A Closer Look At The Second Largest Cybersecurity M&A Transaction In History

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1 1 acquires A Closer Look At The Second Largest Cybersecurity M&A Transaction In History Advisors & Dealmakers In Cybersecurity. Momentum Partners, LLC Advise. Network. Invest.

2 Symantec Acquires Blue Coat In Second Largest Cybersecurity Transaction Symantec Not Only Acquires Blue Coat, Acquires CEO In A $4.65B All Cash Deal. Transaction Overview Blue Coat Overview Date: EV / LTM Rev: 6/12/ x HQ: Sunnyvale, CA // Founded: 1996 CEO: Greg Clark (Now CEO of Symantec) Customers: 15,000 In December 2011, Thoma Bravo acquired Blue Coat and took company private for $1.3B. In March 2015, Bain Capital acquired Blue Coat from Thoma Bravo for $2.4B. Acquires EV / LTM EBITDA: Private Equity Support: NM Network Security Cloud + + Platform Capabilities Protect Cloud and On- Premise Assets Respond Rapidly to Security Incidents Protects enterprises and its users from cyber threats Defend Against Advanced Threats Manage Encrypted Traffic Enterprise Security $4.65 Billion Advanced web and cloud security Encrypted traffic management Network performance and optimization Optimize Network Performance Leverage Cloud to Protect the Cloud Transaction Funding Symantec acquires Blue Coat for $4.65B in an all cash deal Silver Lake makes an additional $500M investment into Symantec (doubling their investment to $1B) Bain Capital to reinvest $750M to help fund the deal Additional $2.8B raised in the form of debt for acquisition Top 5 Cybersecurity Transactions by Value Date Announced Acquirer Target Deal Value ($B) EV / LTM Rev August 19, 2010 $ x June 12, 2016 $ x February 9, 2004 $ x July 23, 2013 $ x March 10, 2015 $ x Source: Company press releases and websites, 451 Research. 1

3 The Market Continues To Value Scale, Predictability, & Profitability Symantec s Acquisition of Blue Coat Is A Prime Example. 9.0x 8.0x Check Point $14,461 mn Proofpoint $2,631 mn Splunk $7,526 mn Palo Alto Networks $11,670 mn 7.0x $3,073 mn (1) CyberArk $1,527 mn EV / Revenue 2016E 6.0x 5.0x 4.0x 3.0x 2.0x 1.0x AVG $989 mn Barracuda $774 mn MobileIron $273 mn F-secure $466 mn Imprivata $349 mn Qualys $1,121 mn Mimecast $582 mn Trend Micro $4,695 mn Fortinet $5,794 mn FireEye $2,567 mn Imperva $1,260 mn Rapid7 $588 mn R 2 By Quarter Current: 22.2% Q4: 29.2% Q3: 63.2% Q2: 68.4% 0.0x 0% 5% 10% 15% 20% 25% 30% 35% 40% E Revenue Growth High Growth Cybersecurity Low Growth Cybersecurity (1) Note: Size of the bubble indicates Market Cap (Equity value in the case of Blue Coat). In USD; Market data as of June 15, Source: Capital IQ. 2

4 Strategic Moves For Competitive Advantage Accelerating The Landscape Of Buyers For Cybersecurity Companies Has Expanded Over Time. Cybersecurity IT Notable Deals By Sector Defense IT PE 1/16: $275M / 6.9x 11/15: $280M / NA 10/15: $400M / 7.5x 11/15: $78M / NA 10/15: $71M / NA 4/15: $1.9B / NA 10/15: $453M / NA 7/15: $190M / NA 10/14: $233M / 3.0x Defense ISP Industrial Industrial / IoT ISP PE 1/16: NA / NA 10/15: $9M / NA 8/15: NA / NA Most Active Acquirers 12/14: $710M / 6.0x 7/15: NA / NA 4/15: $200M / 3.3x 7/14: NA / NA 4/15: $786M / 3.6x 3/15: $2.4B / NA Source: Momentum Partners. 3

5 Cybersecurity M&A: A Closer Look At Deal Value & Multiples The Combination of Blue Coat s Deal Value & Valuation Multiple Are Rare Air. M&A By Deal Size M&A By Valuation Multiples (EV / LTM Rev) 55% 50% 45% 40% 48% 85 35% 30% 25% 27% 30% 26% 35% 30% 25% 20% 15% 10% 5% 0% $247M Median Deal Size For >10x 16% 13% 29 11% 7% % >$0M - $50M $50M - $100M $100M - $250M $250M - $500M $500M - $1B $1B+ 20% 15% 10% 5% 0% % > x 3.0x - 5.0x 5.0x x 10.0x The median exit enterprise value for Cybersecurity exits since 2010 is $65M M&A exits in Cybersecurity are typically below $100M 60%+ of the time Exits above $1B are quite rare representing 6% of all deals (3 public, 6 private and 2 spin-out) Contemplated transactions are increasingly falling into two categories: Transformational (a la Symantec/Blue Coat) Opportunistic (rationalizing valuation and cooling funding markets) Valuations for M&A exits in Cybersecurity vary for many reasons growth, market leadership, scale, customer validation, technology and team Exits >10x are a small minority (18%) where the buyers are typically cash rich and willing to pay what it takes (median cash balance of the buyers at time of acquisition was $2.2B and median market cap was $17.9B) Buyers Source: Momentum Partners, 451 Research, Capital IQ. 4

6 The Security M&A Chessboard Major Moves Will Be Made Post Symantec / Blue Coat. The Top Targets (2016E Revenue $M) The Top Consolidators (Cash Balance $B) $105.3 $793.6 $63.5 $501.0 $425.3 $56.1 $336.8 $15.3 $303.6 $14.9 $211.0 $9.0 $197.8 $6.0 $2.8 All considered IPO candidates (> $75M in Revenue) $1.4 Each likely seeking $1B+ exit $1.1 Network/Endpoint Security MSSP Web Security Application Security IAM Vulnerability Management Cloud Security Application Security IAM Advanced Endpoint Security Backed by Vista Equity (Fund V: $5.7B) & Raytheon ($2.6B Cash) The Wild Cards Source: Momentum Partners. Advanced Endpoint Security The Wild Cards 5

7 CYBERscape: The Cybersecurity Landscape The Security Sector Is Dynamic And Vast. Infrastructure Security Endpoint Security Application Security Network Firewall Network Monitoring Endpoint Prevention WAF & Application Security Intrusion Prevention Systems Unified Threat Management Endpoint Detection & Response Vulnerability Assessment Messaging Security Web Security Managed Security Service Provider Industrial / IoT Security Security Operations & Incident Response Threat Intelligence Mobile Security Data Security SIEM Cloud Security Security Incident Response Specialized Threat Analysis & Protection Transaction Security Risk & Compliance Source: Momentum Partners. 6 Identity & Access Management

8 15 Advise. Network. Invest. Momentum Partners, LLC Momentum Capital Markets, LLC 340 Brannan Street Suite 501 San Francisco, California Michael Tedesco Executive Chairman Eric McAlpine Managing Partner Petros Kitsos Senior Advisor Timothy Lipton Partner Keith Skirbe Director Dino Boukouris Director *Securities offered through Momentum Capital Markets, LLC, a division of Financial Telesis Inc. Member FINRA/SIPC.