [USA]‒ SCM RFID tracking systems
‒ Adds expertise in big data and bridges gap between its RFID platform and IoT
Source: Capital IQ & 451 Research
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SCM M&A Revenue Multiples
<2.5 x 2.5-4 x >4 x0
2
4
6
8
10
12
EV/S Multiples
Freq
uenc
y
Commodity
Commercial Execution
Breakout
Commodity: • Niche & Regional Players• Generally less than $10M in TTM revenue
Commercial Execution: • Purchased for scale• SaaS income, highly recurring revenues• Generally $20-100M TTM revenue
Breakout: • No disclosed transactions in this range since 2013• SAP/Ariba megadeal falls into this category
Source: Capital IQ & 451 Research
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Matt Grabow
Matt Grabow leads the M&A group at Infor, including transaction execution and integration of acquired assets. Matt joined Infor in 2008, and previously as an M&A and research associate at Piper Jaffray. He holds an MBA from the University of St. Thomas, and a degree in Economics from Gustavus Adolphus.
DirectorCorporate Development M&A
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Infor – HistorySmall-time ERP grows out of the four walls of manufacting and moves into retail with the assistance of acquisitions like Lawson and GT Nexus.
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Infor – Representative Deals 2002-2015GT Nexus Inc. Single Source Systems SSA Global
Technologies, Inc.MAPICS, Inc.
Saleslogix assets ENXSuite (product line) Systems Union Group plc
Mercia Software
GRASP Systems International, Inc.
Approva Corporation IBS Espana S.L. Lilly Software Associates
PeopleAnswers, Inc. Lawson Software, Inc. IBS Danmark A/S IncoDev Software-Entwicklung GmbH
TDCI Ltd. Qurius NV IBS France Aperum
CERTPOINT Systems Inc.
Bridgelogix Datastream Systems Inc.
NxTrend Technology, Inc.
Orbis Global SoftBrands, Inc. Geac Computer Corporation Ltd
Varial Software GmbH
Group Laurier ShipLogix, Inc. Alpine Systems daly.commerce
Easy RMS Hansen Information Technologies
Formation Systems Infor Business Solutions AG
RSVP Business Systems Quality Control Solution
Workbrain Corporation Hallco 1390 Ltd. Future Three Software, Inc.
Local.ly Extensity Inc. Intuita Holdings Ltd. Brain AG, Substantially All Assets
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Infor – M&A Strategy• Gaps in product offerings• Deeper into verticals• Expand horizontal offerings
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Infor – View of the Market• Mature market consolidation
• SCM is the first of the edge apps (gives way to HCM and CRM)
• Innovative companies in this space still exist
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Infor – M&A desirables• Product fit? Filling a gap?• Different? Need it to keep up with competing
products?
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Infor – M&A Red Flags• Old technology/architecture• Bypass “nice to have” opportunities to focus on
deals that give existing customers value
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Ed Gardner
Ed Gardner is the Executive Vice president of Corporate Development at Descartes Systems Group, Inc. He joined Descartes in 2003 where he first held a number of senior roles within our corporate finance organization. In his current role as Executive Vice President, Corporate Development, Mr. Gardner is responsible for the development and execution of our M&A strategy. Mr. Gardner's previous experience includes both practical logistics experience where he worked in a senior leadership position at a third party logistics provider (3PL) as well as deal execution and integration experience as part of Ernst & Young's Transaction Advisory Services practice in London, England.
Executive Vice PresidentCorporate Development
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Descartes – What do we do?Global Logistics Network• 200,000 trading partners• lots of documents, people, processes, assets,
parties, countries, etc involved in shipment• Connect Automate Value Added Applications
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Descartes – SCM & Logistics Deals 2012-2015• Bearwear• MK Data Services LLC• Pentant Limited• e-customs Inc.• Airclic• CUSTOMS Info• Computer Management USA• Impatex Freight Software Ltd• KSD Software Norway AS• Integrated Export Systems• Infodis B.V.
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Descartes - M&A key driving factors• Omni Channel retail influence on customer
expectations• The “Amazon effect”
• Mobility• Collecting real-time data for use in the field as well as to
communicate with customers
• Last mile and customer experience
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Descartes - M&A key driving factorsTrade Data Content to differentiate “the network”Examples:Customs infoMK Data
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Descartes - M&A Red Flags• Adjusted EBITDA and cashflow ratio with high
fluctuation• Descartes is proud of its slow and steady 15%/year
growth
• Skewed EBITDA
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Descartes - M&A Financial Metrics• Recurring revenue trends• EBITDA Margin• Combined company revenue• Making Money Day 1• Financial, strategic and cultural fit
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Descartes – M&A desirables• Network and connections
• New community?• Vertical reach?• Functionality?• Geographic
• Cross-border activity will continue
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Nat Burgess
Nat joined Corum in 1996 and brings a diverse background in technology M&A and law. While with the Enforcement Division of the U.S. Securities and Exchange Commission, Nat helped identify and build cases against securities fraud schemes. With the Strategic Development Division of Morgan Stanley's M&A group, Nat worked on cross-border acquisitions of U.S. and European companies by Japanese firms, and on financings by large Japanese public companies. Nat moved to Morgan Stanley's Tokyo office, where he reported directly to the President of Morgan Stanley, Japan Ltd. and focused exclusively on cross-border M&A.
After Morgan Stanley, Nat co-founded Postcard Software, a creator of advertiser-driven bilingual (English and Japanese) Internet content. At Activision, Nat led the company's on-line business development.
Nat earned an undergraduate degree in Japanese literature from Yale College and a law degree from UCLA. While in law school, Nat wrote articles for the International Forum at Yale, Tokyo Journal.
President
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Attributes of a Valuable SCM Acquisition
1. Build to Scale2. Focus on Recurring Revenue3. Build for Profitability4. Be Different5. Global Exchange of Data
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