Vaquero Capital: The State of M&A, Techstars FounderCon September 2013
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Vaquero Capital: The State of M&A, Techstars FounderCon September 2013

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Vaquero Capital Keynotes Techstars FounderCon 2013,

Vaquero Capital Keynotes Techstars FounderCon 2013,
September 16, 2013

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Vaquero Capital: The State of M&A, Techstars FounderCon September 2013 Presentation Transcript

  • 1. Confidential The State of M&A David Grove Managing Partner Vaquero Capital
  • 2. 2 0 100 200 300 400 500 600 SaaS and Internet Outpacing the Market S&P 500 NASDAQ SaaS Peer Group Internet Peer Group The Market Conditions are Robust… 93%YoY increase in 1H13 Technology M&A deal value 61IPOs raising $13Bnof proceeds in 2Q13 74%and 43%YTD increase in SaaS Software and Internet indices respectivelyJan 09 July 13
  • 3. 3 …Driven by Growing Confidence 62%of S&P 500 beat Q2 earnings estimates – highest since 3Q11 $1.5Tof Cash in corporate coffers 14.2VIX Average (1H13) -- lowest since 2007 High Business Confidence Strong Balance Sheets Lower Volatility
  • 4. 4 Significant IPOs have added to Buyers Internet / Digital Media SaaS Historical Buyers
  • 5. 5 Premium Sales and Bright Shiny Objects
  • 6. 6 How Do You Achieve Premium Valuation? Massive, often untapped markets Ability to achieve sustainable, long-term growth Engagement Talent Build v. Buy Defensive & Strategic Technology Exponential growth in traffic and deep engagement New paradigms leveraging mobile devices Visionary teams creating new markets Ability to understand generational shifts Rapid market share gain Time to market critical Existing business model in massive emerging market Threat to market share if competitors own Next generation technologies Re-inventing consumer engagement modality Size of Market What Is It Worth to You? Sell v. Build
  • 7. 7 Internet Leaders SaaS Leaders Hot M&A Growth + Profitability – Risk = Valuation Traditional Valuation Metrics “Bright Shiny Objects” 40% Growth 40% Growth 9x Revenue Egregious Revenue Multiples = Infinite FCF Multiples 20% FCF 50x FCF 10% FCF 8.5x Rev 40x FCF 12x Rev 70x FCF
  • 8. 8 Deal Considerations Structure Stock v. Cash Earnouts Management & Employees Interests & Perspectives Board Founder Investors “Tech” Companies Are Bought Not Sold Marketing Using financing as a trigger
  • 9. 9 Preparing for Exit Start Early Hygiene Matters Consider Exit When Financing Lawyer Up
  • 10. 10 Driving Competition Negotiated Sale Auction Targeted Auction Hybrid
  • 11. 11 Recent High Profile Deals  Talent  Strategic  Unique  Engagement  Location, Location, Lo cation  Build v. Buy  Unique  Competition  Synergies  Mobile  Talent  Installed Base  Transformative
  • 12. 12 Establish Relationships in Advance of Exit Build an Ecosystem of Partners Get to know future buyers – Don’t worry, they cant do what you do..
