Travel & Hospitality Technology Mergers & Acquisitions Industry Update Mergers & Acquisitions Business Valuation Strategic Consulting Corporate Finance
Industry Snapshot: Travel & Hospitality Notable M&A Activity 1/23/15. Expedia (NasdaqGS:EXPE) Buys Travelocity for $280 Million. The two companies have worked together since 2013, when they entered into a long-term agreement under which Expedia handles most of Travelocity s operations, from running searches to answering customers questions. Capital Markets % Change 1 Week 4 Weeks YTD Travel & Hospitality (2.6%) (1.8%) (5.9%) SaaS 0.3% 1.3% (3.0%) S&P 500 0.4% 1.9% (1.5%) 1/07/15. Cvent, Inc. (NYSE:CVT) acquired Elite Meetings International, LLC. Elite Meetings International helps meeting planners find hotels and resorts for their meetings, incentive events, and trade shows using various tools. 12/19/14. Multimedia Games Holding Company, Inc., acquired by Global Cash Access Holdings, Inc. (NYSE:GCA) for $1.1 Billion. Multimedia Games Holding Company designs, manufactures and supplies gaming machines and systems to casino, lottery and commercial bingo gaming facility operators. 10/31/14. XPIENT Solutions, LLC was acquired by Heartland Payment Systems, Inc. for $30 Million. XPIENT Solutions, LLC provides point-of-sale, back office and enterprise management software for quick service and fast casual restaurant operators. 10/23/14-11/21/14. Direct Travel, Inc. acquired Peak Travel Group Inc., Best Travel, Inc. and Travel Leaders Franchise Group, LLC. Direct Travel Group, Inc. continued its roll up of travel agencies. 10/07/14. onpeak, LLC was acquired by Global Experience Specialists, Inc. for $43 Million. onpeak, LLC provides technology solutions for hotel booking and housing services for the events industry. 9/30/14. KUBRA Data Transfer Ltd. was acquired by Hearst Magazines Corporation. KUBRA Data Transfer Ltd develops and provides customer interaction management solutions. 9/15/14. Decision Street, LLC was acquired by Cvent, Inc. Decision Street, LLC provides a sales and analytics software package that serves the hospitality industry. 9/03/14. INFOR, Inc acquired SalesLogix, N.A., LLC from SwiftPage. SalesLogix, N.A., LLC provides SaaS customer relationship management software and sales automation solutions. 8/25/14. VRX Studios Inc. was acquired by MediaValet Inc. VRX Studios Inc. produces and syndicates visual content for travelers. 1
Announced M&A Transactions acquired by acquired by acquired by Closed Closed Closed Jan 23, 2015 Jan 7, 2015 December 19, 2014 Notes Notes Notes Expedia Inc. (NasdaqGS:EXPE) acquired Travelocity.com LP from Sabre Holdings Corporation for $280 million in cash. Travelocity.com provides travel services to leisure and business travelers in United States and Canada. It allows customers to find various travel deals, such as vacation packages, flights, hotels, cars, cruises, and airline tickets; and plan and book tours to various destinations around the world. Cvent, Inc. (NYSE:CVT) acquired Elite Meetings International (EMI), a Santa Barbara, Ca.-based premier hospitality marketing company. Terms of the purchase were not disclosed. EMI s online venue-sourcing tools for meeting planners EliteMeetings.com and SpeedRFP.com will be integrated into Cvent s growing hospitality cloud offering. Global Cash Access Holdings, Inc. (NYSE:GCA) has acquired Multimedia Games Holding Company, Inc. (NasdaqGS:MGAM) from Renaissance Technologies Corp. and others for $1.1 billion in cash. Global Cash will pay $36.50 for each share of Multimedia Games. The acquisition will be financed with debt and cash on hand for which Global Cash has secured committed debt financing. 2
