M&A SNAPSHOT

Q3 2011
OCTOBER 2011

M&A SNAPSHOT
OVERVIEW COMMENTARY
M&A activity in Q3 2011 continues to show good overall tone although as we exit the quarter general economic worries are beginning to warrant caution. Within the important $25 million - $1 billion transaction value range, M&A volume (62 transactions) and total consideration paid ($11 billion) were roughly equivalent to Q2. The marquee deal of the quarter was clearly Googles $12b acquisition of Motorola Mobility. As has been the case for the past couple of years, Google remains the most active acquirer in the quarter with seven acquisitions. In addition to Motorola, acquisitions include Zagat (crowd sourced local business review), Daily Deal (local deals), Zave Networks (coupon redemption), Centerd (local deals), Punchd (mobile loyalty cards) and Fridge (a social network). Googles M&A eorts continue to largely be focused on enhancing consumer engagement on mobile devices, thereby improving Googles marketing and advertising monetization opportunities. Social, Local and Mobile (SoLoMo) are consistent themes. Overall, digital marketing, e and m-commerce and marketing analytics continue to be an extremely active M&A theme and comprises roughly 25% of the activity within the $25mm-$1b transaction size range. Traditional IT vendors also continue to position themselves to address the proliferation of mobile devices, cloud-based services and applications, integrating social and location awareness into a wide range of applications and enabling intelligently targeted marketing and advertising. This past quarter, Architect Partners has published its M&A Alert on eleven of the most strategic transactions in the quarter.

FOLLOWING ANALYSIS
M&A DASHBOARD: NOTABLE ACQUIRERS: M&A TRANSACTIONS: OTHER NOTABLE TRANSACTIONS:
SUMMARY OF QUARTERLY ACTIVITY IN NUMBERS AND TONE ACTIVE INFLUENTIAL BUYER ACTIVITY SUMMARY OF TRANSACTIONS BETWEEN $25MM-$1B IN VALUE SUMMARY OF NOTABLE TRANSACTIONS WITHOUT ANNOUNCED VALUE OR ABOVE $1B.

COMING SOON
ANALYSIS OF VC-BACKED M&A EXITS

M&A DASHBOARD
COVERAGE
Architect Partners tracks M&A activity within the converging Internet | mobile | digital media sectors. The following assessment is focused on M&A transactions with announced values of between $25mm and $1B as these typically represent successful business-building endeavors.

MARKET TONE
Good. Deepening base of acquirers. Transaction volume solid. Generally balanced buyer/seller dynamics. 2010 Q2 Q3
68 53 38 40 $14

Q1

Q4

Q1
68

2011 Q2
61

Q3
63

M&A Exits (#)...........................................................................................

$12 $6 $12

$12

$11

$5 27 17 18 16 23 23

Total Consideration Paid ($b).............................................................

12

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

$75 $100 $98 $105 $98 $113 $80

Median Transaction Size ($mm).........................................................

55% 45% 52% 49% 48% 49% 52%

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

!"#$$ !%#$$ !"&$ !'($

!"#$

!%&$

!"'$

All Internet | Mobile | Digital Media M&A Exits(1)(#).....................

Note: 1) Includes all Internet | mobile | digital media transactions regardless of transaction value. Transaction values within a range are presented as a mid-point value

NOTABLE ACQUIRERS
The following acquirers are generally active or inuential buyers within the Internet | mobile | digital media sectors. Below, we highlight announced acquisitions in the third quarter of 2011.

ACQUIRER

# 7 3 3 3 3 3 2 2 2 2 2 2

TARGET

NOTABLE ACQUIRERS (continued)

ACQUIRER # 2 2 2 2 2
Video Processing Asset

TARGET

2 2 1 1 1 1 1 1 1
5

M&A TRANSACTIONS: $25MM-$1B

Below highlights M&A transactions that have announced values of between $25mm and $1b announced in Q3 2011 within the converging Internet | mobile | digital media sectors.
# ANNOUNCED DATE BUYER TARGET TRANSACTION VALUE ($MM) TARGET DESCRIPTION AP INSIGHT SM M&A ALERT VCBACKED

NON-SERVICE PROVIDER TRANSACTIONS 1 08/03/2011 Web.com Group Network Solutions $756 Provides domain registration and hosting services.

