technology, media & telecom · software and payment solutions, designed to improve government...

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lfy- Harris Williams

Technology, Media & Telecom

Financial Technology Sector Review I Q2 2020

HW Financial Technology Introduction

1

Tyler DewingManaging Director

[email protected]: (617) 654-2133

Mike QuealyVice President


Scott ReinigDirector


HW FINANCIAL TECHNOLOGY TEAM

Julien OussadonDirector

[email protected]: +44 (0)20 7518 8909

OTHER TMT GROUP LEADERSHIP

Erik SzyndlarManaging Director


Sam HendlerManaging Director

[email protected] Office: (617) 654-2117

Mike WilkinsManaging Director

[email protected] Office: (415) 217-3411

Thierry MonjauzeManaging Director

[email protected]: +44 20 7518 8901

HW TECHNOLOGY, MEDIA & TELECOM (“TMT”) GROUPHARRIS WILLIAMS (“HW”)

• 25+ years and more than 1,000 closed transactions

• 350+ professionals across eight office globally

• 170+ closed transactions in the last 24 months

• 10 industry groups

• 35+ dedicated TMT professionals

• TMT offices include Boston, San Francisco, and London

FOCUSED ADVISORY SERVICES

• Mergers and acquisitions (M&A)

• Capital raises

• Corporate divestitures

VERTICAL FOCUS SECTORS

• Architecture, Engineering, and Construction Software

• Education Technology and Services

• Energy Technology

• Facilities and Real Estate Software

• Financial Technology and Payments

• Government Technology

• Healthcare IT

• Industrial and Supply Chain Technology

• Internet and eCommerce

• Retail Technology

HORIZONTAL FOCUS SECTORS

• Application Software

• Cloud Managed Services and Hosting Solutions

• Compliance Solutions

• CRM and Marketing Automation

• Human Capital Management

• Infrastructure and Security Software

• IT and Tech-Enabled Services

• Marketing, Research, and Insights Software

KEY TMT THEMES

✓SaaS / Cloud ✓Data & Analytics ✓Digital Transformation ✓A.I. / Machine Learning

CONSISTENT RECOGNITION FOR QUALITY

has received a strategic investment from

SELECT HW FINTECH

EXPERIENCE

has acquired has been acquired by has acquired has acquired has been acquired by has been acquired by

&

has acquired

mailto:[email protected]








Financial Technology Taxonomy

2

S E L E C T R E C E N T H W F I N A N C I A L T E C H N O L O G Y T R A N S A C T I O N S

Select Market Participants Select Market Participants Select Market Participants

ENTERPRISE AND COMMERCIAL INSTITUTIONAL CONSUMER

Solutions focused on supporting B2C and B2B payments and

financial activity and serving the financial needs of enterprises of

all sizes

Solutions focused on delivering improved financial and payment

experiences, personal wealth management, and access to

consumer loans

Solutions focused on serving the specific operational and compliance needs of banks,

insurance companies, and asset managers

PAYMENTS B2B TRANSACTIONS FINANCIAL SOFTWARE BANKING INSURANCE ASSET MGMT. / TRADING PAYMENTS PERSONAL FINANCE INVESTING

has been acquired by

Provider of integrated SaaS civic engagement and payment solutions for government entities

&


Provider of member management software and payment processing solutions for fraternal organizations and nonprofits


Provider of integrated software, data and analytics solutions to the global energy market, including financial services, capital markets, and trading and risk professionals

has acquired

Provider of an all-in-one, cloud-based marketing automation platform for financial professionals, broker dealers, insurance agents, and enterprises

has received a strategic

investment from

Provider of next-generation integrated digital government software and payment solutions, designed to improve government operations, revenue collection, and citizen engagement


Provider of e-learning, workforce management, and compliance solutions to enterprises and professionals across financial services, healthcare, and real estate

has acquired

Provider of a SaaS platform serving single-family and condo high-rise associations with unified property management, resident portals, accounting, payments, and security solutions

has acquired

Provider of integrated risk management, policy administration, and insurance claims management software solutions

Provider of business management and revenue cycle management (RCM) services to the health and wellness, child care, insurance, and leisure and attraction verticals


has acquired

Provider of SaaS property and investment management software solutions for the residential and commercial real estate markets

Case Study: FMG Suite

3

FMG Suite Overview FMG’s Proprietary Marketing Automation Platform

FMG Suite is a leading, cloud-based marketing automation platform for financial professionals, broker dealers, insurance agents, and enterprises. More than 40,000 financial professionals use FMG Suite every day to engage with clients and prospects to grow their businesses.

Key Investment Highlights

✓ Leading all-in-one cloud-based marketing automation platform for financialprofessionals

✓ Highly scalable SaaS solution provides high ROI value proposition

✓ Turnkey solution combines websites, marketing automation, and traditionalmarketing tools

✓ Compelling financial profile with high recurring revenue and profitability

✓ Underpenetrated market opportunity supported by favorable secular trends

✓ Industry compliance requirements provide a material barrier to entry

✓ Proven management team with deep domain and acquisition expertise

has acquired

Process Notes

▪ Competitive process with strategic, quasi-strategic, andfinancial sponsor involvement

▪ Buyers primarily interacted with Management on a virtualbasis, with a select few number of parties having met with Management in-person pre-COVID

▪ Aurora Capital Partners delivered a fully-baked LOI aftercompleting all business, legal, tax, and other diligence

The Most Comprehensive Turnkey Marketing Automation Platform for Financial Professionals and Enterprises

Enterprise & Commercial Market Observations1

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Stock Price Performance





Market Observations

Market Observations

Market Observations

Market Observations

Market Observations

Payment networks that facilitate next-generation payment channels continue to benefitfrom accelerating migration of payments to digital environments, a trend that will bemagnified by the ongoing COVID-19 pandemic.

Payment networks are increasingly focused on growing payment volumes by enhancingtheir solution offerings to deliver fast, frictionless, and secure payment processingacross end markets and geographies.

The payment processing landscape is undergoing significant change as incumbents seekto maintain market share through consolidation and improvements to merchant andconsumer user experiences.

As payments continue to shift to digital platforms, software providers are keen toimprove their competitive positions and gather better customer data by incorporatingprocessing functionality directly into their solutions.

