global technology m&a trends and analysis – 1h 2015
TRANSCRIPT
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Global Technology M&A Trends and Analysis – 1H 2015
July 2015
2Global Technology M&A Trends and Analysis l Woodside Capital Partners l July 2015
Software Industry Landscape
Internet Software Online Services
Systems Software Application Software IT services
3Global Technology M&A Trends and Analysis l Woodside Capital Partners l July 2015
Hardware Industry Landscape
Communications Equipment Electronic Equipment, Instruments & Components
Technology Hardware, Storage& Peripherals
Semiconductors &Semiconductor Equipment
Technology Distributors
4Global Technology M&A Trends and Analysis l Woodside Capital Partners l July 2015
CONTENTS
Technology Trends 9
Software Sector M&A Overview 27
Stock Market Performance 61
Executive Summary 5
Hardware Sector M&A Overview 44
5Global Technology M&A Trends and Analysis l Woodside Capital Partners l July 2015
Global digital ad tech spending is forecasted to reach US$253.0 Bn by 2018 with an estimated 36.6% share in media ad spending; Mobile Internet adspending will dominate digital ad spending
Mobile Internet ad spending will continue to have the biggest share in US digital ad spending; digital video ad spending share is set to increase to 15.5% ofdigital spending by 2018
Rise in associated loss due to data breach incidents has led to increases in spending by the US government on cyber security; cyber security market isexpected to reach US$155 Bn by 2019
Global wearable technology shipments, including fitness devices, is expected to reach 126.1 Mn in 2019 from 19.6 Mn in 2014 Smart homes market is estimated to be the largest market within smart cities, constituting 26.6% share in 2017; sales to expand at 26.9% CAGR over 2012–
17; IoT market to accelerate to US$7.1 Tn by 2020 and IoT-enabled devices to represent 50% of global connected devices by 2020, driven by lowcomponent cost and need for connectivity
Global e-commerce and m-commerce markets are forecast to reach US$1.3 Tn and US$626 Bn, respectively by 2018, led by rapid smartphone adoptionand internet penetration; US e-commerce and m-commerce markets to reach US$491.5 Bn and US$132.7 Bn, respectively in 2018
Global semiconductor market to reach US$369.6 Bn by 2017, driven by integrated circuits segment; Asia-Pacific region continue to be the largest and fastestgrowing market
Executive Summary
Technology Trends
Growth in digital ad tech sector, driven by programmatic marketing platform, real-time-bidding, and mobile ad growth, expected to lead to increased M&Aactivity during the next 12 months
Enterprises seeking technology innovations to reduce business vulnerability and threats from emerging finance solutions are likely to increase M&A activities The need to establish presence in the sector and the growing demand for smart mobility with decline in hardware costs to drive deal activity in IoT sector Consolidation among players, omni-channel capabilities and need to build supply chain to drive M&A in e-commerce space in 2015 In 2015, M&A activity in semiconductor sector continues to be fuelled by shift from PCs to mobiles, new technologies that improve connectivity and
functionality Demand for analytics and low-cost architecture is expected to drive M&A activity in HR technologies and smart storage solutions
Technology Industry Outlook
6Global Technology M&A Trends and Analysis l Woodside Capital Partners l July 2015
Global M&A activity in 2015 is expected to continue the robust deal activity experienced in 2014; Deal value surges in the first two months of Q2 2015
Global mid-market deal volume and value surge in Q1 2015 after a subdued previous quarter; US mid-market deal value driven by few major deals in Q12015
Global average transaction size surges in Q1 2015 over Q4 2014; Mid market deals rise in Q1 2015; Mega deals drive transaction value in the first twomonths of Q2 2015
US average transaction size trend upwards for all size segments in Q1 2015; First two months of Q2 2015 witnesses robust increase in deal value led bymega deals
Global M&A activity remained robust in 2014, with high deal volume and average transaction size; Momentum is expected to continue in 2015 with increasingaverage transaction size
Globally, online services and application software experience the largest M&A activity among the software sub-sectors, accounting for over 85% of dealvolume in Q1 2015
M&A activity in software industry is led by online services and application software sub-sectors in US, accounting for over 87% of deal volume in Q1 2015
Strategic buyers dominate the global and US M&A activity in the software industry; over 95% of acquisitions have been made by strategic buyers
US and Canada accounts for nearly half of global M&A activity in software industry, followed by Europe
Global and US M&A transactions marked by higher purchase price multiples in Q1 2015 compared to Q1 2014
Cross-border M&A accounts for nearly one-fourth of global transactions; cross-border deal value at three-year high in the first two months of Q2 2015
US buyers have acquired more software companies outside the US than non-US buyers have acquired in the US; both inbound and outbound M&A activityremain buoyant in Q2 2015
Yahoo, Google and Twitter have been the most active recent acquirers in the software industry
Executive Summary
Software Industry: M&A Activity
7Global Technology M&A Trends and Analysis l Woodside Capital Partners l July 2015
Executive Summary
Global hardware industry M&A activity registered strong growth in first five months of 2015; deal value highest in three years
The number of deals below US$50 Mn and above US$500 Mn increased in Q1 2015 over Q4 2014; large ticket deals drove transaction value in first twomonths of Q2 2015
Global mid-market deal volume and value decline in Q1 2015; US mid-market deal value also fell in Q1 2015
Average transaction size trends upwards for all size segments in Q1 2015 in the US; first two months of Q2 2015 witness robust increase in deal value, led bymega deals
Global M&A activity remained robust in first five months of 2015, with high deal volume and average transaction size
Globally, electronic equipment and semiconductors witnessed the largest M&A activity in deal volume and value in Q1 2015
M&A activity in the US was led by electronic equipment, instruments and components, and communications equipment sub-sectors in US, accounting for over64% of deal volume in Q1 2015
Strategic buyers dominate global M&A activity in hardware industry with over 90% of deals
Strategic buyers dominate M&A activity in US hardware industry, representing over 90% of deals
US and Canada record highest M&A activity in hardware industry, accounting for 41% transactions by deal volume and 49% by deal value
Global and US M&A transactions marked by lower purchase revenue multiples in Q1 2015 than Q4 2014 and Q1 2014
Global M&A transactions marked by higher purchase price EBITDA multiples than Q4 2014 and Q1 2014 in Q1 2015; US M&A transactions marked by lowerpurchase price EBITDA multiples in Q1 2015
Cross-border M&A accounts for over one-fourth of global transactions; cross-border deal value reaches three-year high in first two months of Q2 2015
Number of US inbound deals increased in Q1 2015 while outbound deals remained flat; deal value of inbound M&A registered record growth as compared tothe last three years
Intel, Ametek and Arrow Electronics have been the most active recent acquirers in the hardware industry
Hardware Industry: M&A Activity
8Global Technology M&A Trends and Analysis l Woodside Capital Partners l July 2015
CONTENTS
Technology Trends 9
Software Industry M&A Overview 27
Stock Market Performance 61
Executive Summary 5
Hardware Industry M&A Overview 44
9Global Technology M&A Trends and Analysis l Woodside Capital Partners l July 2015
Global Digital Ad Tech Spending (US$ Bn) Global Mobile Internet Ad Spending (US$ Bn)
Digital ad spending is expected to rise at a CAGR of 14.9% from 2014 to 2018, driven by mobile, digital video, and programmatic buying
Effective data-driven targeting, low CPMs, and a direct feedback loop that enables the calculation of ROI on digital advertising dollars spent have drivenincreased spending
According to comScore, ~60% of time spent online in 2014 was on mobile devices, with the majority of this activity being within apps
Global Digital Advertising: Global ad tech spending continues to grow rapidly, withmobile advertising steadily increasing its share of spending
Source: eMarketer
120.0
145.0
171.0
198.0
225.0
253.0
23.1%
26.6%
29.6%
32.2%34.5%
36.6%
2013 2014 2015E 2016E 2017E 2018E
Digital ad spending % of total media ad spending
19.2
42.6
68.7
101.4
133.7
166.6
16.0%
29.4%
40.2%
51.2%
59.4%
65.9%
2013 2014 2015E 2016E 2017E 2018E
Mobile Internet ad spending % of digital ad spending
10Global Technology M&A Trends and Analysis l Woodside Capital Partners l July 2015
US Digital Advertising Spending (US$ Bn)
32.4 31.6 29.9 26.6 25.0 25.2
10.719.2
28.740.5
49.857.8
24.8%
37.8%
49.0%
60.4%
66.6%69.7%
2013 2014 2015E 2016E 2017E 2018E
Desktop Mobile Mobile as a % of total
US Digital Video Advertising Spending (US$ Bn)
3.14.3
5.2 5.7 6.26.90.7
1.5
2.6
3.9
5.1
6.0
8.9%
11.5%
13.3%14.3%
15.0%
15.5%
2013 2014 2015E 2016E 2017E 2018E
Desktop Mobile Video as % of digital spending
The penetration of new video-capable devices and increased popularity of video streaming services are leading viewership away from traditional television
Ad tech budgets are shifting from linear television to online and mobile video, which has led to expansion in video advertising
US Digital Advertising: Mobile ad spending in US to continue to increase share of digitalad spending
Source: eMarketer; WCP Analysis
11Global Technology M&A Trends and Analysis l Woodside Capital Partners l July 2015
Ad Tech M&A Drivers: Programmatic marketing platforms, real-time-bidding, and mobilead growth
Digital Ad Tech: Key M&A Transactions
High demand for companies that provide innovative ways to create real value for brands is driving the M&A market in the digital ad tech space
Digital ad tech companies that provide improved data analytics through complex algorithms, which enable effective and personalized targeting andprovide real-time data, are expected to gain ground
• Need for customer relationship management systems with valuable social data on target audiences that advertisers can use to develop andprovide successful marketing campaigns may drive further acquisitions and partnerships
Programmatic marketing platforms that provide advanced methods to optimize and measure the return on investment for advertisers are likely toattract increased attention
Source: Capital-IQ; WCP Analysis
Digital Ad Tech: M&A Outlook
Ann. Date Target Acquirer Deal Value (US$ Mn) EV/Revenue Target Description
May-15 Shift Labs Brand Networks 50 NA Provides real-time marketing platform for advertisers
May-15 AOL Verizon 4,759.40 1.7x Digital distributor of content, products, and services
Apr-15 Bronto Software NetSuite 200 NA Provides cloud-based marketing platform
Apr-15 Chango Rubicon Project 122 NA Programmatic advertising platform provider
Mar-15 Mob Partner Cheetah mobile 58 1.9x Operates a mobile affiliate network that connects advertisers
Mar-15 eXelate Nielsen NA NA Provides analytics, smart data & cloud products for marketers
Mar-15 Avazu Dalian Zeus 333.6 NA Digital marketing services provider
Mar-15 Yieldex AppNexus 100 NA Cross-channel revenue and inventory management platform
Feb-15 SocialMoov Marin Software 18.8 NA Provides platform for social advertising
Feb-15 Spotzot Valassis Comm NA NA Provides mobile advertising platforms with focus on location tech.
