Agc's november technology capital markets report


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Agc's november technology capital markets report

  1. 1. AGC’S NOVEMBER TECHNOLOGY CAPITAL MARKETS REPORTTech M&A Transaction Volume Dives in Q4Concerns around sovereign debt and the overall strength of the global economy Number of Tech M&A Transactionscontinue to weigh on technology M&A activity, which has cooled off significantly inthe fourth quarter. With 47 tech M&A deals of $20M+ in the quarter as of 600 576November 30, the current trajectory stands at just 71 deals, down more than 40% 445from the roughly 120 quarterly run rate of 3Q11 and 4Q10. AGC is in the market 450 418 405with 45 engagements and we are seeing first-hand how the European economic 300 265slowdown is causing buyers to heighten their scrutiny, pull out of deals in process 150 102 121 125 105 109 120and, in some cases, completely shut down their M&A engine. The successful 12x 70 71revenue multiple achieved by SuccessFactors is the needle in the haystack as the 0norm is 2.2x trailing revenues for deals completed year-to-date in 2011. Large techprivate equity funds continue to provide exits for many of our emerging growthcompanies, as demonstrated by two of November’s three largest M&A deals being Warburg and Goldman’s $975M buyout of SMB hostingplayer Endurance International, and the ~$780M LBO of Tekelec led by Siris Capital at 1.3x LTM revenues. Strong cash flow and cashbalances, combined with a dire need for new technology, will bring these strategic technology buyers back into the market in the first half of2012.Private Placement Volume Dips in the Fourth QuarterThe Q4 run rate of private placement transactions is down roughly 33% from the Number of Tech Private Placementsaverage of the first three quarters of the year. In perhaps the most powerfultestament of late, VentureWire recently reported that the board of CalPERS, the 1,451 1,500 1,310 1,268nation’s largest pension fund and an historically ‘generous supporter of venture 1,183capital,’ had approved measures aimed at cutting its commitment to the asset class 1,000 929from more than $3B down to roughly $500M in an attempt to ‘mitigate risk’ in its 500 317 341 329 324 384~$50B private equity program. The restructuring and downsizing of the venture 240 286 231industry will continue with other LPs likely to follow CalPERS’ lead. November saw 0just 86 tech private placements of $5M+ with 4Q11 now tracking at 231 deals. Ofthe top three largest financings, two were in the red-hot daily deals business.LivingSocial disclosed a fresh $200M round of funding from a group of investors that’s expected to include JPMorgan, T. Rowe Price, while WhaleShark Media secured $150M from Institutional Venture Partners, Russian Venture Company and JPMorgan. In thethird-largest private placement of the month, DriveCam announced that it is set to raise $85M from new investor Welsh, Carson, Anderson &Stowe. Of the remaining 83 emerging growth tech fundings in November, the median check size was $10M and volume was heavilyconcentrated in the Digital Media / Internet and Software / IT Services sectors.Tech Companies Lining Up to Go Public in 2012November marked a vast improvement in the technology IPO market relative to the Number of Tech IPO Pricingsfreeze experienced in the late summer and early fall. Security company Imperva isup more than 50% but the other five have gained an average of barely 2%. The 80 71 70two consumer Internet plays – Groupon and Angie’s List – are trading at roughly 6010x revenues while the balance of the group is trading at an average multiple of 50 47 40 355.2x revenues – not so bad. Follow-ons, likewise, were strong with a tally of seven 30 20for the month. Looking ahead, investors are anticipating early 2012 offerings from 20 14 11 13 10 12 10 4 6 5 5high-growth names like Zynga, Yelp!, Vantiv, Trustwave, Synacor, ExactTarget and 0BioAmber, which have added to the S-1 backlog through recent filings with theSEC. ACTIVITY SNAPSHOT Number of Transactions November YTD Monthly Avg. 2010 Monthly Avg. NASDAQ Composite M&A 25 32 35 Close of Nov. 30 2620.34 Private Placements 86 101 99 QTD 8.5% PIPEs and Convertible Offerings 4 12 13 YTD (1.2%) YoY 3.4% IPOs and Follow-Ons November YTD Monthly Avg. 2010 Monthly Avg. 52-Week High / Low 2887.75 / 2298.89 Filings 5 6 4 Pricings 6 4 5 Follow-Ons 7 4 5
