2. M&A SNAPSHOT
OVERVIEW COMMENTARY COMING SOON
M&A activity dropped a bit in Q4 2010 although the overall tone remains
good. ANALYSIS OF VC-BACKED M&A EXITS
M&A activity within the crucial $25 million - $1 billion transaction value range
in our sector was down 22%, while median transaction size increased slightly STRATEGIC THEMES DRIVING M&A ACTIVITY
by 7%. VC-backed company exits remained fairly consistent with the past
several quarters.
The biggest M&A headline of the quarter was the deal that didn’t get done,
Google’s attempted acquisition of Groupon. While not completed,
transactions with rumored valuations at these levels are very important tone
setters for the overall internet | mobile | digital media M&A market. In this
particular case, it also illuminated the strategic importance of local business
merchants to Google, and by extension, its competitors.
Other notable transactions include DeNA’s $403mm purchase of ngmoco
(following Disney’s acquisition of Playdom in Q3 2010), eBay’s announcement
of three acquisitions (Milo.com, Critical Path and Private Sale) and Amazon’s
continued aggressive consolidation within online retailing (Quidsi and
BuyVIP). We are also seeing an increase in M&A activity level in the internet |
mobile | digital media sectors from traditional IT vendors, as demonstrated by
Teradata's purchase of Aprimo and Oracle’s acquisition of Art Technology
Group.
FOLLOWING ANALYSIS
SUMMARY OF QUARTERLY ACTIVITY IN
M&A DASHBOARD: NUMBERS AND TONE
NOTABLE ACQUIRERS: ACTIVE INFLUENTIAL BUYER ACTIVITY
M&A TRANSACTIONS: SUMMARY OF TRANSACTIONS BETWEEN
$25MM-$1B IN VALUE, AP INSIGHTSM M&A
ALERT LINKS
OTHER NOTABLE TRANSACTIONS: SUMMARY OF NOTABLE TRANSACTIONS
WITHOUT ANNOUNCED VALUE OR
ABOVE $1B. AP INSIGHTSM M&A ALERT
LINKS
2
3. M&A DASHBOARD
COVERAGE MARKET TONE
Good. Slight increase in exit values offset
Architect Partners tracks M&A activity within the
by decrease in volume. Generally balanced
converging internet | mobile | digital media sectors.
buyer/seller dynamics.
The following assessment is focused on M&A
transactions with announced values of between
$25mm and $1B as these typically represent successful 2009 2010
business-building endeavors. Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
68 68
53 53
46
41 38 40
M&A Exits (#)..................................................................................
$14
$11 $12 $12
$9
$6 $6
$5
Total Consideration Paid ($b)......................................................
18 17 18
16
12
10
7
5
Venture-Backed M&A Exits (#)...................................................
$146
$128
$100 $100 $98 $105
$85 $75
Median Transaction Size ($mm).................................................
55% 52%
48% 49%
43% 45%
41% 38%
U.S.-based Target (%)....................................................................
372 368
362
341
All Internet | Mobile | Digital Media M&A Exits(1)(#)............
Note: 1) Includes all internet | mobile | digital media transactions regardless of transaction value
3
4. NOTABLE ACQUIRERS
The following acquirers are generally active or influential buyers within the internet | mobile | digital media sectors. Below,
we highlight announced acquisitions in the fourth quarter of 2010.
ACQUIRER # TARGET
4
3
3
3
2
2 WALLETIN
2
2
2
2
2
2 SPECTRUM
LICENSES
4
6. M&A TRANSACTIONS: $25MM-$1B
Below highlights M&A transactions that have announced values of between $25mm and $1b announced in Q4 2010 within the
converging internet | mobile | digital media sectors.
ANNOUNCED TRANSACTION AP INSIGHT SM
# DATE ACQUIRER TARGET VALUE ($mm) TARGET DESCRIPTION M&A ALERT VC-BACKED
NON-SERVICE PROVIDER TRANSACTIONS
NON-SERVICE PROVIDER TRANSACTIONS
1 11/02/2010 Oracle Art Technology $951 Provides eCommerce software that enables enterprises to provide a
1 11/02/2010 Oracle Art Technology
Group $951 cohesive online and mobile customerenables enterprises to provide a
Provides eCommerce software that shopping experience.
2 12/22/2010 Rovi Group
Sonic Solutions $698 cohesive online and mobile customer shopping experience.
Develops digital content delivery solutions over the Internet.
2 12/22/2010 Rovi Sonic Solutions $698 Develops digital content delivery solutions over the Internet.
3 11/08/2010 Amazon.com Quidsi $545 Operates as an online retailer for baby care, health, beauty, and
3 11/08/2010 Amazon.com Quidsi $545 household as an online retailer for baby care, health, beauty, and
Operates essentials. !
household essentials. !
