THE GLOBAL LEADER IN SOFTWARE M&A

AN M&A UPDATE

2006 Software M&A Review

and 2007 Outlook

Corum Group Ltd.

www.corumgroup.com

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Agenda

• Opening Remarks - Corum

• M&A Market Overview
• Market Trends
• IPO Market
• International
• Public Markets
• Valuations
• Top Buyers & Active Sectors
• Corum Q4 M&A Briefing Release

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 THE GLOBAL LEADER IN SOFTWARE M&A

Corum Group
• M&A specialists since 1985
• Software and IT experts – mostly former CEOs
• Dominant North American and European presence
• 200+ transactions completed
• $6 Billion in wealth created
• 55+% cross-border transactions
• Recognized industry leaders/experts
• Sponsor of Selling Up Selling Out conferences
• Sponsor of World Financial Symposiums Conferences
• Publisher of industry leading M&A research

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Headlines Tell the Story

“Private Equity Fueling Buyouts”

Associated Press, December 2006

“2006  - Bubble 2?”

Seattle Times, December 2006

“Hong Kong tops New York this year in IPOs”

New York Times, December 2006 

“Money is everywhere – but for how long?”

Wall Street Journal, January 2007

“Wall Street Bonuses – so much money – too few

Ferrari’s”
New York Times, January 2007

“Can M&A’s Best Times Get Better?”

Wall Street Journal, January 2007

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Surge in M&A Continues

2006 vs 2005 - M&A up 30+% worldwide / all industries

2006 – $3.7 Trillion in worldwide M&A

2000 – $3.4 Trillion in worldwide M&A

Europe – $1.43 Trillion in 2006 (up 39% vs. ‘05)

US – $1.56 Trillion in 2006 (up 36% vs. ‘05)

Source: Thomson Financial

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 THE GLOBAL LEADER IN SOFTWARE M&A

Software and IT M&A Activity

# of Transactions by Sector
45%
40%
35%
30%
25%
20%
15%
10%
5%
0%

2005 % Deal Volume 2006 % Deal Volume

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 THE GLOBAL LEADER IN SOFTWARE M&A

Software and IT M&A Activity

Transaction Value by Sector

60%

50%

40%

30%

20%

10%

0%

2005 % Deal Value 2006 % Deal Value

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M&A Is the Primary Source of Liquidity

In Dollar Volume – US dollar volume all industries

$1,700
$1,600
$1,500
$1,400
$1,300
$1,200
$1,100
$1,000
In Billions

$900
$800
$700
$600
$500
$400
$300
$200
$100
$0
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

M&A Dollar Volume IPO Amount Raised

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Slow IPO Market is Recovering

IPO data all industries
• December most active IPO month since 1999
• 2006 much stronger than ‘05
• Venture-backed technology deals returned to the IPO scene
• Eleven technology IPOs in Q4 - up from three in Q3

Q4:05 Q4:06 % Change

# of IPO Pricings 48 82 70.83%

Total Value $7,000 $16,100 130.00%

Average Value $145 $196 35.17%

Values are in millions

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 THE GLOBAL LEADER IN SOFTWARE M&A

Surge in M&A - Deal Drivers

• Enormous liquidity (equity and debt)
• Strong stock markets
• Recovery in IPOs
• Analysts favorable to acquisitions
• Private Equity in 25% of deals
• Converging market sectors
• Heavy competition for market leadership
• Strength of Euro / British Pound

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M&A Dominant Corporate Strategy

Support for acquisitions is stronger than ever:
• Immediate impact on top/bottom line
• Stimulate growth in new or existing markets
• Counter takeover attempts
• Speed time to market
• Forestall competitive threats
• Gain talent, brand and domain expertise
• Fill product and technology gaps
• Tap into emerging markets
• Provide pathway to a global presence
• Gain access to innovation

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Global M&A Activity

• Cross-border transactions increasing

• European deal activity was up 39% in 2006
• Of European buyers, the United Kingdom was the most active
globally with $339 billion of transactions

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Global Marketplace

64% of Corum’s recent transactions have been cross-border –

A trend we are seeing throughout the industry

Intra-Country
36%
Cross Border
64%

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Corum Transactions (Partial 2006)

Carlyle Group / UC4 Software GmbH

• Enterprise job scheduling and event-driven IT automation
NCR Corporation / IDVelocity
• RFID infrastructure and process management software
WellPoint Systems Inc. / IDEAS International
• Provider of accounting and campaign finance solutions for domestic and
multinational marketplace
NICE Systems / FAST Video Security
• Developer of video systems for security and surveillance purposes
Blue Cross Blue Shield / REDmedic
• Provider of a personal medical profile available to emergency personnel
via the internet
Thomson West / Cowles Legal
• User-friendly solutions for estate planning and trust terminations
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Corum Transactions (More 2006)

