HW Software Introduction

Harris Williams (“HW”)

  • 25+ years and more than 1,000 closed transactions 
  • 350+ professionals across eight office 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 Themes

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

Horizontal Focus Areas

  • 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 Services

Vertical Focus Areas

  • 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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HW Current Market Observations and Insights

HW Technology, Media and Telecom Mid-Year Review

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For access to HW’s Optimizing the Outcome: Dealmaking in TMT During COVID-19, visit TMT Mid-Year Review

Latest HW Market Insights

For access to HW’s latest insight and perspective, email us at insights@harriswilliams.com or visit www.harriswilliams.com/news-insights

Recent Publications:

COVID - 19: Consumer Insights, New Normal Trends, & Investment Implications

M&A Learnings from Past Economic Disruptions

The Impact of 5G on Telecom

Deep Sector Expertise Across Key TMT Focus Areas

  • Architecture, Engineering, and Construction
  • Education Technology and Services
  • Financial Technology and Payments
  • Healthcare IT
  • Industrial and Supply Chain Technology
  • …and more

For access to HW’s TMT content, email us at: TMT_Insights@harriswilliams.com

Case Study: SuperOffice

HW’s TMT Group advised SuperOffice on its majority investment from Axcel.

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Headquartered in Oslo, Norway, SuperOffice is a leading provider of cloud-based CRM software for SMBs in Europe. The Company was founded in 1990 and provides a complete range of mission-critical CRM solutions to improve the efficiency of administrative, sales, marketing, and service functions.

Super Office has a high-quality and diversified customer base with over 5,500 primarily SMB customers. The Company offers an intuitive solution interface that enables its customers to seamlessly communicate with consumers.

Founded in 1994, Axcel is a Nordic private equity firm focusing on mid-market companies and has a broad base of both Nordic and international investors. Axcel has raised six funds with total committed capital of just over EUR 2.5 billion. These funds have made 55 platform investments, with almost 100 major add-on investments and 43 exits. Axcel currently owns 12 companies with combined annual revenue of more than EUR 1.3 billion and more than 5,000 employees.

Relevant Sub-Sectors

  • SaaS
  • CRM
  • Horizontal

 

Case Study: Eclipse

HW’s TMT Group advised Eclipse Legal Systems on its acquisition by Access.

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Eclipse is a leading mid-market case, matter, and practice management software provider operating primarily in the UK legal market. Eclipse’s core product, Proclaim, is in use by over 25,000 professionals in a vast range of sectors. Clients range from household-name commercial organizations and heavyweight law firms, through to niche market operators and sole practitioners.

The Company’s fully integrated, end-to-end platform with unparalleled flexibility, scalability, and configurability enables customers to review statuses, view and upload documents, and more.

Access, a portfolio company of HG Capital and TA Associates, has been recognized in The Sunday Times Tech Track 100 in 2019 and is a leading provider of business software to mid-sized UK organizations. It helps more than 35,000 customers across commercial and not-for-profit sectors become more productive and efficient. Its innovative Access Workspace cloud platform transforms the way business software is used, giving every employee the freedom to do more. Founded in 1989, Access employs more than 2,600 staff.

Relevant Sub-Sectors

  • SaaS
  • Legal Tech
  • Vertical software

Case Studies: FMG Suite and Flightdocs

HW’s TMT Group advised on two notable buyside transactions.

screen_shot_2020-07-24_at_12.49.39_pm.pngRelevant Sub-Sectors

  • SaaS
  • Marketing Tech
  • Fintech

Transaction Overview

FMG Suite is a leading, cloud-based marketing automation platform for financial professionals, broker dealers, insurance agents, and enterprises. The Company serves more than 40,000 financial professionals every day to engage with clients and prospects to grow their businesses.

Aurora Capital Partners is a leading private equity firm managing funds with total capital commitments of over $3 billion. Aurora focuses principally on control investments in middle-market companies with leading market positions, stable industry dynamics, attractive business model characteristics, and actionable opportunities for growth in partnership with management.

screen_shot_2020-07-24_at_12.51.20_pm.pngRelevant Sub-Sectors

  • SaaS
  • Aviation
  • Data Analytics

Transaction Overview

Flightdocs is a leading provider of cloud-based maintenance tracking, inventory management, and flight operations software to the aviation industry.

ATP is a global information services and software solutions company focused on making flying safer and more reliable. ATP Information Services is the general and business aviation industry's source for aircraft technical publications and real-time regulatory information. ATP Software Solutions is the leading provider of maintenance tracking, flight operations, inventory management, repetitive defect analysis, and troubleshooting software.

