VENUE Market Spotlight TECH FINANCING. February 2015 Edition

VENUE Market Spotlight TECH FINANCING February 2015 Edition

CONTENTS Welcome 3 Foreword 4 Survey 5 Mega deals in the room 8 About RR Donnelley 10 VENUE Market Spotlight: Tech Financing

WELCOME Dear Valued Reader, Welcome to the February 2015 edition of the Venue Market Spotlight. This month s will focus on private equity and venture capital investing in the technology sector. Technology is now a staple in virtually every facet of life. And now, companies are rapidly adopting new technologies to streamline their operations and enhance return on investments. The statistics are staggering. According to information technology research company Gartner, by 2017, US consumers mobile engagement will comprise half of US digital commerce revenue. It is with this backdrop that respondents in this month s Spotlight project that both private equity and venture capital technology investments will rise over the next 12 months, following recent trends. According to Mergermarket data, US private equity activity rose by 48% year on year in 2014 to its highest level in five years. Venture capital activity tracked this upward path in technology investments. According to PwC s and National Venture Capital Association s MoneyTree Report, internet-specific firms garnered US$11.9bn last year, the highest level of Internet-specific investments since 2000. Yearly software industry investments also reached the highest level since 2000 at US$19.8bn in 2014. These investments in software firms comprised 41% of total venture capital investments in 2014. Looking at these figures, it is easy to see that the shifts in the use of technology both in personal and business settings are affecting where investors place their capital. At RR Donnelley, we take pride in serving the needs of different market segments. We have serviced every type of complicated transaction and know first-hand the challenges that each deal can present. In fact, last year not only did we service the largest IPO in history, but the technology behind our Venue virtual data room supported the largest M&A transaction of 2014. With the rest of 2015 ripe with investing opportunity, we are ready to serve the transactional needs of our clients to help them better navigate this vibrant deal making environment. Sincerely, Tom Juhase President, Financial Services Group RR Donnelley 3

FOREWORD Global tech companies had one of their biggest deal-making years ever in 2014 with the industry seeing its highest aggregated deal values since 2006 and highest volumes since 2001. From the private equity (PE) and venture capital (VC) perspective, this looks set to continue. The technology sector is set for a significant capital boost from PE and VC firms in the next 12 months, as outlined in this month s Spotlight, according to our survey of tech M&A professionals. Company executives are utilizing tech to boost efficiency and rationalize workforces, while developments such as the Internet of Things the increasing connectivity of items other than computing machines to the internet is proliferating people s personal devices both in number and connectivity. Indeed, research from Gartner suggests that there will be 4.9 billion things connected to the internet in 2015. This will include cars, phones and household appliances. This has not gone unnoticed by private investors. The level of confidence coupled with the potential numbers outlined above should mean that skyrocketing valuations should come as no surprise, as investors continue to put high premiums on tech. Respondents to this month s survey expect these multiples to rise further. Additionally, they also believe the technology IPO pipeline will swell, as these very same high valuations are pushing technology companies to seek the public markets. In turn, this is providing an easier exit strategy for PE and VC investors. Other key findings from our survey of tech M&A professionals include: Nearly half of respondents point to consumers rising need for convenience as the primary driver for new PE and VC tech investments, as they increasingly turn to online and mobile devices for everyday activities. Sixty percent apiece expect cloud storage and mobile enterprise solutions to be the subsectors attracting the most capital. This fits in well with current business trends as corporates increasingly support their business functions with online storage capability and remote access. More than half of respondents expect PE to be most active in the European tech space. This comes against the backdrop of a healthier economy and cheaper debt available for PE firms, as well as increasingly attractive subsectors in Europe s tech market, such as UK fintech. Cheaper debt, a healthy economy and the incredible potential of tech mean that PE and VC firms are investing heavily. And, after a record 2014, this year looks set to continue in that vein. Investors are giving tech companies a significant boost in capital. VENUE Market Spotlight: Tech Financing

