J.P.Morgan Software Investment Banking
Raise offensive capital - capital markets alternatives
Discussion
Considerations
Illustrative
terms
J.P.Morgan
Common stock
Opportunity for Management to fully
market the story and attract software
growth investors
Increase daily liquidity and technicals
Great track record of deploying capital -
both organically and for acquisitions
■ Significant embedded upside for investors
Preserves balance sheet flexibility for
future financing needs
1-2 weeks of preparation; target offering
post earnings NDR and analyst day
Dilution
Size: $400-$700mm
Discount: mid-single digits
Convert
Low cost debt financing for issuers
Equity sold at a premium if converted
Net-share settlement feature can
significantly reduce dilution
1-2 week execution timeline
Debt on balance sheet → refinancing
obligation at maturity if not converted
May add friction costs in change of control
situation
Size: $500mm
Coupon: 0.25% - 0.75%
Premium/share price: 30.0% - 35.0% /
$39.75
Call spread: 2.00% coupon / 100%
conversion premium @ $60.00
Debt
Cheapest form of capital
Strong track record as existing issuer
■ Receptive debt markets
Software investors typically see leverage
at up to 3.0-3.5x
May be best option for an identified
acquisition
L+325-350 with O floor at 99-99.50 at 5.0x
gross leverage
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