VC-BACKED M&A SNAPSHOT

Q1 2012
APRIL 2012

VC-BACKED M&A SNAPSHOT

OVERVIEW COMMENTARY
Consistent with overall M&A activity, in Q1 2012, VC-backed M&A activity also shows a good overall tone. Median transaction size increased by 36% from $95 to $129, although VC-backed M&A exits within the $25mm and $1b range decreased from 19 to 12. Although activity levels have been down for the past two quarters, we believe weve already seen the trough and expect M&A activity to increase for the foreseeable future. Summary observations for the quarter include: 1. China-based Youkus $1b+ acquisition of Tudou represents the largest VCbacked transaction this quarter. 2. The median return on invested capital was a healthy 6.1x(a) 3. Six transactions that provide >8.0x invested capital multiple returns to investors are provided below: Buyer / Seller Trx Value/ Invested Cap 19.5x 19.4x 16.7x 10.8x 8.4x 8.2x Seller Description Mobile App Search and Discovery Network interconnect solutions Power-bandwidth-ecient microservers Online social games Hosted enterprise VoIP system Mobile advertising platform

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

Apple/Chomp Cisco/Lightwire AMD/SeaMicro Zynga/OMGPOP ShoreTel/M5 Networks SingTel/Amobee

4. Non-U.S. sellers comprised 25% of transactions. All of these four companies were backed by local region VCs.

(a) Note: Data pertains to 12 transactions in the quarter (out of a total of 16), where both acquisition price and total invested capital were disclosed.

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 Q1 Q2 Q3
26 20
3 17 8

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

Q4
20
4

Q1

2011 Q2 Q3
27
4

Q4
21
2

2012 Q1
16
4

27

Venture-Backed M&A Exits

(#)1...................

12

18

23

23

16

19

12

$4.2 $3.4 $2.3 $1.4 $3.2 $3.4

$3.6 $2.3 $1.8

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

$135 $124
$103 $104 $80 $95 $129

$70

$70

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

85% 67% 74% 75% 63% 64% 67% 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 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 Q1 2012s Venture Capital-backed transactions. This list contains transactions within the $25mm to $1b values. We also include Youkus $1b+ acquisition of Tudou.com and other notable transactions with undisclosed values.

TARGET

ACQUIRER

ACQUISITION PRICE ($mm)

$1,144 $334 $321 $271 $180 $174 $158 $100 $70 $65 $50 $43 $35 ND ND ND

CAPITAL ($mm)
(a) $20 $39 $14 $17 $63 $19 $116 $18 $156 $3 $17 $60 $2 $76 ND Average Median

INVESTED

MULTIPLE OF INV. CAPITAL VENTURE CAPITAL FIRMS

NA 16.7x 8.2x 19.4x 10.8x 2.8x 8.4x 0.9x 4.0x 0.4x 19.5x 2.5x 0.6x NA NA NA 7.9x 6.1x

TARGET LOCATION

M&A ALERT

Note: a) Represents public company at time of acquisition. Source: Architect Partners, Capital IQ and Public Information