m&a market update - marlin & associates

November 2018

M&AM A R L I N & A S S O C I A T E S

M A R K E TU P D A T E

INVESTMENT BANKING AND STRATEGIC ADVISORY TO THE TECHNOLOGYAND INFORMATION INDUSTRIES

www.MarlinLLC.com © Marlin & Associates Holdings LLC, All Right Reserved

Toronto

Washington, D.C.

New York

Dear Clients and Friends:

Our latest report on the values and trends in the dozen+ segments of the information technology industry that we follow, and sometimes lead, can be found below.

The information technology industry has been a global one for many years, and to us, that’s a good thing. Good software engineers, code writers, mathematicians etc. are everywhere: US , Canada, UK, and Ireland; Russia, and Ukraine; Israel and Palestine, Turkey and China; Australia, New Zealand, South Africa and a half dozen other countries.

Recently, this globalism has come under attack. There are several good reasons including some very real hacks, malware, worms, phishing, spoofing and more. And part of the reason globalism has been under attack is because politicians have been railing against foreign workers.

As a result, people have begun to ask questions such as: “Has Kaspersky's antivirus software become a Kremlin tool? Can we trust code written in China? Do the Israelis put a back door into their code just in case?” (And for others, “…Do American software manufacturers employ similar tactics?”)

While the questions are legitimate, globalism is a big part of what has made the information technology industry great. It’s what will keep it great. We are not naïve. We’re aware of specific incidents of government intrusion into the industry. But for the most part, it’s a system that has worked well. So our preferred approach is threefold: trust AND verify, and keep the politicians out of it. The globalization of IT has worked well for decades. Let’s not mess it up.

There were quite a number of interesting transactions in the global information technology world over the past month. Many are discussed in the enclosed report. A few of the more interesting ones include:

Marlin & Associates is one of the most active firms advising buyers and sellers of U.S. and international middle-market firms that provide software, data, and related services. The firm is based in New YorkCity, with offices in Washington, D.C., and Toronto, Canada. It has been the recipient of numerous awards including “Boutique Investment Bank of the Year,” “Middle-Market Investment Bank of the Year,”"Middle-Market Financing Agent of the Year – Equity," and “TMT Advisory Bank of the Year.” Marlin & Associates' team of professionals has advised over 200 information-technology transactions.

DEAR CLIENTS AND FRIENDS,

• Adobe (NASDAQ:ADBE) agreed to acquire Marketo for $4.75bn,

• Udaan (Bangalore, Karnataka) raised approximately $225mm in a Series C funding round led by DST Global,

• Nasdaq (NASDAQ:NDAQ) agreed to acquire Cinnober for SEK1.7bn (~$190mm), valuing the company at an implied 4.4x LTM revenue,

• SurveyMonkey raised $180mm in its IPO, implying an enterprise value of ~$2bn and valuing the company at an implied 8.8x LTM revenue,

• Lianlian (Hangzhou, China) raised ¥1.0bn (~$147mm) in a Series C funding round led by Sequoia Capital China and Boyu Capital,

• CoreLogic acquired the remaining 71.96% stake in Symbility Solutions for CAD 110mm (~$83.8mm), implying an enterprise value of CAD 130.2mm (~$99.3m) and valuing the company at an implied 3.0x LTM revenue and 33.7x LTM EBITDA,

• Akulaku (Pasig, Philippines) raised $70mm in a Series C funding round led by FinUp,

• Ipsos (ENXTPA: IPS) acquired Synthesio for $50mm.

Russians, Chinese, Israelis, Midterms - Who Can You Trust? Our November Information Technology M&A

Kenneth B. Marlin | Managing PartnerMarlin & Associates | www.marlinllc.com

Sincerely,

Please feel free to call us if you have any questions on any of the sectors that we follow.

See below for our November Infotech M&A Update.

http://www.marlinllc.com/

Sources: Marlin & Associates, Capital IQ and Public sources. All market and operating data is sourced as of 10/31/18. These companies are asample of firms in the sector as M&A defines it, and do not comprise a comprehensive list of all firms in the sector. M&A calculates mean andmedian multiples for the sector using data from a set of firms that it believes to be reasonable and which may not be identical to the set reflectedabove.

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Sector Comparison Snapshot

Sector Analyses

Application Software

B2B E-commerce & Marketing Technologies

Banking Software & Processors

Business Intelligence Software

Capital Markets Software & Services

Data & Analytics – Financial Services

Information & Market Research

Insurance Technology

Payment Technology

Securities Exchanges

Security Software

Technology-Enabled Financial Institutions

Merger-and-Acquisition Activity Trends

MARLIN & ASSOCIATES MARKET UPDATE

NOVEMBER 2018

02


0x 2x 4x 6x 8x 10x

Tech-enabled Financial Institutions *




Payment Technology


Security Software


Data & Analytics - Financial Services




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SECTOR COMPARISON SNAPSHOT:CURRENT REVENUE & EBITDA MULTIPLESEnterprise Value / 2018 Revenue

Enterprise Value / 2018 EBITDA

*Tech-enabled Financial Institutions multiples calculated using Market Cap / Revenue and Market Cap / EBT

NOVEMBER 2018

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Tech-enabled Financial Institutions *


Payment Technology





Data & Analytics - Financial Services




Security Software



Public Market Data

04

NOVEMBER 2018

Recent Activity

[1] Cloudera (NYSE:CLDR) added to the index as of IPO 4/27/17

Company Market Enterprise EV / Revenue EV / EBITDA Revenue Growth EBITDA Margin(USD millions) Cap Value CY2017A CY2018E CY2017A CY2018E CY2017A CY2018E CY2017A CY2018E