! !

09/14/2011

Teradyne

LitePoint

$580

Develops wireless test solutions for WLAN, WiMax and WiFi devices.

08/17/2011

Wi-Lan

MOSAID Technologies

$464

Engages in licensing and developing patented semiconductor and wireless/wireline communications IP technology. Operates online or 'virtual' classes for public schools.

09/15/2011

Pearson

Connections Education

$400

07/21/2011

Acer

iGware

$395

Provides cloud computing services for more than 100 million consumer devices.

09/01/2011

IBM

Algorithmics

$387

Provides financial risk analytics software and advisory services. Algorithmics enables financial services companies to quantify, manage and optimize their risk exposure across a range of financial risk areas such as market, liquidity, credit, operational, economic and regulatory requirements, and make effective business decisions. Provides financial transaction processing software for financial institutions.

09/15/2011

Bserv

Fundtech

$353

09/29/2011

Intel

Telmap

$325

Provides location-based services enabling mobile operators to offer mobile location-based services such as local search, mapping and navigation services across multiple mobile OS. Provides graphics visualization products including graphics processors, desktop cards, integrated chipsets and drivers for mobile devices. Helps online retailers create and deliver dynamic display advertising campaigns where the ad creatives and media placements are dynamically adapted in real time based on a number of variables including: geographic location, time of day, language, and behavioral characteristics of the user, among others. Provides traffic and news information reports to radio and television stations.

07/06/2011

HTC

S3 Graphics

$300

10

08/01/2011

ValueClick

Dotomi

$295

11

08/02/2011

GTCR Golder Rauner

Global Traffic Network

$277

12

07/07/2011

eBay

Zong

$240

Provides a payment solution which allows consumers to pay for on-line digital goods purchases using their mobile phone number. Provides domain name, Web hosting and Internet related services.

! !

13

09/23/2011

HgCapital

Group NBT

$231

14

09/16/2011

King Capital International Citrix

Rising India

$214

Engages in the development and production of digital special effects and 3D character animation for films and TV production. Develops open source software solution that accelerates the deployment, management, and configuration of multi-tier and multi-tenant infrastructure cloud services.

15

07/12/2011

Cloud.com

$200+

Note: Transaction values within a range are presented as a mid-point value

M&A TRANSACTIONS: $25MM-$1B (continued)

# 16 ANNOUNCED DATE 07/07/2011 BUYER MIH Allegro TARGET Markafoni TRANSACTION VALUE ($MM) $200 TARGET DESCRIPTION Online private shopping club that offers apparel, accessories, sporting goods, cosmetics, toys and technology products. Provides detailed 3D city visualization solutions for Web map publishers and real estate portals. Offers a street level 3D imagery solution and Interior Panoramas that provides interior views of restaurants, shopping malls, hotels. Offers ticket booking services for theatres, comedy shows, sports, music shows and various events. Offers load balancing and traffic management software that enable companies to substantially improve the performance of their cloud-delivered applications and websites. Provides user-generated ratings and reviews for restaurants and local businesses such as hotels, retailers and other vendors. AP INSIGHT SM M&A ALERT VCBACKED 17 07/14/2011 An undisclosed buyer C3 Technologies $155

18

09/05/2011

Vivendi

See Group

$151

19

07/19/2011

Riverbed Technology

Zeus Technology

$125

20

09/08/2011

Google

Zagat

$125

21

08/08/2011

Great Hill Partners

Plimus

$115

Provides a hosted outsourced e-commerce platform for selling software, games and other digital goods online. Operates myYearbook.com, an online social network for teenagers and highschool students. Develops and licenses DRM and content distribution technologies.

