STRICTLY CONFIDENTIAL
A Skillsapien Master Class
Materials Prepared for Discussion
August 28, 2013
Strictly Confidential 2
Managing Director: Glenn Chen
Selected Universe
Selected Global
Clients /
Customers
Selected M&A /...
Strictly Confidential 3
Future IQ Group: a Global Track Record
Note: - Numbers in parentheses represent multiple events pe...
Strictly Confidential 4
Summary Profile: Glenn Chen
 Future IQ Group. Location (Palo Alto, CA).
 Managing Director & Glo...
Strictly Confidential
Is “General
Solicitation” a
The likely answer is
proceed with
caution
Strictly Confidential
 Due diligence is paramount
 Applies to Rule 506(c) & amended Rule 144A
 “Reasonable efforts” to ...
Strictly Confidential
Too-hot / too-cold:
can you have your
cake and eat it too?
7
Strictly Confidential
Separate Set of Proposed Rules Could Dampen Enthusiasm
 General solicitation under Reg D does not e...
Strictly Confidential
“General Solicitation” should likely
lead to more deal flow and improve
the chances of better valuat...
Strictly Confidential 10
“The Transaction Process Architecture”
Comprehensive,
detailed strategic
assessment / planning
Ma...
Strictly Confidential
 Again, due diligence is paramount
 Allowing general solicitation under Reg D
does not exempt issu...
Strictly Confidential 12
Being Organized Impacts Outcome & Valuation
EXIT PLAN
Personal
Financial
Plan
Wealth
Preservation...
Strictly Confidential 13
Sample Positioning Template (Prior Dates)
VerticalsEnablersMobilePlatform
Verticals
seeking mobil...
Strictly Confidential 14
Sample Positioning Template (Prior Dates)
The
Innovators
The Majors
Strictly Confidential Sources: Deja-Vu Capital.
Strictly Confidential 16
Expertise & Competition Maximize Outcome & Valuation
Selected examples (strictly confidential for...
Strictly Confidential
Dual Track Can Result in 5 Tracks!*
 Dual track: (1) raise money and (2) seek a corporate partner (...
Strictly Confidential 18
Valuation Approaches (Sample List Only)
Approach Method
Market Approach Public markets
Trading co...
Strictly Confidential
Sample “Football Field” Valuation Summary
19
Notes:
(1) With an expected closing this year, revenues...
Strictly Confidential 20
Financing market
conditions to Q2-2013
Up rounds exceeded down
rounds in 2Q13, 64% to 22%
with 14...
Strictly Confidential 21
Primary Contact Information
Glenn Chen
gchen@futureiq.com
Skillsapien profile: http://skillsapien...
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Future IQ Presentation at Skillsapien Valuations MasterClass 2013-8-28

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Part of the Skillsapien seminar on Valuations Before and After SEC General Solicitation

Date: Aug 28th, 2013
Venue: NestGSV

Presented by Glenn Chen

Published in: Economy & Finance, Business
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Future IQ Presentation at Skillsapien Valuations MasterClass 2013-8-28

  1. 1. STRICTLY CONFIDENTIAL A Skillsapien Master Class Materials Prepared for Discussion August 28, 2013
  2. 2. Strictly Confidential 2 Managing Director: Glenn Chen Selected Universe Selected Global Clients / Customers Selected M&A / Investor Institutions per Above Client Transactions & Affiliations Note: Sample current / historical related business experiences and affiliations. Selected Clients, M&A/Investor Institutions & Affiliations
