Casual Connect M&A Boot Camp

1. Casual ConnectM&A Boot Camp Jim Perkins Regional Director Digital Media Specialist Corum Group, Ltd. jimp@corumgroup.com +1.602.284.7805

2. The Corum Group M&A specialists since 1985 – only software/related tech Only work on sell-side, primarily with privately held firms Offices globally – 60% of transactions cross border Developed the “Optimal Outcome” M&A process Employs a team approach - fully offloads clients with 5 experts Senior negotiators are former CEOs – selling/results oriented Largest educator in the world – builds buyer relations Largest proprietary buyer database – provides client advantage

3. Industry Leadership

4. Sold More Firms Than Anyone Tific is a leading vendor in SaaS-based remote help support systems. PlumChoice: USA Tific: Sweden inubit AG is the technologically leading provider for Business Process Management (BPM) software. Bosch: Germany Inubit: Germany Edvantage Group’s SaaS-based learning solutions are used by over 500,000 users across hundreds of organizations to develop employee skills and competencies. Lumesse: United Kingdom Edvantage Group: Norway Instantiations is a leading vendor in platform specific development tools. Google: USA Instantiations: USA Cintellate works in the areas of environment, health, safety (EHS) and risk-related performance. SAI Global: Australia Cintellate: Australia Petrospec is a leader in geopressure analysis and drilling engineering SW for hydrocarbon exploration and production. Geoservices Group: France Petrospec: USA

5. Recent Corum Transactions SatoriSoftware is a leader in address management tools with focus on the postal delivery space. Neopost: France Satori Software: USA 360 is a recognized player in field workforce management, with a SaaS offering. IFS: Sweden 360 Scheduling: UK has acquired Apex Systems of Singapore is a leader in the Asia-Pac region for banking and insurance solutions. NTT Data: Japan Apex Systems: Singapore Altitude is a leading provider of Telecommunication Management Solutions to businesses globally. BBVA / iP: Spain Altitude: Portugal The ECM division of Beta Systems is a recognized leader in output management for the financial and postal sectors. BancTec: USA Beta Systems: Germany The Nefsis videoconferencing software and online service was the first to use cloud computing in the videoconferencing industry. Brother: Japan Nefsis: USA

6. M&A Boot Camp - Agenda Overview - Market Perspective M&A Activity- Valuations Achieving an Optimal Outcome 8 Required stages of the M&A Process Avoiding the Deal Disasters Improve Your Odds – Get Educated The Most Important Transaction of Your Life

7. Agenda Overview - Market Perspective M&A Activity Achieving an Optimal Outcome 8 Required stages of the M&A Process Avoiding the Deal Disasters Improve Your Odds – Get Educated The Most Important Transaction of Your Life

8. Gartner Top 10 Strategic Technologies • Media tablets & beyond • Expected iOS/Android will dominate the market with 80% of tablets shipped by 2015 • Entering the post-PC era – Windows just one of a variety of environments • Mobile-centric applications and interfaces • More than 70 billion mobile app store downloads by 2014 • 50% of tools optimized for app development in 2010 will be acquired or disappear by 2014 • Social and contextual user experience • Context-aware computing uses information about end users or objects environment to improve interaction

9. Gartner Top 10 Strategic Technologies • Application stores and marketplace • Rise of enterprise app stores that can develop specific apps • Use a managed diversity system approach • The Internet of everything • Cameras, sensors, recognition etc. now all part of environment • Privacy issues a concern • Next-generation analytics • Mobile devices performing analytics themselves • Analytics to enable and track collaborative decision making • Big data • New techniques to handle extreme data • Enterprises just can’t store it all

10. Gartner Top 10 Strategic Technologies In-memory computing Most devices will have persistent flash memory New layer of memory hierarchy A long-term, disruptive trend on par with Cloud computing Extreme low-energy servers Server technologies are going to change to handle big data More smaller, slower, physical servers vs. fewer virtual ones Cloud Computing Next-gen battleground for Google, Amazon & others Focus on hybrid private/public cloud apps & improving security and governance

11. M&A is the Primary Source of Liquidity In Dollar Volume (Billions) – All Industries

12. M&A – Cash Is King All estimates in US$Billions

13. Agenda Overview - Market Perspective M&A Activity Achieving an Optimal Outcome 8 Required stages of the M&A Process Avoiding the Deal Disasters Improve Your Odds – Get Educated The Most Important Transaction of Your Life

14. Software M&A Activity 2002-2012 Total Deal Volume vs. Total Deal Value $457b $432b $373b $301b $226b $250b $220b 4029 $200b $150b 3800 3640 3696 $83b $62b 3212 3040 3015 3008 2081 1921 1508 Deal Volume Dollar Value