Announced M&A Transactions acquired by has acquired acquired by Closed Closed Oct 31, 2014 October November 2014 Closed October 7, 2014 Notes Heartland Payment Systems, Inc. (NYSE:HPY) acquired Xpient Solutions LLC from Patriarch Partners, LLC and others for $30 million. The purchase price was funded from a combination of operating cash and financing under the 2014 revolving credit facility. Heartland Payment Systems provides card payment processing services in the United States Notes On November 21, Direct Travel, Inc. acquired Peak Travel Group Inc. On November 13, Direct Travel, Inc. acquired Best Travel & Tours, Inc. which had turnover of $207 million in 2013. Oct 23, Direct Travel, Inc. acquired Travel Leaders Franchise Group, LLC from Ted Child. For the year ending December 31, 2013, Travel Leaders reported revenues of $40 Million. Notes Global Experience Specialists, Inc. completed the acquisition of onpeak, LLC from Lakeview Equity Partners, LLC through its fund Lakeview Equity Partners I, L.P., Roynat Merchant Capital Inc. and other shareholders. Global Experience Specialists, Inc. provides exhibition and event services in the United States, Canada, the United Kingdom, and Abu Dhabi. 3
Capital Markets: Overview 20.00% 15.00% 10.00% 11.5 5.00% 0.00% -5.00% -10.00% (4.9) (9.1) -15.00% -20.00% S&P 500 Index (^SPX) - Index Value Travel Index: AGYS, AMS, DBD, DRIV, EXPE, NCR, PCLN, PAR, RP, OWW - Index Value SaaS Index: ADP, INFA, CTCT, CRM, SAP, ULTI - Index Value % Change 1 Week 4 Weeks YTD Travel & Hospitality (2.6%) (1.8%) (5.9%) SaaS 0.3% 1.3% (3.0%) S&P 500 0.4% 1.9% (1.5%) 4
Capital Markets: Stock Performance Last Four Weeks Last 52 Weeks Orbitz Worldwide 9.5% Constant Contact, Inc. 30.4% Amadeus IT Holding SA 7.6% Expedia, Inc 25.5% SAP 5.6% PAR Technology Corporation 14.4% PAR Technology Corporation 4.3% S&P Index 11.5% Salesforce.com, Inc 4.2% Amadeus IT Holding SA 10.5% Agilysys Inc. 3.4% ADP, Inc. 6.4% The Ultimate Software Group, Inc. 2.0% Salesforce.com, Inc 2.7% S&P Index 1.9% The Ultimate Software Group, Inc. (4.1%) ADP, Inc. 1.6% RealPage, Inc. (4.5%) NCR Corp. 1.3% Diebold, Incorporated (4.8%) Expedia, Inc (2.5%) SAP (6.9%) Priceline Group Inc. (3.6%) Priceline Group Inc. (8.8%) Informatica Corporation (4.7%) Informatica Corporation (15.4%) Diebold, Incorporated (5.3%) Agilysys Inc. (11.3%) RealPage, Inc. (15.3%) NCR Corp. (13.1%) (30%) (10%) 10% 30% 50% (40%) (20%) 0% 20% 40% 60% SaaS Travel & Hospitality S&P 500 Index 5
Private Equity Groups M&A Transactions In SAAS & Median Deal Value 90 $60.0 80 70 60 50 40 $32.5 40 41 65 70 $30.0 52 79 $50.0 $50.0 $40.0 $30.0 30 20 10 21 $5.6 29 $9.7 $24.2 $14.4 $13.8 $20.0 $10.0 0 2013 Q1 2013 Q2 2013 Q3 2013 Q1 2014 Q2 2014 Q3 2014 Q4 $0.0 Deal Count Median Deal Size (millions, USD) Source: PitchBook Data, Inc. Time Period Deal Count Median Deal Size (millions, USD) 2013 Q1 21 $5.6 2013 Q2 29 $9.7 2013 Q3 40 $24.2 2013 Q4 41 $32.5 2014 Q1 65 $14.4 2014 Q2 70 $30.0 2014 Q3 52 $13.8 2014 Q4 79 $50.0 6
Private Equity Capital Investments In SAAS & Investment Transaction Count 80 70 60 50 55 74 $9,620 65 68 $9,565 74 $7,399 68 71 $8,031 12,000.0 10,000.0 8,000.0 40 35 6,000.0 30 20 10 0 4,000.0 $2,794 $2,881 $1,632 2,000.0 $246 0.0 2013 Q1 2013 Q2 2013 Q3 2013 Q1 2014 Q2 2014 Q3 2014 Q4 Deal Count Total Capital Invested (millions, USD) Source: PitchBook Data, Inc. Time Period Deal Count Total Capital Invested (millions, USD) 2013 Q1 35 245.6 2013 Q2 55 1,631.7 2013 Q3 74 9,620.2 2013 Q4 65 2,794.3 2014 Q1 68 9,564.7 2014 Q2 74 7,398.8 2014 Q3 68 2,881.1 2014 Q4 71 8,031.5 7
Capital Markets: Market Movers Top 3 Overperformers Company Market Close 90 Day Change Recent News $9.10 21.7% $5.87 17.4% $33.77 13.4% On January 23, Bloomberg reported Online travel agency Orbitz Worldwide is putting itself on the market and plans to talk with potential buyers. PAR Technology Corporation, has announced that Kennebunkport Resort Collection, a collection of resort properties, has chosen ATRIO PMS as its cloud property management system and Duetto's Revenue Strategy Solutions for revenue management of its collection of properties. According to a January 15 report by Global Capital Air France KLM sold its shares of Amadeus IT Holdings on January 13, at a price very close to a record high