SOFTWARE SECTOR REVIEW

S

OFTWARE

S

ECTOR

R

EVIEW

Boston

Two International Place

24 Floor

Boston, MA 02110

617-482-7501

Jeff Bistrong

[email protected]

San Francisco

575 Market Street

31 Floor

San Francisco, CA 94105

415-288-4260

Mike Wilkins

[email protected]

London

63 Brook St

London, W1K 4HS

United Kingdom

Phone: +44 (0) 20 7518 8900

Thierry Monjauze

[email protected]

1Q 2014

T

ECHNOLOGY

• M

EDIA

• T

ELECOM

K

EY

C

ONTACTS

:

Technology • Media • Telecom

To subscribe please email:

[email protected]

Investment banking services are provided by Harris Williams LLC, a registered broker-dealer and member of FINRA and SIPC, and Harris Williams & Co.

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Harris Williams & Co. Ltd conduct business.

TABLE OF CONTENTS

2

3

4

5

6

8

14

16

DEAL SPOTLIGHT

HW&CO. TMT GROUP OVERVIEW

WHAT WE’VE BEEN READING

NOTEWORTHY SOFTWARE TRANSACTIONS

SOFTWARE M&A ACTIVITY

SOFTWARE SECTOR OVERVIEWS

SOFTWARE IPO OVERVIEW

MIDDLE MARKET DEBT OVERVIEW

RECENT HW&CO. TMT TRANSACTIONS

S

OFTWARE

•

Application Software

•

Infrastructure Software

•

Data and Informatics

•

Healthcare IT

•

Telecom and Data Center

Solutions

•

M2M Technologies

K

EY

F

OCUS

T

HEMES

•

Big Data / Analytics

•

Cloud-Migration

•

Mobilization

I

NTERNET

& D

IGITAL

M

EDIA

•

Information and Media

•

eCommerce

•

Consumer Internet

•

eLearning

•

Internet and Social Gaming

•

Online Advertising and

Marketing

•

Network Optimization

•

SaaS and Subscription Models

•

Vertical-Specific Solutions

HW&C

O

. TMT G

ROUP

F

OCUS

A

REAS

•

E

IGHT

O

FFICES

•

A

PPROXIMATELY

220

E

MPLOYEES

•

10 I

NDUSTRY

G

ROUPS



Boston



San Francisco



London

Richmond

Minneapolis

Philadelphia

Cleveland

Frankfurt

HW&C

O

. G

LOBAL

P

RESENCE

Technology • Media • Telecom

RECENT HW&CO. TMT TRANSACTIONS

H

ARRIS

W

ILLIAMS

& C

O

. O

VERVIEW

2

a portfolio company of and

has been acquired by

a subsidiary of

has been acquired by has been acquired by a portfolio company of has been acquired by

has been acquired by a division of

has been acquired by a portfolio company of

has been recapitalized a portfolio company of

has been acquired by a portfolio company of

and

D

EAL

S

POTLIGHT

– EC

I

S

OFTWARE

S

OLUTIONS

(“EC

I

”)

HW&Co.’s long-term relationship with ECi culminated in the Company’s recent sale to

The Carlyle Group.



Leading provider of vertically-focused enterprise software for small and medium

sized businesses (SMBs) throughout the U.S.



Provides cloud-based and on-premise ERP, business management, and

e-commerce solutions.



Partners with 7,400 customers across multiple sectors including manufacturing,

office equipment, office supplies, contract office furniture, lumber and building

materials, hardware, and janitorial / sanitary.



Successful track record of driving growth through a combination of organic and

acquisition-driven strategies.

F

OR

M

ORE

I

NFORMATION

, P

LEASE

C

ONTACT

:

Jeff Bistrong, Managing Director

[email protected]

Tyler Dewing, Director

[email protected]

a portfolio company of

has been acquired by

a portfolio company of

has received an

investment from

2009

HW&Co. advised ECi

in a capital raise from

Goldman Sachs

2014

HW&Co. advised ECi

in its sale to The

The Internet of Things Will

Transform the Data Center

Gartner, 3/19/14



The “Internet of Things” (IoT) connects remote assets and provides a data stream between the asset

and centralized management systems. Growth in IoT deployments, which are projected to reach 26

billion installed units globally by 2020, will have a transformational effect on the data center market.



Gartner predicts that the influx of IoT technologies in data centers will give rise to a multitude of

technological challenges including security and storage management.

Read the

full article

here

.

There's no future in onpremises IT

-- it's time to move to the cloud

InfoWorld, 3/19/14



InfoWorld is predicting a continued shift to cloud-based infrastructure-as-a-service (“IaaS”) and

platform-as-a-service (“PaaS”) IT services business models.



In the age-old rent-versus-buy debate, InfoWorld argues that the cloud is making a strong case for

renting as managed cloud environments provide efficiency gains and cost reductions.

Read the

full article

here

.

