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Q2 2013 exit report final Q2 2013 exit report final Presentation Transcript

  • Embedded Specialized Accomplished Digital Media and Software M&A and Private Placement Activity Q2 2013
  • Table of Contents Section I Summary Observations Section II M&A Activity Section III Private Placement Activity Section IV Trends & Outlook Section V Public Company Valuation Metrics 2 Q2 2013 IN REVIEW Digital Media and Software M&A and Private Placement Activity
  • SUMMARY OBSERVATIONS
  • Summary Observations Global Digital Media deal activity has seen another quarter of declines while the Software sector has seen the number of private placements grow Despite a flurry of headlines highlighting large acquisitions made by buyers such as Yahoo! (Tumblr) or Google (Waze), data on global Digital Media and Software M&A and Private Placement activity points to generally lower deal activity relative to last year Global Digital Media and Software M&A has now seen two consecutive quarters of declining deal activity and values ― Digital Media M&A declined quarter-over-quarter in Q2 2013 by 14.2% in terms of number of deals and by 26.6% in terms of median deal value ― Software M&A declined quarter-over-quarter in Q2 2013 by 8.7% in terms of number of deals and by 8.8% in terms of median deal value Global Digital Media Private Placements have also seen two consecutive quarters of declining deal activity and size ― Declined quarter-over-quarter in Q2 2013 by 6.9% in terms of numbers of deals and by 19.5% in terms of median size of round Global Software Private Placements, however, have seen a strong increase in number of deals by 32.3% quarterover-quarter – while at the same time showing a decrease of nearly a third in terms of median round size ― These trends are consistent with what we see as a growing shift in VC interest away from B2C and Consumer Internet investments and toward B2B and Software investments ― Anecdotal evidence points toward very healthy M&A and capital raise advisory activity at investment banks focused on the Software sector Source: Siemer & Associates’ proprietary research database 4 Q2 2013 IN REVIEW Digital Media and Software M&A and Private Placement Activity
  • Summary Observations (cont.) Trends seem to indicate that capital is increasingly flowing into earlier stage startups, with fewer companies making it to pre-IPO rounds; large strategic buyers increasingly opting to acquire at an earlier stage Regarding smaller private placement deal sizes, we believe this is due to a combination of factors: ― Companies requiring less and less capital to start up in today’s environment ― Bifurcation of the market where more capital is flowing into earlier stage startups while fewer and fewer companies desire or make it to the point of being able to raise a large, pre-IPO round ― Trends point toward large strategic buyers increasingly opting to acquire at an earlier stage in a company’s development – both in Media and in Software ― In regards to software, there is a growing trend to see startups grow to $2 - $3 mm in revenue, prove out client adoption and scalability of a desirable point solution or feature, and sell to one of the large strategics at that point before the company becomes “expensive” Channel checks with generalist M&A lawyers and private equity firms indicate that deal flow has been somewhat weaker in Q1 and Q2 2013 relative to last year ― However, early stage tech-focused lawyers and venture capital firms seem to have remained “busy” ― There is a perception that there has been a lot of “market check” exploration by sellers and “sniffing around” by strategic buyers which has not translated into completed deals per se – at least not yet Source: Siemer & Associates’ proprietary research database 5 Q2 2013 IN REVIEW Digital Media and Software M&A and Private Placement Activity
  • M&A ACTIVITY
