San Diego Venture Group; M&A Event Nov 2013; Capstone
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Is there a buyer for every company? What do you have to do get your company ready for an exit? Should you hire a banker? Sell out soon or go for it all? Find out more by checking out the presentation we delivered at the event Thursday, November 21.
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San Diego Venture Group; M&A Event Nov 2013; Capstone
- 1. Capstone Partners Investment Banking Advisors Capstone Banking Advisors Partners Investment 2012 AWARD WINNER: GLOBAL INVESTMENT BANKING BOUTIQUE FIRM OF THE YEAR Capstone Partner Investment Banking Adv M&A Trends in Technology & Life Sciences Prepared for San Diego Venture Group November 2013 BOSTON ¡ CHICAGO ¡ LONDON ¡ LOS ANGELES ¡ PHILADELPHIA ¡ SAN DIEGO ¡ SILICON VALLEY Capstone Banking Advisors Capstone Partners Investment Partners Investment Banking Advisors WORLD CLASS WALL STREET EXPERTISE. BUILT FOR THE MIDDLE MARKET.TM 1 1
- 2. Capstone Partners Investment Banking Advisors Capstone Banking Advisors Partners Investment Tech & Telecom Observations and M&A Trends Recommendations Capstone Banking Advisors Capstone Partners Investment Partners Investment Banking Advisors WORLD CLASS WALL STREET EXPERTISE. BUILT FOR THE MIDDLE MARKET.TM 2 2
- 3. Capstone Partners Volume: Technology & Telecom U.S. M&A Dollar Investment Banking Advisors n Tech & Telecom M&A reached nearly $160B in the U.S. in the last twelve months } Recent upswing driven primarily by PE funds becoming more aggressive in tech (i.e, Dell) Capstone Banking Advisors Capstone Partners Investment Partners Investment Banking Advisors 3 3
- 4. Capstone Partners Dollar Volume: Tech & Telecom San DiegoAdvisors Investment Banking M&A n Banner Year for San Diego Tech & Telecom M&A with more than $10B in deals } Public target M&A driven by 4 large deals ranging from $900M to $4.0B in size } Private target M&A driven by 3 large deals ranging from $350M to $1.0B in size Capstone Banking Advisors Capstone Partners Investment Partners Investment Banking Advisors 4 4
- 5. Capstone Partners U.S. M&A Transaction Volume: Tech & Telecom Investment Banking Advisors n 2,100-2,300 M&A transactions per annum in the U.S. in Tech & Telecom } Internet & Software account for approximately 65% of the mix Capstone Banking Advisors Capstone Partners Investment Partners Investment Banking Advisors 5 5
- 6. Capstone Partners Transaction Volume: Tech & Telecom San DiegoAdvisors Investment Banking M&A n San Diego M&A transaction volume is typically 30-40 transactions per year } San Diego mix slightly more Hardware oriented than national average (Qualcomm effect?) Capstone Banking Advisors Capstone Partners Investment Partners Investment Banking Advisors 6 6
- 7. Capstone Partners Median LTM Revenue Multiples: Internet & Software Investment Banking Advisors n Internet & Software median multiples have been expanding, reaching 3.9x for LTM } 25% of deals are being done at revenue multiples of 5.5x or higher Capstone Banking Advisors Capstone Partners Investment Partners Investment Banking Advisors 7 7
- 8. Capstone Partners Median Revenue Multiples by Segment: Hardware Investment Banking Advisors n Median Hardware multiples have remain conservative at 1.3x revenue } Not surprising that Hardware segments are attracting far less capital Capstone Banking Advisors Capstone Partners Investment Partners Investment Banking Advisors 8 8
- 9. Capstone Partners Recent Premium Multiple Transactions: Tech & Telecom Investment Banking Advisors n Entrepreneurs all dream of these type of outcomes….. Capstone Banking Advisors Capstone Partners Investment Partners Investment Banking Advisors 9 9
