Vendor Ecosystem - Talent Management, HR, Workforce Management, M&A Activity, Public Sector Valuations.

1. HCM Software Market Update & Vendor Ecosystem
January 2015

2. About SEG
• Twenty-two year, exclusive focus on software
advisory services to lower & middle market
representing companies seeking:
• Strategic exit
• Growth capital
• Buyout
• Inorganic growth via acquisition
• Fairness opinions and valuations
• Board advisory services
• Clients span virtually every technology, product
category, delivery model and vertical market
• Global presence providing advice and guidance to
more than 2,000 private and public companies
throughout US, Canada, Europe, Asia-Pacific, Africa
and Israel
• Strong cross-functional team leveraging transaction,
operating, legal and engineering experience
• Unparalleled software industry reputation, track
record and industry research
• Highly referenceable base of past clients and buyers
/ investors
Focus on
Advice
Multi-service
Multi-
Industry
Focus on
Software
Advisory
Boutiques
Bulge Bracket
Firms
IPO Boutiques
Copyright © 2015 by SOFTWARE EQUITY GROUP, LLC, All Rights Reserved
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3. Copyright © 2015 by SOFTWARE EQUITY GROUP, LLC, All Rights Reserved
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SEG’s Industry Leading HCM Software Experience
3
10 Exits Completed in Talent Management, HR & Workforce Management Software

4. HCM Vendor Ecosystem

5. Human Capital Management (HCM) Software Overview
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• Recruiting
• Learning
• Compensation
• Performance
• Etc.
• Core HRIS
• Payroll
• Benefits
Administration
• Etc.
• Time & attendance
• Shift scheduling /
optimization
• Mobile workforce
Management
• Expense
Management
• Etc.
• Solutions for
staffing/recruitment
firms
• Other HCM related
technologies not
falling into alternate
categories

6. Talent Management Workforce Management OtherHR
IndependentAcquiredSEG-Landscape: HCM Software Vendors
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CONFIDENTIAL

7. SEG-Landscape: Public/Private Capital in HCM Software
Public Companies VC/Private Equity
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CONFIDENTIAL

8. BRIEF MARKET UPDATE – HCM Technology

9. Healthy Labor Market
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CONFIDENTIAL
Jan-07, 4.6%
Oct-09, 10.0%
Nov-14, 5.8%
Jan-07, 238K
Mar-09, -826K
Nov-14, 353K
-1000K
-800K
-600K
-400K
-200K
0K
200K
400K
600K
4.0%
5.0%
6.0%
7.0%
8.0%
9.0%
10.0%
11.0% Jan-07
Mar-07
May-07
Jul-07
Sep-07
Nov-07
Jan-08
Mar-08
May-08
Jul-08
Sep-08
Nov-08
Jan-09
Mar-09
May-09
Jul-09
Sep-09
Nov-09
Jan-10
Mar-10
May-10
Jul-10
Sep-10
Nov-10
Jan-11
Mar-11
May-11
Jul-11
Sep-11
Nov-11
Jan-12
Mar-12
May-12
Jul-12
Sep-12
Nov-12
Jan-13
Mar-13
May-13
Jul-13
Sep-13
Nov-13
Jan-14
Mar-14
May-14
Jul-14
Sep-14
Nov-14
U.S.MonthlyJobGain/Loss
U.S.UnemploymentRate
Unemployment Rate
Net Jobs Gain/Loss
• Healthy labor markets drive adoption of human capital management software products, which in turn, drives HCM software M&A volume.
• The U.S unemployment rate has been steadily declining since peaking in October 2009 at 10%. According to the Bureau of Labor Statistics
(BLS), the unemployment rate was 5.8% in November 2014, and is projected to have fallen to 5.6% following December 2014.
• Non-farm payroll job creation in 2014 was especially strong according to the BLS, with the U.S. economy adding over 200K new jobs
during 11 out of 12 months. In comparison, 200K jobs or more were created during 6 months in both 2013 and 2012, 4 months in 2011, 3
months in 2010, no months in 2009 and 2008, and only the month of January during 2007.