  2. 2. Novem ber M&ATarget Value LTM Rev. EV / LTM Rev. Acquirer SectorPoint International $1,050 186 5.6x VeriFone Systems Financial TechnologyEndurance International 975 - - Warburg Pincus, Goldman Sachs Softw are and IT ServicesTekelec 778 $401 1.3x Siris, ComVest, ZelnickMedia, Sankaty, GSO CommunicationsMagma Design Automation 549 146 3.4x Synopsys Softw are and IT ServicesHuaw ei Symantec 530 - - Huaw ei Technologies Data SecurityHealthDataInsights 400 - - HMS Holdings Healthcare ITKobo 315 - - Rakuten Digital Media and InternetTri-Star Electronics 285 95 3.0x Carlisle Interconnect Technologies Hardw are and ComponentsmindSHIFT Technologies 167 - - Best Buy Softw are and IT ServicesINX 158 354 0.4x Presidio Data CenterNokia Microw ave Transport 144 - - DragonWave CommunicationsAccu-Sort 135 92 1.5x Datalogic Hardw are and ComponentsNovem ber Private Placem entsCompany Amount Total Funding Round Investor(s) SectorLivingSocial $200 $832 - JPMorgan, T. Row e Price, Digital Media and InternetWhaleShark Media 150 279 - Institutional VP, JPMorgan, Russian Venture Company Digital Media and InternetDriveCam 85 - - Welsh, Carson, Anderson & Stow e Softw are and IT ServicesRapid7 50 59 C TCV Data SecurityMarketo 50 108 F Battery, InterWest, Mayfield Fund, Storm, Institutional VP Softw are and IT ServicesHappiest Minds Technologies 45 - A Canaan Partners, Intel Capital Softw are and IT ServicesFashionandyou 40 50 C Mayfield, NVP, Intel Capital, Nokia Grow th, Sequoia Digital Media and InternetCloudera 40 76 D Accel, Greylock, MeriTech, In-Q-Tel, Ignition Partners Data CenterExactTarget 40 188 - - Digital Media and InternetBeyond the Rack 37 54 - Highland, Rho, BDC, iNovia, Panorama, Tandem Digital Media and InternetZuora 36 78 D Benchmark, Greylock, Redpoint, Index, Shasta, Tenaya Softw are and IT ServicesL18 34 - C Accel, NEA, FirstMark Capital Digital Media and InternetBrightRoll 30 46 D Adams Street, Comerica, Scale, Trident, True Ventures Digital Media and InternetSolaria 30 72 - - SemiconductorsAgriWorld Exchange 23 - - - Digital Media and InternetFixmo 23 31 C Kleiner Perkins, Paladin, iNovia, Horizons Ventures, Panorama Softw are and IT ServicesVirident Systems 21 50 C Globespan, Sequoia, Intel Capital, Artiman, Cisco Inv. Arm Data CenterMedley Health 20 - A Cardinal Partners, Technology Partners, Vivo Ventures Healthcare ITGrupo Assa 20 - - International Finance, HSBC Capital Softw are and IT ServicesNovem ber PIPEs and ConvertiblesCompany Amount LTM Rev. EV / LTM Rev. Investor -- Largest Shareholder(s) SectorTake-Tw o Interactive $220 $958 1.1x ND -- Oppenheimer, BlackRock, Icahn, Glenview , Vanguard Softw are and IT ServicesNetflix 200 2,925 1.2x TCV -- BlackRock, Vanguard, JAT, Morgan Stanley, Sands Digital Media and InternetData Storage Corp. 20 4 5.1x Southridge Partners -- ND Data SecurityTeleCommunications Systems 11 406 0.6x The US Army -- Tocqueville, Dimensional, BlackRock CommunicationsIPOs and Follow -OnsNovember Filings Amount LTM Rev. EV / LTM Rev. After-Market Largest Shareholder(s) SectorBioAmber $150 $1,026 - - Naxamber, Sofinnova, Mitsui, Siclanova Healthcare ITYelp! 100 58 - - Bessemer, Elevation, Benchmark Digital Media and InternetVantiv 100 774 - - Fifth Third, Advent International Financial TechnologyExactTarget 100 187 - - Battery, Greenspring, Scale, TCV, Insight, SAP Softw are and IT ServicesSynacor 75 40 - - Walden, Crystal, Advantage CP, Intel Capital Digital Media and InternetNovember PricingsGroupon $700 $1,291 10.3x 6% NEA, Accel, Maveron Digital Media and InternetAngies List 114 79 11.0x 20% T. Row e Price, Cardinal Equity, Prism, TD Digital Media and InternetIntermolecular 97 53 9.0x (9%) Redpoint, CMEA Capital, USVP, ATMI SemiconductorsImperva 90 72 8.3x 52% Accel, Venrock, USVP, Greylock Data SecurityInvensense 75 130 5.8x 36% Artiman, Partech, Sierra, Qualcomm Hardw are and ComponentsDigital Domain Media 61 120 3.1x (31%) Palm Beach, Oman, ComVest, Mountain Partners Digital Media and InternetNovember Follow -OnsLinkedIn $621 $436 15.7x 3% Sequoia, Greylock, Bain, Bessemer Digital Media and InternetFusion-io 291 245 9.0x (11%) NEA, Lightspeed, SG Gestion, Fidelity Data StorageMoneygram Intl 150 1,229 1.3x 3% TH Lee, Blum, RS Invest., Fidelity, Silver Point Financial TechnologyAllot Communications 78 72 6.4x 24% Brookside, Tamir Fishman, Wells Fargo, Ranger CommunicationsHealthstream 53 78 5.1x 4% T. Row e Price, Essex, BlackRock, Conestoga Healthcare ITIZEA Holdings 29 4 5.9x - MindComet, GRQ Consultants, Sandor Softw are and IT ServicesAugme Technologies 20 4 34.2x (29%) C&H Capital Softw are and IT ServicesExpected PricingsBluestem Brands $160 $560 - - Bain, Battery, Petters, Prudential, Fortress Digital Media and InternetWhiteSmoke 23 11 - - Evolution Venture Funds, Israel Angels, Kreos Softw are and IT ServicesDisclosed M &A and IPOs >=$20M ; private placements, PIPEs and convertible debt offerings >= $5M ; targets & issuers and / or acquirers & investors based in the U.S. and Canada; data based on announcement s made 11/1/11through 11/30/11, except for IPO and follow-on after-market performance data from close of 12/7/11; Sources: Capital IQ, The 451 Group, IPO M onitor, TechCrunch, VentureWire, The Wall Street Journal, DealBook (The New York Times)