  • Transaction and Valuation Overview by Sector Global Digital Media M&A activity decreased in Q2 2013 by 14.2% and the median implied EV decreased by 26.6% from Q1 2013. As for global Software M&A, transaction activity decreased by 8.7% while the median implied EV decreased by 8.8% during the same period. Global Digital Media M&A Number of Transactions $15 364 323 300 $11.5 277 $9.4 200 $10 $6.9 $7.2 $5 100 $5.1 0 500 Q3 2012 Q4 2012 Number of Transactions Q1 2013 537 509 502 $15 446 $15.2 400 $12.1 300 407 $10.2 $11.7 $9.3 $10 200 $5 100 $0 Q2 2012 $20 0 Q2 2013 $0 Q2 2012 Median Implied EV Median Implied EV (Disclosed Values in mm USD) 404 401 600 Median Implied EV (Disclosed Values in mm USD) 400 $20 Number of Transactions 500 Global Software M&A Q3 2012 Q4 2012 Number of Transactions Q1 2013 Q2 2013 Median Implied EV Source: Capital IQ and Siemer & Associates’ proprietary research database 7 Q2 2013 IN REVIEW Digital Media and Software M&A and Private Placement Activity
  • M&A Multiples by Sector Both Digital Media and Software EV / Revenue multiples increased during Q2, by 55.6% and 60.0%, respectively. Digital Media EV / EBITDA multiples decreased by 25.9% over the prior quarter, while Software multiples increased by 27.4%. Global Digital Media M&A Global Software M&A 15.0x 15.0x 12.5x 12.2x Median Disclosed Multiples Median Disclosed Multiples 11.0x 10.3x 10.0x 9.2x 8.1x 6.0x 5.0x 10.7x 10.0x 8.5x 8.4x 5.0x 1.4x 1.6x Q2 2012 Q3 2012 2.0x 0.9x 0.0x EV / Revenue Q4 2012 Q1 2013 1.4x 1.4x Q2 2013 1.9x 1.4x 1.0x Q4 2012 Q1 2013 0.0x Q2 2012 EV / EBITDA Q3 2012 EV / Revenue 1.6x Q2 2013 EV / EBITDA Source: Capital IQ and Siemer & Associates’ proprietary research database 8 Q2 2013 IN REVIEW Digital Media and Software M&A and Private Placement Activity
  • Number of M&A Deals by Geographic Location Global M&A across Digital Media and Software decreased 11.1% QoQ, with transaction volume decreasing 11.9% and 5.6% across North America and Europe, respectively. Number of Transactions 600 500 469 400 478 438 413 364 300 290 294 282 223 200 210 133 100 97 117 93 84 42 0 North America Europe Q2 2012 Q3 2012 Asia / Pacific Q4 2012 Q1 2013 41 36 40 26 Other Q2 2013 Source: Capital IQ and Siemer & Associates’ proprietary research database 9 Q2 2013 IN REVIEW Digital Media and Software M&A and Private Placement Activity
  • Number of Q2 2013 M&A Deals by Subsector Q2 2013 deal concentration in Digital Media was led by Internet Media and eCommerce while Productivity Software drove nearly 22.1% of Software M&A activity. Digital Media 12 14 Software 45 87 120 69 119 90 46 18 64 Advertising eCommerce Misc. Software Mobile Gaming Internet Media Networking Software Productivity Software Mobile Web / Domain Hosting Services SaaS Source: Capital IQ and Siemer & Associates’ proprietary research database 10 Q2 2013 IN REVIEW Digital Media and Software M&A and Private Placement Activity
  • Q2 2013 Global M&A Sector Overview & Highlights Sector Deal Metrics Volume: 277 Select Notable Transactions $1.1bn $1.1bn $632.0mm $370.0mm $193.7mm $150.5mm $94.3mm $48.4mm $44.8mm $35.0mm $8.4bn $3.9bn $2.4bn $2.0bn $611.6mm $607.8mm $600.0mm $336.3mm $322.4mm $205.0mm Value: $5.5bn Digital Media Mean EV: $84.6mm Median EV: $6.9mm Volume: 407 Value: $19.8bn Software Mean EV: $240.0mm Median EV: $9.3mm Volume: Includes total number of reported M&A transactions Value: Includes aggregate implied EVs of all reported deals with publicly available information Mean and Median: Includes publicly disclosed M&A implied EVs only 11 Q2 2013 IN REVIEW Digital Media and Software M&A and Private Placement Activity
  • Q2 2013 Leading Acquirers by Sector Digital Media Q2 2013 Acquisitions 2013 YTD Acquisition Total 12 6 6 3 6 3 2 2 5 4 Software Q Q2 2013 Acquisitions 2013 YTD Acquisition Total 5 4 5 3 2 2 2 4 4 4 Source: Capital IQ and Siemer & Associates’ proprietary research database 12 Q2 2013 IN REVIEW Digital Media and Software M&A and Private Placement Activity
  • M&A Deals by Buyer Type Transactions by Strategic vs. Financial Buyers in the Digital Media and Software sectors 1000 51 Number of Transactions 800 42 51 852 859 862 39 730 600 30 615 400 200 0 Q2 2012 Q3 2012 Q4 2012 Strategic Buyer Q1 2013 Q2 2013 Financial Buyer Note: Includes total number of reported M&A transactions Source: Capital IQ and Siemer & Associates’ proprietary research database 13 Q2 2013 IN REVIEW Digital Media and Software M&A and Private Placement Activity