Microsoft / iView Multimedia
• Digital asset cataloging solution for creative professionals
Apax Partners / Plexus Systems
• On-demand manufacturing execution software (SaaS)
Rocket Software / Mainstar Software
• Storage management and disaster recovery solutions for OS/390
environments
Gemcom Software / Surpac Minex Group
• Mine planning, engineering, geology, surveying, mineral exploration and
resource modeling solutions for the mining industry
Harland Financial / Financialware, Inc.
• Enterprise Content Management system for banks and financial
institutions
MDA / Mindbox
• Sophisticated decisioning software for mortgage banking
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Current Activity

With a strong 2006 completed, we enter 2007 with optimism

8 companies currently under Letter of Intent:

• Enterprise Applications
• Enterprise Infrastructure
• Systems Management
• Gaming and Entertainment
• Vertical Markets
• Specialty services
• Financial Services

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Public Markets – Reaching New Highs

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Public Valuation Multiples

Sector Q4:05 Q1:06 Q2:06 Q3:06 Q4:06 Y on Y Q to Q

Digital Media 3.50 x 2.65 x 2.82 x 2.74 x 2.59 x
Enterprise Applications 3.19 x 2.91 x 4.27 x 4.35 x 4.43 x
Business Intelligence 1.36 x 3.10 x 2.15 x 2.87 x 3.03 x
Enterprise Content Management 1.52 x 1.59 x 1.46 x 1.89 x 2.15 x
Supply Chain Management 1.70 x 1.82 x 1.58 x 1.60 x 1.89 x
Enterprise Infrastructure 2.20 x 2.15 x 2.36 x 2.40 x 2.77 x
Legacy Extention / SOA 1.40 x 2.72 x 2.59 x 1.36 x 1.70 x
Software Development Tools 2.34 x 1.95 x 1.44 x 1.88 x 1.71 x
Storage 3.17 x 2.81 x 2.43 x 2.66 x 2.98 x
Gaming 2.19 x 1.59 x 1.44 x 2.25 x 2.47 x
Internet Infrastructure 4.10 x 4.41 x 3.57 x 4.03 x 3.63 x
Internet Pure Play 4.10 x 6.07 x 3.34 x 4.00 x 3.78 x
IT Services 0.74 x 0.85 x 0.78 x 0.84 x 0.80 x
Security 3.76 x 3.36 x 3.00 x 2.94 x 3.36 x
Wireless 2.85 x 2.18 x 2.28 x 2.07 x 2.34 x
Vertical Market - Engineering 3.00 x 2.61 x 2.71 x 2.69 x 3.06 x
Vertical Market - Financial Services 2.88 x 3.15 x 3.26 x 3.53 x 3.17 x
Vertical Market - Government 1.07 x 1.45 x 1.21 x 1.24 x 1.13 x
Vertical Market - Healthcare 2.36 x 2.54 x 1.98 x 2.69 x 2.36 x
Vertical Market - Other 2.51 x 2.63 x 2.63 x 1.75 x 2.02 x
Vertical Market - Telecom 2.37 x 2.52 x 2.02 x 2.12 x 2.10 x

TTM EV/S Multiples

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Public Multiples ─ Differ Dramatically by Sector

5x

4x

Software as a
Service
3x
3.90x – 9.49x

2x

Security Financial Services

1x Software
Niche 1.50x – 4.00x
Applications 1.39x – 7.83x

1.00x – 2.50x
0
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TTM EV/Sales Range
 THE GLOBAL LEADER IN SOFTWARE M&A

Looking Back – Valuation Multiples

M&A Transaction Multiples - Software Industry

7.00
6.7
6.00

5.00
P/S Multiple

4.00
2.9
2.7 2.7 3.0 2.9 2.95
2.6
3.00 2.3 2.3
2.0 1.6 1.8 2.1 2.2 2.5
1.5 1.5
2.00

1.00

0.00
1H:98

2H:99

1H:00

2H:00

1H:01

2H:01

1H:03

2H:03

1H:04

1H:05

1H:06

2H:06
2H:98

1H:99

1H:02

2H:02

2H:04

2H:05
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Top Buyers in 2006

Strategic Buyers Active Private Equity Firms*
Microsoft 16 Accel-KKR
IBM 13 Apax Partners
Oracle 11 Carlyle Group
EMC 9 Francisco Partners
Motorola 8 Golden Gate Capital
Jupitermedia 7 Silver Lake Partners
L-3 Communications 7 Symphony Technology Group
Sage Group 7 Thoma Cressey
Cisco Systems 6
NeoMedia Technologies 6
Yahoo 6 * Partial List
Accenture 5
Google 5
Kronos 5
Trimble Navigation 5
VeriSign 5

