VC-BACKED M&A SNAPSHOT

Q2 2011
JULY 2011

VC-BACKED M&A SNAPSHOT

OVERVIEW COMMENTARY
VC-backed M&A exits were steady this quarter with 27 transactions within the $25mm and $1b range, equal to last quarters. Summary observations for the quarter include: 1. Microsofts $9b acquisition of Skype represents by far the largest VC-backed transaction this quarter. 2. The median return on invested capital was a healthy 4.3x(a) 3. Six transactions that provide >8.0x invested capital multiple returns to investors are provided below: Buyer / Seller Trx Value/ Inv. Cap

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

Seller Description Mobile banking for developing countries Digital ad campaign management Demand side advertising Mobile social gaming Mobile local shopping application Online movie application

Visa / Fundamo 22.0x DGFastChannel / MediaMind 13.8x Google / Admeld 13.1x GREE / OpenFeint 8.9x eBay / Where 8.4x Warner Bros / Flixster 8.3x

4. Non-U.S. sellers comprised 36% of transactions. companies were backed by local region VCs.

Nine out of ten of these

(a) Note: Data pertains to 20 transactions in the quarter (out of a total of 28), where both acquisition price and total invested capital were disclosed. 28 transaction also includes Microsofts acquisition of Skype where announced value is larger than $1b.

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.

MARKET TONE
Quality businesses with momentum attract close assessment although buyers generally remain prudent and move at a moderate pace.

Q1

2010 Q2 Q3
26 20

2011 Q4
20

Q1

Q2
27

3 17

4 27

4 18 16
23

12

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

$4.2

$3.4 $2.3 $1.4

$3.2

$3.4

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

$135 $124
$103 $104

$70

$70

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

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

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 VC-backed M&A transactions where consideration paid was 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 Venture Capital-backed transactions this quarter. This list contains transactions with $25mm and $1b values and one notable transaction (Microsofts purchase of Skype) that is larger than $1b. MULTIPLE OF ACQUISITION INVESTED TARGET M&A TARGET ACQUIRER PRICE ($mm) CAPITAL ($mm) INV. CAPITAL VENTURE CAPITAL FIRMS LOCATION ALERT
$9,225 $524 $400 $367 $300 $296 $295 $135 $124 $120 $120 $110 $104 $75 $70 $61 $60 $54 $41 $40 $2025 $38 $30 $253 $56 ND $118 $16 ND $19 $44 $5 $12 $9 $18 $88 $14 $83 $19 $6 (b) (a) (b) 3.2x 13.8x 13.1x 1.5x 5.4x ND 2.5x 8.4x ND 6.5x 2.7x 22.0x 8.9x 8.3x 4.0x 0.7x 4.3x 0.6x 2.2x 6.7x
INVESTORS PRE IPO:

CUBIT INVESTMENTS

FORUM VC

Note: a) Andreessen Horowitz and SilverLake acquired a 70% stake in Skype in 2009. b) Represents public company at time of acquisition. Funding is cumulative private nancing for the company. ND=amount undisclosed

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

TARGET ACQUIRER ACQUISITION PRICE ($mm)
$40 $32 $28 $25 ND ND ND ND

INVESTED CAPITAL ($mm)

ND $21 $16 ND $23 $6 $7 $9 Average Median (b)

MULTIPLE OF INV. CAPITAL VENTURE CAPITAL FIRMS

ND 1.5x 1.8x ND ND ND ND ND 6.1x 4.3x
FORUM VC

TARGET LOCATION

M&A ALERT

Note: b) Represents public company at time of acquisition. Funding is cumulative private nancing for the company. ND=amount undisclosed