technology m&a trends 2012

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©COPYRIGHT 2012. FIRMEX. ALL RIGHTS RESERVED About Firmex Firmex focused on providing the best virtual data room solution for managing corporate transactions and financial compliance Who uses Firmex? Firmex community includes over 200,000 users worldwide Conducted over 10,000 deals in the last 18 months Why offer a Webinar Series? As part of our value-added service, we believe it is important to offer educational resources to our expanding community Joel Lessem CEO Firmex

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Page 1: Technology m&a trends 2012

©COPYRIGHT 2012. FIRMEX. ALL RIGHTS RESERVED

About Firmex

Firmex focused on providing the best virtual data room solution for managing corporate transactions and financial compliance

Who uses Firmex?• Firmex community includes

over 200,000 users worldwide• Conducted over 10,000 deals

in the last 18 months

Why offer a Webinar Series?• As part of our value-added service, we believe it is important

to offer educational resources to our expanding community

Joel LessemCEOFirmex

Page 2: Technology m&a trends 2012

©COPYRIGHT 2012. FIRMEX. ALL RIGHTS RESERVED

Firmex Webinar SeriesApril 17th, 2012

1:00 p.m. to 2:00 p.m.

Cyrus LamKPMG Corporate Finance LLCManaging Director757 3rd AvenueNew York, NY [email protected]

Trends in Technology M&AAnd Outlook for the Remainder of 2012

@Firmex, #FirmexWebinar

Page 3: Technology m&a trends 2012

©COPYRIGHT 2012. FIRMEX. ALL RIGHTS RESERVED

About Firmex

Firmex is focused on providing the best virtual data room solution for managing corporate transactions and financial compliance

Who uses Firmex?• Firmex community includes

over 200,000 users worldwide• Conducted over 10,000 deals

in the last 18 months

Why offer a Webinar Series?• As part of our value-added service, we believe it is important

to offer educational resources to our expanding community

Joel LessemCEOFirmex

Page 4: Technology m&a trends 2012

©COPYRIGHT 2012. FIRMEX. ALL RIGHTS RESERVED

Cyrus LamCyrus Lam is a Managing Director with KPMG Corporate Finance LLC in New York with a technology focus specializing in IT Services, BPO, and Enterprise Software sectors. He has over 14 years of cross-border M&A experience, acting on buy-side and sell-side, as well as assisting on private placements (debt and equity). Cyrus holds a Masters Degree and a Bachelor of Commerce degree in Business and Accounting from the University of Mumbai, India. He is also a Chartered Accountant and is a Fellow of the Institute of Chartered Accountants, India.

Cyrus has been with KPMG for over 16 years, having started in India as an accountant and later transitioning to the Indian Corporate Finance Practice. In October 2000, Cyrus joined KPMG Corporate Finance in London, and subsequently moved to the U.S. Corporate Finance team in December 2006.

Cyrus specializes in the technology and support services vertical with a focus on:• Information technology services• Enterprise software (including both vertically and horizontally focused software companies)• Business process outsourcing

During his time with KPMG, Cyrus has developed significant cross-border transaction experience, having worked on M&A deals in India, the U.S., the U.K., Sweden, Germany, France, Spain and the Netherlands.

Page 5: Technology m&a trends 2012

Trends in Technology M&AAn Outlook for the Remainder of 2012

Cyrus F. Lam

KPMG Corporate Finance LLC

April 17, 2012

CORPORATE FINANCE

ADVISORY

Page 6: Technology m&a trends 2012

6©2012 KPMG Corporate Finance LLC, a Delaware limited liability company, is a member of FINRA and SIPC and is registered as a broker-dealer with the SEC. KPMG Corporate Finance LLC is also registered as a municipal advisor with the SEC and MSRB. KPMG Corporate Finance LLC is a subsidiary of KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights reserved.

Important notice

This presentation is confidential and does not carry any right of publication or disclosure to any other party. This presentation is incomplete without reference to, and should be viewed solely in conjunction with, the oral briefing provided by KPMG Corporate Finance LLC. Neither this presentation nor any of its contents may be used for any other purpose without the prior written consent of KPMG Corporate Finance LLC.

The information in this presentation is based upon publicly available information and reflects prevailing conditions and our views as of this date, all of which are accordingly subject to change and such changes may be material. In preparing this presentation, we have relied upon and assumed, without independent verification, the accuracy and completeness of all information available from public sources or which was otherwise reviewed by us.

The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.

While the information presented and views expressed in this presentation and the oral briefing have been prepared in good faith, KPMG Corporate Finance LLC accepts no responsibility or liability to any party in connection with such information or views.

Page 7: Technology m&a trends 2012

M&A Market Landscape

Technology M&A Landscape

Deal Management

Questions

Page 8: Technology m&a trends 2012

8©2012 KPMG Corporate Finance LLC, a Delaware limited liability company, is a member of FINRA and SIPC and is registered as a broker-dealer with the SEC. KPMG Corporate Finance LLC is also registered as a municipal advisor with the SEC and MSRB. KPMG Corporate Finance LLC is a subsidiary of KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights reserved.

Global and U.S. M&A activity

Source: Capital IQ and Financial Times

Global M&A activity U.S. M&A activity

2012 was expected to be a robust M&A year, but Q1 volumes have disappointed

Q1-12 global deal volume is the lowest since Q1-10

However, there has been a recent surge in the number of IPOs over the past 6 months

Private equity firms are using buoyant equity markets to take more of their portfolio companies public

There have been 36 private equity backed IPOs in Q1-12 representing 35% of global IPOs deals, the most since 2000

427 451

396

605

525 550 569

718

661 677

621

554 537

7,442 8,148

8,517

10,971 10,315

10,716 10,717

12,879

11,505

12,641 12,478

13,233

10,675

-

2,000

4,000

6,000

8,000

10,000

12,000

14,000

-

100

200

300

400

500

600

700

800

900

1,000

Q1-09 Q2-09 Q3-09 Q4-09 Q1-10 Q2-10 Q3-10 Q4-10 Q1-11 Q2-11 Q3-11 Q4-11 Q1-12

Deal V

olum

e

Dea

l Val

ue ($

b)

Deal Value Deal Volume

195 188

100

226

167 207 203 223 235 255 266

219

150

2,004 2,228 2,440 3,033 3,159 3,224 3,284

3,810 3,478

3,854 3,714 3,820 3,232

-

2,000

4,000

6,000

8,000

10,000

12,000

14,000

-

100

200

300

400

500

600

700

800

900

1,000

Q1-09 Q2-09 Q3-09 Q4-09 Q1-10 Q2-10 Q3-10 Q4-10 Q1-11 Q2-11 Q3-11 Q4-11 Q1-12

Deal V

olum

e

Dea

l Val

ue ($

b)

Deal Value Deal Volume

Page 9: Technology m&a trends 2012

9©2012 KPMG Corporate Finance LLC, a Delaware limited liability company, is a member of FINRA and SIPC and is registered as a broker-dealer with the SEC. KPMG Corporate Finance LLC is also registered as a municipal advisor with the SEC and MSRB. KPMG Corporate Finance LLC is a subsidiary of KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights reserved.