  • PRIVATE PLACEMENT ACTIVITY
  • Private Placement Overview and Valuation by Sector Global Digital Media Private Placement (PP) activity decreased in Q2 2013 by 6.9% and the median implied investment size decreased by 19.5% over Q1 2013. As for Software, transaction activity increased by 32.3% while the median implied investment size decreased by 32.8% during the same period. Global Digital Media Private Placement 1,400 Global Software Private Placement $10 700 $10 $9.7 Number of Transactions 1,096 $6 859 $6.2 800 600 $4.7 $4 $4.1 400 $3.3 $2 200 0 $8 Q3 2012 Q4 2012 Number of Transactions Q1 2013 500 400 $6.0 452 418 $6.4 470 423 $6 $5.8 300 $4 $3.9 200 $2 100 $0 Q2 2012 622 0 Q2 2013 $0 Q2 2012 Median Investment Q3 2012 Q4 2012 Number of Transactions Q1 2013 Median Implied Investment (Disclosed Values in mm USD) $8 600 Median Implied Investment (Disclosed Values in mm USD) 1,202 1,000 800 1,280 Number of Transactions $9.9 1,200 Q2 2013 Median Investment Source: Capital IQ and Siemer & Associates’ proprietary research database 15 Q2 2013 IN REVIEW Digital Media and Software M&A and Private Placement Activity
  • Number of Private Placement Deals by Geographic Location Global PP across Digital Media and Software increased 7.0% QoQ, with transaction volume increasing 1.8% in North America and 14.1% in Europe. Number of Transactions 1,200 1,000 1066 949 800 982 835 850 600 447 400 352 325 284 200 324 173 176 191 145 159 63 0 North America Europe Q2 2012 Q3 2012 Asia / Pacific Q4 2012 Q1 2013 64 83 65 89 Other Q2 2013 Source: Capital IQ and Siemer & Associates’ proprietary research database 16 Q2 2013 IN REVIEW Digital Media and Software M&A and Private Placement Activity
  • Number of Q2 2013 Private Placement Deals by Subsector Q2 2013 PP activity in Digital Media was largely led by Internet Media, while Software-as-a-Service investments drove over 28.8% of Software PP activity. Digital Media 96 13 Software 85 179 194 167 49 390 98 98 53 Advertising eCommerce Gaming Internet Media Mobile Web / Domain Hosting Services Misc. Software Mobile Networking Software Productivity Software SaaS Source: Capital IQ and Siemer & Associates’ proprietary research database 17 Q2 2013 IN REVIEW Digital Media and Software M&A and Private Placement Activity
  • Q2 2013 Global Private Placement Overview & Highlights Sector Deal Metrics Volume: 800 Select Notable Investments $250.0mm $170.0mm $130.8mm $130.0mm $100.0mm $100.0mm $83.2mm $68.0mm $64.4mm $60.0mm $60.0mm $225.0mm $105.1mm $100.0mm $70.0mm $50.0mm $50.0mm $50.0mm $45.0mm $45.0mm $38.0mm Value: $3.5bn Digital Media Mean Size: $5.7mm Median Size: $3.3mm Volume: 622 Value: $3.1bn Software Mean Size: $5.4mm Median Size: $3.9mm Volume: Includes total number of reported PP transactions Value: Includes aggregate implied Investments of all reported deals with publicly available information Mean and Median: Includes publicly disclosed Private Placement investments only 18 Q2 2013 IN REVIEW Digital Media and Software M&A and Private Placement Activity
  • Q2 2013 Private Placement Deals by Investor Type Investments by Strategic vs. Financial Investors in the Digital Media and Software sectors 1200 101 99 80 Number of Transactions 1000 913 902 43 72 731 720 82 81 Q1 2013 Q2 2013 780 800 600 400 200 104 116 Q2 2012 0 86 Q3 2012 Q4 2012 Strategic Investor Financial Investor Combination Note: Includes total number of reported PP transactions with buyer information Source: Capital IQ and Siemer & Associates’ proprietary research database 19 Q2 2013 IN REVIEW Digital Media and Software M&A and Private Placement Activity
  • TRENDS & OUTLOOK