SURVEY What do you think will happen to the fundraising environment for technology investments over the next 12 months? (Select one per investment type) Which technology segment will PE and VC invest in the most over the next 12 months? (Select top two) Cloud storage 60% Private Equity 53% 33% 14% Mobile enterprise solutions 60% 29% Cyber security 40% Venture Capital 47% 40% 13% SaaS 27% Managed services 13% 0 20 40 60 80 100 Percentage of respondents Significantly increase Somewhat increase Remain the same Technology will receive a rise in investments from both PE (53%) and VC (47%) in the coming year, according to respondents. A positive fundraising environment is expected for the technology sector as businesses want to raise their technological standards and capabilities to increase operational efficiency and to offer the best services to their customers, says a Europe-based managing director at a PE firm. He added that PE and VC investors prefer to ally themselves with parties that have well-thought-out plans and processes, since these give them a certain amount of confidence in the profitability of their investments. A POSITIVE FUNDRAISING ENVIRONMENT IS EXPECTED FOR THE TECHNOLOGY SECTOR 0 10 20 30 40 50 60 70 Percentage of respondents Cloud storage (60%) and mobile enterprise solutions (60%) are expected to be the most attractive tech subsectors for PE and VC investors according to respondents. Cloud storage where data is managed and backed up remotely by a hosting company so users can access the information over an Internet network has become increasingly widespread across the globe. Indeed, forecasts by Cisco suggest that by 2018, 78% of workloads will be processed by cloud data centers. Considerable investments are also expected in mobile enterprise solutions, which refers to the changing working habits of employees as they increasingly work remotely by using mobile devices and cloud services. Many companies scale of operations have increased tremendously, putting pressure on firms to maintain the efficiency of their workforce by looking to mobile enterprise solutions, says a partner at a US-based VC firm. PE and VC firms are also expected to focus their investments on cyber security (40%), an area which has risen up the corporate agenda on the back of recent high-profile attacks on companies such as Sony. 5

SURVEY (CONTINUED) Which region do you expect to see the most levels of technology investment activity by PE and VC over the next 12 months? What are the greatest factors driving the demand for technology investments over the next 12 months? (Select top two) 47% Private Equity 57% 7% 7% 29% Serving consumer s need for convenience Securing information and data/cyber security 33% Streamlining business processes 27% 29% Facilitating geographic expansion for businesses 27% Venture Capital 14% 22% 21% 43% 0 20 40 60 80 100 Percentage of respondents Europe North America Latin America Asia-Pacific Storing data and information Complying with industry regulations Shifting to the use of smartphones and tablets Other 7% 13% 20% 27% 0 10 20 30 40 50 60 Percentage of respondents According to over half of respondents (57%), Europe will see the greatest levels of PE technology investment followed by Asia-Pacific at 29%. European businesses have been under immense pressure in the aftermath of the financial crisis and are struggling with rising operational costs that can be addressed by making the processes digital. European companies are ramping efforts to improve their workflow through technology, says a director of investment of a US-based PE firm. PE investors are taking advantage of this interest that has been building up among businesses in the region. Meanwhile, VC investments will be focused a lot on Asia- Pacific as businesses located in the region have demonstrated significant growth potential, says a managing director at a US-based VC firm. Indeed, 43% of respondents said that VC companies will be most active in Asia-Pacific. Respondents chose serving consumer need for convenience (47%) as the top driver for technology investments. This trend in consumer-focused tech is evidenced by the popularity and ascendency of taxi-app Uber, which is a smartphone application now valued at approximately US$40bn that provides customers with information regarding available taxis in their immediate area. The second top reason why technology investments will be in demand is companies need to secure their data, cited by 33% of respondents. Businesses are investing in security tools to safeguard their core information and analytical reports, especially given the shift into the use of smartphones and tablets. With the increasing scale of global businesses and the significant number of entities interlinked on digital frameworks, the issues pertaining to cyber security have become considerable, says a managing partner at an Asia- Pacific PE and VC firm. VENUE Market Spotlight: Tech Financing