15. Top Strategic Acquirers: 2011

16. Gaming M&A History Source: Digi-Capital

17. Top Private Equity Acquirers: 2011

18. Corum Index Corum Index *$ values in millions

19. 10 Reasons Tech M&A Will Remain Strong Extraordinary change – interrelated mega trends Strategic buyers have record cash Debt is at lowest cost ever Private equity - over $500 billion available New public foreign buyers (e.g. China, India)

20. Entrance of new non-tech buyers (e.g. Bosch) Many large private buyers American companies are cheap to foreign investors Most US buyers cash is international (e.g. Skype) Software rising in importance (e.g. HP, IBM) 10 Reasons Tech M&A Will Remain Strong

21. Agenda Overview - Market Perspective M&A Activity- Valuations Achieving an Optimal Outcome 8 Required stages in M&A Process Avoiding the Deal Disasters Improve Your Odds – Get Educated The Most Important Transaction of Your Life

22. Requires time due to regulatory environment Far more tasks than people realize Due diligence creates deal fatigue Failure rate is 80% for self-managed transactions …For the most important transaction of your life, do it right: seek an Optimal Outcome! Selling Your Company…

23. The Inherent Problem in M&A Buyer Seller Price Structure Liabilities Taxes Risk You will be diametrically opposed on EVERYTHING!

24. Valuation Maximization Creating the Best Transaction Structure Minimizing Personal Liability/Risk Reducing Tax Liability and Holdbacks Structuring Ideal Employment/Non-competes Providing for Proper Integration What is Optimal Outcome?

25. 8 Required Stages in M&A Process Closing Negotiation Preparation Contact 6 1 3 5 8 4 7 2 Integration Discovery Due Diligence Research

26. Optimal Outcome – 8 Stages 6 1 3 5 8 4 7 2 • Set tasks, timeline • Allocate staff resources • Conduct internal due diligence • Compile business/marketing plan • Ready financials/projections • Ready presentation materials Preparation

27. Optimal Outcome – 8 Stages 6 1 3 5 8 4 7 2 • Prepare buyers list (A&B level, financial, non tech) • Perform strategic analysis on each buyer • Prepare preliminary valuation • Determine proper contact (Execs, EA’s, advisors) • Outside advisor/board/investor influencers • Prepare position statement for each buyer Research

28. Optimal Outcome – 8 Stages 6 1 3 5 8 4 7 2 • Create introductory correspondence • Draft/customize executive summary • Execute NDAs and non-solicitations • Screen initial interest, valuation expectations • Establish log on all communications • Refine position/process based on feedback Contact

29. Optimal Outcome – 8 Stages 6 1 3 5 8 4 7 2 • Coordinate conference calls, site visits, and meetings • Establish technology review process • Prepare formal valuation report • Develop synergy and contribution analysis • Set up NDA with customers, contractors, etc. • Finish due diligence on buyer Discovery

30. Optimal Outcome – 8 Stages 6 1 3 5 8 4 7 2 • Organize and host final visits • Provide structure guidance • Create an auction environment • Negotiate with top bidder(s) • Sign Letter of Intent (L.O.I.) • Inform other bidders of No Shop Negotiation

31. Optimal Outcome – 8 Stages 3 6 1 5 8 4 7 2 • Verification of financial statements/projections • Determine if outside advisors/opinions needed • Establish confidential data room • Technical/Legal/Ownership due diligence • Written explanation of business model/methodologies • Complete definitive agreement/attachments Due Diligence

32. Optimal Outcome – 8 Stages 6 1 3 5 8 4 7 2 • Final reps & warranties • Determine escrow hold-backs • Final opinion(s) • Sign contracts • Arrange payment/distribution • Regulatory filings Closing

33. Optimal Outcome – 8 Stages 6 1 3 5 8 4 7 2 • Advanced planning – during negotiation • Determine synergies • Best practices analysis • Interim transition team • Employee retention plan • Set up monitoring/reporting Integration

34. Optimal Process – 8 Stages Will Yield • 20 to 300 • Global Buyer Candidates (depends on your size) • 700 to 1,000 • Communications of Various Kinds • 10 to 30 • Expressions of Interest • 5 to 15 • NDAs • 3 to 8 • Qualified Parties • 1 to 3+ • Offers Typically 6 contacts to get to first discussion 29 contacts to get to meaningful dialogue

35. With a Professional Global Search • 9 – 12 months required to complete because of workload, SOX and buyer DD considerations • 3 – 5 man years of professional work involved to do the job right from preparation to final close • 75% of the time there are other buyers willing to pay more than first firm that approached with offer • 48% is the average improvement from first offer to L.O.I. with an auction environment

36. M&A Uniquely Allows Entry to Top Execs Seller Buyer CEO Do you want to buy my company? J.V./Alliance FIN MKT MANF DIV Resell/License DIV DIV DIV DIV DIV DIV DIV DIV