  • Q2 2013 Features & Trends Software Digital Media Compared to the first half of 2012, the number of M&A deals for B2C online media and technology dropped slightly by 10.0% Cloud computing and the ability to leverage big data in the cloud continues to be a big driver of Software M&A activity The decline in overall M&A activity in Q2 2013 has been masked by headline deals such as Yahoo!/Tumblr and Google/Waze Salesforce.com’s $2.4bn acquisition of ExactTarget combines two leading software companies, bolstering Salesforce.com’s Marketing Cloud platform with marketing automation and email marketing capabilities Yahoo!’s $1.1bn acquisition of Tumblr connects the Internet giant to large online communities by targeting the younger generation of digital media users IBM’s acquisition of cloud computing infrastructure provider SoftLayer Technologies diversifies IBM’s cloud offerings for enterprise planning Google’s $1.1bn acquisition of Waze allows for the integration of social navigation in Google’s product offerings while solidifying its position as a global leader in the mobile mapping sector Service Link’s acquisition of Lender Processing Services Inc. (LPS) expands Service Link’s ability to offer mortgage analysis services through integrated support and solutions, indicative of how certain service providers are repositioning themselves as technology platforms Alibaba Group’s $586.0mm acquisition of an 18.0% stake in Weibo gives it entrance into the social media scene and access to the microblogging platform’s data Source: Capital IQ and Siemer & Associates’ proprietary research database 21 Q2 2013 IN REVIEW Digital Media and Software M&A and Private Placement Activity
  • M&A and Private Placement Outlook Due to a rising public equity market and higher domestic growth rates, strategic buyers are actively seeking acquisitions that provide access to supplementary revenue streams Deal activity in Q2 2013 was primarily driven by small transactions in which companies looked to acquire talent and bolt-on technologies to grow their existing businesses ― Strategic acquirers continue to look for targets with complimentary technologies, access to data and / or tools or content platforms For the remainder of 2013, deal flow across the Digital Media and Software sectors is expected to increase as buyers tap into large amounts of accumulated cash to acquire new products or talent ― In the Digital Media sector, early stage investments in new platforms and technologies continue to be a major theme and M&A activity continues to skew toward the lower to middle market as large consolidators such as Google, Yahoo! and Facebook seek to acquire companies at an earlier stage ― Mobile Technologies and Digital Advertising are expected to continue to lead activity in Digital Media as traditional media firms begin to adapt to new distribution and monetization models ― In the Software sector, demand for cloud-based networks and infrastructure is continuing to drive innovation and M&A activity through the remainder of 2013 VC and PE investors continue to seek out large market opportunities in Big Data and Mobile ― Q2 2013’s largest software private placement: AirWatch’s $225.0mm financing, demonstrates rising investor confidence in the growth of mobile Source: Siemer & Associates’ proprietary research database 22 Q2 2013 IN REVIEW Digital Media and Software M&A and Private Placement Activity
  • PUBLIC COMPANY VALUATION METRICS
  • Public Company Valuation Metrics (figures in millions of $USD, except per share) Online Advertising 1000mercis ad pepper media International N.V. Digital Generation, Inc. Hi-Media S.A. Local Corporation Marchex, Inc. ReachLocal, Inc. Sedo Holding AG Septeni Holdings Co., Ltd. TradeDoubler AB Tremor Video, Inc. ValueClick, Inc. Weborama YuMe, Inc. Share Price as of 6/28/2013 $57.46 1.10 7.37 2.17 1.68 6.02 12.26 2.60 1,132.55 2.54 9.00 24.71 16.89 0.00 Mean Median Market Cap (mm) $179.0 23.5 204.7 96.8 38.4 225.9 348.4 79.2 142.8 108.3 444.8 1,883.2 58.9 0.0 EV / LTM EV / CY 2013E Enterprise Value (EV) $135.3 10.3 560.5 123.3 44.4 208.8 260.2 69.5 100.3 86.0 419.3 1,834.1 56.0 0.0 Revenue 2.9x 0.1x 1.5x 0.5x 0.5x 1.5x 0.5x 0.4x 0.2x 0.3x 3.7x 2.7x 1.6x 0.0x EBITDA 8.3x NM 5.6x 7.6x NM NM 28.3x 13.0x 5.4x 32.5x NM 8.7x 12.2x 0.0x Revenue NA NA 1.7x NA 0.4x 1.4x 0.4x NA NA NA NA NA NA NA EBITDA NA NA 5.4x NA 4.5x 16.1x 6.7x NA NA NA NA NA NA NA LTM Annual Revenue Growth 4.0% -3.1% 9.1% -15.3% 9.2% -9.2% 19.7% 7.3% 15.9% -15.6% 0.0% 21.7% 9.8% 0.0% $279.1 $111.8 1.2x 0.5x 12.1x 8.5x 1.0x 0.9x 8.2x 6.0x 3.8% 5.7% Source: Capital IQ 24 Q2 2013 IN REVIEW Digital Media and Software M&A and Private Placement Activity