- 10. Capstone Partners Premium Multiple Transaction Profiles: Tech & Telecom Investment Banking Advisors Ann. Date Buyer Target Segment Target Description 2/11/13 Cloud & IT Infrastructure Provides storage virtualization capacity and performance management software for use in virtual server and desktop environments for businesses. 8/15/13 Cloud & IT Infrastructure Provides financial anti-fraud software and SaaS to businesses globally. Also provides anti-malware, endpoint integrity and mobile device security software. 1/23/13 Carrier Back Office 12/5/12 4/3/13 6/27/13 Mobile / Local Marketing 12/20/12 Finance & Administration 7/23/13 A cloud-based wireless networking company, deploys wireless network infrastructures. Provides marketing automation, social media marketing, mobile marketing, customer analytics and campaign management software to businesses globally. Provides on-demand revenue performance management and marketing automation software solutions for businesses. Provides web-based electronic health records management Vertical Market - software for the healthcare sector. Healthcare Cloud & IT Infrastructure LTM Multiple Revenue on $ Multiple Invested Premium to 1 Mo Prior $185M 92.3x 8.3x NA $900M 25.7x 90.0x NA $475M 15.8x 55.9x NA $327M 14.2x 5.1x NA $310M 13.7x 3.8x NA $1.2B 12.0x 15.0x NA $600M 10.3x 17.3x NA $957M 9.7x 26.7x NA $235M 9.4x 3.9x NA $2.39B Provides 3G, LTE and WiFi base stations and related Wireless Network management software for wireless telecom service providers Equipment globally. 11/18/12 3/5/13 Provides mobile network management software for wireless telecommunication operators worldwide. Provides enterprise mobile device management software and Mobile OS & Utility software-as-a-service (SaaS) for businesses. Software Cloud & IT Infrastructure Deal Value 8.9x NA 43.7% Provides intelligent cybersecurity technologies worldwide. Sorted by LTM Revenue Multiple Excludes deals with Target company revenue less than $2M Capstone Banking Advisors Capstone Partners Investment Partners Investment Banking Advisors 10 10
- 11. Capstone Partners Transactions in San Diego: Tech & Telecom Recent Notable Investment Banking Advisors Ann. Date Buyer Target 7/12/13 10/17/12 5/20/13 9/30/13 9/5/13 8/23/13 7/2/13 Target Description Provides prepaid digital wireless services under the Cricket brand name in the United States Engages in the development of light sources for the manufacturers of photolithography tools in the semiconductor equipment industry Provides Web, email, and data security solutions to protect an organization’s data and users Provides member and event management, online marketing, transaction processing, HR management and CRM software and SaaS Provides auto collision claims management and auto repair management and price estimating software and SaaS Provides SaaS-based fleet management solutions for the transportation industry in North and Latin America Provides self-service kiosks that purchase and recycle used mobile phones, tablets and MP3 players, offering cash in exchange to consumers in US LTM Multiple on Deal Value Revenue $ Invested Multiple Premium to 1 Mo Prior $4.9B 1.3x NA 158.2% $2.7B 4.2x NA 44.8% $1.1B 2.7x NA 70.1% $1.0B 2.1x NA 48.0% $1.0B NA NA NA $800M NA NA NA $350M 11.9x 11.1x NA Sorted by LTM Revenue Multiple Excludes deals with Target company revenue less than $2M Capstone Banking Advisors Capstone Partners Investment Partners Investment Banking Advisors 11 11