Big Data’s Growth: Overwhelming

yet Vital to Success of SMBs

Mid Size Insider, 3/3/14



According to Baseline, data has been doubling every two years and the majority of CIOs say they

believe the surge in data is crucial, yet remain unsure of how to handle it.



Mid Size Insider stresses the importance of SMBs finding solutions to refine and store the ever-growing

quantity of data in order to gain actionable insights on how to optimize inventories and drive

customer penetration.

Read the

full article

here

.

Beyond the Data: How to

Succeed in Building Efficiency

Analytics

Green Tech Media, 3/5/14



As energy data becomes more granular, the energy efficiency marketplace continues to demand

real-time data-driven insights, customization at scale, and standards creation.



Google’s recent $3.2 billion acquisition of Nest Labs, a provider of smart home monitoring devices,

highlights the growing importance of energy analytics and management.

Read the

full article

here

.

Healthcare Information

Technology Deals: The Heat is On

The Wall Street Journal, 3/10/2014



Sellers are emboldened by demand in the healthcare IT sector, with approximately $33+ billion worth

of M&A transactions consummated over the past three years.



The momentum of the healthcare industry is reflected in the S&P 500 Healthcare Index, a collection of

healthcare technology and services companies, which increased 36% in 2013 and 7% in YTD 2014.

Read the

full report

here

.

Global Mobile Ad Spend Jumped

105% in 2013, On Track For $31.5B

in 2014

TechCrunch, 3/19/14



According to eMarketer, mobile advertising revenues surged 105% in 2013 reaching approximately

$18 billion in sales.



Mobile advertising analysts are predicting that industry revenues will increase 75% in 2014 to $31.5

billion, while Google and Facebook are projected to comprise approximately 70% of all mobile

advertising revenue during 2014.

Read the

full article

here

.

W

HAT

W

E

’

VE

B

EEN

R

EADING

N

OTEWORTHY

S

OFTWARE

T

RANSACTIONS

– 1Q 2014



Blue Kai is a leading cloud-based, big data platform that enables companies to personalize online, offline and

mobile marketing campaigns with richer and more actionable information about targeted audiences.



The acquisition bolsters Oracle's growing suite of technology solutions aimed at CMOs and enables Oracle to

capitalize on increasing budgets within marketing departments as technology solutions continue to provide

significant return on investments.

Oracle Corporation acquires Blue Kai

3/14/14

Ent. Value: $400M

Revenue: NA

EV / Revenue: NA

EV / EBITDA: NA

3/13/14

Ent. Value: $1,100M

Revenue: NA

EV / Revenue: NA

EV / EBITDA: NA



Renaissance Learning is an educational assessment and learning analytics company that makes cloud-based

educational software for use in Kindergarten through 12th grade.



Employed at over 30,000 schools, the Company’s technology solution enables educators to identify knowledge

gaps and tailor their educational offerings accordingly.



In 2011, London-based Permira acquired Renaissance Learning in a take-private transaction for $455 million.

Hellman & Friedman acquires Renaissance Learning

1/30/14

Ent. Value: $746 M

Revenue: $182 M

EV / Revenue: 4.1x

EV / EBITDA: 101.4x



Accelrys is a leading provider of scientific innovation product lifecycle management (“PLM”) software, supporting

industries and organizations that rely on scientific innovation to differentiate themselves.



The acquisition enhances Dassault’s PLM platform by providing greater access to the CPG, food-and-beverage,

pharmaceutical, biotechnology, chemical, and energy industries.



In 2013, Accelrys bolstered its core PLM offering when it acquired Qumas, a specialist in enterprise compliance

and quality management software.

Dassault Systemes acquires Accelrys

3/26/14

Ent. Value: NA

Revenue: NA

EV / Revenue: NA

EV / EBITDA: NA



Fieldglass is a leading provider of intelligent solutions for finding and managing human capital.



The Company offers a unified technology platform that allows hiring managers and HR personnel to acquire

human capital, including contingent workers, services, and direct hires.



The acquisition “reaffirms SAP as the undisputed leader of integrated human resources and procurement in the

cloud for businesses of all sizes and industries” according to SAP’s co-CEOs Bill McDermott and Jim Hagemann

Snabe.

SAP acquires FieldGlass

3/18/14

Ent. Value: $930M

Revenue: NA

EV / Revenue: NA

EV / EBITDA: NA



TravelClick provides cloud-based revenue-generating solutions for hoteliers worldwide, including reservation,

business intelligence and guest management solutions.



With over 37,000 customers, TravelClick enables customers to better manage their inventory and to drive bookings.



The hospitality technology market is becoming increasingly dynamic and complex, with customers requiring better

analytical and revenue-enhancing tools.