What do you expect to happen to the valuations of technology companies in the next 12 months? What do you expect to happen to the number of technology companies that will enter the IPO pipeline over the next 12 months? Significantly increase Somewhat increase 7% 7% 33% Significantly increase Somewhat increase 53% 47% Remain the same Somewhat decrease 53% All respondents believe that the valuations of technology companies will rise in the next 12 months, with 47% of them saying that the rise will be significant. This anticipation comes as technology companies have proved their ability to innovate and adapt their business structures to cater to the rising needs and demands of their customer bases. Diversification and continuous innovation have helped technology companies improve their market position as the demand for technology among consumers rises significantly, helping these companies attract investors and improve their valuations, says a US-based growth equity investor. TECH COMPANIES RAPID INNOVATION LEADS TO HIGH VALUATIONS Eighty-six percent of respondents expect that the number of technology companies entering the IPO pipeline will rise in the next 12 months, with roughly a third (33%) of respondents thinking that this number will significantly increase. There will be a rise in technology IPOs as the sector needs a tremendous amount of capital, says a partner at a Europe-based VC fund. Some notable technology IPOs that did well after pricing aside from the biggest technology offering to date, Alibaba s US$21bn IPO include those from computer networking company Arista Networks and software company Zedesk, among others. There are also many private technology companies that have very high valuations pre-ipo such as lodging website Airbnb and Uber. 7

Mega deals in the room Venue data room: A special report Axis Capital and PartnerRe merge January 26, 2015 Financial Advisor for Target: Credit Suisse Counsel for Target: Appleby; Davis Polk & Wardwell LLP; Skadden Arps Slate Meagher & Flom LLP Financial Advisor for Buyer: Goldman Sachs Counsel for Buyer: Conyers Dill & Pearman; Simpson Thacher & Bartlett LLP Industry: Financial Services; Insurance related Oracle acquires Datalogix December 22, 2014 Financial Advisor for Target: Goldman Sachs Counsel for Buyer: Kirkland & Ellis LLP Industry: Computer software; Internet / ecommerce; Media; Services (other); Advertising; Consulting services (excl. IT consulting); e-retailing; Application software products GIC Private Limited and Global Logistic Properties Limited acquires IndCor Properties from Blackstone Group L.P. December 1, 2014 Counsel for Buyer(s): Skadden Arps Slate Meagher & Flom LLP; Allen & Gledhill LLP; Morrison & Foerster LLP Financial Advisor for Seller: Barclays; Citi; RBC Capital Markets Inc; Wells Fargo Securities, LLC Counsel for Seller: Simpson Thacher & Bartlett LLP Industry: Real estate Cypress Semiconductor and Spansion merge December 1, 2014 Financial Advisor for Target: Jefferies LLC; Morgan Stanley Counsel for Target: Fenwick & West LLP; Gibson Dunn & Crutcher LLP; Greenberg Traurig LLP; Latham & Watkins LLP; Skadden Arps Slate Meagher & Flom LLP Financial Advisor for Buyer: Qatalyst Group Counsel for Buyer: Shearman & Sterling LLP; Wilson Sonsini Goodrich & Rosati P.C. Industry: Computer: Hardware; Computer: Semiconductors; Computer peripherals; Electronic components; Semiconductors Actavis plc acquires Allergan, Inc. November 17, 2014 Financial Advisor for Target: Bank of America Merrill Lynch; Goldman Sachs Counsel for Target: Latham & Watkins LLP; Matheson; Richards Layton & Finger, P.A.; Wachtell, Lipton, Rosen & Katz Financial Advisor for Buyer: JP Morgan Counsel for Buyer: Cleary Gottlieb Steen & Hamilton LLP; Cravath, Swaine & Moore LLP; Weil Gotshal & Manges LLP Industry: Medical: Pharmaceuticals; Drug development; Drug manufacture; Drug supply SunEdison Inc. and TerraForm Power, Inc. acquire First Wind Holdings, Inc. November 17, 2014 Financial Advisor for Target: Goldman Sachs; Marathon Capital LLC Counsel for Target: Davis Polk & Wardwell LLP Financial Advisor for Buyer: Barclays; Morgan Stanley Counsel for Buyer: Orrick Herrington & Sutcliffe LLP; White & Case LLP Financial Advisor for Buyer: Bank of America Merrill Lynch; Citi; Lazard Counsel for Buyer: Cleary Gottlieb Steen & Hamilton LLP Industry: Energy; Alternative energy Acadia Healthcare Company acquires CRC Health Group October 29, 2014 Target: CRC Health Group, Inc. Financial Advisor for Target: Citi Counsel for Target: Ropes & Gray LLP Financial Advisor for Buyer: Jefferies LLC ; UBS Investment Bank Counsel for Buyer: Cleary Gottlieb Steen & Hamilton LLP Private Equity Firm for Seller: Bain Capital, LLC Industry: Medical; Health institutions Tesoro Logistics acquires natural gas business from QEP Resources October 19, 2014 Financial Advisor for Buyer: Bank of America Merrill Lynch Counsel for Buyer: McGuireWoods LLP Debt Provider (Senior) for Buyer: Bank of America Merrill Lynch; Royal Bank of Scotland Group Plc Financial Advisor for Seller: Deutsche Bank AG; Goldman Sachs Counsel for Seller: Latham & Watkins LLP; Wachtell, Lipton, Rosen & Katz Industry: Energy; Transportation; Freight and other transportation services Vista Equity Partners acquires Tibco Software September 29, 2014 Target: TIBCO Software Inc. Financial Advisor for Target: Goldman Sachs Counsel for Target: Wilson Sonsini Goodrich & Rosati P.C. Financial Advisor for Buyer: Bank of America Merrill Lynch; Deutsche Bank AG; Jefferies LLC; JP Morgan; Union Square Advisors LLC Counsel for Buyer: Kirkland & Ellis LLP Private Equity Firm for Buyer: Vista Equity Partners Debt Provider for Buyer: Jefferies LLC; JP Morgan Industry: Computer software; Application software products; Software development and Systems integration For more information: Please contact your RR Donnelley Sales Rep. Call 1.888.773.8379 Or visit www.venue.rrd.com Venue demo (audio enabled): http://www.rrdonnelley.com/venue/ Resources/ProductDemo.asp Corporate Headquarters 111 South Wacker Drive Chicago, IL 60606-4301 U.S.A. 888.773.8379 www.rrdonnelley.com www.venue.rrd.com Copyright 2015 R. R. Donnelley & Sons Company. All rights reserved.