- 12. Capstone Active Tech & Telecom Buyers – Last 2 Years Most Partners Investment Banking Advisors Company # of Deals Total Notable Tech & Telecom Transactions Date 9/16/13 8/30/13 6/11/13 4/23/13 2/6/13 Company Bump Technologies WIMM Labs Waze wavii Channel Intelligence Value $60M NA $966M $30M $125M Date 10/2/12 7/20/12 6/5/12 6/4/12 4/2/12 Company Viewdle Sparrow Quickoffice Meebo TxVia Value $45M NA NA $100M NA 25 9/19/13 8/15/13 7/9/13 6/4/13 8/27/12 Daeja Image Systems Trusteer CSL International SoftLayer Technologies Kenexa NA $900M $20M $2.0B $1.4B 5/2/12 4/13/12 12/8/11 10/11/11 10/4/11 TeaLeaf Technology Varicent Software DemandTec Platform Computing Q1 Labs $500M $172M $486M $300M $575M 24 9/2/13 6/3/13 3/19/13 3/14/13 3/4/13 Nokia (Devices & Services BU) InCycle Software Netbreeze Pando Networks MetricsHub $7.2B NA NA $11M NA 11/13/12 10/16/12 7/9/12 6/15/12 11/22/11 Azaleos StorSimple Perceptive Pixel Yammer VideoSurf NA NA NA $1.2B $70M 23 8/23/13 8/12/13 4/25/13 3/8/13 8/24/12 Midnox Mobile Technologies Parse Mixtent Threadsy NA NA $85M NA NA 6/18/12 5/18/12 4/12/12 4/9/12 12/5/11 Face.com Karma Science Tagtile Instagram Gowalla $60M $80M NA $1.0B NA 22 8/2/13 7/3/13 6/25/13 5/20/13 3/25/13 RockMelt Xobni Hortonworks Tumblr Summly NA NA $50M $1.1B $30M 5/2/13 3/25/13 3/20/13 2/12/13 10/25/12 Todoroo Summly Jybe Propeld Stamped NA $30M NA NA $10M 20 9/10/13 7/23/13 6/20/13 5/29/13 4/3/13 WhipTail Technologies Sourcefire Composite Software JouleX Ubiquisys $415M $2.4B $180M $107M $310M 1/23/13 11/29/12 11/18/12 11/15/12 2/24/12 Intucell Cariden Technologies Meraki Cloupia Lightwire $475M $141M $1.2B $125M $254M 38 Capstone Banking Advisors Capstone Partners Investment Partners Investment Banking Advisors 12 12
- 13. Capstone Partners Investment Banking Advisors Capstone Banking Advisors Partners Investment Life Sciences and Observations M&A Trends Recommendations Capstone Banking Advisors Capstone Partners Investment Partners Investment Banking Advisors WORLD CLASS WALL STREET EXPERTISE. BUILT FOR THE MIDDLE MARKET.TM 13 13
- 14. Capstone Partners Volume: Life Sciences U.S. M&A Dollar Investment Banking Advisors n Life Sciences M&A typically $50-80B per year in the U.S. } 2009 was on outlier due to Pfizer / Wyeth ($79.6B) and Merck / Schering-Plough ($51.4B) Capstone Banking Advisors Capstone Partners Investment Partners Investment Banking Advisors 14 14
- 15. Capstone Partners Dollar Volume: Life Sciences San DiegoAdvisors Investment Banking M&A n Banner Year in Life Sciences M&A in San Diego with $18B in transactions } Public M&A driven by 2 very large transactions of $16.0B and $6.9B } Private M&A was driven primarily by one $1.0B deal Capstone Banking Advisors Capstone Partners Investment Partners Investment Banking Advisors 15 15
- 16. Capstone Partners U.S. M&A Transaction Volume: Life Sciences Investment Banking Advisors n Life Sciences transaction volume typically 250 deals in the U.S. per annum } Bio / Pharma accounts for approximately 80% of the transactions Capstone Banking Advisors Capstone Partners Investment Partners Investment Banking Advisors 16 16
- 17. Capstone Partners Transaction Volume: Life Sciences San DiegoAdvisors Investment Banking M&A n Life Sciences M&A transaction volume in San Diego typically 10-15 deals per year } San Diego’s Life Sciences exits are dominated by Bio / Pharma Capstone Banking Advisors Capstone Partners Investment Partners Investment Banking Advisors 17 17
- 18. Capstone Partners Median LTM Revenue Multiples: Bio / Pharma Investment Banking Advisors n Median Revenue Multiple for Bio / Pharma typically ranges from 2.0-2.5x } 25% of deals are being done at revenue multiples of 3.8x or higher n Revenue multiples less relevant because many companies are acquired pre-revenue Capstone Banking Advisors Capstone Partners Investment Partners Investment Banking Advisors 18 18
