Closing Deals. Consumer Apps with a special focus on Fitness, Education and mHealth Deals and Developments
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Closing Deals.
Consumer Apps with a
special focus on Fitness,
Education and mHealth
–
Deals and Developments
Track Record
No. 1 M&A advisor in German-
speaking Europe in Q1 2020 1
>450 transactions over the
past 20 years
Focus Areas
M&A: Closing Deals.
75% sell-side and 25% buy- We advise on M&A,
side mandates growth equity and equity
ECM and Equity Research research.
Global Reach
Partner of Globalscope
International reach: Our Locations
55 Partners
48 Countries
5 Continents Berlin
Copenhagen
Hamburg
Clients
London
Entrepreneurs & profitable Munich
growth companies Stockholm
Financial investors
Organisation
70+ employees
12 partners
6 locations
Source: 1) Mergermarket 2
Our consumer apps deal team has a proven
track record of executing transactions and
vast industry expertise
Mark Miller Dr. Arnold Holle
Managing Partner Managing Partner
Founded Carlsquare in 2000 Carlsquare since 2018
Previously Deutsche Bank, Previously World Bank,
Bertelsmann BCG, UBS, Goldman Sachs
Nico Schmidt-Weidemann Erik Lundberg
Partner Director
Carlsquare since 2016 Carlsquare since 2017
Previously CMC Consulting Group, Previously Stella EOC, EY
Groupe BPCE
Caspar Graf Stauffenberg Anders Bo
Managing Partner Managing Partner
Carlsquare since 2012 Carlsquare since 2019
Previously Aequos, MAP, Previously Westlb, HSH,
Binding Group Dansk Merchant Capital
Michael Moritz Mischa Krause
Managing Partner Director
Founded Carlsquare in 2000 Carlsquare since 2011
Previously Treuhandanstalt Previously internet startup
Berlin, Doertenbach & Co. Avocado Store, a Rocket
internet startup
Philip Goldhahn Philipp Claus
Senior Associate Associate
Carlsquare since 2014 Carlsquare since 2018
Previously Silverpeak, Previously Piper Jaffray,
Kühne + Nagel Canccord Genuity
Caroline Heintz Cindy Faller
Associate Analyst
Carlsquare since 2020 Carlsquare since 2019
Previously PwC Previously Mazars, Trinavis
Lukas Moritzen Anshul Tyagi
Analyst Analyst
Carlsquare since 2020 Carlsquare since 2019
Previously GCA Altium, Pareto Previously Lovina Capital,
Securities, benten capital Punjab National Bank
3
Carlsquare successfully
advised the founders of the
“healthy living” app 7Mind on
their sale to Südwestdeutsche
Medienholding
Founded in 2014, 7Mind is the largest German
platform for offering digital content for meditation
and mindfulness. More than 1.5m users have
already found a simple and at the same time
scientifically sound introduction to the world of
meditation and mindfulness with the 7Mind app.
Südwestdeutsche Medienholding completes the
first important transaction in the newly created
Ventures business with 7Mind and lays the
foundation for the development of a digital health
platform. At the same time, SWMH is
implementing its corporate strategy according to
which accompanying growth businesses are to
make a significant contribution to the
diversification of the SWMH group by the end of
2022.
Carlsquare advised Preglife
AB on growth financing
received growth
through eEquity
investment from
Preglife launched its app in October 2010 and has
since then been downloaded more than 2.6m
times, today the app has more than 500,000
active users and is live in all Nordic countries,
Poland, Germany, United Kingdom and United
States. The application conveys knowledge and
information to pregnant and new parents so they
can make informed decisions with regards to their
family and themselves. Since launch, Preglife has
cooperated with a large network of doctors and
midwives to guarantee that the information is
accurate, relevant and correct. Preglife had a
turnover of c. EUR 2m at the time of the
transaction and growing fast with profitability.
eEquity is a private equity company focusing on
Nordic digital growth companies.