for the stock. Top 3 Underperformers Company Market Close Two Week Change Recent News $1,039.98-11.0% $19.62-9.8% $31.79-9.6% According to Loyalty Traveler and EyeforTravel.com, the online booking space may become more crowded with the entrance of Amazon. Amazon might also consider lower commissions of 15% or less. RealPage Inc. (RP) got an activist wake-up call in November after 9.9% stakeholder JHL Capital Group went from a passive investor to an activist after a report that the company rejected a nearly $2 billion bid. On January 15, US security systems company Diebold Inc (NYSE:DBD) said it was merging its Brazilian and Latin American units to drive greater efficiency and further improve customer service. 8
Company Liquidity Estimates by Subsector ($ millions) Travel & Hospitality Index 3x LTM EBITDA -$0.3 $4,539.7 $716.9 $107.0 $2,387.6 Less LT Debt 0.3 2,301.1 638.6 135.2 1,746.7 Plus Cash 67.2 503.2 240.4 233.4 2,252.7 Dry Powder $66.6 $2,741.8 $318.7 $205.2 $2,893.7 Travel & Hospitality Index 3x LTM EBITDA $3,018.0 $9,507.5 -$1.3 $105.7 $381.8 Less LT Debt 3,752.0 3,925.8 16.3 38.6 450.5 Plus Cash 424.0 5,043.7 10.3 30.7 250.1 Dry Powder -$310.0 $10,625.4 -$7.3 $97.8 $181.4 SaaS Index 3x LTM EBITDA $7,840.8 $572.1 $110.9 $261.6 $21,407.6 $206.1 Less LT Debt 1,947.9 0.0 0.0 2,350.9 5,220.1 7.8 Plus Cash 2,175.7 234.6 101.9 846.3 3,963.8 99.9 Dry Powder $8,068.6 $806.7 $212.8 -$1,243.0 $20,151.3 $298.3 9
About The McLean Group Founded in 1997, The McLean Group is a national, middle market investment bank with deep expertise in a variety of industry verticals. Headquartered in McLean, VA, The McLean Group is among the largest independent middle market investment banks in the region. Our core advisory services include: Mergers & Acquisitions The McLean Group uses its considerable experience and expertise in the travel and hospitality industry to guide its clients through each stage of the mergers & acquisitions (M&A) process and ultimately identify the most probable and suitable candidates to complete transactions under the most favorable terms. Business Valuation & Litigation Support As a core competency and complement to its M&A business, The McLean Group provides business valuation services, including intangible asset and financial security valuations for a variety of transactions, financial reporting and tax purposes. In addition, The McLean Group has the experience and credentials necessary to support litigation proceedings, including quantifying economic damages and valuing a minority interest in a business. Capital Formation The McLean Group arranges private equity, venture capital, senior debt and subordinated debt to support clients expansions, M&A, refinancings, recapitalizations, leveraged buyouts and other shareholder liquidity objectives. Strategic Consulting The McLean Group's Strategic Consulting business provides transaction, financial and interim management services to companies ranging from start-up entities to publicly-held corporations across an assortment of industries. McLean Securities, a wholly-owned affiliate of The McLean Group, is a registered broker/dealer with the Financial Industry Regulatory Authority (FINRA) and a Member, Securities Investor Protection Corporation (SIPC). 10
Travel & Hospitality M&A Transactions 11
Travel & Hospitality Valuation Engagements 12
Contact Information The McLean Group 7918 Jones Branch Dr., Suite 750 McLean, VA 22102 Main: 703.827.0200 Fax: 703.827.0175 Travel & Hospitality Team Joe Golden Principal jgolden@mcleanllc.com Kathi Crow Managing Director kcrow@mcleanllc.com Mark Dayman Managing Director mdayman@mcleanllc.com Brent Lorenz Vice President blorenz@mcleanllc.com Scott Wait Managing Director swait@mcleanllc.com Disclaimer: The McLean Group does not provide accounting, tax or legal advice. The contents of this document are believed to be reliable, however The McLean Group, LLC makes no representation as to the accuracy or completeness of this information. 13