Jan-15 ZipDial Twitter 30 NA Provides marketing, customer engagement & analytics solutions
12Global Technology M&A Trends and Analysis l Woodside Capital Partners l July 2015
The per capita cost of data breaches continues to increase, with the average estimated cost at US$153.1 in 2015, up from US$146.9 in 2014
Spending on cyber security by the US government is expected to increase significantly due to the increasing losses from data breaches, which is among thehighest in the world
Per Capita Cost of Data Breach (US$) US Budget Allocation on Cyber Security Cyber Security Market Size (US$ Bn)
Cyber Security: Increase in data breaches leads to spending increases
Source: Ponemon Institute; MarketsandMarkets
188
210
177
143
131
120
131
52
37
201
195
183
158
141
127
135
70
51
217
211
186
163
146
135
133
78
56
US
Germany
France
UK
Italy
Japan
Australia
Brazil
India
2013 2014 2015E
0.9
14.0
2000 2016E
95.6105.4
116.2
128.1
141.3
155.7
2014 2015E 2016E 2017E 2018E 2019E
~14x increase CAGR: 10.2%
13Global Technology M&A Trends and Analysis l Woodside Capital Partners l July 2015
Cyber Security: Recent Transactions and Outlook
Cyber Security: Key M&A Transactions
The need for continuous improvement in technology to counter rapid evolving cyber threats is forecast to drive M&A as firms seek to acquiresolutions rather than develop in-house
• Firms may look to buy innovation-driven, small-scale firms that offer niche cyber security services and products
An increase in business vulnerability as a result of growth in connectivity (often through less secure devices such as mobile phones and cloudstorage) is likely to drive companies to acquire/partner with other security providers to reduce the risk of potential loss of IP, reputation, andcustomers
The increased use of electronic/mobile commerce and banking, greater use of digital cash, and growth in new payment models may also lead toincreased acquisitions
Source: Capital-IQ; WCP Analysis
Cyber Security: M&A Outlook
Ann. Date Target Acquirer Deal Value (US$ Mn) EV/Revenue Target Description
Jun-15 OPenDNS Cisco 635.0 NA Cloud-based security solutions
Jun-15 Virtustream EMC 1,200 NA Provides enterprise-class cloud software and services and cybersecurity solutions
Jun-15 KnowledgeConsulting Group
ManTechInternational NA NA Provides cyber risk management, governance, operations, and
compliance services
May-15 Resolution1 Security General DynamicsFidelis NA NA Provides incident resolution solutions
May-15 Creative ComputingSolutions
Informationinnovators NA NA Cyber security and health-focused Solutions
Apr-15 Information SecuritySolutions
Assured Info.Security NA NA Cyber security, information technology security, and cyber
intelligence solutions
14Global Technology M&A Trends and Analysis l Woodside Capital Partners l July 2015
Internet of Things (IoT) Market Size (US$ Tn) Global Connected Devices (Bn)
IoT devices are projected to contribute to ~50% of global connected devices by 2020 as a result of:• Low cost to add IoT capability to consumer products, due to reduced component costs• Increased demand for remote control, monitoring, and sensing functions
The advent of low-priced sensors, low-cost internet bandwidth, big data analytics and the need for connectivity have led to growth in the IoT market
IoT Market: Reduced component cost and need for connectivity to drive rapid growth
Source: IDC, Strategy Analytics
1.9
2.7
3.8
5.6
7.1
2013 2015E 2017E 2019E 2020E
0
5
10
15
20
25
30
35
2014 2015E 2016E 2017E 2018E 2019E 2020E
PCs Smartphones TabletsInternet Media Devices Smart TVs Smart Home DevicesWearables IoT
49.9%
4.8%
14.5%
4.8%4.2%5.9%
12.8%
3.0%
CAGR: 20.4%
As a %of total
15Global Technology M&A Trends and Analysis l Woodside Capital Partners l July 2015
Global Wearable Device Shipments (Mn) Global Wearable Device Shipments by Product (Mn)
Wearable device shipments are projected to reach 46.0 Mn by 2015 from 19.6 Mn in 2014; higher consumer awareness, new device launches, and crossplatform adaptation of smart wearables are driving the demand for wearable devices
Wrist-wear devices, such as watches and bands, account for 90.4% of wearable devices; they are forecast to reach 101.4 Mn in shipments in 2019 from 17.7Mn in 2014, expanding at a CAGR of 41.8%.
Global Wearables: Fitness devices to drive rapid growth
Source: IDC; Note: Basic wearables are those devices that do not run third party applications
15 2027
3644
52
4
26
38
50
63
74
19
46
65
86
107
126
2014 2015E 2016E 2017E 2018E 2019E
Basic Smart
CAGR: 46.0%
19.6
126.1
17.7
101.4
1.6
6.75.6
0.1
5.1
0.2
7.3
2014 2019E
Wristwear Modular Clothing Eyewear and Earwear Other
16Global Technology M&A Trends and Analysis l Woodside Capital Partners l July 2015
Smart Home Market (US$ Bn) Smart Home Devices within smart cities (Mn)
The smart home technology market is expected to reach US$71.8 Bn in 2017 from US$21.8 Bn in 2012, expanding at a CAGR of 26.9%
Adoption is fueled by an increasing need for connectivity across devices for entertainment, computing, monitoring and control, and health
The share of smart homes in smart cities is projected to increase to 39.9% in 2017 from 26.6% in 2015, fueled by investments in energy management,automation, and security
Smart Homes: Rapid growth driven by need for connectivity across devices and energymanagement, automation and security
Source: Deloitte University Press; Gartner
13.7
41.38.1
30.5
21.8
71.8
2012 2017E
Smarthome hardware Smarthome installation services and fees
CAGR: 26.9%
97.8 126.4 159.5206.2
354.6648.1294.2
586.1
1,067.0
237.2
298.9
371.0
252
304.9
371.1
19.9
33.4
57.3
2015E 2016E 2017E
Public Services Smart Comm. Buildings Smart Homes Transport Utilities Others
17Global Technology M&A Trends and Analysis l Woodside Capital Partners l July 2015
IoT Market: Large, traditional companies acquiring smaller IoT vendors to establishfoothold in rapidly emerging IoT sector
IoT: Key M&A Transactions
Ann. Date Target Acquirer Deal Value (US$ Mn) EV/Revenue Target Description
Jun-15 Altera Intel 15,844.5 8.3x Embedded chip company that specializes in reconfigurable chips
Apr-15 Motorola Sol. Ent.device business Zebra 3,450.0 NA Rugged mobile comp, tablets, and WLAN products for business
Feb-15 Exelis, Inc. Harris Corp. 5,193.2 1.43x Command, control, communication, computers, intelligence, andsurveillance electronics and systems provider
Feb-15 MyFitnessPal &Endomondo Under Armour 560.0 NA Health tracking app
Social sports and fitness network
Feb-15 AlertMe British Gas 67.7 NA Home energy-monitoring software provider
Jan-15 Wit.ai Facebook NA NA Voice recognition technology
Large players, in an attempt to establish their foothold in the IoT-enabled landscape, are expected to increase acquisitions/partnerships with nicheplayers: 2014/15 saw Google buy manufacturers of Internet-enabled technology for homes (Nest acquisition) and wearables (WIMM Labs acquisition)
The need to leverage declines in technology cost and increased use of Internet connectivity to improve consumer relationships, find new revenuesources, and gain differentiated competitive advantage is likely to increase M&A activity in the IoT sector
The threat of competition from established technology companies that also have presence in the IoT space is likely to drive acquisitions by biggerbrands (Under Armour acquisition of MyFitnessPal)
Connected cars and industrial IoT solutions are anticipated to drive growth in M&A activity as the need for smart mobility solutions and industrialdemand intensify
Source: Capital-IQ; WCP Analysis
IoT: M&A Outlook
18Global Technology M&A Trends and Analysis l Woodside Capital Partners l July 2015
Global E-commerce Sales* (US$ Bn) Global M-commerce Sales* (US$ Bn)
Global e-commerce sales are expected to expand to US$1.3 Tn in 2018 from US$545 Bn in 2012, with Asia-Pacific and North America leading the market
Global m-commerce sales are projected to increase at a CAGR of 47.4% over 2012-2018, driven by growth in the adoption of mobile devices such assmartphones and tablets
Global E-commerce and M-commerce: Growth led led by rapid smartphone/Internetadoption combined with improved ability to transact via mobile devices
Source: eMarketer; Euromonitor; Goldman Sachs; Ex-travel
61.0
133.0
204.0
298.0
415.0
516.0
626.0
2012 2013 2014E 2015E 2016E 2017E 2018E
545.0638.0
752.0
882.0
1,024.0
1,179.0
1,346.0
2012 2013 2014E 2015E 2016E 2017E 2018E
CAGR: 16.3% CAGR: 47.4%
19Global Technology M&A Trends and Analysis l Woodside Capital Partners l July 2015
US E-commerce Sales (US$ Bn) US M-commerce Sales (US$ Bn)
US is currently the largest retail e-commerce market, with US$304.1E Bn in global e-commerce sales in 2014
US retail m-commerce sales are forecast to rise to US$132.7 Bn in 2018 at a CAGR of 32.3% over 2012–18, driven by sales through tablets
According to Forrester, US consumer adoption of smartphones and tablets is likely to rise to 244 mn and 150 mn users, respectively, in 2017
US E-Commerce and M-Commerce: M-Commerce to steadily increase overall share ofE-Commerce
Source: eMarketer
225.3
263.3
304.1
347.3
392.5
440.4
491.5
5.2%5.8%
6.4%7.0%
7.6%8.2%
8.9%
2012 2013 2014E 2015E 2016E 2017E 2018E
Retail E-commerce Sales % of Retail Sales
24.8
42.1
57.8
76.4
98.1
114.5
132.7
0.6%
0.9%
1.2%
1.5%
1.9%
2.1%
2.4%
2012 2013 2014E 2015E 2016E 2017E 2018E
Retail M-commerce Sales % of Retail Sales
20Global Technology M&A Trends and Analysis l Woodside Capital Partners l July 2015
E-Commerce M&A Drivers: Consolidation, omni-channel capabilities and need to buildsupply chain
E-commerce/M-commerce: Key M&A Transactions
Ann. Date Target Acquirer Deal Value (US$ Mn) EV/Revenue Target Description
Jun-15 LightInTheBoxHolding
ZhejiangAokang Shoes 83.5 0.67x Online retail company
May-15 Menulog Group JUST EAT 687.3 33.0x Online takeaway food and home-delivery platform
May-15 Hualian ElectricCommerce
China StrategicHoldings 258.1 NA Online shopping platform
May-15 Geeknet GameStop 133.8 0.71x Online retailer for the global geek community
Apr-15 Freecharge Snapdeal 400.0 NA Online mobile recharge provider
Feb-15 Orbitz Worldwide Expedia 1,880.1 1.82x Online travel company
Consolidation in the sector, with bigger companies acquiring smaller, niche ones, is projected to drive M&A as players seek to expand geographicreach and product line
Growth in the concept of the omni-channel brand is likely to drive online retailers to acquire companies with physical real estate to provideinspection/trial of their products and engage with consumers. For instance, in 2014, Alibaba invested US$692 Mn in a Chinese department storeoperator to provide a storefront to its online operations and boost consumer experience
Brick-and-mortar retailers may look to acquire e-commerce retailers to build their digital footprint and/or enter new markets
To capitalize on mobile commerce, firms are likely to increase vertical and horizontal integration to expand mobile capabilities, thereby driving M&A insegments such as payments
Source: Capital-IQ; WCP Analysis
E-commerce/M-commerce: M&A Outlook
21Global Technology M&A Trends and Analysis l Woodside Capital Partners l July 2015
Global Semiconductor Market by Segment (US$ Bn) Global Semiconductor Market by Region (US$ Bn)
