m&a snapshot q4 2012

M&A SNAPSHOTQ4 2012

JANUARY 2013

M&A SNAPSHOT

OVERVIEW COMMENTARY

Following a muted quarter in Q3, we saw a healthy increase in M&A activity for the final quarter of 2012. Within the $25 million - $1 billion transaction value range, M&A activity was up by 43% from Q3. Although deal activity increased, the total deal value slightly decreased by 20% to $10b, as the median transaction size dropped by 14%, from $107mm last quarter to $92mm this quarter. Despite the dip in valuations, we see a growing and healthy M&A market, as all Internet | mobile | digital media exits jumped up 28%, from 364 in Q3 to 466 in Q4.

Cisco was the most active acquirer this quarter with five closed transactions, including the $1.2b acquisition of cloud-managed network company Meraki, a pioneer of cloud-managed networked infrastructure. Cisco used Q4 to address its strategy for the growing adoption of wireless products, as it also acquired Cariden Technologies and vCider, both companies targeting network management and planning. Emulex acquired network management and security company Endace for $122mm. Oracle tied for second most active acquirer of Q4, with its marquee purchase of public marketing company Eloqua for $871mm at a 9.7x revenue premium. The largest transaction of Q4 was Softbank’s acquisition of Sprint Nextel for $33b.

Hyper-local companies Zillow (3 deals) and Airbnb (2) were also busy acquirers in the fourth quarter. Zillow expanded its rental search capabilities with the acquisition of San Francisco-based HotPads and expanded its product offering with Seattle-based home shopping platform Buyfolio. Airbnb addressed the growing trend in online community interaction platforms by acquiring Localmind and getSpotOn. In Q4, hyper-local companies accounted for 10% of the total transactions within the $25mm-$1b transaction value range, including Expedia’s acquisition of trivago for $628mm and Yelp’s acquisition of Qype for $47mm.

The transformation of marketing continues to be major M&A theme. The marquee transactions this quarter were Oracle’s acquisition of Eloqua for $871mm, Epsilon Data’s acquisition of Hyper Marketing for $460mm, ExactTarget’s acquisition of Pardot for $95.5mm and DealerTrack’s acquisition of ClickMotive for $57mm.

This past quarter, Architect Partners has published its M&A Alert on ten of the most strategic transactions in the quarter.

FOLLOWING ANALYSIS

M&A DASHBOARD:

NOTABLE ACQUIRERS:

M&A TRANSACTIONS:

OTHER NOTABLE TRANSACTIONS:

COMING SOON

ANALYSIS OF VC-BACKED M&A EXITS

SUMMARY OF QUARTERLY ACTIVITY IN NUMBERS AND TONE

ACTIVE INFLUENTIAL BUYER ACTIVITY

SUMMARY OF TRANSACTIONS BETWEEN $25MM-$1B IN VALUE

SUMMARY OF NOTABLE TRANSACTIONS WITHOUT ANNOUNCED VALUE OR ABOVE $1B.

2

COVERAGEArchitect Partners tracks M&A activity within the converging Internet | mobile | digital media sectors. The following assessment is focused on M&A transactions with announced values of between $25mm and $1B as these typically represent successful business-building endeavors.

MARKET TONEHealthy, with increased activity from Q3. Slight decrease in consideration paid due to drop in average deal size. Balanced buyer / seller dynamics.

Note: 1) Includes all Internet | mobile | digital media transactions regardless of transaction value. Transaction values within a range are presented as a mid-point value

Source: Architect Partners, Capital IQ, company filings and public information 3

2010 Q3 Q4

M&A DASHBOARD

68 61 63 57

$98 $113

$80 $90

48% 49% 52% 42%

27 23 23

19

2011Q1 Q2 Q3 Q4

457$ 482$ 450$ 417$

M&A Exits (#)1.................................................

Total Consideration Paid ($b)....................

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

Median Transaction Size ($mm)...............

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

All Internet | Mobile | Digital Media M&A Exits(1).......

$14 $12 $11

$9

2012Q1 Q2 Q3 Q4

45% 55% 52% 49%

$6 $5

$12 $12

38 40

68 53

$75 $100 $98 $105

12 17 18 16

362$$ 372$$ 368$ 341$ 352$440$

364$

466$

$12 $14

$12 $10

41

57 44

63

$103 $127

$107 $92

56% 46% 47% 48%

12 16 15 14

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 2012.