B2B payments continue to be a key focus area for businesses globally as they seek tooptimize their supply chains with software, particularly in light of the current macroenvironment, driving demand for solutions that improve processes and reduce paymentfriction.

Businesses continue to adopt solutions that improve collections and settlement,increase transparency across their entire ecosystems, and improve regulatorycompliance.

As financial services become increasingly digital, industries and regulators continue toimplement stringent and expensive compliance requirements that are driving theadoption of software and AI solutions to automate data collection and meet compliancedemands.

Heightened awareness of—and focus on—privacy and data protection in the digital ageis making innovative solutions that offer superior security measures a strategicimperative for businesses across industries.

Enterprises across all markets continue to transition from legacy offerings to moderncloud-based solutions that improve operational efficiency, are user friendly for ayouthful workforce, and are capable of delivering solutions to evolving industries andcan be easily tailored for evolving work environments, as highlighted by the rapidincrease in employees working from home during COVID-19.

Incumbents and challengers alike continue to be acquisitive of solutions that expandtheir total addressable market (TAM) and enable them to offer more closely integratedworkforce management and benefits administration solutions across industries.

Card Networks Are Encouraging Contactless Payments Worldwide

Lessons From Banks and Payment Networks’ Latest Earnings Calls

The State of Dynamic Discounting in B2B Payments

Banks Embrace Real-Time Data Connectivity With Third-Party FinTechs

How Benefits and HR Tech Companies Are Responding to Coronavirus

Key Public Comps

Key Public Comps

Key Public Comps

Key Public Comps

Key Public Comps

Enterprise Value /

LTM Rev. LTM EBITDA 2020E EBITDA

11.0x 27.5x 25.1x

Enterprise Value /


8.9x 26.3x 14.1x

Enterprise Value /


4.8x 15.5x 12.0x

Enterprise Value /


7.2x 25.4x 19.0x

Enterprise Value /


10.4x 16.4x 17.2x

Transaction Spotlight





June 23, 2020

April 13, 2020

Enterprise Value: NA

June 4, 2020

Capital Raised: $8M

June 23, 2020

Capital Raised: $15M

June 8, 2020


Enterprise Value: $985M

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0%

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300%

Jun-15 Jun-16 Jun-17 Jun-18 Jun-19 Jun-20

S&P 500 Payment Networks

0%

100%

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300%

400%

500%


S&P 500 Payment Processing

0%

50%

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S&P 500 B2B Transactions

0%

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400%


S&P 500 Data & Compliance

0%

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300%


S&P 500 Payroll & Benefits

Undisclosed

https://www.businessinsider.com/coronavirus-pandemic-will-strengthen-contactless-payment-adoption-2020-4

https://www.pymnts.com/news/banking/2020/green-shoots-scorched-earth-what-we-learned-banks-payment-networks-latest-earnings-calls/

https://spendmatters.com/2020/06/24/the-state-of-dynamic-discounting-in-b2b-payments/

https://www.pymnts.com/news/b2b-payments/2020/bank-fintech-bbva-western-union-visa-real-time-data-connectivity/

https://www.benefitnews.com/list/how-benefits-and-hr-tech-companies-are-responding-to-coronavirus

Institutional & Consumer Market Observations1

5

Key Public Comps Stock Price Performance





Enterprise Value /


5.1x 19.5x 19.9x

Enterprise Value /


4.3x 18.1x 19.7x

Enterprise Value /


8.0x 18.2x 17.3x

Enterprise Value /


6.6x 8.7x 19.6x

Price /

2019 Book Value 2020E Book Value

0.0x 0.4x

Market Observations

Market Observations

Market Observations

Market Observations

Market Observations

Traditional financial institutions continue to acquire, partner with, and implement next-generation technology solutions across back-, middle-, and front-office functions tocompete with specialized digital offerings.

Digital-native banking platforms that offer consumers flexible and convenient productsare gaining prominence, putting additional pressure on incumbents, particularly asconsumer loyalty remains low and physical footprint becomes less important toyounger generations.

Insurance carriers and underwriters are increasingly focused on digitizing the customerjourney to enable personalized and contextual interactions with policyholders andprospects across all channels to increase customer acquisition and to lower costs.

Similar to the disruption occurring in the banking sector, digital-native and vertical-specific platforms continue to attract customers and put increasing pressure ontraditional insurance providers and market rates.

AMT organizations continue to seek software solutions that enhance returns withpowerful research tools using data and analytics, improve liquidity and access to capital,and streamline investor relations functions, allowing managers to focus on investing.

Wealth managers and financial advisors continue to use partnerships and M&A toachieve scale and fend off online investment platforms and robo-advisors, and to slowthe flow of capital moving into passive funds.

Consumer utilization of peer-to-peer payment solutions—especially those facilitatedthrough mobile platforms—has given rise to a number of innovative offerings and hasforced incumbents to acquire or launch frictionless solutions to keep pace.

Growing demand for peer-to-peer transfers continues to drive down costs as providersof all sizes compete to monetize rapidly growing payment volumes.

Persistently low rates and a strong macroeconomic environment have inhibited growthin alternative lending / investing platforms; however, the COVID-19 pandemic couldprove to be a catalyst for demand.

Marketplace lending has become increasingly specialized as niche players offeringvertical-specific solutions and expertise have successfully attracted new customers,despite being in the early stages of maturity.

Insurance Innovation: Putting Customers First in the Claims Process

Cloud Banking Gives Legacy Systems a Lift

Robo Advisor User Base Set to Nearly Double by 2024

The Role of Financial Institutions in Real-Time Payments

Pandemic Lending Pushes Community Banks Toward Fintech Fixes






May 28, 2020

June 10, 2020


June 24, 2020


June 15, 2020


April 7, 2020

Enterprise Value: $1.2B


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S&P 500 Insurance

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S&P 500 Asset Management & Trading

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S&P 500 P2P Transfers

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S&P 500 Marketplace Lending

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S&P 500 Banking

https://insurtechnews.com/insights/connected-insurance-how-to-deliver-better-customer-service-at-scale

https://www.pymnts.com/cloud-banking/2020/cloud-banking-gives-legacy-systems-a-lift/

https://www.wealthmanagement.com/technology/robo-advisor-user-base-set-nearly-double-2024

https://www.paymentsjournal.com/the-role-of-financial-institutions-in-real-time-payments/

https://news.bloomberglaw.com/banking-law/pandemic-lending-pushes-community-banks-toward-fintech-fixes

Company Description

Impact of COVID-19 on Financial Technology

6

The global COVID-19 pandemic represents a watershed moment for integrated payments as consumer, business, and government behavior changes dramatically, and it will have significant short- and long-term implications across all fintech segments.