The global semiconductor market is forecasted to expand at a CAGR of 4.9% to US$369.6.0 Bn during 2012–17 led by the integrated circuits segment,which accounts for more than 80% of total semiconductor sales
Asia-Pacific, the largest market, accounts for over 55% of the total semiconductor sales, and is projected to expand most rapidly at a CAGR of 6.6% over2012–17
Global Semiconductors: Growth led by integrated circuits segment and Asia-Pacificregion
Source: World Semiconductor Trade Statistics
163.0 174.4194.2 207.7 216.4 224.6
54.461.5
69.371.9 73.3 74.6
33.234.9
37.536.1
37.0 37.8
41.134.8
34.831.5
32.132.6
2012 2013 2014 2015E 2016E 2017E
Asia Pacific Americas Europe Japan
238.2 251.8277.3 285.8 295.3 303.9
26.227.6
29.9 32.433.5 34.7
19.118.2
20.220.4
21.021.6
8.08.0
8.58.7
9.19.5
2012 2013 2014E 2015E 2016E 2017E
Integrated Circuits Optoelectronics Discrete Semiconductors Sensors
291.6
335.8
305.6
369.6347.2
358.9
22Global Technology M&A Trends and Analysis l Woodside Capital Partners l July 2015
Semiconductor M&A Drivers: Shift from PCs to mobiles, new technologies expected toimprove connectivity and functionality
Semiconductor: Key M&A Transactions
Ann. Date Target Acquirer Deal Value (US$ Mn) EV/Revenue Target Description
Jun-15 Altera Corp. Intel 18,220.5 8.31x A semiconductor company, which manufactures programmablelogic devices and reconfigurable complex digital circuits
May-15 Broadcom Corp. Avago Tech. 36,697.9 3.97x The company offers semiconductor solutions for wired andwireless communications
May-15 NXPSemiconductors Investor Group 1,800.0 - Divestiture of RF Power business
Apr-15 OmniVisionTechnologies Investor Group 1,897.8 1.00x The company designs, develops, manufactures, and markets
semiconductor image-sensor devices
Mar-15 FreescaleSemiconductor
NXPSemiconductor 17,297.2 3.58x The company manufactures embedded processors
Mar-15 Philips LumiLeds Investor Group 2,900.0 1.80x The company develops, manufactures, and markets LEDs,modules, products, and systems for lighting applications
The continued shift from PCs to mobile is likely to increase M&A activity among PC-focused chip manufacturers, as they look to acquire companiesto boost their mobile capabilities
New technologies, such as Internet-of-Things, wearables, and smart home, may create opportunities for the semiconductor sector; embedding‘smart’ capabilities into devices would require semiconductor companies to acquire innovative companies to optimize R&D investments
Demand for products offering enhanced functionality, high processing speed, and reduced power consumption, is likely to increase M&A activity(Sumitomo Chemical’s bid to acquire the compound semiconductor materials business of Hitachi Cable)
Chinese companies and investment groups becoming more active as potential buyers
Source: Capital-IQ; WCP Analysis
Semiconductor: M&A Outlook
23Global Technology M&A Trends and Analysis l Woodside Capital Partners l July 2015
HR Technology: Social sourcing in recruitment and demand for analytics expected todrive M&A activity
HR Technology: Key M&A Transactions
The cloud-based human capital management (HCM) applications market is projected to expand to US$8.4 Bn by 2018 from US$5 Bn in 2013 at aCAGR of 10.9%
Big data and the growing contingent workforce are increasing demand for HR Technology
Real-time workforce visibility and flexibility allow for organizations to respond to changing market conditions
Cloud technology is creating massive economies of scale, while reducing IT resource involvement
Adoption of social sourcing in recruitment, mobile applicant tracking, and Big Data analytics is forecasted to result in the acquisition of niche techplayers
Source: Entrepreneur; Capital-IQ; WCP Analysis
HR Technology: M&A Outlook
Ann. Date Target Acquirer Deal Value (US$ Mn) EV/Rev Target Description
May-15 SuperiorHR Zuman NA NA Offers human resource (HR) outsourcing and consultingservices
Nov-14 bswift Aetna 400.0 NA Benefits administration technology & services to employers
Oct-14 Allocate Software HgCapital 145.3 2.3x Workforce optimization & assurance s/w & services
Oct-14 Evolv CornerstoneOnDemand 42.5 14.2x Provides workforce optimization solutions through big data
Sep-14 Concur SAP 8,300.0 11.5x Cloud-based travel and expense management
Apr-14 Distill Gild NA NA Provides platform enabling companies to find, engage, andhire talent with data and intelligence
24Global Technology M&A Trends and Analysis l Woodside Capital Partners l July 2015
Storage Market: Software-defined storage and infrastructure convergence for personaland enterprise data storage expected to drive M&A activity
Storage: Key M&A Transactions
The high cost and vulnerability of physical servers and storage devices are driving enterprises to adopt cloud storage as it offers the option of low-cost scalability with easy access and management of data
Data protection and other add-on storage capabilities will become more directly linked to storage solutions
Storage will move beyond serving database-friendly LUNs to providing more application-centric storage features
Private cloud storage, particularly Tier-2 storage, is expected to be rolled out in larger deployments in 2015 by both the government sector andlarger enterprises
The need for advanced SSDs, flash arrays, software-defined-storage, and infrastructure convergence for personal and enterprise data storage isanticipated to drive M&A activity
Source: Appsruntheworld; TechTarget; Capital-IQ; WCP Analysis
Storage: M&A Outlook
Ann. Date Target Acquirer Deal Value (USD Mn) EV/Rev. Target Description
Apr-15 IBM Storage Lenovo 3,400.0 NA Entire storage portfolio of IBM
Mar-15 Spansion Cypress 5,000.0 NA Supplier of flash memory and microcontrollers
Mar-15 Amplidata WD/HGST NA NA Object-based software defined storage solution
Jan-15 CloudOn Dropbox 100.0 NA Mobile document creator and editor
Jul-14 InMage Systems. MicrosoftCorporation NA NA provides backup, disaster recovery, and cloud platform
software for enterprises
Apr-14 InkTank Red Hat 175.0 NA Open source object storage provider
25Global Technology M&A Trends and Analysis l Woodside Capital Partners l July 2015
Industry Landscape of Technology Sub-sectors
Internet of Things Semiconductor Digital and Video Advertising
Cyber Security HR Technology & Storage E-commerce / M-commerce
26Global Technology M&A Trends and Analysis l Woodside Capital Partners l July 2015
CONTENTS
Technology Trends 9
Software Industry M&A Overview 27
Stock Market Performance 61
Executive Summary 5
Hardware Industry M&A Overview 44
27Global Technology M&A Trends and Analysis l Woodside Capital Partners l July 2015
Global and US Software M&A Activity: Robust deal activity expected to continuethrough 2015 with deal value surging in the first two months of Q2 2015
Global & US: Deal Volume and Value
6.2 6.03.5 4.7 3.2 4.7 6.4 6.8
10.66.2 4.2 4.2
7.4 7.3
6.39.7
9.8 9.4
3.1
23.5 11.6 10.7
29.4
13.7 26.9
7.3
8.8 15.0
569 590 597553
512 512558 567 541
651
554508 496
385
286 275 297 302266 256 276 268
281 323 296
243 251191
12'Q1 12'Q2 12'Q3 12'Q4 13'Q1 13'Q2 13'Q3 13'Q4 14'Q1 14'Q2 14'Q3 14'Q4 15'Q1 15'Q2*
Deal Value (USD Bn) - Global (Ex. US) Deal Value (USD Bn) - US Deal Volume - Global Deal Volume - US
Global deal volume in the software industry decreased 2.4% QoQ and 8.3% YoY to US$496B in Q1 2015, while aggregate deal value increased 40.9% QoQ toUS$16.1 Bn in 2015’Q1 led by acquisition of Advent Software (US$2.6 Bn) by SS&C Technologies and Fundtech by DH Corporation (US41.3 Bn). However, dealvalue in 2015’Q1 declined 59.7% YoY as 2014’Q1 witnessed one of the largest deals (Facebook’s acquisition of WhatsApp valued at US$19.7 Bn)
US deal volume rose 3.3% QoQ but declined 10.7% YoY to 251 in Q1 2015. Aggregate deal value surged 19.3% QoQ but decreased 70.2% YoY to US$8.8 Bn inQ1 2015. Deal value in US for the first two months of Q2 2015 stood higher than Q1 2015 at US$15.0 Bn led by two large deals (AOL and Informatica Corp.)
Source: Capital-IQ; *Till June 8, 2015; Note: Deals that are announced, closed or effective; Deal value includes transactions with disclosed values only
28Global Technology M&A Trends and Analysis l Woodside Capital Partners l July 2015
Global: Deal Volume by Ticket Size
136 142 144121
109 117137 130
112137
99 10480 71
2834 28
2224
21
27 46
32
41
37 32
33
17
4
7 6
9
311
106
13
11
13 7
7
7
12'Q1 12'Q2 12'Q3 12'Q4 13'Q1 13'Q2 13'Q3 13'Q4 14'Q1 14'Q2 14'Q3 14'Q4 15'Q1 15'Q2*
Deals (<USD50 Mn) Deals (USD50-500 Mn) Deals (>USD500 Mn)
Global: Deal Value by Ticket Size (US$ Bn)
Deals below US$50 Mn dominate the M&A deal volume, with 80 transactions valued at US$1.2 Bn in Q1 2015. Average deal value stood at US$14.6 Mn in Q12015 compared to US$12.5 Mn in 2014’Q4 and US$12.0 Mn in Q1 2014
Mid Market witnessed 33 transactions valued at US$6.2 Bn in Q1 2015. Average deal value stood at US$188.3 Mn vs. US$142.7 Mn in Q4 2014 and US$150.3Mn in Q1 2014.
Deal value for large deals (>US$500 Mn) totaled US$8.7 Bn from 7 transactions, with an average deal value of US$1.2 Bn in Q1 2015
Global M&A Software Trends: Average transaction size increasing; Mid market dealsrise in Q1 2015; Mega deals drive transaction value in the first two months of Q2 2015
1.7 1.9 1.5 1.7 1.3 1.2 1.6 1.7 1.3 1.9 1.3 1.3 1.2 1.1
4.7 5.44.1 3.3 2.9 3.9 4.6
8.04.8
6.1 7.14.6 6.2
4.2
6.08.5
7.7 9.1
2.2
23.1
11.87.8
33.9
11.9
22.7
5.7
8.717.0
12'Q1 12'Q2 12'Q3 12'Q4 13'Q1 13'Q2 13'Q3 13'Q4 14'Q1 14'Q2 14'Q3 14'Q4 15'Q1 15'Q2*
Deals (<USD50 Mn) Deals (USD50-500 Mn) Deals (>USD500 Mn)
Source: Capital-IQ; *Through June 8, 2015; Note: Deal value includes transactions with disclosed values only
29Global Technology M&A Trends and Analysis l Woodside Capital Partners l July 2015
Global Mid-Market Software M&A: Deal volume and value surge in Q1 2015
Global & US: Mid Market Deal (US$50-500 Mn) Volume and Value
Global mid-market deal volume rose marginally to 33 as compared to 32 in Q1 2014 and Q4 2014. Deal value surged 36.0% QoQ and 29.1% YoY to US$6.2Bn in Q1 2015. Major deals in Q1 2015 included the acquisition of MyFitnessPal by Under Armour and KCG Hotspot by BATS Global Markets
US mid-market deals stood at 13 in Q1 2015 vis-à-vis 16 in Q4 2014 and 18 in Q4 2014. Aggregated deal value was US$2.7 Bn, an increase of 14.3% QoQand at similar levels compared to Q1 2014
1.0
2.82.0
0.9 1.32.2 2.4
3.7
2.1
3.4
2.3 2.2
3.6
1.9
3.7
2.6
2.2
2.3 1.6
1.72.2
4.4
2.7
2.7 4.8
2.3
2.7
2.2
2834
2822 24 21
27
46
32
4137
32 33
171915 14 14 13 10 9
2418 18
2216 13
8
12'Q1 12'Q2 12'Q3 12'Q4 13'Q1 13'Q2 13'Q3 13'Q4 14'Q1 14'Q2 14'Q3 14'Q4 15'Q1 15'Q2*
Deal Value (USD Bn) - Global (Ex. US) Deal Value (USD Bn) - US Deal Volume - Global Deal Volume - US
Source: Capital-IQ; *Through June 8, 2015; Note: Deal value includes transactions with disclosed values only
30Global Technology M&A Trends and Analysis l Woodside Capital Partners l July 2015
US: Deal Volume by Transaction Size US: Deal Value by Transaction Size (US$ Bn)
In Q1 2015, there were 30 transactions below US$50 Mn representing a total value of US$500 Mn. Average deal value rose to US$15.7 Mn in Q1 2015 fromUS$14.2 Mn in Q4 2014 and US$13.6 Mn in Q1 2014
Mid-Market had 13 transactions valued at US$2.7 Bn in Q1 2015. Average deal value was US$204.3 Mn vs. US$145.2 Mn in Q4 2014 and US$204.3 Mn in Q12014.