M&A volume by sector

Source: Capital IQ

Note: *2012 deal value and deal volume are annualized based on Q1-12

Consumer Discretionary Consumer Staples Energy Financials Healthcare

Industrials Information Technology Materials Telecommunications Utilities

-

5

10

15

-

100

200

300

400

500

600

700

2009 2010 2011 2012*-

5

10

15

-

100

200

300

400

500

600

700

2009 2010 2011 2012*

Deal Value Deal Volume

-

5

10

15

-

100

200

300

400

500

600

700

2009 2010 2011 2012*

Dea

l Val

ue ($

b)

-

5

10

15

-

100

200

300

400

500

600

700

2009 2010 2011 2012*-

5

10

15

-

100

200

300

400

500

600

700

2009 2010 2011 2012*

Deal V

olum

e ('000s)

-

5

10

15

-

100

200

300

400

500

600

700

2009 2010 2011 2012*

Dea

l Val

ue ($

b)

-

5

10

15

-

100

200

300

400

500

600

700

2009 2010 2011 2012*-

5

10

15

-

100

200

300

400

500

600

700

2009 2010 2011 2012*

Deal Value Deal Volume

-

5

10

15

-

100

200

300

400

500

600

700

2009 2010 2011 2012*-

5

10

15

-

100

200

300

400

500

600

700

2009 2010 2011 2012*

Deal V

olum

e ('000s)

Page 10: Technology m&a trends 2012

10©2012 KPMG Corporate Finance LLC, a Delaware limited liability company, is a member of FINRA and SIPC and is registered as a broker-dealer with the SEC. KPMG Corporate Finance LLC is also registered as a municipal advisor with the SEC and MSRB. KPMG Corporate Finance LLC is a subsidiary of KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights reserved.

Average M&A multiples by sector

Source: Capital IQ

Consumer Discretionary Consumer Staples Energy Financials Healthcare

Industrials Information Technology Materials Telecommunications Utilities

1.2x

9.0x

0.0x

2.0x

4.0x

6.0x

8.0x

10.0x

12.0x

14.0x

2009 2010 2011 Q1-12

En

terp

rise

Val

ue M

ultip

le

1.2x

9.7x

0.0x

2.0x

4.0x

6.0x

8.0x

10.0x

12.0x

14.0x

2009 2010 2011 Q1-12

2.9x

7.0x

0.0x

2.0x

4.0x

6.0x

8.0x

10.0x

12.0x

14.0x

2009 2010 2011 Q1-12

EV/Revenue EV/EBITDA

3.6x

12.1x

0.0x

2.0x

4.0x

6.0x

8.0x

10.0x

12.0x

14.0x

2009 2010 2011 Q1-12

2.3x

9.9x

0.0x

2.0x

4.0x

6.0x

8.0x

10.0x

12.0x

14.0x

2009 2010 2011 Q1-12

1.3x

9.2x

0.0x

2.0x

4.0x

6.0x

8.0x

10.0x

12.0x

14.0x

2009 2010 2011 Q1-12

En

terp

rise

Val

ue M

ultip

le

1.7x

10.1x

0.0x

2.0x

4.0x

6.0x

8.0x

10.0x

12.0x

14.0x

2009 2010 2011 Q1-12

1.1x

8.9x

0.0x

2.0x

4.0x

6.0x

8.0x

10.0x

12.0x

14.0x

2009 2010 2011 Q1-12

EV/Revenue EV/EBITDA

2.0x

10.1x

0.0x

2.0x

4.0x

6.0x

8.0x

10.0x

12.0x

14.0x

2009 2010 2011 Q1-12

2.2x

9.8x

0.0x

2.0x

4.0x

6.0x

8.0x

10.0x

12.0x

14.0x

2009 2010 2011 Q1-12

Page 11: Technology m&a trends 2012

11©2012 KPMG Corporate Finance LLC, a Delaware limited liability company, is a member of FINRA and SIPC and is registered as a broker-dealer with the SEC. KPMG Corporate Finance LLC is also registered as a municipal advisor with the SEC and MSRB. KPMG Corporate Finance LLC is a subsidiary of KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights reserved.

M&A volume by deal size

Source: Capital IQ

Note: Chart represents only transactions with disclosed values

Global M&A volume by deal size

1,321 1,534 1,475 1,764 1,639 1,648 1,582 1,832 1,640 1,832 1,800 1,907 1,415

1,029 1,356 1,437

2,052 1,729 1,958 1,928

2,413 1,924

2,214 2,214 2,285

1,591

444

566 713

1,039

847 941 1,031

1,301

1,022

1,234 1,118 1,163

835 104

120 137

176

152

184 208

264

234

231 197

193

166

-

1,000

2,000

3,000

4,000

5,000

6,000

Q1-09 Q2-09 Q3-09 Q4-09 Q1-10 Q2-10 Q3-10 Q4-10 Q1-11 Q2-11 Q3-11 Q4-11 Q1-12

De

al V

olu

me

$0m - $5m $5m - $50m $50m - $500m > $500m

Page 12: Technology m&a trends 2012

12©2012 KPMG Corporate Finance LLC, a Delaware limited liability company, is a member of FINRA and SIPC and is registered as a broker-dealer with the SEC. KPMG Corporate Finance LLC is also registered as a municipal advisor with the SEC and MSRB. KPMG Corporate Finance LLC is a subsidiary of KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights reserved.

Average M&A multiples by deal size

1.0x

1.7x

1.9x

2.7x

8.0x

9.6x

10.0x

11.4x

0.0x

2.0x

4.0x

6.0x

8.0x

10.0x

12.0x

14.0x

Q1-09 Q2-09 Q3-09 Q4-09 Q1-10 Q2-10 Q3-10 Q4-10 Q1-11 Q2-11 Q3-11 Q4-11 Q1-12

En

terp

rise

Va

lue

Mu

ltip

le

$0m - $5m $5m - $50m $50m - $500m > $500m

Global M&A multiples by deal size

Source: Capital IQ

Note: Chart represents only transactions with disclosed values

EV/ EBITDA

EV/ Revenue

Page 13: Technology m&a trends 2012

13©2012 KPMG Corporate Finance LLC, a Delaware limited liability company, is a member of FINRA and SIPC and is registered as a broker-dealer with the SEC. KPMG Corporate Finance LLC is also registered as a municipal advisor with the SEC and MSRB. KPMG Corporate Finance LLC is a subsidiary of KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights reserved.

916 1,005 1,045

1,494 1,559 1,687

0

300

600

900

1,200

1,500

1,800

2006 2007 2008 2009 2010 2011

Cas

h a

nd

equ

ival

ents

($b)

S&P 500 Companies Cash Balance

197

257

333

439478

521477

425

$-

$100

$200

$300

$400

$500

$600

2004 2005 2006 2007 2008 2009 2010 2011

Cap

ital O

verh

ang

($b)

Abundance of available investable capital

The market is flush with capital that needs to be deployed; financial investors have over $400b in dry powder

Strategic acquirers (made up of the S&P 500) are holding an additional $1.7 trillion in investable cash

The M&A markets should benefit from the nearly $2.1 trillion of “dry powder”

PE Investors Sitting on $425b of Dry Powder

Source: Private Equity Growth Capital Council and Capital IQ

Page 14: Technology m&a trends 2012

14©2012 KPMG Corporate Finance LLC, a Delaware limited liability company, is a member of FINRA and SIPC and is registered as a broker-dealer with the SEC. KPMG Corporate Finance LLC is also registered as a municipal advisor with the SEC and MSRB. KPMG Corporate Finance LLC is a subsidiary of KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights reserved.