4 12/21/2010 Teradata Aprimo $525 Provides marketing software and solutions which enable marketers to
4 12/21/2010 Teradata Aprimo $525 efficiently marketing software and solutions whichtheir multi-channelto
Provides automate, deliver, analyze and manage enable marketers !
marketing campaigns. deliver, analyze and manage their multi-channel
efficiently automate, !
5 10/12/2010 DeNA ngmoco marketing campaigns.
$403 Develops social games and social game networking platform.
5 10/12/2010 DeNA ngmoco $403 Develops social games and social game networking platform.
!
!
6 10/26/2010 Francisco Partners Source Photonics $259 Designs, manufactures, and sells optical communication products for
6 10/26/2010 Francisco Partners Source Photonics $259 telecommunication systems and data communications networks. for
Designs, manufactures, and sells optical communication products
7 12/07/2010 Salesforce.com Heroku $252 Operates an online platform for software development. networks.
telecommunication systems and data communications
!
7 12/07/2010 Salesforce.com Heroku $252 Operates an online platform for software development. !
8 12/03/2010 j2 Global Protus IP Solutions $212 Provides software-as-a-service communication tools for small to
8 12/03/2010 j2 Global
Communications Protus IP Solutions $212 Provides software-as-a-service communication tools for small to
medium businesses and enterprise organizations. !
Communications medium businesses and enterprise organizations. !
9 10/01/2010 Arrow Electronics Richardson $210 Designs and distributes electronic components serving the wireless
9 10/01/2010 Arrow Electronics Richardson
Electronics, RF, $210 Designs and distributes electronic components serving the wireless
communications, electron device and display systems markets.
Wireless and RF,
Electronics, Power communications, electron device and display systems markets.
Division and Power
Wireless
10 12/23/2010 Consolidated Media Division
JobsDB $206 Online recruitment network serving recruiters, job seekers and
10 12/23/2010 Consolidated Media
Holdings Limited, JobsDB $206 employers.
Online recruitment network serving recruiters, job seekers and
MacquarieLimited,
Holdings employers.
Macquarie
Investment
Investment
Management
Management
Limited; SEEK
Limited; SEEK
Limited; Tiger
Global Tiger
Limited;
Global
11 12/20/2010 eBay Private Sale $200 Germany-based online shopping services through its platform
11 12/20/2010 eBay Private Sale $200 www.brands4friends.de.shopping services through its platform
Germany-based online !
www.brands4friends.de. !
12 12/15/2010 Scantron GlobalScholar $167 Online learning platform for college students.
12 12/15/2010 Scantron GlobalScholar $167 Online learning platform for college students.
13 11/12/2010 Discovery 50% Stake in Animal $156 Operates a television broadcasting network.
13 11/12/2010 Discovery
Communications 50% Stake in Animal
Planet and 50% $156 Operates a television broadcasting network.
Communications Stake inand 50%
Planet Liv
14 11/16/2010 Juniper Networks Stake in Liv
Trapeze Networks $152 Offers wireless local area network (WLAN) mobility systems for the
14 11/16/2010 Juniper Networks Trapeze Networks
(divestiture by $152 mobile enterprise workforce.
Offers wireless local area network (WLAN) mobility systems for the
(divestiture by
Belden) mobile enterprise workforce.
15 11/04/2010 American Express Belden)
Accertify $150 Provides software solutions, tools, and strategies for e-commerce
15 11/04/2010 American Express Accertify $150 companies.
Provides software solutions, tools, and strategies for e-commerce !
companies. !
6
7. M&A TRANSACTIONS: $25MM-$1B (continued)
ANNOUNCED TRANSACTION AP INSIGHT SM
# DATE ACQUIRER TARGET VALUE ($mm) TARGET DESCRIPTION M&A ALERT VC-BACKED
NON-SERVICE PROVIDER EasyLink Services
16 10/21/2010 TRANSACTIONS Xpedite Systems, $105 Provides enterprise unified fax services.
International Premiere Global
1 11/02/2010 Corporation
Oracle Services and
Art Technology $951 Provides eCommerce software that enables enterprises to provide a
Premiere
Group cohesive online and mobile customer shopping experience.
2 12/22/2010 Rovi Conferencing
Sonic Solutions $698 Develops digital content delivery solutions over the Internet.
17 10/26/2010 Broadcom Percello $98 Fabless semiconductor company that provides digital baseband
3 11/08/2010 Amazon.com Quidsi $545 Operates as an online retailer for baby care, health, beauty, and
integrated circuits. !
household essentials. !