Deal value for large deals (>US$500 Mn) totaled US$5.6 Bn from 4 transactions, with an average deal value of US$1.4 Bn in Q1 2015
US Software M&A: Average transaction size increases in Q1 2015; Mega deals drivegrowth in Q2 2015
0.7 0.8 0.6 0.8 0.5 0.4 0.6 0.6 0.7 0.9 0.5 0.5 0.5 0.4
3.7 2.6 2.2 2.3 1.6 1.7 2.24.4
2.7 2.7 4.82.3 2.7 2.2
1.96.3 7.0 6.3
1.0
21.3
8.7 5.8
26.1
10.0
21.5
4.55.6
12.4
12'Q1 12'Q2 12'Q3 12'Q4 13'Q1 13'Q2 13'Q3 13'Q4 14'Q1 14'Q2 14'Q3 14'Q4 15'Q1 15'Q2*
Deals (<USD50 Mn) Deals ($50-USD500 Mn) Deals (>USD500 Mn)
4652 51 48
42 43
58
46 4859
39 3730
22
1915 14
14
13 10
924 18
18
2216
13
8
15 5
5
1 8
7 58
9
12
5
4
5
12'Q1 12'Q2 12'Q3 12'Q4 13'Q1 13'Q2 13'Q3 13'Q4 14'Q1 14'Q2 14'Q3 14'Q4 15'Q1 15'Q2*
Deals (<USD50 Mn) Deals (USD50-500 Mn) Deals (>USD500 Mn)
Source: Capital-IQ; *Through June 8, 2015; Note: Deal value includes transactions with disclosed values only
31Global Technology M&A Trends and Analysis l Woodside Capital Partners l July 2015
Global Software M&A Activity by Quarter
Global: Average Deal Size
12'Q1, $74.2 Mn
12'Q2, $86.1 Mn
12'Q3, $74.9 Mn
12'Q4, $92.4 Mn
13'Q1, $46.5 Mn
13'Q2, $189.4 Mn
13'Q3, $103.0 Mn
13'Q4, $96.4 Mn
14'Q1, $255.1 Mn
14'Q2, $105.5 Mn
14'Q3, $208.3 Mn
14'Q4, $80.9 Mn
15'Q1, $134.4 Mn
15'Q2*, $234.6 Mn
$0Mn
$50Mn
$100Mn
$150Mn
$200Mn
$250Mn
$300Mn
20 25 30 35 40 45 50 55 60
Aver
age
Dea
l Siz
e (U
S$ M
n)
Deal Volume (>USD50 Mn)
Bubble size indicates total deal value for disclosed deals >$50 Mn)
Source: Capital-IQ; * Through June 8, 2015; Note: Deal value includes transactions with disclosed values only
Green indicates year 2012, Blue 2013, Orange 2014 and Yellow 2015Data Label: Quarter, Average Deal Size
32Global Technology M&A Trends and Analysis l Woodside Capital Partners l July 2015
Global: Deal Volume by Sector
21 16 16 17 29 21 29 27 25 30 13 15 12 8
313 350 339 313 281 291322 336 322
386
329 318 314259
4240 37
38 46 3638 40 40
43
52 38 32
25
141148 161
139123 117
126 131108
146
122107 108
69
3927 33
3221 28
33 2627
27
2616 19
14
139 11
1412 19
10 719
19
12
14 11
10
12'Q1 12'Q2 12'Q3 12'Q4 13'Q1 13'Q2 13'Q3 13'Q4 14'Q1 14'Q2 14'Q3 14'Q4 15'Q1 15'Q2*Internet Software Online Services IT ServicesApplication Software Systems Software Multiple Sectors
Global: Deal Value by Top 2 Sub-Sectors (US$ Bn)
Online services dominate the global M&A activity, accounting for over 60% of the transactions in Q1 2015. Number of transactions totaled 314 in Q1 2015 vs.318 in Q4 2014 and 322 in Q 2014. Application software, the second largest sector in terms of M&A activity, had 108 transactions in Q1 2015, similar to 107transactions in Q4 2014 and 108 deals in Q1 2014
In terms of deal value, online services and application software have consistently remained the top two sectors. Deal value totaled US$6.9 Bn for onlineservices and US$6.0 Bn for application software in Q1 2015
Global M&A Activity by Software Sector
3.1
9.0
2.9 4.1 2.3
10.3 9.9 12.0
29.2
12.815.5
6.2 6.9
15.18.1
5.6
6.6 5.3
1.8
3.63.3
5.4
4.5
11.5
4.06.0
6.4
9.91.3
1.1 3.8 4.7
2.3
8.1
4.4 2.2
5.4
2.7
4.0
1.4
3.2
0.8
12'Q1 12'Q2 12'Q3 12'Q4 13'Q1 13'Q2 13'Q3 13'Q4 14'Q1 14'Q2 14'Q3 14'Q4 15'Q1 15'Q2*
Online Services Application Software Systems Software Others
Source: Capital-IQ; *Through June 8, 2015; Note: Deal value includes transactions with disclosed values only
33Global Technology M&A Trends and Analysis l Woodside Capital Partners l July 2015
US: Deal Volume by Sector US: Deal Value by Top 2 Sub-Sectors (US$ Bn)
Online services represented over 60% of the transactions in Q1 2015 in US. Number of transactions totaled 158 in Q1 2015 vs 160 in Q4 2014 and 187 in Q12014. Application software, the second most active sector, had 61 transactions in Q1 2015 compared to 47 transactions in Q4 2014 and 51 deals in Q1 2014
Online services and application software are the dominant sectors in software industry. Deal value for transactions with disclosed value totaled US$5.1 Bn forapplication software and US$3.0 Bn for online services in Q1 2015
US M&A Activity by Software Sub-Sector
12 8 7 9 18 7 16 14 10 11 3 8 7 2
170 165 176 176 147 158163 166 187 199 204
160 158136
1816
17 2423 14
20 1912
18 22
17 13
12
62 6774 73
5954
55 5151
7050
47 61
33
16 1616 16
1212
17 1513
1612
5 7
6
8 37 4
711
5 3 8
9
5
65
2
12'Q1 12'Q2 12'Q3 12'Q4 13'Q1 13'Q2 13'Q3 13'Q4 14'Q1 14'Q2 14'Q3 14'Q4 15'Q1 15'Q2*
Internet Software Online Services IT ServicesApplication Software Systems Software Multiple Sectors
2.31.25.2
2.6 1.1
7.64.9
7.4
22.5
8.6
14.1
4.5 3.0
9.14.4
4.1
5.53.2
1.2
3.01.9
4.7
3.4
10.5
2.0 5.1
5.49.4
0.7
0.4 1.93.6
0.9
6.5
3.6 1.5
2.2
1.6
2.3
0.90.7
0.6
12'Q1 12'Q2 12'Q3 12'Q4 13'Q1 13'Q2 13'Q3 13'Q4 14'Q1 14'Q2 14'Q3 14'Q4 15'Q1 15'Q2
Internet Software Online Services Application Software Systems Software Others
Source: Capital-IQ; *Till June 8, 2015; Note: Deal value includes transactions with disclosed transaction values only
34Global Technology M&A Trends and Analysis l Woodside Capital Partners l July 2015
Global: Deal Volume by Buyer Type Global: Deal Value by Buyer Type (US$ Bn)
Strategic buyers accounted for over 95% of the transactions, and 459 inQ1 2015 compared to 468 in Q4 2014 and 497 in Q1 2014
Financial buyers led only 22 M&A transactions in Q1 2015’Q1 vs. 23 in Q42014 and 29 in Q1 2014
Deal value for transactions led by strategic buyers rose to US$14.7 Bn inQ1 2015 from US$8.7 Bn in Q4 2014 but declined compared to US$31.6Bn in Q1 2014
Financial buyers accounted for US$1.3 Bn in Q1 2015 vs. US$2.4 Bn inQ4 2014 and US$8.4 Bn in Q1 2014
Strategic Buyers Dominating Global Software M&A Activity
521 540 534 500462 474 497 516 497
599
497 468 459
357
2835 25
3427 25
33 2629
34
4023 22
16
1 11 2 1
3
11 2
1
12'Q1 12'Q2 12'Q3 12'Q4 13'Q1 13'Q2 13'Q3 13'Q4 14'Q1 14'Q2 14'Q3 14'Q4 15'Q1 15'Q2*
Strategic Buyer Financial Buyer Both
8.811.2 11.6 11.7
5.1
17.712.1
14.7
31.6
13.7
22.8
8.7
14.712.2
3.73.5 1.6 2.2
1.2
10.6
5.8 2.3
8.4
6.2
8.2
2.4
1.39.91.1
0.1
0.4
0.5
0.1
0.2
12'Q1 12'Q2 12'Q3 12'Q4 13'Q1 13'Q2 13'Q3 13'Q4 14'Q1 14'Q2 14'Q3 14'Q4 15'Q1 15'Q2*
Strategic Buyer Financial Buyer Both
Source: Capital-IQ; Note: 261 transactions did not disclose buyer details; Deal value refers to deals with disclosed transaction value
35Global Technology M&A Trends and Analysis l Woodside Capital Partners l July 2015
US: Deal Volume by Buyer Type US: Deal Value by Buyer Type (US$ Bn)
Strategic Buyers Dominating US Software M&A Activity
273 256 269 281247 240 251 250 263
296263
223 236
178
915
1117
12 1317 12
12
20
28
1110
8
1 1
3
12'Q1 12'Q2 12'Q3 12'Q4 13'Q1 13'Q2 13'Q3 13'Q4 14'Q1 14'Q2 14'Q3 14'Q4 15'Q1 15'Q2*
Strategic Buyer Financial Buyer Both
5.97.9 8.6 7.2
3.1
13.7
7.310.7
28.4
8.0
18.7
5.08.2 9.70.3
1.8 1.1 2.2
0.1
9.8
4.30.1
1.1
5.7
8.2
2.3
0.6
5.40.1
12'Q1 12'Q2 12'Q3 12'Q4 13'Q1 13'Q2 13'Q3 13'Q4 14'Q1 14'Q2 14'Q3 14'Q4 15'Q1 15'Q2*
Strategic Buyer Financial Buyer Both