  • Public Company Valuation Metrics (figures in millions of $USD, except per share) Online Media & Search Angie's List, Inc. AOL Inc. Apple Inc. Baidu, Inc. Demand Media, Inc. Google Inc. IAC/InterActiveCorp Jiayuan.com International Ltd. LinkedIn Corporation Microsoft Corporation Naspers Ltd. NetEase, Inc. OpenTable, Inc. Pandora Media, Inc. Renren Inc. SINA Corporation Sohu.com Inc. Tencent Holdings Ltd. Tomorrow Focus AG TheStreet, Inc. WebMD Health Corp. Yandex N.V. Yahoo Japan Corporation Yahoo! Inc. Share Price as of 6/28/2013 $26.56 36.48 396.53 94.60 6.00 880.37 47.58 5.20 178.30 34.55 73.52 63.17 63.95 18.40 2.99 55.73 61.62 39.22 4.98 1.86 29.37 27.65 492.72 25.13 Mean Median Market Cap (mm) $1,543.2 2,825.4 372,202.5 33,083.3 519.7 292,076.9 3,983.4 156.1 19,677.9 288,489.0 28,986.8 8,202.1 1,457.0 3,216.4 1,132.6 3,720.2 2,356.5 71,865.5 290.3 63.0 1,441.9 9,096.4 28,333.4 27,206.6 Enterprise Value (EV) $1,495.2 2,473.0 333,065.5 29,752.9 410.3 249,354.9 3,993.1 66.4 18,847.6 229,466.0 30,644.6 5,729.2 1,360.4 3,140.9 278.1 3,045.8 1,998.7 68,768.0 290.3 16.2 1,242.7 8,747.9 23,544.2 24,275.5 $43,417.0 $3,567.0 EV / LTM Revenue EBITDA 8.5x NM 1.1x 5.1x 2.0x 5.8x 7.7x 14.7x 1.0x 5.8x 4.7x 14.8x 1.4x 9.3x 0.9x 5.8x 17.0x NM 3.0x 7.6x 6.1x 22.6x 4.2x 9.0x 8.1x 27.8x 6.7x NM 1.5x NM 5.5x NM 1.7x 5.4x 8.9x 23.1x 1.4x 15.9x 0.3x NM 2.6x 30.9x 8.8x 20.1x 6.8x 11.7x 4.9x 11.8x 4.8x 4.5x 13.7x 11.8x EV / CY 2013E Revenue EBITDA 4.4x NM 1.1x 5.5x 2.0x 6.3x 5.7x 13.0x 1.0x 3.9x 3.8x 10.0x 1.2x 5.8x 1.0x 5.8x 9.9x NM 0.0x 6.1x NA NA 3.5x 6.9x 6.1x 13.2x 3.5x NM 1.1x NM 4.7x 24.2x 1.4x 5.1x NA NA NA NA NA NA 2.4x 10.2x 6.6x 14.7x NA NA 6.0x 16.5x 3.4x 3.5x 9.8x 6.9x LTM Annual Revenue Growth 70.9% 0.9% 18.8% 47.1% 19.1% 33.8% 29.6% 24.2% 79.8% 4.1% 27.3% 8.1% 15.6% 55.2% 47.2% 12.3% 27.0% 50.3% 16.0% -10.6% -10.9% 40.3% 13.5% -1.7% 25.7% 21.6% Source: Capital IQ 25 Q2 2013 IN REVIEW Digital Media and Software M&A and Private Placement Activity
  • Public Company Valuation Metrics (figures in millions of $USD, except per share) Online Gaming Activision Blizzard, Inc. Changyou.com Limited Electronic Arts Inc. Funcom N.V. GameLoft SA Gravity Co., Ltd Konami Corp. Majesco Entertainment Co. Take-Two Interactive Software Inc. The9 Limited Ubisoft Entertainment SA Zynga, Inc. Share Price as of 6/28/2013 $14.26 30.44 22.99 0.32 6.99 1.17 21.21 0.57 14.97 3.73 13.08 2.78 Mean Median Market Cap (mm) $15,936.1 1,613.8 7,036.9 21.1 556.2 32.5 2,940.1 23.8 1,379.8 91.3 1,251.9 2,207.0 EV / LTM EV / CY 2013E Enterprise Value (EV) 11,318.1 1,494.6 5,915.9 34.5 483.9 -13.7 2,651.4 -1.7 1,312.5 -3.6 1,109.5 1,038.3 Revenue 2.3x 2.3x 1.6x 1.3x 1.8x NM 1.2x NM 1.1x NM 0.7x 0.8x EBITDA 6.8x 3.6x 18.2x NM 11.5x NM 8.1x NM NM NM 1.8x 7.2x Revenue 2.7x 2.4x 1.7x NA NA NA 1.2x NA 0.0x NA NA 1.6x EBITDA 7.4x 4.4x 9.8x NA NA NA 6.4x NA 7.4x NA NA 11.7x LTM Annual Revenue Growth 11.8% 28.6% -8.4% 91.7% 26.7% -5.5% -15.0% -51.2% 47.1% 45.2% 18.4% 0.5% $2,111.6 $1,073.9 1.4x 1.3x 8.2x 7.2x 1.6x 1.6x 7.8x 7.4x 15.8% 15.1% Source: Capital IQ 26 Q2 2013 IN REVIEW Digital Media and Software M&A and Private Placement Activity
  • Public Company Valuation Metrics (figures in millions of $USD, except per share) eCommerce 1-800-Flowers.com Inc. Amazon.com Inc. Blue Nile Inc. eBay Inc. Expedia Inc. Groupon, Inc. HomeAway, Inc. Mercadolibre, Inc. Netflix, Inc. Overstock.com Inc. priceline.com Incorporated Rakuten, Inc. Stamps.com Inc. Shutterfly, Inc. Vistaprint N.V. Share Price as of 6/28/2013 $6.19 277.69 37.78 51.72 60.15 8.55 32.34 107.76 211.09 28.20 826.67 11.82 39.39 55.91 49.37 Mean Median Market Cap (mm) $395.2 126,416.4 468.2 67,121.7 8,128.8 5,656.3 2,746.9 4,757.9 12,337.3 666.9 42,639.6 15,552.4 608.5 2,123.0 1,611.6 EV / LTM EV / CY 2013E Enterprise Value (EV) $396.2 121,561.4 428.4 62,235.7 7,755.2 4,488.3 2,432.5 4,564.4 12,011.4 585.0 39,111.1 