4
Our business model is designed to assist
companies and their owners in maximizing
shareholder value throughout the life cycle
Proven expertise in consumer
+80 transactions Proven expertise in M&A
businesses and application
in the consumer sector and IPOs
software M&A
sold to
sold to Brøndby IF – sold a majority stake received growth
Public Offering to investment from
a portfolio company
of
sold to sold to merged with sold to sold to
sold the majority
and and share of
sold to sold to
Invested in sold to to
received investment sold to
sold to sold to sold to
from a strategic investor
5App Store subscriptions
boom as consumer choose
convenience
140
124
120
Mobile app revenue in EURbn
100
80 73
60 56
40 37
20
0
2015 2016 2017 2021
Source: Statista
The State of Mobile 2019
EUR 182bn worldwide downloads
EUR 107bn worldwide app store
consumer spend, 59% CAGR 2016-2019
3.4hrs per day spent in mobile by the
average user
29% 3-year CAGR worldwide app store
consumer spend
c. 42% global smartphone penetration
rate1
c. EUR 36bn worldwide e-learning
revenue
130% more money spent on health and
fitness apps
Source: Statista; State of mobile 2020; 1) Global population/ number of smartphone users worlwide
6Amid strong interest from investors, a large
amount of funding flows into apps
Selected funding activities in the application sector since 2018
Capital raised ∑ Last round Round
Company HQ Description (EURm) (EURm) type Investor(s)
Provider of health insurance services for 832
US 449 Series E
senior citizens in New Jersey
Provider of a subscription based mobile 573
UK 495 Series C
healthcare application
Provider of an online learning platform for 202
US 46 Series E
students
Provider of an online portal to provide 180
US 180 Growth
virtual training on health and fitness
Developer of an app for meditation, 127
US 102 Series B
mindfulness and sleep
Developer of a language learning platform
US 126 10 Growth
for classrooms
US Provider of online meditation services 113 49 Series C
Developer of a mobile software application
DE 100 60 Series C
for tax declaration and returns
Provider of a health app that offers visits to
SE 70 33 Venture
a doctor online
Provider of an education and technology
US 35 16 Series C
platform for personalized learning
DE Provider of a medical education platform 30 30 Series B
Provider of Moshi, a sleep and mindfulness
UK 26 11 Series B
application for kids
Provider of a platform for mobile reading
DE 20 16 Series C
on internet portals and mobile applications
Digital learning and cloud coaching
DE 20 4 Series A
platform for professionals
Developer of a mobile application to
DE 19 15 Series B
improve health and wellbeing of females
Developer of a mobile application for a
SE 18 5 Growth
healthy balanced lifestyle
Provider of an online learning platform that
UK 18 13 Series B
enables users to learn languages
Provider of an eLearning platform for Crowd-
UK 13 2
children aged 3-7 years Funding
Developer of a fitness app that enables
US 11 7 Ventures
users to work out live and online
Developer of a platform to convey
SE >10 >10 Growth
knowledge to prospective and new parents
Developer of an application that educates
SE 7 5 Venture
children in math
Developer of an online platform that
UK 6 3 Growth
manages stress/wellness of individuals
DE Provider of interactive online piano lessons 4 3 Growth
Provider of live yoga classes that are
FI 4 3 Series B
accessed online
Provider of an application software for
SE 3 2 Seed
prevention and cure of rheumatoid arthritis
Last round as proportion of total funding
Source: Capital IQ, Carlsquare research 7The application sector gains attention and
spurs M&A activities
Selected M&A transactions in the application sector since 2018
Date HQ Target Description Buyer
Developer of an online platform that manages
Apr 20 UK
stress/wellness of individuals
Provider of a platform for offering digital content for