Payment networks and processors have reported signs of decreased volume resultingfrom social distancing and travel restrictions, negatively impacting financials andvaluations in the near-term; however, COVID-19 is likely to accelerate digital paymentadoption as consumers and businesses migrate to e-commerce and retailers promotecashless transactions.

Payment Networks and Processors

B2B payment technology providers in select end markets, such as hospitality and travel,have been materially impacted by the economic slowdown, but other market segmentsare benefiting from accelerated demand for digital procure-to-pay and bill paymenttechnologies that mitigate business continuity risks in historically paper-driven or in-person environments.

B2B Payments

Financial services institutions were generally performing well prior to the escalation ofCOVID-19, boding well for technology companies that serve the sector; however,financial institutions will likely reprioritize resources and decrease technology spendingin the short term, particularly in segments most vulnerable to macro conditions and adeclining interest rate environment, such as banking and insurance.

Institutional Software

Consumer behavior has shifted considerably under restrictions, increasingunemployment, and waning confidence; however, consumer-focused fintechs arepositioned to benefit from acceleration of digital payments, mobile banking andfinancial management, and alternative lending.

Consumer

Financial software vendors have performed well relative to other fintech players, asmost generate revenue from recurring subscriptions; however, software providers willlikely experience higher churn across, underlying customer base, particularly at thesmall and midsize business (SMB) level, and sales cycle challenges as enterprises curtailand/or delay spending decisions.

Financial Software

Y E A R - T O - D AT E P U B L I C E Q U I T Y P E R F O R M A N C E

RECENT IPOs

S&P 500 Index

(4.0%)

Company IPO Date

(15.7%)

9.5%

(17.8%)

2.3%

(2.1%)

10.5%

(3.5%)

3.9%

20.9%

(73.3%)

Payment

Networks

Payment

Processing

B2B

Transactions

Data &

Compliance

Payroll &

Benefits Banking Insurance AMT P2P Transfers

Marketplace

Lending

Provider of integrated payment processing technology and point of sale (POS) solutions

June 5, 2020

Provider of an insurance comparison platformMay 21, 2020

Provider of cloud-based software to streamline banking operations and digitize customer experiences

July 14, 2020

Provider of digital-native insurance solutions for consumersJuly 2, 2020

Provider of enterprise data and analytics softwareJuly 1, 2020

Select Financial Technology M&A Transactions1

7

Mastercard’s acquisition of Finicity

• Finicity is a cloud-based open-banking platform for financial management, payments, and credit card decision-making that aggregates data and activity across accounts to deliver analytics and insights to consumers.

• The Company integrates with over 16,000 banks to receive and analyze data and serves some of the world’s leading financial institutions and fintech companies, including Experian, Rocket Mortgage, U.S. Bancorp, and JPMorgan Chase.

• Mastercard’s acquisition of Finicity comes on the heels of Visa’s acquisition of open-banking platform Plaid and will help expand its existing EU-centric open-banking solutions in the U.S., as well as enhance its credit-decisioning capabilities.

Zip’s acquisition of QuadPay

• Quadpay is a payment platform that provides retailers and e-commerce merchants the ability to integrate flexible payment options to allow consumers to split purchases into four interest-free installments.

• The Company, headquartered in New York, New York, boasts an impressive customer base, including Amazon, Walmart, and Etsy, among 3,500 other merchants serving 1.5 million consumers.

• Zip, a leading provider of “buy now, pay later” technology in Australia, will leverage the acquisition to expand its reach into the U.S. market, increasing its overall user base to 3.5 million and accelerating payment volumes.

Apttus’ acquisition of Conga

• Conga is a leading provider of digital document-transformation technologies that promote collaboration, process automation, intelligence, and compliance.

• The Company serves over 10,000 enterprise and mid-market organizations globally, encompassing 85,000 users across nearly all industries within 85 countries around the world.

• Apptus, which is backed by Thoma Bravo, will leverage Conga to enhance its offering by delivering a comprehensive suite of quote-to-cash, contract life-cycle management, document creation, and e-signature technologies that streamlines and digitizes workflows.

• Galileo Financial Technologies is a global API-based payments platform that enables companies, financial institutions, and investment firms to deliver digital payment and banking functionality.

• The Company serves a number of leading fintech companies around the world—including SoFi—and processed $53 billion in annualized payments in March 2020, up from $26 billion in September 2019.

• SoFi’s acquisition represents a significant opportunity to expand its offering to its one million members as well as to diversify its customer base both in terms of product offerings utilized and international markets.

SoFi’s acquisition of Galileo

SS&C’s acquisition of Innovest

• Innovest systems is a web-based software solution for trust accounting, payments, custody, trade execution, and other asset-servicing processes utilized by trusts, banks, retirement plans, and wealth management firms.

• The Company has over $500 billion in assets under administration on its trust and wealth management platform, processing over four million payments annually.

• SS&C serves customers with over $90 trillion in assets in trusts, representing a compelling opportunity to cross-sell Innovest software solutions into its existing customer base, not only increasing wallet share, but strengthening its overall competitive positioning.

Personal Finance

B2B Transactions

Payment NetworksAnnounced June 23, 2020


Rev: NA EV / EBITDA: NA

EV / Rev: NA

Announced June 2, 2020



EV / Rev: NA

Closed May 12, 2020


Rev: $84M EV / EBITDA: NA

EV / Rev: 8.5x

Announced April 7, 2020

Enterprise Value: $1.2B

Rev: $100M EV / EBITDA: NA

EV / Rev: 12.0x

Closed May 18, 2020



EV / Rev: NA

Marketplace Lending

AMT

Financial Technology Acquisition Activity

8

GLOBAL FINANCIAL SOFTWARE M&A ACTIVITY2

• Across financial software, there were 133 M&A transactions closed in Q2 2020, with strategic acquirers representing 71% of total deal volume.