Increased leverage capability for M&A

Leverage on M&A transactions has remained stable, and is currently above 4.0x EBITDA

Total loan volumes in Q1 2012 have increased since Q4 2011, but are still below Q2 2011 levels

2011 total leverage on middle market transactions reached $374 billion, compared to $236 billion in 2010

However, the volatility in Q4 2011 has put deal pricing under some pressure

Actual pricing varies by size, ABL vs. cash flow and credit rating

Tranche Pricing (bps)

Revolver L + 350 - 450

Senior Term A L+ 550 - 650

Senior Term B L+ 650 - 700

Mezzanine 13% - 14% current pay & 3% - 4%PIK

Middle Market LBO Credit Statistics

Total Leveraged Loan Volume

Representative Debt Pricing

Source: LCD and Capital IQ

0.0x

1.0x

2.0x

3.0x

4.0x

5.0x

6.0x

Jan-

10Fe

b-10

Mar

-10

Apr

-10

May

-10

Jun-

10Ju

l-10

Aug

-10

Sep

-10

Oct

-10

Nov

-10

Dec

-10

Jan-

11Fe

b-11

Mar

-11

Apr

-11

May

-11

Jun-

11Ju

l-11

Aug

-11

Sep

-11

Oct

-11

Nov

-11

Dec

-11

Jan-

12Fe

b-12

Mar

-12

Mul

tiple

of E

BIT

DA

First Lien Debt/EBITDA Second Lien Debt/EBITDA

Other Sr. Debt/EBITDA Sub Debt/EBITDA

43.4 65.9 54.2 72.7 141.2 119.0 53.1 60.8 109.8-

20

40

60

80

100

120

140

160

1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 3Q12

$ in

bill

ions

Page 15: Technology m&a trends 2012

15©2012 KPMG Corporate Finance LLC, a Delaware limited liability company, is a member of FINRA and SIPC and is registered as a broker-dealer with the SEC. KPMG Corporate Finance LLC is also registered as a municipal advisor with the SEC and MSRB. KPMG Corporate Finance LLC is a subsidiary of KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights reserved.

Factors impacting M&A in 2012

Low borrowing cost

Anticipated 2013 capital gains/ dividends tax

increase

China and Eurozone

uncertainty

Oil prices and Middle East instability

U.S. 2012 Presidential election year

Page 16: Technology m&a trends 2012

16©2012 KPMG Corporate Finance LLC, a Delaware limited liability company, is a member of FINRA and SIPC and is registered as a broker-dealer with the SEC. KPMG Corporate Finance LLC is also registered as a municipal advisor with the SEC and MSRB. KPMG Corporate Finance LLC is a subsidiary of KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights reserved.

Knowledge @ Wharton/KPMG survey

KPMG and Knowledge@Wharton, The Wharton School of the University of Pennsylvania, have teamed to conduct the 2012 M&A Outlook Survey

Survey is based on 875 executives’ insights and opinions with 70% of executives expecting to complete an acquisition in 2012

One-third of respondents remain optimistic for 2012 M&A

However deal environment still murky, with two-thirds of respondents expecting full recovery in 2013 or later

Companies that survived the economic downfall are leaner and better prepared to weather uncertain conditions

U.S. election cycle, tax uncertainty and European economic woes will have significant impact on how companies pursue transactions

Interest in emerging markets still present, but stability of developed markets continues to hold allure

Due diligence issues continues to challenge dealmakers

KPMG Link:http://www.kpmg.com/US/en/IssuesAndInsights/ArticlesPublications/Pages/executives-show-guarded-optimism.aspx Source: KPMG International and The Wharton School

Page 17: Technology m&a trends 2012

17©2012 KPMG Corporate Finance LLC, a Delaware limited liability company, is a member of FINRA and SIPC and is registered as a broker-dealer with the SEC. KPMG Corporate Finance LLC is also registered as a municipal advisor with the SEC and MSRB. KPMG Corporate Finance LLC is a subsidiary of KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights reserved.

KPMG M&A Predictor

KPMG Link:http://www.kpmg.com/global/en/issuesandinsights/articlespublications/ma-predictor/Pages/default.aspxSource: KPMG International

KPMG’s M&A Predictor is a forward-looking tool that helps clients forecast worldwide trends in mergers and acquisitions. The Predictor was established in 2007. It looks at the appetite and capacity for M&A deals by tracking and projecting important indicators 12 months forward.

Despite still being up on the dark days of 2009, the first six months of 2012 look set to be challenging

Confidence dips in global market

Lack of confidence will restrict deal flow

Consumer staples, technology, and healthcare sectors are predicted to fare better than others

Forward P/E ratios down 5% since June 2011

Page 18: Technology m&a trends 2012

M&A Market Landscape

Technology M&A Landscape

Deal Management

Questions

Page 19: Technology m&a trends 2012

19©2012 KPMG Corporate Finance LLC, a Delaware limited liability company, is a member of FINRA and SIPC and is registered as a broker-dealer with the SEC. KPMG Corporate Finance LLC is also registered as a municipal advisor with the SEC and MSRB. KPMG Corporate Finance LLC is a subsidiary of KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights reserved.

General technology M&A activity

Source: Capital IQ

U.S. technology M&A activityGlobal technology M&A activity

■ In Q1-12 global technology M&A deal values have had a good start, however, deal volumes are lower than Q4 2011

■ U.S. technology deal values have declined since Q3-10, while deal volume has been relatively consistent

■ Quarterly technology deal values are impacted by the timing of large deals

■ Scientific Atlanta - NDS in Q1 2012

■ HP – Autonomy in Q3 2011

13.2 10.8 28.9 12.4 8.2 28.6 38.6 22.6 23.4 26.4 33.1 17.5 31.0

643 645

728

831 902

871 906

962 973 991 971 948 895

-

200

400

600

800

1,000

1,200

-

5

10

15

20

25

30

35

40

45

Q1-09 Q2-09 Q3-09 Q4-09 Q1-10 Q2-10 Q3-10 Q4-10 Q1-11 Q2-11 Q3-11 Q4-11 Q1-12

Deal V

olum

e

Dea

l Val

ue ($

b)

Deal Value Deal Volume

8.8 3.7 20.4 8.2 4.7 21.9 27.8 14.5 14.1 15.7 13.6 12.4 8.9

242 232 298

362 418

349 413 426 411 396 415 393 380

-

200

400

600

800

1,000

1,200

-

5

10

15

20

25

30

35

40

45

Q1-09 Q2-09 Q3-09 Q4-09 Q1-10 Q2-10 Q3-10 Q4-10 Q1-11 Q2-11 Q3-11 Q4-11 Q1-12

Deal V

olum

e

Dea

l Val

ue ($

b)

Deal Value Deal Volume

Page 20: Technology m&a trends 2012

20©2012 KPMG Corporate Finance LLC, a Delaware limited liability company, is a member of FINRA and SIPC and is registered as a broker-dealer with the SEC. KPMG Corporate Finance LLC is also registered as a municipal advisor with the SEC and MSRB. KPMG Corporate Finance LLC is a subsidiary of KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights reserved.

Global technology M&A – valuations and deal size

■ Enterprise software deals values were at their lowest point in the 6 quarters ending Q2 10

■ Q1-12 average enterprise value/ revenue and EBITDA multiples are 2.4x and 11.0x, respectively

■ The largest software transaction was Hewlett-Packard’s acquisition of Autonomy in August 2011 for ≈$11b

Average enterprise software deal value and multiples

Source: Capital IQNote: All charts represent only transactions with disclosed values and multiples

Average BPO and IT services deal value and multiples

■ BPO and IT services industry has seen relatively sustained deal values

■ Q1-12 average enterprise value/ revenue and EBITDA multiples are 1.7x and 10.2x, respectively

■ Average enterprise value/ EBITDA multiples have gradually decreased during 2011

17 100 72 51 36 82 118 100 105 153 281 147 255

2.4x

1.3x 1.5x 1.9x 1.8x 2.0x 1.7x 1.7x2.7x 2.6x

2.0x 2.0x 2.4x

6.3x

5.7x

10.4x

13.1x

8.4x

13.2x

8.2x8.3x

12.9x

16.4x

21.4x

9.4x11.0x

0.0x

5.0x

10.0x

15.0x

20.0x

25.0x

-

50

100

150

200

250

300

350

Q1-09 Q2-09 Q3-09 Q4-09 Q1-10 Q2-10 Q3-10 Q4-10 Q1-11 Q2-11 Q3-11 Q4-11 Q1-12

En

terprise V

alue Multiple

Dea

l Val

ue ($

m)