359

314

356

354

376

375

₃₆₄

₃₆₂

330

372

357

406

309

342

318

322

321

1Q '10

2Q '10

3Q '10

4Q '10

1Q '11

2Q '11

3Q '11

4Q '11

1Q '12

2Q '12

3Q '12

4Q '12

1Q '13

2Q '13

3Q '13

4Q '13

1Q '14

6



Significant acquisition growth

strategies have been

implemented by large tech

companies in an effort to

enhance technology

platforms and grow talent and

reach.



Since 2010, IBM, Oracle,

Google, and Cisco have

consistently been the most

active software investors.



Despite a global M&A

slowdown, 2013 proved to

be a strong year for many

of tech’s leading strategic

consolidators.



Over the last four quarters,

strategic software M&A

volume has remained

consistent, but still below

higher levels observed in

2011 and 2012.

S

TRATEGIC

S

OFTWARE

A

CQUISITION

A

CTIVITY

(1) This analysis compiles M&A transactions for the most active software-focused, strategic acquirers from 2010 to 1Q 2014.

(2) Non-control, private placement transactions are excluded from this analysis.

Source: Capital IQ and HW&Co. research.

MOST ACTIVE STRATEGIC SOFTWARE M&A ACTIVITY BY VOLUME

(1)(2)

GLOBAL STRATEGIC ACQUIRER SOFTWARE M&A ACTIVITY BY VOLUME

(2)

12

5

10

3

₁

3

6

5

₂

4

4

8

5

5

9

7

4

8

3

2

12

10

7

8

5

₃

10

5

2

6

10

8

5

9

7

₉

1

2

7

2

1

2

4

2

1

₁

1

1

2014YTD

2013

2012

2011

2010

NEW PLATFORM PRIVATE EQUITY SOFTWARE ACQUISITION VOLUME

(1)(2)

1

4

₃

₃

1

2

2

2

1

2

3

3

1

9

6

2

3

2

2

1

2

₁

1

6

3

6

2

₁

2

5

1

1

₂

1

2

1

1

1

1

1

2014YTD

2013

2012

2011

2010



As of 1Q 2014, Vista Equity,

Thoma Bravo, and TA

Associates were among the

most active acquirers of new

platform investments in the

software sector.



Vertical market leaders with

disruptive technologies remain

among the most sought after

acquisition targets for private

equity investors.



Coming off a robust second

half of 2013, private equity

investment activity in the

software sector increased in

1Q 2014 over 4Q 2013.



Take-private transactions by

private equity remain popular.



Market conditions remain

attractive for private equity

transactions.

P

RIVATE

E

QUITY

S

OFTWARE

A

CQUISITION

A

CTIVITY

GLOBAL NEW PLATFORM PRIVATE EQUITY SOFTWARE ACQUISITION VOLUME

(2)

40

52

34

48

38

38

60

33

39

49

40

43

₃₇

39

50

40

47

1Q '10

2Q '10

3Q '10

4Q '10

1Q '11

2Q '11

3Q '11

4Q '11

1Q '12

2Q '12

3Q '12

4Q '12

1Q '13

2Q '13

3Q '13

4Q '13

1Q '14

Date

Closed Acquirer Target Description

Enterprise Value ($mm)

Revenue Multiple

Application Software

Pending Hellman & Friedman LLC Renaissance Learning Inc. Computer-based assessment technology and school improvement programs. $1,100 NA

Pending Dassault Systemes SA Accelrys Inc. Scientific business intelligence software and solutions. $683 4.1x

Pending Amadeus Americas, Inc. NMTI Holdings, Inc. NMTI Holdings, Inc. provides software for the hospitality industry. $500 NA

Pending HGGC, LLC Serena Software, Inc. Software products for mainframe change management. $436 2.4x

Pending Wolters Kluwer Third Coast Holdings Inc Enterprise legal management software. $290 NA

Pending SAP AG Fieldglass, Inc. Human capital management solutions. NA NA

03/12/14 The Carlyle Group LP ECi Software Solutions, Inc. ERP software for SMBs. $420 3.8x

02/20/14 BBVA Compass Bancshares, Inc. Simple Finance Technology Corp. Online banking software. $117 NA

02/18/14 Court Square Capital Partners AFS Technologies, Inc. Business enterprise and on-demand software solutions. NA NA

01/24/14 H&F, JMI Equity Applied Systems, Inc. Software solutions for the insurance industry. $1,800 NA

01/16/14 Open Text Corporation GXS Group, Inc. Provides business-to-business e-commerce and integration services. $1,165 2.4x

01/14/14 Dassault Systemes SA Realtime Technology AG 3D visualization software. $263 2.3x

01/10/14 NCR Corp. Digital Insight Corporation On-demand financial management solutions for financial institutions. $1,650 5.1x

12/30/13 PTC Inc. ThingWorx, Inc. Software application development platform. $130 NA

11/21/13 Experian plc Passport Health Software and solutions for hospitals and health care providers. $850 NA

Median $500 3.1x

APPLICATION SOFTWARE M&A VOLUME

GLOBAL

8



Application software M&A

volume declined slightly in 1Q

2014, though technology

incumbents continue to fill

gaps in their technology

offerings and pursue adjacent

verticals via acquisition.



