How to Win in
Tech M&A
in 2014
A Brief US M&A Overview

November, 2013


GroupArgent / Results Argent Current M&A
Our transactions span the globe. Below is a representation of current M&A
engagem...
Much has Changed in 10 years...
MOBILE:
Smartphone
sales beat PC
sales for the
first time ever

Within the past 10 years, ...
…and Markets are Back on The Rise
As the S&P and Nasdaq have reached 10-year highs, the IPO market has responded, with
201...
Top Tech IPOs Raised $21bn+ Since 2012
1

May – 2012
$16bn raised @ $38/sh

2

Nov – 2013
$1.8bn raised @ $26/sh

3

Oct –...
Tech M&A Market is Back Open for Business
Tech M&A has seen a steady increase throughout 2013, with a significant boost in...
Multiples Are Up
Software companies continue to receive the highest multiples in 2013, while Hardware /
Networking, Intern...
Top 2013 US Target / US Acquirer Deals
The average multiple for the top 10 deals in which a US target is acquired by a US
...
Top 2013 US Target / European Acq. Deals
Meanwhile, US targets acquired by European companies have a higher revenue multip...
Top Active Acquirers Have Changed…
While the software subsector may have the greatest deal volume, consumer-facing
compani...
…Leading to New Kids On The Block…
There are new names in the top M&A acquirers of 2013, ranging across subsectors

After ...
…And Continuing the Acqui-Hire Trend
The most powerful people in tech are hiring their next wave of innovators by acquirin...
How to Win in M&A in 2014: Blunt Advice
1

Embrace Timing
Know when your exit is available and when the valuation
is right...
About Our Firm
We are the leading advisor to companies seeking to build and realize value in the global
marketing, technol...
Our Global Team
Our international presence consists of ten offices throughout Europe, North America,
Latin America, Asia-P...
Thank You

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How to Win in Tech M&A in 2014

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A brief US M&A overview presented by GroupArgent and ResultsArgent, highlighting that the M&A window is open for business and providing the four "must-hear" pieces of advice for tech companies looking to exit.

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How to Win in Tech M&A in 2014

