SSA Global

Shelley Isenberg

SVP Acquisitions and Corporate Development

February 12, 2004

Shelley Isenberg

SVP Acquisitions and Corporate Development

February 12, 2004

M&A Today: Technology, Information and Business Services

What Buyers Want

Agenda

Direction of the Enterprise Resource Planning Software Industry

About SSA

Acquisitions a tactic to achieve the strategy what buyers want & what they can provide “land mines” and how to deal with them

Summary

Direction of the ERP Industry

Many acquisitions in our space

Investors seek to exit as they don’t see the expected results

Too many ERP players, not enough customers

Less expensive to buy software than build it

Less expensive to acquire customers that organically grow the base

Mid market is seen as the “sweet spot”

About SSA

Mission Statement Our mission is to help customers move their businesses forward faster by:

Delivering the right solutions Implementing it quickly Making it pay

Industry Ranking #1 enterprise software provider in the manufacturing space #4 player in the extended ERP market

Financial Highlights Revenue this FY will be $700+m EBITA 20+%

Global Footprint 3,600 employees 47 direct and 74 affiliate offices worldwide

Company Mantra “Acquire market share; develop customer share” “Keep customers for life”

Become a global market leader in mid-market ERP space

Vertically focused

Triple customer base

Provide more of an “end to end” offering

Morph from a “software company” to a “solutions provider”

Get more of “customer’s share of wallet”

Grow revenues from approx. $130 m (FY01) to over $1 b (FY04)

Become a global market leader in mid-market ERP space

Vertically focused

Triple customer base

Provide more of an “end to end” offering

Morph from a “software company” to a “solutions provider”

Get more of “customer’s share of wallet”

Grow revenues from approx. $130 m (FY01) to over $1 b (FY04)

Strategy (since FY02)

10% organic growth

Significant acquisitive growth

Maintain 20% margins

Commoditize pricing

10% organic growth

Significant acquisitive growth

Maintain 20% margins

Commoditize pricing

Tactics to Achieve our Strategy

Value Creation:

Cheapest way to grow

Fastest way to grow

Large customer base provides opportunities:

cross selling

commoditize pricing

recurring revenue base

Synergistic cost cutting by fully integrating

Create end to end offering to get more of customers’ IT spend

Value Creation:

Cheapest way to grow

Fastest way to grow

Large customer base provides opportunities:

cross selling

commoditize pricing

recurring revenue base

Synergistic cost cutting by fully integrating

Create end to end offering to get more of customers’ IT spend

Why SSA Acquires

Customer Base Targets

$20+ m to $400 m in revenue

30+ % recurring revenue

Manufacturing or distribution industry focus

Global or regional

Unprofitable

Extension Product Targets

Proven successful product

J2EE, Java, WebSphere technology

Fill a “white space” within our “end to end” offering

Target has a good product in need of global distribution arm

Unprofitable

Customer Base Targets

$20+ m to $400 m in revenue

30+ % recurring revenue

Manufacturing or distribution industry focus

Global or regional

Unprofitable

Extension Product Targets

Proven successful product

J2EE, Java, WebSphere technology

Fill a “white space” within our “end to end” offering

Target has a good product in need of global distribution arm

Unprofitable

Target Profiles

To be qualified, a target must satisfy our 4 M’s:

Money

valuation

currency

Motivation

willing seller

Method

transaction structure

Match

fit (technology, culture, industry, sector, etc.)

To be qualified, a target must satisfy our 4 M’s:

Money

valuation

currency

Motivation

willing seller

Method

transaction structure

Match

fit (technology, culture, industry, sector, etc.)

Target Selection

From Sellers Perspective We Provide:

speed

history of successful “win/win” deals

certainty of outcome

cash

continuity of business

pragmatic due diligence review

opportunity for sr. management to exit if they want to (i.e. no handcuffs)

From Sellers Perspective We Provide:

speed

history of successful “win/win” deals

certainty of outcome

cash

continuity of business

pragmatic due diligence review

opportunity for sr. management to exit if they want to (i.e. no handcuffs)

Value Proposition

From Buyer’s Perspective We Require:

motivated seller

satisfied customer base/proven technology

quick process

access to sr. management & key customers

limited due diligence

confirmation of assumed integration synergies

unrestricted ability to integrate

100% ownership of both the target and IPR

full, frank & early disclosure of “land mines” & “nuances”

From Buyer’s Perspective We Require:

motivated seller

satisfied customer base/proven technology

quick process

access to sr. management & key customers

limited due diligence

confirmation of assumed integration synergies

unrestricted ability to integrate

100% ownership of both the target and IPR

full, frank & early disclosure of “land mines” & “nuances”

Requirements

litigation (threatened or actual)

side letters

significant assets not owned by target

restructuring costs too high

unhappy customers / product problems

revenue recognition issues

significant off balance sheet liabilities

lack of adequate due diligence data

target does not record data divisionally or segmented

revenue and/or costs not allocated

data in foreign languages/financial statement presentation

records don’t tie (to each other or to management’s representations)

differed revenue obligations not adequately provided for

powerful union/works council

litigation (threatened or actual)

side letters

significant assets not owned by target

restructuring costs too high

unhappy customers / product problems

revenue recognition issues

significant off balance sheet liabilities

lack of adequate due diligence data

target does not record data divisionally or segmented

revenue and/or costs not allocated

data in foreign languages/financial statement presentation

records don’t tie (to each other or to management’s representations)

differed revenue obligations not adequately provided for

powerful union/works council

“Land Mines”

Dealing with “Land Mines”

“ring-fence” the problem price adjustment leave behind with seller indemnity

condition to close – seller to resolve the problem at no cost to target (seller is often in a better position to do so)

change deal structure to an “asset deal”

“follow the money” – often a barometer for the business

Integration is planned from the beginning

Initial valuation model contains integration cost/savings assumptions

Due diligence includes validation of assumptions

Due diligence also includes integration planning

Integration is executed early and ruthlessly

Plan is complete & ready to execute prior to close

Some execution may be done prior to close

Minimize repeated right-sizing (cut deep and fast once)

Integration is planned from the beginning

Initial valuation model contains integration cost/savings assumptions

Due diligence includes validation of assumptions

Due diligence also includes integration planning

Integration is executed early and ruthlessly

Plan is complete & ready to execute prior to close

Some execution may be done prior to close

Minimize repeated right-sizing (cut deep and fast once)

Key to Success

it’s key for buyers to make their expectation clear to sellers upfront

similarly, buyers should make it clear as to what they can offer to the seller

the earlier “land mines” are revealed so they can be addressed the better - …last minute surprises often lead to worse results for the seller

it’s a small world – reputations are important in the M&A field

it’s key for buyers to make their expectation clear to sellers upfront

similarly, buyers should make it clear as to what they can offer to the seller

the earlier “land mines” are revealed so they can be addressed the better - …last minute surprises often lead to worse results for the seller

it’s a small world – reputations are important in the M&A field

Summary

THANK YOU