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         <Summary>This Week Sees A Flurry Of IT M&amp;A Activity</Summary>
         <Description>&lt;p&gt;&lt;strong&gt;by Lorie Roscitt&lt;/strong&gt;&lt;/p&gt;&lt;p&gt;While all attention is fixated on worldwide economic problems, M&amp;amp;A transactions continue to occur under the radar. This week alone, as stock markets around the world continue to decline, several significant deals have been struck -- and at multiples favorable to the target companies. Furthermore, these transactions cut across all sectors that Updata Advisors covers.&lt;/p&gt;&lt;p&gt;For example, in the Internet sector, eBay announced Monday that it was spending over $1 billion to acquire&amp;nbsp;three companies; &lt;a title="eBay buys 2 Danish Internet companies" href="http://investor.ebay.com/releasedetail.cfm?ReleaseID=338504" target="_blank"&gt;two online classified websites in Denmark&lt;/a&gt; for $390 million and $945 million for &lt;a title="eBay buys Bill Me Later" href="http://investor.ebay.com/releasedetail.cfm?ReleaseID=338502" target="_blank"&gt;Bill Me Later, Inc.&lt;/a&gt;, a provider of online credit. eBay anticipates that Bill Me Later will generate an estimated $150 million in revenue in 2009, which represents a deal value multiple of 6.3x 2009 revenues. Not shabby. &lt;/p&gt;&lt;p&gt;In the IT services sector, Tata Consultancy Services today announced its intention to spend &lt;a title="TCS acquires Citigroup Global Services" href="http://www.tcs.com/news_events/press_releases/Pages/TCS-To-Acquire-Citigroup-Global-Services.aspx"&gt;$505 million to acquire Citigroup Global Services&lt;/a&gt;, an India-based BPO firm which expects to generate revenues of approximately $278 million in 2008, representing a multiple of 1.8x 2008 revenues. This is above the 1.1x median trailing revenue multiple Updata Advisors has observed for companies in the BPO-sector over the past 12 months. &lt;/p&gt;&lt;p&gt;Also this morning, Symantec &lt;a title="Symantec acquires MessageLabs" href="http://www.symantec.com/about/news/release/article.jsp?prid=20081008_02" target="_blank"&gt;announced it has signed a definitive agreement to acquire MessageLabs&lt;/a&gt;, a SaaS-based provider of online messaging and Web security services for a purchase price of approximately $695 million in cash. MessageLabs generated approximately $145 million in revenue during fiscal year ending July 31, 2008, representing a multiple of 4.8x trailing revenues. This compares favorably to the median 2.0x revenue multiples paid for security companies and 3.5x paid for SaaS firms over the past year. &lt;/p&gt;&lt;p&gt;The financial technology sector also saw a deal struck this morning as Fundtech Ltd. announced the &lt;a title="Fundtech acquires Synergy Financial Systems" href="http://biz.yahoo.com/bw/081008/20081008005450.html?.v=1" target="_blank"&gt;acquisition of Synergy Financial Systems Ltd. for $6.3 million&lt;/a&gt; (including earnouts) which had $2.5 million of trailing 12 months revenues, representing a trailing revenue multiple of 2.5x. Updata Advisors has observed a 2.1x median trailing revenue in the financial technology sector during the past year. &lt;/p&gt;&lt;p&gt;Finally, Oracle, who is&amp;nbsp;already a serial buyer of companies, announced the &lt;a title="Oracle acquires Primavera" href="http://www.oracle.com/us/corporate/press/017594_EN" target="_blank"&gt;acquisition of Primavera Software&lt;/a&gt; this morning. Primavera is&amp;nbsp;a provider of project portfolio management (PPM) solutions. In this case, the deal value was not disclosed. In the past 12 months, Oracle has acquired 11 companies at a total cost exceeding $9 billion.&lt;/p&gt;&lt;p&gt;While these transactions are merely anecdotal and the volume of M&amp;amp;A transactions has clearly declined during the current economic and financial malaise, it is heartening to note that good things can happen during bad times. &lt;b /&gt;&lt;/p&gt;</Description>
