State of Technology Capital Markets October 1, 2015 LBO Purchase - - PowerPoint PPT Presentation

State of Technology Capital Markets

October 1, 2015

8.1x 9.3x 8.3x 6.6x 8.4x 8.2x 7.9x 8.8x 9.6x 9.8x 9.7x 0.0x 2.0x 4.0x 6.0x 8.0x 10.0x 12.0x 2006 2007 2008 2009 2010 2011 2012 2013 2014 1H15 2Q15 Senior Debt/EBITDA Sub Debt/EBITDA Others Equity/EBITDA

LBO Purchase Price Multiples & Equity Contribution

Large Corporate Purchase Price Multiples Middle Market(1) Purchase Price Multiples

8.6x 9.8x 9.5x 7.9x 8.5x 9.1x 8.9x 8.8x 9.8x 10.1x 10.5x 0.0x 2.0x 4.0x 6.0x 8.0x 10.0x 12.0x 2006 2007 2008 2009 2010 2011 2012 2013 2014 1H15 2Q15 Senior Debt/EBITDA Sub Debt/EBITDA Others Equity/EBITDA

Source: Capital IQ

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Note: (1) Middle Market defined as businesses with less than $50M of EBITDA Source: Capital IQ

Average Debt Multiples of Middle Market LBO Loans(1)(2)

Middle Market LBO Debt Multiples

4.9x 4.8x 4.1x 4.0x 3.4x 3.8x 3.8x 4.3x 4.7x 4.7x 5.6x 4.5x 3.3x 4.2x 4.3x 4.5x 4.8x 5.3x 5.1x 5.2x 0.0x 1.0x 2.0x 3.0x 4.0x 5.0x 6.0x 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 1H15 2Q15 1LD/EBITDA 2LD/EBITDA Other Sr. Debt/EBITDA Sub Debt/EBITDA

Note: (1) Middle Market LBO loans are on purchase price with less than $50M EBITDA (2) Excludes media and telecommunication loans; EBITDA adjusted for prospective cost savings or synergies

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Source: Capital IQ

Middle Market Private Equity Landscape

U.S. Deal Flow by Year ($ in billions) U.S. Private Equity Fundraising ($ in billions)

$274 $352 $204 $84 $229 $261 $288 $303 $399 $159 $0 $100 $200 $300 $400 $500 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015* Capital Invested ($B) # of Deals Closed

Source: Pitchbook

1H’15

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$66 $106 $113 $120 $140 $124 106 138 145 175 175 83 $- $40 $80 $120 $160 $200 2010 2011 2012 2013 2014 2015 First Half Fundraising # of Funds Closed 2015 Est. Funds Raised

Source: Pitchbook

80 85 90 95 100 105 110 115 120 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 ^SPX - Share Pricing ^DJC - Share Pricing ^COMP - Share Pricing Sep-15

Technology-Related Equity Outperforms Market

DJIA, NASDAQ Composite and S&P 500 Comparison

China Concerns Oil & Gas Drop and Correction

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Source: Capital IQ

+0.8% (4.0%) (6.6%)

Overview of Venture Activity

• Despite a slight decline in global YTD 2015 volumes, funding activity within the Technology sector has steadily increased since the recession
• 2014 represented the largest year for VC activity within the Technology sector since 2000
• The total value of the VC funding in 2015 is on pace to break 2014’s record year of $142 billion

Global Technology Venture Activity by Quarter ($ in millions) Commentary

Source: CB Insights Source: CB Insights

2,461 2,898 2,980 3,030 3,250 3,308 3,477 3,666 3,692 3,767 3,873 3,852 3,718 3,687 $16,747 $18,685 $20,136 $17,486 $17,478 $18,793 $20,927 $22,866 $27,953 $36,980 $37,912 $38,827 $43,219 $51,329 $0 $10,000 $20,000 $30,000 $40,000 $50,000 $60,000 1000 2000 3000 4000 Q1'12 Q2'12 Q3'12 Q4'12 Q1'13 Q2'13 Q3'13 Q4'13 Q1'14 Q2'14 Q3'14 Q4'14 Q1'15 Q2'15 Internet Mobile & Telecom Fin Tech Software (Non-Internet) Ad Tech Other