Select Software M&A Transactions – 2Q 2020

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Thoma Bravo’s Acquisition of Exostar

  • Exostar is a provider of cloud-based secure collaboration and information-sharing solutions for highly regulated industries.
  • The company’s software solutions enable more than 150,000 organizations, across the aerospace and defense, life sciences, and healthcare verticals, to manage the complexity and mitigate the risks involved with sharing information with third-party partners.
  • Post-acquisition, Thoma Bravo plans to leverage its experience in identity and access management and security software to rapidly accelerate the company's growth trajectory while continuing to support its customer base through product innovation.
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Carlyle’s Acquisition of Unison

  • Unison is a provider of procurement, supply chain, and contract management software to federal government agencies and government contractors.
  • The company’s cloud-based solutions enable its customers to efficiently navigate the complex rules and compliance requirements mandated by the federal government for procurement, grants, and contract lifecycle management programs.
  • Following the acquisition, Carlyle will leverage its deep operational expertise and experience investing in leading industry-specific vertical software companies to continue to accelerate growth and new product development.
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Keysight Technologies’ Acquisition of Eggplant

  • Exostar is a provider of cloud-based secure collaboration and information-sharing solutions for highly regulated industries.
  • The company’s software solutions enable more than 150,000 organizations, across the aerospace and defense, life sciences, and healthcare verticals, to manage the complexity and mitigate the risks involved with sharing information with third-party partners.
  • Post-acquisition, Thoma Bravo plans to leverage its experience in identity and access management and security software to rapidly accelerate the company's growth trajectory while continuing to support its customer base through product innovation.
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AKKR’s Growth Equity Investment in PINC

  • PINC is a provider of a cloud-based yard and supply chain management software solutions for the manufacturing and retail industries.
  • The company’s solution delivers real-time visibility and workflow orchestration to enable clients to identify, locate, and manage inventory throughout the supply chain predictably and cost-effectively.
  • Following the acquisition, AKKR will leverage its deep supply chain management expertise to support PINC’s growth through focused internal innovations and accretive strategic acquisitions.
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Apttus’ (Thoma Bravo) Pending Merger with Conga

  • Conga is a provider of an intelligent document automation and CRM optimization software platform.
  • The combined company will offer solutions for Quote-to-Cash, CLM, document generation, and process automation enabling more than 10,000 enterprise and mid-market customers to streamline workflows and deliver documents more effectively throughout their organizations.
  • Following the merger, the combined company, operating under the Conga brand, will offer customers a complete digital transformation solution focused on commercial excellence.

Software Acquisition Activity – Strategic Acquirers

Most Active Strategic Acquirers of Software Assets by Volume1

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  • The 10 most active strategic software acquirers registered 24 acquisitions in 1H 2020. M&A activity among large strategic software acquirers lagged the pace set in 2019 as the deal environment felt the impacts of the COVID-19 pandemic.
  • Apple was the most active strategic acquirer in 1H 2020, with six acquisitions including Fleetsmith, Dark Sky, Inductiv, and Voysis.
  • Other notable 2Q 2020 strategic software transactions include Microsoft’s acquisition of CyberX and VMware’s acquisition of Lastline.

Global Strategic Acquirer Software M&A Activity by Volume1

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  • Globally, strategic software M&A registered 410 acquisitions in 2Q 2020, a decrease from 540 in 1Q 2020.
  • The COVID-19 pandemic temporarily slowed M&A activity as strategics focused internally on assessing potential near-term and long-term implications of the virus.

Note: Includes control investments only.

Software Acquisition Activity – Private Equity

Most Active Private Equity Buyers of New Software Platforms by Volume1

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  • The 10 most active software investors completed 22 new platform investments in 1H 2020.
  • Thoma Bravo remained the most active software private equity firm in 1H 2020, completing five platform acquisitions including Command Alkon, Exostar, and Syntellis Performance Solutions.
  • Other notable 2Q 2020 private equity platform acquisitions include Carlyle's acquisition of Unison and Francisco Partners’ acquisition of Consignor.

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

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  • Globally, private equity buyers registered 63 new software platform investments in 2Q 2020, a 28% decrease from 1Q 2020.
  • New platform activity was meaningfully lower than in previous quarters as private equity investors focused on managing their existing portfolio companies through the initial stages of the COVID-19 shutdown. Following an initial period of internal focus and cost cutting within their portfolios, private equity investors have notably turned their attention to acquiring smaller companies on behalf of their existing portfolio.

Application Software – M&A Market Summary

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  • Application Software M&A registered 404 transactions in 2Q 2020, representing a 12% decrease from the prior quarter.
  • Median reported Application Software M&A transaction multiples decreased to 2.3x revenue in 2Q 2020.

Notable Application Software M&A Transactions1,4,5

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  • Application Software transaction volume slowed in 2Q 2020, as both strategic and financial buyers focused internally on business operations and navigating the pandemic.
  • Notable 2Q 2020 vertical-specific software transactions include Accelya Solutions’ (Vista) pending acquisition of Farelogix (Travel), Advent's acquisition of Conservice (Utilities), and Access's acquisition of Eclipse Legal Systems (Legal).

SaaS – M&A Market Summary

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  • SaaS M&A volume registered 34 transactions in 2Q 2020, a strong decrease from previous quarters.
  • Median reported SaaS transaction revenue multiples increased slightly to 4.6x in 2Q 2020.