Jan 20 DE
mediation and mindfulness
Operator of an online learning platform for primary,
Dec 19 NO
secondary and higher education
Provider of health solutions including the Fitbit online
Nov 191 NO
dashboard and mobile apps
Oct 19 UK Europe's leading digital platform for students
Oct 19 UK Operator of an education platform
Provider of an e-learning platform for experts and students
Jul 19 DK
worldwide
Operator of an online platform for e-learning, gamification,
Apr 19 SE
coaching and performance tracking
Apr 19 US Provider of On-Demand online tutoring
Provider of an artificial intelligence-based platform to help
Jan 19 DE
users understand themselves better
Provider of an online platform for educational courses and
Jan 19 DE
which connects teachers and students
Provider a web-based platform for e-learning and online
Dec 18 CA
training
Dec 18 NL Provider of digital learning materials
Nov 18 CZ Developer of learning software for pre-school children
Provider of online training, pre-licensing and corporate
Sep 18 US
training services
Sep 18 DE Developer of eLearning videos for digital skills
Operates a digital education platform for university students
Jun 18 DE
of various academic disciplines
Provider of a digital platform for technical and vocational
Jun 18 DE
training
May 18 AT Provider of online fitness programs
Feb 18 UK Operator of a game-based learning website for students
▪ Financial investors continue to show great interest in investments in the areas of fitness,
education and mHealth
▪ In addition, the number of acquisitions by strategic partners such as technology companies, publishing
and media houses has also increased over the last few years
▪ According to the Institute for Mergers, Acquisitions & Alliances, most financial investors in the DACH
region see an opportunity from COVID-19 and will continue to invest heavily with a special interest in
technology related companies such as the application sector2
Note: 1) Closing pending; 2) Survey between 19 - 20 March in the DACH region - Panel of 400 private equity professionals - Fully completed questionnaires were included in the evaluation by 81 experts
Source: Capital IQ, Mergermarket, Institute for Mergers, Acquisitions & Alliances, Proventis Partners, Carlsquare research
8New interesting apps gain attention and spur
interest from financial investors
Selected active financial investors within the application industry
9
Interesting new categories on the rise – selected applications:
Click to find the app in the app store
Fitness Education (incl. productivity) mHealth (incl. sleep/meditation)
YAZIO MyFitnessPal Strava Lumosity Memorado Blinkist Sleep Cycle Clue Power Nap App
BodyFast Runkeeper FitOn Memrise simpleclub Udemy Flo Insight Timer Life Cycle
BetterMe CYBEROBICS Fastic Mimo Busuu Babbel Headspace Calm Moshi
Freeletics Pacer Fitness App Simply Piano Peak Skoove MINDBODY breathe Min Doktor
Runtastic Lifesum Asana Rebel Flowkey Yousician Duolingo Preglife Balloon 7Mind
▪ New categories within the application sector significantly gain attention (e.g. fitness,
education and mHealth)
▪ Globally, consumers spent c. EUR 1.4bn on Health and Fitness apps in 2019 – this includes new pathways to
meal planning, training regimes, exercise tracking, wellness and meditation
▪ Educational applications such as Babbel, a provider of language learning via social networking or Flowkey, a
platform that teaches users how to play the piano, experience strong growth
Source: Carlsquare research 9COVID-19 increases the usage of applications
and drives valuation
Education, fitness and mHealth applications have seen significant growth following COVID-191
Business 129%
Education 126%
News 87%
Social networking 61%
Games 50%
Medical 49%
Entertainment 48%
Fitness & mHealth 42%
Productivity 33%
Shopping 18%
Music 13%
Food & Drink 4%
Weather -4%
Sports information -25%
