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Software M&A Update

Q3 2017 November 28, 2017

Table of Contents

• M&A Market Brief – Page 3-6

• Notable Software M&A Transactions in Q3 – Page 7-10

• Publicly Traded Software Firms (Valuation Table) – Page 11-13

• M&A Spotlight: Symantec / DigiCert – Page 13

• M&A Spotlight: Navicure / ZirMed – Page 14

• M&A Spotlight: Cisco / Springpath – Page 15

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PURPOSES ONLY. THIS IS NOT AN OFFER TO SELL, RECOMMEND OR PURCHASE SECURITIES. A NON-DISCLOSURE

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FINDERS AGREEMENT IN PLACE.

Sources for our research and data include: Dealogic, ValueWalk, Pwc, Company Websites, SEC Filings, MergerMarket, Berkery Noyes, Deloitte, Fortune, 451 Research, medium.com, Vista Point, CNBC

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M&A Market Brief Global, U.S. and Software M&A Activity Q3 2017

Worldwide

Global M&A activity in Q3 2017 was USD $819.7 billion - deal value decreased by 3.03% compared to Q2 2017.

The first nine months of 2017 proved US market’s busiest first nine months in 11 years, according to Thompson Reuters.

Five out of the ten largest deals in Q3 were focused in the US, indicating a shift away from Europe in the last few months.

Technological disruption is an important deal motivator. Companies involved in M&A are most interested in acquiring relevant technologies and responding to transformation in their industry as well as a desire to expand on their products. Established businesses are modernizing through technology focused deals, making traditional industry boundaries blurry and unconventional.

High liquidity, access to cheap financing, healthy balance sheets and a need to demonstrate growth to shareholders via M&A all provide a positive outlook for the remainder of 2017.

United States

Sluggish international growth and global uncertainty have made the United States a favored destination for M&A activity. Western Europe is the next preferred destination for M&A deals.

A large amount of available capital increased corporate acquisition activity and buying power, improved financing markets and expected policy reforms from the new administration position 2017 to be a strong year for M&A activity.

The current administration is expected to roll back the Dodd-Frank Act and other regulations that have arguably stifled M&A activity in financial services. Furthermore, these regulatory changes can also pump in new sources of debt financing for M&A.

Trump's Tax reform plan is unveiled to Congress confirming the substantial tax cuts for corporations from 35% to 20% and a special tax holiday for repatriation of foreign profits back to the US. The plan would also allow companies to deduct equipment purchases immediately.

Software

Software and tech-enabled services dominated overall technology deal value and volumes during Q3 2017, accounting for 46% of M&A deal flow. Transaction volume in Q3 2017 decreased by 9% versus Q3 2017. While Total transaction value in Q3 2017 increased 14% over Q2 2017.

Application software accounted for 56% of software deals in Q3 2017 .

The median revenue multiple declined from 2.7 x in 2016 to 2.2x in Q3 2017.

The median EBITDA multiple remained constant during this timeframe at 12.9x.

The software market has slowed significantly as Q1 2017 still accounts for 56% of overall value for the first 3 quarters of 2017, including the 6 largest deals of the year so far.

The sale of Symantec's website security and related PKI solutions to DigiCert for $950 million marked the largest cyber security transaction of the year.

Software, SaaS and Cloud

M&A Advisory + Investment Banking

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Fig 1. Global M&A Deal Value — Quarterly Comparison

Source: MergerMarket 2017



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Fig 2. Tech Deal Overview

Source: PwC

Fig 3. Software M&A Deals – Comparison By Quarter, 2017

Source: Berkery Noyes



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Outlook for 2018 According to Deloitte, corporate and private equity executives foresee an acceleration of merger and acquisition (M&A) activity in 2018, both in the number of deals and the size of the transactions. Technology acquisition is the new No. 1 driver of M&A pursuits and dealmakers report using non-spreadsheet based M&A technology tools to help reduce conflicts, costs, and time. The software industry, which has been one of the most active sectors, should also continue seeing high M&A rates, with continued investment from non-technology buyers, renewed interest from foreign investors and a potential M&A spree from technology giants if cash repatriation via tax reform comes to fruition.