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         <Summary>Part 3: Reaching Gen Y</Summary>
         <Description>&lt;p&gt;It is the not-too-distant future and I&amp;rsquo;m walking around the city oblivious to my surroundings as the latest Britney tune comes pouring through my earbuds. I meander down the street and as I approach a Best Buy, Britney cuts out and I suddenly hear the unmistakable ping-ping-ping of a text message! &amp;ldquo;$10 off any DVD at Best Buy &amp;ndash; valid for the next 2 hours ONLY!&amp;rdquo; reads the text. Impulsive and physically incapable of resisting a deal like this, I rush into the store and pick up &lt;a target="_blank" href="http://www.imdb.com/title/tt0458525/" title="X-Men Origins: Wolverine (2009)"&gt;X-Men Origins: Wolverine&lt;/a&gt; on DVD.&lt;/p&gt;&lt;p&gt;This is the future. And of course, in this ad-saturated future, everyone has a GPS-enabled smart phone. &lt;/p&gt;&lt;p&gt;The National Retail Federation has projected that holiday sales this year &lt;a target="_blank" href="http://www.nrf.com/modules.php?name=News&amp;op=viewlive&amp;sp_id=573" title="NRF Foresees Challenging Holiday Season..."&gt;will rise only 2.2%&lt;/a&gt;, a significant hit to the 4.4% average maintained over the last 10 years. Consumers are likely to pinch pennies this holiday season as uncertainty in the US financial system continues. But as usual, Generation Y is the exception to the rule. Australian research firm The Leading Edge &lt;a target="_blank" href="http://www.smartcompany.com.au/Free-Articles/The-Briefing/20080819-Gen-Y-keeps-spending-despite-downturn.html" title="Gen Y keeps spending despite downturn"&gt;conducted a study&lt;/a&gt; of 1,230 young adults ages 18-24 and found that 33% of respondents in this age group actually planned to spend more this holiday season on tech gadgets than they did last year. This is obviously good news for retailers, but only if they can actually reach this spend-thrifty demographic.&lt;/p&gt;&lt;p&gt;Our instant gratification mentality (as well as our willingness to spend on whatever&amp;rsquo;s cool) hasn&amp;rsquo;t gone unnoticed. While pouring millions of dollars into advertising on MTV might have worked for Gen X, Gen Y spends far &lt;a target="_blank" href="http://www.businessweek.com/globalbiz/content/jul2008/gb20080730_562367.htm" title="Gen Y is setting the tech agenda"&gt;less time watching television&lt;/a&gt;. Major brands have learned the hard way that in order to keep Gen Y engaged and gain access to our wallets, they must move beyond archaic brand recognition techniques on tired media channels. These days, interactive marketers are reaching Gen Y through a multitude of ways, such as:&lt;/p&gt;&lt;p&gt;Social networking sites. &lt;a target="_blank" href="http://www.emarketer.com/Article.aspx?id=1006593" title="Social media and shopping behavior"&gt;85% of Gen Yers&lt;/a&gt; are on a social network; this is obviously where retailers need to be in order to make sure they&amp;rsquo;re seen by Gen Y. Internet Retailer sponsored a &lt;a target="_blank" href="http://www.emarketer.com/Article.aspx?id=1006593" title="Social media and shopping behavior"&gt;study&lt;/a&gt; in August 2008 and asked US online retailers where their online presence was. 39% of respondents said they advertised on social networks such as Facebook, MySpace, and YouTube. The better ad campaigns on these venues move beyond simple banner ads and more toward engagement with the target audience. For example, when Disney Pixar&amp;rsquo;s Wall-E came out, Facebook featured free images of characters from the movie that users could distribute to each other for free.&amp;nbsp; &lt;/p&gt;&lt;ul&gt;&lt;li&gt;&lt;strong&gt;Text messages.