• Strategic acquirers continue to outpace private equity as the race for wallet share and additional payment volumes remains front of mind for many decision-makers.

• Despite ongoing market turmoil driven by the COVID-19 pandemic, fintech continues to be a bright spot as digitization accelerates.

Private EquityStrategic

• The 10 most active strategic fintech consolidators have acquired over 100 companies since 2016.

• During the first half of 2020, eight of the top 10 most active strategics made at least one acquisition, including SS&C and Global Payments, each of which have made three acquisitions year to date.

MOST ACTIVE STRATEGIC ACQUIRERS OF FINTECH ASSETS BY VOLUME2

2019

2018

2017

2016

2020

42 40 2944 41 35

66 63 6549 54 48 59

40 43 35 39

122

91 102

127119 121

144 162 169

141115

94

107

86 79 8794

164

131 131

171 160 156

210 225

234

190

169

142

166

126 122 122 133

Q2-16 Q3-16 Q4-16 Q1-17 Q2-17 Q3-17 Q4-17 Q1-18 Q2-18 Q3-18 Q4-18 Q1-19 Q2-19 Q3-19 Q4-19 Q1-20 Q2-20

4 42 2 2

32 2

1

2 2

2 23

2

2

32

42

24 2

3

4

1

3

3

25 1

21

12

42

3

3 1

1 1 1

11

16

1312

10 10 10

8 8 87

Enterprise & Commercial Solutions – Landscape

9

P A Y M E N T S O T H E R E & C F I N A N C I A L S O F T W A R E

REPRESENTATIVE ENTERPRISE & COMMERCIAL SOLUTION PROVIDERS

PAYMENT PROCESSING & NETWORKS

Vertical Specific Payments

Real Estate & Leasing

SMB Marketplace Lending

Accounting, Tax, & Treasury

Virtual Credit Cards

HCM & Payroll

B2B TRANSACTIONS FINANCIAL SOFTWARE

Benefits

Data & CompliancePayment Networks

Payment Security

S E E N E X T P A G E F O R V E R T I C A L P A Y M E N T S M A R K E T M A P D E T A I L

Transfers & Remittance

Procure to Pay (P2P)

Bill Payment and Receivables

Accounts Payable / Accounts Receivable

Banks

Gateways, ISOs & Payfacs

Payment Processors

Payfac Enablement / Infrastructure

To receive the latest Financial Technology market maps, please contact HW at *[email protected]


Vertical Software and Payments Ecosystem

10

REPRESENTATIVE VERTICALLY-INTEGRATED SOFTWARE AND PAYMENTS PROVIDERS

DIVERSIFIED PAYMENT PROCESSORS AND INDUSTRY CONSOLIDATORS

Integrated Payments Enablers Diversified / Other Verticals

Field Services

Government EducationParking / Transportation

Healthcare

Food / BeverageEvents

Recreation / Wellness Real Estate / Property ManagementNon-Profit Hospitality / Travel

Legal



Enterprise & Commercial Solutions – Trading Comparables

11

VALUATION1

($ in millions)

B 2 B T R A N S A C T I O N STransfer/Remit

eInvoicing, EDI, RCM

B2B Payments

Payment Networks

Payment Processing

P A Y M E N T S

Payroll & Benefits

Data & Compliance

F I N A N C I A L S O F T W A R E

As of June 30th, 2020

Accounting & Tax

Western Union WU $11,111 $8,884 76.0% 8.2% 13.5% (5.3%) (11.4%) 25.0% 2.1x 2.4x 8.4x 9.6x 7.4x

Open Text Corporation OTEX $14,522 $11,503 88.8% 2.7% 34.7% 3.2% 11.3% 37.7% 4.9x 4.4x 13.1x 12.9x 28.9x

Basware HLSE:BAS1V $538 $484 92.6% 63.5% (25.4%) 2.8% (0.9%) 3.2% 3.2x 3.3x NM 28.4x NM

Cass Information Systems CASS $407 $563 64.0% (18.0%) (21.5%) 7.0% NM 0.0% 2.5x NA NA NA 17.0x

FleetCor Technologies FLT $25,264 $21,079 76.3% (11.2%) 74.4% 8.8% (7.4%) 57.4% 9.5x 10.3x 16.6x 20.0x 18.8x

WEX WEX $9,358 $7,180 69.8% (22.0%) 58.3% 15.5% (9.1%) 39.2% 5.4x 6.0x 13.8x 15.0x 46.3x

Visa V $423,053 $411,263 90.2% 11.1% 106.0% 10.7% (6.9%) 68.2% 18.0x 19.3x 26.4x 28.8x 29.4x

Mastercard MA $298,688 $296,806 85.2% 10.8% 143.5% 12.9% (6.3%) 60.2% 17.7x 18.9x 29.4x 33.5x 30.4x

American Express AXP $95,465 $76,633 68.9% (23.8%) 13.0% 8.1% (4.5%) 0.0% 2.4x 2.5x NA NA 10.7x

Discover Financial Services DFS $31,985 $15,343 53.9% (36.3%) (19.5%) 7.2% 33.6% 0.0% 3.9x 2.9x NA NA 3.9x

Fidelity National Information Services FIS $102,039 $82,845 84.8% 7.6% 57.0% 22.7% 19.9% 40.8% 9.9x 8.2x 24.2x 19.4x 184.3x

Fiserv FISV $88,130 $65,355 78.1% 5.5% 59.6% 74.9% 46.4% 51.5% 8.7x 5.9x 16.8x 15.8x 55.5x

Global Payments GPN $59,305 $50,734 80.9% 4.3% 87.8% 45.9% 34.2% 41.0% 12.1x 9.0x 29.4x 19.8x 66.8x

Square SQ $45,770 $46,106 97.3% 43.4% 347.3% 42.9% 11.0% 8.8% 9.7x 8.7x NM NM 64.7x