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Table 1. Notable Software M&A Transactions, Q3 2017

Announcement

Date Target Acquirer Target Description

Deal

Size

EV/

Revenue

EV/

EBITDA

9/28/2017 Exa (EXA) Dassault

Systemes

Developer of

simulation software

and services for

vehicle

manufacturers.

$400M 5.17x 79.95x

9/28/2017 WorkWave

EQT

Partners,

Industrial &

Financial

Systems

Provider of highly

scalable, cloud-

based Software-as-a-

Service (SaaS) for

the field service and

last mile delivery

and logistics

industries. It serves

small & medium-

sized (SMB) service

businesses.

9/25/2017 VelocityEHS

CVC Capital

Partners

(Aaron

Dupuis)

The company

operates an

environmental,

health and safety

regulation

compliance

software.

$328M

9/25/2017 FolioDynamix

Envestnet

(Judson

Bergman)

Developer of a cloud

based wealth

management

platform providing

on-demand

technology and

product services.

$195M

9/18/2017

Silver Spring

Networks

(SSNI)

Itron

The company's

UtilityIQ software

and network

enabled meters

allows utilities to

implement metering

solutions

$830M 1.57x



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Announcement


Deal

Size

EV/

Revenue

EV/

EBITDA

9/14/2017 ZirMed

Bain

Capital,

Navicure

Provider of a cloud-

based financial and

clinical performance

management

platform designed to

optimize revenue

and population

health.

$750M

9/11/2017 Snap

Interactive LiveXLive

Provider of live

video social

networking and

interactive dating

applications.

$34M 1.03x

9/11/2017 Applied

Systems

Stone Point

Capital

The company's

insurance

automation software

and agency and

brokerage

management

systems automate

the exchange of

information and data

throughout the

insurance lifecycle.

8/30/2017 Microscan Omron

Corporation

The company's code

scanning and

decoding

technology helps for

critical automatic

identification,

inspection and

verification.

$160M

8/21/2017 Springpath Cisco

The company has

developed a

distributed file

system purpose-

built for hyper

convergence that

enables server-

based storage

systems.

$320M



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Announcement


Deal

Size

EV/

Revenue

EV/

EBITDA

8/9/2017 Granular

E. I. du

Pont de

Nemours

The company's farm

management

software and

analytics platform

support the

production and

accounting workflow

on large farms.

$300M

8/2/2017

Symantec

(Web security

and PKI

Solutions)

DigiCert

Symantec’s Website

Security and related

PKI solutions. With

the transition of SSL

validation, issuance

and other processes

to DigiCert,

Symantec customers

have a clear path

forward to maintain

trust in their SSL

certificates.

$950M

7/28/2017

Airbus DS

Communicati

ons

Motorola

Solutions

Developer of

command center

software for fielding

emergency calls

(911) and citizen

emergency

notification.

7/17/2017 Brighterion MasterCard

Developer of

artificial intelligence

and machine

learning

technologies

created to provide

real-time

intelligence from all

data sources

regardless of type,

complexity and

volume.



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Announcement


Deal

Size

EV/

Revenue

EV/

EBITDA

7/13/2017 Observable

Networks

Cisco

Systems

Developer of an

endpoint modeling

service platform

designed to detect

and monitor real-

time network

behavior and

anomalies related to

security breaches.

7/6/2017 Fireglass Symantec

Provider of cyber

security software

and solutions

designed to

eliminate malware

and phishing from

web and email with

no endpoint agent.