Oracle 195,311 194,013 5.0x 4.9x 12.3x 10.4x 4% 2% 41% 47%SAP 129,482 132,898 5.0x 4.7x 19.4x 14.4x 6% 5% 26% 33%salesforce 106,224 107,195 10.2x 8.1x nm 34.1x 25% 26% 9% 24%Intuit 55,493 54,215 10.0x 8.6x 33.1x 23.6x 12% 17% 30% 36%Workday 28,723 26,915 12.6x 9.7x na 61.5x 36% 29% na 16%Constellation 14,646 14,588 5.9x 4.8x 30.7x 19.1x 17% 22% 19% 25%Amdocs 9,060 8,542 2.2x 2.1x 11.8x 10.2x 4% 3% 19% 21%Paycom Softw are 7,330 7,280 16.8x 13.0x nm 31.1x 32% 29% 21% 42%NICE 6,519 6,460 4.8x 4.5x 21.0x 14.8x 31% 9% 23% 30%Zendesk 5,835 5,836 13.6x 9.9x na nm 38% 38% na 6%Xero 3,941 4,190 16.7x 12.2x na nm 38% 36% na 12%Paylocity 3,650 3,566 10.7x 8.6x nm 36.0x 26% 24% 7% 24%Softw are AG 3,360 3,249 3.2x 3.3x 11.0x 10.6x 1% (1%) 30% 31%Manhattan Associates 3,146 3,052 5.1x 5.5x 15.4x 19.7x (2%) (7%) 33% 28%

Trim Mean 31,189 31,244 8.6x 7.1x 18.4x 21.4x 19% 17% 23% 27%Median 8,195 7,911 7.9x 6.8x 17.4x 19.4x 21% 19% 23% 27%

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5 Year M&A Application Software Index[1] vs. S&P 500, base = 100

M&A Application Software Index S&P 500

DateAnnounced Acquirer(s) / Investor(s) Target / Issuer Description

10/23/18

Oracle (NYSE:ORCL) agreed to acquire DataFox Intelligence for an undisclosed sum. DataFox offers a platform that leverages machine learning and natural language processing to signal actionable insights on sales leads. Oracle plans to leverage DataFox’s platform to enrich its cloud applications with AI-driven company-level data.

10/8/18

Cloudera (NYSE:CLDR) and Hortonworks (NASDAQ:HDP) have agreed to merge in a deal worth $5.2bn valuing Hortonworks at an implied multiple of 5.4x. The merger is expected to allow customers, partners, employees and the open source community to benefit from the enhanced offerings, larger scale and improved cost competitiveness.

10/8/18

Upland Software (NASDAQ:UPLD) acquired Rant & Rave for an implied enterprise $65mm. Rant & Rave is a leading provider of cloud-based customer engagement solutions. Upland Software plans to integrate Rant & Rave’s solutions into its platform to expand its mobile messaging offering.



Public Market Data

05

[1] Shopify (SHOP) added to the index as of IPO 5/21/15

NOVEMBER 2018

Recent Activity

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5 Year LTM Revenue & EBITDA Multiples[1]


Company Market Enterprise(USD millions) Cap Value CY2017A CY2018E CY2017A CY2018E CY2017A CY2018E CY2017A CY2018E

Adobe 134,129 131,069 18.0x 14.6x 52.6x 32.7x 25% 23% 34% 45%Mercadolibre 17,494 15,919 23.6x 15.1x nm nm 73% 57% nm 4%Shopify 15,034 14,956 10.7x 10.5x nm nm 66% 2% 13% nmHubSpot 5,856 5,614 14.9x 11.2x nm nm 39% 33% nm 9%QuinStreet 704 639 1.9x 1.4x 56.6x 15.6x 12% 33% 3% 9%ChannelAdvisor 340 290 2.4x 2.2x nm 35.3x 8% 7% nm 6%Mediagrif Interactive 123 135 2.2x 2.1x 8.6x 7.7x 5% 2% 25% 28%


EV / Revenue EV / EBITDA Revenue Growth EBITDA Margin

Date Announced Acquirer(s) / Investor(s) Target / Issuer Description

10/24/18 BlueCore agreed to acquire Betaout for an undisclosed sum. Betaout provides a marketing personalization and engagement suite for eCommerce sites.

10/16/18

Springbot (Atlanta, GA) raised $15mm in a Series B funding round led by North Atlantic Capital and that included new investors Harbert Management, Silicon Valley Bank and Tech Square and return investors TechOperators, Forte Ventures and TTV Capital. Springbot provides an eCommerce marketing platform built on Magneto.

10/3/18

Braze (New York, NY) raised $80mm in a Series E funding round led by Meritech Capital Partners. Braze provides an AI-enabled omnichannel customer engagement solutions for enterprises including cross-channel personalization, lifecycle engagement orchestration, optimization & AI, and data agility and management.

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5 Year M&A eCommerce Index[1] vs. S&P 500, base = 100

M&A eCommerce Index S&P 500



Public Market Data

06

[1] Q2 Holdings (QTWO) added to the index as of IPO 3/20/14

Recent Activity

NOVEMBER 2018

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5 Year M&A Banking Software Index[1] vs. S&P 500, base = 100

M&A Banking Software Index S&P 500

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FIS 34,407 42,742 4.7x 5.0x 17.0x 13.5x (1%) (7%) 27% 37%Fiserv 30,863 35,400 6.2x 6.1x 19.8x 16.4x 3% 2% 31% 37%Jack Henry & Associates 11,601 11,570 7.9x 7.3x 25.4x 20.8x 6% 7% 31% 35%Temenos 9,995 10,434 14.2x 12.3x 52.3x 32.5x 16% 15% 27% 38%Oracle Financial Services 4,197 3,832 6.2x 5.5x 15.2x 13.1x 1% 12% 41% 42%ACI Worldw ide 2,988 3,586 3.5x 3.4x 20.1x 13.8x 2% 2% 17% 25%Bottomline Technologies 2,689 2,707 7.4x 6.6x 62.8x 27.5x 6% 12% 12% 24%Ellie Mae 2,515 2,243 5.4x 4.7x 31.8x 17.5x 16% 15% 17% 27%Q2 Holdings 2,294 2,176 11.2x 9.0x na nm 29% 24% na 8%Virtusa 1,461 1,671 1.7x 1.4x 25.2x 17.0x 20% 25% 7% 8%Sw ord Group 371 366 1.8x 1.7x 13.2x 11.1x 8% 10% 14% 15%Microgen 334 336 4.1x 3.7x 18.5x 15.6x 46% 11% 22% 24%Gresham Technologies 134 125 4.4x 3.9x 25.7x 16.8x 26% 14% 17% 23%




11/28/16

QuantGroup (Beijing, China) raised $72mm in a Series C round of funding led by new investor Sunshine Insurance Group, and including participation from GuosenHongsheng Investment Co., Fosun Capital, and other undisclosed investors. QuantGroup provides online financial services in China.