22

07/19/2011

Quepasa

Insider Guides

$97

23

09/28/2011

Pendrell

ContentGuard

$90

24

09/26/2011

Renren

QianJun

$80

A social video sharing site.

!
25 09/19/2011 NICE Systems The Fizzback Group $80 Provides a customer engagement solution that help companies to listen, respond, and act in real-time to their customers' comments. Provides online survey software, enterprise feedback management, online community software and survey analytics software solutions. Provides speech recognition and speech synthesis technologies.

! !

26

07/19/2011

Verint Systems

Vovici

$76

27

08/13/2011

Nuance Communications RealPage

Loquendo

$75

28

08/22/2011

Multifamily Technology Solutions GDC Technology

$74

Operates MyNewPlace.com, an apartment and home rentals listing services accessible via Web, mobile Web and iPhone/iPod Touch. Offers software-based digital cinema solutions for digital post-production, delivery and exhibitions of movies and onscreen advertisement.

29

07/08/2011

CAG Digital Investment Holdings

$73

30

08/03/2011

Augme Technologies

Hipcricket

$72

A mobile marketing company.

Note: Transaction values within a range are presented as a mid-point value

M&A TRANSACTIONS: $25MM-$1B (continued)

# 31 ANNOUNCED DATE 08/30/2011 BUYER DG FastChannel TARGET EyeWonder TRANSACTION VALUE ($MM) $66 TARGET DESCRIPTION Provides interactive online video advertising solutions and video advertising platforms that enable advertising agencies and content publishers to create, deliver, manage, and optimize their interactive digital advertising campaigns. Develops a mobile group text messaging and voice calling application. GroupMe allows users to create private groups of up to 25 friends and text chat (via text messages delivered via mobile application or SMS), set up voice calls, share photos and locate friends on a map. Offers M2M communication solutions, connecting embedded sensing devices in machines via SIM-based technology. A media and entertainment company engaged in producing movies. AP INSIGHT SM M&A ALERT VCBACKED 32 08/21/2011 Skype GroupMe $64

33

08/14/2011

ECI Partners

Wireless Logic

$57

34

08/03/2011

Michael Yufeng Chi, Chairman and Chief Executive Officer of Perfect World Inrix

Beijing Perfect World Cultural Communication

$56

35

07/28/2011

ITIS

$55

Provides real-time traffic and travel information to assist motorists. ITIS collects traffic flow and incident data from cellular phone networks and GPS devices, fixedsensor systems and incident reports. Operates a multi-channel customer support platform. Feeds customer service conversations into single collaborative desktop where service requests through traditional and social channels are collected and handled by the customer support team. Develops and manufactures optical network devices for the telecommunications industry. Provides an online service that connects its users with family and friends using photos and videos.

36

09/21/2011

Salesforce

Assistly

$50

37

09/29/2011

NeoPhotonics

Santur

$47

! !

38

08/01/2011

IncrediMail

Smilebox

$40

39

09/21/2011

Rakuten

Play

$39

Operates as an online retailer of DVD, CD and games.

40

07/01/2011

Logicalis Group

Netarx

$34

Develops unified communication solution including mobile voice, data, and visual communications on an IP-based network.

41

07/20/2011

Playtech

Mobenga

$34

Develops mobile sports betting software.

42

07/08/2011

Local.com

Screamin Media

$33

Offers discount deals on restaurants, spas, and events to customers, local businesses, and community schools. Engages in the development, production, and distribution of television drama series and motion pictures. Develops fun games for console and handheld platforms.

43

09/16/2011

Digital Aria

The ChainG

$32

44

08/02/2011

Glu Mobile

Griptonite

$31

45

08/22/2011

Cisco Systems

Axiom Systems

$31

Offers IP service fulfillment software which allows operators to automate the management of network services.