15,766.4 561.3 1,958.6 1,798.8 Revenue 0.5x 1.9x 1.0x 4.3x 1.8x 1.9x 8.2x 11.6x 3.2x 0.5x 7.1x 3.4x 4.7x 2.9x 1.6x EBITDA 8.8x NM 29.6x 14.4x 12.2x 32.6x NM 31.9x NM 18.1x 19.7x 14.6x 19.1x 23.5x 16.8x Revenue 0.5x 1.4x 0.8x 3.3x 1.5x 1.6x 5.8x 7.9x 2.7x 0.5x 5.3x NA 4.0x 2.1x 1.4x EBITDA 7.2x 19.8x 14.1x 9.7x 7.9x 12.7x 19.0x 21.6x 26.3x 14.3x 14.0x NA 14.7x 10.5x 10.2x LTM Annual Revenue Growth 3.8% 24.5% 18.0% 17.4% 19.5% 26.8% 22.0% 22.2% 12.1% 9.3% 20.6% 16.9% 11.6% 31.3% 16.3% $18,377.0 $4,488.3 3.6x 2.9x 20.1x 18.6x 2.8x 1.9x 14.4x 14.0x 18.1% 18.0% Source: Capital IQ 27 Q2 2013 IN REVIEW Digital Media and Software M&A and Private Placement Activity
  • Public Company Valuation Metrics (figures in millions of $USD, except per share) Direct Marketing / Lead Gen Bankrate, Inc. eHealth, Inc. Harte-Hanks Inc. Market Leader, Inc. Moneysupermarket.com Group PLC Move, Inc. QuinStreet, Inc. Tree.Com, Inc. Trulia, Inc. Zillow, Inc. Share Price as of 6/28/2013 $14.36 22.72 8.60 10.70 2.91 12.82 8.63 17.14 31.09 56.30 Market Cap (mm) $1,436.7 442.3 537.0 289.1 1,577.2 511.1 370.0 192.8 1,002.0 1,944.1 Mean Median (figures in millions of $USD, except per share) Content Delivery Networks Akamai Technologies, Inc. Aruba Networks, Inc. Brightcove, Inc. Limelight Networks, Inc. NeuLion Incorporated RealNetworks Inc. Rovi Corporation Share Price as of 6/28/2013 $42.55 15.36 8.76 2.25 0.49 7.56 22.84 Mean Median Enterprise Value (EV) $1,541.5 328.7 583.2 267.1 1,548.8 480.9 353.6 119.5 797.6 1,765.1 $778.6 $532.0 Market Cap (mm) $7,561.1 1,753.6 246.3 216.3 81.0 267.8 2,300.7 Enterprise Value (EV) $7,048.1 1,312.7 219.4 97.8 81.1 7.2 2,949.0 $1,673.6 $219.4 EV / LTM Revenue EBITDA 3.5x 14.7x 2.0x 15.5x 0.8x 6.9x 5.6x NM 5.0x 14.1x 2.3x 28.5x 1.1x 9.3x 1.3x NM 10.0x NM 13.3x NM 4.5x 2.9x 14.8x 14.4x EV / LTM Revenue EBITDA 5.0x 13.5x 2.2x NM 2.4x NM 0.5x NM 2.1x NM NA NM 4.7x 13.6x 2.8x 2.3x 13.6x 13.6x EV / CY 2013E Revenue EBITDA 3.3x 12.3x 1.8x 9.4x 0.8x 6.8x 3.9x 18.4x NA NA 2.0x 11.3x 1.3x 9.1x 1.1x 5.8x 6.5x 30.8x 9.1x NM 3.3x 2.0x 13.0x 10.3x EV / CY 2013E Revenue EBITDA 4.3x 10.0x 2.3x 11.7x 2.1x 38.1x 0.4x 21.5x NA NA NA NA 3.8x 8.1x 2.6x 2.3x 17.9x 11.7x LTM Annual Revenue Growth -2.1% 6.9% -4.7% 29.1% 13.1% 8.1% -16.8% 71.1% 87.8% 71.3% 26.4% 10.6% LTM Annual Revenue Growth 18.3% 19.3% 31.7% 4.3% 1.1% -21.1% -9.1% 6.4% 4.3% Source: Capital IQ 28 Q2 2013 IN REVIEW Digital Media and Software M&A and Private Placement Activity
  • Public Company Valuation Metrics (figures in millions of $USD, except per share) Mobile Content Acotel Group SpA Aspiro AB Com2uS Corporation DADA SpA DeNA Co., Ltd. GameLoft SA Glu Mobile, Inc. Gree, Inc. Index Corporation Kongzhong Corp. Mandalay Digital Group, Inc Smith Micro Software Inc. SNAP Interactive, Inc. Tencent Holdings Ltd. Tose Co.,Ltd. Share Price as of 6/28/2013 $22.42 0.13 29.12 5.07 19.63 6.99 2.21 8.87 2.42 6.50 4.45 1.06 0.51 39.22 6.43 Mean Median Market Cap (mm) $92.2 43.4 282.4 82.2 2,633.3 556.2 151.3 2,070.0 9.5 272.7 90.0 39.5 19.9 71,865.5 47.6 Enterprise Value (EV) $59.7 29.7 250.9 118.1 1,999.3 483.9 130.1 1,918.9 196.4 142.8 92.9 11.2 15.7 68,768.0 22.0 4,949.3 130.1 EV / LTM Revenue EBITDA 0.4x NM 0.7x NM 3.2x 12.2x 1.1x 10.6x 1.0x 2.4x 1.8x 11.5x 1.5x NM 1.2x 3.0x 1.2x 18.8x 0.8x 4.6x 16.3x NM 0.3x NM 0.9x NM 8.9x 23.1x 0.4x 5.1x 2.7x 1.1x 10.2x 10.6x EV / CY 2013E Revenue EBITDA NA NA NA NA NA NA NA NA NA NA NA NA 1.3x 234.6x NA NA NA NA NA NA 1.5x 7.7x 0.3x NM 1.1x 11.9x NA NA NA NA 1.0x 1.2x 84.8x 11.9x LTM Annual Revenue Growth -4.2% 12.5% 125.5% 2.6% 38.9% 26.7% 26.4% 11.5% -9.9% 15.6% -16.7% -10.5% -19.8% 50.3% 1.5% 16.7% 11.5% Source: Capital IQ 29 Q2 2013 IN REVIEW Digital Media and Software M&A and Private Placement Activity