Navigation -29%
Travel -53%
-60% -40% -20% 0% 20% 40% 60% 80% 100% 120% 140%
Source: SensorTower
▪ COVID-19 reshaped the application ecosystem - categories such as education, mHealth and fitness
experienced growth, while categories such as travel and navigation experienced declines
Long term trend for consumer applications are expected even after COVID-19
Worldwide App Store and Google Play user spending Worldwide App Store and Google Play downloads
in EURbn in bn
160 153 200
+10% 184
+15%
138 171
140
159
122 148
120 150 140
107
100 91 115
80 76 100
60
40 50
20
0 0
2019 2020F 2021F 2022F 2023F 2024F 2019 2020F 2021F 2022F 2023F 2024F
Source: TechCrunch Source: SensorTower
▪ Since ‘’lock-down’’ provisions were implemented to protect from COVID-19, the application sector has
experienced growth in downloads and user spending
▪ By 2024, downloads are projected by TechCrunch to reach >180bn, up 9% from the earlier forecast that came
out before COVID-19 that had initially accounted for 7bn fewer installs
Note: 1) Data is from the App Store only; Aggregated data for nine countries (China, South Korea, Italy, Japan, France, Germany, Spain, the U.S., and Great Britain);
Growth is calculated comparing the 30 days following each country’s 200th confirmed case of COVID-19 vs. the prior 30 days
10Valuation and key metrics for the application
software market
EV multiples Key metrics (as of 01/05/2020)
Enterprise Sales EBITDA EBITDA Sales growth
value (EURm) multiple ’20E multiple ’20E margin ’20E ‘19 – ’20
1,168,832 5x 17x 29% (2%)
1,134,246 4x 34x 13% 20%
231,252 4x 16x 23% 17%
177,951 10x 72x 13% 28%
(13%)
41,982 7x 22x 32%
36,008 4x 16x 22% 14%
26,119 6x 25x 23% (4%)
24,757 4x n/a 0% 29%
20,951 11x 33x 34% 19%
18,323 4x 25x 17% 12%
8,602 5x 35x 13% 7%
5,964 5x n/a 0% 46%
4,939 13x n/a 12% 28%
3,180 6x 47x 13% 24%
2,195 2x 10x 25% 2%
1,829 15x 38x 40% 14%
Median 5x Median 25x Median 19% Median 16%
Businesses in the wider “app space” have some of the highest valuations in the stock market and are
widening their lead in the COVID-19 crisis
▪ “App stocks” are naturally amongst the least affected by or possibly even benefitting from the lock-down, so
this strong relative valuation has become more marked since February 2020
Investors are looking for predictable, stable revenues, cash generation and long-term growth
▪ Subscription based business models are awarded higher valuations
▪ Every valuation discussion will put the impact of COVID-19 on 2020 results and on the mid-term outlook
front and center
▪ Investors will shy away from anything with an uncertain outlook due to COVID-19
▪ Family offices and private equity group who gathered massive funds will naturally flock to opportunities in
the “apps space”, as companies in the sector continue to trade very successfully or even better than before
and can better than anyone else communicate on the medium-term impact of COVID-19 on their businesses
Private companies in the “app space” will be a key focus area for investors in H2 2020 – relative pricing will
be much higher than in 2019
Valuations for consumer applications of c. 4-5x revenue and c. 10-15x EBITDA (not-listed growth cases)
Source: Capital IQ, Carlsquare research 11The application sector has experienced high
valuations compared to major indices
Share price development of mobile peer group in comparison to selected indices
Share price development over the past three years1 Share price development
of mobile peer group
since 01/01/20202
250
(2%)
200
24%
150
(27%)
100
28%
50
Jun 17
Jun Nov 17
17 Nov Apr 18
17 Apr Sep 18
18 Sep Feb 19
18 Feb Jul 19
19 Jul Dec 19
19 Dez 19 Apr 20 9%
Mobile peer group MSCI software 2%
Nasdaq 100 MSCI Tech
MSCI world 5%
(3%)
Share price development since 01/01/20201 (9%)
(13%)
110
10%
100
18%
90
12%
80
70 47%
60 (13%)
Jan 20
Jan 20 Feb20
Feb 20 Mrz 20
Mar 20 Apr 20
Apr 20
27%
Mobile peer group Nasdaq 100