Source: Capital-IQ; Note: 85 deals did not disclose buyer details; Deal Volume includes all transactions for which buyer details are disclosed; Deal value refers to deals with disclosed transaction value
Strategic buyers also represented over 95% of the transactions, and wereinvolved in 236 transactions in Q1 2015 compared to 223 in Q4 2014 and263 in Q1 2014
Financial buyers led 10 M&A transactions in Q1 2015 vs. 11 in Q4 2014and 12 in Q1 2014
Deal value for transactions led by strategic buyers increased to US$8.2Bn in Q1 2015 from US$5.0 Bn in Q4 2014 but declined compared toUS$31.6 Bn in Q1 2014
Deal value for transactions led by financial buyers was US$600 Mn in Q12015 vs US$D2.3 Bn in Q4 2014 and US$1.1 Bn in Q1 2014
36Global Technology M&A Trends and Analysis l Woodside Capital Partners l July 2015
Global: Deal Volume by Region Global: Deal Value by Region (US$ Bn)
US and Canada Accounts for Nearly Half of Total M&A activity in Software Industry,Followed by Europe
316 309 328 322 292 285 296 291 300347 317
274 270203
177 186184
156145 153 162 177 170
190
150
145 136
104
55 69 6257
53 5571 74 45
74
62
64 64
58
13 12 1410
13 815 16
12
25
12
7 12
9
8 14 98
9 1114 9
14
15
13
18 14
11
12'Q1 12'Q2 12'Q3 12'Q4 13'Q1 13'Q2 13'Q3 13'Q4 14'Q1 14'Q2 14'Q3 14'Q4 15'Q1 15'Q2*
United States and Canada Europe Asia / PacificLatin America and Caribbean Africa / Middle East
6.311.1 10.2 10.0
3.2
24.8
11.9 11.0
29.4
13.8
27.0
7.4 8.9
15.03.2
3.22.3 2.4
1.6
2.0
2.8 4.5
8.9
4.7
2.6
2.54.6
4.9
2.8
0.90.7 0.8
1.4
1.2
3.0 1.8
1.2
1.0
1.3
1.3
2.3
1.6
0.10.4
0.1
0.1
0.1
0.20.1
0.10.1 0.8
0.1
0.1
0.2 0.2
0.4
0.3
0.3
0.4
0.4
0.6
12'Q1 12'Q2 12'Q3 12'Q4 13'Q1 13'Q2 13'Q3 13'Q4 14'Q1 14'Q2 14'Q3 14'Q4 15'Q1 15'Q2*
United States and Canada Europe Asia / PacificLatin America and Caribbean Africa / Middle East
US and Canada led the M&A activity in software industry, accounting forover 54% of the total global deals in Q1 2015. Number of deals in USstood at 270 in Q1 2015 compared to 274 in Q4 2014 and 300 in Q1 2014
Europe is the second most active market, with 136 transactions in Q12015
In total deal value for the software industry, US and Canada accounted foraround 55%, with US$8.9 Bn in Q1 2015 vs US$7.4 Bn in Q4 2014 andUS$29.4 Bn in Q1 2014
Europe remained the second largest market with transactions worthUS$4.6 Bn in Q1 2015
Source: Capital-IQ; *Through June 8, 2015; Note: Deal value includes transactions with disclosed transaction values only
37Global Technology M&A Trends and Analysis l Woodside Capital Partners l July 2015
Global: Average EV/ Revenue Multiple and TTM Revenue
2.5x
3.2x
2.4x2.6x
2.3x
3.7x
2.6x
3.3x
2.8x
3.5x
4.0x
3.5x 3.4x3.0x
45.3 33.155.7 53.1
22.3
286.9
57.540.5
69.147.3
88.1
50.0 41.3
116.2
12'Q1 12'Q2 12'Q3 12'Q4 13'Q1 13'Q2 13'Q3 13'Q4 14'Q1 14'Q2 14'Q3 14'Q4 15'Q1 15'Q2*
EV/ Revenue Multiple Average TTM Revenue (USD Mn)
US: Average EV / Revenue Multiple and TTM Revenue
3.2x
2.4x
4.1x
3.2x 3.1x
4.3x
3.7x
5.4x
3.9x
4.5x
5.0x
4.5x 4.6x
2.7x
41.1 73.4115.6 115.4
40.9
258.2
137.851.5
126.658.5
158.474.1
112.1
361.6
12'Q1 12'Q2 12'Q3 12'Q4 13'Q1 13'Q2 13'Q3 13'Q4 14'Q1 14'Q2 14'Q3 14'Q4 15'Q1 15'Q2*
EV/ Revenue Multiple Average TTM Revenue (USD Mn)
Average EV / Revenue multiple was 3.4x in Q1 2015 compared to 3.5x inQ4 2014 and 2.8x in Q1 2014
Average revenue of the acquired company decreased to US$41.3 Mn inQ1 2015 from US$50.0 Mn in Q4 2014 and US$69.1 Mn in Q1 2014
Average EV / Revenue multiple increased to 4.6x in Q1 2015 from 4.5x inQ4 2014 and 3.9x in Q1 2014
Average revenue of an acquired company rose to US$112.1 Mn in Q12015 from US$74.1 Mn in Q4 2014, but decreased compared toUS$126.6 Mn in Q1 2014
Valuation Trends: Software Revenue Multiples Higher in 2015 vs. 2014 in US andWorldwide
Source: Capital-IQ; *Through June 8, 2015; Note: Deal value includes transactions with disclosed values only
38Global Technology M&A Trends and Analysis l Woodside Capital Partners l July 2015
Global: Average EV / EBITDA Multiple and TTM EBITDA US: Average EV / EBITDA Multiple and TTM EBITDA
Average EV / EBITDA multiple rose to 16.7x in Q1 2015 from 15.9x in Q42014 and 11.0x in Q1 2014
Average EBITDA of the acquired company was US$16.3 Mn in Q1 2015vs. US$8.4 Mn in Q4 2014 and US$17.1 Mn in Q1 2014
Average EV/ EBITDA multiple increased to 25.5x in Q1 2015 from 17.3xin Q4 2014 and 10.9x in Q1 2014
Average EBITDA of the acquired company surged to US$29.5 Mn in Q12015 from US$9.5 Mn in Q4 2014 and US$13.3 Mn in Q1 2014
Valuation Trends: Software EBITDA Multiples Higher in 2015 vs. 2014 in US andWorldwide
17.9x
14.4x 13.8x12.4x 11.7x 11.8x
17.7x
15.1x
11.0x
26.4x
15.7x 15.9x16.7x 16.0x
8.4 13.2 13.5 22.24.1
48.6
10.1 12.0 17.1 16.2 24.98.4 16.3
38.3
12'Q1 12'Q2 12'Q3 12'Q4 13'Q1 13'Q2 13'Q3 13'Q4 14'Q1 14'Q2 14'Q3 14'Q4 15'Q1 15'Q2*
EV/ EBITDA Multiple Average TTM EBITDA (USD Mn)
24.5x
7.3x
19.4x
16.2x
13.5x 13.2x
27.5x
20.9x
10.9x
34.8x
15.3x17.3x
25.5x
20.6x
4.2 26.2 23.6 39.7 4.792.2
15.3 7.1 13.3 12.3 35.3 9.5 29.570.4
12'Q1 12'Q2 12'Q3 12'Q4 13'Q1 13'Q2 13'Q3 13'Q4 14'Q1 14'Q2 14'Q3 14'Q4 15'Q1 15'Q2*
EV/ EBITDA Multiple Average TTM EBITDA (USD Mn)
Source: Capital-IQ; *Through June 8, 2015; Note: Deal value includes transactions with disclosed values only
39Global Technology M&A Trends and Analysis l Woodside Capital Partners l July 2015
Cross-Border Software M&A: Nearly one-fourth of global transactions; 3-year high invalue in Q2 2015
Global: Cross-Border M&A
Cross-border M&A activity remained buoyant in 2014, registering 618 deals compared to 506 deals in 2013. Deal value for disclosed deals totaled US$24.1 Bn in2014 vs. US$15.3 Bn in 2013
Cross-border M&A deal volume stood at 121 in Q1 2015 compared to 155 in Q4 2014 and 143 in Q1 2014. Deal value for disclosed deals totaled US$5.1 Bn in2015’Q1 vs US$3.5 Bn in Q4 2014 and US$7.6 Bn in Q1 2014
Source: Capital-IQ; *Through June 8, 2015; Note: Deal value includes transactions with disclosed values only
4.96.1
2.74.0
2.23.5 3.9
5.7
7.6
4.4
8.7
3.55.1
11.7
128
164
152
113 114125
142
125
143
171
149155
121112
12'Q1 12'Q2 12'Q3 12'Q4 13'Q1 13'Q2 13'Q3 13'Q4 14'Q1 14'Q2 14'Q3 14'Q4 15'Q1 15'Q2*
Cross-Border M&A Deal Value (USD Bn) Cross-Border M&A Deal Volume
40Global Technology M&A Trends and Analysis l Woodside Capital Partners l July 2015
US Cross-Border Software M&A Activity: Generally strong and stable; transaction sizesurged in Q2 2015
US: Inbound and Outbound Deals
US inbound M&A deal volume was 163 in 2014 compared to 125 in 2013. US outbound M&A activity remained robust in 2014, registering 224 deals compared to188 deals in 2013.
US inbound M&A was 28 in Q1 2015 compared to 36 in Q4 2014 and Q1 2014. Deal value for disclosed deals rose to US$2.7 Bn in Q1 2015 from US$0.9 Bn inQ4 2014 and US$1.8 Bn in Q1 2014. Outbound deals totaled 48 in Q1 2015 compared to 59 in Q4 2014 and 49 in Q1 2014. Deal value for disclosed dealstotaled US$ 400 Mn in Q1 2015 vs US$1.6 Bn in Q4 2014 and US$2.2 Bn in Q1 2014.