Average Deal Value Average EV/ Revenue Average EV/ EBITDA

123 136 112 130 99 187 199 127 105 143 169 132 210

1.2x 1.2x 1.2x 1.2x 1.4x 1.3x 1.3x 1.2x 1.5x 1.6x 1.7x 1.6x 1.7x

8.3x

11.1x10.1x

7.6x

14.0x

9.6x 8.5x

11.9x 12.3x

10.8x 10.3x

8.3x

10.2x

0.0x

5.0x

10.0x

15.0x

20.0x

25.0x

-

50

100

150

200

250

300

350

Q1-09 Q2-09 Q3-09 Q4-09 Q1-10 Q2-10 Q3-10 Q4-10 Q1-11 Q2-11 Q3-11 Q4-11 Q1-12

En

terprise V

alue Multiple

Dea

l Val

ue ($

m)

Average Deal Value Average EV/ Revenue Average EV/ EBITDA

Page 21: Technology m&a trends 2012

21©2012 KPMG Corporate Finance LLC, a Delaware limited liability company, is a member of FINRA and SIPC and is registered as a broker-dealer with the SEC. KPMG Corporate Finance LLC is also registered as a municipal advisor with the SEC and MSRB. KPMG Corporate Finance LLC is a subsidiary of KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights reserved.

Top ten recent technology M&A transactions

Source: Capital IQ and company filings;

Large Precedent Technology M&A Transactions (in $USD millions unless otherwise noted)

Announcement Date Status Buyers/Investors Target

Enterprise Value

EV / Revenue

EV / EBITDA

Mar-12 Announced Scientific-Atlanta, LLC NDS Group Ltd. 4,965 5.0x 17.5x

Mar-12 Announced Insight Venture Partners Quest Softw are Inc. 1,947 2.3x 12.7x

Feb-12 Announced Oracle Corporation Taleo Corp. 1,805 5.7x 60.9x

Feb-12 Announced Vista Equity Partners Misys plc 2,042 3.2x 16.1x

Dec-11 Closed SAP America, Inc. SuccessFactors, Inc. 3,516 12.0x NM

Aug-11 Closed Hewlett-Packard Company Autonomy Corp. plc 10,301 11.1x 25.2x

Aug-11 Closed Datatel, Inc. SunGard Higher Education, Inc. 1,775 - -

Jun-11 Closed Providence Equity Partners LLC Blackboard Inc. 1,767 3.7x 22.3x

May-11 Closed Schneider Electric España, S.A. Telvent Git S.A. 1,917 1.8x 11.4x

Apr-11 Closed CenturyLink, Inc. Savvis, Inc. 2,963 3.0x 12.9x

■ In the past 12 months there have been 20 technology transactions with values in excess of $1billion

■ PE has been relatively active in the >$1bn value range

■ Average enterprise value/revenue and EBITDA multiples were 5.3x and 22.4x, respectively

Page 22: Technology m&a trends 2012

22©2012 KPMG Corporate Finance LLC, a Delaware limited liability company, is a member of FINRA and SIPC and is registered as a broker-dealer with the SEC. KPMG Corporate Finance LLC is also registered as a municipal advisor with the SEC and MSRB. KPMG Corporate Finance LLC is a subsidiary of KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights reserved.

Public enterprise software company comparables

Enterprise software comparables for select application software, infrastructure software, operating systems and SaaS public companies are presented below, with mean forward revenue and EBITDA multiples of 4.5x and 15.3x.

Presented application software companies experienced an average share price gain of 12.8% in the past year. Mean forward revenue and EBITDA multiples are expected to be 3.5x and 14.3x respectively.

Presented infrastructure companies experienced an average share price gain of 4.4% in the past year. Mean forward revenue and EBITDA multiples are expected to be 4.5x and 13.8x respectively.

Source: Capital IQ and company filings(1) Market Capitalization amounts are in millions, based on closing share prices as of March 31, 2012; (2) Market Capitalization and Share Prices are based on foreign exchange listed securities and converted to $USD(3) Enterprise Value (EV) equals Market Capitalization plus Debt, Preferred Equity, and Minority Interest, minus Cash and Cash Equivalents; (4) EBITDA equals Earnings before Interest, Taxes, Depreciation, and Amortization

KPMG Corporate Finance LLC - Enterprise Software Public Comparables

Enterprise Value / Equity Value

CompanyMarket Cap (1,2)

EnterpriseValue (3)

SharePrice (1,2)

% of 52-Wk High

ChgPct 1Yr

Cur QtrRev RR

Cur QtrEBITDA(4) RR

2012E Revenue

2012E EBITDA(4)

2012E P/E

2013EP/E

Application SoftwareAriba Inc. 3,118 2,953 32.71 88.1% -4.2% 5.9x NM 5.4x 23.3x NM 28.9xDeltek, Inc 684 816 10.66 91.6% 40.3% 2.3x 12.7x 2.2x 9.6x 27.2x 15.9xInformatica Corporation 5,680 5,078 52.90 84.7% 1.4% 5.6x 20.4x 5.6x 18.7x 38.2x 28.0xJ DA Software Group Inc. 1,169 1,157 27.48 78.5% -9.2% 1.7x 5.8x 1.6x 5.9x 12.7x 10.6xManhattan Associates, Inc. 977 879 47.53 94.7% 45.2% 2.6x 12.5x 2.4x 10.1x 21.3x 17.1xMICROS Systems, Inc. 4,419 3,686 55.29 99.2% 11.9% 3.4x 15.9x 3.2x 13.1x 30.1x 22.9xMicroStrategy Inc. 1,510 1,310 140.00 78.4% 4.1% 2.0x 26.4x 2.1x 21.0x NM 29.0xOpen Text Corp. 3,545 3,743 61.16 84.6% -1.9% 2.9x 9.3x 2.9x 9.7x 15.0x 11.4xP egasystems Inc. 1,443 1,331 38.16 80.3% 0.5% 2.9x NM 2.7x 23.5x NM 30.1xQlik Technologies, Inc. 2,703 2,526 32.00 89.8% 23.1% 5.8x 23.2x 6.2x NM NM NMSage Group plc 6,206 6,224 4.78 95.5% 7.2% NM NM 2.8x 9.8x 15.7x 13.1xSAP AG 83,197 81,330 69.88 95.6% 14.1% 3.5x 8.0x 3.9x 11.1x 19.2x 15.2xTeradata Corporation 11,467 10,985 68.15 97.8% 34.4% 4.1x 17.1x 4.1x 15.8x 29.9x 22.5xApplication Software Mean 12.8% 3.6x 15.1x 3.5x 14.3x 23.3x 20.4x

Infrastructure SoftwareBMC Software Inc. 6,595 5,587 40.16 71.0% -19.3% 2.5x 6.6x 2.5x 5.9x 13.5x 11.4xCA Technologies 13,384 12,343 27.56 98.4% 14.0% 2.4x 6.3x 2.5x 6.7x 14.1x 11.2xCitrix Systems, Inc. 14,644 13,904 78.91 89.2% 7.4% 5.6x 19.2x 5.5x 17.6x 32.3x 25.3xCommVault Systems, Inc. 2,194 1,937 49.64 89.9% 24.5% 4.7x NM 4.4x 22.6x NM NMCompuware Corporation 2,009 2,036 9.19 78.5% -20.4% 2.0x 11.3x 1.9x 8.8x 20.0x 18.4xF5 Networks, Inc. 10,688 10,131 134.96 98.9% 31.6% 7.9x 24.0x 7.0x 17.3x 36.3x 25.4xOP NET Technologies Inc. 654 557 29.00 60.5% -25.6% 3.0x 14.1x 2.8x 12.0x NM 26.9xOracle Corporation 145,074 130,502 29.16 79.9% -12.8% 3.6x 8.3x 3.4x 6.8x 13.4x 11.1xP rogress Software Corp. 1,481 1,166 23.62 77.7% -18.8% 2.3x 13.5x 2.2x 9.5x 16.4x 16.3xQuest Software Inc. 1,944 1,874 23.27 89.0% -8.4% 1.9x 6.9x 2.0x 6.7x 17.4x 12.5xRiverbed Technology, Inc. 4,423 3,953 28.08 67.1% -25.4% 4.9x 28.8x 4.6x 14.5x 31.4x 21.6xSolarWinds, Inc. 2,799 2,647 38.65 91.5% 64.7% 11.9x 24.6x 10.5x 23.3x 38.9x 28.2xTIBCO Software Inc. 4,967 4,750 30.50 92.4% 11.9% 5.3x NM 4.4x 14.4x 32.8x 22.2xVMware, Inc. 47,768 43,705 112.37 98.8% 37.8% 10.3x NM 9.6x 26.8x NM 36.8xInfrastructure Software Mean 4.4% 4.9x 14.9x 4.5x 13.8x 24.2x 20.6x

