VC-BACKED M&A SNAPSHOT

Q4 2012
FEBRUARY 2013

VC-BACKED M&A SNAPSHOT

OVERVIEW COMMENTARY
Although overall M&A activity was up 43% in Q4 (see our Q4 M&A Snapshot), venture-backed M&A exits declined somewhat. Given the inherent variability of quarterly measures, Architect Partners doesnt place too much emphasis in the quarterly decline. However, 2012 overall has been materially slower than 2011. 2012 had 75 venture-backed exits, which was down 23% from 2011 (98 deals). Summary observations for the quarter include: 1. Softbanks $4.8b acquisition of eAccess, a Japanese ISP, and Priceline.coms $1.8b acquisition of Kayak, which had gone public in July 2012, were the two largest VC-backed exits this quarter. The median return on invested capital was 4.7x(a) Five transactions that provide >8.0x invested capital multiple returns to investors are provided below: Buyer / Seller Trx Value/ Invested Cap 98.0x 17.9x 15.0x 11.4x 8.3x Seller Description Legal technology provider; UK-based Social portfolio platform Cloud-managed networking equipment Hotel search site; Germany-based Technology-oriented media content

FOLLOWING ANALYSIS
SUMMARY OF VC-BACKED M&A EXITS: VC-BACKED M&A TRANSACTIONS:
SUMMARY OF QUARTERLY ACTIVITY IN NUMBERS AND TONE

LISTING OF TRANSACTIONS.

VC-BACKED

2. 3.

BT / Tikit Group Adobe / Behance Cisco / Meraki Expedia / Trivago j2 Global / Zi Davis Media

4.

U.S. sellers comprised 75% of total VC-backed transactions within Q4.

(a) Note: Data pertains to 9 transactions in the quarter (out of a total of 12), where both acquisition price and total invested capital were disclosed between the $25mm - $1b range.

VC-BACKED M&A SNAPSHOT - SUMMARY

COVERAGE
Architect Partners tracks venture capital-backed M&A activity within the converging Internet | mobile | digital media sectors. The following assessment is focused on venture capital-backed M&A transactions with announced values of between $25mm and $1b as these typically represent successful business-building endeavors. We also include transactions with unannounced values which we believe are within $25mm-$1b range. 2010 Q3
26

MARKET TONE
Average. Decrease in activity and consideration paid. Quality businesses with momentum will continue to attract strong interest. Strategic-driven transactions command premium exits.

Q4
20

Q1

2011 Q2 Q3
27

Q4
21

Q1
16
4

2012 Q2 Q3
25 20

Q4
15

3 17

4 27

4 18 16

2 23 23 19

5 3 15 12

Venture-Backed M&A Exits (#)1.............

$4.2

12

12

16

$3.4 $2.3 $1.4

$3.2

$3.4

$3.6 $2.3
$1.8

$3.7

$3.8 $3.1

Total Consideration Paid ($b)2,4..............

$135 $70 $70 $124 $103 $104
$129 $152 $112 $76

$80

$95

Median Transaction Size ($mm)2,4..........

85% 67% 74% 75% 63% 64% 67% 73%

75%

84%

73%

75%

U.S.-based Target (%)3................................

Note: 1) Dark blue includes VC-backed M&A transactions with announced values of between $25mm and $1b. Light blue includes notable VC-backed M&A transactions where consideration paid was >$1b or not announced, however we believe to have values of between $25mm and $1b. 2) Total consideration paid and median transaction size are calculated based on transactions with announced values of between $25mm and $1b. 3) Percentage is based on U.S. target, calculated based on cumulative transactions. 4) Transaction values with a range are presented as a mid-point value

VC-BACKED M&A SNAPSHOT - TRANSACTIONS

Below we highlight Q4 2012s Venture Capital-backed M&A transactions. This list contains transactions within the range of $25mm to $1b values. We also include three $1b+ acquisitions and other notable transactions with undisclosed values.

TARGET

ACQUIRER

ACQUISITION PRICE ($mm)

$4,808

CAPITAL ($mm)
$1,488

INVESTED

MULTIPLE OF INV. CAPITAL VENTURE CAPITAL FIRMS

3.2x

TARGET M&A LOCATION ALERT

$1,789

(a)

NA

$1,200

$80

15.0x

$871

(a)

NA

$650

$160

4.1x

$628

$55

11.4x

$250$350

$65

3.9x5.4x

$165

$20

8.3x

Note: a) Represents public company at time of acquisition. For purposes of this VC-backed M&A analysis, Architect Partners only includes recently public companies that have IPO dates within one year preceding the announcement of an M&A event. Source: Architect Partners, Capital IQ and Public Information

VC-BACKED M&A SNAPSHOT - TRANSACTIONS (continued)

TARGET ACQUIRER ACQUISITION PRICE ($mm)
$125

CAPITAL ($mm)
$7

INVESTED

MULTIPLE OF INV. CAPITAL VENTURE CAPITAL FIRMS

17.9x

TARGET M&A LOCATION ALERT

$98

$1

98.0x

$77

$18

4.3x

$65

NA

NA

$57

NA

NA

$50

$23

2.2x

$45

$13

3.5x

Average Median

15.7x 4.7x

Note: a) Represents public company at time of acquisition. For purposes of this VC-backed M&A analysis, Architect Partners only includes recently public companies that have IPO dates within one year preceding the announcement of an M&A event. Source: Architect Partners, Capital IQ and Public Information