deal origination in the uk technology mid market

Deal Origina+onin the UK Technology Mid

Market

Its all in the Cloud...

We understand the Deal Origina+on Process

• Sector Exper+se and Understanding -‐ Technology, Telecoms and Media

• Clear understanding of Sub Sectors and their cons+tuent companies

• Companies -‐ Public, Private, PE Backed, Subsidiaries

• Financial Hurdles and Analysis

• Geography -‐ Company Loca+ons

• Business Model

• Management Team Quality

• Other Factors: company age, owners age, Death/Divorce/Disease, Management Succession

• Deal Types: MBO, MBI, P2P, 2BO, 3BO, Growth

• Need for a Deal and Timing; need for capital

• Process -‐ Approach, Discuss, Meet, Nego+ate, Terms, Close

Deal Screening and Origina+on is complex...

Acquirors Targets

Ability Ability

MoneyMoney

Intent Intent

Strategy

Sectors

Scale

Stage

Zone of

Confluence

Deal Mo+va+on is important...

• Strong IP or other sustainable advantage

• Addressing a large poten+al market

• Like to exhibit upper quar+le growth

• Strong management with shareholder value orienta+on

• High Gross Margins >50%

• Product service is “need to have” with clearly differen+ated market posi+on

• Clear routes to market

• Low capital intensity

• Geographical loca+on may be a factor

• Financial: Revenues, Profits, Growth, Margins, Cash Genera+on, Revenues per employee, Return on Capital Employed

Profile of an Investee Company

• Trade Carve Out deals (Acquisi+ons)

• Trade Infill Deals (Divestments)

• Buy and Build Placorms

• Secondary (or Ter+ary) Deals

• Public to Private Transac+ons

• Filling the IPO Gap

• MBO/MBI Founder Exits

• Turnaround/Recapitalisa+on

• Growth Investment

Private Equity Deals vary...

• IAF Capital have proven deal origina+on capability

We have done it before...

Financial Advisor to

CIBER Europe Limited

on its $41m acquisition of Ascent Technology Group from 3i plc

May 2004



on its $41m acquisition of Ascent Technology Group from 3i plc

May 2004



on its €66.3m acquisition of Novasoft Group AG

Pall Mall Capital originated the transaction

August 2004



on its €66.3m acquisition of Novasoft Group AG

Pall Mall Capital originated the transaction

August 2004

But its a Compe++ve Market for Buyout Investors...

We understand the UK M&A Market

• M&A in the European Technology Sector was consistent with the level of ac+vity in 2011

• There were 234 PE and VC exits in 2012, down from 281 in 2011

• Financial investors accounted for 14% of the deals done in 2012

• In the UK of 190 completed buyouts, 79 were in the range of £10-‐£100m, of which 18 were in the TMT sector

• There were 37 UK exits in 2012

M&A Ac+vity con+nued in 2012...

• The number of UK listed technology companies con+nued to decline with the acquisi+ons of Aegis, Misys, Logica, C&W, Torex, Psion, Kewill, Tikit, Netbenefit, SHL, Maxima and Atlan+c Global

• One of the most significant developments was the ac+vity of overseas buyers who accounted for 36% of all deals

• The key focus for investors in 2012 was somware companies -‐ mainly in niche ver+cals such as warehouse management and vo+ng somware

• IT Managed services accounted for 19% of deals but the sector remains very fragmentedM&A Ac+vity con+nued in 2012...

But Deal Origina+on is compe++ve...

Top Valua+ons for UK Technology M&A Deals

• The IPO market is likely to remain quiet, so M&A is the only prac+cal way for vendors to realise their equity

• Overseas trade acquirers are ac+vely looking for deals and pay compe++ve prices

• Businesses in demand need to be well run and scalable

• Some UK PLCs have raised addi+onal capital in 2012; Digital Barriers, Capita, Quindell Porcolio and Cupid

• Sectors in demand are likely to include: e-‐commerce, informa+on management, FinTech, cloud/managed services, niche somware, business intelligence/analy+cs and IT Security

What is the Outlook for 2013?

• Mobile Phones overtake PCs for web access• Mobile apps on a variety of architectures• Personal cloud for storage• Enterprise app stores• Communica+on of intelligent devices• Cloud services• Big Data -‐ informa+on management• Analy+cs and simula+on• In Memory Compu+ng• Integrated ecosystems• Internet of Things

GartnerTop

Predic+onsfor 2013

We understand the UK Technology Sector

Who are the UK Players...

UK TechnologyCompanies

PublicCompanies

VC/PE Funded

PrivateEarlyStage<£5m

SubsidiariesForeignOwned

Compe+tors

• UK Market players break down into Six Categories:

• Public Companies

• VC/PE Funded Companies

• Private Companies

• Subsidiaries

• Foreign Owned/Compe+tors

• Early Stage = <£5m Revenues

Who are the Deal Ecosystem Players...

UK TechnologyCompanies

US TechnologyCompanies

EuropeanTechnologyCompanies

VC/PEFunds

DoNothing

Indian/AsianTechnologyCompanies

UK Domes+cTechnologyCompanies

• US Technology Companies, seeking cross border deals in UK -‐ Top 500

• European Technology Companies, seeking cross border deals in UK -‐ Top 100

• VC/PE Funds, including secondary and ter+ary deals -‐ Top 200

• Indian/Asian Technology Companies, seeking cross border deals in the UK -‐ Financially strong but limited in number

• UK Domes+c Technology Companies, seeking to consolidate the market; any exis+ng market players

• There is always the Do Nothing Scenario

• IT & Business Services

• Somware

• Hardware & Electronics

• Telecoms

• Digital Media & Internet

• Adver+sing • BioTech• CleanTech• Consumer Electronics/Devices• Consumer Web• eCommerce• Educa+on• Enterprise• Games, Video and

Entertainment• Legal• Mobile/Wireless• Network/Hos+ng• Consul+ng• Communica+ons• Search• Security• Semiconductor• Somware

• Energy & U+li+es• Engineering• FinTech Banking• FinTech Insurance• FinTech Other FS• Legal & Professional Services• Media & Marke+ng• Other PS• Other Ver+cals• PharmaTech• PS Educa+on• PS Healthcare• Retail and Hospitality• Telco Somware• Travel & Transport• Built Environment Somware• Communica+on & CEM• Data & Content Management• ERP• Human Capital Management• Logis+cs and WMS• Other Business Applica+ons• Security

Sector Complexity is nothing new...