37. 5 Major Benefits of a Professional Process • Model– The preparation process will help forge a better business model for your firm • Research – Your strategic position will improve from the research/positioning process • Market Feedback – Buyer contact will provide invaluable data/insights to help improve your value • Relationships – Not everyone is a buyer, but you open many doors which will yield business • Exit – The merger, asset sale or financial recapitalization of your company

38. Agenda Overview - Market Perspective M&A Activity- Valuations Achieving an Optimal Outcome 8 Required stages of the M&A Process Avoiding the Deal Disasters Improve Your Odds – Get Educated The Most Important Transaction of Your Life

39. Self-Managed M&A Process …80% Failure Rate! (for self-managed transactions)

40. Workload, Value Destroyers, Deal Killers We recently polled our advisory group, The World Technology Council, about the workload involved in the M&A process, and the pitfalls. The following are the top 60 activities, broken down into Documents and Projects, as well as Value Destroyers and Deal Killers… *WTC consists of CEOs who have sold a company, technology experts; analysts and industry luminaries from Corum’s transactions and industry leading research and educational programs (100 events a year)

41. Workload: Documents & Projects • Corporate Preparation • Business Plan • Marketing Plan • Org Chart • Staff Bios • NDA • Non Solicitation • Executive Summary • Introduction Letter • Financials 3 Yrs. • Recast Financials • Financial Package • 3 Yr. Projections • Pipeline Analysis • Lead Process • Pricing Analysis • Market Research • Competitive Research • Buyer Research • Ind. Buyer Strategy Items in RED require professional skills, confidential M&A data, inside buyer knowledge, extensive transaction experience, or outside advisors

42. Workload: Documents & Projects • Corporate Presentation • Comparable Transactions • Industry Comps • DCF Analysis • Replacement Cost • Terminal Value • Valuation Report • All Agreements • All Litigation – Threats • Shareholder Qual. • HR Needs • Audit • Activity Log • Terms Sheet(s) • Synergy Analysis • Dilution Analysis • Tax Analysis • Taxable Assets • Negotiation • LOI Items in RED require professional skills, confidential M&A data, inside buyer knowledge, extensive transaction experience, or outside advisors

43. Workload: Documents & Projects • Stand Still Prep. • Outside Opinions • DD Checklist • DD Timeline • Merger Agreement • Asset Schedule • Fairness Opinion • Employ. Agreement • Non Competes • Patent Analysis • Customer Overview • Client Sign-off • Bulk Sale • Sovereign Approval • Proxies • Security Agreements • Registration • Shareholder Exp. Distr. • Announcements • Integration Process Items in REDrequire professional skills, confidential M&A data, inside buyer knowledge, extensive transaction experience, or outside advisors

44. Tech M&A: Value Destroyers Improperly handled M&A process problems: • Confidentiality issues externally • Internal confidentiality problems • Theft of technology • Loss of staff (non-solicitation) • Wear on management • Business drop-off due to lack of focus

45. 10 Biggest Deal Killers Dealing with only one buyer No leverage in negotiation Misalignment Shareholders & management & employees Contact at wrong level, with the wrong person Not knowing the buyer well enough Improper research of potential buyers “A,” “B,” financial, international, strategic Not understanding the buyer’s process& models Timeline, decision-makers

46. 10 Biggest Deal Killers • Unable to portray value properly Credibility in valuation is imperative • Improper due diligence preparation Affects credibility, prolongs process • Not qualifying buyer properly Ability to pay, interest, etc. • Not orchestrating all buyers properly This is the tough part! • Ego / Greed / Arrogance You need experience during negotiations

47. Agenda Overview - Market Perspective M&A Activity- Valuations Achieving an Optimal Outcome 8 Required stages of the M&A Process Avoiding the Deal Disasters Improve Your Odds – Get Educated The Most Important Transaction of Your Life

48. Selling Up, Selling Out – Overview PREPARATION INTERNAL DUE DILLIGENCE VALUATION METHODOLOGIES STRUCTURE LETTER OF INTENT NEGOTIATION LOI TO CLOSING INTEGRATION ACHIEVING M&A BENEFITS

49. Selling Up, Selling Out (SUSO) • Since 1990, the most attended executive conference in technology history • More events hosted than all other competitive conferences combined • Over $1.5 trillion in transaction value by attendees – buyers and sellers …the definitive Tech M&A education

50. Key Questions Addressed at the SUSO What are buyers looking for? How do you position for a higher value? How to optimize your business model? Which agreements/contracts are critical? Why is full disclosure mandatory? Full disclosure or go to jail? How to best present yourself? Get ready – Buyer’s due diligence checklist!