HW Software Introduction

Harris Williams (“HW”)

  • 25+ years and more than 1,000 closed transactions
  • 350+ professionals across eight offices globally
  • 170+ closed transactions in the last 24 months
  • 10 industry groups

Focused Advisory Services

  • Mergers and acquisitions (M&A)
  • Capital raises
  • Corporate divestitures

Consistent Recognition for Quality

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HW Technology, Media & Telecom (“TMT”) Group

  • 35+ dedicated TMT professionals
  • TMT offices include Boston, San Francisco, and London

Key TMT Themes

  • SaaS / Cloud
  • Data & Analytics
  • Digital Transformation
  • A.I. / Machine Learning

Horizontal Focus Sectors

  • Application Software
  • Cloud Managed Services and Hosting Solutions
  • Compliance Solutions
  • CRM and Marketing Automation
  • Human Capital Management
  • Infrastructure and Security Software
  • IT and Tech-Enabled Services
  • Marketing, Research, and Insights Software

Vertical Focus Sectors

  • Architecture, Engineering, and Construction Software
  • Education Technology and Services
  • Energy Technology
  • Facilities and Real Estate Software
  • Financial Technology and Payments
  • Government Technology
  • Healthcare IT
  • Industrial and Supply Chain Technology
  • Internet and eCommerce
  • Retail Technology

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Select Software M&A Transactions – Q3 2020

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Thoma Bravo’s Acquisition of Majesco

  • Majesco is a provider of cloud-based software solutions for the insurance industry, offering distribution management, data and analytics, and digital engagement.
  • The Company's software is used by over 200 customers ranging from large, global insurance carriers to mid-market insurers, MGAs, startups, and mutual and regional carriers to enable them to digitize and modernize their critical workflows.
  • Following the take-private, Majesco will leverage Thoma Bravo's significant operational expertise to focus on long-term growth through new product development designed to provide additional value to its base of global insurance providers.
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Clearlake’s Pending Acquisition of Zywave

  • Zywave is a provider of mission-critical, cloud-based insurance distribution software for insurance brokers across property and casualty, human capital management, and employee benefits markets.
  • The Company offers solutions that streamline and automate key revenue-generating activities including sales, renewals, and quote delivery, as well as content generation, data tracking, and analytics for 6,000+ brokerages, including the top 100 U.S. insurance firms.
  • Clearlake’s acquisition will enable Zywave to continue executing an inorganic growth strategy, building on the recent purchases of miEdge, RateFactory, Code SixFour, and HR360, as it seeks to expand its offerings.
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Thomas H. Lee’s Acquisition of Insurance Technologies

  • Insurance Technologies is a provider of sales and regulatory automation software solutions for the insurance and financial services industries.
  • The Company’s solution suite is used by carriers and brokers to manage the end-to-end sales and buying experience for insurance, investment and retirement products across a single, integrated platform.
  • THL’s investment will enable Insurance Technologies to continue its aggressive investment in technological innovation, increase speed to market for new products, and support development of a cloud-based product suite through organic and inorganic initiatives.
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GI Partners’ Pending Acquisition of Sectigo

  • Sectigo is a provider of automated digital identity management and web security software.
  • The Company offers web security tools including TLS/SSL certificates, signing certificates, and Public Key Infrastructure management solutions that are used by over 700,000 businesses globally.
  • Following the acquisition, Sectigo will leverage GI Partners' deep security software expertise and operational resources to accelerate growth globally through an organic and inorganic strategy.
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Hg Capital’s Pending Majority Investment in Sovos

  • Sovos is a provider of tax and regulatory compliance software for global enterprises.
  • The Company's cloud-based tax determination, transaction control compliance, and tax reporting software is used by over 8,000 customers across 70 countries to manage highly complex global tax regimes.
  • The additional investment from Hg Capital, which was previously a minority investor, will be used to support geographic expansion, deepen its partner ecosystem, and develop new solutions to rapidly respond to emerging tax and regulatory changes.

Software Acquisition Activity – Strategic Acquirers

Most Active Strategic Acquirers of Software Assets by Volume1

  • The 10 most active strategic software acquirers registered 35 acquisitions through 3Q 2020. M&A activity among large strategic software players remains on a pace set in 2019 as the deal environment picked up throughout the summer of 2020 after a slowdown in the spring.
  • Apple was the most active strategic acquirer through 3Q 2020, with eight acquisitions including Mobeewave.
  • Other notable 3Q 2020 strategic software transactions include Roper's acquisition of Vertafore and Microsoft's acquisition of ZeniMax.

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Global Strategic Acquirer Software M&A Activity by Volume1

  • Globally, strategic software M&A registered 560 acquisitions in 3Q 2020, an increase from 410 in 2Q 2020.
  • Strategics continue to view M&A as a meaningful contributor to growth and are focused on pursuing vertical-specific software solutions to expand and complement their current portfolios.

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Note: Includes control investments only.

Software Acquisition Activity – Private Equity

Most Active Private Equity Buyers of New Software Platforms by Volume1

  • The 10 most active software investors completed 34 new platform investments through 3Q 2020.
  • Thoma Bravo remained the most active software private equity firm through 3Q 2020, completing seven platform acquisitions including Command Alkon, Exostar, Syntellis Performance Solutions, Majesco, and Foundation Software.
  • Other notable 3Q 2020 private equity platform acquisitions include TH Lee's acquisition of Insurance Technologies and CD&R's acquisition of Epicor.