  • Public Company Valuation Metrics (figures in millions of $USD, except per share) Mobile Advertising Augme Technologies, Inc. Millennial Media Inc. Voltari Corporation Velti Plc Share Price as of 6/28/2013 $0.40 8.71 3.56 1.40 Market Cap (mm) $51.8 692.8 16.7 127.0 Mean Median (figures in millions of $USD, except per share) Web / Domain Hosting ASG Group Limited Melbourne IT Ltd. Newtek Business Services Inc. NeuStar, Inc. Tucows Inc. United Online, Inc. VeriSign, Inc. Web.com Group, Inc. Share Price as of 6/28/2013 $0.31 2.00 2.11 48.68 1.86 7.58 44.66 25.60 Mean Median Enterprise Value (EV) $47.5 559.3 12.9 157.9 $194.4 $102.7 Market Cap (mm) $63.4 164.7 78.0 3,203.2 74.9 701.2 6,732.3 1,220.0 EV / LTM Revenue EBITDA 1.8x NM 2.9x NM 0.2x 0.8x 0.6x NM 1.4x 1.2x 0.8x 0.8x EV / LTM EV / CY 2013E Revenue EBITDA 1.1x NM 1.6x 13.9x NA NA 0.5x 7.4x 1.1x 1.1x 10.7x 10.7x EV / CY 2013E LTM Annual Revenue Growth 70.6% 68.7% -11.0% 22.8% 37.8% 45.7% Enterprise Value (EV) $102.0 179.6 149.6 3,448.7 78.7 813.0 5,876.0 1,906.1 Revenue 0.7x 1.2x 1.1x 4.1x 0.7x 0.9x 6.5x 4.4x EBITDA 9.6x 8.4x 8.3x 9.1x 12.3x 8.7x 10.7x 27.8x NM Revenue NA NA NA 3.7x 0.6x 1.0x 5.9x 3.4x EBITDA NA NA NA 7.5x 6.3x 7.3x 9.1x 11.3x LTM Annual Revenue Growth -3.4% -5.1% 11.3% 25.9% 14.8% -2.5% 13.6% 71.8% $1,569.2 $496.3 2.4x 1.1x 11.9x 9.3x 2.9x 3.4x 8.3x 7.5x 15.8% 12.4% Source: Capital IQ 30 Q2 2013 IN REVIEW Digital Media and Software M&A and Private Placement Activity
  • Public Company Valuation Metrics (figures in millions of $USD, except per share) General Software AVG Technologies N.V. BMC Software Inc. CA Technologies International Business Machines Corp. Jive Software, Inc. Oracle Corporation Rainmaker Systems Inc. Red Hat, Inc. SAP AG The Active Network, Inc. Qihoo 360 Technology Co. Ltd. Share Price as of 6/28/2013 $19.45 45.13 28.62 191.11 18.17 30.71 0.39 47.82 73.04 7.57 46.17 Mean Median Market Cap (mm) $1,051.2 6,383.8 12,962.7 211,901.6 1,210.8 142,212.1 10.5 9,052.0 87,098.9 466.9 5,668.4 Enterprise Value (EV) $1,065.6 6,214.4 11,601.7 233,362.6 1,077.2 128,987.1 9.8 8,198.4 87,677.4 364.4 5,367.4 $43,993.3 $6,214.4 EV / LTM Revenue EBITDA 2.8x 9.0x 2.8x 10.2x 2.5x 6.9x 2.3x 8.8x 8.8x NM 3.5x 7.4x 0.4x NM 6.0x 29.6x 4.1x 12.1x 0.8x 33.1x 14.5x NM 4.4x 2.8x 14.6x 9.6x EV / CY 2013E Revenue EBITDA 2.5x 7.7x 2.7x 7.2x 2.7x 7.6x 2.3x 8.2x 5.2x NM 3.4x 6.9x NA NA 5.1x 17.6x 3.6x 10.0x 0.8x 6.6x 8.3x 25.4x 3.7x 3.1x 10.8x 7.7x LTM Annual Revenue Growth 28.2% 1.4% -3.6% -3.5% 41.2% 0.2% -12.7% 16.4% 13.2% 19.9% 72.6% 15.7% 13.2% Source: Capital IQ 31 Q2 2013 IN REVIEW Digital Media and Software M&A and Private Placement Activity
  • Public Company Valuation Metrics (figures in millions of $USD, except per share) On-Demand Software Concur Technologies, Inc. Constant Contact, Inc. Dealertrack Technologies, Inc. ExactTarget, Inc. LogMeIn, Inc. NetSuite Inc. RealPage, Inc. Responsys, Inc. Salesforce.com, Inc The Ultimate Software Group, Inc. Vocus Inc. Share Price as of 6/28/2013 $81.38 16.07 35.43 33.72 24.46 91.74 18.34 14.31 38.18 117.29 10.52 Market Cap (mm) $4,543.5 493.5 1,540.8 2,348.5 594.7 6,768.8 1,404.8 706.4 22,523.7 3,242.6 221.9 Mean Median Share Price as of Ad Agency 6/28/2013 The Interpublic Group of Companies, Inc. $14.55 Omnicom Group Inc. 62.87 Publicis Groupe SA 71.11 WPP plc 17.05 (figures in millions of $USD, except per share) Mean Median Enterprise Value (EV) $4,335.3 396.2 1,534.2 2,247.5 389.5 6,592.1 1,382.0 601.1 22,118.3 3,174.2 259.3 $3,911.8 $1,534.2 Market Cap (mm) $6,233.2 16,257.2 14,933.7 23,571.4 Enterprise Value (EV) $7,305.2 19,301.7 14,728.3 28,238.6 $17,393.4 $17,015.0 EV / LTM Revenue EBITDA 9.0x NM 1.5x 20.8x 3.8x 26.4x 7.1x NM 2.7x NM 19.9x NM 4.1x 25.7x 3.5x 30.9x 6.8x NM 9.0x NM 1.4x NM 6.3x 4.1x 25.9x 26.0x EV / LTM Revenue EBITDA 1.0x 8.8x 1.3x 9.3x 1.7x 8.7x 1.8x 10.2x 1.5x 1.5x 9.3x 9.0x EV / CY 2013E Revenue EBITDA 6.7x 29.7x 1.4x 8.0x 3.1x 12.0x 4.9x NM 2.7x 11.3x 13.1x NM 3.3x 13.3x 2.5x 16.7x 4.8x 29.3x 7.1x 0.0x 1.2x 9.6x 4.6x 3.3x 14.4x 12.0x EV / CY 2013E Revenue EBITDA 1.1x 7.9x 1.3x 8.8x NA NA 1.6x 9.3x 1.3x 1.3x 8.7x 8.8x LTM Annual Revenue Growth 22.3% 16.1% 10.5% 39.4% 14.8% 31.3% 22.5% 21.3% 32.1% 24.4% 48.4% 25.7% 22.5% LTM Annual Revenue Growth -0.8% 2.0% 12.2% 3.5% 4.2% 2.8% Source: Capital IQ 32 Q2 2013 IN REVIEW Digital Media and Software M&A and Private Placement Activity