11/16/16

LendingTree (NASDAQ:TREE) acquired Iron Horse Holdings (dba: CompareCards) for $130mm. CompareCards is an online platform enabling consumer credit card comparisons, and providing credit education and credit health management solutions. The transaction consideration consists of $85mm cash at closing and up to $45mm of earn-out payments paid during 2017 and 2018.

11/10/16

Meta Financial Group (NASDAQ:CASH) acquired Specialty Consumer Services (SCS) for $54mm. SCS offers a loan management platform and a proprietary underwriting model that are primarily used to deliver consumer tax advances and other consumer credit services. The transaction consideration consists of approximately $15mm at closing, with potential for additional contingent payments.


10/22/18

Finn AI raised C$14mm (~$11mm) in a Series A funding round, co-led by Yaletown Partners and Flying Fish Partners and that included BDC Capital and 1843 Capital. Finn AI is a virtual banking assistant driven by artificial intelligence. Finn AI expects the funding to enhance its enterprise tooling and expand its banking and personal finance capabilities.

10/16/18

Zenmonics raised an undisclosed sum in a Series A funding round, led by Fidelity National Information Services (NYSE:FIS). Zenmonics is a provider of innovative software to support all channels of banking. Marlin & Associates advised Zenmonics on this transaction, its first institutional fundraise.

10/01/18

Jack Henry & Associates (NASDAQ:JKHY) acquired Agiletics for an undisclosed sum. Agiletics is a provider of solutions to help banks serve commercial customers through cash management services. Agiletics joined Jack Henry & Associates under Jack Henry Banking, the company’s banking information processing division.

https://www.marlinllc.com/transactions/recent/zenmonics-secures-a-strategic-investment-from-fis



Splunk 14,638 13,814 10.9x 8.2x na 56.1x 34% 33% na 15%Open Text Corporation 9,105 10,891 4.1x 3.8x 14.9x 10.5x 34% 8% 28% 37%Tableau Softw are 8,883 7,926 9.0x 8.1x na na 6% 12% na naAlteryx 3,238 3,081 23.4x 16.0x na na 53% 47% na naVerint Systems 3,007 3,411 3.0x 2.7x 30.6x 11.7x 7% 9% 10% 23%Talend 1,851 1,759 11.8x 8.6x na na 40% 38% na naMicroStrategy 1,453 754 1.5x 1.5x 9.3x 20.4x (1%) (1%) 16% 7%Hortonw orks 1,439 1,357 5.2x 4.0x na na 42% 31% na naAttunity 363 325 5.2x 3.9x na 26.1x 14% 35% na 15%Dataw atch 119 114 3.0x 2.5x na 67.4x 19% 23% na 4%




Public Market Data

07

[1] Hortonworks (HDP) added to the index as of IPO 12/12/14, Talend (TLND) added to the index as of IPO 7/29/16, Alteryx (AYX) added to the index as of IPO 2/24/17

Recent Activity

NOVEMBER 2018

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5 Year M&A BI Index[1] vs. S&P 500, base = 100

M&A BI Index S&P 500


10/18/18

Incorta (San Mateo, US) raised an additional $15mm in a Series B funding round, bringing its total Series B funding to $30mm, led by Microsoft’s M12 and Telstra Ventures. Incorta provides a business intelligence platform that offers data analytics and visualization applications.

10/17/18

Lucid Software (South Jordan, US) raised $72mm in an equity funding round fromMeriTech Capital, ICONIQ Capital and Spectrum Equity. Lucid Software provides a business intelligence and visualization platform, including its Lucidchart offering, a flowchart dashboarding tool for project management.

10/12/18RealPage (NASDAQ:RP) acquired Rentlytics for $57mm, representing an estimated6.3x TEV / 2019 revenue multiple. Rentlytics provides a business intelligence platform focused on the real estate management and real estate investment verticals.



Public Market Data

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Recent Activity

NOVEMBER 2018

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5 Year M&A Capital Markets Index vs. S&P 500, base = 100

M&A Capital Markets Index S&P 500


IHS Markit 21,280 27,193 7.6x 6.8x 24.3x 17.7x (1%) 12% 31% 38%Broadridge 14,080 15,018 3.5x 3.4x 18.9x 17.9x 24% 2% 19% 19%SS&C Technologies 12,120 18,074 10.8x 5.3x 28.7x 14.6x 13% 105% 38% 36%Computershare 7,841 8,810 4.0x 3.8x 16.0x 13.4x 10% 3% 25% 29%SimCorp 3,099 3,083 7.9x 7.0x 29.4x 24.9x 16% 12% 27% 28%Envestnet 2,360 2,663 3.9x 3.3x 34.4x 17.2x 18% 19% 11% 19%IRESS 1,354 1,490 4.8x 4.5x 21.1x 16.6x 10% 8% 23% 27%First Derivatives 1,118 1,146 5.0x 4.3x 41.3x 23.9x 23% 16% 12% 18%Linedata Services 248 323 1.6x 1.6x 8.2x 6.7x 7% (4%) 19% 25%Cinnober 192 179 4.4x 4.4x na na 7% (1%) na naStatPro Group 111 141 2.2x 1.9x 22.8x 12.1x 31% 15% 10% 16%Brady 72 65 2.2x 2.1x na 17.0x (10%) 4% na 13%

Trim Mean 4,252 5,093 4.5x 4.0x 24.5x 16.7x 13% 9% 21% 24%Median 1,857 2,076 4.2x 4.1x 23.6x 17.0x 12% 10% 21% 25%[1] Pro Forma full year combined figures



10/30/18

Sentieo (Harbour Beach, FL) raised $19mm in an equity funding round led by Centana Growth Partners. Sentieo provides an online equity research platform utilized by investment managers, corporates, wealth management advisors, investment banking advisory firms, venture capital firms and private equity firms.