- 19. Capstone Partners Transactions in San Diego: Life Sciences Recent Notable Investment Banking Advisors Ann. Date Buyer 2/28/13 6/17/13 7/30/13 3/6/13 1/7/13 1/30/13 2/12/13 12/11/12 5/9/13 Capstone Banking Advisors Capstone Partners Investment Partners Investment Banking Advisors Target Target Description Offers molecular and cell biology reagents, endpoint PCR and other benchtop instruments and consumables Focuses on developing medicines for the treatment of hormonallydriven cancers, such as prostate and breast cancer Focuses on the discovery, development and commercialization of antibiotics for serious infections Engages in cGMP manufacturing, analytical development, aseptic filling into vitals and syringes and protein delivery technology Engages in the development and marketing of oncology drugs to target glycans Engages in discovering and developing agricultural solutions through genomic technologies Produces organic pharmaceutical grade cannabis compounds and extracts Engages in developing and commercializing prescription therapeutics to treat medical conditions Joint venture between Olympus and Cytori, manufactures future generation devices based on adipose-derived stem and regenerative cell processing systems 19 LTM Multiple on Deal Value Revenue $ Invested Multiple Premium to 1 Mo Prior $16B 4.1x NA 22.0% $1B NA 8.2x NA $817M 52.8x NA 66.7% $175M 3.3x 58.3x NA $144M NA NM NA $85M NA 3.5x NA $35M NA NA NA $25M 2.1x NA NA $16M NA NA NA 19
- 20. Capstone Active Life Sciences Buyers – Last 2 Years Most Partners Investment Banking Advisors Company # of Deals Total Notable Tech & Telecom Transactions Date Company Value 9 3/28/13 3/20/13 9/24/12 9/3/12 6/15/12 Cosmo Pharmaceuticals Obagi Medical Products QLT, Visudyne Business Medicis Pharmaceutical OraPharma NA $439M $133M $3.2B $441M 6 8/26/13 Amplimmune 6/10/13 Pearl Therapeutics 5/28/13 Omthera Pharmaceuticals $500M $1.2B $511B 4/2/13 AlphaCore Pharma 7/12/12 Link Medicine (Certain Assets) 4/23/12 Ardea Biosciences NA NA $1.3B 5 3/25/13 SARcode Bioscience 1/8/13 Lotus Tissue Repair 8/7/12 Insmed $675M $324M $12M 4/12/12 Pervasis Therapeutics 3/15/12 Ferrokin Biosciences $172M $320M 5 5/7/13 Inviragen 11/6/12 Envoy Therapeutics 10/4/12 LigoCyte Pharmaceuticals $250M $140M $60 4 4 4 7/1/13 CoAxia NA 7/2/12 ThermoGenesis (CryoSeal Fibrin $2M Sealant System) 11/8/12 Vessix Vascular 10/8/12 Rhythmia Medical $425M $265M 4/29/13 Nfocus Neuromedical 12/26/12 CV Ingenuity $96M $275M Date 4/12/12 3/26/12 2/13/12 11/18/11 Company Value Pedinol Pharmacal ISTA Pharmaceuticals Eyetech Graceway Pharmaceuticals $492M $22M $26M $1.3B 4/11/12 URL Pharma 12/20/11 Intellikine $800M $310M 3/12/12 ZOLL Medical 11/8/11 Asahi Kasei Pharma America $2.2B NA 9/19/12 BridgePoint Medical 3/8/12 Cameron Health $110M $1.4B 7/2/12 MindFrame 11/21/11 BARRX Medical $78M $413M 3 Capstone Banking Advisors Capstone Partners Investment Partners Investment Banking Advisors 20 20
- 21. Capstone Partners of Friendly Advice A FewBanking Advisors Investment Words n Study Strategic Landscape } Competitive dynamics, partnerships, product holes of likely buyers, etc. n Get to Know Potential Buyers Early } Familiarity = More Likely to Pay Premium n Determine What Potential Buyers Value } Access to large market, revenue growth, customer list, technology / IP, etc. n Strategic Market Entry Platform or Tactical Tuck-In? } Know which your company is and drive financing and exit timing accordingly n Recognize Your Exit Window Before it Closes } First 2 acquisitions are done at a premium, then multiples typically wane n Separate Emotion from Valuation Expectations } Understand market-driven valuation drivers and how they apply to your company n Surround Yourself with the A Team } Do you want to be the most inexperienced player at the poker table? Capstone Banking Advisors Capstone Partners Investment Partners Investment Banking Advisors 21 21
- 22. Capstone Partners Contact Information Investment Banking Advisors DAVID MICHAELS Managing Director, Head of Technology & Telecom Group Phone: (858) 926-5950 Email: dmichaels@capstonellc.com TEAK MURPHY Vice President, Technology & Telecom Group Phone: (858) 345-2408 Email: tmurphy@capstonellc.com Capstone Banking Advisors Capstone Partners Investment Partners Investment Banking Advisors 22 22