Publicly disclosed application

software M&A multiples are at

their most attractive levels

relative to the median over

the last three years.



Vertically-oriented solutions,

most notably in Healthcare IT,

Financial Services, and the

Public Sector, continue to

drive investment in

application software assets.



Industry leading application

software platforms are

commanding premium

valuations from both strategic

and financial acquirers.

A

PPLICATION

S

OFTWARE

– M&A M

ARKET

S

UMMARY

Source: Capital IQ and HW&Co. proprietary information.

1Q '1 0 2Q '1 0 3Q '1 0 4Q '1 0 1Q '1 1 2Q '1 1 3Q '1 1 4Q '1 1 1Q '1 2 2Q '1 2 3Q '1 2 4Q '1 2 1Q '1 3 2Q '1 3 3Q '1 3 4Q '1 3 1Q '1 4 1Q '1 0 2Q '1 0 3Q '1 0 4Q '1 0 1Q '1 1 2Q '1 1 3Q '1 1 4Q '1 1 1Q '1 2 2Q '1 2 3Q '1 2 4Q '1 2 1Q '1 3 2Q '1 3 3Q '1 3 4Q '1 3 1Q '1 4 Confidential

NOTABLE APPLICATION SOFTWARE M&A TRANSACTIONS

MEDIAN M&A REVENUE MULTIPLES

245 230 245 261 267 271 285 269 256 288 266 296 243 245 245 256 231 1.5x 1.7x 2.3x 1.7x 1.5x 2.0x 1.8x 1.9x 1.1x 2.1x 2.4x 1.3x 1.6x 1.8x 2.2x 2.0x 2.7x

Date

Closed Acquirer Target Description

Enterprise Value ($mm)

Revenue Multiple

SaaS

Pending Thoma Bravo, LLC TravelCLICK, Inc. Provides cloud-based revenue-generating solutions for hoteliers. $930 NA 03/11/14 Thoma Bravo, LLC Global Healthcare Exchange, LLC Cloud-based healthcare technology for supply chain management. NA NA

02/28/14 Corporate Executive Board Co. KnowledgeAdvisors, Inc. Learning and talent measurement software. $52 NA

02/06/14 Oracle Corporation Responsys, Inc. Marketing solutions across various interactive channels. $1,597 8.2x

12/19/13 The Hearst Corporation Homecare Homebase, LLC SaaS solutions for the homecare and hospice industry. $625 8.9x 12/19/13 Omnitracs, Inc. Roadnet Technologies, Inc. Fleet and workforce management and GPS tracking solutions. NA NA 11/15/13 Vista Equity Partners The Active Network, Inc. Cloud computing applications for activity and participant management. $946 2.1x 11/04/13 Vitera Healthcare Greenway Medical Software solutions and managed business services to healthcare providers. $632 4.7x

08/30/13 SciQuest, Inc. CombineNet, Inc. Web-based sourcing and supply chain optimization solutions. $43 3.6x

08/20/13 Trulia, Inc. Market Leader, Inc. SaaS CRM and marketing solutions for the real estate industry. $314 6.6x

07/25/13 Aspect Software, Inc. Voxeo Corporation Interactive voice response (IVR) or Voice over IP (VoIP) solutions. $145 3.3x

07/16/13 Concur Technologies, Inc. TRX, Inc. SaaS solutions for reservation and expense management. $79 1.7x

07/10/13 Salesforce.com, Inc ExactTarget, Inc. Web-based project management solutions. $2,539 8.0x

05/06/13 Relias Learning, LLC Care2Learn Online continuing education and healthcare compliance training solutions. $64 5.5x

02/08/13 Oracle Corporation Eloqua, Inc. SaaS revenue performance management solutions. $872 9.7x

Median $625 5.5x



Acquirers continue to apply

premiums to assets with SaaS

deployment models given

propensity for high quality of

revenue and scalable

technology platforms.



Large, public SaaS companies

remain acquisitive and are

seeking opportunities to

broaden their product

portfolios.



Private equity investors

continue to find opportunity in

the public markets for

attractive SaaS acquisition

targets.

