DealMarket Digest Issue92 - 26th April 2013


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• Buyout of China’s Focus Media Close to Closure
• Mobile Location-Based Advertising worth €6.5 billion in 2017
• First Quarter Global M&A Down : Mergermarket
• GPs Advised to Examine Past Wins For Success Tips; Bain & Co.
• Researcher Spot Oversubscribed PE Fundraising Trend in Q1
• Quote of the Week: Relationship Advice for Entrepeneurs

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DealMarket Digest Issue92 - 26th April 2013

  1. 1. DIGEST 92SEE WHAT’S NEW AND NOTEWORTHY IN PRIVATE EQUITY THIS WEEK /// ISSUE 92April 26, 201312Buyout of China’s Focus MediaClose to ClosureMobile Location-Based Advertisingwill be worth € 6.5 billion in 2017First Quarter Global M&A Down :MergermarketGPs Advised to Examine Past WinsFor Success Tips; Bain & Co.Researcher Spot Oversubscribed PEFundraising Trend in Q1Quote of the Week: RelationshipAdvice for Entrepreneurs3
  2. 2. OF CHINA’S FOCUS MEDIACLOSE TO CLOSUREThis week’s deal of the week is the USD 3.8billion buyout of Chinas digital advertiserFocus Media Holding Ltd. by management anda Carlyle Group-led private equity consortium,which should close next week followingshareholder approval, according to a report inThe Deal. There were few other mega buyoutsin the market this week, neither reported norrumored.MOBILE LOCATION-BASED ADVERTISINGWILL BE WORTH €6.5 BILLION IN 2017Good news about growth opportunities for web companies such as Yelp, Verve, Placecast, Foursquareand more is to be found in a new research report from the analyst firm Berg Insight. Berg forecasts thetotal value of the global real-time mobile location-based advertising and marketing (LBA) market to growfrom EUR 526 million in 2012 to EUR 6.5 billion in 2017. This will then correspond to 32.8 percent of allmobile advertising and marketing. The ability to precisely target prospective customers using real-timelocation is currently one of the most promising additions to the advertising toolbox.Key drivers for LBA include the growing adoption of both outdoor and indoor location technologies, aswell as the increasing consumer acceptance of location-based services in general. Major brands are so farthe main spenders.Image source: K-mobile
  3. 3. QUARTER GLOBAL M&A DOWN:MERGERMARKETThe latest report from mergermarket onM&A trends reveals that despite severmega-deals around the world at the endof the last quarter, the totals for Q1 2013were down compared to Q1 2012 by alittle over 10%. The most active adviserwas JPMorgan, which leads the globalleague table by deal value with USD124.2bn-worth of deals, including four ofthe top ten deals.Image source: MergermarketOther Findings on Global M&A• The first quarter of this year was the slowest opening quarter in ten years (Q1 2003, USD 232.9bn)• After the highest quarterly value in five years (Q4 2012, USD 737.1bn, 3,559 deals), Q1 2013 saw adecrease in total M&A value of 44.9%. It is the seventh year in a row to see lower totals in Q1 than inthe preceding Q4• The year has already seen four mega-deals adding up to USD 87.7bn. Last year’s mega-deals in thesame period totaled USD 70.7bn• Only the US and Africa & Middle East saw higher totals in Q1 2013 than in the same period in 2012,with increases in deal value of 33.6% and 101.4% respectivelyGPS ADVISED TO EXAMINE PAST WINSFOR SUCCESS TIPS; BAIN & CONew research conducted by Bain & Company was described in its latest PE Outlook report. The globallyfocused report said that Bain, along with Oliver Gottschalg, a professor at the École des Hautes ÉtudesCommerciales in Paris, and PERACS, a provider of quantitative analytics for the PE industry, found thatmost buyout funds, including the top-quartile performers, produce a mix of big winners and losers.Examining the successful deals closely can be useful way to find reliable information on which to basefuture success.Bain said that in order to mobilize the right resources and processes to ensure that a higher proportion oftheir investments will become run-away winners, some leading firms are subjecting their past deals to adetailed forensic examination. A forensic investigation can serve a multitude of purposes. It can help lay astrong foundation for the launch of a new fund or set the right course for investing an immature fund.Such a probing dissection of nearly 100 of its past deals helped one major global PE firm define its deal“sweet spot” and mobilize its resources and processes around factors that make a deal successful.