Note: Transaction values within a range are presented as a mid-point value

M&A TRANSACTIONS: $25MM-$1B (continued)

# 46 ANNOUNCED DATE 09/20/2011 BUYER Serve Virtual Enterprises TARGET Sometrics TRANSACTION VALUE ($MM) $30 TARGET DESCRIPTION A social media analytics and ad platform company. AP INSIGHT SM M&A ALERT VCBACKED

!
Adperio $30 Interactive advertising agency. Provides services in areas including social media, banners, Web displays, email and mobile marketing. Offers an online loyalty program to create custom panels. Provides online marketing solutions incuding customer acquisition, lead generation and email marketing. Offers data-driven digital marketing services.

47

07/24/2011

Matomy Media

48

07/14/2011

Affinion Group

Prospectiv Direct

$30

49

09/14/2011

St. Ives

Response One

$30

50

09/11/2011

8x8

Contactual

$28

Provides cloud-based call center and customer interaction management solutions.

51

09/14/2011

Hong Kong Economic Times Holdings

Ringier Print

$28

A magazine publishing company.

52

07/01/2011

Irdeto

Rovi Corporation, BD+ Business

$25

Enables studios to protect high definition Blu-ray Disc content.

Note: Transaction values within a range are presented as a mid-point value

M&A TRANSACTIONS: $25MM-$1B (continued)

# ANNOUNCED DATE BUYER TARGET TRANSACTION VALUE ($MM) TARGET DESCRIPTION AP INSIGHT SM M&A ALERT VCBACKED SERVICE PROVIDER TRANSACTIONS 1 08/01/2011 Astrium Vizada $960 Provides mobile satellite services at sea, on land, and in flight in France and internationally. Free-to air TV broadcast based in France.

09/08/2011

Groupe CANAL+

Bollore, TV Business

$652

07/28/2011

DMT

Elettronica Industriale

$494

Engages in the production and management of television networks in Italy.

09/29/2011

Netia

Telefonia Dialog

$292

A telecom operator in Poland.

07/04/2011

Hunan TV & Broadcast Intermediary

Majority Stake in Hunan Huixin and Hunan Huide and Hunan Huiyue and Hunan Huirun Cable Network Four Points Media Group Aero 2

$208

Cable TV network in China.

09/08/2011

Sinclair Broadcast Group Narodowy Fundusz Inwestycyjny Midas Tele2 Sverige

$200

Operates television stations based in Salt Lake City, Utah.

09/19/2011

$171

Offers wireless telecommunications and internet services through 900 MHz band network based on HSPA+ technology. Poland-based. Offers mobile broadband and mobile data services in Norway.

07/22/2011

Network Norway

$140

08/24/2011

WideOpenWest

Broadstripe Michigan Assets Broadstripe Washington and Oregon Properties Crowley Data Poland

$55

Digital cable and broadband Internet services.

10

08/24/2011

Wave Broadband

$32

Digital cable and broadband Internet services

11

09/29/2011

Netia

$32

Provides telecommunication services in Poland.

Note: Transaction values within a range are presented as a mid-point value

10

M&A TRANSACTIONS: OTHER NOTABLE

A number of important transactions were announced in the third quarter of 2011 with consideration in excess of $1b or with unannounced transaction values.

# 1

ANNOUNCED DATE 08/15/2011

BUYER Google

TARGET Motorola Mobility

TRANSACTION VALUE ($MM) $12,033

TARGET DESCRIPTION Manufactures and markets Android mobile phones, tablets and home networking devices including cable modems, set-top-boxes. Provides high-speed Internet, voice and cable TV services.

AP INSIGHT SM M&A ALERT

VCBACKED

08/15/2011

Time Warner Cable

Insight Communications

$4,789

09/11/2011

Broadcom

NetLogic Microsystems

$3,661

Develops semicondctor chips and integrated circuits used in mobile wireless infrastructure, data center, enterprise, metro Ethernet and infrastructure networks. A video game and Internet game developer and publisher and a leader in the fastgrowing $3B+ casual gaming segment.

07/11/2011

Electronic Arts

PopCap Games

$1,025

Note: Transaction values within a range are presented as a mid-point value

11