StartUpBridge | Allied Advisers May 2019 MEMBER FINRA, SIPC (BA - - PowerPoint PPT Presentation

▶

Mar 03, 2024 647 likes •759 views

ALLIED ADVISERS StartUpBridge | Allied Advisers May 2019 MEMBER FINRA, SIPC (BA SECURITIES) Confidential Confidential Middle-Market M&A Is The Dominant Liquidity Route ALLIED ADVISERS Technology Sector Exits (Over Last 5 Years) 97% of

SLIDE 1 Confidential ALLIED ADVISERS Confidential

StartUpBridge | Allied Advisers

May 2019

MEMBER FINRA, SIPC (BA SECURITIES)

SLIDE 2 Confidential ALLIED ADVISERS

Middle-Market M&A Is The Dominant Liquidity Route

*All Undisclosed deal values are estimated to be below $100.0M 2 97% of the exits pertain to M&A type transactions, the remaining 3% being IPO Middle Market Deal Size (<$100M is ~90% of volume and, deals between $100-$200M is 3% of volume) Entrepreneurs and Investors will benefit from proactive planning Technology Sector Exits (Over Last 5 Years) Deal Size ($MM)

No. of Deals

% of Deals Undisclosed Values* 9,721.0 74.5% < 50.0 1,589.0 12.2% 50.0 – 100.0 331.0 2.5% 100.0 – 200.0 381.0 2.9% Undisclosed – 200.0 12,022.0 92.1% 200.0 – 1000.0 661.0 5.1% > 1000.0 361.0 2.8% Total 13,044.0 100.0% M&A Analysis (Deals Sizes Over the Last 5 Years) – Middle Market (<$100M is 89.2% of exits) 3% 97% IPO M&A

SLIDE 3 Confidential ALLIED ADVISERS

When To Bring In An Investment Banker?

3 Inbound On Company Peer Companies In Space Getting Acquired / Consolidation rapidly

ccurring

Evaluating The Decision Of Raising Another Round Or Selling Growth Slowing, Margin Expansion slow; needs a lot of investment in sales which can be leveraged via an acquirer Investors Been In Company For A While And Looking For Liquidity For LP / Company Company top-line growth and margins continue to expand improving valuations Is the team on-hand (or readily available) the right one to scale it to becoming an Unicorn / IPO Advisory Services To Assist In Finding The Best Opportunity

SLIDE 4 Confidential ALLIED ADVISERS

How To Build Longer Term Relationships – SBI Can Help

Partnerships / Raise Visibility With Acquirers

§ Get ARR revenue and access to customers and new markets § Allows both companies to make product stickier and reduce churn § Access to new customer list / new vertical which would take longer organically § If deal goes well, the partner could become a buyer § Help guide them through the “build vs. buy” math

White Label Deals / Commercial Partnerships with Potential Acquirers

§ Provides visibility to Business Units within Acquirers § May come with a commercial partnership allowing revenue growth without sales investment § May prompt an inbound from them § Be cautious of giving the CVC Board Seats, Right of First Refusal / Notification (ROFR / ROFN), keeping your IP ownership and not allowing them to influence your product roadmap to meet their unique needs

Engaging with Corporate Venture Groups

§ Outreach to them to describe your offering / value proposition to see how you could engage commercially. This also helps speed M&A discussions when your advisor reaches out to Corporate Development and someone internally can validate the technology / product offering

Networking with Product Groups / Business Units (CEO, GM, VP / Directors)

§ Provides customer leads and helps raise visibility in front of buyer universe § Beating your competition and winning clients is a good way to get on their radar § Get on your industry reports (Gartner, 451Group, TechCrunch)

Attending conferences / Keep Selling / Analyst Mentions

SLIDE 5 Confidential ALLIED ADVISERS § While strategic buyers are active they are also risk averse and are willing to pay higher valuations for companies that they already know and are familiar with § It can take multiple meetings before potential buyers fully comprehend the value of a company and they are often more willing to meet when there is less pressure to make an M&A decision and they can evaluate companies in a thoughtful manner § Allied can work with Company to set up initial meetings with senior executives from likely buyers § The length of the “advisory period” can vary from a couple of months to longer based on the client’s interest and a variety of other factors § While Company is a leader in sector, Company might not be on the radar for some of the potential partners and it could take some time for these potential partners to truly comprehend the strategic value of Company’s team, products and technology § It is also possible that some of the companies that there might have been limited interactions with the key decision makers or the the strategy / M&A organizations § Engaging ahead of a formal sales process could help Company be proactive in generating an unsolicited inbound and appropriately responding in such an event

Performs “Pre-M&A” Advisory Work

5 § While majority of transactions involve kicking off an M&A process right after Allied is engaged, a small number of Allied’s engagements are “advisory” in which Allied initially work with clients to build relationship and profile with buyers ahead of an M&A process which enhances exit valuation § Company could potentially greatly benefit from this approach given there is flexibility in timing and Company wants to use this as an option