  3. 3. Strictly Confidential 3 Future IQ Group: a Global Track Record Note: - Numbers in parentheses represent multiple events per location. - Sample current / historical transactions and prior experience.  Clients – Locations:  Beijing, China  Calgary, Canada  Houston, Texas USA  Irvine, California USA  London, United Kingdom  Los Angeles, California USA  Lund, Sweden  Madrid, Spain  Middle East  Milan, Italy  New Delhi, India  New York, New York USA (2)  Norwalk, Connecticut USA  Park City, Utah USA  Pittsburgh, Pennsylvania USA  San Diego, California USA (3)  San Francisco, California USA (2)  Seattle, Washington USA  Shanghai, China (2)  Silicon Valley, California USA (8)  Singapore  St. Petersburg, Russia  Stockholm (Solna), Sweden  Tampa, Florida USA  Thame, United Kingdom  Tel Aviv, Israel (2)  Acquirors / Investors – Locations:  Aalborg, Denmark  Annapolis, Maryland USA  Beijing, China  Chicago, Illinois USA  Dallas, Texas USA  Durham, North Carolina USA  London, United Kingdom  Luxembourg  Hong Kong  Houston, Texas  Irvine, California USA  Los Angeles, California USA  New York, New York USA (11)  Parsippany, New Jersey USA  Salt Lake City, Utah USA  San Diego, California USA (2)  San Francisco, California (3)  San Mateo, California USA  San Jose, California USA (2)  Seattle, Washington USA  Sydney, Australia  Tel Aviv, Israel  Toronto, Canada  Wilsonville, Oregon USA
  4. 4. Strictly Confidential 4 Summary Profile: Glenn Chen  Future IQ Group. Location (Palo Alto, CA).  Managing Director & Global Head of Advisory Services (Mergers & Acquisitions / Corporate Finance)  WCP LLC. Locations (Palo Alto, CA; London, UK).  Partner & Advisory Board, Global Investment Banking (M&A and Corporate Finance) – TMT (Technology / Media / Telecom)  MCF Corporation. Locations (San Francisco, CA; New York, NY).  Managing Director, Global Investment Banking (M&A and Corporate Finance) – TMT (Technology / Media / Telecom)  East Peak Advisors LLC. San Francisco Bay Area, CA.  Global Investment Banking (M&A and Corporate Finance); acquired by Friedman, Billings, Ramsey Group, Inc.  Moore, Clayton & Co. and Independent Investment Banker. San Francisco, CA.  Global Investment Banking & Strategy (Mergers & Acquisitions / Corporate Finance) – Technology / Media / Telecom)  UBS Warburg LLC (now known as UBS Investment Bank). San Francisco, CA.  TMT (Technology / Media / Telecom) Global Investment Banking / Corporate Finance Division  Robertson Stephens (under BankAmerica then FleetBoston Financial Company). San Francisco, CA.  Global Investment Banking / Corporate Finance Division  Barclays Bank Plc. London and Cambridge, England.  (1) Barclays Global Investors  (2) Barclays de Zoette Wedd (BZW; Barclays’ Investment Banking Division) and Barclays Unicorn Limited Global Investment Management Group  University of Cambridge M.B.A. (United Kingdom).  University of Pennsylvania B.A. (U.S.A. Ivy League). Glenn Chen Managing Director
  5. 5. Strictly Confidential Is “General Solicitation” a The likely answer is proceed with caution
  6. 6. Strictly Confidential  Due diligence is paramount  Applies to Rule 506(c) & amended Rule 144A  “Reasonable efforts” to verify investor status with tight controls  “Bad actor” rules, due diligence requirements, and risks of losing exemption  Of note, SEC Commissioner Luis Aguilar strongly opposed the new rules, saying he was “saddened and disappointed” that the new rules did not do more to protect investors Key Points Relevant to Deal Makers Sources: MoFo.
  7. 7. Strictly Confidential Too-hot / too-cold: can you have your cake and eat it too? 7
  8. 8. Strictly Confidential Separate Set of Proposed Rules Could Dampen Enthusiasm  General solicitation under Reg D does not exempt rules against misleading investors  Advertising naturally tends toward slick “puffing” language. The SEC probably will be looking for examples of overstatement to target for enforcement  New investor protection measures in connection with Rule 506(c) offerings:  15 calendar days from start of general solicitation efforts  Final amendment to Form D within 30 days after offering  Revised Form D to request additional information  1 year wait for non-compliance  Potential new Rule 509: legends; 2 year window required to file any written solicitation materials  Social media impact: likely areas of enforcement  Recent uproar by startup advocates: e.g., AngelList co-founder Naval Ravikant, others; comments critical to revisions Sources: TechCrunch, MoFo.