Operating SystemsMicrosoft Corporation 270,644 232,756 32.26 97.9% 27.0% 2.8x 6.7x 3.0x 7.3x 12.5x 10.7xRed Hat, Inc. 11,541 10,727 59.89 97.1% 31.9% 9.0x NM 7.9x 28.2x NM NMOperating Systems Mean 29.5% 5.9x 6.7x 5.5x 17.8x 12.5x 10.7x

Page 23: Technology m&a trends 2012

23©2012 KPMG Corporate Finance LLC, a Delaware limited liability company, is a member of FINRA and SIPC and is registered as a broker-dealer with the SEC. KPMG Corporate Finance LLC is also registered as a municipal advisor with the SEC and MSRB. KPMG Corporate Finance LLC is a subsidiary of KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights reserved.

Public enterprise software company comparables (2)

Source: Capital IQ and company filings

Presented SaaS companies experienced an average share price gain of 16.4% in the past year. Mean forward revenue and EBITDA multiples are expected to be 5.4x and 19.9x respectively.

2012E EV/EBITDA and 3-year revenue CAGR 2012E EV/EBITDA and 2012E EBITDA margin

Source: Capital IQ and company filings(1) Market Capitalization amounts are in millions, based on closing share prices as of March 31, 2012(2) Market Capitalization and Share Prices are based on foreign exchange listed securities and converted to $USD(3) Enterprise Value (EV) equals Market Capitalization plus Debt, Preferred Equity, and Minority Interest, minus Cash and Cash Equivalents(4) EBITDA equals Earnings before Interest, Taxes, Depreciation, and Amortization

0.0x

5.0x

10.0x

15.0x

20.0x

25.0x

30.0x

35.0x

0% 5% 10% 15% 20% 25% 30% 35% 40% 45%

EV / EB

TID

A

2012E EBITDA Margin

0.0x

5.0x

10.0x

15.0x

20.0x

25.0x

30.0x

35.0x

0% 5% 10% 15% 20% 25% 30% 35% 40% 45%

EV / EB

TID

A

3-year Revenue CAGR

KPMG Corporate Finance LLC - Enterprise Software Public Comparables

Enterprise Value / Equity Value

CompanyMarket Cap (1,2)

EnterpriseValue (3)

SharePrice (1,2)

% of 52-Wk High

ChgPct 1Yr

Cur QtrRev RR

Cur QtrEBITDA(4) RR

2012E Revenue

2012E EBITDA(4)

2012E P/E

2013EP/E

SaaSCarbonite, Inc. 278 205 11.01 52.2% NM 3.0x NM 2.4x NM NM NMConcur Technologies, Inc. 3,128 2,903 57.38 91.7% 3.5% 7.2x NM 6.2x 26.9x NM NMConstant Contact, Inc. 900 760 29.79 82.0% -14.6% 3.3x 29.3x 3.0x 16.4x NM 26.1xCornerstone OnDemand, Inc. 1,079 997 21.84 92.9% 19.8% 11.1x NM 8.8x NM NM NMKenexa Corp. 851 768 31.24 94.1% 13.2% 2.5x 20.0x 2.1x 13.5x 37.9x 25.0xLogMeIn, Inc. 865 667 35.23 74.3% -16.4% 5.2x NM 4.7x 22.2x NM 39.5xNetSuite Inc. 3,493 3,358 50.29 97.1% 72.9% 13.1x NM 11.3x NM NM NMResponsys, Inc. 568 475 11.97 65.8% NM 3.2x 21.7x 2.9x 18.6x NM NMsalesforce.com, inc 21,168 20,947 154.51 96.5% 15.7% 8.3x NM 7.1x NM NM NMTaleo Corp. 1,935 1,819 45.93 99.9% 28.8% 5.4x NM 4.8x 21.4x NM 36.6xThe Ultimate Software Group, Inc. 1,933 1,884 73.28 97.7% 24.7% 6.5x NM 5.7x NM NM NMSaaS Mean 16.4% 6.2x 23.7x 5.4x 19.9x 37.9x 31.8x

Total Enterprise Software Mean 11.4% 4.9x 15.7x 4.5x 15.3x 23.9x 21.7x

Page 24: Technology m&a trends 2012

24©2012 KPMG Corporate Finance LLC, a Delaware limited liability company, is a member of FINRA and SIPC and is registered as a broker-dealer with the SEC. KPMG Corporate Finance LLC is also registered as a municipal advisor with the SEC and MSRB. KPMG Corporate Finance LLC is a subsidiary of KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights reserved.

Public BPO and IT services company comparables

BPO comparables for select CRM and voice, financial/ transaction processing, HR/ administration, and offshore BPO public companies are presented below, with mean forward revenue and EBITDA multiples of 1.7x and 7.7x.

Presented CRM and voice companies experienced an average share price gain of -17.1% in the past year. Mean forward revenue and EBITDA multiples are expected to be 0.6x and 4.8x respectively.

Presented HR and administration companies experienced an average share price gain of 2.7% in the past year. Mean forward revenue and EBITDA multiples are expected to be 2.0x and 8.3x respectively.

KPMG Corporate Finance LLC - BPO and IT services public comparables

Enterprise Value / Equity Value

CompanyMarket

Cap (1)

EnterpriseValue (3)

SharePrice (1,2)

% of 52-Wk High

ChgPct 1Yr

Cur QtrRev RR

Cur Qtr EBITDA(4) RR

2012E Revenue

2012E EBITDA(4)

2012E P/E

2013EP/E

BPO

CRM and VoiceConvergys Corporation 1,550 1,232 13.35 91.3% -7.0% 0.5x 4.1x 0.6x 4.9x 13.4x 13.2xSykes Enterprises, Incorporated 683 472 15.80 69.0% -20.1% 0.4x 4.8x 0.4x 4.4x 11.6x 11.4xTeleperformance 1,582 1,550 28.56 77.3% -24.3% 0.6x 3.6x 0.5x 4.1x 11.4x 8.9xTeleTech Holdings Inc. 912 833 16.10 71.9% -16.9% 0.7x 6.8x 0.7x 6.0x 12.2x 10.6xCRM and Voice Mean -17.1% 0.6x 4.8x 0.6x 4.8x 12.2x 11.0x