10/30/18

Backstop Solutions (Chicago, IL) raised $20mm in an equity funding round led by Vistara Capital. Backstop provides cloud-based CRM software solutions for financial services providers including hedge funds, funds of funds, investment funds, pension funds, family offices, venture capital firms and private equity firms.

10/18/18

FundGuard (New York, NY) raised $4mm in an equity funding round from new investors Blumberg Capital and LionBird Ventures. FundGaurd provides an AI-powered, cloud-based investment funds operating systems platform for asset managers, custodian banks, and fund administrators to manage investments.


Data & Analytics – Financial Services

Public Market Data

09

NOVEMBER 2018

Recent Activity


S&P Global 46,218 49,259 8.1x 7.7x 16.8x 15.6x 7% 5% 48% 49%Thomson Reuters 32,772 39,832 7.6x 7.2x 15.8x 30.8x 2% 6% 48% 24%Moody's 28,296 32,227 7.7x 7.1x 16.2x 14.8x 17% 8% 47% 48%Experian 21,788 25,145 5.5x 5.2x 16.9x 15.1x na 6% 33% 34%Verisk Analytics 20,157 22,593 10.5x 9.4x 22.9x 20.0x 8% 12% 46% 47%MSCI 13,741 14,917 11.7x 10.4x 22.6x 19.1x 11% 13% 52% 54%CoStar Group 13,198 12,127 12.6x 10.2x 48.4x 30.2x 15% 23% 26% 34%TransUnion 12,571 16,455 8.5x 7.0x 23.4x 18.0x 13% 21% 36% 39%Equifax 12,335 14,771 4.4x 4.3x 13.2x 12.8x 7% 2% 33% 34%FactSet Research Systems 8,700 9,036 7.2x 6.6x 21.1x 19.5x 10% 9% 34% 34%FICO 5,917 6,591 7.0x 6.2x 30.5x 27.4x 5% 12% 23% 23%Morningstar 5,379 5,102 5.6x 5.7x 21.8x 19.7x 14% (2%) 26% 29%Dun & Bradstreet 5,307 6,425 3.7x 3.7x 14.0x 12.7x 2% (0%) 26% 29%CoreLogic 3,332 4,956 2.7x 2.8x 12.9x 10.2x (5%) (3%) 21% 27%



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5 Year M&A Data & Analytics Financials Index vs. S&P 500, base = 100

M&A D&A Financial Index S&P 500


10/24/18

Thomson Reuters (TSX:TRI) agreed to acquire Integration Point for an undisclosed sum. Integration Point offers a cloud-based trade management & compliance software. Thomson Reuters expects the acquisition to further strengthen its offerings in the global trade management space.

10/15/18

Tresata (Charlotte, NC) raised $50mm in funding from GCP Capital Partners valuing the company at $1bn. Tresata provides the software platform for real-time customer intelligence management. The company plans to use the funds to continue to fund its operations and accelerate growth.

10/4/18

eVestment (Atlanta, GA) acquired RedQuarry for an undisclosed amount. RedQuarry offers investment research management software solutions for team collaboration, compliance and research continuity. eVestment plans to rebrand RedQuarry as eVestment Research Management.



Reed Elsevier (RELX Group) 40,807 48,961 5.1x 5.0x 16.8x 14.3x 7% 2% 30% 35%Wolters Kluw er 16,200 18,447 3.6x 3.7x 13.2x 13.6x 3% (3%) 27% 27%Gartner 13,594 15,553 4.7x 3.9x 40.7x 21.2x 35% 21% 12% 18%Nielsen 9,237 17,595 2.7x 2.7x 10.3x 9.6x 4% (1%) 26% 28%Pearson 9,214 9,834 1.7x 1.8x 13.6x 11.1x (1%) (7%) 12% 16%Informa 8,047 11,653 5.1x 3.8x 16.0x 11.5x 31% 32% 32% 33%Euromoney Institutional Investor 1,797 1,860 3.7x 3.5x 13.7x 12.7x 8% 6% 27% 27%comScore 880 1,019 2.5x 2.4x na na 1% 3% na 0%Forrester Research 742 596 1.8x 1.7x 17.0x 13.7x 4% 5% 10% 12%




Public Market Data

NOVEMBER 2018

10


10/30/18Ipsos (ENXTPA:IPS) acquired Synthesio for $50mm. Synthesio provides clients social media intelligence tools to measure the impact of social and mainstream media conversations.

10/24/18Bluecore (New York, NY) acquired Betaout for an undisclosed sum. Betaout provides a customer intelligence platform that allows marketers to target and automate customer engagement with an omni-channel approach.

10/18/18

Argus Media (London, UK) acquired Integer Research for an undisclosed sum. Integer Research produces specialized market and financial analysis and benchmarking information for the fertilizer, industrial chemical, wire and cable industries.

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5 Year M&A Info & Mkt Research Index vs. S&P 500, base = 100

M&A Info & Mkt Research Index S&P 500


Insurance Software

Public Market Data

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[1] Majesco added to the index as of IPO 6/30/15

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NOVEMBER 2018

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5 Year M&A Insurance Tech Index[1] vs. S&P 500, base = 100

M&A Insurance Tech Index S&P 500


Guidew ire Softw are 7,310 6,548 11.4x 9.1x nm 40.2x 28% 25% 7% 23%Ebix 1,812 2,336 6.4x 4.7x 18.8x 13.9x 22% 35% 34% 34%CorVel 1,106 1,016 1.9x na 14.4x nm 7% na 13% nmSapiens 572 587 2.2x 2.0x 27.3x 14.0x 25% 7% 8% 15%Majesco 285 282 2.4x na nm nm (6%) na 1% nm




10/30/18Ethos (San Francisco, CA) raised $35mm in a venture funding round led by Accel.Ethos uses data intelligence to offer suitable life insurance policies without medical examination.