Eastman Chemical Company acquires Taminco Corporation September 11, 2014 Target: Taminco Corporation Financial Advisor for Target: Morgan Stanley Counsel for Target: Kirkland & Ellis LLP Financial Advisor for Buyer: Citi Counsel for Buyer: Cleary Gottlieb Steen & Hamilton LLP; Jones Day Private Equity Firm for Seller: Apollo Global Management, LLC Counsel for Seller: O Melveny & Myers LLP Industry: Chemicals and materials; Fine chemicals other; Petrochemicals derivatives Roche acquires InterMune August 24, 2014 Financial Advisor for Target: Centerview Partners; Goldman Sachs Counsel for Target: Cravath, Swaine & Moore LLP; Sullivan & Cromwell LLP Financial Advisor for Buyer: Citi Counsel for Buyer: Davis Polk & Wardwell LLP Industry: Biotechnology; Medical: Pharmaceuticals; Biotechnology related research; Drug development; Drug manufacture; Drug supply Zillow acquires Trulia July 28, 2014 Financial Advisor for Target: JP Morgan; Qatalyst Group Counsel for Target: Davis Polk & Wardwell LLP; Goodwin Procter LLP; Wilson Sonsini Goodrich & Rosati P.C. Financial Advisor for Buyer: Goldman Sachs Counsel for Buyer: Latham & Watkins LLP; Perkins Coie LLP; Shearman & Sterling LLP Industry: Internet / e-commerce; Real Estate: Real estate; Search engines and other internet enabling technology Exelon acquires Pepco April 30, 2014 Target: Pepco Holding Financial Advisor for Target: Lazard; Morgan Stanley Counsel for Target: Covington & Burling LLP; Davis Polk & Wardwell LLP; Sullivan & Cromwell LLP Financial Advisor for Buyer: Barclays; Goldman Sachs; Loop Capital Markets Counsel for Buyer(s): Baker Botts LLP; Fried Frank Harris Shriver & Jacobson LLP; Kirkland & Ellis LLP; Weil Gotshal & Manges LLP Industry: Energy; Utilities (other); Electrical power; Transmission; Integrated utilities Mallinckrodt Plc acquires Questcor Pharmaceuticals, Inc. April 7, 2014 Target: Questcor Pharmaceuticals Financial Advisor for Target: BofA Merrill Lynch; Centerview Partners Counsel for Target: Latham & Watkins LLP; Matheson Simpson Thacher & Bartlett LLP Financial Advisor for Buyer(s): Barclays Counsel for Buyer(s): Arthur Cox; Wachtell Lipton Rosen & Katz Industry: Medical: Pharmaceuticals; Drug development; Drug supply Starr Investment acquires MultiPlan February 17, 2014 Target: MultiPlan Inc. Financial Advisor for Target: BofA Merrill Lynch; Credit Suisse; Dean Bradley Osborne; Goldman Sachs; LionTree Advisors LLC; Raine Group LLC; RBC Capital Markets Inc. Counsel for Target: Simpson Thacher & Bartlett LLP Private Equity Seller(s): BC Partners Limited; Silver Lake Partners Private Equity Buyer: Partners Group Holding Financial Advisor for Buyer: Barclays; JP Morgan; LionTree Advisors LLC Counsel for Buyer: Kirkland & Ellis LLP Industry: Medical; Services (other) Grupo Bimbo SA de CV acquires Canada Bread Company, Limited from Maple Leaf Foods Inc. February 12, 2014 Financial Advisor for Target: CIBC World Markets Inc. Counsel for Target: Stikeman Elliott LLP Counsel for Buyer: Ritch, Mueller, Heather y Nicolau, S.C.; Torys LLP; White & Case LLP Financial Advisor for Seller: Centerview Partners; RBC Capital Markets Inc. Counsel for Seller: Blake, Cassels & Graydon LLP; Davis Polk & Wardwell LLP; Goodmans LLP; Osler, Hoskin & Harcourt LLP Industry: Consumer: Foods; Baked goods; Food ingredients; Food-others; Frozen and chilled foods KKR acquires National Vision February 7, 2014 Target: National Vision Counsel for Seller: Weil Gotshal & Manges LLP Financial Advisor for Seller: Barclays; Wells Fargo Securities LLC Counsel for Buyer: Simpson Thacher & Bartlett LLP Private Equity Buyer: Kohlberg Kravis Roberts & Co. L.P. Private Equity Seller: Berkshire Partners LLC Industry: Consumer: Retail; Chemists/ health; Other retailing of consumer products and services Men s Wearhouse acquires Jos. A. Bank January 16, 2014 Target: Jos. A. Bank Clothiers Financial Advisor for Target: Financo Inc.; Goldman Sachs Counsel for Target: Guilfoil Petzall & Shoemake; Skadden Arps Slate Meagher & Flom LLP Financial Advisor for Buyer: BofA Merrill Lynch; JP Morgan Counsel for Buyer: Davis Polk & Wardwell LLP; Willkie Farr & Gallagher LLP Industry: Consumer: Retail; Apparel Deals. Done. Simple. Corporate Headquarters 111 South Wacker Drive Chicago, IL 60606-4301 U.S.A. 888.773.8379 www.rrdonnelley.com www.venue.rrd.com Copyright 2015 R. R. Donnelley & Sons Company. All rights reserved.