S

AA

S – M&A M

ARKET

S

UMMARY

1Q '1 0 2Q '1 0 3Q '1 0 4Q '1 0 1Q '1 1 2Q '1 1 3Q '1 1 4Q '1 1 1Q '1 2 2Q '1 2 3Q '1 2 4Q '1 2 1Q '1 3 2Q '1 3 3Q '1 3 4Q '1 3 1Q '1 4 1Q '1 0 2Q '1 0 3Q '1 0 4Q '1 0 1Q '1 1 2Q '1 1 3Q '1 1 4Q '1 1 1Q '1 2 2Q '1 2 3Q '1 2 4Q '1 2 1Q '1 3 2Q '1 3 3Q '1 3 4Q '1 3 1Q '1 4 Confidential Confidential

NOTABLE SAAS M&A TRANSACTIONS

SAAS M&A VOLUME

GLOBAL

MEDIAN M&A REVENUE MULTIPLES

3.0x 5.0x 2.5x 0.8x 2.1x 2.6x 2.4x2.6x 2.7x 5.5x 1.2x 2.3x 5.0x 3.9x 2.9x 6.2x 3.6x 31 27 39 50 34 31 33 36 41 37 41 51 38 48 34 39 30

Date

Closed Acquirer Target Description

Enterprise Value ($mm)

Revenue Multiple

Data and Analytics

Pending Oracle Corporation Collective Intellect, Inc. Web-based, automated, real-time text mining and analytics software. NA NA

03/28/14 Sun Capital Partners, Inc. Aclara Technologies LLC Utility management communications software. $150 NA

03/17/14 GSI Group Corporation JADAK Technologies, Inc. Data collection technologies. $93 NA

03/14/14 Oracle Corporation Blue Kai, Inc. Cloud-based data management platform for marketing applications. $400 NA 10/29/13 NeuStar, Inc. Aggregate Knowledge, Inc. Campaign and audience analytics for advertisers, trading desks, and publishers. $119 NA 10/25/13 inVentiv Health Catalina Health Personalized health data driving medication adherence and improved outcomes. NA NA

10/02/13 SAP AG KXEN, Inc. Predictive analytics solutions for business users. NA NA

10/01/13 Intel Corporation Sensory Networks, Inc. Software pattern matching and content processing acceleration solutions. $20 NA

09/25/13 Splunk, Inc. BugSense, Inc. Tools that collect and analyze crash reports from mobile applications. $9 NA

08/28/13 Datawatch Corporation Panopticon Software AB Visual data monitoring and analysis software tools. $31 6.3x

07/29/13 Cisco Systems, Inc. Composite Software, Inc. Data virtualization software solutions. $180 NA

06/12/13 Salesforce.com, Inc EdgeSpring, Inc. Visual analytics and business intelligence solutions. $80 NA

03/11/13 JLL Partners BioClinica, Inc. Clinical data management tools for life sciences companies. $108 1.4x

12/17/12 Informatica Deutschland Heiler Software AG Enterprise product information management solutions. $85 3.3x

Median $93 6.3x

10



In 1Q 2014, publicly disclosed

transaction M&A revenue

multiples moderately

increased compared to the

previous four quarters and are

slightly above average for the

previous three years.



Strategic buyers continue to

be the most active acquirers

of data and analytics

companies.



Data and analytics M&A is

likely to remain active as high

profile buyers continue to look

for ways to capitalize on the

ongoing growth in data.

D

ATA

AND

A

NALYTICS

– M&A M

ARKET

S

UMMARY

1Q '1 0 2Q '1 0 3Q '1 0 4Q '1 0 1Q '1 1 2Q '1 1 3Q '1 1 4Q '1 1 1Q '1 2 2Q '1 2 3Q '1 2 4Q '1 2 1Q '1 3 2Q '1 3 3Q '1 3 4Q '1 3 1Q '1 4 1Q '1 0 2Q '1 0 3Q '1 0 4Q '1 0 1Q '1 1 2Q '1 1 3Q '1 1 4Q '1 1 1Q '1 2 2Q '1 2 3Q '1 2 4Q '1 2 1Q '1 3 2Q '1 3 3Q '1 3 4Q '1 3 1Q '1 4 Confidential

Source: Capital IQ and HW&Co. proprietary information.

NOTABLE DATA AND ANALYTICS M&A TRANSACTIONS

DATA AND ANALYTICS M&A VOLUME

GLOBAL

MEDIAN M&A REVENUE MULTIPLES

78 67 61 63 91 70 72 76 63 82 73 72 64 72 71 67 64 1.0x 1.4x 1.0x 1.0x 1.3x 1.6x 1.3x 1.4x 3.2x 1.6x 0.9x 2.0x 1.4x 0.9x 1.4x 1.0x 3.0x



1Q 2014 infrastructure

software M&A volume

increased moderately from

4Q 2013, but remained lower

than the average quarterly

volume in prior years.



Median revenue multiples for

publicly disclosed M&A

transactions have declined

since their peak in 2011.



Strategic buyers continue to

drive M&A activity in the

infrastructure software sector.



With the recent security

software acquisitions by Cisco

(SourceFire) and FireEye

(Mandiant), expectations

continue for other high profile

strategic buyouts.

