Based on the financial information and assumptions in Exhibit 2, undertake a DCF valuation for Bottomline Technologies identifying the intrinsic equity value of a share. Outline the assumptions used and explain your calculations and workings. After that, based on the financial information and assumptions in Exhibit 3, undertake a LBO valuation for Bottomline Technologies, identifying the IRR that will be generated on equity assuming an exit in year 5. Outline the assumptions used in your calculations and explain your workings

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Bottomline Technologies Case Study - Financials Bottomline Technologies Income Statement (in millions) 2018 $'m 15,516 9,876 5,640 4,449 1,191 75 2017 $'m 15,797 10,077 5,720 4,196 1,524 59 -6 1,471 551 920 411 413 2.24 2.23 Net sales Cost of goods sold Gross profit Operating expenses Operating income Interest expense Interest income Income before income taxes Income taxes Net income Weighted-average number of shares-basic Weighted average number of shares-diluted Earnings per share-basic Earnings per share-diluted 2016 $'m 16,435 10,146 6,289 4,206 2,083 75 -5 2,013 751 1,262 435 440 2.9 2.87 -8 1,124 448 676 399 400 1.69 1.69 Exhibit 3 Bottomline Technologies Case Study Leveraged Buyout (LBO) Assumptions The directors of 3M are keen to finance the acquisition of Bottomline Technologies with a large proportion of debt and would like to model the expected IRR on initial equity assuming an exit after year 5. The following assumptions should be used in your LBO valuation: . . . Transaction comparable information suggests that an entry multiple of 7 times 2018 EBIT would be a good proxy valuation for the Bottomline Technologies on a LBO basis. The debt on the 2018 balance sheet of Bottomline Technologies will be refinanced on the acquisition. Directors of 3M anticipate using 70% Debt and 30% Equity to finance the acquisition. The debt financing has been structured in a manner to achieve a repayment schedule of $500m per annum from year 1. With the exit multiple not expected to expand and the earliest exit expected in year 5, the directors of 3M would like to know whether the acquisition of Bottomline Technologies would meet their expected 45% return on equity capital. . . Bottomline Technologies Case Study - Financials Bottomline Technologies Income Statement (in millions) 2018 $'m 15,516 9,876 5,640 4,449 1,191 75 2017 $'m 15,797 10,077 5,720 4,196 1,524 59 -6 1,471 551 920 411 413 2.24 2.23 Net sales Cost of goods sold Gross profit Operating expenses Operating income Interest expense Interest income Income before income taxes Income taxes Net income Weighted-average number of shares-basic Weighted average number of shares-diluted Earnings per share-basic Earnings per share-diluted 2016 $'m 16,435 10,146 6,289 4,206 2,083 75 -5 2,013 751 1,262 435 440 2.9 2.87 -8 1,124 448 676 399 400 1.69 1.69 Exhibit 3 Bottomline Technologies Case Study Leveraged Buyout (LBO) Assumptions The directors of 3M are keen to finance the acquisition of Bottomline Technologies with a large proportion of debt and would like to model the expected IRR on initial equity assuming an exit after year 5. The following assumptions should be used in your LBO valuation: . . . Transaction comparable information suggests that an entry multiple of 7 times 2018 EBIT would be a good proxy valuation for the Bottomline Technologies on a LBO basis. The debt on the 2018 balance sheet of Bottomline Technologies will be refinanced on the acquisition. Directors of 3M anticipate using 70% Debt and 30% Equity to finance the acquisition. The debt financing has been structured in a manner to achieve a repayment schedule of $500m per annum from year 1. With the exit multiple not expected to expand and the earliest exit expected in year 5, the directors of 3M would like to know whether the acquisition of Bottomline Technologies would meet their expected 45% return on equity capital