Financial and Transaction ProcessingAlliance Data Systems Corporation 6,303 12,923 125.96 98.8% 46.7% 3.8x 17.0x 3.7x 11.5x 17.2x 13.1xCSG International, Inc. 488 639 15.14 70.1% -24.1% 0.9x 2.6x 0.9x 3.9x 7.0x 13.3xDST Systems Inc. 2,326 3,409 54.23 91.3% 2.7% 1.9x 12.5x 1.7x 8.1x 13.6x 12.1xFiserv, Inc. 9,617 12,773 69.39 99.1% 10.6% 2.8x 10.1x 2.8x 8.7x 15.2x 12.1xGlobal P ayments Inc. 3,722 3,755 47.50 88.1% -2.9% 1.8x 8.0x 1.6x 7.2x 17.3x 13.0xTotal System Services, Inc. 4,357 4,320 23.07 99.3% 28.0% 2.3x 12.0x 2.4x 8.1x 20.2x 16.3xFinancial and Transaction Processing Mean 10.2% 2.2x 10.4x 2.2x 7.9x 15.1x 13.3x

HR and AdministrationAutomatic Data P rocessing, Inc. 27,075 25,756 55.19 96.7% 7.6% 2.5x 11.4x 2.3x 10.9x 21.9x 18.3xCapita P LC 7,129 9,780 11.71 94.5% -1.8% 2.1x 11.4x 1.9x 11.2x 16.0x 13.0xInsperity, Inc. 796 528 30.64 94.6% 0.9% 0.3x 7.3x 0.2x 5.7x 24.6x 16.3xIron Mountain Inc. 4,927 8,101 28.80 80.5% -7.8% 2.8x 8.4x 2.7x 8.8x 23.5x 18.6xP aychex, Inc. 11,235 10,732 30.99 91.9% -1.3% 4.7x 11.4x 4.6x 10.8x 21.9x 19.0xXchanging P LC 363 336 1.52 82.2% 18.7% 0.3x 2.5x 0.3x 2.7x 11.1x 9.1xHR and Administration Mean 2.7% 2.1x 8.7x 2.0x 8.3x 19.8x 15.7x

Offshore BPOExlservice Holdings, Inc. 862 777 27.44 95.1% 29.7% 1.9x 9.9x 1.7x 9.6x 20.5x 15.2xFirstsource Solutions Limited 81 374 0.19 46.8% -53.4% 0.9x 10.5x 0.8x 8.3x 3.0x 4.1xGenpact Ltd. 3,626 3,577 16.30 89.8% 12.6% 2.0x 11.2x 1.9x 10.9x 21.0x 16.7xWNS (Holdings) Ltd. 603 675 12.05 92.3% 14.2% 1.4x 8.4x 1.6x 9.1x NM NMOffshore BPO Mean 0.8% 1.6x 10.0x 1.5x 9.5x 14.8x 12.0x

Total BPO Mean 0.6% 1.7x 8.7x 1.7x 7.7x 15.9x 13.4x

Presented financial and transaction processing companies experienced an average share price gain of 10.2% in the past year. Mean forward revenue and EBITDA multiples are expected to be 2.2x and 7.9x respectively.

Presented offshore BPO companies experienced an average share price gain of 0.8% in the past year. Mean forward revenue and EBITDA multiples are expected to be 1.5x and 9.5x respectively.

Source: Capital IQ and company filings(1) Market Capitalization amounts are in millions, based on closing share prices as of March 31, 2012(2) Market Capitalization and Share Prices are based on foreign exchange listed securities and converted to $USD(3) Enterprise Value (EV) equals Market Capitalization plus Debt, Preferred Equity, and Minority Interest, minus Cash and Cash Equivalents(4) EBITDA equals Earnings before Interest, Taxes, Depreciation, and Amortization

Page 25: Technology m&a trends 2012

25©2012 KPMG Corporate Finance LLC, a Delaware limited liability company, is a member of FINRA and SIPC and is registered as a broker-dealer with the SEC. KPMG Corporate Finance LLC is also registered as a municipal advisor with the SEC and MSRB. KPMG Corporate Finance LLC is a subsidiary of KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights reserved.

Public BPO and IT services company comparables (2)

Comparables for select commercial, government, European, and offshore IT services public companies are presented below, with mean forward revenue and EBITDA multiples of 1.3x and 7.2x.

Presented government IT services companies experienced an average share price gain of -9.7% in the past year. Mean forward revenue and EBITDA multiples are expected to be 0.6x and 6.1x respectively.

Presented commercial IT services companies experienced an average share price gain of -2.2% in the past year. Mean forward revenue and EBITDA multiples are expected to be 0.9x and 6.5x respectively.

Presented European IT services companies experienced an average share price gain of -16.3% in the past year. Mean forward revenue and EBITDA multiples are expected to be 0.5x and 5.2x respectively.

KPMG Corporate Finance LLC - BPO and IT services public comparables

Enterprise Value / Equity Value

CompanyMarket

Cap (1)

EnterpriseValue (3)

SharePrice (1,2)

% of 52-Wk High

ChgPct 1Yr

Cur QtrRev RR

Cur Qtr EBITDA(4) RR

2012E Revenue

2012E EBITDA(4)

2012E P/E

2013EP/E

IT Services

Commercial IT ServicesAccenture plc 41,567 36,526 64.50 97.9% 17.3% 1.3x 8.8x 1.3x 7.8x 19.1x 15.1xCGI Group, Inc. 5,746 6,642 22.28 91.5% 6.4% 1.6x 9.4x 1.5x 8.2x 14.7x 11.8xCIBER, Inc. 308 310 4.24 60.7% -36.7% 0.3x 11.0x 0.3x 7.6x 27.9x 13.8xComputer Sciences Corporation 4,643 6,524 29.94 58.2% -38.6% 0.4x NM 0.4x 3.2x 6.3x 8.8xDell Inc. 29,241 23,677 16.60 90.4% 14.4% 0.4x 5.8x 0.4x 4.2x 7.8x 7.4xHewlett-P ackard Company 47,120 70,361 23.83 57.0% -41.8% 0.6x 5.1x 0.6x 4.3x 4.9x 5.4xInternational Business Machines Corp. 241,755 261,200 208.65 99.8% 28.0% 2.2x 7.6x 2.4x 9.5x 15.6x 12.7xP erficient Inc. 376 366 12.01 93.8% 0.0% 1.4x 11.6x 1.2x 7.3x NM 16.2xSapient Corp. 1,746 1,539 12.45 76.6% 8.7% 1.5x 10.2x 1.3x 9.8x 19.8x 14.3xThe Hackett Group, Inc. 246 213 5.97 96.1% 55.5% 1.1x 9.6x 0.9x 7.5x 18.5x 11.9xUnisys Corporation 862 764 19.72 59.5% -36.8% 0.2x 1.4x 0.2x 1.6x 8.6x 6.1xCommercial IT Services Mean -2.2% 1.0x 8.1x 0.9x 6.5x 14.3x 11.2x

Government IT ServicesCACI International Inc. 1,650 2,225 62.29 93.7% 1.6% 0.6x 6.2x 0.5x 6.3x 14.5x 10.1xManTech International Corporation 1,271 1,356 34.46 74.5% -18.7% 0.5x 4.2x 0.4x 4.9x 9.4x 10.1xMAXIMUS, Inc. 1,372 1,183 40.67 86.9% 0.2% 1.2x 8.9x 1.2x 8.1x 18.7x 14.3xSAIC, Inc. 4,502 4,762 13.20 74.8% -22.0% 0.5x NM 0.4x 5.1x 9.5x 9.6xGovernment IT Services Mean -9.7% 0.7x 6.4x 0.6x 6.1x 13.0x 11.0x

European IT ServicesAtos S.A. 4,884 5,079 57.65 96.7% -1.8% 0.5x 4.3x 0.4x 4.2x 14.0x 9.7xCap Gemini S.A. 6,883 6,307 44.74 79.8% -23.0% 0.5x 4.7x 0.5x 5.1x 14.5x 12.3xLogica P LC 2,549 3,064 1.59 68.2% -24.2% 0.5x 8.9x 0.5x 6.1x 10.6x 8.3xEuropean IT Services Mean -16.3% 0.5x 5.9x 0.5x 5.2x 13.0x 10.1x

Source: Capital IQ and company filings(1) Market Capitalization amounts are in millions, based on closing share prices as of March 31, 2012(2) Market Capitalization and Share Prices are based on foreign exchange listed securities and converted to $USD(3) Enterprise Value (EV) equals Market Capitalization plus Debt, Preferred Equity, and Minority Interest, minus Cash and Cash Equivalents(4) EBITDA equals Earnings before Interest, Taxes, Depreciation, and Amortization

Page 26: Technology m&a trends 2012

26©2012 KPMG Corporate Finance LLC, a Delaware limited liability company, is a member of FINRA and SIPC and is registered as a broker-dealer with the SEC. KPMG Corporate Finance LLC is also registered as a municipal advisor with the SEC and MSRB. KPMG Corporate Finance LLC is a subsidiary of KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights reserved.