I

NFRASTRUCTURE

S

OFTWARE

– M&A M

ARKET

S

UMMARY

1Q '1 0 2Q '1 0 3Q '1 0 4Q '1 0 1Q '1 1 2Q '1 1 3Q '1 1 4Q '1 1 1Q '1 2 2Q '1 2 3Q '1 2 4Q '1 2 1Q '1 3 2Q '1 3 3Q '1 3 4Q '1 3 1Q '1 4 1Q '1 0 2Q '1 0 3Q '1 0 4Q '1 0 1Q '1 1 2Q '1 1 3Q '1 1 4Q '1 1 1Q '1 2 2Q '1 2 3Q '1 2 4Q '1 2 1Q '1 3 2Q '1 3 3Q '1 3 4Q '1 3 1Q '1 4 Date

Closed Acquirer Target Description

Enterprise Value ($mm)

Revenue Multiple

Infrastructure Software

Pending Juniper Networks, Inc. WANDL, Inc. Network planning and management software. $60 NA

03/25/14 Synopsys Inc. Coverity, Inc. Source code analysis tools. $350 NA

03/21/14 Sphere 3D Corporation V3 Systems, Inc. Desktop cloud management solutions. $16 NA

03/04/14 Zayo Colocation, Inc. CoreXchange, Inc. Data center and networking solutions. $18 NA

02/18/14 Akamai Technologies, Inc. Prolexic Technologies Inc. Distributed denial of service (DDoS) detection solutions. $403 NA

01/30/14 Computer Sciences Corp. ServiceMesh Inc. Cloud application management platform. $295 NA

01/06/14 JDS Uniphase Corporation Network Instruments, LLC Network troubleshooting and analysis solutions. $200 5.0x

12/30/13 FireEye, Inc. Mandiant Corporation Internet security and response software and managed services. $826 3.8x

12/06/13 Splunk, Inc. Cloudmeter, Inc. Application monitoring solutions in the cloud and datacenters. $21 NA

10/07/13 Cisco Systems, Inc. Sourcefire, Inc. Intelligent cybersecurity technologies. $2,194 8.9x

09/17/13 F5 Networks, Inc. Versafe Ltd. Security applications for identity theft and online fraud prevention applications. $88 NA 09/10/13 Bain, Golden Gate, Insight BMC Software, Inc. Software that provides system and service management solutions. $6,866 3.1x

08/30/13 IBM CSL International Ltd Virtualization management software for IBM’s zEnterprise system. NA NA

08/22/13 Thoma Bravo Keynote Systems, Inc. Mobile and web cloud testing and monitoring solutions worldwide. $341 2.8x

07/10/13 McAfee, Inc. Stonesoft Oyj Firewall security software. $375 7.0x

06/25/13 Vista Equity Partners Websense, Inc. Web, email, and data security solutions. $971 2.7x

Median $295 3.8x

INFRASTRUCTURE SOFTWARE M&A VOLUME

GLOBAL

NOTABLE INFRASTRUCTURE SOFTWARE M&A TRANSACTIONS

MEDIAN M&A REVENUE MULTIPLES

78 69 78 64 60 80 69 69 49 58 55 67 41 60 56 50 53 1.3x 4.3x 3.4x 1.3x 0.7x 2.3x 3.1x 4.8x 4.8x 1.8x 2.3x 2.8x 0.5x 1.8x 1.3x 4.0x 3.0x

12



Revenue and EBITDA multiples

increased in 1Q 2014 relative

to 1Q 2013 in nearly all

software sub-sectors.



Large-cap SaaS companies,

with proven earnings

performance and superior

profitability metrics, continue

to command premium

valuations.



Human capital management

(HCM), healthcare IT (HCIT)

and supply chain

management (SCM) software

providers remain “hot” areas

of investment.



More mature software sectors

such as enterprise software,

product life cycle

management (PLM), data

storage, network

management, and public

sector reflect more stable

trading multiples.

P

UBLIC

S

OFTWARE

V

ALUATION

M

ULTIPLES

BY

S

ECTOR

2.5x 8.1x 5.3x 3.4x _3.1x 4.3x 3.5x 2.0x 7.9x 3.5x 3.1x 3.7x 4.6x 2.4x 2.6x 9.9x 7.2x 4.2x 3.8x _3.7x 3.1x 3.1x 10.2x 6.6x 3.2x 7.1x 3.7x 2.9x Software Bellwethers

HCM SCM Enterprise PLM HCIT Public Sector Marketing Automation Large-Cap SaaS Small-Cap SaaS Data and Analytics IT Security Network Management Data Storage 1Q '13 1Q '14 7.6x 67.8x 50.5x 13.4x 16.2x 19.8x 24.1x 7.7x 66.5x 26.4x 15.1x 9.5x 16.1x 9.5x 8.8x 120.7x 23.5x 13.2x 15.0x 15.1x 15.5x 36.1x 105.6x 26.6x 16.2x 11.4x 18.2x 11.0x Software

Bellwethers HCM SCM Enterprise PLM HCIT Public Sector AutomationMarketing Large-Cap SaaS Small-Cap SaaS Data and Analytics IT Security ManagementNetwork Data Storage 1Q '13 1Q '14

Note: Large-Cap SaaS companies have market capitalizations greater than $2.0bn, while Small-Cap SaaS companies have market capitalizations less than $2.0bn.