  9. 9. Strictly Confidential “General Solicitation” should likely lead to more deal flow and improve the chances of better valuations due to broader outreach generating competitive interests, BUT being organized early is critical, and “try not to do this at home by yourself” (if you can help it) 9
  10. 10. Strictly Confidential 10 “The Transaction Process Architecture” Comprehensive, detailed strategic assessment / planning Market trends Competitive positioning Industry landscape Investor / acquiror taxonomy / universe Enterprise valuation analyses
  11. 11. Strictly Confidential  Again, due diligence is paramount  Allowing general solicitation under Reg D does not exempt issuers from prohibitions on using unregistered broker-dealers  Due diligence and deal execution by professionals / broker-dealers  Suitability analyses, compliance, and “red flags”  Execute flawlessly  Targeted positioning  Maximizing valuation / terms Prepare Early, Plan, and Get Organized
  12. 12. Strictly Confidential 12 Being Organized Impacts Outcome & Valuation EXIT PLAN Personal Financial Plan Wealth Preservation Planning Insurance Needs Business Continuity Owner’s Exit Objectives Business Valuation Value Chain
  13. 13. Strictly Confidential 13 Sample Positioning Template (Prior Dates) VerticalsEnablersMobilePlatform Verticals seeking mobility gains Selected enablers seeking help in mobilizing their offerings Opportunities in multiple layers of Mobile Platform Finance Entertainment Health Care GovernmentEducationRetailTransportation Provisioning-Personalization-Synchronization Content & Apps Mgmt. Presence Mgmt. Basic Applications & GUIs ODMs Brand Device Manufacturers Firmware & Operating Systems Chipsets Components Peripherals & Extensions Connectivity/Billing Aggregation + Interconnection + Roaming Continuity Virtual Network Operators Cell Networks WiMAX Networks Wi-Fi Networks Video Streaming Networks Circuit-Switched & IP-Based Inter-Network Backbones Source: Nexit Ventures and industry sources Communication
  14. 14. Strictly Confidential 14 Sample Positioning Template (Prior Dates) The Innovators The Majors
  15. 15. Strictly Confidential Sources: Deja-Vu Capital.
  16. 16. Strictly Confidential 16 Expertise & Competition Maximize Outcome & Valuation Selected examples (strictly confidential for informational purposes only): Number of Potential Parties Contacted Term Sheets Received % Price Increase from Initial Offer Comments / Issues 30+ 60 21 4 1 3 450% 50% 200% Strategic asset; buy vs. build considerations by potential acquirers Structural considerations; strong IP (patent portfolio) and global story; improvement in terms even with 1 term sheet Played an integral role in originating the buyer and facilitating a targeted, competitive auction Deal Type Dual Track Dual Track Sale Note: Informational, indicative, sample track record from prior experiences (strictly confidential). Client 1 Client 2 Client 3
  17. 17. Strictly Confidential Dual Track Can Result in 5 Tracks!*  Dual track: (1) raise money and (2) seek a corporate partner (to invest or acquire), both done simultaneously  Dual track approach is optimal because it really results in 5 tracks!  investment by a financial party;  trade sale of the company (an exit);  change of control transaction by a financial sponsor;  investment by a corporate / strategic party; or  commercial / business development transaction(s) with a corporate / strategic party  Note: same rolodex / relationships apply to all 5 tracks  Thus, dual track gives you options  complete power to say "no," but at least you have options to accept now or postpone; AND  your company is "bought" (the best situation) versus "sold" (less ideal but still optimal) * Important note: content, topics, and strategies on this slide are unique, confidential, proprietary trade rights and IP of Future IQ Group, LLC.
  18. 18. Strictly Confidential 18 Valuation Approaches (Sample List Only) Approach Method Market Approach Public markets Trading comparables M&A transactions Private placements IPO backdown Asset Approach Liquidation value Replacement cost Income Approach Discounted cash flows Scenario analyses Embedded options Company Specific Prior equity events Accretion / dilution models Relative value analyses Other relevant factors What does a full valuation typically entail?