Notable SaaS M&A Transactions1,4,5

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  • Cloud adoption continues to drive sector consolidation with both public and PE-backed strategics seeking to bolster their cloud capabilities and fortify their positions in key vertical markets, even during the COVID-19 pandemic.
  • Notable 2Q 2020 SaaS transactions include Apttus’ (Thoma Bravo) pending merger with Conga, Thoma Bravo’s acquisition of Exostar, and Francisco Partners’ acquisition of Consignor.

Data and Analytics – M&A Market Summary

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  • Data and Analytics M&A registered 68 transactions in 2Q 2020, continuing the downward trend of the prior three quarters.
  • Median reported Data and Analytics transaction multiples decreased to 3.3x in 2Q 2020.

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

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  • As the volume of complex data available to enterprises increases, strategic buyers are actively pursuing real-time information and business intelligence solutions to differentiate themselves from their peers.
  • Notable 2Q 2020 Data and Analytics transactions include Bain Capital’s acquisition of Agile Sports Technologies, Thompson Street Capital's acquisition of PKWare, and Thoma Bravo and MDP's acquisition of Kaufman Hall Software.

Infrastructure Software – M&A Market Summary

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  • Infrastructure Software M&A registered 49 transactions in 2Q 2020, a decrease from 61 in 1Q 2020.
  • In 2Q 2020, median reported Infrastructure Software transaction multiples decreased slightly to 4.0x revenue.

Notable Infrastructure Software M&A Transactions1,4,5

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  • Infrastructure Software M&A activity continued to slow in 2Q 2020 after a very active year in 2019.
  • Noteworthy Infrastructure Software M&A transactions in 2Q 2020 include VMware’s pending acquisition of Lastline, NVIDIA’s acquisition of Cumulus Networks, and Keysight's acquisition of Eggplant.

Private Placement Activity by Software Sector

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

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  • There were 1,267 private placement financings in 2Q 2020, which represented a 20% increase compared to 4Q 2019.
  • Total reported capital investment in the software sector rebounded in 2Q 2020, and remains above historical averages.

Private Placement Capital Raised by Round1,4 (As Percentage of Total Reported Private Placement Capital)

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  • In 2Q 2020, the majority of private capital invested was in early stage (Seed – B) rounds, comprising 67% of total capital invested.
  • Notable private placements across stages included Onfido’s $100 million Series D led by TPG Growth, Instacart’s $225 million growth investment led by DST Global, and Duck Creek Technologies’ $230 million growth investment led by Kayne Anderson.

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

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  • The near halt in IPO activity continued into Q2 with two companies listing, ZoomInfo and Lemonade.
  • The IPO freeze shows signs of thawing as public software company valuations approach record highs and notable unicorns signal a willingness to test the markets in the coming quarters.
  • The pipeline of technology remains robust with Snowflake Computing and Palantir filing S-1's this quarter, adding to the backlog that includes Airbnb and Procore.

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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

 

 

The information and views contained in this report were prepared by Harris Williams LLC (“Harris Williams”). It is not a research report, as such term is defined by applicable law and regulations, and is provided for informational purposes only. It is not to be construed as an offer to buy or sell or a solicitation of an offer to buy or sell any securities or financial instruments or to participate in any particular trading strategy. The information contained herein is believed by Harris Williams to be reliable but Harris Williams makes no representation as to the accuracy or completeness of such information. Harris Williams and/or its affiliates may be market makers or specialists in, act as advisers or lenders to, have positions in and effect transactions in securities of companies mentioned herein and also may provide, may have provided, or may seek to provide investment banking services for those companies. In addition, Harris Williams and/or its affiliates or their respective officers, directors and employees may hold long or short positions in the securities, options thereon or other related financial products of companies discussed herein. Opinions, estimates and projections in this report constitute Harris Williams’ judgment and are subject to change without notice. The securities and financial instruments discussed in this report may not be suitable for all investors and investors must make their own investment decisions using their own independent advisors as they believe necessary and based upon their specific financial situations and investment objectives. Also, past performance is not necessarily indicative of future results. No part of this material may be copied or duplicated in any form or by any means, or redistributed, without Harris Williams’ prior written consent. 

Harris Williams LLC is a registered broker-dealer and member of FINRA and SIPC. Harris Williams & Co. Ltd is a private limited company incorporated under English law with its registered office at 8th Floor, 20 Farringdon Street, London EC4A 4AB, UK, registered with the Registrar of Companies for England and Wales (registration number 07078852). Harris Williams & Co. Ltd is authorized and regulated by the Financial Conduct Authority. Harris Williams & Co. Corporate Finance Advisors GmbH is registered in the commercial register of the local court of Frankfurt am Main, Germany, under HRB 107540. The registered address is Bockenheimer Landstrasse 33-35, 60325 Frankfurt am Main, Germany (email address: hwgermany@harriswilliams.com). Geschäftsführer/Directors: Jeffery H. Perkins, Paul Poggi. (VAT No. DE321666994). Harris Williams is a trade name under which Harris Williams LLC, Harris Williams & Co. Ltd and Harris Williams & Co. Corporate Finance Advisors GmbH conduct business.