Source: Capital IQ and HW&Co. proprietary information. Trading multiples are as of 3/31/2014.

EBITDA MULTIPLE ANALYSIS 1Q 2013 VS. 1Q 2014

REVENUE MULTIPLE ANALYSIS 1Q 2013 VS. 1Q 2014

K

EY

M

ETRICS

BY

S

ECTOR

– P

UBLIC

S

OFTWARE

C

OMPANIES

`

EV / LTM Revenue Multiple

NTM Revenue

_Growth

-23%

61%

86%

86%

20%

-5%

16%

-25%

NTM EBITDA

Growth

LTM EBITDA

Margin

-65%

45%

47%

-73%

Correlation with

EV/R Multiple

Correlation with

EV/R Multiple

Correlation with

EV/R Multiple

27%

10%

12%

12%

21%

23%

11%

7%

72%

15%

-31%

20%

0%

9%

6%

66%

-14%

-30%

15%

15%

19%

61%

-9%

88%

7%

10%

22%

37%

-13%

-75%

9%

4%

20%

88%

38%

-26%

5%

17%

21%

83%

-54%

-44%

11%

5%

21%

20%

28%

10%

95%

89%

-36%

5%

4%

30%

13%

-23%

-17%

98%

21%

-68%

13%

9%

9%

94%

33%

-67%

24%

19%

-4%

93%

40%

-65%

2.6x

2.9x

3.1x

3.1x

3.2x

3.7x

3.7x

3.8x

4.2x

6.6x

6.9x

7.2x

9.9x

10.2x

Software Bellwethers

Data Storage

Marketing Automation

Public Sector

Data and Analytics

Network Mgmt

HCIT

PLM

Enterprise

Small-Cap SaaS

IT Security

SCM

HCM

Large-Cap SaaS

14



Tech IPO activity was

significant throughout 2013

with nearly 25% of tech

companies raising over

$250M.



Nearly 50 tech companies

went public in 2013,

compared with less than 40

during 2012.



At the time of IPO, nearly 40%

of tech companies have LTM

revenue growth in excess of

75%.

S

UMMARY

OF

T

ECHNOLOGY

IPO

S

RECENT U.S. IPO ACTIVITY (BY OFFERING SIZE)

OFFERING SIZE AT IPO

MARKET CAP AT IPO

REVENUE GROWTH (1YR PRIOR)

Source: Capital IQ.

11 11 9 18 4 8 12 9 7 9 6 16 12 13 5 3Q-10 4Q-10 1Q-11 2Q-11 3Q-11 4Q-11 1Q-12 2Q-12 3Q-12 4Q-12 1Q-13 2Q-13 3Q-13 4Q-13 1Q-14 $0 - 50M $50 - 100M $100 - 250M $250M +

9%

33%

37%

22%

$0 - 50M

$50 - 100M

$100 - 250M

$250M +

20%

41%

39%

< 25%

25 - 75%

> 75%

4%

22%

15%

59%

$0-50M

$50-500M

$500M-$1B

$1B+

(1) Revenue growth based on LTM prior to IPO Date. Offering size and revenue at IPO are shown in millions.

Circle Size Denotes Revenue ($)

%

Revenue

Growth

(1

)

K

EY

P

ERFORMANCE

M

ETRICS

FOR

R

ECENT

S

OFTWARE

IPO

S

IPO Date

5/16/2013

5/16/2013

6/6/2013

8/8/2013

9/17/2013

9/19/2013

9/19/2013

9/26/2013 10/15/2013 10/24/2013 11/5/2013

11/6/2013

1/23/2014

2/27/2014

3/13/2014

Revenue Growth

(1)

_103.6%

_129.4%

_159.9%

_59.0%

_32.6%

_242.3%

_257.4%

_20.8%

_174.2%

_163.2%

_35.4%

_12.0%

_68.0%

_39.7%

_212.3%

Revenue at IPO

(3)

_$65.9

_$143.1

_$27.3

_$96.7

_$91.2

_$115.2

_$159.6

_$94.2

_$168.0

_$500.9

_$218.0

_$90.9

_$81.5

_$74.6

_$13.0

Offering Size

(3)

_$78.8

_$254.2

_$75.0

_$117.6

_$130.8

_$303.5

_$116.0

_$64.0

_$260.9

_$252.6

_$74.5

_$54.5

_$91.0

_$105.6

_$177.6

42.0% 64.1% 33.9% 20.1% 4.5% 93.5% (16.0%) (44.7%) (27.6%) 21.5% 75.3% 94.8% (29.4%) (9.4%) (26.3%)

103.6%

129.4%

159.9%

59.0%

32.6%

242.3%

257.4%

20.8%

174.2%

163.2%

35.4%

12.0%

68.0%

39.7%

212.3%

(50.0%)