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Global Private Equity New Software Platforms M&A Activity by Volume1

  • Globally, private equity buyers registered 96 new software platform investments in 3Q 2020, a significant increase from 2Q 2020.
  • Private equity investments across software exhibited strong momentum compared to 2Q 2020 as private equity investors began to look at new platform investments after focusing their attention on add-on acquisitions for their existing portfolio during 2Q.

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Note: Includes control new platform investments only. Excludes add-on acquisitions.

Application Software – M&A Market Summary

  • Application Software M&A registered 470 transactions in 3Q 2020, representing a 17% increase from the prior quarter.
  • Median reported Application Software M&A transaction multiples decreased to 2.6x revenue in 3Q 2020.

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Notable Application Software M&A Transactions1,4,5

  • Application Software transaction volume increased in 3Q 2020, as both strategic and financial buyers began to shift their focus externally after navigating the initial impact of the pandemic in the spring.
  • Notable 3Q 2020 vertical-specific software transactions include Thoma Bravo’s pending acquisition of Foundation Software (AEC), A-KKR’s acquisition of Navtor (Transportation), and CD&R’s acquisition of Epicor.

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SaaS – M&A Market Summary

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  • SaaS M&A volume registered 65 transactions in 3Q 2020, a strong increase from previous quarters.
  • Median reported SaaS transaction revenue multiples increased slightly to 4.8x in 3Q 2020.

Notable SaaS M&A Transactions1,4,5

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  • Demand for cloud-based delivery models remains strong, resulting in continued robust M&A activity by both strategic and private equity buyers, even during the COVID-19 pandemic.
  • Notable 3Q 2020 SaaS transactions include Clearlake’s pending acquisition of Zywave, Roper’s acquisition of Vertafore, and THL Partners’ acquisition of Insurance Technologies.

Data and Analytics – M&A Market Summary

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  • Data and Analytics M&A registered 100 transactions in 3Q 2020, breaking the downward trend of the prior three quarters.
  • Median reported Data and Analytics transaction multiples decreased to 3.4x in 3Q 2020.

Notable Data and Analytics M&A Transactions1,4,5

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  • Data and Analytics remained a key focus area for enterprises in 3Q 2020 as companies increasingly seek data-driven insights and visibility to support critical decision-making.
  • Notable 3Q 2020 Data and Analytics transactions include JLL Partners’ pending acquisition of MedeAnalytics, Veeam Software’s (Insight) acquisition of Kasten, and HelpSystems’ (HGGC) acquisition of GlobalSCAPE.

Infrastructure Software – M&A Market Summary

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  • Infrastructure Software M&A registered 75 transactions in 3Q 2020, an increase from 49 in 2Q 2020.
  • In 3Q 2020, median reported Infrastructure Software transaction multiples increased slightly to 4.1x revenue.

Notable Infrastructure Software M&A Transactions1,4,5

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  • Infrastructure Software M&A activity increased in 3Q 2020, as both private equity investors and established software vendors continue to acquire software assets to build holistic security platforms.
  • Noteworthy Infrastructure Software M&A transactions in 3Q 2020 include Invanti Software’s pending acquisition of MobileIron, STG Partners and OTPP’s acquisition of RSA Security, and CrowdStrike’s acquisition of Preempt Security.

Private Placement Activity by Software Sector

Private Placements by Software Sub-Sector and New Capital Raised1,4

  • There were 1,337 private placement financings in 3Q 2020, which represented an increase compared to 3Q 2019.
  • Total reported capital investment in the software sector decreased slightly in 3Q 2020, but remains above historical averages.

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Private Placement Capital Raised by Round1,4

(As Percentage of Total Reported Private Placement Capital)

  • In 3Q 2020, the majority of private capital invested was in the larger stage (Series B or later) rounds, making up 60% of total capital invested.
  • Notable private placements across stages included Rippling’s $145 million Series B led by Founders Fund, Keeper Security’s $60 million growth round led by Insight Partners, and Coursera’s $130 million Series E led by NEA.

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Select Recent Software Private Placements1,4

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Note: Financial information presented above represents reported capital raised only.

Public Software Valuation Multiples by Sector1

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Key Metrics by Sector – Comparable Public Software Companies1

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Summary of Technology IPOs

Recent U.S. Technology IPO Activity (by Offering Size)1

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  • Continuing the momentum from the previous quarter, IPO activity increased substantially with eight technology companies listing publicly in 3Q 2020.
  • Notable 3Q 2020 IPOs include cloud insurance software vendor Duck Creek Technologies and construction and engineering software provider Bentley Systems.
  • The pipeline of technology IPOs remains strong with companies including McAfee and Airbnb planning on listing in Q4.

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Key Performance Metrics for Recent Software IPOs1

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Select HW TMT Transactions

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Appendix: Software Sector Public Company Universe1

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Appendix: Software Sector Public Company Metrics1

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1. S&P Capital IQ

2. PNC Capital Markets

3. S&P LCD stats

4. PitchBook

5. HW proprietary transaction information