QUARTERLY FINANCIAL TECHNOLOGY MARKET EXECUTIVE BRIEFING

Transcription

1 QUARTERLY FINANCIAL TECHNOLOGY MARKET EXECUTIVE BRIEFING Analysis Through Q October 1, 2015 This communication is provided for informational purposes only, is not a formal confirmation of any particular transaction, and should not be regarded as an offer to sell or solicitation to buy any financial instrument or service. Morgan Partners LLC accepts no liability whatsoever arising directly or indirectly from the use of this document, and offers no warranty in relation to the accuracy or completeness off its contents. Unauthorized distribution without prior consent from Morgan Partners LLC is strictly prohibited. Morgan Partners LLC is a broker-dealer registered with the Securities and Exchange Commission and is a FINRA / SIPC member firm.

2 Morgan Partners Deal Announcement: Intygral acquired by Zywave Intygral s Situation has acquired a portfolio company of Financial Advisor to the Seller July 2015 Founded in 2006, Intygral is a leading provider of digital marketing systems for the insurance industry. The company helps agencies engage customers more proactively, automating important marketing tasks and driving impressive ROI. Hundreds of agencies use the Intygral platform to sell and service millions of policyholders nationwide. After receiving multiple unsolicited expressions of interest from potential acquirers, owner Serent Capital engaged Morgan Partners to manage these discussions in order to optimize the ultimate outcome. Morgan Partners Approach I've worked with a lot of bankers in my career, and having experienced insurance technology professionals like the team at Morgan Partners made all the difference in producing a successful outcome. Kevin Frick Co-Founder & Partner Serent Capital Morgan Partners took over discussions with all interested parties while simultaneously assembling an abbreviated information memorandum and preparing the company for due diligence. Working closely with Intygral management and representatives from Serent, the Morgan team conducted a disciplined process producing multiple competitive offers. Anticipating likely questions from buyers, Morgan Partners hardened company management to pointed, probing diligence queries and helped ensure a smooth diligence effort. Results and Outcome The ability to dive into a relatively complex situation and immediately take control ultimately enabled Morgan Partners to achieve the best possible outcome for both Serent Capital as well as the Intygral team. The transaction with Zywave closed on July 15, 2015, just 3½ months after Morgan Partners was engaged. The Intygral team could not be happier with their new home at Zywave, and Intygral s Digital Marketing Platform has become an important part of Zywave s Broker Briefcase content marketing solution. 2

3 Contents Overall Market Performance 4 Sub-sector Comparison 6 Sub-sector Analyses Capital Markets Technology Insurance Technology Data & Analytics Service Providers Technology-led Traditional Financial Institutions Contact Information 16 3

4 Fintech Sub-sector Performance: YTD % 20% 15% 14% 13% 10% 5% 0% 3% 0% (2%) -5% -10% (8%) -15% S&P 500 Insurance Technology Service Providers Capital Markets Technology Data & Analytics Technology-led Financial Institutions The broader market was in slightly positive territory until Q3, when a sell-off driven largely by instability in Greece and the falling Chinese stock market drove the market down Insurance Technology and Capital Markets Technology have been the clear winners throughout the year Insurance Tech was led by Sapiens, Ebix and Innovation Group, while Capital Markets Tech grew behind top performer SimCorp as well as strong results from SS&C and Fiserv 1 Capital Markets Technology, Insurance Technology, Data & Analytics, Service Provider, and Technology-led Financial Institution performance reflects the constituents on pages 7, 9, 11, 13, and 15 of this briefing, respectively, and are calculated as the market cap-weighted daily percentage price change from the base value for each constituent. Constituents must have pricing data for the entire measurement period for inclusion in the aggregate. Source: S&P CapitalIQ 4

