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VC-BACKED M&A SNAPSHOT

Q1 2013
April 9th 2013

VC-BACKED M&A SNAPSHOT

OVERVIEW COMMENTARY
While overall M&A activity was down in Q1 (see our Q1 2013 M&A Snapshot), venture-backed M&A exits stayed consistent with Q4 2012 levels with 12 transactions within the $25mm - $1b range. However, total consideration paid for VC-backed companies declined 32%, from $3.1b in Q4 to $2.1b in the current quarter. Despite this decline in overall value, we believe levels are likely to rebound in the next quarter or two. Summary observations for the quarter include: 1. The big deals this quarter included Ciscos $475mm acquisition of Intucell and Operas $155mm acquisition of Skyre Labs. Both were mobile network performance-related transactions. The median return on invested capital was 6.0x(a) Four transactions provide >10.0x invested capital multiple returns to investors: Buyer / Seller Cisco / Intucell Amazon / Goodreads Dropbox / Orchestra Yahoo / Summly Trx Value/ Invested Cap 52.8x 50.0x 12.5x 10.0x Seller Description European online payment provider Social book reading site Maker of mobile email app (Mailbox) Mobile content summarization app

FOLLOWING ANALYSIS
SUMMARY OF VC-BACKED M&A EXITS: VC-BACKED M&A TRANSACTIONS:
SUMMARY OF QUARTERLY ACTIVITY IN NUMBERS AND TONE

LISTING OF TRANSACTIONS.

VC-BACKED

2. 3.

4.

U.S. sellers comprised 71% of total VC-backed transactions within Q1 2013.

(a) Note: Data pertains to 10 transactions in the quarter (out of a total of 12), where both acquisition price and total invested capital were disclosed between the $25mm - $1b range.

VC-BACKED M&A SNAPSHOT - SUMMARY

COVERAGE
Architect Partners tracks venture capital-backed M&A activity within the converging Internet | mobile | digital media sectors. The following assessment is focused on venture capital-backed M&A transactions with announced values of between $25mm and $1b as these typically represent successful business-building endeavors. We also include transactions with unannounced values which we believe are within $25mm-$1b range.

MARKET TONE
Average. Consistent number of VC-backed exits with a decline in total consideration paid. Quality businesses with momentum will continue to attract strong interest. Strategic-driven transactions continue to command premium values.

Q1

2011 Q2 Q3
27

Q4
21

Q1
16
4

2012 Q2 Q3
25 20

Q4
9

2013 Q1

4 27

2 23 23 19

5
12

15

3 16 15
16

5 15

14
2 12

Venture-Backed M&A Exits (#)1............................

$4.2 $3.4 $3.6 $2.3

12

12

$3.7 $1.8
$1.8

$3.8

$3.7

$3.1

$3.8 $2.1

Total Consideration Paid ($b)2,4............................

$103 $104
$129 $152

$129
$76

$152
$112

$80

$95

$123 $76

Median Transaction Size ($mm)2,4........................

63% 64% 67% 73%

75%

84%

75% 73%

84%

75%

70%

71%

U.S.-based Target (%)3.............................................

Note: 1) Dark blue includes VC-backed M&A transactions with announced values of between $25mm and $1b. Light blue includes notable VC-backed M&A transactions where consideration paid was >$1b or not announced, however we believe to have values of between $25mm and $1b. 2) Total consideration paid and median transaction size are calculated based on transactions with announced values of between $25mm and $1b. 3) Percentage is based on U.S. target, calculated based on cumulative transactions. 4) Transaction values with a range are presented as a mid-point value

VC-BACKED M&A SNAPSHOT - TRANSACTIONS

Below we highlight Q1 2013s Venture Capital-backed M&A transactions. This list contains transactions within the range of $25mm to $1b values. We also include two other notable transactions with undisclosed values.

TARGET

ACQUIRER

ACQUISITION PRICE ($mm)

$485

CAPITAL ($mm)
NA

INVESTED

MULTIPLE OF INV. CAPITAL VENTURE CAPITAL FIRMS

NA

TARGET M&A LOCATION ALERT

$475

$9

52.8x

$268

NA

NA

$155

$41

3.8x

$150

$3

50.0x

$125

$21

6.0x

$120

$51

2.4x

Note: a) Represents public company at time of acquisition. For purposes of this VC-backed M&A analysis, Architect Partners only includes recently public companies that have IPO dates within one year preceding the announcement of an M&A event. Source: Architect Partners, Capital IQ and Public Information

VC-BACKED M&A SNAPSHOT - TRANSACTIONS (continued)

Below we highlight Q1 2013s Venture Capital-backed M&A transactions. This list contains transactions within the range of $25mm to $1b values. We also include two other notable transactions with undisclosed values.

TARGET

ACQUIRER

ACQUISITION PRICE ($mm)

$89

CAPITAL ($mm)
$15

INVESTED

MULTIPLE OF INV. CAPITAL VENTURE CAPITAL FIRMS

5.9x

TARGET M&A LOCATION ALERT

$85

$20

4.3x

$75

$6

12.5x

$48

$30

1.6x

$30

$3

10.0x

NA

NA

NA

NA

$1

NA

Note: a) Represents public company at time of acquisition. For purposes of this VC-backed M&A analysis, Architect Partners only includes recently public companies that have IPO dates within one year preceding the announcement of an M&A event. Source: Architect Partners, Capital IQ and Public Information

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