10/23/18

CoreLogic acquired the remaining 71.96% stake in Symbility Solutions for CAD 110mm (~$83.8mm), implying an enterprise value of CAD 130.2mm (~$99.3m) and valuing the company at an implied 3.0x LTM revenue and 33.7x LTM EBITDA. Symbility Solutions develops software for employee benefits and P&C insurance.

10/17/18Devoted Health (Waltham, MA) raised $300mm in a venture funding round led by Andreessen Horowitz. Devoted Health provides an online platform that enables seniors to avail health insurance along with healthcare services.


Payment Technology

Public Market Data

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NOVEMBER 2018

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5 Year M&A Payment Tech Index[1] vs. S&P 500, base = 100

M&A Payment Tech Index S&P 500

Company Market Enterprise(USD millions) Cap Value CY2017E CY2018E CY2017E CY2018E CY2017E CY2018E CY2017E CY2018E

PayPal 100,944 87,398 6.7x 5.7x 36.0x 21.9x 21% 18% 19% 26%Square 34,883 34,736 nm 22.5x nm nm 43% 57% 14% 16%Worldpay 28,718 36,693 9.7x 9.3x 21.7x 19.5x 11% 4% 45% 48%Wirecard 22,990 21,665 12.4x 9.4x 48.3x 34.0x 45% 31% 26% 28%FleetCor Technologies 18,419 21,934 9.8x 9.1x 19.6x 16.1x 23% 7% 50% 56%Global Payments 18,129 22,824 5.7x 5.8x 20.7x 16.3x 5% (0%) 28% 35%First Data 18,084 37,084 4.6x 4.3x 12.9x 11.3x 4% 6% 35% 38%Total System Services 16,758 19,999 5.9x 5.2x 20.4x 14.7x 12% 13% 29% 35%Cielo 8,437 10,347 3.3x 3.3x 7.4x 8.0x (6%) 1% 44% 41%Western Union 8,100 10,626 1.9x 1.9x 8.2x 7.6x 2% 2% 24% 25%WEX 7,674 9,531 7.6x 6.4x 21.6x 14.9x 23% 19% 35% 43%Euronet Worldw ide 6,033 5,793 2.6x 2.3x 14.7x 11.7x 15% 13% 18% 19%EVERTEC 1,947 2,413 5.9x 5.4x 17.3x 11.5x 5% 11% 34% 47%PayPoint 696 637 2.3x 3.4x 8.3x 7.9x (0%) (32%) 28% 43%SafeCharge 498 411 3.7x 3.1x 13.1x 10.9x 7% 19% 28% 28%MoneyGram International 273 967 0.6x 0.6x 4.4x 3.9x (2%) (5%) 14% 16%



[1] SafeCharge (SCH) added to the index as of 4/4/14, PayPal (PYPL) added as of 7/7/15, Worldpay (WPG) added as of 10/14/15, First Data (FDC) added as of 10/16/15, Square (SQ) added as of 11/20/15.


10/17/18 Undisclosed

Euronet (NASDAQ:EEFT) raised $1.0bn in a senior unsecured revolving credit facility. Euronet is a leading global electronic payments provider and distributor. The credit facility is a five-year credit facility with a syndicate of domestic and international financial institutions. The previous senior secured facility of $675mm has been terminated concurrently with the new credit facility.

10/8/18

Klarna (Stockholm, Sweden) raised $20mm in an equity funding round led by H&M. Klarna is a payments startup that facilitates financing for online shoppers at point of sale. The investment is part of a partnership with H&M that will attempt to build an omni-channel payment service for H&M’s physical and online storefronts.

10/5/18

Brex (San Francisco, CA) raised $125mm in a Series C funding round led by DST Global and GreenOaks Capital Partners. Brex provides business credit card and expense management solutions, focusing on startups. The company plans to use the funds to expand beyond the startup market.



Public Market Data

13

NOVEMBER 2018

Recent Activity

[1] Euronext (ENX) added to the index as of IPO 6/20/14


CME Group 62,491 64,422 17.9x 15.7x 25.7x 22.1x 1% 13% 69% 71%IntercontinentalExchange (ICE) 44,375 51,568 11.5x 10.4x 18.1x 16.6x 3% 7% 61% 63%Hong Kong Exchange 33,051 8,675 6.1x 4.3x 7.5x 5.8x 18% 21% 69% 75%Deutsche Börse Group 23,715 25,282 8.7x 8.1x 17.5x 13.8x 3% 3% 48% 59%London Stock Exchange (LSE) 20,035 21,387 9.9x 7.7x 20.0x 15.0x 18% 9% 42% 51%BM&F Bovespa 14,471 14,822 23.7x 11.8x 29.4x 16.3x 0% 27% 51% 72%The Nasdaq OMX Group 14,507 17,904 4.8x na 14.2x 13.7x 7% (100%) 32% naCBOE 12,617 13,679 19.5x 28.3x 20.8x 17.2x 217% (78%) 30% 165%Japan Exchange Group (JPX) 9,581 9,437 9.7x 8.6x 14.0x 13.4x 4% 8% 66% 64%Australian Exchange (ASX) 8,341 7,575 11.5x 12.6x 14.0x 16.4x 5% (14%) 77% 77%Singapore Exchange (SGX) 5,362 4,694 8.1x 7.5x 14.9x 12.9x 3% 5% 53% 58%Euronext 4,365 4,459 7.9x 6.4x 13.5x 11.3x 7% 14% 54% 57%TMX Group 3,539 4,269 7.5x 6.8x 12.5x 12.3x 0% 10% 60% 56%

Trim Mean 17,311 16,316 10.7x 9.6x 16.8x 14.4x 6% (0%) 55% 65%Median 14,471 13,679 9.7x 8.4x 14.9x 13.8x 4% 8% 54% 64%


11x

13x

15x

17x

6.5x

7.5x

8.5x

9.5x


EV /

EBIT

DA

EV /

Reve

nue



95

125

155

185

215


5 Year M&A Sec Exchanges Index[1] vs. S&P 500, base = 100

M&A Sec Exchanges Index S&P 500


10/30/18Coinbase (San Francisco, CA) raised $300mm in a venture funding round led by Tiger Global. Coinbase offers an exchange for Bitcoins, payment gateway for online merchants to accept Bitcoins and also provides APIs for developers.