$250M

Source: PitchBook



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Publicly Traded Software Firms, Valuation Table

Enterprise Software Stock Price (as of 9/30)

Market Cap ($USD mm)

Enterprise Value (EV) / Revenue EV/EBITDA

Microsoft Corporation [MSFT] $74.49 $647,023 6.7 19.91

Oracle Corporation [ORCL] $48.35 $205,840 5.2 13.29

Pegasystems Inc. [PEGA] $57.65 $4,180 5.3 57.0

Red Hat, Inc. [RHT] $110.86 $21,970 8.0 43.0

SAP SE [SAP] $109.65 $137,430 5.1 20.6

SS&C [SSNC] $40.15 $8,200 6.5 17.9

Average (Mean) 6.1 28.6

Banking and Financial Software Stock Price (as of 9/30)

Market Cap ($USD mm) EV / Revenue EV/EBITDA

CA Technologies Inc. [CA] $33.38 $13,580 3.4 10.9

CoreLogic, Inc. [CLGX] $47.00 $3,700 2.8 13.2

NCR Corp. [NCR] $37.57 $3,680 1.0 7.5

DST Systems Inc. [DST] $55.04 $3,580 2.3 10.3

Fidelity National Information [FIS] $93.33 $31,190 4.4 16.4

Fiserv, Inc. [FISV] $128.87 $27,040 5.7 18.1

Genpact Limited [G] $29.23 $6,000 2.6 15.6

Jack Henry & Associates [JKHY] $103.92 $8,740 5.9 19.0


Note: Average EV/EBITDA’s are calculated excluding the companies with negative EV/EBITDA



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Security Software Stock Price (as of 9/30)

Market Cap ($USD mm) EV/Revenue EV/EBITDA


Check Point Software [CHKP] $114.02 $17,670 8.4 17.0

FireEye Inc. [FEYE] $16.77 $2,620 3.4 N/A

Fortinet, Inc. [FTNT] $35.84 $6,950 4.1 39.4

Imperva, Inc. [IMPV] $43.40 $1,390 3.7 N/A

Progress Software Corporation [PRGS] $38.17 $2,020 4.9 14.6

Red Hat, Inc. [RHT] $110.86 $21,970 8.0 43.0

Symantec Corp. [SYMC] $32.81 $17,580 4.9 29.8


Software - NEC Stock Price (as of 9/30)

Market Cap ($USD mm)

EV/Revenue EV/EBITDA

BroadSoft, Inc. [BSFT] $50.30 $1,730 4.3 63.4


CommVault Systems, Inc. [CVLT] $60.80 $2,480 3.0 210.6

PTC Inc. [PTC] $56.28 $7,430 7.1 87.9

Splunk Inc. [SPLK] $66.43 $9,570 8.3 N/A


CRM Stock Price (as of 9/30)


Microsoft Corporation [MSFT] $74.49 $647,023 6.7 19.91

Oracle Corporation [ORCL] $48.35 $205,840 5.2 13.29

Salesforce.com, Inc. [CRM] $93.42 $75,640 7.6 153.97

SAP SE [SAP] $109.65 $137,430 5.1 20.6




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Business Intelligence & Analytics Stock Price (as of 9/30)


Teradata Corporation [TDC] $33.79 $4,330 1.8 15.9

MicroStrategy Inc. [MSTR] $127.71 $1,520 1.7 8.1


Source: PitchBook

HR/HCM Software Stock Price (as of 9/30)


Cornerstone OnDemand [CSOD] $40.61 $1,990 4.4 N/A

Workday Inc. [WDAY] $105.39 $22,350 11.1 N/A

Average (Mean) 7.8 N/A



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M&A Spotlight

DigiCert to Acquire Symantec’s Website Security Business for $950 Million

August 2, 2017 – DigiCert, an SSL certificate authority, today announced its agreement to acquire Symantec,

a digital security leader, to acquire Symantec’s Website Security Business. The deal pending formal review

and the customary closing conditions is expected to be completed in the third quarter of fiscal 2018. The

deal consists of $950 million in cash and a 30% stake in the DigiCert business.

Digicert plans to continue operating from their Lehi, Utah headquarters with support from Symantec's

Mountain View/ global offices. The acquisition is slated to help accelerate the companies efforts to simplify

SSL/TLS and related PKI solutions to better meet their customer's needs.

Symantec’s CEO Greg Clark said that the acquisition would allow the company to focus on its Integrated

Cyber Defense platform. Symantec plans to use the majority of the cash to pay down debts after the

acquisition closes. Symantec’s CEO commented that the company does not have any plans for future

divestitures but will remain keen for potential M&A targets.