18 10/05/2010 Amazon.com BuyVIP $97 Allows members to participate in limited-time sales campaigns that
4 12/21/2010 Teradata Aprimo $525 Provides marketing software and solutions which enable marketers to
offer high-quality fashion and lifestyle products. !
19 11/22/2010 Broadcom Gigle Networks $83 efficientlySystem-on-a-Chip (SoC) integrated circuits for home
Develops automate, deliver, analyze and manage their multi-channel !
marketing campaigns.
networking adapters, which plug into a power outlet. !
5
20 10/12/2010
12/02/2010 DeNA
eBay ngmoco
Milo.com $403
$75 Develops an online service that allows users to research product
Operates social games and social game networking platform. !
availability and prices online for purchase in a local store. !
6 10/26/2010 Francisco Partners Source Photonics $259 Designs, manufactures, and sells optical communication products for
21 11/05/2010 Novatel Wireless Enfora $71 Provides wireless networking devices communications networks.
telecommunication systems and data and applications that enable
7 12/07/2010 Salesforce.com Heroku $252 companies to access and analyze location and other important
Operates an online platform for software development. !
!
8 12/03/2010 j2 Global Protus IP Solutions $212 information from their geographically dispersed assets. small to
Provides software-as-a-service communication tools for
22 12/15/2010 KDDI
Communications KKBOX $60 medium businesses and operator based in Taiwan.
Online streaming music enterprise organizations. !
9
23 10/01/2010
11/03/2010 Arrow Electronics
PDI Richardson
group DCA $210
$55 Designs and distributes electronic components serving the wireless
Multichannel interactive digital communications agency.
24 10/13/2010 Qualcomm Electronics, RF,
iSkoot $52 Optimizes non-video data device between host serversmarkets.
communications, electron traffic and display systems and processing -
Innovation Center Wireless and Power limited feature phones. !
25 12/01/2010 Ericsson (China) Division
Guangdong Nortel $50 Joint venture between Nortel and local Chinese corporations and
10 12/23/2010 Consolidated Media
Communications JobsDB
Telecommunications $206 telecom operators. network serving and development, manufacturing,
Online recruitment Offers research recruiters, job seekers and
Holdings Limited, Equipment employers.
network support and customer services in China.
Macquarie
Investment
26 11/05/2010 QuinStreet
Management Car Insurance.Com $50 Online auto insurance comparison site.
27 11/17/2010 Limited; SEEK
Imagination HelloSoft $47 Provides Video over IP, Voice over IP and wireless LAN technologies.
Limited; Tiger
Technologies !
28 11/04/2010 Global
Pace Latens Systems $46 Develops software-based Conditional Access and Middleware for pay-
TV and Internet protocol television (IPTV) operators.
29
11 12/23/2010
12/20/2010 Chengdu B-ray
eBay Shanghai Chenyan
Private Sale $40
$200 Mobile game developer for iOS.
Germany-based online shopping services through its platform
Media Information www.brands4friends.de. !
12 12/15/2010 Scantron Technology
GlobalScholar $167 Online learning platform for college students.
30 12/21/2010 QSC IP Partner $33 Offers data center and storage solutions that enable audio and video
13 11/12/2010 Discovery 50% Stake in Animal $156 streaming. television broadcasting network.
Operates a
Communications Planet and 50%
Stake in Liv
31
14 11/09/2010
11/16/2010 The Hut Group
Juniper Networks Lookfantastic Group
Trapeze Networks $31
$152 Online shopping site for network (WLAN) mobility
Offers wireless local areahair and beauty products. systems for the
32 10/21/2010 Advanced Digital (divestiture by
Pirelli Broadband $31 mobile enterprise workforce.
Provides broadband access and photonics solutions for telecom
Broadcast Belden)
Solutions operators and service providers.
15
33 11/04/2010
12/06/2010 American Express
VODone Accertify
3guu.com $150
$30 Providesand develops mobile game platform that for e-commerce
Designs software solutions, tools, and strategies allows users to
companies.
download games on their mobile phones.
!
34 12/14/2010 Imagination Caustic Graphics $27 Offers 3D graphic rendering services.
Technologies
35 10/12/2010 Platinum Equity Ulticom $26 Designs, develops, markets, licenses, and supports network signaling
solutions software and hardware for use in the communications
industry.
7
8. M&A TRANSACTIONS: $25MM-$1B (continued)
ANNOUNCED TRANSACTION AP INSIGHT SM
# DATE ACQUIRER TARGET VALUE ($mm) TARGET DESCRIPTION M&A ALERT VC-BACKED
SERVICE PROVIDER TRANSACTIONS
1 12/06/2010 UPC Polska Aster Sp $805 Provides cable television, broadband Internet, and fixed line telephone
services in Poland.