100+ Strategic buyers with 2 to 4 transactions

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Vertical Market Consolidation – Fewer Buyers

Tougher to find buyers for smaller companies
Example: Financial Services Software Sector

• Advanced Financial Solutions • John Harland   (M&F Worldwide ‘07)

(Metavante ‘04)
• BancTec (taken private – Welsh
Carson PE ‘99)
• Bisys Group (Open Solutions ‘05)
• Bottomline Technologies
• Carreker (Checkfree in ‘07)
• CheckFree
• Concord EFS (First Data ‘03)
• Digital Insight (Intuit ‘06)
• First Data  • TSA
• Fiserv
• Jack Henry
• Kirchman (Metavante ‘06)
• Metavante
• Misys
• Open Solutions (Carlyle ‘06)
• S2 Systems (Total Systems ‘05))
• Sanchez  (Fidelity National in ‘04)
• Sungard (taken private – Silver
Lake Partners ‘05)
• Total Systems

2000 to 2006 - Key Buyers - 60% of list is gone

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Private Buyers

Number of private buyers increasing

• Slow IPO market and high cost of being public
• Cash and credit available to Private Equity
• Financial buyers comfortable with technology deals

Notable companies going private in 2006

• John H. Harland
• Embarcadero
• WatchGuard Technologies
• Sabre Holdings
• Open Solutions

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Transaction Highlights – Private Equity

Buyer Seller Value (Millions $) Sector

Silver Lake Partners Sabre Holdings $5,000 Vertical Market

Carlyle Group Open Solutions, Inc. $1,300 Financial Services

Silver Lake Partners IPC $800 Vertical Market

Thoma Cressey Embarcadero $234 Enterprise Infrastructure

Francisco Partners WatchGuard Technologies $151 Security

Insight Venture Partners Netsmart Technologies $115 Healthcare

Vision Solutions, iTera and
Thoma Cressey $100 Enterprise Infrastructure
Sirius Computer Solutions
Endeavor Information
Francisco Partners Undisclosed Vertical Market
Systems
Carlyle Group / Kennet
FRS Global Undisclosed Vertical Market
Partners
Vista Equity Who'sCalling Undisclosed Enterprise Applications

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Transaction Highlights – International

Buyer Seller Value (Millions $) Sector

Publicis Group S.A. Digitas Inc $1,300 Internet Infrastructure

Check Point Software Protect Data AB $586 Security

ePLDT SPI Technologies $159 IT Services

Stepstone ExecuTRACK Software $41 Enterprise Applications

Yahoo! Inc. Wretch $22 Internet Pure Play

McAfee, Inc. Onigma $20 Security

Nokia Gate5 Undisclosed Wireless

Microsoft iView Undisclosed Digital Media

Tandberg Television Zetools Undisclosed Digital Media

Sage Group plc / Sage Corum Corporation

Undisclosed Enterprise Applications
Software Canada Ltd. (no relation)

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Transaction Highlights – Strategic

Buyer Seller Value (Millions $) Sector

Google YouTube $1,650 Internet Pure Play

Intuit Inc Digital Insight $1,350 Financial Services

Trimble Navigation @Road Inc $496 Wireless

Oracle Stellent, Inc. $440 Enterprise Applications

Rocket Software Seagull Software $56 SOA

Corel Corporation InterVideo $196 Digital Media

Kronos Unicru $150 Enterprise Applications

Cisco System Arroyo Video $92 Digital Media

IBM Webify Undisclosed Enterprise Infrastructure

ADP Employease Undisclosed Enterprise Applications

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Mega Deals

2006 – Strong Year for $ Billion+ Transactions

Mega Deal Breakdown
• 21 in the software and IT marketplace
• 17 by strategic buyers
• 7 were cross-border
• Value range: $1 billion to $7.4 billion

Companies with multiple technology deals in excess of $1 billion

• Carlyle Group – Freescale and Open Solutions
• IBM – FileNet and Internet Security Systems

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Active Sectors

Strong activity across all sectors in 2006

Outlook for 2007:
• Enterprise Applications
• Internet - Infrastructure and pure plays
• IT Services
• Security
• Vertical market applications
• Wireless technologies and infrastructure

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Corum Q4 Briefing Sample

Enterprise Applications

Public Peer Group (In $U.S. millions – except share prices)