Source: http://investor.symantec.com/About/Investors/press-releases/press-release-details/2017/DigiCert-to-Acquire-Symantecs-Website-Security-and-Related-PKI-Solutions/default.aspx



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Dassault Systèmes Acquires Exa Corporation for $400 Million

September 28, 2017 - Dassault Systèmes, a global leader in simulation software for product engineering

announced its definitive agreement to acquire Exa. The offer terms of $24.25 per share, a 43% premium,

payable in cash will be executed on October 10th.

The merger seeks to further build Dassault Systèmes’ 3DEXPERIENCE platform, combining the existing

Lattice Boltzmann fluid simulation offers customers integrated solutions to simplify both commercial and

technical interactions. “Both Dassault Systèmes and Exa believe in the value of an integrated focus on

science and industry. It is a critical part of our commitment to delivering 3DEXPERIENCE universes that

harmonize products, nature and life. Simulation of dynamic fluid flow is an important part of our multiphysics

and multiscale simulation strategy,” said Bernard Charlès, Vice Chairman and CEO, Dassault Systèmes.

Exa’s clients include companies like BMW, Tesla, Toyota, NASA, Embraer and British Petroleum. Almost all

transportation and mobility manufacturers use Exa’s product to simulate aerodynamic flow, aeroacoustics,

and thermal management.

Dassault has also acquired a few other companies this year including a majority stake in cloud computing

software firm Outscale and marine & offshore engineering software provider AITAC.

The transaction is expected to be completed in the fourth quarter of 2017. The transaction is expected to

be accretive for Dassault Systèmes’ earnings.

Source: https://www.3ds.com/press-releases/single/dassault-systemes-to-acquire-exa-corporation/



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Cisco Purchases Software Startup Springpath for $320 Million

August 21, 2017 - Springpath, a leader in hyper-convergence software announced its acquisition by Cisco

today. The company developed a distributed file system built for hyper-convergence that enables server-

based storage systems. The strategic acquisition was born out of the long-standing relationship between

the two companies since early 2016 where the companies partnered to launch Hyperflex, the industries first

integrated the hyperconverged system.

The acquisition also marks a “ meaningful addition to our data center portfolio and aligns with our overall

transition to providing more software-centric solutions," said Rob Salvagno, Cisco vice president. In the

recent string of software-centric acquisitions, Cisco remains committed to its goal of transitioning to a more

balanced hardware and software provider. Hyper-converged infrastructure systems are projected to be a

$6 billion market in 3 years has been the focus of enterprise hardware companies for some time.

Cisco will acquire Springpath for a total of $320 million in cash and assumed equity awards, plus additional

retention-based incentives. The deal is expected to close in the first quarter of the fiscal year 2018.

Source: https://newsroom.cisco.com/press-release-content?type=webcontent&articleId=1874577



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About Solganick & Co.

Solganick & Co., Inc. is an independent investment banking and M&A advisory firm focused exclusively on the global software, IT services, and digital media industry sectors. We advise buyers and sellers of companies and efficiently execute M&A transactions that help increase shareholder value. Our professionals have advised on $20+ billion in M&A transactions to date and have current clients and relationships globally with entrepreneurs, companies and leading private equity firms within the sectors we cover. Please contact us for information regarding this report or to inquire about an M&A transaction.

Follow Us on Twitter: @Solganickco Los Angeles San Francisco Houston 811 W 7th St Ste 1200 650 California St 2100 West Loop South, Ste 900 Los Angeles, CA 90071 San Francisco, CA 94108 Houston, TX 77027 +1 (310) 684-3130 www.solganickco.com Aaron Solganick, CEO Alex Khoras, Director of Business Development [email protected] [email protected] Frank Grant, Managing Director Sergio Rivera Vazquez, [email protected] [email protected] Rachael Fang, Vice President Michael Chen, Analyst [email protected] [email protected] Sam Sheedban, Associate Elizabeth Kreitzer, Analyst [email protected] [email protected] Eugene Sung, Analyst [email protected]

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