Source: Capital-IQ; *Through June 8, 2015; Note: Deal value includes transactions with disclosed values only
0.7 0.90.3
1.7
0.21.2
1.9 1.4 1.80.4
6.1
0.9
2.7
5.5
2.63.3
1.5
1.8
0.6
1.41.0
2.9 2.2
2.8
1.1
1.6
0.4
4.730
3742
35 36
25
3529
3641
50
3628
30
58 59 62
3442
4652
48 49
68
48
59
4841
12'Q1 12'Q2 12'Q3 12'Q4 13'Q1 13'Q2 13'Q3 13'Q4 14'Q1 14'Q2 14'Q3 14'Q4 15'Q1 15'Q2*
Inbound Deal Value (USD Bn) Outbound Deal Value (USD Bn) Inbound Deal Volume Outbound Deal Volume
41Global Technology M&A Trends and Analysis l Woodside Capital Partners l July 2015
Notable Transactions in Software Industry
2012
2013
2014
2015YTD
Internet Software Online Services IT Services Application Software Systems Software
(USD2.4 Bn; NA)
(USD125.0 Mn; NA)
(USD324.0 Mn; NA)
(USD155.0 Mn; NA)
(USD205.7 Mn; 2.0x)
(USD200.0 Mn; NA)
(USD62.1 Mn; NA)
(USD28.0 Mn; 2.7x)
(USD1.6 Bn; 3.4x)
(USD1.2 Bn; NA)
(USD2.6 Bn; 8.0x)
(USD2.0 Bn; NA)
(USD19.7 Bn; NA)
(USD3.3 Bn; 14.8x)
(USD4.8 Bn; 1.7x)
(USD4.1 Bn; 7.6x)
(USD0.9 Bn; 1.5x)
(USD0.8 Bn; 5.4x)
(USD4.1 Bn; 2.1x)
(USD0.6 Bn; NA)
(USD1.1 Bn; 2.7x)
(USD1.0 Bn; NA)
(USD1.8 Bn; 1.7x)
(USD0.4 Bn; 5.7x)
(USD2.7 Bn; 2.7x)
(USD2.1 Bn; 3.2x)
(USD1.0 Bn; NA)
(USD1.0 Bn; NA)
(USD4.7 Bn; 3.9x)
(USD2.4 Bn; 2.9x)
(USD5.3 Bn; 4.6x)
(USD2.6 Bn; 6.4x)
Open Solutions LLC
(USD1.0 Bn; 5.0x)
(USD171.5 Mn; 4.5x)
(USD8.4 Bn; 3.1x)
(USD2.4 Bn; 8.9x)
(USD0.8 Bn; 8.1x)
(USD0.4 Bn; NA)
(USD0.5 Bn; NA)
(USD0.2 Bn; NA)
and others
Source: Capital-IQ; Text in brackets (Deal Value, EV / Revenue Multiple)
42Global Technology M&A Trends and Analysis l Woodside Capital Partners l July 2015
Most Active Acquirers in Software Industry Since 2012: Yahoo, Google andTwitter
Most Active Buyers by Number of Deals (Since 2012)
3027
2220 20 20
1816 16 16 15
Yahoo Google Twitter IBM Oracle Trimble Cisco Dropbox Facebook Vista EquityPartners*
Microsoft
Source: Capital-IQ; * Financial Buyer
43Global Technology M&A Trends and Analysis l Woodside Capital Partners l July 2015
CONTENTS
Technology Trends 9
Software Industry M&A Overview 27
Stock Market Performance 61
Executive Summary 5
Hardware Industry M&A Overview 44
44Global Technology M&A Trends and Analysis l Woodside Capital Partners l July 2015
Global Hardware M&A Activity: Strong growth in 2015; Deal value highest in threeyears
Global & US: Deal Volume and Value
15.28.5 9.3 5.4 4.3
11.1 8.2 7.3 4.4 8.1 5.3 9.8 10.6
40.03.94.9 3.0 10.3
31.23.8 11.0 10.3
7.7
16.29.4
10.9
34.7
59.4
295 262 276 261228 229 217
245281 270 255 267 288
209
97 95 93 90 91 85 83 77
119
92 94 90 10671
12'Q1 12'Q2 12'Q3 12'Q4 13'Q1 13'Q2 13'Q3 13'Q4 14'Q1 14'Q2 14'Q3 14'Q4 15'Q1 15'Q2*
Deal Value (USD Bn) - Global (Ex. US) Deal Value (USD Bn) - US Deal Volume - Global Deal Volume - US
The global deal volume increased 7.9% QoQ and 2.5% YoY to 288 in Q1 2015, while the aggregate deal value grew to US$45.3 Bn in Q1 2015 compared toUS$20.7 Bn in Q4 2014 and US$12.1 Bn in Q1 2014. This was led by the acquisition of Freescale Semiconductors (US$17.3 Bn) by NXP Semiconductors
Deal volume in the US rose 17.8% QoQ, but declined 10.9% YoY to 106 in Q1 2015. Aggregate deal value surged 218.5% QoQ and 350.3% YoY to US$34.7 Bnin Q1 2015. Deal value in the US for the first two months Q2 2015 stood higher than that for all of Q1 2015 at US$59.4 Bn, as a result of two mega deals:Broadcom (US$36.7 Bn) by Avago Technologies and Altera (US$18.2 Bn) by Intel
Source: Capital-IQ; *Through June 8, 2015; Note: Deals that are announced, closed or effective; Deal value includes transactions with disclosed values only
45Global Technology M&A Trends and Analysis l Woodside Capital Partners l July 2015
Global: Deal Volume by Ticket Size
83 8297
8368
78 7587 81
72 67 64 69
51
2236
25
28
21
20 21
22 30
2725 29
26
24
7
6 3
8
4
6 5
5 5
12
7 712
11
12'Q1 12'Q2 12'Q3 12'Q4 13'Q1 13'Q2 13'Q3 13'Q4 14'Q1 14'Q2 14'Q3 14'Q4 15'Q1 15'Q2*
Deals (<USD50 Mn) Deals (USD50-500 Mn) Deals (>USD500 Mn)
Global: Deal Value by Ticket Size (US$ Bn)
Deals below US$50 Mn dominated the M&A deal volume, with 69 transactions valued at US$900 Mn in Q1 2015. The average deal value stood at US$13.5 Mnin Q1 2015, vs. US$13.1 Mn in Q4 2014 and US$12.0 Mn in Q1 2014
The mid-market witnessed 26 transactions at USD4.3 Bn in 2015’Q1. The average deal value was USD166.4 Mn in 2015’Q1, compared with USD179.1 Mn in2014’Q4 and USD144.4 Mn in 2014’Q1
The deal value for large deals (>US$500 Mn) totaled US$40.0 Bn from 12 transactions, with an average deal value of US$3.3 Bn in Q1 2015
Global M&A Hardware Trends: Large increase in transaction size in 2015 contrasts withoverall decline in volume since 2012
1.0 0.9 1.2 1.2 0.7 0.8 0.7 0.8 1.0 0.9 0.7 0.8 0.9 0.73.7 6.0 4.3 3.6 2.7 4.0 4.3 4.1 4.3
6.93.8 5.2 4.3 3.3
14.46.5
6.810.9
32.0
10.114.1 12.7
33.9
16.5
10.3
14.7
40.095.4
12'Q1 12'Q2 12'Q3 12'Q4 13'Q1 13'Q2 13'Q3 13'Q4 14'Q1 14'Q2 14'Q3 14'Q4 15'Q1 15'Q2*
Deals (<USD50 Mn) Deals (USD50-500 Mn) Deals (>USD500 Mn)
Source: Capital-IQ; *Through June 8, 2015; Note: Deal value includes transactions with disclosed values only
46Global Technology M&A Trends and Analysis l Woodside Capital Partners l July 2015
Global Hardware M&A Trends: Mid-market deal volume and value generally flat since2012
Global & US: Mid Market Deal (US$50-500 Mn) Volume and Value
The global mid-market deal volume declined to 26 in Q1 2015, compared with 29 in Q4 2014. The deal value declined 16.7% QoQ and 0.1% YoY to US$4.3Bn in Q1 2015. The major deals in Q1 2015 were the acquisition of Annapurna Labs (US$400.0 Mn) by Amazon and Vitesse Semiconductor (US$399.0 Mn) byMicrosemi
US mid-market deals stood at five in Q1 2015 vs nine in Q4 2014 and 13 in Q1 2014. The deal value totaled US$1.1 Bn, decreasing 41.4% QoQ and 33.7%YoY
1.7
3.8
2.5 2.2 1.9 2.1 2.2 1.82.7
3.1
2.0
3.3 3.22.4
2.0
2.2
1.8
1.4
0.8
1.92.2
2.3
1.7
3.8
1.8
1.91.1
0.9
22
36
25 2821 20 21 22
30 2725
29 26 24
12 148 10
6 9 9 10 13 1510 9
5 7
12'Q1 12'Q2 12'Q3 12'Q4 13'Q1 13'Q2 13'Q3 13'Q4 14'Q1 14'Q2 14'Q3 14'Q4 15'Q1 15'Q2*
Deal Value (USD Bn) - Global (Ex. US) Deal Value (USD Bn) - US Deal Volume - Global Deal Volume - US
Source: Capital-IQ; *Through June 8, 2015; Note: Deal value includes transactions with disclosed values only
47Global Technology M&A Trends and Analysis l Woodside Capital Partners l July 2015
US: Deal Volume by Ticket Size US: Deal Value by Ticket Size (US$ Bn)
The number of deals below US$50 Mn was 21, and had a total value of US$400 Mn in Q1 2015. The average deal value rose to US$19.9 Mn in Q1 2015, fromUS$18.1 Mn in Q4 2014 and US$12.6 Mn in Q1 2014
The mid-market had five transactions totaling US$1.1 Bn in Q1 2015. The average deal value rose to US$221.1 Mn vs. US$209.5 Mn in Q4 2014 andUS$128.2 Mn in Q4 2014
The deal value for large deals (>US$500 Mn) totaled US$33.2 Bn from nine transactions, with an average deal value of US$3.7 Bn in Q1 2015
US Hardware M&A Trends: Large increase in transaction size in 2015 contrasts withoverall decline in volume since 2012
0.3 0.3 0.4 0.5 0.2 0.3 0.3 0.2 0.5 0.3 0.1 0.3 0.4 0.22.0 2.2 1.8 1.4 0.8
1.9 2.2 2.3 1.7 3.8 1.8 1.9 1.1 0.91.6 2.4
0.9
8.4
30.2
1.6
8.5 7.75.6
12.1
7.68.7
33.2
58.3
12'Q1 12'Q2 12'Q3 12'Q4 13'Q1 13'Q2 13'Q3 13'Q4 14'Q1 14'Q2 14'Q3 14'Q4 15'Q1 15'Q2*
Deals (<USD50 Mn) Deals ($50-USD500 Mn) Deals (>USD500 Mn)
2225 27 25 23 24 24
21
36
1813
19 21
12
12
14 8 10
69 9
10
13
15
10
9 5
7
2
3
16
2
2 32
3
7
5
3 9
5
12'Q1 12'Q2 12'Q3 12'Q4 13'Q1 13'Q2 13'Q3 13'Q4 14'Q1 14'Q2 14'Q3 14'Q4 15'Q1 15'Q2*
Deals (<USD50 Mn) Deals (USD50-500 Mn) Deals (>USD500 Mn)
Source: Capital-IQ; *Through June 8, 2015; Note: Deal value includes transactions with disclosed values only
48Global Technology M&A Trends and Analysis l Woodside Capital Partners l July 2015
Global Hardware M&A Activity by Quarter
Global: Average Deal Size
Bubble size indicates deal value (for disclosed deals >$50 Mn)
Source: Capital-IQ; * Through June 8, 2015; Note: Deal value includes transactions with disclosed values only
Green indicates year 2012, Blue 2013, Orange 2014 and Yellow 2015Data Label: Quarter, Average Deal Size
12'Q1, $170.4 Mn
12'Q2, $107.9 Mn
12'Q3, $98.3 Mn
12'Q4, $131.5 Mn
13'Q1, $381.7 Mn
13'Q2, $143.4 Mn
13'Q3, $189.6 Mn13'Q4, $154.3 Mn
14'Q1, $104.1 Mn 14'Q2, $218.5 Mn
14'Q3, $149.1 Mn
14'Q4, $207.3 Mn
15'Q1, $423.4 Mn
15'Q2*, $1,155.2 Mn
-$200Mn
$0Mn
$200Mn
$400Mn
$600Mn
$800Mn
$1000Mn
$1200Mn
$1400Mn
23 28 33 38 43
Aver
age
Dea
l Siz
e (U
S$ M
n)
Deal Volume (>USD50 Mn)
49Global Technology M&A Trends and Analysis l Woodside Capital Partners l July 2015
Global: Deal Volume by Sub-Sector
6135
54 38 47 32 36 52 42 37 43 45 49 39
126
134113
116 99
88 90
100144
106111 118 120
92
1318 14
16 16
19 15
13
17
31 15 13 17
9
4033 29 44
2139 35
36
31
43 3842
42
31
55
42 66 47
45 51 41
44
4753
4849
60
38
