Corum group ltd www corumgroup com
Download
1 / 27

Corum Group Ltd. corumgroup - PowerPoint PPT Presentation


  • 309 Views
  • Updated On :

Corum Group Ltd. www.corumgroup.com SaaS in the Economic Storm Bellevue Boston Houston London Mexico City Munich Oslo Paris Philadelphia Phoenix Portland Santa Clara Toronto Zurich SIIA - On-demand Europe 2008

Related searches for Corum Group Ltd. corumgroup

loader
I am the owner, or an agent authorized to act on behalf of the owner, of the copyrighted work described.
capcha
Download Presentation

PowerPoint Slideshow about 'Corum Group Ltd. corumgroup' - albert


An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -
Presentation Transcript
Corum group ltd www corumgroup com l.jpg

Corum Group Ltd.www.corumgroup.com

SaaS in the Economic Storm

Bellevue Boston Houston London Mexico City Munich Oslo Paris Philadelphia Phoenix Portland Santa Clara Toronto Zurich

SIIA - On-demand Europe 2008

Software Industry M&A Market Update

June 10, 2008


Slide2 l.jpg

Middle Market Software M&A Specialists

  • M&A specialists since 1985

  • Software and IT experts – mostly former CEOs

  • Publisher of industry-leading M&A research

  • Host of Selling Up Selling Out conferences / M&A workshop series

  • Dominant North American and European presence

  • 60%+ cross-border transactions

  • Platinum sponsor of World Financial Symposiums – Silicon Valley, Boston, London

  • $6 billion in wealth created

  • 200+ transactions completed


Headlines tell the story l.jpg
Headlines Tell the Story

“Can M&A’s Best Times Get Better?”

Wall Street Journal, January 2007

“Money is Everywhere – But for How Long?”

Wall Street Journal, January 2007

“Stock Surge + Bond Boom = M&A Magic”

Wall Street Journal, April 2007

“As Deal Barriers Fall, Takeover Bids Multiply”

Wall Street Journal, May 2007

“M&A – The Best Investment Game in Town”

Moneyextra.com UK, May 2007

“Market Pressures Test Resilience of Buyout Boom”

Wall Street Journal, June 2007

“Dry-Up in Debt Won’t Deter Tech Deals”

Barron’s, September 2007

“Time to Celebrate; 2007 Breaks M&A Record”

Wall Street Journal, October 2007

“M&A Seen on the Brink After Record 2007”

Reuters, December 2007

“Tech Cos Seen Going M&A Route, Not IPO in 2008”

Reuters, December 2007

“IT Spending Growth Expected to Slow in 08”

InformationWeek, December 2007

“Bear Stearns’ No. 1 Foe: Fear Itself”

CNN Money, March 2008

“Deal Making: It Shall Return”

Wall Street Journal, May 2008

“Let’s Still Make a Deal”

Business Week, June 2008


Current market conditions l.jpg
Current Market Conditions

Global economic infrastructure in disarray

Difficultly borrowing money

IPO markets are dead

Many are struggling

Worries about depth of recession

Concern over inflation

Price of oil up

Troubled housing market

Consumer confidence low

Unemployment up

Cost of food and consumer goods rising


The silver lining l.jpg
The Silver Lining

On the plus side:

  • Technology revenues remain strong

  • Earnings remain positive

  • Forward analyst estimates look good

  • Lending requirements loosening

  • PE buyers see opportunity in the coming months

  • PE and VC investors raising new funds

  • International markets remain strong

  • No buyers saying “we’re pulling back”

  • Large cap stocks up

  • Strong cash reserves

  • M&A has become operational



Reality check l.jpg
Reality Check

  • Don’t take the current market for granted.

  • Volatile public markets

  • “Long, deep recession,” Warren Buffet

  • Price of oil continues to rise

  • Political change

  • Global conflicts


Why does m a prevail l.jpg
Why Does M&A Prevail?

The need to buy is stronger than ever

  • Acquisitions add more growth

  • Counter takeover attempts

  • Consolidation

  • Speed time to market

  • Buy talent and domain expertise

  • Fill product gaps

  • Get ahead of a technology curve

  • Tap into emerging consumer markets

  • Cost of being public and complying with SOX

  • Need for international presence

  • Only true liquidity event for managing shareholders


Global m a activity l.jpg
Global M&A Activity

  • Cross-border transactionlevels remain strong while international M&A activity contributed over 40% to the

    total of announced deals for 2007

  • Europe and Asia both set records for deal volume in 2007

  • U.S. sellers continue to look overseas for buyers

  • Weak dollar attracting non-U.S. buyers

  • Strong € makes European targets attractive to acquisitive international buyers looking to increase revenues and profits based in stronger currency

  • 67 international tech co’s on BusinessWeek’s InfoTech 100 list up from 25 in 1998


Emerging international markets l.jpg
Emerging International Markets

Regions to watch:

  • China

  • Brazil

  • Israel

  • India

  • Eastern Europe

  • Russia


Sectors l.jpg
Sectors

2008 sector stats looking good…


Public valuation revenue multiples l.jpg
Public Valuation Revenue Multiples

TTM EV/S Multiples

Increased

Decreased

N/A


Looking back valuation multiples l.jpg
Looking Back – Valuation Multiples

M&A Transaction Revenue Multiples – Software Industry

2008 is starting off stronger than 2007 finishedQ1 P/S multiple of 2.6x


Saas is mainstream l.jpg
SaaS is Mainstream

70%plan to use SaaS (Aberdeen Group)