Broad Knowledge of the Global Somware Sector...

What are their Op+ons?

UK SomwareCompanies

Sale

VC/PEFunded

ExternalGrowthFunding

P2P


P2P

Private

Acquisi+on

Buyout

Acquisi+on

Buyout

Sale

IPO

Subsidiaries

Acquisi+on

Buyout

ForeignOwned

Compe+tors

EarlyStage<£5m

Acquisi+on

Buyout


P2P


P2P

Sale

IPO

Sale

IPO

Acquisi+on

Buyout

SaleAcquisi+on

IPO

Sale


P2P


P2P

EarlyStage<£5m

PublicCompanies

VC/PEFunded

Private

ForeignOwned

Compe+tors

IPO

PublicCompanies

• Strategic Op+ons are limited

• IPO

• P2P

• External Growth Funding

• Sale

• Acquisi+on

• Buyout

• But Strategic Op+ons depend on circumstances

Subsidiaries

IPO

Buyout

Where are the Deals to be found?

UK SomwareCompanies

Sale

VC/PEFunded


P2P


P2P

Private

Acquisi+on

Buyout

Acquisi+on

Buyout

Sale

IPO

Subsidiaries

Acquisi+on

Buyout

ForeignOwned

Compe+tors

EarlyStage<£5m

Acquisi+on

Buyout


P2P


P2P

Sale

IPO

Sale

IPO

Acquisi+on

Buyout

SaleAcquisi+on

IPO

Sale


P2P


P2P

EarlyStage<£5m

PublicCompanies

VC/PEFunded

Private

ForeignOwned

Compe+tors

IPO

PublicCompanies

• Buyside Deals

• Playing to our strengths in deal origina+on

• Sell Side Deals

• Depth of market knowledge and interna+onal grasp of compe+ng companies makes this an aqrac+ve deal area

• Deal Areas of least aqrac+on

• These do not play to our strengths and are to be avoided

Subsidiaries

IPO

Buyout

• Electronic Document Management

• eServices

• Internet Infrastructure Somware

• Legal Sector

• Payments Systems

• EDI

• Pensions Administra+on

• Accoun+ng

• Road Traffic Technology

• Supply Chain Management

• Manufacturing

• Security

• Retail Solu+ons

And Deep Somware Sector Knowledge...

• Energy & U+li+es• Engineering• FinTech Banking• FinTech Insurance• FinTech Other FS• Legal & Professional Services• Media & Marke+ng• Other PS• Other Ver+cals• PharmaTech• PS Educa+on• PS Healthcare• Retail and Hospitality• Telco Somware• Travel & Transport• Built Environment Somware• Communica+on & CEM• Data & Content Management• ERP• Human Capital Management• Logis+cs and WMS• Other Business Applica+ons• Security

Just some of our Databases...

UK Mid Market Technology Companies £5m -‐ £100m

We can advise on Deal Origina+on

So, how can we work together?

Former Regular Army Officer

25 Years Investment Banking Experience

Strong Deal Originator

Over $150 millon in Technology Sector Deals since 2001

This summary memorandum has been prepared from internally developed data, informa+on in the public domain and other sources believed to be reliable. No representa+on, warranty or undertaking (express or implied) is given and no responsibility is accepted by IAF Capital Limited (“IAFC”) or by any of their officers, employees or agents for the completeness or accuracy of any informa+on contained in, or of any omissions from, this summary memorandum or any supplementary informa+on made available to any interested party or its advisors, and any liability in respect of such informa+on or omissions is hereby expressly disclaimed.

This summary memorandum does not cons+tute an offer, invita+on or recommenda+on to buy, sell, subscribe for or issue any securi+es or a solicita+on of any such offer or invita+on and shall not form the basis of any contract with IAFC. Opinions expressed herein are subject to change without no+ce. In providing this summary memorandum, IAFC does not undertake any obliga+on to provide the recipient with access to any further informa+on or to correct any inaccuracies or omissions which may become apparent. IAFC and their officers, employees and agents may own or have posi+ons in securi+es of companies or issuers men+oned herein and may also provide or seek to provide financial advisory, banking and other services for any such companies or issuers.

With respect to recipients in the United States, this Informa+on Memorandum is being distributed solely to "accredited investors" within the meaning of the rules and regula+ons promulgated under the Securi+es Act of 1933, as amended (the "Act"). The Company's stock has not been and will not be registered under the Act, or any applicable state or foreign securi+es laws, nor has the United States Securi+es and Exchange Commission or any state or foreign regulatory authority passed upon the accuracy or adequacy of this Informa+on Memorandum or endorsed the merits of this offering, and any representa+on to the contrary is unlawful. The Company's stock is offered pursuant to exemp+ons provided by Sec+on 4(2) of the Act and Regula+on D thereunder, certain state securi+es laws and certain rules and regula+ons promulgated under the Act. The Company's stock may not be transferred in the absence of an effec+ve registra+on statement under the Act and any applicable state or foreign securi+es laws or an opinion of counsel acceptable to the Company and its counsel that such registra+on is required.

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