9/14/18

Nasdaq (NASDAQ:NDAQ) agreed to acquire Cinnober for SEK1.7bn (~$190mm), valuing the company at an implied 4.4x LTM revenue. Cinnober, which provides technology solutions to brokers, exchanges, and clearinghouses, is Nasdaq’s first acquisition since eVestment in September 2017. Nasdaq expects to realize significant synergies from product enhancement, cross-sale, and efficiency opportunities.

8/15/18

Coinbase (San Francisco, CA) acquired Distributed Systems. As a part of the transaction, the five-person Distributed Systems team and its technology will join Coinbase. Distributed Systems is a digital identity startup and a full-stack machine intelligence.


Company Market Enterprise EV / Revenue EV / EBITDA Revenue Growth EBITDA Margin(USD millions) Cap Value CY2017A CY2018E CY2017A CY2018E CY2017A CY2018E CY2017A CY2018E

Check Point Softw are 17,655 15,884 8.6x 8.3x 16.9x 15.4x 7% 3% 51% 54%Palo Alto Netw orks 16,986 15,503 7.8x 6.1x nm 24.2x 27% 27% nm 25%Fortinet 14,439 12,805 8.6x 7.2x nm 28.8x 17% 20% 11% 25%Symantec 11,435 14,038 3.0x 2.9x 16.3x 6.5x 25% 0% 18% 45%F5 Netw orks 10,704 9,665 4.6x 4.4x 15.2x 11.4x 4% 4% 30% 39%Okta 6,227 5,955 22.9x 15.9x nm nm 62% 44% nm nmProofpoint 4,746 4,556 8.8x 6.4x nm 42.6x 37% 38% nm 15%FireEye 3,557 3,419 4.6x 4.1x nm 29.8x 5% 11% nm 14%Avast 3,462 4,745 7.3x 5.8x 18.7x 10.6x 92% 24% 39% 55%Sophos 2,879 2,708 4.5x 3.9x nm 29.5x 18% 14% 2% 13%Tenable 2,594 2,330 12.4x 8.8x nm nm 51% 41% nm nmCyberArk 2,520 2,163 8.3x 6.7x nm 28.1x 21% 23% 11% 24%Mimecast 2,063 1,986 8.2x 6.3x nm 49.6x 41% 31% 5% 13%Imperva 1,978 1,674 5.2x 4.7x nm 37.5x 22% 10% nm 13%Radw are 1,126 826 3.9x 3.5x nm 30.2x 8% 10% nm 12%Forescout 1,114 914 4.1x 3.2x nm nm 32% 28% nm nmCarbon Black 1,084 920 5.7x 4.4x nm nm 39% 29% nm nmTrim Mean 5,722 5,559 6.8x 5.6x 16.6x 26.2x 27% 21% 19% 25%Median 3,462 3,419 7.3x 5.8x 16.6x 28.8x 25% 23% 15% 24%

Security Software

Public Market Data

Recent Activity

14

30x

35x

40x

45x

50x

55x

60x

4.0x

5.0x

6.0x

7.0x

8.0x

9.0x

10.0x


EV /

EBIT

DA

EV /

Reve

nue



90

120

150

180

210

240

270


5 Year M&A Security Index[1] vs. S&P 500, base = 100

M&A Security Index S&P 500

NOVEMBER 2018

[1] Mimecast (MIME) added to the index as of 11/19/15, Okta (OKTA) as of 4/7/17, Forescout (FSCT) as of 10/27/17, Carbon Black (CBLK) as of 5/8/18, Avast (AVST) as of 5/10/18 and Tenable (TENB) as of 7/26/18


10/24/18Check Point Software (NASDAQ:CHKP) acquired Dome9 for an undisclosed sum. The acquisition enhances Check Point’s Cloud Security offering with advanced active policy enforcement and multi-cloud protection capabilities.

10/10/18

Thoma Bravo agreed to acquire Imperva (NASDAQ:IMPV) for $1.82bn, valuing the Company at an implied 5.2x LTM revenue. Thoma Bravo has become very active in the space with the acquisitions of DigiCert, Bomgar, LogRhythm, Centrify and, a few days ago, the rumored intent to acquire Symantec.

10/3/18

Palo Alto Networks (NYSE:PANW) agreed to acquire RedLock (Menlo Park, CA) for $173mm. RedLock, which emerged from stealth just a year ago, helps companies make sure their cloud instances are locked down and secure. The acquisition fits with Evident.io, a cloud infrastructure security startup, that Palo Also Networks acquired in March for $300mm.


15

Technology-Enabled Financial Institutions

Public Market Data

Recent Activity

[1] Elevate (ELVT) added to the index as of IPO 4/6/17


11/16/16

LendingTree (NASDAQ:TREE) acquired Iron Horse Holdings (dba: CompareCards) for $130mm. CompareCards is an online platform enabling consumer credit card comparisons, and providing credit education and credit health management solutions. The transaction consideration consists of $85mm cash at closing and up to $45mm of earn-out payments paid during 2017 and 2018.

11/10/16

Intrum Justitia (STO:IJ) acquired 1st Credit for £130mm ($161mm), valuing the Company at an implied 3.9x 2015 EBITDA. 1st Credit provides debt purchase and outsourced debt collection services for banks, credit card providers, utilities, telecoms, and retail companies.


10/31/18

Akulaku (Pasig, Philippines) raised $70mm in a Series C funding round led by FinUp. Akulaku is a mobile app which lets users buy products online in installments without the need for a credit card. The company plans to use the funds to explore additional online verticals, such as catering and convenience stores. The company also plans to deepen its penetration within the Southeast Asian markets.

10/30/18

The Credit Junction (New York, NY) raised $23mm in an equity funding round led by Century Equity Partners. The Credit Junction is a data-driven, asset-based lender for small and medium sized businesses. In addition to the $23mm equity round, the company also raised a $150mm credit facility in March 2018.