SLIDE 6 Confidential ALLIED ADVISERS

Its Never Too Early To Think Strategically

We can work with you as you evaluate these options

$300.0M $100.0M

Buyers Universe Shrinks at $300M Situational Analysis Business Highlights and Factors to Consider

‹

Owns 30.0% Owns 10.0% Situation A: $100.0 Million Exit Value Exit at 10X ARR ($10M) Situation B: $300.0 Million Exit Value Exit at 10x ARR ($30M) Which is better (Situation A or Situation B) Same economic outcome at $30M but for Situation B there is more execution risk but more cache in terms of exit value Is it a feature or a product? Business Model / Stand-Alone Unit Economics What is Proprietary How Big is the Market Team Resources / Ability to Scale Competition / Risk from Large Players ~90% of Tech Exits are below $100M 6

SLIDE 7 Confidential ALLIED ADVISERS

Creating Multiple Options

Allied professionals have extensive experience, driving significantly higher valuations, even when there is an existing party at the table and dealing with any issues which invariably come up

Company Description Image recognition software AI company focused on Publishers DevOps Software Company Situation Received initial interest from one of its business partners Had strong relationship with the company for

ver a decade but did not provide a Term Sheet

despite indicating desire to do so Received unsolicited Interest from a Large Software company Value Extracted In spite of a Rights of First Refusal agreement (ROFR) that was already in place; was able to bring another party to the table and persuade the initial interested party to raise its offer twice

ver the course of the process

Contacted a number of additional publishers and got other publishers interested. This resulted in a Term Sheet valuation at ~2.0x received from

thers. Commercial Partner did not want to loose

access to the technology if it went to a competitor Ran a process with other infrastructure players and got another company to make a bid Outcome Final offer represented a 70% increase compared to its initial offer, and an improvement in many other deal terms Got Term Sheet at attractive terms (~2x) other prospects and made party willing to move towards acquisition vs. continuing on commercial relationship Value of the initial bid increased by 76% from initial offer. The other party came back in during Exclusivity and made a revised bid. We decided to go with the existing party given the familiarity and also were able to get major concession during the DA discussions

Case Studies

SLIDE 8 Confidential ALLIED ADVISERS

Allied Advisers

8 Hands on senior attention. All buyer calls done by senior bankers – never outsourced to junior bankers

Why Allied Advisers

We have been operators – engineering, management professional before becoming bankers Support team is former bulge bracket bankers with over a decade plus of work experience Worked at bulge and boutique banks and all types of deals (IPO, FO, Debt, VC Capital Raises, Buyside, Sell-Side – Private and Public) Larger firms focus on >$150M deals; less focus on middle-market growth deals Cross-border expertise – deals closed in Canada, Europe, Israel and several of clients have large or most of their workforce in India Principals grew up in India and familiar with the eco-system and cultural aspects Have partnerships with like minded individuals whom we bring into deals as appropriate § IT services deals – Partner with a former colleague – IIT, Chicago MBA, Goldman Sachs, boutique banks § Semi / communication deals – Partner with a former Deutsche Bank / Piper Jaffray banker on a related deal

SLIDE 9 Confidential ALLIED ADVISERS

Bio

9 Gaurav Bhasin Gaurav started Allied Advisers to serve entrepreneurs and investors of emerging growth companies. He most recently led Sale of PuzzleSocial to Zynga (gaming), Sale of CirclePix to InsideRe (SaaS) and $30M Raise for Medsphere (SaaS) § Gaurav began his career as an engineer and management professional before moving to Investment Banking. He has closed more than 35 transactions (M&A, Financings including structured debt and PE / VC raises, Recapitalization, Strategic Alliances and Divestitures, IPO, Follow-On) representing both public and private sellers, buyers and strategic partners in a broad range of technology industries and sectors, including Internet (incl. gaming, e-commerce), Software (incl. Application Software, Infrastructure Software, Vertical SaaS including Health Care IT and Real Estate Marketing Software) and Hardware (Semis, Industrial tech incl. parking solutions). Gaurav has also closed transactions for emerging technologies companies in AR, IoT and AI § Prior to starting Allied Advisers, Gaurav was a Managing Director at Capstone Headwaters and Pagemill Partners, a division of Duff & Phelps Securities. Previously, Gaurav worked as an investment banker at Banc of America Securities where he provided advisory services to technology companies on IPOs, follow-on offerings, M&A and debt-related transactions representing more than $3B in aggregate value. Gaurav has successfully completed complex cross-border transactions in geographical regions worldwide including Canada, Europe and Israel. One

f his cross-border transactions led ACQ to recognize the transaction as Cross-Border M&A Advisor of the year

§ Gaurav holds an MS in engineering from UCLA where he graduated in the top 5% of his class and attended engineering school on a full research fellowship. He also got an MBA from the Anderson School of Management at UCLA while working full-time from where he graduated with Anderson Honors § He is a Licensed Registered Representative (Series 7, 63 and 79) of the National Association of Securities Dealers. He grew up in India and is conversant in Bengali, Hindi, Punjabi and Urdu. He is also co-author of several published papers in scientific journals Email: gbhasin@alliedadvisers.com Mobile: (650) 644-7749