5% to 55%cost savings (Springboard Research)

30%+new soft licenses will be deployed as SaaS by 2012 (Saugatuck)

50%+software revenues from subscription by 2015 (Needham)

40%surveyed use hosted CRM (AMR)

49%will expand use of SaaS (AMR)

25%of business software revenue by 2011 (Gartner)

29%annual growth (IDC)


Waves of saas evolution l.jpg
Waves of SaaS Evolution

SaaS 1.0

SaaS 2.0

Wave I: 2001-2006Cost-effective Software Delivery

Wave II: 2005-2010Integrated Business Solutions

Wave III: 2008-2014Workflow-enabled Business Transformation

High

Ubiquitous AdoptionOptimized Bus. EcosystemsIT-targeted EcosystemsInter-enterprise CollaborationIT Utility / SaaS InfrastructureCustomized, Personalized WorkflowFocus on Business Transformation

Early AdoptionStand-alone AppsMulti-tenancyLimited ConfigurabilityFocus on TCO / rapid deployment

Mainstream AdoptionIntegrated w/ Business PortfolioSaaS Integration PlatformsBusiness Marketplaces and SaaS ecosystems

Adoption

SaaS Tipping-Point

Low

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

  • A platform for mission-critical application workloads

Source : Saugatuck Technology


The saas value chain drivers l.jpg
The SaaS Value Chain – Drivers

Customer

Satisfaction

Margin

Solve customer business needs


Valuation over 9 months l.jpg
Valuation over 9 months

  • Multiples

  • In September 07

    • EV / Sales : 6.33 ; forward multiples : 4.19 (12months later)

  • In January 08

    • EV / Sales : 3.69 ; forward multiples : 2.65

  • In May 08

    • EV / Sales : 3.14 ; forward multiples : 2.35

  • Relevant M&A Transactions




Saas in the heart of the 5 revolutions l.jpg
SaaS in the heart of the 5 revolutions*

  • Unified communications

    • NGNetworks, IPT, SIP Presence, conferencing

  • Devices

    • What devices is right for particular application / activity

  • Datacenters

    • Virtualized and distributed architectures ; multithreading

  • SOA achitectures

    • Matching IT to business process ; core apps easy tailored

  • Application delivery

    • SaaS business model

      All of them are interelated !!

* John Chapman – IT Europa


Investors acquirers attracted to l.jpg
Investors / Acquirers Attracted to:

  • SaaS is not only a matter of business model : part of a wider vision

  • SaaS is “reccession proof” : cutting costs and increasing flexibility

  • Predictable recurring cash flow

  • Revenue visibility this year and beyond

  • Low churn / high user satisfaction

  • Solves cutomer business needs or they’ll leave

  • Easier to plan and manage growth / scalability

  • Higher margins at scale

  • Cash flow is what gives a company value

  • License models are difficult to project

  • If it is not predictable it may be more volatile

  • Markets doesn’t like what’s volatile


Seller motivation l.jpg
Seller Motivation

Timing – personal, business, market

Have been approached

Need a larger partner to achieve vision

Capitalize on current success

Investors want out

Running out of cash

Founder age

Facing a build vs. sell decision

Tough to compete with larger players

Lacking resources to expand internationally

Lack of liquidity

Time for change


What do buyers really buy l.jpg

Vision

Research

Management

Business Model

Planning R&D Process

Patents

Documentation

Pricing

Support

Market Share

Staff

User Base

What Do Buyers ReallyBuy?

  • Marketing Channels

  • Alliances

  • Competitive Position

  • Technology

  • Sales Process

  • Capital Structure

  • Growth

  • Profitability

  • Domain Expertise


Buyers prioritize acquisition opportunities l.jpg
Buyers – Prioritize Acquisition Opportunities

  • Target Size

  • Product prioritization – which new products / markets do they want to own?

  • Product leadership – compared to competition

  • Market size – addressable market large / expandable?

  • Can product port into other verticals, market segments?

  • Cultural and technical compatibility

  • Management team


Will the numbers pencil l.jpg
Will the Numbers Pencil?

Financial Considerations: Will the acquisition improve financial performance?

  • Return on Equity

  • EBITDA multiples

  • Impact of deal on revenue growth rate and EBITDA

  • Recurring revenue

  • Accretion / dilution to GAAP Earnings Per Share (public buyer); cash flow (private buyer)

    Don’t forget -- third party analysts and / or lenders need to bless the deal


Slide26 l.jpg

Corum’s Weekly M&A Update

Weekly M&A Update Complete list of week’s deals (Registration)


Contact information l.jpg
Contact Information

Corum Group Ltd.

10500 NE 8th Street, Suite 1500Bellevue, WA 98004USA+1 425-455-8281

Corum Group International S.à.r.l.BeimParadeplatzBasteiplatz 78001 ZurichSwitzerland+41 44 251 82 65

www.corumgroup.com

For full research and conference registration


ad