  4. 4. report says that examining “the scores of variables that influenced each deal, it is possible to find realmeasures that influence returns, such as leverage, multiple expansion, revenue growth and margins”. ThePE industry’s strongest funds got there not because of the specific size and types of deals they target,rather than success is driven by the “alpha-generating capabilities of the GPs that manage them”. Furtherdetails on forensic examination were not provided in the report. It is to be assumed that Bain provides thiskind of consulting for PE funds interested in examining their past data for future success.RESEARCHER SPOT OVERSUBSCRIBED PEFUNDRAISING TREND IN Q1Private Equity International’s latest quarterly report on global PE fundraising found that the amount raisedis stable compared to last year. The estimated sum of USD 69.3 billion was raised globally, by 130 funds,across all private equity strategies in the first quarter of 2013, according to a release that was publishedon PE Hub. Last year an average of USD 73.7 billion was raised in each quarter of the year. Of note, is thatseveral firms raised surplus amounts on their fund targets. The oversubscribed funds trend reinforces thebelief that for managers with strong track records and a good story to tell, there’s ample opportunity toattract capital. It is the flight to quality trend that is often evident in PE.Other findings• Funds with a focus on investment in North America proved the most popular, securing USD 23.3 billion• The single largest fund close in the quarter was that of Cinven at USD 6.5 billion for pan-Europeaninvestment.• Buyout funds are still the most popular, accounting for USD 28.5 billion in the quarter.• Venture capital and growth equity funds also demonstrated a strong quarter, collecting USD 17.9billion.• Both distressed and secondary funds showed a marked decline relative to fundraising appeal 2012.• Funds aiming to invest in Asia-Pacific are notable for their growing confidence.“Entrepreneurs who successfully navigate the complexprocess and emotional whirlwind associated with privateequity investment are the ones who take the time toevaluate all of the pros and cons, and ultimately make apragmatically informed decision with their eyes wideopen. Rather than denying the mental and emotionalissues that come with a decision of this magnitude, theyembrace all of its ramifications and choose to frame thedecision — the “win” — on their”QUOTE OF THE WEEK: RELATIONSHIPADVICE FOR ENTREPRENEURS
  5. 5. said it: newly appointed CEO of Martin JetpackIn context: In an article written by Kadlic, entrepreneurs are given some advice on the benefits ofaccepting private equity investment. The PE expert suggests that owning a small business is a white-knuckled affair, where mission-critical events can threaten a companys very survival on a daily basis.Aside from launching the company and terminating the company, perhaps the next most importantdecision for a business owner is agreeing to accept outside investment from a private equity firm, thearticle posits. It is about giving up some control, but also about gaining support to grow the company andperhaps even gain more free time. The article is unusual in that it has a strong emotional component andpsychological perspective for a transaction that is normally described in terms of material and financialpros and cons.Where we found it: Crains Cleveland
  6. 6. DealMarketDealMarket launched in 2011 and is growing fast. Just one year afterlaunch, DealMarket counts more than 52,000 recurring users from 154countries, and over 3,000 deals and service providers promoted or listedon the platform.DealMarket is an online platform enabling private equity buyers, sellersand advisors to maximize opportunities around the world – a one-stopshop for Private Equity professionals. Designed by Private Equityprofessionals for Private Equity professionals, the platform is easy to use,cost effective and secure, providing access, choice and control across theinvestment cycle.DealMarket’s offering includes• DealMarketPLACE, an unfiltered view of the global deal and advicemarketplace, where searching is free and postings are the price of acappuccino a day (with no commission).• DealMarketSTORE offers affordable access to industry-leading third-partyinformation and services on demand; and• DealMarketOFFICE is a state-of-the-art deal flow management tool,helping Private Equity investors to capture, store, manage and sharetheir deal flow more efficiently.DealMarket was voted the “Best Global Private Equity Platform for 2013”by Corporate Newswire.www.DealMarket.comThe Dealmarket Digest empowers members of Dealmarket by providingup-to-date and high-quality content. Each week our in-house editor siftsthrough scores of industry and academic sources to find the mostnoteworthy news items, scoping trends and currents events in the globalprivate equity sector. The links to the sources are provided, as well as aneditorialized abstract that discusses the significance of the articlesselected. It is a free service that embodies the values of the Dealmarketplatform delivers: Professional, Accessible, Transparent, Simple, Efficient,Effective, and Global.To receive the weekly digest by email register on Valerie Thompson, Zurich