Adyen ADYEN $42,169 $44,078 97.7% 93.5% NM 57.5% NM 10.7% 14.1x NM NM NM 127.7x

Euronet Worldwide EEFT $5,200 $5,002 56.0% (42.8%) 9.7% 8.4% (17.2%) 22.0% 1.9x 2.3x 8.6x 22.3x 13.6x

EVO EVOP $1,835 $944 71.5% (22.8%) NM (14.0%) (12.5%) 32.6% 3.8x 4.3x 11.6x 14.1x NM

Automatic Data Processing ADP $64,745 $63,989 81.7% (10.5%) 45.3% 5.2% (1.4%) 24.9% 4.5x 4.5x 17.9x 18.9x 24.1x

Paychex PAYX $27,309 $27,173 83.7% (9.3%) 33.0% 15.1% (3.1%) 40.7% 6.8x 7.0x 16.6x 17.4x 23.5x

Paycom Software PAYC $17,661 $17,789 90.6% 36.4% 352.8% 30.3% 11.8% 42.3% 23.9x 21.4x NM NM 65.4x

Ceridian CDAY $12,410 $11,949 94.5% 54.5% NM 11.3% 3.1% 22.5% 15.1x 14.6x NM NM 94.5x

Paylocity PCTY $7,735 $7,832 96.8% 50.4% 222.9% 24.2% 12.3% 28.1% 14.9x 13.3x NM NM 85.1x

TriNet TNET $4,197 $4,101 79.2% (11.2%) 86.1% 10.1% NM 9.5% 1.1x 4.4x 11.5x 11.2x 12.6x

Intuit INTU $73,930 $77,238 96.5% 12.1% 123.0% 13.2% 5.6% 35.3% 10.4x 9.8x 29.4x 27.3x 43.7x

Avalara AVLR $10,056 $10,437 95.9% 76.1% NM 40.5% 20.3% 0.5% 26.3x 21.9x NM NM NM

Sage LSE:SGE $9,366 $9,072 81.3% (19.1%) (6.9%) 7.8% (10.7%) 24.6% 3.6x 4.1x 14.8x 16.2x 24.4x

Xero ASX:XRO $8,791 $8,817 97.9% 45.9% 235.1% 32.2% 11.7% 19.7% 19.3x 17.3x NM NM NM

Moody's MCO $56,849 $51,516 95.6% 38.5% 125.8% 8.7% (1.2%) 47.9% 11.8x 11.9x 24.6x 25.6x 28.5x

Thomson Reuters TRI $36,592 $33,618 83.9% 5.3% 33.3% 7.4% 1.1% 25.4% 6.2x 6.1x 24.4x 19.6x 23.7x

Experian EXPN $35,901 $31,674 96.1% 14.7% 70.6% 4.2% 0.0% 33.8% 7.2x 7.2x 21.2x 20.9x 34.7x

Equifax EFX $24,045 $20,864 95.5% 26.5% 25.1% 2.8% 4.1% 33.6% 6.9x 6.6x 20.4x 20.2x NM

TransUnion TRU $20,115 $16,520 86.0% 18.4% 101.0% 14.6% (3.4%) 39.6% 7.6x 7.8x 19.1x 21.4x 36.2x

FICO FICO $13,069 $12,125 95.7% 32.0% 199.9% 16.1% 2.1% 31.8% 10.9x 10.7x 34.3x 33.4x 45.0x

Enterprise & Commercial Solutions – Transaction Activity

12

SELECT RECENT M&A TRANSACTIONS1

SELECT RECENT PRIVATE PLACEMENT TRANSACTIONS2

Pending Finicity Mastercard Provider of consumer financial management and analytics solutions. $985

Pending AppExtremes Apttus Provider of cloud-based contract lifecycle management solutions. NA

06/24/2020 IDX Broker Elm Street (Aquiline) Provider of real estate technology and marketing solutions. NA

06/16/2020 Omni Latam Greensill Capital Provider of online lending platform for SMBs in Latin America. NA

06/15/2020 Xavier Receipt Bank Provider of accounting software that automates verification of complex financial data. NA

06/09/2020 BELLIN Treasury International Coupa Software Provider of cloud-based treasury management software. NA

06/04/2020 Castleton Technology MRI Software Provider of management software for non-profit organizations in the U.K. $103

05/29/2020 Excelity Global Solutions Ceridian HCM Provider of payroll processing and HCM software and services. NA

05/19/2020 SwervePay Ontario Systems Provider of consumer-facing payment solutions for healthcare. NA

05/05/2020 Taxweb Software Sovos Provider of tax determination software for companies in Brazil. NA

05/04/2020 ConnXus Coupa Software Provider of online platform for small businesses to expand supplier networks. NA

04/27/2020 TrueCoach Transaction Services Provider of software and payments for managing sports leagues and gyms. NA

04/23/2020 Acceptiva Qgiv Provider of online donation management and payments solutions for non-profits. NA

04/07/2020 FlashBanc Celero Commerce Provider of electronic payment technology and marketing loyalty software. NA

04/02/2020 Echo Daily VizyPay Provider of POS systems and payment processing technology for hospitality and personal services. NA

06/19/2020 Checkout.com Coatue Provider of payment processing gateway technology. $150

06/16/2020 Cedar Andreessen Horowitz Provider of billing and payments technology for healthcare providers. NM

06/16/2020 Brightside Andreessen Horowitz Provider of a personal finance wellness platform for employees. $35

06/09/2020 Squire Technologies Charles River Ventures Provider of software and payments for pet grooming services. $34

06/04/2020 Payfone Apax Partners Provider of a digital identity authentication platform. $100

06/03/2020 CINC SystemsC Spectrum Equity Provider of community association software and payments solutions. NM

05/28/2020 Vesta Goldfinch Provider of fraud protection and guaranteed payment technologies. $125

05/28/2020 Marqeta Undisclosed Investors Provider of integrated payment processing solutions. $150

05/21/2020 AvidXchange Undisclosed Investors Provider of automated invoice and payment processing platform. $8

05/15/2020 Benefitfocus Buildgroup Provider of web-based benefit administration software. $80

05/11/2020 ACGI Fullsteam Provider of association management software and payments solutions. NM

05/01/2020 Corcentric Bregal Provider of process automation and procurement solutions for B2B transactions. $77

