SEG OverviewSEG Snapshot: 3Q19 SaaS M&A Update2Copyright © 2019 by SEG Capital Advisors, LLC. All Rights Reserved 3 Report Definitions4 Brief SEG Overview9 SaaS M&A Update24 AppendixTable of Contents3Copyright © 2019 by SEG Capital Advisors, LLC. All Rights Reserved Software Industry Includes SaaS, on-premise license model software, internet, and mobile M&A transactionsSaaS Primarily offers solutions via the cloud and through a subscription or transaction-based pricing modelEV Enterprise ValueTTM Trailing Twelve MonthsYoY Year-Over-Year QoQ Quarter-Over-QuarterReport DefinitionsSEG Snapshot: 3Q19 SaaS M&A UpdateBrief SEG Overview5Copyright © 2019 by SEG Capital Advisors, LLC. All Rights Reserved Software Equity Group OverviewUnmatched Expertise | Extraordinary Results25+Years of ExperienceBillionsin Aggregate Transaction Value1,000sof Buyer Relationships Software Equity Group (SEG) provides unparalleled M&A advisory services for emerging and established B2B software companies Exclusive focus on sell-side advisory services for 25+ years Services include: Strategic M&A Majority Recapitalizations Divestitures Board AdvisoryBROAD NETWORK OF SOFTWARE INDUSTRY BUYERS & INVESTORS6Copyright © 2019 by SEG Capital Advisors, LLC. All Rights Reserved Leading Sell-Side Advisor to B2B Software Providers7Copyright © 2019 by SEG Capital Advisors, LLC. All Rights Reserved SEG RESEARCHWe constantly track transactions and buyer appetite to aggressively create competitive markets for our clients businesses. As always, our research is complimentary. CLICK TO ACCESS RESEARCHSEG Snapshot: 2019 GovTechM&A UpdateSEG Snapshot: 2019 Real Estate Software M&A UpdateSEG Snapshot: 2019 Annual Software Industry ReportSEG Snapshot: 2Q19 SaaS M&A Market Update8Copyright © 2019 by SEG Capital Advisors, LLC. All Rights Reserved SEG M&A StoriesSEG M&A Stories are a unique way to gain insight into the M&A process from former SEG clients themselves. Check out our recent videos from SEG clients LeaseLabs, Nexternal, Bigfoot, and Indatus.Dana Zeff (Founder & CEO) & Steven Ozbun (President), LeaseLabsAlex Gile, Co-Founder & President, NexternalDavid Durik, CEO,IndatusPaul Lachance, Co-Founder, BigfootSEG Snapshot: 3Q19 SaaS M&A UpdateSaaS M&A Market Update10Copyright © 2019 by SEG Capital Advisors, LLC. All Rights Reserved Summary: 3Q19 SaaS M&A For the first time, M&A deal volume for the overall software industry (including SaaS, on-premise license model software, internet, and mobile deals) eclipsed 700 transactions in 3Q19. Specific to the SaaS M&A market, deal volume reached a historical high of 314 SaaS transactions in 3Q19, a 24.6% YoY increase from 3Q18s 252 transactions. Annual deal volume is expected to reach approximately 1,100 1,200 deals by end of 2019. M&A targets with a vertical focus comprise approximately 42% of SaaS M&A transactions in 3Q19. Verticals with the highest deal count in 3Q19 include Healthcare (28 deals), Financial Services (18 deals), and Real Estate (12 deals). SaaS M&A transactions posted a strong median multiple of 4.8x EV/Revenue in 3Q19. The SaaS M&A revenue multiple has been trending up over the past few quarters, increasing from 4.3x EV/Revenue in 3Q18. The high multiple was driven by some notable mega-deals in 3Q19, including Splunks acquisition of SignalFX (21.0x EV/Revenue), Main Capital Partners acquisition of GBTEC (16.2x EV/Revenue), and VMwares acquisition of Carbon Black (8.9x EV/Revenue). Private equity buyers drove M&A activity, composing 56.7% of SaaS M&A deals in 3Q19. Equity backed strategic acquisitions noticeably increased over the past few quarters, making up 41.7% of SaaS M&A deals alone. In comparison, this buyer group only comprised 34.5% of deals in 3Q18. High-level review of 3Q19 key trends. Enjoy the report and feel free to reach out with any questions or to discuss our relevant market insights.