  19. 19. Strictly Confidential Sample “Football Field” Valuation Summary 19 Notes: (1) With an expected closing this year, revenues are projected for the current year. (2) Based on current multiples data where available. (3) Comparable M&A transactions. (4) Comparable M&A transactions. (5) Control premium offsets the private company discount. (6) Control premium offsets the private company discount. Preliminary valuation analysis only. Further results will require additional business and financial due diligence. Additional methodologies may be required after the due diligence review (e.g., DCF, etc.). 60 70 80 90 100 110 120 Trading Comparables (Multiple of CY13E Revenues) (6) Trading Comparables (Multiple of CY12A Revenues) (5) M&A Comparable Transactions (Multiple of CY13E Revenues) (4) M&A Comparable Transactions (Multiple of CY12A Revenues) (3) Valuation Range ($mm) ValuationMethodology Best Company Valuation Review (Enterprise Value) Multiples Applied to Best Company's Operating Results (1) (2)
  20. 20. Strictly Confidential 20 Financing market conditions to Q2-2013 Up rounds exceeded down rounds in 2Q13, 64% to 22% with 14% of rounds flat; a decrease from 1Q13 when 68% of rounds were up, 11% were down and 21% were flat. Fenwick & West Venture Capital Barometer™ showed average price increase of 62% in 2Q13, a slight increase from 57% reported in 1Q13. The median price increase of financings in 2Q13 was 19%, an increase from 1Q13 results of 14%, but noticeable decline from prior quarters. Corporate venture investing highest since 2001. Financing market conditions to Q2-2013 Up rounds exceeded down rounds in 2Q13, 64% to 22% with 14% of rounds flat; a decrease from 1Q13 when 68% of rounds were up, 11% were down and 21% were flat. Fenwick & West Venture Capital Barometer™ showed average price increase of 62% in 2Q13, a slight increase from 57% reported in 1Q13. The median price increase of financings in 2Q13 was 19%, an increase from 1Q13 results of 14%, but noticeable decline from prior quarters. Corporate venture investing highest since 2001. M&A market conditions to Q2-2013 Volume for Q213 was 627 deals, down 14% YOY and 5% sequentially; lowest level in three years. Corporate volume (570 deals) declined for the third consecutive quarter, down 16% YOY and 7% sequentially. PE volume (57 deals) increased for 2nd consecutive quarter, up 10%YOY and 24% sequentially. PE and non-technology companies were major buyers. Distressed and non-core asset sales continued. M&A market conditions to Q2-2013 Volume for Q213 was 627 deals, down 14% YOY and 5% sequentially; lowest level in three years. Corporate volume (570 deals) declined for the third consecutive quarter, down 16% YOY and 7% sequentially. PE volume (57 deals) increased for 2nd consecutive quarter, up 10%YOY and 24% sequentially. PE and non-technology companies were major buyers. Distressed and non-core asset sales continued. Sources: Fenwick & West, Ernst & Young.
  21. 21. Strictly Confidential 21 Primary Contact Information Glenn Chen gchen@futureiq.com Skillsapien profile: http://skillsapien.com/sp/464-183 8/28/13 Notice: No formal advice is provided in this presentation, and all information contained in this presentation and other related materials incorporated by reference herein are solely for draft informational discussion purposes only provided “as is” without warranty and is therefore inherently preliminary by nature as an early review by the direct recipient(s). Direct recipient(s) who intend to distribute this information to other parties must receive prior approval and consent from me. This presentation may contain information that is privileged, confidential, legally privileged, and / or exempt from disclosure under applicable law. If you are not the intended recipient, you are hereby notified that any disclosure, copying, distribution, or use of the information contained herein (including any reliance thereon) is STRICTLY PROHIBITED, and no responsibility is accepted by me and my entities, as applicable, for any loss or damage arising in any way from its use. We and our entities are not liable for errors, omissions or inaccuracies in the information presented before, during, and after this presentation and with any communications / discussions regarding this information. If you received this information in error, please immediately contact the sender and destroy the material in its entirety, whether in electronic or hard copy format. FINRA (via affiliated broker-dealer, if applicable). Content and media used are referenced herein and/or are labeled for reuse based on the sources. All other rights are part of their respective owners. Thank you. © Future IQ Group, LLC 2013. All rights reserved.

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