&lt;/strong&gt; A study by BIGresearch &lt;a target="_blank" href="http://www.emarketer.com/Article.aspx?id=1006374" title="Young adults influenced by mobile ads"&gt;revealed&lt;/a&gt; that Gen Yers are twice as likely as the general population to be influenced by text message marketing. This medium is trickier as too many texts can be an extreme nuisance. (No one wants their music interrupted every five minutes just to be reminded that Macy&amp;rsquo;s is having a sale.) Marketing through this channel should be kept to a strictly opt-in basis and messages should be well-targeted, infrequent, and include a coupon. &lt;/li&gt;&lt;li&gt;&lt;strong&gt;User-generated content.&lt;/strong&gt; One effective marketing strategy some corporations have leveraged is allowing Gen Y to get involved with the brand by creating content for it. &lt;a target="_blank" href="http://www.applebees.com/realvideos/default.aspx" title="Applebee's Show Us Your Neighborhood"&gt;Applebee&amp;rsquo;s&lt;/a&gt; has an initiative to engage younger patrons by inviting them to create their own videos to upload and share with others via their website. And it&amp;rsquo;s not just restaurants that are engaging Gen Y in this manner. The community section of ABC&amp;rsquo;s website for popular primetime drama &lt;a target="_blank" href="http://abc.go.com/primetime/lost/index?pn=index" title="ABC's Lost"&gt;Lost&lt;/a&gt; allows users to communicate with other fans via message boards, upload videos of their own plot theories, and play interactive games about the show.&lt;/li&gt;&lt;li&gt;&lt;strong&gt;And through Gen Y itself.&lt;/strong&gt; We&amp;rsquo;ve been inundated with commercials our whole lives so at this point we&amp;rsquo;re pretty good at tuning ads out. Most of us, however, don&amp;rsquo;t tune out our friends. In fact, we keep close tabs on each other and rely on each other to pass along information about what&amp;rsquo;s new and cool. We connect and share news through outlets such as Facebook&amp;rsquo;s news feed, Twitter, and Google Reader. Yelp has rested its whole business model on the idea that peer reviews matter. And they&amp;rsquo;re right. &lt;/li&gt;&lt;/ul&gt;&lt;p&gt;But it isn&amp;rsquo;t just corporations that are leveraging technology to engage with tech-savvy Generation Y. Presidential nominee Senator Obama alerted his vice presidential choice to supporters &lt;a target="_blank" href="http://www.nytimes.com/2008/08/24/us/politics/24biden.html?_r=1&amp;oref=slogin" title="Obama chooses Biden as running mate"&gt;via text message&lt;/a&gt;. He even has his own &lt;a target="_blank" href="http://my.barackobama.com/page/content/iphone" title="Official iPhone app"&gt;iPhone app&lt;/a&gt;. Both Senators McCain and Obama have integrated Gen Y-friendly technologies into their campaigns such as blogs, Facebook pages &amp;ndash; both even have their own social networks! &lt;/p&gt;&lt;p&gt;And even Broadway has gotten into the act! Two-year old rock musical &lt;a target="_blank" href="http://www.springawakening.com/" title="Spring Awakening"&gt;Spring Awakening&lt;/a&gt; (with it&amp;rsquo;s heavily Gen Y cast) launched &lt;a target="_blank" href="http://www.springawakening.com/digitalrush" title="Spring Awakening - Digital Rush"&gt;Digital Rush&lt;/a&gt; &amp;ndash; a text message-based coupon offering same-day discount tickets to the show. &lt;/p&gt;&lt;p&gt;The future as described above isn&amp;rsquo;t too far off. And when it comes, established brands will have to either cater to the powerful Gen Y demographic, or risk losing us (&lt;a target="_blank" href="http://www.usatoday.com/money/advertising/2006-10-11-retail-teens-usat_x.htm" title="Gen Y sits on top of consumer food chain"&gt;and our disposable cash&lt;/a&gt;). &lt;/p&gt;</Description>
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         <Summary>Updata Co-Sponsors Panel Event</Summary>