5 Corporate Cash and Technology M&A Activity S&P 500 Total Cash Balance ($ billions) vs. Tech M&A Volume $1,800 1,000 $1,600 $1,400 $1,200 $1,000 $800 $600 $400 $ $0 Jun-09 Sep-09 Dec-09 Mar-10 Jun-10 Sep-10 Dec-10 Mar-11 Jun-11 Sep-11 Dec-11 Mar-12 Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 Sep-13 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 0 S&P 500 Cash (left axis) All Tech Quarterly M&A Volume (right axis) The spike in corporate cash balances at year-end 2014 contributed in part to the uptick in deal volume during 2015 Software M&A activity picked up significantly in Q with 557 deals, easing somewhat to 480 in Q3. Transactions over $1 Billion in enterprise value jumped over the last two quarters, with 9 such deals in Q2 followed by 6 in Q3 Source: S&P CapitalIQ. S&P 500 constituent information as of June

6 Sub-sector Comparison Enterprise Value / LTM Revenue 1 Financial Technology Data & Analytics Capital Markets Technology Service Providers Insurance Technology 2.1X 2.3X 3.7X 4.3X Tech-led Traditional Financial Institutions 2.2X S&P X Enterprise Value / LTM EBITDA 1 Financial Technology Capital Markets Technology Data & Analytics Service Providers Insurance Technology 14.8X 14.1X 11.2X 13.3X Tech-led Traditional Financial Institutions S&P X 12.6X Within Fintech, the Capital Markets Technology and Data & Analytics sub-sectors continue to trade at the most favorable multiples Insurance Technology multiples have strengthened over the last two quarters, while Service Providers have weakened somewhat 1 Enterprise value, revenue and EBITDA are universe medians drawn from publicly traded companies as of September 2015, where the constituents of each sub-sector are those on pages 7, 9, 11, 13, and 15 of this briefing. LTM denotes latest 12 months. Source: S&P CapitalIQ 6

7 Capital Markets Tech: Public Company Statistics Revenue and EBITDA Multiples 4.0x 3.5x 3.0x 2.5x 1.5x 1.0x 0.5x 18.0x 16.0x 14.0x x 6.0x 4.0x Enterprise Value / LTM Revenue (left axis) Enterprise Value / LTM EBITDA (right axis) Source: S&P CapitalIQ 7

8 Capital Markets Technology: Select Transactions Q Transactions Notable Transactions 9/22/2015: FactSet acquires Portware Portware is the financial industry's leading developer of broker-neutral, automated trading solutions for global equities, futures, options and FX Portware's tools and expertise in trading are a very strong complement to FactSet s leading suite of financial information and analytics for investment professionals 1 Announcement follows on the heels of FactSet s acquisition of Code Red, and will greatly benefit the combined entity s buy-side clients 2 7/26/2015: Deutshce Börse AG acquires 360T Group 360 Treasury Systems AG is the leading global provider of a multi-bank, multi-asset trading platform Strategic purchase will position 360T for continued strong global growth on a new scale, while enabling Deutsche Börse Group to enter the growing and attractive FX market 3 Revenue multiple represents high water mark for capital markets transactions this year Source: S&P Capital IQ and publicly available records 1 GlobeNewswire, 2 Waters Technology, 3 Treasury Management Intl: 8

9 Insurance Technology: Public Company Statistics Revenue and EBITDA Multiples 3.0x 2.5x 1.5x 1.0x 0.5x 18.0x 16.0x 14.0x x 6.0x 4.0x Enterprise Value / LTM Revenue (left axis) Enterprise Value / LTM EBITDA (right axis) Source: S&P CapitalIQ 9

10 Insurance Technology: Select Transactions Q Transactions Notable Transactions 8/5/2015: ipipeline acquired by Thoma Bravo ipipeline is a leading technology provider of cloud-based software solutions to the life insurance industry ipipeline has followed a strong growth trajectory, and its relationship with Thoma Bravo is expected to both drive organic growth as well as allow the company to pursue complementary acquisitions 1 7/17/2015: Zywave acquires Intygral from Serent Capital Intygral, formerly known as Astonish Results, specializes in digital marketing systems for Property and Casualty (P&C) insurance brokers Zywave, a leading provider of SaaS technology to the insurance broker community, plans to integrate Intygral s platform into its flagship Broker Briefcase solution 2 Intygral automates prospecting and cross-sell campaigns, manages sales pipeline activities and provides timely and useful marketing dashboards for the broker community 7/7/2015: RegEd sold to Falfurrias Capital Partners RegEd is a leading provider of compliance technology solutions RegEd solutions drive new levels of operational efficiency and enable its more than 400 enterprise clients to cost-effectively comply with regulations and mitigate risk 3 Source: S&P Capital IQ and publicly available records 1 MarketWatch, 2 MarketWatch, 3 GlobeNewswire, 10