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Global Software and Technology Services M&A Activity

• Strategic buyers have consistently accounted for 90%+ of Software and Technology Services transactions since 2012
• Strategic buyers have also accounted for approximately 75% of the deal value, on average, since 2012
• Deal value for transactions led by strategic buyers rose to $34.2B in Q2 2015 from $28.0B in Q2 2014
• Financial buyers led an all-time high 106 M&A transactions in Q2 2015 compared to 91 in Q2 2014 and 76 in Q2 2013

Deal Volume by Buyer Type Commentary

Source: Capital IQ

936 930 912 932 869 836 939 953 944 1,077 1,085 1,144 1,140 1,227 71 68 62 70 66 76 69 70 101 91 84 90 83 106 200 400 600 800 1,000 1,200 1,400 Strategic Buyer Financial Buyer

June YTD Deal Volume by Buyer Type

Strategic 73% Cross-Border Strategic 13% Financial 6% Cross-Border Financial 1% Buyer Not Disclosed 7%

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Source: Capital IQ Source: Capital IQ

Global Software and Technology Services M&A Activity (continued)

• Internet Software and Services has represented the largest category of Software and Technology Services M&A activity, accounting for

approximately 50% of total transactions since 2012

• Transaction volume has grown to 665 in Q2 2015 compared to 549 in Q2 2014 and 406 in Q2 2013
• Internet Software and Services and Application Software have consistently remained the top two sectors in terms of deal value
• Deal value totaled $39.0B for Internet Software and Services and $10.1B for Application Software in Q2 2015

Deal Volume by Sub-Sector Commentary

Source: Capital IQ

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443 472 440 431 401 406 468 459 490 549 563 601 586 665 231 246 251 245 243 230 230 266 244 293 271 287 272 307 202 154 172 187 176 169 194 183 188 196 189 228 240 211 46 48 47 53 51 43 47 46 52 44 64 45 44 54 85 78 64 86 64 64 69 69 71 86 82 73 81 96 200 400 600 800 1,000 1,200 1,400 Internet Software and Services Application Software IT Consulting and Other Services Data Processing and Outsourced Services Other

Source: Capital IQ

Notable Announced 1H 2015 Transactions

Internet Software and Services Application Software Acquirer Target Transaction Value $589 Million $350 Million $200 Million $438 Million

Global Software and Technology Services M&A Activity (continued)

• US and Canada based buyers lead M&A activity in the Software and Technology Services industry, accounting for approximately 48% of total

global deals since 2012

• Transactions based in the US and Canada have accounted for approximately 46% of total deal value since 2012, representing $27.8B in Q2 2015

compared to $20.0B in Q2 2014

Buyer Deal Volume by Region Commentary

Source: Capital IQ

528 483 492 496 464 464 485 465 509 586 532 536 558 573 294 292 288 276 257 259 249 294 289 323 304 358 341 333 99 135 110 126 111 114 158 155 147 163 197 214 200 283 30 25 27 35 30 25 33 43 35 42 60 52 36 62 56 63 57 69 73 50 83 66 65 54 76 74 88 82 200 400 600 800 1,000 1,200 1,400 United States and Canada Europe Asia / Pacific Rest of World Buyer Not Disclosed

Increasing Demand from Asian Strategics

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Source: Capital IQ Source: Capital IQ

Notable Recent Transactions Involving Asian Strategics Acquirer Target Transaction Value $410 Million $219 Million Q-o-Q Compounded Growth by Region (’12-YTD ’15) US & Canada 0.6% Europe 0.9% Asia / Pacific 7.8% RoW 5.3%