Stock Stock Market Enterprise Trailing Multiple Forward Multiple
Symbol Company Price Value Value P/E EV/EBITDA EV/S P/E EV/S
CA CA, Inc. $22.79 $11,990.0 $13,290.0 126.6 x 16.07 x 3.43 x 22.56 x 3.29 x
LWSN Lawson Software Inc. $7.45 $1,400.0 $1,120.0 -248.33 x 30.37 x 2.41 x 16.93 x 1.31 x
ORCL Oracle Corp. $17.21 $89,190.0 $87,210.0 24.59 x 13.40 x 5.43 x 15.50 x 4.47 x
QADI QAD Inc. $8.40 $271.5 $239.8 18.26 x 11.60 x 1.05 x 20.49 x 0.94 x
SAP SAP AG $53.16 $259,780.0 $255,910.0 118.13 x 69.92 x 21.08 x 24.73 x 19.27 x
CRM Salesforce.com $36.74 $4,170.0 $3,930.0 734.80 x 98.57 x 8.85 x 85.44 x 5.50 x
Median Valuation Multiples 71.36 x 23.22 x 4.43 x 21.53 x 3.88 x
M&A Transactions

Witness Systems Acquires Demos Solutions and Exametric, Inc.

Witness Systems, a global provider of workforce optimization software and services, announced
that it has acquired Demos Solutions Consulting Group Ltd. (also known as Demos Solutions) and
Exametric, Inc., the two leaders in supplying enterprise productivity and resource planning solutions to the
financial services industry. The acquisitions broaden the revenue opportunity and customer base for
Witness Systems, further extending the business valu e of its workforce optimization solutions from
contact centers to bank branches and ultimately to other areas in the enterprise. The two companies will
be combined and operate as Witness Enterprise Solutions, a group focusing initially on WFO Solutions
for retail bank branches and operations.

Announcement: October 2 2006

Deal Value: $29 Million (Cash plus potential earn out up to $18 million of next three years )

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Corum Q4 Briefing Sample (continued)

Security

Public Peer Group (In $U.S. millions – except share prices)

Stock Stock Market Enterprise Trailing Multiple Forward Multiple
Symbol Company Price Value Value P/E EV/EBITDA EV/S P/E EV/S
CHKP Check Point Software Tech Ltd. $22.08 $5,100.0 $3,910.0 18.54 x 11.91 x 6.85 x 15.33 x 6.35 x
ENTU Entrust Inc. $4.32 $259.1 $228.2 -25.41 x -67.32 x 2.48 x 54.00 x 1.94 x
MFE McAfee Inc. $28.31 $4,520.0 $3,360.0 33.31 x 12.05 x 3.08 x 19.00 x 2.75 x
SFNT SafeNet Inc. $24.50 $518.3 $438.4 -2450.00 x 13.30 x 1.53 x 18.56 x 1.39 x
SCUR Secure Computing Corp. $6.64 $428.3 $512.1 -39.06 x 23.86 x 3.30 x 27.67 x 2.04 x
SYMC Symantec Corp. $20.87 $19,580.0 $19,110.0 51.92 x 12.66 x 3.89 x 16.56 x 3.36 x
VRSN VeriSign Inc. $24.23 $5,880.0 $5,340.0 9.01 x 12.90 x 3.42 x 21.83 x 3.47 x
WBSN Websense Inc. $22.88 $1,020.0 $721.4 30.51 x 11.31 x 4.18 x 21.79 x 3.43 x
Median Valuation Multiples 13.77 x 12.35 x 3.36 x 20.40 x 3.06 x
M&A Transactions

McAfee, Inc. To Acquire Citadel Security Software Inc.

McAfee, Inc. will acquire Citadel Security Software Inc., a leading provider of solutions in security policy
compliance and vulnerability remediation. Security risk management is emerging as a high growth
opportunity. The acquisition will add to McAfee's suite of products that help enterprises neutralize security
vulnerabilities and reduce risk, giving McAfee a broader capability for security policy compliance
enforcement and vulnerability remediation. Highly regulated enterprises, including government and
health-care customers, will especially benefit as McAfee integrates Citadel's automated solutions that
help enterprises comply with regulatory requirements and internal policies, speed their compliance
process and minimize threat exposure.

Announcement: October 3 2006

Deal Value: $56.15 Million (Cash, plus an estimated $4 million in working capital reimbursement)
Seller Revenue: $14.24 ttm

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Corum Links
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Contact Information

Corum Group Ltd.

10500 NE 8th Street, Suite 1500
Bellevue, WA 98004
USA
+1 425-455-8281

Corum Group International S.à.r.l

General Guisan – Quai 30
CH-8002 Zurich
Switzerland
+41 1 251 82 65

www.corumgroup.com

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