SSA Global

1
SSA Global
MA Today Technology, Information and Business
Services
What Buyers Want

• Shelley Isenberg
• SVP Acquisitions and Corporate Development
• February 12, 2004

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Agenda

• Direction of the Enterprise Resource Planning
  Software Industry
• About SSA
• Acquisitions
• a tactic to achieve the strategy
• what buyers want what they can provide
• land mines and how to deal with them
• Summary

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Direction of the ERP Industry

• Many acquisitions in our space
• Investors seek to exit as they dont see the
  expected results
• Too many ERP players, not enough customers
• Less expensive to buy software than build it
• Less expensive to acquire customers that
  organically grow the base
• Mid market is seen as the sweet spot

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About SSA

• Mission Statement
• Our mission is to help customers move their
  businesses forward faster by
• Delivering the right solutions
• Implementing it quickly
• Making it pay
• Industry Ranking
• 1 enterprise software provider in the
  manufacturing space
• 4 player in the extended ERP market
• Financial Highlights
• Revenue this FY will be 700m
• EBITA 20
• Global Footprint
• 3,600 employees
• 47 direct and 74 affiliate offices worldwide
• Company Mantra

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Strategy (since FY02)

• Become a global market leader in mid-market ERP
  space
• Vertically focused
• Triple customer base
• Provide more of an end to end offering
• Morph from a software company to a solutions
  provider
• Get more of customers share of wallet
• Grow revenues from approx. 130 m (FY01) to
  over 1 b (FY04)

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Tactics to Achieve our Strategy

• 10 organic growth
• Significant acquisitive growth
• Maintain 20 margins
• Commoditize pricing

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Why SSA Acquires

• Value Creation
• Cheapest way to grow
• Fastest way to grow
• Large customer base provides opportunities
• cross selling
• commoditize pricing
• recurring revenue base
• Synergistic cost cutting by fully integrating
• Create end to end offering to get more of
  customers IT spend

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Target Profiles

• Customer Base Targets
• 20 m to 400 m in revenue
• 30 recurring revenue
• Manufacturing or distribution industry focus
• Global or regional
• Unprofitable
• Extension Product Targets
• Proven successful product
• J2EE, Java, WebSphere technology
• Fill a white space within our end to end
  offering
• Target has a good product in need of global
  distribution arm
• Unprofitable

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Target Selection

• To be qualified, a target must satisfy our 4 Ms
• Money
• valuation
• currency
• Motivation
• willing seller
• Method
• transaction structure
• Match
• fit (technology, culture, industry, sector,
  etc.)

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Value Proposition

• From Sellers Perspective We Provide
• speed
• history of successful win/win deals
• certainty of outcome
• cash
• continuity of business
• pragmatic due diligence review
• opportunity for sr. management to exit if they
  want to (i.e. no handcuffs)

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Requirements

• From Buyers Perspective We Require
• motivated seller
• satisfied customer base/proven technology
• quick process
• access to sr. management key customers
• limited due diligence
• confirmation of assumed integration synergies
• unrestricted ability to integrate
• 100 ownership of both the target and IPR
• full, frank early disclosure of land mines
  nuances

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Land Mines

• litigation (threatened or actual)
• side letters
• significant assets not owned by target
• restructuring costs too high
• unhappy customers / product problems
• revenue recognition issues
• significant off balance sheet liabilities
• lack of adequate due diligence data
• target does not record data divisionally or
  segmented
• revenue and/or costs not allocated
• data in foreign languages/financial statement
  presentation
• records dont tie (to each other or to
  managements representations)
• differed revenue obligations not adequately
  provided for
• powerful union/works council

13
Dealing with Land Mines

• ring-fence the problem
• price adjustment
• leave behind with seller
• indemnity
• condition to close seller to resolve the
  problem at no cost to target (seller is
  often in a better position to do so)
• change deal structure to an asset deal
• follow the money often a barometer for the
  business

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Key to Success

• Integration is planned from the beginning
• Initial valuation model contains integration
  cost/savings assumptions
• Due diligence includes validation of
  assumptions
• Due diligence also includes integration
  planning
• Integration is executed early and ruthlessly
• Plan is complete ready to execute prior to
  close
• Some execution may be done prior to close
• Minimize repeated right-sizing (cut deep and
  fast once)

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Summary

• its key for buyers to make their expectation
  clear to sellers upfront
• similarly, buyers should make it clear as to
  what they can offer to the seller
• the earlier land mines are revealed so they
  can be addressed the better - last
  minute surprises often lead to worse results for
  the seller
• its a small world reputations are important
  in the MA field

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THANK YOU