12'Q1 12'Q2 12'Q3 12'Q4 13'Q1 13'Q2 13'Q3 13'Q4 14'Q1 14'Q2 14'Q3 14'Q4 15'Q1 15'Q2*Technology Distributors Semiconductors & Semiconductor EquipmentTechnology Hardware, Storage & Peripherals Electronic Equipment, Instruments & ComponentsCommunications Equipment
Global: Deal Value by Top 2 Sub-Sectors (US$ Bn)
Electronic equipment, instruments and components dominated global M&A activity, accounting for over 40% transactions in Q1 2015. The number oftransactions totaled 120 in Q1 2015, vs. 118 in Q4 2014 and 144 in Q1 2014. Technology distributors, the second largest sub-sector in terms of M&A activity,had 60 transactions in Q1 2015, compared with 49 in Q4 2014 and 47 in Q1 2014
Communications equipment and semiconductors and semiconductor equipment were the top two sectors based on deal value
Global Hardware M&A Activity by Sub-Sector
13.6
6.92.8
6.2 4.7 6.2
14.428.8
3.2
8.1 8.4
8.4
4.37.1
4.1
29.2
1.6
7.6
3.8 2.78.5
4.1
6.06.9
8.2
23.2
61.8
2.2
2.3
3.7 2.64.9
3.5
3.8
4.64.8
3.3
11.1
3.8
6.3
7.7
8.7
12'Q1 12'Q2 12'Q3 12'Q4 13'Q1 13'Q2 13'Q3 13'Q4 14'Q1 14'Q2 14'Q3 14'Q4 15'Q1 15'Q2*Rest Technology DistributorsSemiconductors & Semiconductor Equipment Technology Hardware, Storage & PeripheralsElectronic Equipment, Instruments & Components Communications Equipment
Source: Capital-IQ; *Through June 8, 2015; Note: Deal value includes transactions with disclosed values only
50Global Technology M&A Trends and Analysis l Woodside Capital Partners l July 2015
US: Deal Volume by Sector US: Deal Value by Top 2 Sub-Sectors (US$ Bn)
Electronic equipment, instruments and components represented more than 41% of the transactions in Q1 2015 in US. Number of transactions totaled 44 in Q12015 vs. 35 in Q4 2014 and 64 in Q1 2014. Communications equipment, the second most active sub-sector, had 24 transactions in Q1 2015 compared to 16transactions in Q4 2014 and 21 deals in Q1 2014
Semiconductors and Semiconductor Equipment was the largest sub-sector in terms of deal value in Q1 2015 with value totaling US$19.3 Bn
Global Hardware M&A Activity by Sub-Sector
2316 21
1322
15 1225 21
919 16
2417
40 5235 45
42
3433
35
64
42
4135
44
28
46
8 35
115
4
4
127
9
8
2
1613
11 156
15
17
6
15
1416
15
14
12
14 818 14 16 10
16 7
15
1511
15
16
12
12'Q1 12'Q2 12'Q3 12'Q4 13'Q1 13'Q2 13'Q3 13'Q4 14'Q1 14'Q2 14'Q3 14'Q4 15'Q1 15'Q2*Technology Distributors Semiconductors & Semiconductor EquipmentTechnology Hardware, Storage & Peripherals Electronic Equipment, Instruments & ComponentsCommunications Equipment
2.44.1
2.2 2.6 3.34.7
14.2
2.9 2.1
7.46.0
3.2
3.4
0.4
28.2
1.1
1.4 4.8
0.81.4
0.9
3.1 7.13.2
5.9
19.3
58.6
0.70.6
0.9
3.1
0.7
0.7
2.10.5
1.2
5.3
0.42.8
1.2
0.4
12'Q1 12'Q2 12'Q3 12'Q4 13'Q1 13'Q2 13'Q3 13'Q4 14'Q1 14'Q2 14'Q3 14'Q4 15'Q1 15'Q2*Others Technology DistributorsSemiconductors & Semiconductor Equipment Technology Hardware, Storage & PeripheralsElectronic Equipment, Instruments & Components Communications Equipment
Source: Capital-IQ; *Through June 8, 2015; Note: Deal value includes transactions with disclosed transaction values only
51Global Technology M&A Trends and Analysis l Woodside Capital Partners l July 2015
Global: Deal Volume by Buyer Type Global: Deal Value by Buyer Type (US$ Bn)
Strategic buyers account for over 90% of the M&A deals: 248 in Q1 2015compared with 228 in Q4 2014 and 243 in Q1 2014
Financial buyers led 23 M&A transactions in Q1 2015, vs 16 in Q4 2014and 14 in Q1 2014
The deal value for transactions by strategic buyers rose to US$33.0 Bn inQ1 2015, from US$15.4 Bn in Q4 2014 and US$10.8 Bn in Q1 2014
Financial buyers accounted for US$11.6 Bn in Q1 2015, representing asignificant increase from US$5.0 Bn in Q4 2014 and US$0.3 Bn in Q12014
Strategic Buyers Dominating Global Hardware M&A Activity
265
221246
220201 199 190
221243 236 228 228
248
178
14
21
16
22
13 1711
11
1411
12 16
23
20
1
1
43 2
1
12'Q1 12'Q2 12'Q3 12'Q4 13'Q1 13'Q2 13'Q3 13'Q4 14'Q1 14'Q2 14'Q3 14'Q4 15'Q1 15'Q2*
Strategic Buyer Financial Buyer Both
18.412.2 11.5
14.9
7.2 8.5
18.616.0
10.8
23.1
12.9 15.4
33.0
94.2
0.7
1.2 0.8
0.5
28.1
6.2
0.51.6
0.3
1.8
5.0
11.6
4.0
0.7
0.90.1
0.7
12'Q1 12'Q2 12'Q3 12'Q4 13'Q1 13'Q2 13'Q3 13'Q4 14'Q1 14'Q2 14'Q3 14'Q4 15'Q1 15'Q2*
Strategic Buyer Financial Buyer Both
Source: Capital-IQ; Note: 226 transactions did not disclose buyer details; Deal value refers to deals with disclosed transaction value
52Global Technology M&A Trends and Analysis l Woodside Capital Partners l July 2015
US: Deal Volume by Buyer Type US: Deal Value by Buyer Type (US$ Bn)
Strategic Buyers Dominating US Hardware M&A Activity
89 84 83 79 84 79 74 69
113
83 86 8293
59
79 6 9
74
54
3
56
5
9
10
1 1
1
12'Q1 12'Q2 12'Q3 12'Q4 13'Q1 13'Q2 13'Q3 13'Q4 14'Q1 14'Q2 14'Q3 14'Q4 15'Q1 15'Q2*
Strategic Buyer Financial Buyer Both
3.4 4.42.3
9.9
3.0 3.6
10.68.8 7.7
15.3
7.7 7.0
25.8
57.2
0.60.6
0.7
0.4 28.1
0.3
0.4
1.50.04 1.7 3.9
8.2
2.2
0.9
0.7
12'Q1 12'Q2 12'Q3 12'Q4 13'Q1 13'Q2 13'Q3 13'Q4 14'Q1 14'Q2 14'Q3 14'Q4 15'Q1 15'Q2*
Strategic Buyer Financial Buyer Both
Source: Capital-IQ; Note: 34 deals did not disclose buyer details; Deal Volume includes all transactions for which buyer details are disclosed; Deal value refers to deals with disclosed transaction value
Strategic buyers accounted for over 90% of M&A transactions in the US:93 transactions in Q1 2015, compared with 82 in Q4 2014 and 113 in Q12014
Financial buyers led nine M&A transactions in Q1 2015, vs five in Q42014 and three in Q1 2014
The deal value for transactions led by strategic buyers increased toUS$25.8 Bn in Q1 2015, from US$7.0 Bn in Q4 2014 and US$7.7 Bn inQ1 2014
The deal value for transactions led by financial buyers was US$8.2 Bn inQ1 2015, vs US$3.9 Bn in Q4 2014 and US$41.0 Mn in Q1 2014
53Global Technology M&A Trends and Analysis l Woodside Capital Partners l July 2015
Global: Deal Volume by Region Global: Deal Value by Region (US$ Bn)
Hardware Deal Activity by Region
115 106 104 98 102 91 88 91126
103 100 102120
75
112103 98 94 77
80 73 84
8696
70 80
93
73
5344 60
5342 47
5057
5659
7173
61
57
4
5 27
5 4 2
5
5 109
68
4
11
4 129
2 74
8
8 25
66
12'Q1 12'Q2 12'Q3 12'Q4 13'Q1 13'Q2 13'Q3 13'Q4 14'Q1 14'Q2 14'Q3 14'Q4 15'Q1 15'Q2*
United States and Canada Europe Asia / PacificLatin America and Caribbean Africa / Middle East
4.9 5.53.1
10.431.3
4.2
11.0 10.87.7
16.8
9.4 11.1 35.0
59.4
2.14.6
1.9
0.80.4
8.2
6.5
0.9
1.7
1.6
0.6
3.6 7.6
28.1
11.91.3
7.1
3.63.4
2.4
1.6
5.0
2.6
5.3
2.5
4.72.2
11.7
0.01
0.9 0.2
0.50.3
0.02
0.10.8
0.1
0.6
0.3
0.02 0.1
0.1
0.1
1.1 0.1
0.30.01
0.01
0.0050.1
0.02
0.001
2.0
1.3 0.4
12'Q1 12'Q2 12'Q3 12'Q4 13'Q1 13'Q2 13'Q3 13'Q4 14'Q1 14'Q2 14'Q3 14'Q4 15'Q1 15'Q2*
United States and Canada Europe Asia / PacificLatin America and Caribbean Africa / Middle East
The US and Canada led M&A activity in the hardware industry, accountingfor ~41% of deals in Q1 2015. The number of deals in the region was 120in Q1 2015, compared with 102 in Q4 2014 and 126 in Q1 2014
Europe was the second most active market, with 93 transactions in Q12015
The US and Canada accounted for over 49% of the deal value in thehardware industry, which totaled US$35.0 Bn in Q1 2015, vs US$11.1 Bnin Q4 2014 and US$7.7 Bn in Q1 2014
Europe, with transactions worth US$7.6 Bn, remained the second largestmarket in Q1 2015
Source: Capital-IQ; *Through June 8, 2015; Note: Deal value includes transactions with disclosed transaction values only
54Global Technology M&A Trends and Analysis l Woodside Capital Partners l July 2015
Global: Average EV/ Revenue Multiple and TTM Revenue
1.5x
1.3x 1.3x
1.6x1.4x
1.5x 1.5x
2.1x
2.7x
1.8x
2.2x 2.2x
1.8x2.0x
53.2186.0 261.3 171.0
1,117.3
286.9
606.0
174.5 67.7 102.8 100.0163.2 235.3
568.6
12'Q1 12'Q2 12'Q3 12'Q4 13'Q1 13'Q2 13'Q3 13'Q4 14'Q1 14'Q2 14'Q3 14'Q4 15'Q1 15'Q2*
EV/ Revenue Multiple Average TTM Revenue (USD Mn)
US: Average EV/ Revenue Multiple and TTM Revenue
1.8x1.6x
2.7x
2.1x
1.4x1.6x
1.5x
2.9x3.1x
2.0x 2.1x
3.0x
1.9x 2.0x
69.9 95.5 360.0 305.9
4,388.6
146.7 389.1 223.3 91.9 155.0 280.4 178.6463.8 929.2
12'Q1 12'Q2 12'Q3 12'Q4 13'Q1 13'Q2 13'Q3 13'Q4 14'Q1 14'Q2 14'Q3 14'Q4 15'Q1 15'Q2*
EV/ Revenue Multiple Average TTM Revenue (USD Mn)
The average EV/Revenue multiple was 1.8x in Q1 2015, compared with2.2x in Q4 2014 and 2.7x in Q1 2014
The target company’s average revenue rose to US$235.3 Mn in Q1 2015,from US$163.2 Mn in Q4 2014 and US$67.7 Mn in Q1 2014
The average EV/Revenue multiple decreased to 1.9x in Q1 2015, from3.0x in Q4 2014 and 3.1x in Q1 2014
The acquired company’s average revenue surged to US$463.8 Mn in Q12015, from US$178.6 Mn in Q4 2014 and US$91.9 Mn in Q1 2014
Global and US Hardware M&A Revenue Multiples
Source: Capital-IQ; *Through June 8, 2015; Note: Deal value includes transactions with disclosed values only
55Global Technology M&A Trends and Analysis l Woodside Capital Partners l July 2015
Global: Average EV/ EBITDA Multiple and TTM EBITDA US: Average EV/ EBITDA Multiple and TTM EBITDA