10. Annual HCM Software M&A Deal Volume
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0
10
20
30
40
50
60
70
80
90
2008 2009 2010 2011 2012 2013 2014
#ofTransactions
Other
WFM
HR
Talent
• Driven by a favoring economic climate and increasingly stable labor markets, aggregate HCM software M&A
deal volume in 2014 was up 56% over 2013 (100% increase for Talent Management, 43% increase for HR and
50% increase for Workforce Management)
56%

11. Talent Management Software M&A Snapshot
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CONFIDENTIAL
0
2
4
6
8
10
12
14
16
#ofTransactions
Quarterly M&A Volume
Other Delivery
On-Premise
SaaS
0
5
10
15
20
25
30
35
40
45
2008 2009 2010 2011 2012 2013 2014
#ofTransactions
Annual M&A Volume
Other Delivery
On-Premise
SaaS
Date Buyer Seller
Enterprise
Value (mm)
EV/
Rev
12/02/11 SAP SuccessFactors $3,516.1 12.1x
02/08/12 Oracle Taleo $1,805.5 5.7x
08/25/12 IBM Kenexa $1,307.1 4.1x
04/26/11 Successfactors Plateau Systems* $290.0 4.2x
01/07/14 INFOR PeopleAnswers* $200.0 7.0x
12/02/11 Nice Systems Merced Systems $170.0 3.0x
03/29/10 HgCapital Stepstone Solutions* $148.1 2.2x
05/05/08 Taleo Vurv Technology $130.5 4.0x
09/01/10 Taleo Learn.com $125.0 5.2x
04/03/09 Vista Equity Partners SumTotal Systems $106.7 0.9x
Date Buyer Seller
Enterprise
Value (mm)
EV/
Rev
12/02/11 SAP SuccessFactors $3,516.1 12.1x
01/07/14 INFOR PeopleAnswers* $200.0 7.0x
07/29/08 Monster Trovix* $72.5 7.0x
02/08/12 Oracle Taleo $1,805.5 5.7x
09/01/10 Taleo Learn.com $125.0 5.2x
04/26/11 SuccessFactors Plateau Systems* $290.0 4.2x
08/25/12 IBM Kenexa $1,307.1 4.1x
06/21/11 Taleo Jobpartners* $37.4 4.0x
05/05/08 Taleo Vurv Technology $130.5 4.0x
09/29/08 Bedford Funding Authoria* $63.1 4.0x
Top by Enterprise Value Top by EV/Rev

12. HR Software M&A Snapshot
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Top by Enterprise Value Top by EV/Rev
Date Buyer Seller
Enterprise
Value (mm)
EV/
Rev
11/03/14 Aetna bswift $400.0 -
11/22/13 Towers Watson Liazon $215.0 -
09/22/14 Sage Group PAI Group $157.8 4.1x
12/17/10 Lawson Software Enwisen $75.0 5.0x
Date Buyer Seller
Enterprise
Value (mm)
EV/
Rev
10/22/13 NetSuite TribeHR* - 20.0x
12/17/10 Lawson Software Enwisen $75.0 5.0x
09/22/14 Sage Group PAI Group $157.8 4.1x
0
1
2
3
4
5
6
7
8
9
#ofTransactions
Quarterly M&A Volume
Other Delivery
On-Premise
SaaS
0
5
10
15
20
25
2008 2009 2010 2011 2012 2013 2014
#ofTransactions
Annual M&A Volume
Other Delivery
On-Premise
SaaS

13. Workforce Management Software M&A Snapshot
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Top by Enterprise Value Top by EV/Rev
Date Buyer Seller
Enterprise
Value (mm)
EV/
Rev
09/18/14 SAP Concur $7,651.6 11.5x
10/14/14 HgCapital Allocate Software $145.3 2.3x
04/03/14 Amadeus i:FAO $93.8 4.6x
12/09/11 LDC Workplace Systems $60.2 4.0x
05/06/14 inContact Uptivity $50.2 2.6x
09/13/11 Verint Systems GMT $42.0 -
08/01/09 Concur Etap-On-Line $40.0 3.7x
Date Buyer Seller
Enterprise
Value (mm)
EV/
Rev
09/18/14 SAP Concur Technologies $7,651.6 11.5x
04/03/14 Amadeus i:FAO $93.8 4.6x
12/09/11 LDC Workplace Systems $60.2 4.0x
08/01/09 Concur Etap-On-Line $40.0 3.7x
05/06/14 inContact Uptivity $50.2 2.6x
10/14/14 HgCapital Allocate Software $145.3 2.3x
0
1
2
3
4
5
6
7
8
#ofTransactions
Quarterly M&A Volume
Other Delivery
On-Premise
SaaS
0
5
10
15
20
25
2008 2009 2010 2011 2012 2013 2014
#ofTransactions
Annual M&A Volume
Other Delivery
On-Premise
SaaS

