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SaaS-valuaatiot: Näin sijoittajat ja ostajat määrittävät arvon Ville Rissanen Ernst & Young SAAS-KLUBI To 18.11.2021 klo 15 | Online

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Ville Rissanen Director, EY Corporate Finance [email protected] • In investment banking since 2013, previously at Maventa (acquired by Visma) • MSc in Finance from Aalto University • Provided M&A advice to clients such as:

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Advised Adra Software in its sale to Trintech, a portfolio company of Vista Equity 2017 Advised Reeleezee in its sale to Exact Holding 2017 Advised Experian (Marketing Services) in its sale to Vector Capital 2017 Advised Piriform in its sale to Avast Software 2017 2017 Advised Health & Parenting in its sale to Philips 2017 Advised Khazanak Nasional Berhad in its acquisition of Sigfox 2016 Advised Solibri in its sale to Nemetschek Group 2016 Advised Thunderhead in its sale to AKKR 2016 Advised MIND4iT in its sale to Visma 2016 Advised Groupama in its sale of Cegid Group to Silver Lake Partners Advised Heeros in its IPO on NASDAQ First North 2016 Advised Inflexion Private Equity Partners in its acquisition of UKFast 2018 Advised i3D.net in its sale to Ubisoft 2018 Advised Petrotechnics in its sale to Sphera 2018 Advised OP5 in its sale to ITRS Group, a portfolio company of TA Associates 2018 Advised Voiceworks in its merger with Swyz Group, a portfolio company of Waterland 2018 Advised Volvo Group in its sale of WirelessCar to Volkswagen Group 2018 Advised Trustweaver in its sale to Sovos, a portfolio company of HG Capital 2018 Advised Quinyx in its capital raise from Alfvén & Didrikson and Battery Ventures 2019 2019 Advised ipnordic in its sale to Within Reach Group, a portfolio company of Waterland Advised Gemalto in its sale of Netsize to Link Mobility 2019 Advised Consignor in its sale to Francisco Partners 2020 Advised Axcel in its acquisition of Superoffice 2020 Advised Unikie in its fundraising from CapMan Growth 2020 Advised Viima Solutions in its sale to Main Capital Partners owned HYPE Innovation 2021 Advised Accountor Group in its sale of Eduhouse to Verdane 2021 Advised CataCap in its sale of LanguageWire to Bridgepoint 2021 Advised FundConnect in its sale to FE fundinfo 2021 Advised Cryptomathic in its sale to Riverside 2021 Advised Monterro in its sale of Palette Software to Altor Fund V. 2021 Advised Inflexion Private Equity Partners in its acquisition of Infront 2021 Advised ICG in its acquisition of Iver 2021 EY is a prolific adviser in SaaS and software deals

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Arvostuskertoimet ja kehitys

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+10 years of BULL market 0% 100% 200% 300% 400% 500% 600% N ov-11 M ay-12 N ov-12 M ay-13 N ov-13 M ay-14 N ov-14 M ay-15 N ov-15 M ay-16 N ov-16 M ay-17 N ov-17 M ay-18 N ov-18 M ay-19 N ov-19 M ay-20 N ov-20 M ay-21 N ov-21 NASDAQ Composite Index (^COMP) - Index Value S&P 500 (^SPX) - Index Value ^COMP +501% ^SPX +279%

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Annual software M&A volume 110 0 500 1.000 1.500 2.000 2.500 3.000 3.500 1,305 2016 2010 1,642 2012 2011 2015 2013 2014 2017 2018 2019 1,250 2020 2021YTD 2,488 1,532 3,052 1,238 1,747 SaaS On-premise Includes transactions made in USA and Europe

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Software M&A median valuation 3,2x 5,7x 8,0x 5,5x 0,0x 2,0x 4,0x 6,0x 8,0x 2010 2011 2017 2012 2013 2015 2014 2020 2016 2018 2019 YTD/2021 1.9x 3.0x SaaS Software (incl. SaaS) EV/Net sales (LTM) Includes transactions made in USA and Europe

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Q&A Mitä uskot SaaS-valuaatioille, rahoitustarjonnalle ja ostajien kiinnostukselle tapahtuvan 2-3 vuoden tähtäimellä?

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SaaS-firmoja hankitaan kovilla valuaatioilla, ketkä niitä ostavat?

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Most active strategic buyers

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Illustrative funding lifecycle Pre-seed Seed/An gel Early stage Series A, B Growth stage Series C,… Liquidity events Sale, IPO Founders, friends & family Investor examples:

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SaaS model continues to attract Private equity investors with deep pockets 36% 31% 24% 10% Listed strategic PE-backed Private equity Private strategic 55% 0% 20% 40% 60% 80% 100% Q4/20 Q3/20 Q4/19 Q1/20 Q3/21 Q1/21 Q2/21 Q2/20 Private equity/PE-backed Q3/21

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Major PE firms considering Tech as a core focus sector BACK THEN TODAY

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Funds increasingly pursuing multi stage strategies MID MARKET BUYOUT LARGE CAP BUYOUT GROWTH EQUITY GROWTH

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Private Equity has become a driving force in European software M&A

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Valuation multiples: strategic vs. PE buyer -5% 21% 13% 7% 21% -4% -9% 14% -22%-20% -14% -22% -30% -20% -10% 0% 10% 20% 30% 40% 50% 2012 2010 2011 2016 2013 2014 2015 2017 2018 2019 2020 2021YTD Strategic premium Includes transactions made in USA and Europe

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Q&A Onko ostaja/sijoittaja lähestynyt teitä viimeisen 12 kuukauden aikana?