04/23/2020 Digits Financial Benchmark Provider of financial software to give startups a real-time view into financial operations. $22

04/21/2020 NS8 Lightspeed Provider of data and analytics solutions for fraud prevention. $123

04/16/2020 Taxfix Index Ventures Provider of mobile software application for tax declaration and returns. $65

Institutional Solutions – Landscape

13

REPRESENTATIVE INSTITUTIONAL SOLUTION PROVIDERS

ASSET MANAGEMENT & TRADING

Trading, Wealth & Risk Management

Compliance & Reporting

MULTI-VERTICAL INSTITUTIONAL SOLUTIONS

Data & Analytics Networking & Collaboration Exchanges

BANKING

Core Systems

Digital Enablers

Lending & Workflow

Alternative Lending

Lead Generation

Compliance & Analytics

INSURANCE

Core Systems & Policy Management

Online Distribution & Direct-to-Consumer

Claims Management

Sales & Marketing

Lead Generation

Payments



Institutional Solutions – Trading Comparables

14

VALUATION1

($ in millions)

B A N K I N G

Core Systems

I N S U R A N C E

Technology & Underwriting

A S S E T M A N A G E M E N T & T R A D I N G

AMT

Data & Analytics

Market Indices


Jack Henry & Associates JKHY $14,113 $14,100 94.4% 34.9% 77.2% 6.5% 6.7% 32.4% 8.7x 8.1x 26.7x 25.4x 42.4x

Temenos SWX:TEMN $12,209 $11,187 80.5% (12.9%) 73.9% 15.6% (1.9%) 39.6% 12.6x 12.8x 31.7x 29.5x 71.3x

CoreLogic CLGX $7,004 $5,338 98.1% 58.9% 55.0% (1.5%) (1.7%) 28.1% 4.0x 4.0x 14.1x 13.3x 36.8x

Q2 Holdings QTWO $4,925 $4,565 91.4% 11.7% 132.2% 30.9% 25.4% 5.6% 15.6x 12.5x NM NM NM

ACI Worldwide ACIW $4,442 $3,129 68.6% (22.3%) 20.7% 24.6% 10.0% 24.2% 3.5x 3.2x 14.6x 12.9x 42.4x

Oracle Financial Services Software BSE:532466 $2,635 $3,249 83.4% (17.6%) (32.1%) (2.3%) (4.8%) 46.1% 3.9x 4.1x 8.5x 8.5x 11.5x

Bottomline Technologies EPAY $2,259 $2,230 88.7% 15.5% 97.6% 4.7% 3.4% 22.5% 5.2x 5.0x 23.1x 23.9x 269.4x

Guidewire Software GWRE $8,613 $9,220 89.3% 9.6% 61.3% (4.1%) 4.4% 17.4% 12.3x 11.8x NM NM NM

Sapiens International SPNS $1,454 $1,405 94.1% 68.0% 150.0% 12.4% 14.6% 16.9% 4.5x 3.9x 26.4x 22.2x 36.6x

Ebix EBIX $1,391 $682 43.5% (55.7%) (58.5%) 16.6% (10.0%) 31.1% 2.4x 2.7x 7.7x NA 4.8x

Moody's MCO $56,849 $51,516 95.6% 38.5% 125.8% 8.7% (1.2%) 47.9% 11.8x 11.9x 24.6x 25.6x 28.5x

RELX LSE:REL $52,369 $44,563 88.7% (5.3%) 7.4% 9.2% (7.3%) 36.4% 5.0x 5.4x 13.8x 15.5x 24.7x

Thomson Reuters TRI $36,592 $33,618 83.9% 5.3% 33.3% 7.4% 1.1% 25.4% 6.2x 6.1x 24.4x 19.6x 23.7x

MSCI MSCI $30,192 $27,906 93.6% 38.8% 224.1% 8.6% 6.8% 54.0% 19.4x 18.2x 35.9x 32.8x 43.8x

SS&C Technologies Holdings SSNC $21,737 $14,473 84.6% (3.7%) 47.0% 35.4% (0.8%) 38.8% 4.7x 4.7x 12.1x 12.3x 26.4x

FactSet Research Systems FDS $12,839 $12,440 95.5% 14.6% 97.7% 5.7% 3.6% 35.5% 8.9x 8.5x 24.9x 24.1x 32.6x

CME CME $61,562 $58,285 72.1% (17.3%) 29.8% 12.7% 9.0% 67.3% 12.7x 11.6x 18.8x 16.9x 29.3x

ICE ICE $58,261 $50,126 89.9% 6.3% 39.0% 4.6% 10.7% 64.4% 11.2x 10.1x 17.4x 15.6x 23.6x

London Stock Exchange LSE:LSE $37,753 $36,317 96.9% 46.5% 118.5% 12.6% (3.1%) 54.3% 12.3x 12.7x 22.7x 23.1x 57.1x

NASDAQ NDAQ $22,971 $19,602 97.8% 23.0% 67.1% (0.4%) NM 31.2% 5.4x 8.5x 17.3x 16.1x 20.5x

CBOE CBOE $11,032 $10,235 72.9% (12.6%) 2.1% (9.8%) NM 31.0% 4.4x 8.8x 14.3x 12.8x 26.7x

Euronext ENXTPA:ENX $7,732 $6,987 98.8% 30.8% 93.7% 8.2% 26.6% 59.1% 10.1x 8.0x 17.2x 14.0x 21.4x

Broadridge Financial Solutions BR $16,493 $14,489 92.1% (2.5%) 67.0% 0.8% 5.0% 21.3% 3.8x 3.6x 17.8x 16.2x 26.5x

Envestnet ENV $4,562 $3,935 83.8% 7.5% 85.7% 10.8% 5.9% 21.3% 5.1x 4.8x 23.8x 22.4x NM

Institutional Solutions – Transaction Activity

15



Pending BidFX Singapore Exchange Provider of an electronic foreign exchange trading platform. $128

Pending IRESS OneVue Provider of third-party fund registry technology. NA

Pending Sharepost Forge Provider of online secondary marketplace for private company securities. $160

06/23/2020 Assets of Motif Investing, Inc. The Charles Schwab Provider of thematic-driven digital retail investment platform. NA