ABOUT RR DONNELLEY RR Donnelley is a global provider of integrated communications. The company works collaboratively with more than 60,000 customers worldwide to develop custom communications solutions that help to drive top-line growth, reduce costs, enhance ROI and ensure compliance. Drawing on a range of proprietary and commercially available digital and conventional technologies deployed across four continents, the company employs a suite of leading Internet based capabilities and other resources to provide premedia, printing, logistics and business process outsourcing services to clients in virtually every private and public sector. About Venue Venue is a secure online workspace with a powerful feature-set and an intuitive design that allow you to easily organize, manage, share and track all of your sensitive information. Venue data rooms provide complete control, ensuring that you can manage who has access to your data room, which documents they see, and how they can interact with those documents. RR DONNELLEY AT A GLANCE $10.2 billion 2012 net sales 55,000+ Employees 500+ Global locations Nearly 125 Manufacturing locations 750+ Issued and pending patents Nearly $1.2 billion Capital investments over the past five years Venue data rooms are backed by RR Donnelley, a $10.2 billion corporation with more than 500 locations and over 55,000 employees worldwide. RR Donnelley s total revenues are larger than all other virtual data room providers combined. We bring extensive experience to providing integrated communications services. For more information regarding Venue, RR Donnelley, or this report, please contact us directly. Daniel Perez Marketing Manager, Venue Data Room RR Donnelley Financial Services Group financial.rrd.com 255 Greenwich St. New York, NY 10007 Phone: 888.773.8379 Fax: 212.341.7475 venuecommunications@rrdvenue.com VENUE Market Spotlight: Tech Financing

VENUE Market Spotlight: Tech Financing