MSCI Tech MSCI software
MSCI World Mean +7%
▪ Both indices, the MSCI World and the Nasdaq 100, have experienced a decline in share development since
01/01/2020, with a decrease of -13% and -0%, respectively
▪ The selected mobile peer group’s median share price development of 7% since 01/01/2020 is significantly
higher compared to the performance of various indices
▪ The mobile peer group’s share price increased by an average of 7% since 01/01/2020 and by an average of
143% since 01/05/2017
▪ The mobile peer group is the only one to record of positive development over the period since 01/01/2020,
all selected indices have experienced a decrease in share prices
Note: 1) Share price development from 01/01/2020 to 01/05/2020 with index=100; 2) As of 01/05/2020 12IPO: the alternative for financing innovation,
growth, acquisitions and internationalization
for high-growth companies
CASE STUDY: STILLFRONT GROUP
From building a highly compelling equity story to a successful IPO and
continuous accelerated growth - fundraising, IPO, and M&A
▪ Merger of Bytro Labs and Stillfront in which
Carlsquare acted as advisor
2013
• Stillfront Group is a leading free-to-play powerhouse
with an active portfolio of 30 games and
1.4m daily active users
• The Company is headquartered in Stockholm,
On 8 December 2015, Stillfront Sweden, with a group of 12 studios operating in 10
2015 Group IPO on Nasdaq First North countries with ~650 professionals
Premier Growth Market • The Company was listed on Nasdaq in Dec-15 and
has since then increased its market capitalization
from EUR 33m in 2015 to EUR 620m in 2019
▪ Acquisition of Babil Games Revenue and EBITDA development
and Simultronics EURm
2016 200 186 45%
180 40% 40%
38%
160 36% 36% 35%
140 129
▪ eRepublic Labs and OFM Studios 30%
were acquired 28%
120
95 25%
2017 ▪ EUR 11m was raised in a 100
20%
public bond issue 80
15%
60
40 10%
▪ Goodgame Studios, Playa Games and
Imperia Online were acquired 20 6 10 5%
0 0%
EUR 60m was raised in a public
2018 ▪ bond issue
2015 2016 2017 2018 2019
Revenue Mobile revenue
EBITDA margin
Source: Company year-end reports
▪ Kixeye was acquired
Mark Miller, Partner at Carlsquare,
▪ EUR 50m was raised in a
2019 directed share issue
was on the Board from 2016 to 2018
▪ EUR 50m was raised in a bond issue
Share price and volume development Close 15 April 2020 SEK 700
SEK
510
500
SEK
70 300
Close first day trading
100
Dec 15
Dez 15 May 16
Mai 16 Oct
Okt 16 Mar
Mrz 17 Aug 17 Jan 18 Jun 18 Nov 18 Apr 19 Sep 19 Feb 20 -100
Volume 000' Trade close
Source: Carlsquare research 13www.carlsquare.com
Why work with us?
We achieve the best result for our clients:
Strong sector expertise and an In all completed sell-side transactions
excellent network in our focus over the past year, we have exceeded our
industries initial valuations – 85% of all projects
begun were successfully completed
In 95% of our projects we approach
We have outstanding expertise in
international buyers. In 2019, 75% of
conducting dual-track processes (M&A
the transactions we advised on were
and IPO in parallel)
cross-border
We are where you are: With offices in
We accelerate processes and Berlin, Munich, Hamburg, London,
complete transactions quickly Stockholm and Copenhagen, we are very
well positioned throughout Europe
We have an outstanding track record We have an experienced team and
when it comes to complex sufficient resources for all types of
ownership structures projects
Mark Miller Dr. Arnold Holle Erik Lundberg Caspar Graf Anders Bo Michael Moritz
Stauffenberg
mark.miller @carlsquare.com arnold.holle@carlsquare.com erik.lundberg@carlsquare.com caspar.stauffenberg@carlsquare.com anders.bo@carlsquare.com michael.moritz@carlsquare.com
M: +49 173 932 84 39 M: +44 7785 53 11 65 T: +46 738 503 559 M: +49 172 674 74 09 T: +45 41 99 82 52 M: +49 172 69 69 301
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