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Mitä tunnuslukuja ostajat tuijottavat?

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Achieving full valuation starts with strong KPIs OTHER HYGIENE FACTORS ► Salesforce efficiency / Quota achievement ► Reliable cohort data ► Sophistication of upsell model ► Modular technology stack ► International success ► Sales Channel development ► SaaS business operations ► Product roadmaps Selected KPIs ARR/MRR G+M ACV ARR growth Churn LTV/CAC % Recurring revenue NRR Engagement Gross margin CAC TAM

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What to include in MRR • Sum of recurring revenue from a given month’s customers • What to include: • Subscription fees and recurring extra charges from extra seats etc. • Upgrades and downgrades • Churn • Discounts

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Selected SaaS KPIs… KPI ”Leading” ARR > €10m ARR growth > 50% % Recurring revenue > 90% Gross margin > 75%

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Selected SaaS KPIs… KPI ”Leading” G+M / Rule of 40% > 40% EUR Churn (annual) < 3% Net Renewal rate ”NRR” > 115% Customer Acquisition Cost ”CAC” < 0.7x

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Selected SaaS KPIs… KPI ”Leading” Annual contract value ”ACV” > €100k LTV / CAC > 5x Engagement rate Total Addressable Market ”TAM” > €2bn

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Miten paljon tulee takkiin jos kasvu ei ole kunnossa?

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“Rule of 40%” Median EV/LTM Revenue vs. Weighted Rule of 40% Selected companies by Weighted Rule of 40% <10% 10%- 20% 20%- 30% 30%- 40% >40% 6,6x 4,8x 5,2x 9,9x 20,4x <10% >40% 10%-20% 20%-30% 30%-40% Median EV/LTM Revenue Note: The Rule of 40% assesses the health of Saas companies by considering revenue growth and profitability. The calculation is a weighted formula that accounts for the higher value placed on revenue growth. Weighted Rule of 40% = (0.67*EBITDA margin) + (1.33*Revenue growth). Values as of November 16th 2021.

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Pitääkö kaiken myynnin olla MRR:ää?

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Only MRR matters? Real-life example of 4 ERP providers A B C D % of MRR 89% 66% 67% 57% EV/Sales 3.2x 3.2x 3.6x 4.3x

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Milloin pääsee eläkkeelle?

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Q&A Kuinka pitkäksi aikaa olisit valmis sitoutumaan uuden ostajan tai pääomistajan palvelukseen?

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Strategic vs. Private equity • Management role in the future • Commitment expectations • Form of compensation • Employee/shareholder agreement

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Typical SHA items 1.Drag-along and tag-along 2.Sale of shares and negative pledge 3.Non-competition & non-solicitation 4.Leaver provisions

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Drag-along and tag-along • Investor has the right to oblige the other shareholders to sell to a third party at the same conditions as the Investor • Other shareholders have the right to sell their shares at the same conditions as the Investor

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Sale of shares and negative pledge • Any sale or pledging needs to be approved by Investor • Right of first refusal; if a mgmt. shareholder intends to sell shares to a third party, the other shareholders have the right of first refusal

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Non-competition & non-solicitation • Certain non-compete and non-solicitation periods (e.g. 2 or 3 years after leaving the company)

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Leaver provisions • Good leavers; Investor can acquire the shares at fair value / moderate discount • Bad leavers; Investor can acquire the shares at significant discount • Vesting mechanisms may be applied

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Milloin on hyvä aika myydä?

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+10 years of BULL market 0% 100% 200% 300% 400% 500% 600% N ov-11 M ay-12 N ov-12 M ay-13 N ov-13 M ay-14 N ov-14 M ay-15 N ov-15 M ay-16 N ov-16 M ay-17 N ov-17 M ay-18 N ov-18 M ay-19 N ov-19 M ay-20 N ov-20 M ay-21 N ov-21 NASDAQ Composite Index (^COMP) - Index Value S&P 500 (^SPX) - Index Value +501% +279% WHAT’S NEXT

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Q&A Miltä kasvuvauhtisi näyttää juuri nyt?

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Ville Rissanen Director, EY Corporate Finance [email protected] • In investment banking since 2013, previously at Maventa (acquired by Visma) • MSc in Finance from Aalto University • Provided M&A advice to clients such as:

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Q&A DISCLAIMER This presentation material (“Presentation”) has been prepared by EY Corporate Finance (“EY”). The information and opinions contained in this document are derived from public and private sources which, without further investigation, cannot be warranted as to their accuracy, completeness or correctness. This information is supplied on the condition that any partner or employee of EY shall not be liable for any error or inaccuracy contained herein, whether negligently caused or otherwise, or for loss or damage suffered by any person due to such error, omission or inaccuracy as a result of such supply. In particular any figures and opinions contained in this document are for discussion purposes only. The information contained herein does not constitute an offer to sell or a solicitation of an offer or a recommendation to purchase securities under the securities laws of any jurisdiction, including the United States Securities Act of 1933, as amended, or any US state securities laws, or a solicitation to enter into any other transaction.

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Q&A

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Kiitos! Vastaathan palautekyselyyn