2 12/06/2010 Macquarie Capital Ceske $762 Operates as television broadcasting company enabling digital
Funds (EU) Radiokomunikace distribution of TV signal and digital terrestrial TV broadcasting in the
Investment Arm Czech Republic.
3 10/01/2010 EarthLink ITC^DeltaCom $573 Provides communication services including data and voice for small
and medium-sized businesses in the Southeast states.
4 11/16/2010 Mobile Telesystems Sistema Telecom $429 Provides wireless and fixed-line communications services and Internet
Group banking services in Russia.
5 10/05/2010 Rogers Atria Networks $418 Owns and operates fibre-optic networks in Canada.
Communications
6 10/13/2010 Partner 012 Smile Telecom $416 Israeli-based telecommunication service provider offering telephone
Communications and internet services.
Company
7 12/20/2010 EarthLink One $370 Provides telecommunication services including data and Internet, VoIP
Communications and voice, Web and converged IP VPN, mobility, and managed services
in the Northeast, Mid-Atlantic, Upper Midwest states, and in the District !
of Columbia.
8 11/29/2010 Cequel NPG Cable $350 Provides cable communications and services in California and Arizona.
Communications
9 10/21/2010 C&M 84.8% stake in GS $337 Cable broadcasting and Internet service provider in South Korea.
Gangnam
Broadcasting
Corporation and
99.8% stake in GS
Ulsan Broadcasting
10 12/22/2010 EQT Partners Hafslund Fibernett $247 Operates dark fiber networks in Norway.
11 12/02/2010 Cable & Wireless The Bahamas $210 Provides telecommunications services including wireless, mobile
Communications Telecommunications trunking, private line, ISDN, cellular and, high speed DSL Internet
Company services in the Bahamas.
12 11/01/2010 LAP Green Network Societe des $90 Provides fixed and international telecommunications services including
Telecommunications DSL internet service, CDMA mobile services and prepaid calling plans in
du Tchad the Republic of Chad.
13 10/07/2010 Open joint stock Metrocom JSC $67 Provides telecommunication services, Internet access, and data
company MegaFon transmission services in Russia.
14 11/10/2010 Daisy Group Spiritel $64 Provides integrated communications services including IP
communications, mobile telecommunications and network services in
the U.K.
15 12/16/2010 Narodowy Fundusz Mobyland $59 Mobile operator. Offers telecommunication services in Poland.
Inwestycyjny Midas
16 11/11/2010 Primus Arbinet $33 Provide data and voice communications services (including VoIP
Telecommunications routing, traffic monitoring and internet exchange) for fixed, mobile,
and wholesale carriers in the U.S.
17 10/06/2010 Empresa Nacional Transam $27 Offers wireless telephony and broadband services in Chile.
de Comunicaciones and
Telecomunicaciones Will
18 12/24/2010 ZAO Comstar- Lanck Telecom $25 Offers voice services to carriers and retail operators including PSTN,
Regions GSM and packet based voice connections in Russia.
8
9. M&A TRANSACTIONS: OTHER NOTABLE
A number of transactions are announced without disclosing transaction values. Below, we highlight a select few notable
transactions which occurred within the fourth quarter of 2010.
ANNOUNCED AP INSIGHT SM
# DATE ACQUIRER TARGET TARGET DESCRIPTION M&A ALERT VC-BACKED
1 12/03/2010 Google Widevine Offers a multiplatform, multiformat DRM (Digital Rights Management)
!
and video optimization solution.
2 10/29/2010 Microsoft Canesta Develops 3D motion-sensing chips and software which enable
!
developers to add motion recognition capabilities.
3 10/19/2010 Critical Path Mirapoint Software Designs and supplies mail server and messaging appliances for
enterprises, service providers, educational institutions, and government
entities.
4 10/19/2010 NCR Mobiqa Provides mobile ticketing and mobile couponing solutions in the United
Kingdom and internationally.
5 10/05/2010 Yahoo! Dapper Provides technical solutions for companies and developers to interact
!
with Web content.
6 10/05/2010 BMC Software Neptuny Provides optimization solutions for telecommunication operators and
IPTV providers.
7 10/05/2010 Ticketscript Trinity Mobile Provides mobile ticketing, couponing, and marketing solutions in the
United Kingdom.
8 10/01/2010 Microsoft Vivaty Operates a 3D virtual community Website. !
9 10/01/2010 Velti Mobclix Operates a mobile ad exchange network through its open marketplace
platform and account management solution.
10 10/01/2010 Google BlindType Virtual keyboard developer.
9