  1. 1. How to Win in Tech M&A in 2014 A Brief US M&A Overview November, 2013 
  2. 2. GroupArgent / Results Argent Current M&A Our transactions span the globe. Below is a representation of current M&A engagements, many of which are cross-border Eastern Europe Western Europe North America Middle East & North Africa South America Asia Sub-Saharan Africa Australia & New Zealand Target Location Acquirer Location 2 
  3. 3. Much has Changed in 10 years... MOBILE: Smartphone sales beat PC sales for the first time ever Within the past 10 years, we have seen the widespread adoption of wifi, invention of social media, revolutionization of what it means to be “mobile” and landmark M&A and IPO events as technology giants work to gain and maintain market share LOCAL: Groupon launches FINTECH: Square is launched MOBILE: Apple introduces first iPhone MOBILE: Amazon introduces Kindle 2008 WIFI: Intel adds Wifi to chips SEARCH: Google IPOs 2004 M&A: eBay acquires Skype for $2.5bn 2005 VIDEO: Skype launches 2003 SOCIAL MEDIA: Facebook launches VIDEO: YouTube launches M&A: Google acquires YouTube for $1.6bn 2006 MICROBLOGGING / NEWS: Twitter launches 2007 SEARCH: Google processes over 1tn URLs CLOUD: Dropbox’s launches Source(s): Internet Research 3 2009 2010 TABLET: Apple introduces first iPad SOCIAL: Instagram launches 2011 M&A: Microsoft acquires Skype for $8.5bn IPO: Groupon IPOs ($700m raised / $13bn valuation) 2012 IPO: Facebook is 3rd largest IPO ever ($16bn raised / $104bn valuation) M&A: Facebook acquires Instagram for $1bn M&A: Google acquires Motorola for $12.9bn  2013 MOBILE: Apple releases its 6th gen iPhone; RIM faces market difficulties M&A: Dell is taken private in a $5.5bn LBO
  4. 4. …and Markets are Back on The Rise As the S&P and Nasdaq have reached 10-year highs, the IPO market has responded, with 2013 launching over 180 IPOs and raising $45bn, the highest deal values since 2007 S&P 500 NASDAQ Twitter raised $1.82bn in its IPO, bringing 2013 total deal volume to $45bn+ 1900 1700 IPO deal volume ($bn) 5000 4500 1500 $43 1300 $42 $49 $39 $34 1100 900 5500 $25 $15 $36 $42 $45 4000 3500 3000 2500 $22 2000 700 1500 500 1000 2003 2004 2005 16% 2006 2007 2008 The average first day pop in 2013, the highest level within the last 10 years Source(s): Renaissance Capital 4 2009 2010 9 2011 2012 2013 YTD Companies that have raised more than $1bn in their IPOs, the largest number in 5 years 
  5. 5. Top Tech IPOs Raised $21bn+ Since 2012 1 May – 2012 $16bn raised @ $38/sh 2 Nov – 2013 $1.8bn raised @ $26/sh 3 Oct – 2012 $733m raised @ $28/sh 4 Jun – 2013 $395m raised @ $17/sh Jun – 2012 $240m raised @ $18/sh 10 Jul – 2013 $191m raised @ $21/sh 11 Mar – 2012 $162m raised @ $19/sh 12 5 9 Sep – 2013 $162m raised @ $9/sh 13 Jan – 2012 $132m raised @ $13/sh 14 Sep – 2013 $131m raised @ $26.50/sh 15 Apr – 2012 $120m raised @ $16/sh Sep – 2013 $304m raised @ $20/sh 6 Apr – 2012 $264m raised @ $17/sh 7 Jul – 2012 $260m raised @ $42/sh 8 May – 2013 $254m raised @ $31/sh Source(s): Dealogic, Internet Research 5 
  6. 6. Tech M&A Market is Back Open for Business Tech M&A has seen a steady increase throughout 2013, with a significant boost in 3Q 13 due to the Software subsector IPO deal volume ($bn) $29 $33 $28 $21 $21 $14 $10 1Q 12 2Q 12 Software 3Q 12 Internet 4Q 12 Semiconductor 1Q 13 IT Services 2Q 13 3Q 13 Hardware / Networking As software becomes increasingly cloud-based and thus accessible to a wider enterprise audience, driving robust recurring revenues, acquirers seek software companies with technology that target specific solutions yet can be integrated into larger offerings Source(s): PWC, 451 Research 6 
  7. 7. Multiples Are Up Software companies continue to receive the highest multiples in 2013, while Hardware / Networking, Internet, and Semiconductor companies enjoyed significant boosts to their multiples Enterprise Value / Revenue Multiples 2012 8.0x 8.2x 2013 5.3x 3.4x 1.6x 1.4x 1.3x IT Services 4.7x Semiconductor 4.0x 2.3x Internet Hardware / Networking 6.0x Average 2012 Multiple Across Subsectors Source(s): 451 Research Note(s): Excludes acquisitions of non-US targets 3.3x 7 Software / SaaS Average 2013 Multiple Across Subsectors 
  8. 8. Top 2013 US Target / US Acquirer Deals The average multiple for the top 10 deals in which a US target is acquired by a US company is 4.4x revenue, skewed by Dell’s LBO, the biggest deal of 2013 at $24.8bn Date 1 Feb-13 2 May-13 4 Acquirer Target Description Silver Lake Partners / Michael Dell Sep-13 3 Target Computer & IT systems provider Deal Value ($m) EV / Revenue $24,811 0.4x Electrical connector manufacturer $7,200 1.9x Systems management software provider $6,900 3.2x May-13 Mortgage loan origination software $2,900 2.0x 5 Jul-13 Intrusion detection & prevention & anti-malware $2,700 10.7x 6 Jun-13 Marketing automation SaaS provider $2,500 7.6x 7 Feb-13 Session border controllers provider $2,063 5.9x 8 Jun-13 Online automotive reference content $1,400 3.5x 9 Feb-13 Prepaid payment cards provider $1,400 4.1x 10 Aug-13 Commercial aviation communications & data $1,390 - PE Consortium Average Source(s): 451 Research Note(s): Excludes asset acquisitions 4.4x 8 