10/22/18

Tala (Santa Monica, CA) raised an undisclosed sum in an equity funding round led by PayPal. Tala provides lending services to underserved consumers in emerging markets, including Kenya, Tanzania, and Mexico, via a smartphone app. PayPal’s recent investment of Tala adds to the increasing efforts of the company to expand beyond payment processing.

NOVEMBER 2018

Company Market Market Cap / Revenue Market Cap / EBT Revenue Growth EBT Margin(USD millions) Cap CY2017A CY2018E CY2017A CY2018E CY2017A CY2018E CY2017A CY2018E

The Charles Schw ab 63,071 7.3x 6.2x 17.3x 12.6x 15% 18% 42% 49%TD Ameritrade 29,429 7.4x 5.2x 18.5x 11.1x 20% 42% 40% 47%E*TRADE 12,882 5.1x 4.5x 11.3x 8.1x 21% 14% 45% 55%MarketAxess 7,931 20.0x 18.3x 39.3x 33.2x 7% 9% 51% 55%BGC Partners 5,164 1.6x 1.3x 30.9x 5.5x 15% 21% 5% 24%Interactive Brokers 3,724 2.4x 2.0x 3.5x 2.2x 10% 19% 67% 91%IG Group 2,884 4.2x 4.1x 9.1x 8.0x 3% 2% 46% 51%TP ICAP 2,090 0.9x 0.9x 7.9x 5.3x 96% 2% 12% 17%LendingClub 1,371 2.4x 2.0x na 14.8x 15% 21% na 13%Monex Group 1,214 2.8x 2.6x 24.8x na 15% 11% 11% naInvestment Technology Group 946 2.0x 1.9x nm na 4% 6% 1% naOn Deck 548 2.8x 1.4x na 12.5x 40% 100% na 11%GAIN Capital 344 1.2x 0.9x na 3.5x (27%) 23% na 27%BinckBank 321 1.7x 2.0x 34.6x na (0%) (14%) 5% naElevate Credit 184 0.3x 0.2x 61.0x 1.6x 16% 18% 0% 14%

Trim Mean 5,296 3.2x 2.7x 21.5x 8.4x 14% 16% 26% 31%Median 2,090 2.4x 2.0x 18.5x 8.0x 15% 18% 26% 37%

12x

14x

16x

19x

21x

23x

2.5x

3.2x

3.9x

4.6x

5.3x

6.0x


EV /

EBT

EV /

Reve

nue

5 Year LTM Revenue & EBT Multiples

Market Cap / LTM Revenue Market Cap / LTM EBT

100

116

132

148

164

180


5 Year M&A Fintech Sector Index vs. S&P 500, base = 100

M&A Tech-enabled Fin Institutions Index S&P 500


16

MERGER AND ACQUISITION TRANSACTIONS

Software and Services Transaction Activity

Software and Services Transaction Multiples

NOVEMBER 2018

Note: Mid-market M&A defined as transactions with enterprise values below $1 billion.

(1)

(1)

(1)

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

0

50

100

150

200

250

300

350

400

Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3

2015 2016 2017 2018

Agg

rega

te V

alue

($b

n)

Num

ber

of T

rans

actio

ns

Number of Transactions Aggregate Value

0x

1x

2x

3x

4x

5x

6x

7x

0x

6x

12x

18x

24x

30x

36x

42x

Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3

2015 2016 2017 2018

EV

/ R

even

ue

EV

/ E

BIT

DA

EV / EBITDA EV / Revenue

CLIENTS CHOOSE M&A TO ADVISE THEM ON THEIR IMPORTANT STRATEGIC MOVES

17

NOVEMBER 2018

“The team at Marlin & Associates was critical to our completion of this important strategic transaction, providing invaluable guidance throughout every step of the process. Their expertise in financial technology, SaaS, and the Salesforce ecosystem helped us to prepare effectively and best position Tier1CRM to potential investors. Their knowledge of the market helped us to identify the ideal investors as we move into the next phase of growth at Tier1. We could not have closed this transaction without their steady hand throughout.” Mark Notten, CEO, Tier1CRM

has received an equity investment from

Marlin & Associates acted as exclusive strategic and financial advisor to Investment Metrics

has been acquired by

Marlin & Associates acted as exclusive strategic and financial advisor to OptionsCity Software

Toronto, Canada

Atlanta, GA

Marlin & Associates acted as exclusive strategic and financial

advisor to TMX Group

has sold the Atrium wireless and extranet infrastructure

businesses to

a portfolio company of

Hamilton, Bermuda

Marlin & Associates acted as exclusive strategic and financial advisor to QuoVadis and ABRY


London, UKreceived an investment

from


advisor to OpenGamma

New York City, NY




advisor to Advise Technologies, LLC

New York City, NY

Lake Success, NY

Marlin & Associates acted as exclusive strategic and financial advisor to M&O Systems, Inc.



advisor to Tier1CRM

has received an equityinvestment from

Marlin & Associates acted as exclusive strategic and

financial advisor to MSCI Inc.

New York, NY

has sold Financial Engineering Associates, Inc. to

A portfolio company ofDallas, TX

New York, NY

has acquired

New York, NY

Marlin & Associates acted as exclusive strategic and financial advisor to Aquiline Holdings LLC


advisor to RapidRatings

San Francisco, CA

has received a $30 million equity investment from

New York, NYCharlotte, NC


advisor to Zenmonics

has received an equity investment from

Jacksonville, FL

CLIENTS CHOOSE M&A TO ADVISE THEM ON THEIR IMPORTANT STRATEGIC MOVES

18

NOVEMBER 2018

“Throughout this process, the team at Marlin & Associates provided great financial and strategic advice. They served as a true strategic partner and integral part of the team as they guided the complex cross-border carve-out project. Marlin & Associates unique industry expertise played a critical role in bringing this project to a successful conclusion for all stakeholders." Eric SinclairPresident, TMX Datalinx



financial advisor to Alacra, Inc.