         <Description>&lt;p&gt;Updata, along with &lt;a title="Administaff" href="http://www.administaff.com/index.asp" target="_blank"&gt;Administaff&lt;/a&gt;, &lt;a title="General Counsel Solutions" href="http://www.generalcounsels.com/" target="_blank"&gt;General Counsel Solutions&lt;/a&gt;, &lt;a title="Marcum &amp; Kliegman" href="http://www.mkllp.com/" target="_blank"&gt;Marcum &amp;amp; Kliegman&lt;/a&gt;, &lt;a title="Morgan Stanley" href="http://www.morganstanley.com/" target="_blank"&gt;Morgan Stanley&lt;/a&gt;, and &lt;a title="Scarlet Heifer" href="http://www.scarletheifer.com/" target="_blank"&gt;Scarlet Heifer&lt;/a&gt;, co-sponsored Tech M&amp;amp;A 360: Buyer, CEO, and Banker Perspectives on Maximizing Value in the Post-Bailout Economy last Thursday. This panel event featured Greg Besner (Restricted Stock Systems), Mark Fasciano (Karma411, FatWire), and Updata&amp;rsquo;s own &lt;a title="Joel Strauch, Partner - Updata Advisors" href="http://updataadvisors.com/team.asp?module=press&amp;newsid=31" target="_blank"&gt;Joel Strauch&lt;/a&gt; and &lt;a title="James Socas, General Partner - Updata Partners" href="http://www.updatapartners.com/interior_partnersteam.asp?newsid=54" target="_blank"&gt;James Socas&lt;/a&gt;. Brian Turchin (Cape Horn Strategies) was the moderator. &lt;/p&gt;&lt;p&gt;The event attracted CEOs, Managing Directors, founders, and other top executives from technology startups, banks, and venture capital firms.&lt;/p&gt;&lt;p&gt;The speakers shared their stories of surviving in a tech downturn and gave practical advice about planning and timing an exit. Highlights of the event follow:&lt;/p&gt;&lt;ul&gt;&lt;li&gt;&lt;strong&gt;This is an opportunity to shift gears and get creative.&lt;/strong&gt; Mark Fasciano started an enterprise software company called FatWire with some friends in 1996. Too much capital came in during the Dot-Com Boom and FatWire was overstaffed by the time the tech bust occurred. Sales were flat and the competition was going out of business. Mr. Fasciano noticed that although these were terrible times and his company was hurting, other companies were hurting worse and FatWire had the potential to pull through &amp;ndash; but only if something drastic was done. Mr. Fasciano saw his opportunity when one of his competitors, a company called Divine, was being bought in distress &amp;ndash; until the buyer itself went bankrupt. FatWire then bought two of the content management businesses out of Divine for a relatively small sum of $6.5 million. He acknowledges that at the time, the deal was difficult to justify. Others would ask what kind of revenue the combined company would generate and Mr. Fasciano did not have the answer. There wasn&amp;rsquo;t enough time to do the proper due diligence. But he took the chance, bought his competitor out of a very complicated bankruptcy, took the competitor&amp;rsquo;s product, and jettisoned his own. After this unconventional move during some very rough market turbulence, FatWire had their best growth. Mr. Fasciano sees the current economic downturn as an opportunity to re-evaluate strategy and take risks. He did something counterintuitive: he changed his business profoundly during the worst tech crisis yet to be seen and that has made all the difference.&lt;/li&gt;&lt;li&gt;&lt;strong&gt;There are still M&amp;amp;A opportunities with big technology companies.&lt;/strong&gt; Updata&amp;rsquo;s own Joel Strauch follows the infrastructure software sector. He is seeing large vendors with product lines that they need to expand to satisfy the demands generated by the disruption happening in the infrastructure space &amp;ndash; this disruption is largely attributable to the increasing trend of virtualization in the data center. Data center virtualization vendors are poised to do well in an economic downturn since their technologies enable big cost savings. This market has traditionally been comprised of a small group of vendors, but new players (such as VMware) are entering and incumbents need to protect themselves and defend against new arrivals by filling the holes in their product lines through acquisitions. There are a lot of opportunities to be had right now and companies are realigning their priorities when they see a really cheap deal. &lt;/li&gt;&lt;li&gt;&lt;strong&gt;The highest bid is not always the best.