  • Public Company Valuation Metrics Share Price as of Telecom 6/28/2013 Alcatel-Lucent, S.A. $1.82 AT&T, Inc. 35.40 BCE, Inc. 40.92 BT Group plc 4.70 CenturyLink, Inc. 35.35 China Telecom Corp. Ltd. 0.48 Deutsche Telekom AG 11.62 IDT Corporation 18.69 KDDI Corporation 51.99 Level 3 Communications, Inc. 21.08 Nippon Telegraph and Telephone Corp. 51.79 Orange 9.45 Tata Communications Limited 2.64 Telefónica, S.A. 12.80 Verizon Communications Inc. 50.34 (figures in millions of $USD, except per share) Mean Median Market Cap (mm) $4,142.4 190,452.0 31,746.6 37,039.1 21,529.8 38,608.2 49,977.1 428.0 39,744.4 4,667.8 61,391.8 24,824.1 753.3 58,785.2 144,022.7 EV / LTM EV / CY 2013E Enterprise Value (EV) $5,685.5 261,832.0 51,159.1 51,300.0 41,841.8 49,566.9 106,280.0 294.4 49,275.3 12,648.8 115,423.6 68,686.3 2,567.3 140,118.9 245,046.7 Revenue 0.3x 2.1x 2.7x 1.9x 2.3x 1.1x 1.4x 0.2x 1.3x 2.0x 1.1x 1.2x 0.9x 1.7x 2.1x EBITDA 7.0x 8.9x 6.7x 6.3x 5.5x 4.3x 5.3x 10.7x 5.2x 8.8x 3.7x 4.4x 8.2x 5.3x 7.7x Revenue 0.3x 2.0x 2.6x 2.0x 2.3x 0.9x NA 0.2x NA 1.9x 1.1x 1.3x NA 1.9x 2.0x EBITDA 4.2x 6.0x 6.4x 5.8x 5.7x 3.0x NA NA NA 7.3x 3.7x 4.3x NA 5.6x 5.5x LTM Annual Revenue Growth -2.8% -0.3% 0.2% -4.7% 0.1% 15.2% -1.7% 7.5% 2.5% 27.2% 1.8% -3.9% 21.3% -2.4% 4.4% $80,115.1 $51,159.1 1.5x 1.4x 6.5x 6.3x 1.5x 1.9x 5.2x 5.6x 4.3% 0.2% Source: Capital IQ 33 Q2 2013 IN REVIEW Digital Media and Software M&A and Private Placement Activity
  • Public Company Valuation Metrics (figures in millions of $USD, except per share) VoIP 8x8 Inc. Aruba Networks, Inc. AudioCodes Ltd. BroadSoft, Inc. Cbeyond, Inc. F5 Networks, Inc. magicJack VocalTec Ltd. Sonus Networks, Inc. Synchronoss Technologies, Inc. Vonage Holdings Corporation Windstream Corporation Share Price as of 6/28/2013 $8.24 15.36 4.43 27.60 7.84 68.80 14.19 3.01 30.87 2.83 7.71 Mean Median Market Cap (mm) $594.4 1,753.6 168.5 772.9 238.2 5,421.4 263.3 849.5 1,184.7 600.0 4,570.2 Enterprise Value (EV) $542.2 1,312.7 144.8 694.2 225.4 4,898.5 217.4 626.7 1,127.4 573.3 13,627.3 $2,180.9 $626.7 EV / LTM Revenue EBITDA 5.0x NM 2.2x NM 1.1x NM 4.2x 30.3x 0.5x 2.7x 3.4x 10.6x 1.4x 3.8x 2.5x NM 3.9x 18.0x 0.7x 4.6x 2.2x 6.0x 2.5x 2.2x 10.9x 6.0x EV / CY 2013E Revenue EBITDA 4.4x 22.3x 2.2x 11.3x 1.0x NA 3.7x 14.5x 0.5x 3.1x 3.8x 9.3x 1.4x 3.9x 2.8x NA 2.7x 8.1x 0.8x 5.2x 2.3x 5.9x 2.3x 2.3x 9.3x 8.1x LTM Annual Revenue Growth 25.4% 19.3% -13.4% 13.2% -1.3% 12.9% 33.7% -1.4% 19.4% -2.8% 27.6% 12.1% 13.2% Source: Capital IQ 34 Q2 2013 IN REVIEW Digital Media and Software M&A and Private Placement Activity
  • LTM Subsector Relative Performance as of 6/28/2013 eCommerce, Ad Agencies and Web / Domain Hosting companies aggressively outperformed major indices Subsector Relative Performance as of 6/28/2013 Direct Marketing / Lead Gen 3-Months 6-Months 1-Year 13.4% 38.5% 6.7% Mobile Content 18.1% 11.0% 22.2% Online Advertising -4.2% 17.3% 10.2% On-Demand Software 10.9% 8.9% 12.6% General Software Telecom Online Gaming -5.0% -3.3% -2.3% 0.2% 7.0% 8.3% Web / Domain Online Media eCommerce Hosting & Search 12.6% 34.2% -11.5% 8.5% 15.2% 34.6% 8.2% 21.6% 23.7% 11.7% 10.4% -5.7% VoIP Content Delivery Networks Mobile Advertising Ad Agency -3.4% -13.8% -34.6% 9.8% 8.0% -7.7% 25.3% -35.0% -71.3% 9.1% 22.2% 25.1% eCommerce (34.6%) 40.00% Ad Agency (25.1%) Web / Domain Hosting (23.7%) 20.00% Mobile Content (22.2%) S&P 500 Index (13.2%) On-Demand Software (12.6%) 0.00% Dow Jones Industrial Average (12.4%) Online Advertising (10.2%) -20.00% NASDAQ Composite Index (9.1%) Telecom (8.3%) -40.00% Direct Marketing / Lead Gen (6.7%) General Software (-2.3%) -60.00% Online Media & Search (-5.7%) Content Delivery Networks (-7.7%) Online Gaming (-11.5%) -80.00% VoIP (-34.6%) Mobile Advertising (-71.3%) -100.00% Source: Capital IQ and Siemer & Associates’ proprietary research database 35 Q2 2013 IN REVIEW Digital Media and Software M&A and Private Placement Activity
  • Hong Kong Los Angeles Singapore Siemer & Associates, LLC ● Member FINRA/SIPC ● www.siemer.com 1333 2nd Street, Suite 600 Santa Monica, CA 90401 Phone: (310) 861-2100 Fax: (310) 861-2125 www.siemer.com 36 Q2 2013 IN REVIEW Digital Media and Software M&A and Private Placement Activity