14. Public SaaS Companies: HCM Software
*Data set – January 9, 2015
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Category Name Market Cap EV
TTM
Revenue
TTM
Gross
Margin
TTM
EBITDA
Margin
TTM
Revenue
Growth
EV/
Revenue
EV/
EBITDA
Forward
EV/
Revenue
Forward
EV/
EBITDA YTD
SEG SaaS Index $948.7 $844.3 $142.0 65.5% -6.9% 29.1% 5.6x 61.1x 4.8x 33.8x -10.8%
CRM & Marketing $1,073.0 $905.3 $157.9 68.5% -6.7% 28.4% 5.0x 90.9x 4.1x 30.5x -8.6%
ERP & Supply Chain $948.7 $807.9 $120.5 68.2% -8.7% 30.6% 5.5x 60.7x 4.4x 27.5x -18.9%
Vertically Focused $1,122.3 $940.2 $145.3 62.3% 7.9% 38.1% 6.4x 46.2x 5.2x 27.1x -8.2%
Human Capital Management $1,445.0 $1,372.2 $128.7 59.9% -14.8% 31.8% 7.0x 59.3x 5.3x 42.7x -3.4%
SaaS Other $557.9 $644.3 $163.9 64.6% -11.2% 23.9% 4.4x 74.5x 3.8x 75.5x -12.8%
Company Name Ticker Market Cap EV
TTM
Revenue
TTM
Gross
Margin
TTM
EBITDA
Margin
TTM
Revenue
Growth
EV/
Revenue
EV/
EBITDA
Forward
EV/
Revenue
Forward
EV/
EBITDA YTD
Benefitfocus BNFT $692.3 $673.4 $127.5 34.8% -37.5% 31.8% 5.3x n/a 4.2x n/a -51.7%
Callidus Software CALD $776.6 $748.4 $128.7 59.9% -1.4% 19.8% 5.8x n/a 4.8x 42.7x 22.3%
Cornerstone OnDemand CSOD $1,701.4 $1,697.8 $242.1 71.2% -15.8% 45.2% 7.0x n/a 5.3x 166.1x -40.0%
Halogen Software TSX:HGN $168.8 $122.9 $54.2 73.0% -14.8% 18.9% 2.3x n/a 1.9x n/a -37.7%
Paylocity Holding PCTY $1,445.0 $1,372.2 $117.4 50.2% -5.1% 40.1% 11.7x n/a 9.0x n/a 21.0%
The Ultimate Software Group ULTI $4,177.3 $4,076.5 $482.4 59.6% 14.2% 23.5% 8.5x 59.3x 7.0x 28.5x -3.4%
Workday WDAY $16,191.3 $14,846.2 $703.5 65.1% -22.7% 72.2% 21.1x n/a 14.4x n/a 6.5%
Median: $1,445.0 $1,372.2 $128.7 59.9% -14.8% 31.8% 7.0x 59.3x 5.3x 42.7x -3.4%
• SaaS HCM companies are performing well in the publics markets. Currently, the SEG SaaS HCM Index, which includes the companies
listed below, is outperforming the remaining SEG SaaS Indices on a EV/Revenue basis (7.0x TTM revenue).
• The index is outperforming all others despite posting the poorest median TTM gross margin and EBITDA margin percentages.
• Valuations in the group have been buoyed by strong revenue growth rates (31.8%), which most closely correlates to SaaS company
valuation, and strengthening labor markets.

15. Key Trends
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• Current M&A market extremely active
• Valuations strong for strategic acquisition targets
• Private equity helping to buoy valuations and accelerate deal flow
• HCM M&A market will likely remain quite robust for the next few quarters

16. Contact Information
Kris Beible
(858) 509-2800
kbeible@softwareequity.com
www.softwareequity.com
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