  9. 9. Top 2013 US Target / European Acq. Deals Meanwhile, US targets acquired by European companies have a higher revenue multiple at 6.6x, although deal sizes are smaller Date Target Acquirer Target Description Deal Value ($m) EV / Revenue 1 Oct-13 Device identification & anti-fraud software $310 14.1x 2 Jul-13 Power supply & LED driver semiconductors $310 - 3 Oct-13 Optical transport systems provider $264 1.2x 4 May-13 Manufacturing operations management software $205 4.1x 5 Jun-13 Video surveillance systems & recording software $150 - 6 Apr-13 Genomic bioinformatics SaaS $105 5.3x 7 Aug-13 Professional services automation SaaS $70 - 8 Jul-13 IT BSM & network monitoring SaaS $50 7.1x 9 Feb-13 Mobile video traffic software $50 10.2x 10 Aug-13 Operational intelligence visualization software $40 4.0x Average Source(s): 451 Research Note(s): Excludes asset acquisitions 6.6x 9 
  10. 10. Top Active Acquirers Have Changed… While the software subsector may have the greatest deal volume, consumer-facing companies made the most acquisitions in 2013 YTD = 1 acquisition 2013 YTD 2012 @WalmartLabs, Automattic, CSC, GoDaddy, IMS Health, Intel, Lexmark, Maxim Integrated Products, Shutterfly, TripAdvisor Source(s): 451 Research Note(s): Includes acquisitions involving US acquirer or US target; Excludes asset acquisitions 10 
  11. 11. …Leading to New Kids On The Block… There are new names in the top M&A acquirers of 2013, ranging across subsectors After making only 9 acquisitions between 2010 and 2012, Yahoo has jumped to 21 acquisitions, mainly “acqui-hires” Source(s): 451 Research Note(s): Excludes asset acquisitions The fast-growing ERP company has made 5 acquisitions, predominantly building out its services for retailers A newcomer to the tech M&A space, @WalmartLabs has made 4 acquisitions in the analytics / social network space to enhance its online sales and hire engineers 11 The privately-held owner of Wordpress raised $125m in 2013 and made 3 software and 1 domain name acquisition The year after its IPO, Proofpoint made 4 spam / malware acquisitions totaling $55m 
  12. 12. …And Continuing the Acqui-Hire Trend The most powerful people in tech are hiring their next wave of innovators by acquiring smaller start-ups Bread Labs IQ Engines Ztelic AdMovate Xobni Qwiki Bignoggins Rondee GhostBird Palaran Tumblr Loki Studios MileWise Go Poll Go Todoroo Summ.ly Jybe Propeld Snip.it 19 acqui-hires Midnox Mobile Technologies Monoidics spaceport.io Osmeta Hot Studio Storylane Flexicorp Flutter Wimmlabs Waze Wavii DNNresearch Marakana Lucky Sort Ubalo We Are Hunted Crashlytics 7 acqui-hires 6 acqui-hires 5 acqui-hires Source(s): 451 Research Note(s): Acqui-hires defined based on press articles and releases 12 
  13. 13. How to Win in M&A in 2014: Blunt Advice 1 Embrace Timing Know when your exit is available and when the valuation is right. “Pigs get slaughtered!” 2 Be Open-Minded Not everyone can sell to Yahoo, Google, or Microsoft so embrace non-traditional buyers 3 Focus on Your Core Market You can’t be something to everyone. Too many tech companies get spread thin by concentrating on multiple things instead of doing one thing better than anyone else 4 “Good Companies are Bought, Not Sold” Execute on your strategic plan and often the right buyer will find you 13 
  14. 14. About Our Firm We are the leading advisor to companies seeking to build and realize value in the global marketing, technology, communications, and healthcare industries. Our services include M&A, capital raising, and business consultancy US Technology Bank Global Joint Venture AdTech Marketing / Digital Agencies Media / Content E-Commerce SaaS AdTech Software Marketing / Digital Agencies Healthcare IT Our sole mission is to help you maximize your company’s growth and enterprise value. Whether you need a capital partner, an exit, a door opened or just some good advice, our experienced team will guide you through your options and help you execute to the best possible outcome 14 
  15. 15. Our Global Team Our international presence consists of ten offices throughout Europe, North America, Latin America, Asia-Pacific, Middle East and North Africa, with headquarters in the heart of London and New York City Our M&A experience in every major territory across the globe is unrivalled; we have completed more than 200 transactions over the past 22 years 15 
  16. 16. Thank You 
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