11 Data & Analytics: Public Company Statistics Revenue and EBITDA Multiples 5.0x 4.5x 4.0x 3.5x 3.0x 2.5x 1.5x 1.0x 0.5x 16.0x 14.0x x 6.0x 4.0x Enterprise Value / LTM Revenue (left axis) Enterprise Value / LTM EBITDA (right axis) Source: S&P CapitalIQ 11

12 Data & Analytics: Select Transactions Q2 Q Transactions Notable Transactions 7/6/2015: Euronet Worldwide acquires XE XE is the world s trusted currency authority, offering online tools and services such as the XE Currency Converter and XE Market Analysis XE brings its industry leading online presence and digital expertise to Euronet s money transfer business 1 The acquisition of XE provides Euronet an incredibly large Internet presence and user base attuned to foreign currency, while Euronet offers XE breadth and depth in foreign currency products, a strong balance sheet and geographic expansion opportunities 1 4/1/2015: First Derivatives acquires Affinity Systems Affinity Systems is a provider of software development and consultancy services, recently releasing a solution to address enterprise big data challenges Acquisition expands First Derivatives move into big data analytics 2 Affinity differentiates itself on its deep domain knowledge and its ability to solve complex problems through the development of well-architected solutions, including big data applications with low latency challenges 2 Source: S&P Capital IQ and publicly available records 1 MarketWatch, 2 Finance Magnates, 12

13 Service Providers: Public Company Statistics Revenue and EBITDA Multiples 2.5x 14.0x 1.5x x 1.0x 6.0x 4.0x 0.5x Enterprise Value / LTM Revenue (left axis) Enterprise Value / LTM EBITDA (right axis) Source: S&P CapitalIQ 13

14 Service Providers: Select Transactions Q2 Q Transactions Notable Transactions 7/30/2015: Worley acquires NCA Group NCA Group is a provider of insurance claims services, specializing in daily and catastrophe residential and commercial property claims management throughout the United States, Canada and the Caribbean The transaction creates a market-leading diversified claims services company, differentiated by its ability to mobilize one of the largest adjuster networks in the United States for both daily and catastrophe claims events and provide an extensive range of claims-related services for its customers in all personal, commercial, environmental, and government markets 1 NCA will maintain its independent operations within Worley and the senior management teams will actively collaborate to maximize the advantages of the combined platform for the entire client, adjuster, and employee bases 1 4/27/2015: Capgemini acquires igate IGATE (Nasdaq:IGTE) is a leader in providing integrated technology and operations-based solutions to clients across multiple industries worldwide The deal gives Paris-based Capgemini a significantly higher profile in North America, and the combined company s depth and breadth of offerings will now allow it to compete favorably with Accenture 2 IGATE also has a large presence in India, where around 60% of its employees work 2 Source: S&P Capital IQ and publicly available records 1 Worley, 2 Wall Street Journal, 14

15 Technology-led Traditional Financial Institutions Revenue and EBITDA Multiples 3.0x 14.0x 2.5x 1.5x 1.0x 0.5x x 6.0x 4.0x Enterprise Value / LTM Revenue (left axis) Enterprise Value / LTM EBITDA (right axis) Source: S&P CapitalIQ 15

16 MORGAN PARTNERS LLC MEMBER, FINRA/SIPC 275 GROVE STREET, SUITE NEWTON, MA (617) Morgan Partners is an investment bank working exclusively in the fintech sector. With a focus on the middle market, we help our clients complete buyand sell-side transactions in the $25 - $200 million enterprise value range. Please contact us to discuss your needs. MARC MASELLI Founder and Managing Director marc.maselli@morganpartners.com +1 (617) PATRICK VAUGHN Managing Director patrick.vaughn@morganpartners.com +1 (617)