The average EV/EBITDA multiple rose to 15.5x in Q1 2015 from 12.9x inQ4 2014 and 12.4x in Q1 2014
The acquired company’s average EBITDA rose to US$94.1 Mn in Q12015, vs US$38.4 Mn in Q4 2014 and US$13.5 Mn in Q1 2014
The average EV/EBITDA multiple decreased to 16.4x in Q1 2015, from17.8x in Q4 2014 and 16.9x in Q1 2014
The acquired company’s average EBITDA surged to US$143.1 Mn in Q12015, from US$31.0 Mn in Q4 2014 and US$20.6 Mn in Q1 2014
Global and US Hardware M&A EBITDA Multiples
16.7x
12.2x
9.9x11.1x
7.9x8.7x
10.3x
11.9x 12.4x13.8x
9.9x
12.9x
15.5x
17.4x
6.872.4 54.2 8.9
342.0
21.8 49.6128.5
13.5 34.4 44.0 38.4 94.1193.1
12'Q1 12'Q2 12'Q3 12'Q4 13'Q1 13'Q2 13'Q3 13'Q4 14'Q1 14'Q2 14'Q3 14'Q4 15'Q1 15'Q2*
EV/ EBITDA Multiple Average TTM EBITDA (USD Mn)
17.8x
13.4x12.5x
25.4x
5.5x
9.1x12.1x
20.4x
16.9x
14.5x
9.3x
17.8x16.4x
18.4x
(1.5) 11.7 17.6 22.5
947.7
8.8 113.2 39.0 20.6 51.2 65.9 31.0 143.1 275.2
12'Q1 12'Q2 12'Q3 12'Q4 13'Q1 13'Q2 13'Q3 13'Q4 14'Q1 14'Q2 14'Q3 14'Q4 15'Q1 15'Q2*
EV/ EBITDA Multiple Average TTM EBITDA (USD Mn)
Source: Capital-IQ; *Through June 8, 2015; Note: Deal value includes transactions with disclosed values only
56Global Technology M&A Trends and Analysis l Woodside Capital Partners l July 2015
Cross-Border M&A: Represents over one-fourth of global transactions; Deal valuesurges in 2015
Global: Cross-Border M&A Deals
Cross-border M&A activity remained buoyant in 2014, registering 342 deals over 251 deals in 2013. The deal value for disclosed deals totaled US$31.1 Bn in2014, vs US$20.2 Bn in 2013
The total number of cross-border M&A deals was 97 in Q1 2015, compared with 85 in Q4 2014 and 74 in Q1 2014. The deal value for disclosed deals surged toUS$27.2 Bn in Q1 2015, vs US$11.4 Bn in Q4 2014 and US$2.6 Bn in Q1 2014
Source: Capital-IQ; *Through June 8, 2015; Note: Deal value includes transactions with disclosed values only
3.27.9 6.2 5.5 1.0 7.3 6.5 5.4 2.6 9.1 7.9 11.4
27.2
73.6
106
85
97
79
61 58 59
73 74
9489 85
97
74
12'Q1 12'Q2 12'Q3 12'Q4 13'Q1 13'Q2 13'Q3 13'Q4 14'Q1 14'Q2 14'Q3 14'Q4 15'Q1 15'Q2*
Cross-Border M&A Deal Value (USD Bn) Cross-Border M&A Deal Volume
57Global Technology M&A Trends and Analysis l Woodside Capital Partners l July 2015
US Cross-Border Hardware M&A Activity: Number of deals flat for past three years;Deal value achieved record high in 2015
US: Inbound and Outbound Deals
Inbound M&A deal volume in the US grew significantly to 76 in 2014, compared to 46 in 2013. US outbound M&A activity remained robust in 2014, recording 82deals vs. 68 deals in 2013
US inbound M&A activity was 19 in 2015’Q1, and similar to Q4 2014 (20). The deal value for disclosed deals rose to US$18.9 Bn in Q1 2015, from US$4.2 Bn inQ4 2014 and US$100 Mn in Q1 2014. Outbound deals totaled 31 in Q1 2015, compared to 16 in Q4 2014 and 14 in Q1 2014. The deal value for disclosed dealstotaled US$3.6 Bn in Q1 2015, vs US$1.2 Bn in Q4 2014 and US$1.0 Bn in Q1 2014
Source: Capital-IQ; *Through June 8, 2015; Note: Deal value includes transactions with disclosed values only
0.3 1.2 0.2 3.9 0.2 1.3 0.5 0.4 0.16.0 7.0
4.2
18.9
38.7
0.4 2.6 4.4
0.7
0.40.1 0.4 0.9 1.0
2.00.5
1.2
3.6
2.6
11 15 18 17 12 14 146
17 20 20 19 1916
3426
37
22 1811
19 2014
2329
16
31
18
12'Q1 12'Q2 12'Q3 12'Q4 13'Q1 13'Q2 13'Q3 13'Q4 14'Q1 14'Q2 14'Q3 14'Q4 15'Q1 15'Q2*
Inbound Deal Value (USD Bn) Outbound Deal Value (USD Bn) Inbound Deal Volume Outbound Deal Volume
58Global Technology M&A Trends and Analysis l Woodside Capital Partners l July 2015
Notable Transactions in Hardware Industry
2012
2013
2014
2015YTD
CommunicationsEquipment
Electronic Equipment andInstruments and
Components
Technology Hardware,Storage and Peripherals
Semiconductors andSemiconductor
EquipmentTechnology Distributors
(USD10.0 Bn; NA)
(USD2.5 Bn; 0.7x)
(USD5.0 Bn; 0.3x)
(USD2.0 Bn; 6.1x)
(USD3.9 Bn; 3.2x)
(USD2.8 Bn; NA)
(USD23.1 Bn; 1.2x)
(USD5.1 Bn; NA)
(USD2.9 Bn; 1.5x)
(USD1.0 Bn; 2.0x)
(USD7.2 Bn; 1.8x)
(USD4.0 Bn; NA)
(USD2.6 Bn; 3.1x)
(USD1.7 Bn; 3.9x)
(USD6.5 Bn; 6.0x)
(USD2.4 Bn; 4.1x)
(USD804.0 Mn; NA)
(USD710.7 Mn; 0.8x)
(USD28.1 Bn; 0.4x)
(USD685 Mn; NA)
(USD3.4 Bn; NA)
(USD1.3 Bn; 2.7x)
(USD336.6 Mn; NA)
(USD215.0 Mn; 3.6x)
(USD3.7 Bn; 0.6x)
(USD2.7 Bn; 4.2x)
(USD6.6 Bn; 2.5x)
(USD1.7 Bn; 1.7x)
(USD3.0 Bn; 2.2x)
(USD2.4 Bn; 7.1x)
(USD36.7 Bn; 4.0x)
(USD18.2 Bn; 8.3x)
(USD857.0 Mn; 0.2x)
(USD525.8 Mn; NA)
(USD1.4 Bn; 12.4x)
(USD401.5 Mn; 0.3x)
(USD506.1 Mn; NA)
(USD439.4 Mn; 0.2x)
(USD182.8 Mn; NA)
(USD137.7 Mn; 0.2x)
Source: Capital-IQ; Text in brackets (Deal Value, EV / Revenue Multiple)
Memory Japan Technology
Focus MultimediaTechnology(Shanghai) Join-In (Holding)
PSI Systems
Electric Power ControlSystem & others
SAMT
Giovanna InvestmentHong Kong Limited
and Others
59Global Technology M&A Trends and Analysis l Woodside Capital Partners l July 2015
Most Active Hardware Acquirers: Intel, Ametek and Arrow Electronics
Most Active Buyers by Number of Deals (Since 2012)
12
10
7 7 76 6 6
5 5 5
Intel Ametek Arrow Electronics MicrochipTechnology
ABB ExclusiveNetworks SAS
SBACommunications
Lagercrantz Cansel SurveyEquipment
Google IHS Nigeria
Source: Capital-IQ; Note: M.Tech Holdings has not been included as it acquired nine of its related entities
CAD WorxWarehouse
NDS WestMicro System
Telecomtower assets
Nigeria andCameroon,Rwanda,
Zambia andCote d'Ivoire
Telecomtower assets
60Global Technology M&A Trends and Analysis l Woodside Capital Partners l July 2015
CONTENTS
Technology Trends 9
Software Industry M&A Overview 27
Stock Market Performance 61
Executive Summary 5
Hardware Industry M&A Overview 44
61Global Technology M&A Trends and Analysis l Woodside Capital Partners l July 2015
Technology Stock Performance: Technology indices have outperformed broadermarket indices, led by US; Volatility has trended down
Global Technology Market Performance
0
50
100
150
200
250
300
350
Jan-09 May-09 Oct-09 Feb-10 Jul-10 Nov-10 Apr-11 Aug-11 Jan-12 May-12 Oct-12 Feb-13 Jul-13 Nov-13 Apr-14 Aug-14 Jan-15 May-15
1-Month 3-Month 6-Month 1 Year 3 Year 5 Year
S&P Global Technology Index (0.6%) 0.4% 3.0% 13.5% 61.9% 89.8%
S&P Global Index (1.8%) 0.1% 1.3% 2.2% 51.2% 64.5%
S&P US Technology Index 0.3% 0.9% 3.6% 18.2% 72.7% 120.5%
S&P US Index (1.0%) (0.3%) 1.0% 8.6% 63.7% 96.5%
Source: Bloomberg
S&P US 500 InformationTechnology IndexS&P Global 1200 InformationTechnology IndexS&P 500 Index
S&P Global 1200 Index
0
10
20
30
40
50
60
Jan-09 May-09 Oct-09 Feb-10 Jul-10 Nov-10 Apr-11 Aug-11 Jan-12 May-12 Oct-12 Feb-13 Jul-13 Nov-13 Apr-14 Aug-14 Jan-15 May-15
Volatility: CBOE Volatility Index
Volatility falls belowhistorical average
62Global Technology M&A Trends and Analysis l Woodside Capital Partners l July 2015
Global: EV / Revenue Multiple
Global: EV / EBITDA Multiple
Global: Revenue (US$ per share)
Global: EBITDA (US$ per share)
Global Technology Stock Valuations: Technology stocks trade at an EV / Revenuemultiple premium compared to overall market, while EV / EBITDA multiples are at a discount
1.6x 1.5x1.4x 1.5x
2.0x
2.3x 2.3x2.2x
1.6x 1.6x1.4x 1.5x
1.7x 1.7x1.9x 1.8x
2009 2010 2011 2012 2013 2014 2015E 2016ES&P Global 1200 Information Technology Index S&P Global 1200 Index
839976 1,039 1,086
998 992 1,015 1,0671,195 1,247
1,341 1,392 1,390 1,378 1,311 1,383
2009 2010 2011 2012 2013 2014 2015E 2016ES&P Global 1200 Information Technology Index S&P Global 1200 Index
10.8x
8.1x7.1x
8.0x9.2x 9.6x
8.9x8.3x
7.4x
9.4x8.8x
7.8x8.6x
9.8x 10.0x9.5x
2009 2010 2011 2012 2013 2014 2015E 2016E
S&P Global 1200 Information Technology Index S&P Global 1200 Index
125
183198 196
213234
263284
200228 239 237 242 239 239
261
2009 2010 2011 2012 2013 2014 2015E 2016ES&P Global 1200 Information Technology Index S&P Global 1200 Index
Source: Bloomberg
63Global Technology M&A Trends and Analysis l Woodside Capital Partners l July 2015
US: EV / Revenue Multiple
US: EV / EBITDA Multiple
US: Revenue (US$ per share)
US: EBITDA (US$ per share)
US Technology Stock Valuations: US technology stocks trade at a higher EV / Revenuemultiple premium compared to overall market, and a similar EV / EBITDA multiple discount
2.4x2.2x
1.9x 2.0x
2.7x3.0x 3.0x 2.9x
1.7x 1.8x1.6x 1.7x
2.0x 2.1x 2.2x 2.1x
2009 2010 2011 2012 2013 2014 2015E 2016ES&P US 500 Information Technology Index S&P 500 Index
140 163 190 204 196 210 217 228
903 9391,019 1,064 1,099 1,144 1,129
1,200
2009 2010 2011 2012 2013 2014 2015E 2016ES&P US 500 Information Technology Index S&P 500 Index
10.9x
8.7x7.4x 7.6x
9.9x10.7x
9.5x8.8x
10.1x 9.7x8.4x 9.0x
10.7x11.6x 10.9x
10.0x
2009 2010 2011 2012 2013 2014 2015E 2016E
S&P US 500 Information Technology Index S&P 500 Index
31 42 49 53 53 59 68 74
150173
194 200 208 212230
251
2009 2010 2011 2012 2013 2014 2015E 2016ES&P US 500 Information Technology Index S&P 500 Index
Source: Bloomberg
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