0.0%

50.0%

100.0%

150.0%

200.0%

250.0%

300.0%

350.0%

33.9% 20.1% 4.5% 93.5% (16.0%) (44.7%) (27.6%) 21.5% 75.3% 94.8% 11.9% (29.4%) (9.4%) (12.8%) (26.3%) 56.5% 64.1% 33.9% 20.1% 4.5% 93.5% (16.0%) (44.7%) (27.6%) 21.5% 75.3% 94.8% (29.4%) (9.4%) (26.3%) (50.0%) (40.0%) (30.0%) (20.0%) (10.0%) 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0% 90.0% 100.0%

St

o

c

k

Pr

io

r

Pe

rfo

rm

a

nc

e

(2 )

16



Overall, the middle market

debt market remains strong,

with lenders actively seeking

high quality software credits.



Middle market LBO loan

multiples have increased over

the past three years and are

nearing 2007 levels for high

quality assets.



In 2013, 40% of sponsored loan

transactions involved portfolio

company refinancings, largely

due to the favorable lending

environment.

M

IDDLE

M

ARKET

D

EBT

/ LBO M

ARKET

O

VERVIEW

LBO LOAN VOLUME BY INDUSTRY

(2)

_{SPONSORED LOAN VOLUME BY PURPOSE}

(2)

MIDDLE MARKET LOAN VOLUME

(1)

(1)

PNC Capital Markets.

(2)

S&P LCD stats.

MIDDLE MARKET LBO LOAN MULTIPLES

(1)

0.7% 0.5% 1.3% 1.6% 2.0% 2.9% 9.5% 15.6% 25.4% 40.7% 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% Other Corporate Purpose Recap / Stock Purchase Merger Recap / General Recap Recap / IPO Acquisition Recap / Dividend LBO Refinancing

2013 Volume: $322.3 Billion

20.8% 4.4% 5.9% 6.1% 6.2% 6.9% 12.8% 17.2% 19.8% 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% Other

Oil & Gas Chemicals Manufacturing & Machinery Building Materials

Retail Servicse & Leasing Food & Beverage Computer & Electronics

2013 Volume: $81.7 Billion

$43B $66B $54B $72B $141B $120B $53B $62B $115B $88B $126B $137B $189B $164B $125B $127B 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 Institutional Pro Rata

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 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 FLD/EBITDA SLD/EBITDA Other Sr Debt/EBITDA Sub Debt/EBITDA

Saa

S

A

p

p

lica

tio

n

So

ftw

a

re

Infr

a

str

uctu

re

So

ftw

a

re

HW&C

O

. S

OFTWARE

S

ECTOR

P

UBLIC

C

OMPANY

U

NIVERSE

Software Bellwethers

Apple

Google

Mic rosoft

IBM

Orac le

Intel

Cisc o

SAP

EMC

HP

Salesforc e

Enterprise Software

Orac le

SAP

Salesforc e

Adobe

NetSuite

Sage

Open Text

CSI

Pegasystems

Exac t

Healthc are IT (HCIT)

Cerner

athena

Medidata

Allsc ripts

HMS

Quality

MedAssets

CPSI

Human Capital Management (HCM)

Workday

Conc ur

Ultimate

Cornerstone

Callidus

Clic kSoftware

Marketing Automation Software

Marketo

Constant

Jive

Bazaarvoic e

Voc us

Produc t Lifec yc le Management (PLM)

Dassault

Autodesk

Ansys

Synopsys

Cadenc e

PTC

Mentor

Aveva

Public Sec tor Software

Tyler

Blac kbaud

NIC

K12

Higher One

Supply Chain Management (SCM)

Aspen

Manhattan

SPS

Desc artes

Sc iQuest

E2open

MiX

Americ an

Large- Cap SaaS

Salesforc e

NetSuite

Conc ur

athena

Ultimate

Guidewire

Medidata

Cornerstone

Dealertrac k

Small- Cap SaaS

OpenTable

RealPage

Fleetmatic s

Cvent

Marketo

Proofpoint

SPS

Constant Contac t

LogMeIn

Qualsys

Sc iQuest

Small- Cap SaaS (c ont'd)

E2Open

Bazaarvoic e

Ebix

inContac t

MiX Telematic s

Marin

Data and Analytic s

Teradata

Splunk

Informatic a

Tableau

TIBCO

NICE

Qlik

Verint

Mic rostrategy

Ac tuate

Datawatc h

Network Management

VMware

CA

Citrix

Akamai

Red Hat

F5

SolarWinds

Infoblox

Progress

NetSc out

Radware

Data Storage

EMC

NetApp

Iron Mtn

CommVault

Nimble Storage

Barrac uda

Fusion- io

Carbonite

IT Sec urity

Symantec

Chec k Point

VeriSign

FireEye

Trend Mic ro

Fortinet

Imperva

Proofpoint

AVG Tec h

Qualsys

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