06/16/2020 Stack Fintech Credit Sesame Provider of digital-native banking services. NA

06/01/2020 Trade Alert Cboe Global Markets Provider of securities market intelligence solutions for financial institutions. NA

05/26/2020 Atsource Solutions Dye & Durham Provider of workflow and management software for financial institutions. NA

05/15/2020 Innovest Systems SS&C Technologies Provider of trust and wealth management software solutions. $120

05/12/2020 Nomis Solutions Symphony Technology Group Provider of software and analytics solutions for retail banks. NA

05/04/2020 Catena Technologies IHS Markit Provider of trade reporting software. NA

05/04/2020 AdvisorEngine Franklin Resources Provider of web-based wealth management technology platform. $20

05/01/2020 InsideResponse SelectQuote Provider of marketing technology designed for insurance. $65

04/22/2020 LeapLife Even Financial Provider of digital-native life insurance offerings. NA

04/06/2020 Clearpool BMO Financial Group Provider of trading software for equity markets. NA

04/01/2020 InsPro Technologies Majesco Provider of insurance administration software. $12

06/19/2020 Derivative Path FTV Capital Provider of trading software to hedge interest rate risk. $35

06/17/2020 Pagaya Aflac Ventures Provider of alternative data and asset management software. $102

05/21/2020 Spruce Scale Venture Partners Provider of insurance for real estate companies and mortgage lenders. $29

05/12/2020 Nomis STG Provider of software and analytics solutions for retail banks. NM

05/12/2020 Vise Sequoia Capital Provider of artificial intelligence-based portfolio management software. $15

05/06/2020 AdvisorEngine Franklin Templeton Provider of wealth manager software for advisors. NM

05/05/2020 Treasury Prime QED Investors Provider of banking integration software to automate operations and compliance. $9

05/05/2020 Proxymity Citi; Computershare; J.P. Morgan Provider of digital proxy voting and shareholder communication software. $22

05/04/2020 Bought By Many FTV Capital Provider of digital platform for customized insurance products. $97

04/27/2020 Duck Creek Kayne Anderson Provider of policy administration software for insurance agencies. $230

04/27/2020 Flueid Software Aquiline Capital Partners Provider of real estate and mortgage lending workflow solutions. NM

03/19/2020 Addepar WestCap Group Provider of a web-based platform for data aggregation and reconciliation. $40

03/10/2020 NorthOne Battery Ventures; Redpoint Management Provider of digital banking solutions. $21

03/02/2020 Thought Machine Draper Esprit; Lloyds Banking Group Provider of a cloud native core banking platform. $83

05/03/2019 Carta Lightspeed Provider of ownership management software for private companies. $300

Consumer Solutions – Landscape

16

ALTERNATIVE LENDING PLATFORMS & MARKETPLACES

PAYMENTS & TRANSFERS BANKING & PERSONAL FINANCE INVESTING & WEALTH MANAGEMENT

Digital Banking InvestingPeer to Peer Transfers

Digital Wallets and Payments

Cryptocurrencies

Personal Finance

Credit Monitoring

Wealth Management

REPRESENTATIVE CONSUMER SOLUTION PROVIDERS


Crowdfunding


Consumer Solutions – Trading Comparables

17

VALUATION1

($ in millions)

P E E R T O P E E R

P E R S O N A L F I N A N C E & M O B I L E W A L L E T SPersonal Fin.

Mobile Wallets

P2P Transfers

Marketplace Lending


PayPal PYPL $203,129 $204,574 99.3% 51.5% 224.6% 15.0% 13.7% 27.2% 11.4x 10.1x 42.1x 37.6x 46.3x

Western Union WU $11,111 $8,884 76.0% 8.2% 13.5% (5.3%) (11.4%) 25.0% 2.1x 2.4x 8.4x 9.6x 7.4x

Green Dot Corporation GDOT $1,319 $2,600 94.6% 1.3% 27.4% 4.5% (5.8%) 20.6% 1.2x 1.3x 5.8x 7.7x 13.5x

On Deck Capital ONDK $950 $42 15.3% (82.4%) (84.6%) 71.4% (25.6%) 8.6% 2.1x 2.9x 24.7x NM 4.3x

LendingClub LC $946 $318 27.6% (70.6%) (83.5%) 8.6% NM 17.7% 1.3x 2.8x 7.1x NM NM

Intuit INTU $73,930 $77,238 96.5% 12.1% 123.0% 13.2% 5.6% 35.3% 10.4x 9.8x 29.4x 27.3x 43.7x

Apple AAPL $1,605,875 $1,581,165 98.0% 81.0% 153.3% 2.3% (0.3%) 28.8% 6.0x 6.0x 20.8x 22.0x 19.7x

Microsoft MSFT $1,489,689 $1,543,306 99.6% 50.0% 195.2% 13.3% 10.3% 44.3% 11.1x 10.1x 25.1x 22.1x 27.5x

Amazon AMZN $1,404,892 $1,376,033 98.7% 43.5% 185.0% 20.5% 23.7% 14.9% 5.0x 4.1x 33.7x 31.4x 84.7x

Facebook FB $597,978 $647,453 92.6% 17.7% 50.4% 26.6% 9.1% 56.0% 8.5x 7.8x 15.1x 16.0x 25.9x

Consumer Solutions – Transaction Activity

18



Pending Galileo Processing Social Finance Provider of customized online payyment processing solutions. $1,200

Pending Quadpay Zip Provider of “buy now, pay letter” payment processing solutions. $375

06/29/2020 Empower Retirement Personal Capital Provider of online financial advisory and wealth management solutions. $1,000

06/15/2020 Verse Payments Lithuania Square Provider of digital peer-to-peer payments platform for consumers. NA

05/15/2020 Homebot, Inc. ASG Provider of consumer-facing financial planning applications for homeowners. NA

04/01/2020 PlanPlus Global Morningstar Provider of software tools for personal financial and investment planning. NA

03/12/2020 Validate Accuity Provider of cloud software solutions for transaction management and mobile banking. NA

03/04/2020 Klarna Ant Financial Services Group Provider of an online payment platform offering payment plans for non-cash transactions. NA

02/24/2020 Credit Karma Intuit Provider of consumer technology platform offering free credit scores and reports with monitoring. $7,100