  • 13. 13 Questions?
  • 14. 14 Year Target Buyer Sector Transaction Value LTM Revenue TV / LTM Revenue 9/9/2013 MoPub Twitter Internet - Commerce $350 NA 3.5 x 6/11/2013 Waze Google Internet - Mobile $966 NA NM 6/3/2013 ExactTarget Salesforce.com SaaS - Marketing $2,351 $317 7.4 x 5/20/2013 Tumblr Yahoo! Internet - Social $1,100 NA 13.0 x 11/23/2012 Eloqua Oracle SaaS - Marketing $958 $90 10.6 x 10/21/2012 Ancestry.com Private Investors Internet - Social $1,609 $460 3.5 x 8/25/2012 Kenexa Corp. IBM SaaS - HR $1,397 $318 4.4 x 5/31/2012 Buddy Media Salesforce.com SaaS - Marketing $745 $29 26.0 x 5/22/2012 Ariba SAP America SaaS - Commerce $4,608 $502 9.2 x 4/9/2012 Instagram Facebook Internet - Social $1,000 NA NA 2/8/2012 Taleo Oracle SaaS - HR $1,921 $315 6.1 x 12/2/2011 SuccessFactors SAP America SaaS - HR $3,764 $292 12.9 x 10/23/2011 Rightnow Technologies Oracle SaaS - CRM $1,763 $216 8.2 x 7/11/2011 PopCap Games Electronic Arts SaaS - CRM $1,301 NA NA 6/15/2012 Yammer Microsoft Internet - Social $1,200 NA NA 5/10/2011 Skype Microsoft Internet - Communications $9,325 $860 10.8 x 12/31/2012 SurveyMonkey.com Google SaaS - Marketing $794 NA NA 5/24/2012 PowerReviews Bazaarvoice SaaS - Commerce $128 $12 10.7 x 8/15/2012 Getty Images The Carlyle Group Internet - Media $3,300 NA NA 3/5/2012 Amobee Singapore Telecommunications SaaS - CRM $321 NA NA Mean $1,945 $310 9.7 x Median $1,251 $315 9.2 x Valuation of Hot M&A Comps
  • 15. 15 Valuation of Hot Public Companies EV EV / Rev EV / FCF Revenue Growth FCF Margin Internet 2014E 2015E 2014E 2015E 2014E 2015E 2014E 2015E Angie’s List $1,180 3.0x 3.0x 23.0x 14.0x 38% 27% 15% 20% Retail me Not $1,995 8.2x 6.8x 42.1x 33.4x 25% 21% 19% 20% Facebook $104,617 10.8x 8.4x 48.8x 35.5x 32% 28% 22% 24% Trulia $1,338 7.0x 5.0x 38.0x 26.0x 55% 39% 18% 19% LinkedIn $28,587 13.4x 9.9x 90.7x 61.0x 41% 35% 15% 16% Shutter stock $1,802 6.2x 5.0x 28.0x 20.3x 26% 26% 22% 24% Zillow $3,217 12.0x 8.9x 76.2x 48.1x 41% 34% 16% 19% Pandora $1,735 6.4x 4.7x NM 35.4x 37% 34% 6% 9% Yelp $1,228 18.1x 12.3x 32.6x 18.4x 47% 38% 11% 15% HomeAway $2,454 6.0x 5.0x 19.2x 17.0x 20% 16% 31% 30% Mean 9.1x 6.9x 44.3x 30.9x 36% 30% 18% 20% Median 7.6x 5.9x 38.0x 29.7x 38% 31% 17% 19% EV EV / Rev EV / FCF Revenue Growth FCF Margin Software 2014E 2015E 2014E 2015E 2014E 2015E 2014E 2015E Salesforce $21,928 7.9x 6.1x 41.3x 29.1x 29% 22% 15% 15% Workday $12,521 18.6x 12.8x NM NM 51% 46% NM NM NetSuite $7,735 14.8x 11.3x 109.3x 62.4x 28% 30% 14% 18% Splunk $5,999 16.0x 12.1x 86.5x 53.8x 33% 32% 19% 23% ServiceNow $4,465 11.0x 8.0x 79.8x 44.1x 45% 36% 9% 13% Tableau $3,201 11.3x 8.9x NM 203.5x 40% 26% NM 4% Cornerstone $2,726 10.5x 7.6x 146.6x 43.3x 41% 38% 7% 18% Demandware $1,215 8.9x 6.6x NM NM 36% 35% NM NM Concur $6,099 8.4x 6.8x 113.0x 79.2x 26% 23% 8% 9% Marketo $981 10.8x 8.5x NM NM 28% 27% NM NM Mean 11.8x 8.9x 92.7x 73.6x 36% 31% 12% 14% Median 10.9x 8.2x 86.5x 53.8x 35% 31% 11% 15%