&lt;/strong&gt; Greg Besner has some experience with tough times in the tech sector. He began his company in September 2000, which is considered by many to be the beginning of the end of the good times. Restricted Stock Systems&amp;rsquo; first product was set to be delivered on September 14, 2001, and their servers were located at 7 World Trade Center. Needless to say, it was a very rough time. But RSS was able to survive, and in 2006 Mr. Besner began to think seriously about selling his company. RSS was having good growth and profitability. He wanted to have a transaction in 2007 because he felt multiples were strong. RSS ended up receiving three bidders, two of which were serious bids &amp;ndash; one from a large company and one from a small company. Counter-intuitively, the smaller company made the larger bid. Computershare, the large company, offered $1 million less than the small company. The small company had to raise money in order to finance the deal whereas Computershare had the cash. Mr. Besner felt more confident that if he sold to Computershare, the deal was more likely to close and accepted their offer. The deal officially closed on October 31, 2008, a little over a month after the collapse of Lehman Brothers and Merrill Lynch. Had Mr. Besner taken the larger offer from the company that needed to raise the cash, who knows if given today&amp;rsquo;s economic environment it would have ever closed? Mr. Besner ended up selling his company to Computershare at 5.8x EV/TTM revenue.&lt;/li&gt;&lt;li&gt;&lt;strong&gt;Strategize &amp;ndash; think outside the box.&lt;/strong&gt; Updata Partners&amp;rsquo; James Socas formerly ran corporate development at Symantec and told of a recent conversation he&amp;rsquo;d had with a former colleague. The colleague is being inundated with calls from bankers &amp;ndash; so many calls that he can&amp;rsquo;t return them all. Mr. Socas, bearish about the current state of the economy, warns that the good old days of 300 IPOs in a year are over and so he recommends some unconventional strategy. Inside-the-box thinking traditionally goes like this: I&amp;rsquo;d like to sell my company so I&amp;rsquo;ll call Oracle, IBM, and Cisco. In good times, that isn&amp;rsquo;t a bad idea. But these days everyone has the same idea so calls to corporate development offices aren&amp;rsquo;t getting returned in a timely manner if at all. Mr. Socas recommends outside-the-box thinking: If you want to sell, come up with a broader buyer list and think about partnerships or affiliations with private combinations with or&amp;nbsp; micro-cap companies. Figure out ways to have a dialogue with those companies so that when the economy makes a sale a more attractive option, you&amp;rsquo;ll already have relationships with potential buyers. &lt;/li&gt;&lt;/ul&gt;&lt;p&gt;Panelists strongly advised cultivating relationships with other CEOs. Mr. Fasciano mentioned that he played golf with the CEO of a competitor. Although it isn&amp;rsquo;t likely you&amp;rsquo;ll get a CEO to divulge the details of the state of his own company, in times of economic stress they&amp;rsquo;re all too eager to share information about other companies. Mr. Besner recommended networking at tradeshows and reaching out to potential acquirers as potential partners first. After all, it&amp;rsquo;s much easier to convince a company they need you when they&amp;rsquo;re using your technology and you&amp;rsquo;re servicing their customers. Mr. Strauch agreed with this advice and added that it&amp;rsquo;s important to show these potential buyers that you can make money for them and that a good number of deals happen between companies that know each other very well. &lt;/p&gt;&lt;p&gt;The driving theme of the evening was about recognizing the downturn for what it is and thinking about strategy in a different way. Times are rough now, but they&amp;rsquo;re not as bad as they were during the technology bust of 2001. Some creative thinking could yield unexpected positive results.&lt;/p&gt;</Description>
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