Public BPO and IT services company comparables (3)

Source: Capital IQ and company filings

Presented offshore IT services companies experienced an average share price gain of -9.1% in the past year. Mean forward revenue and EBITDA multiples are expected to be 1.8x and 8.4x respectively.

2012E EV/EBITDA and 3-year revenue CAGR 2012E EV/EBITDA and 2012E EBITDA margin

Source: Capital IQ and company filings(1) Market Capitalization amounts are in millions, based on closing share prices as of March 31, 2012(2) Market Capitalization and Share Prices are based on foreign exchange listed securities and converted to $USD(3) Enterprise Value (EV) equals Market Capitalization plus Debt, Preferred Equity, and Minority Interest, minus Cash and Cash Equivalents(4) EBITDA equals Earnings before Interest, Taxes, Depreciation, and Amortization

KPMG Corporate Finance LLC - BPO and IT services public comparables

Enterprise Value / Equity Value

CompanyMarket

Cap (1)

EnterpriseValue (3)

SharePrice (1,2)

% of 52-Wk High

ChgPct 1Yr

Cur QtrRev RR

Cur Qtr EBITDA(4) RR

2012E Revenue

2012E EBITDA(4)

2012E P/E

2013EP/E

Offshore IT ServicesCognizant Technology Solutions Corporation 23,345 20,913 76.95 92.2% -5.5% 3.1x 15.3x 2.8x 13.6x 27.1x 18.9xHCL Technologies Ltd. 6,561 6,644 9.48 91.3% -11.4% 1.7x 9.6x 1.5x 8.2x 17.9x 12.8xHexaware Technologies Limited 679 588 2.30 93.6% 55.4% 1.8x 8.0x 1.6x 8.0x 14.9x 10.3xiGATE Corporation 952 1,876 16.76 85.6% -10.7% 1.8x 6.5x 1.6x 6.9x 18.5x 10.0xInfosys Ltd. 32,161 28,284 56.29 86.4% -22.5% 3.9x 11.7x 3.7x 11.9x 20.8x 17.1xInfotech Enterprises Limited 327 256 2.94 86.5% -18.6% 0.8x 4.1x 0.7x 4.3x 9.9x 8.4xKP IT Cummins Infosystems Ltd. 280 255 1.57 80.5% -16.6% 0.9x 6.9x 0.8x 5.1x 12.0x 8.8xMphasis Limited 1,669 1,298 7.94 82.8% -14.8% 1.2x 6.6x 1.2x 6.4x 10.1x 10.4xNIIT Technologies Limited 317 291 5.32 94.9% 28.5% 0.9x 5.0x 0.8x 4.5x 7.9x 7.1xP atni Computer Systems Limited 1,439 1,064 9.70 94.8% -9.4% 0.4x 2.5x 1.4x 7.9x 17.8x 13.1xRolta India Ltd. 297 642 1.84 60.3% -40.9% 1.8x 5.0x 1.6x 4.0x 4.0x 4.7xSatyam Computer Services Limited 1,854 1,406 1.58 85.1% 6.8% 1.1x 6.6x 1.0x 6.1x 20.1x 10.3xSyntel, Inc. 2,342 2,022 56.00 90.3% 7.2% 2.9x 7.4x 2.7x 11.7x 19.9x 14.9xTata Consultancy Services Limited 44,906 43,743 22.94 91.3% -13.5% 4.3x 13.5x 3.9x 13.8x 23.1x 18.4xTech Mahindra Limited 1,801 2,037 14.14 90.2% -6.8% 1.9x 11.7x 1.7x 10.0x 11.0x 10.4xVanceInfo Technologies Inc. 510 399 12.04 34.5% -61.7% 1.1x 13.8x 1.1x 7.9x 15.8x 10.3xWipro Ltd. 21,072 20,060 8.62 89.6% -19.6% 2.7x 14.2x 2.4x 12.1x 17.7x 16.4xOffshore IT Services Mean -9.1% 1.9x 8.7x 1.8x 8.4x 15.8x 11.9x

Total IT Services Mean -7.6% 1.4x 8.1x 1.3x 7.2x 14.8x 11.4x

0.0x

2.0x

4.0x

6.0x

8.0x

10.0x

12.0x

14.0x

16.0x

-5% 5% 15% 25% 35% 45% 55%

EV / EBTI

DA

3-year Revenue CAGR

0.0x

2.0x

4.0x

6.0x

8.0x

10.0x

12.0x

14.0x

16.0x

5% 10% 15% 20% 25% 30% 35% 40% 45%

EV / EB

TID

A

2012E EBITDA Margin

Page 27: Technology m&a trends 2012

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156 166 173

30

58 53

148

90

151158

122

99

128

146

0

50

100

150

200

$0

$50

$100

$150

$200

$250

2005 2006 2007 2008 2009 2010 2011

De

al vo

lum

e

De

al v

alu

e ($

b)

Total Capital Invested Deal Count

Private equity technology focus

Global Private Equity Backed Software M&A Activity

2011 Global Private Equity Backed Software M&A Activity

In 2011, within the technology sector, software continued to be the most active acquisition area for private equity investment, followed by IT services

In 2011, within the technology sector, software was also the most active exit area for private equity divestitures, followed by communications & networking

Software55%

Communication & Networking

16%

Hardware7%

Semiconductors4%

Services18%

Software50%

Communication & Networking

20%

Hardware12%

Semiconductors2%

Services16%

Add-on36%

Buyout/ LBO35%

Growth/ Expansion

15%

Corporate Divestiture

6%

Other8%

Source: PitchBook

Page 28: Technology m&a trends 2012

28©2012 KPMG Corporate Finance LLC, a Delaware limited liability company, is a member of FINRA and SIPC and is registered as a broker-dealer with the SEC. KPMG Corporate Finance LLC is also registered as a municipal advisor with the SEC and MSRB. KPMG Corporate Finance LLC is a subsidiary of KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights reserved.