01/27/2020 Pocopay Opera Software Provider of an online payment platform. NA

01/15/2020 Raisin Technologies Undisclosed Provider of online savings solutions. NA

01/11/2020 PaySense PayU Provider of a financing platform designed to give loans and credit options. $185

01/06/2020 Open Lending Nebula Acquisition Provider of automated lending services for the automotive sector. $1,300

12/11/2019 Haven Money Credit Karma Provider of a wealth management platform that automates savings and investments. NA

12/09/2019 Gradifi E*Trade Provider of an online platform for student loan debt problems. $30

06/17/2020 Upgrade Santander Provider of alternative lending solutions to consumers. $40

06/15/2020 Monzo Orange Digital Ventures; General Catalyst; Stripe Provider of digital-native banking services. $76

06/12/2020 Blend Financial Felicis Ventures Provider of digital lending platform for consumers. $12

05/21/2020 Aspiration Alpha Edison Provider of online banking and investment technology for charitable consumer transactions. $135

05/21/2020 ByMiles CommerzVentures Provider of online pay-per-mile car insurance solutions. $18

05/20/2020 Truework Activant Capital Provider of employment and income verification data solutions for consumers. $30

05/14/2020 Anyfin EQT Ventures Provider of loan refinance technology for consumers. $30

05/05/2020 Nium Visa; BRI Ventures Provider of international payment remittance technology. NM

05/05/2020 FirstDollar Next Coast Ventures Provider of healthcare savings solutions for consumers. $5

05/01/2020 Robinhood Sequoia Capital Provider of online brokerage solutions for consumers. $600

03/23/2020 Institutional Capital Network Ping An Ventures; The Blackstone Group Provider of a financial technology platform that democratizes alternative investments for investors. $146

02/28/2020 Stash LendingTree Provider of mobile application that simplifies investing, saving, and retirement options. $108

02/25/2020 Revolut TCV, Index Ventures; TriplePoint Capital Provider of mobile foreign exchange and money transfer solutions. $500

12/18/2019 Varo Gallatin Point Capital; The Rise Fund Provider of digital-native banking services. $235

01/09/2019 N26 Tencent Holdings; Allianz X; Insight Partners Provider of digital-native banking services. $567

Harris Williams Capabilities and Locations

19

Harris Williams has a broad range of industry expertise, which create powerful opportunities. Our clients benefit from our deep-sector experience, integrated industry intelligence and collaboration across the firm, and our commitment to learning what makes them unique. For more information, visit our website at www.harriswilliams.com/industries.

Healthcare & Life Sciences

Energy, Power & Infrastructure

IndustrialsAerospace, Defense & Government Services

Building Products & Materials

Business Services

Consumer Specialty Distribution

Technology, Media & Telecom

Transportation & Logistics

HARRIS WILLIAMS OFFICE LOCATIONS

U N I T E D S T A T E S E U R O P E

BostonOne International PlaceSuite 2620Boston, Massachusetts 02110Phone: +1 (617) 482-7501

Cleveland1900 East 9th Street20th FloorCleveland, Ohio 44114Phone: +1 (216) 689-2400

Minneapolis222 South 9th StreetSuite 3350Minneapolis, Minnesota 55402Phone: +1 (612) 359-2700

Richmond (Headquarters)1001 Haxall Point9th FloorRichmond, Virginia 23219Phone: +1 (804) 648-0072

San Francisco575 Market Street31st FloorSan Francisco, California 94105Phone: +1 (415) 288-4260

Washington, D.C. 800 17th St. NW2nd FloorWashington, D.C. 20006Phone: +1 202-207-2300

FrankfurtBockenheimer Landstrasse 33-3560325 FrankfurtGermanyPhone: +49 069 3650638 00

London63 Brook StreetLondon W1K 4HS, EnglandPhone: +44 (0) 20 7518 8900

Sources and Disclosures

20

The information and views contained in this report were prepared by Harris Williams LLC (“Harris Williams”). It is not a research report, as such term is defined by applicable law and regulations, and is provided for informational purposes only. It is not to be construed as an offer to buy or sell or a solicitation of an offer to buy or sell any securities or financial instruments or to participate in any particular trading strategy. The information contained herein is believed by Harris Williams to be reliable but Harris Williams makes no representation as to the accuracy or completeness of such information. Harris Williams and/or its affiliates may be market makers or specialists in, act as advisers or lenders to, have positions in and effect transactions in securities of companies mentioned herein and also may provide, may have provided, or may seek to provide investment banking services for those companies. In addition, Harris Williams and/or its affiliates or their respective officers, directors and employees may hold long or short positions in the securities, options thereon or other related financial products of companies discussed herein. Opinions, estimates and projections in this report constitute Harris Williams’ judgment and are subject to change without notice. The securities and financial instruments discussed in this report may not be suitable for all investors and investors must make their own investment decisions using their own independent advisors as they believe necessary and based upon their specific financial situations and investment objectives. Also, past performance is not necessarily indicative of future results. No part of this material may be copied or duplicated in any form or by any means, or redistributed, without Harris Williams’ prior written consent.

Harris Williams LLC is a registered broker-dealer and member of FINRA and SIPC. Harris Williams & Co. Ltd is a private limited company incorporated under English law with its registered office at 8th Floor, 20 Farringdon Street, London EC4A 4AB, UK, registered with the Registrar of Companies for England and Wales (registration number 07078852). Harris Williams & Co. Ltd is authorized and regulated by the Financial Conduct Authority. Harris Williams & Co. Corporate Finance Advisors GmbH is registered in the commercial register of the local court of Frankfurt am Main, Germany, under HRB 107540. The registered address is Bockenheimer Landstrasse 33-35, 60325 Frankfurt am Main, Germany (email address: [email protected]). Geschäftsführer/Directors: Jeffery H. Perkins, Paul Poggi. (VAT No. DE321666994). Harris Williams is a trade name under which Harris Williams LLC, Harris Williams & Co. Ltd and Harris Williams & Co. Corporate Finance Advisors GmbH conduct business.

1. CapIQ.

2. PitchBook.

Disclosures

Sources

technology, media & telecom · software and payment solutions, designed to improve government...

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