Palo Alto, CA

New York, NYParis, France

Palo Alto, CA


financial advisor to Everteam.

has acquired the Business Process Management

business from

Campbell, CA

received an investment from


advisor to Trunomi.

Boston, MA

Windsor, CT

Marlin & Associates acted as exclusive strategic and financial advisor to Varden Technologies.


New York, NY

Dublin, Ireland

Marlin & Associates acted as financial advisor to Aquiline

Capital Partners.

has invested in

has sold the assets of

to

Marlin & Associates acted as exclusive strategic and financial advisor to CNO Financial Group.

Dublin, Ireland

London, United KingdomMarlin & Associates acted as

exclusive strategic and financial advisor to Information Mosaic.

has been acquired bySan Francisco, CA

has led a $60 million investment in

New York, NY

Marlin & Associates acted as exclusive financial advisor

Francisco Partners.

Brentwood, TN


Marlin & Associates acted as strategic and financial advisor to Agilum Healthcare Intelligence

has been acquired bySan Mateo, CA


financial advisor to Xignite.

received a strategicinvestment from

Tokyo, Japan

Salt Lake City, UT

Chicago, IL

Marlin & Associates acted as exclusive strategic and financial advisor to iTransact Group, LLC


Phoenix, AZ

Boston, MA and San Francisco, CA


advisor to BillingTree

has completed a majority recapitalization with

M&A Award USA TMT Advisory Firm of the Year (2012, 2015) – Acquisition International

• Financial Technology Deal of the Year (2012, 2011)• North America Small Mid Markets Corporate Deal of the Year (2013)• Corporate M&A Deal of the Year (2010)• Technologies Deal of the Year (2010)* Firm-wide Awards

• Professional Services B-to-B Deal of the Year (2017)*• Cross-Border Deal of the Year (2016)*• Cross-Border Boutique Investment Banking Firm of the Year (2016)*• Boutique Investment Banking Firm of the Year (2014, 2015, 2016)*• Advisory Firm of they Year (2015)*• Middle Market International Professional Services (B-to-B) Deal of the Year (2013)• Financial Services Deal of the Year (2013, 2012 and 2011)• Information Technology Deal of the Year (2011)• Middle Market Deal of the Year <$25M (2011)• Corporate and Strategic Acquisition of the Year (2011)• Middle Market Financial Services Deal of the Year (2011 and 2010)• Middle Market Information Technology Deal of the Year (2011 and 2010)• Middle Market International Financial Services Deal of the Year (2013 and 2010)• Middle Market International Information Technology Deal of the Year (2010)• Middle Market Financial Services Turnaround Deal of the Year (2009)• Middle Market Information Technology Turnaround Deal of the Year (2009)• Middle Market International Deal of the Year(2008)• Middle Market Financial Services Deal of the Year (2008)• Middle Market Technology Deal of the Year (2008)• Middle Market Investment Banking Firm of the Year (2008 and 2007)*• Middle Market International/Cross Border Deal of the Year (2007, Below $100M)• Middle Market Financial Services Deal of the Year (2007, Below $100M)

PEER AND INDUSTRY GROUP RECOGNITION

19

Boutique Investment Banking Firm of the Year(2014, 2015, 2016) - The M&A Advisor

The M&A Advisor and The M&A Forum have recognized Marlin & Associates for excellence in multiple deal categories including:

The Global M&A Network has recognized Marlin & Associates for excellence in multiple deal categories through its M&A Atlas Awards:

TMT Advisory Firm of the Year (2017)

Boutique Investment Banking Firm of the

Year(2017)

– ACQ5 (Acquisition Finance

Magazine)

“We are always grateful to be recognized for our hard work, but we are more pleased that we areable to help our clients achieve the results that they seek.”

Ken MarlinFounder and Managing Partner

NOVEMBER 2018

Note: Not a complete list.

Ken Marlin

Founder and Managing Partner of M&A• Twice named to II’s Tech 50• Member Market Data Hall of Fame• MD Veronis Suhler Stevenson• CEO of Telesphere Corporation • CEO of Telekurs (NA)• EVP Bridge Information systems• SVP at Dun & Bradstreet• BA from the University of California (Irvine)• MBA from UCLA, post-MBA from New

York University Jason Panzer

Chief Operating Officer of M&A• 20+ years of M&A experience advising

technology and PE firms globally• VP Business Development at FactSet• M&A attorney of Skadden, Arps, Slate,Meagher and Flom

• CFO of JCF Group• MBA from Columbia Business School• J.D. from Fordham Law School• CFA Charterholder

• 18+ years of investment banking andprivate equity experience

• Named twice to Dealer’s Digest and recently M&A Advisor’s “40-Under-40”

• Founded Marlin & Associates with Ken Marlin

• Formerly at Veronis Suhler Stevenson, Morgan Stanley, and American International Group

• BS from Binghamton University

MARLIN AND ASSOCIATES: WHO WE ARE

OUR SENIOR TEAM BRINGS EXTENSIVE DEPTH, BREADTH AND INDUSTRY EXPERTISE TO OUR CLIENTS

Michael Maxworthy

20

NOVEMBER 2018

"The Marlin & Associates team was a highly valued player in completing our transaction. Their professional expertise and commitment to the process, preparation, positioning, presentation, and leadership got us to the finish line. They’re smart, available whenever needed, and bring the work ethic to get the deal done.”

Roman BrunnerCEO, QuoVadis

Tom Selby

• 18+ years of M&A experience • VP of Business Development at SunGard• Founder of software company sold to

SunGard • Started career designing trading software

for TD Bank• BaSC, Engineering from University of

Toronto

Sam Levy

• 10+ years of technology investment banking experience

• Experience working with both large corporations and entrepreneurial technology-based companies

• Formerly at BNPParibas,• MBA, NYU Stern, MS from

CentraleSupelec

Tom Selby

Anup Agarwal

• 18+ years of investment banking experience

• Formerly at Lehman Brothers, Bear Stearns and Houlihan Lokey

• MBA, University of Virginia (Darden); BS, Birla Institute of Technology & Science


New York | Washington, D.C. | Toronto

www.MarlinLLC.com

21

m&a market update - marlin & associates

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