65%

45% 43%

20% 20%15%

7% 4%

0%

20%

40%

60%

80%

Cloud computing

Mobile applications (incl. mobile

devices)

Advanced data analytics

Social media/unified collaboration

Security Healthcare IT and

applications

Green computing

Other

% o

f res

po

nden

ts

69%

50%

31% 31%

12% 10% 7% 4% 1%0%

20%

40%

60%

80%

Access or new

technology and products

Product synergies

Access to employees with new skills and expertise

Access to new

geographic markets

Production cost

pressures

Labor cost pressures

Debt Pension and healthcare

cost pressures

Other

% o

f res

po

nden

ts

■ Strategic acquirers (made up of the S&P 500) are holding an additional $1.7t in investable cash

■ Financial investors have over $400 billion in available capital

■ Companies are unable to meet “wall street” growth expectations via organic initiatives, and are looking to acquire other companies

Technology deal drivers for 2012

Biggest revenue growth drivers in 2011-13Most important M&A drivers in 2011-12

■ In a recent KPMG Technology Company Survey, 68% of the interviewed executives expect to be involved in an M&A transaction in the next two years

Source: 2011 KPMG Technology Industry Business Climate Survey based on responses from 102 senior executives at U.S. technology companiesNote: Multiple responses allowed

Source: 2011 KPMG Technology Industry Business Climate Survey based on responses from 102 senior executives at U.S. technology companiesNote: Multiple responses allowed

Cash is king

Access to new technology and revenue streams

Page 29: Technology m&a trends 2012

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Technology deal drivers for 2012 (2)

Significant PE focus

■ Outsourced services and software as a service companies have long term recurring revenues

■ The technology sector provides a relatively secure customer base and long term recurring cash flows

■ Recent transactions include:

■ Insight Venture Partners / Quest Software Inc. for $1.9 billion

■ Vista Equity Partners / Misys plc for $2.0 billion

■ Providence Equity Partners LLC / Blackboard Inc. for $ 1.8 billion

Source: Capital IQ and PitchBookNote: *Enterprise software/BPO/IT Services index represents the respective companies in the preceding KPMG Corporate Finance public comparable companies slides

Other Drivers

■ Possible capital gains and ordinary dividend tax rate increases in 2013

■ Continued rise of subscription based pricing models, as well as freemium models within consumer markets

■ Growth of social media and new evolving business models that are challenging recently established companies (Facebook’s acquisition of Instagram)

■ Price/Earnings valuations are relatively reasonable

■ Enterprise software/ BPO/ IT Services Index*: 16.7x

■ Dow Jones: 14.5x

■ Nasdaq: 22.6x

Page 30: Technology m&a trends 2012

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Rising optimism for technology M&A in 2012

Industry pundits and technology executives anticipate strong growth and M&A activity in 2012 with

cloud computing, mobile and big data continue being the top strategic priorities for key competitors

Industry research

2012 M&A deal volume anticipated to exceed 2011 volume

Potentially slower IT spending in first half of 2012 due to global growth slowdown and potential political changes

After a great 2011, increasing number of small businesses expected to flood the market in 2012

Increased interest in vertically focused solutions as customers demand out-of-the-box functionality

Market competitors

M&A to drive innovation and expansion into growth markets

Valuations and market conditions favor acquisitions and present a plethora of attractive opportunities

Cloud presence tops every list of strategic priorities; other priorities include mobile, virtualization, analytics, storage and security

Acceleration beyond virtualization as corporate customers want to spend less time on underlying infrastructure

Investment banks

Increasing cross-sector convergence between software, hardware and services

Established companies are worried about disruptive technologies and want to capture that growth through M&A than seeing that growth go to start-ups

Big data, mobile and cloud technologies will drive bold investments in 2012

Expanded focus on social media – larger, less agile companies looking to remain relevant

Market participants

Partner big-to-big and acquire big-to-small

Increasing focus on small and medium size business market in SaaS, data analytics and security

Emerging bundled products to handle multiple IT customer needs

Non-software companies looking to acquire software assets

Source: Industry news, industry research, company filings and earnings call/Q&A (www.seekingalpha.com)

Page 31: Technology m&a trends 2012

M&A Market Landscape

Technology M&A Landscape

Deal Management

Questions

Page 32: Technology m&a trends 2012

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M&A continues to be on the radar of key Technology executives

“Cloud computing and desktops' shift to mobile devices will continue to be huge multiyear trends”

Drago Rajkovic, Head – Technology M&A, JPMorgan Chase & Co.; February 6, 2012

“I'm still committed to this string of pearls approach we have, where we buy exciting new companies. We have a lot to do around the opportunity around cloud, Big Data and trust.”

Joe Tucci, CEO, EMC; January 24, 2012

“Our focus on key growth initiatives and investments in innovation are enabling us to expand into new markets, and capitalize on trends like analytics and cloud. I do think the acquisition play is a good one, and I do think the market’s in a more reasonable position”

Mark Loughridge, CFO, IBM; January 19, 2012

“As we look into 2012, there are 3 significant market forces shaping our plan. First, the mobility imperative; second, the enterprise cloud evolution; and third, the cloud service build-out”

Mark Templeton, CEO, Citrix Systems; January 25, 2012

Industry pundits and technology executives expect strong growth and M&A activity in 2012 with

cloud computing, mobile and big data continue being the top strategic priorities for key competitors

“2012 has a perfect storm of trends in disruptive technologies, tax changes, industry consolidation, new buyers and record cash reserves held by major technology companies, all of which will make it the best year since the dot com era for M&A”

Bruce Milne, CEO, Corum; February 2012

“We continue to invest in our technology leadership, including in the areas of cloud computing, virtualization and software-as-a-service”

BMC 2011 Annual Report; May 2011

“Software would be the one area that I think there maybe some assets that are ready to move in 2012, and we would want to be there”

Meg Whitman, CEO, HP; November 21, 2011

“This year’s technology deal volume could be bigger than last year’s and 2007’s. Convergence between hardware, software and services will continue to add products to the same sales chains.”

Chet Bozdog, Global Head – Technology Investment Banking, BoA; February 6, 2012

“We definitely see opportunity in the SMB market. As you know, we created a new group focused on this segment. We are driving a number of new initiatives. We continue to gain traction with our long-term growth initiatives in the areas of cloud, computing, mobile and virtualization”

Enrique Salem, CEO, Symantec; January 25, 2012

“We feel ready to accelerate our innovation, capacity and speed, and go for leadership in five categories; applications, analytics, mobile, database technology, and cloud”

Jim Hagemann Snabe, co-CEO, SAP; January 25, 2012

“Volume last year was much higher than in 2010, and we expect this year to be the same or slightly larger”

Jon Woodruff, Co-Head – Technology Investment Banking, Goldman Sachs; February 6, 2012

“Now with our staff executing well, we expect to be more active with acquisitions in the quarters and years to come, selectively adding to our portfolio with a focus on our 5 foundational priorities - core networking, data center cloud, video, collaboration and business architectures”

John Chambers, CEO, Cisco Systems; February 8, 2012

Source: Industry news, industry research, company filings and earnings call/Q&A (www.seekingalpha.com)

Page 33: Technology m&a trends 2012

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Selling your business to a large U.S. technology buyer

Enhance your profile in the US market

■ Engage with the analyst community (Forrester, Gartner, IDC etc)

■ Participate in trade shows / industry conventions

■ Produce thought leadership pieces, and build your market presence

Enter into partnerships (if appropriate)

■ This is the best way for a mid market company to get on the radar of a large technology buyer

■ Build compatible platforms, but don’t be too narrow in your focus (i.e. don’t be beholden to one platform)

Engage in early (and frequent) discussions

■ Engage early with large technology companies on non-M&A dialogue

■ Discuss potential cross-servicing of common clients – be helpful

■ Build internal support for your business and make sure you have many “mentors” at the potential acquirer – at the highest possible levels

Page 34: Technology m&a trends 2012

©2012 KPMG Corporate Finance LLC, a Delaware limited liability company, is a member of FINRA and SIPC and is registered as a broker-dealer with the SEC. KPMG Corporate Finance LLC is also registered as a municipal advisor with the SEC and MSRB. KPMG Corporate Finance LLC is a subsidiary of KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights reserved.

The KPMG name, logo and ‘cutting through complexity’ are registered trademarks or trademarks of KPMG International Cooperative (KPMG International).

Thank you

Page 35: Technology m&a trends 2012

©COPYRIGHT 2012. FIRMEX. ALL RIGHTS RESERVED

Questions & Answers

Page 36: Technology m&a trends 2012

©COPYRIGHT 2012. FIRMEX. ALL RIGHTS RESERVED

Thank YouJoin us for our May webinar:

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who have capitalized on intellectual assets such as patents, trademarks,

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Featuring Andrew J. Sherman, author and partner at Jones Day.

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