4

ACQUIRER # TARGET

5

3

3

2

2

2

2

2

2

2

2

2

NOTABLE ACQUIRERS

5

ACQUIRER # TARGET

2

2

2

2

2

2

2

2

2

2

1

1

1

NOTABLE ACQUIRERS (continued)

M&A transactions that have announced values between $25mm and $1b announced in Q4 2012 within the convergingInternet | mobile | digital media sectors.

6

M&A TRANSACTIONS: $25MM-$1B

Note: Transaction values within a range are presented as a mid-point value.Source: Architect Partners, Capital IQ, company filings and public information

#ANNOUNCED

DATE BUYER TARGETTRANSACTION VALUE ($MM) TARGET DESCRIPTION

AP INSIGHTSM

M&A ALERTVC-

BACKED

NON SERVICE PROVIDER TRANSACTIONS

1 10/20/2012 Oracle Eloqua $871 Provides on-demand SaaS revenue performance management software solutions for businesses.

!

2 10/16/2012 Pearson EmbanetCompass $650 Develops and support online degree and learning programs in North America. !

3 12/21/2012 Expedia trivago $628 Provides online services for travelers. Germany-based. !

4 10/01/2012 Nexon Gloops $468 One of the largest developers in the Japanese mobile games market.

5 11/09/2012 Epsilon Data Management

Hyper Marketing $460 Provides integrated performance marketing solutions and media services, including relationship, digital, mobile, social, retail, local and affiliate marketing, data and analytics, creative services, search marketing and display advertising.

6 10/31/2012 Vantiv Litle & Co $361 Provides payments processing, management and consultative merchant services.

7 12/05/2012 Citrix Zenprise $300 Develops and markets enterprise mobile device and service management software, which enables companies to manage and secure mobile infrastructures.

!

8 11/08/2012 Global Eagle Acquisition Row 44 $260 Develops and provides in-flight broadband entertainment platform for commercial airlines.

9 10/02/2012 John Wiley & Son's Deltak edu $220 Designs and develops online learning and higher education programs.

7

M&A TRANSACTIONS: $25MM-$1B (continued)


#ANNOUNCED


AP INSIGHTSM

M&A ALERTVC-

BACKED


10 10/26/2012 Burda Digital Xing Ag $215 Operates a professional networking website. Germany-based. !

11 10/24/2012 GREE Pokelabo $174 Develops and markets mobile social games. Japan-based.

12 11/12/2012 j2 Global Ziff Davis Media $165 Publishes technology-based digital content products for technology and gaming enthusiasts and small business owners, as well as provides contextual marketing solutions.

!

13 11/06/2012 Axel Springer Digital Classifieds

Immoweb $163 Operates a property website that enables users to sell and let properties. Belgium-based.

14 11/08/2012 Global Eagle Acquisition Advanced Infight Alliance

$157 Inflight entertainment services, including audio and video programs such as feature films, TV programs, news and sports, as well as electronic games. Also involved in the development of graphical user interfaces for various Internet and inflight entertainment applications. Germany-based.

15 11/29/2012 Cisco Cariden Technologies $141 Provides design, planning and operational automation intelligence for managing networks, which includes maintenance planning, congestion mitigation, troubleshooting and network look-ahead.

16 12/20/2012 Adobe Behance $125 Provides an online platform to showcase and discover creative work. !

17 11/15/2012 Cisco Cloupia $125 Provides cloud automation and management software solutions.

18 12/06/2012 Emulex Endace $122 Designs, develops, manufactures and markets network measurement, monitoring, management, security and surveillance solutions. New Zealand-based.

19 10/26/2012 Ybrant Digital PriceGrabber.com and Classes USA and LowerMyBills

$110 PriceGrabber.com provides online comparison shopping services. Classes USA operates an online higher-education portal. LowerMyBills provides online services to compile and compare rates and plans across multiple services for consumers.

8



#ANNOUNCED


AP INSIGHTSM

M&A ALERTVC-

BACKED


20 12/03/2012 Quindell Portfolio Abstract Legal Holdings

$108 Owns and operates an e-settle claims settlement platform. UK-based.

21 12/20/2012 Red Hat ManageIQ $104 Provides infrastructure management software solutions and automation solutions for private clouds, virtual infrastructures and virtual desktop environments.

22 10/11/2012 ExactTarget Pardot $100 Provides cloud-based B2B marketing automation software solutions for companies with multi-channel sales cycles.

23 11/14/2012 BT Group Tikit Group $98 Offers solutions and services in the areas of financial and practice management, time capture, content management, document production, workflow, customer relationship management (CRM) and infrastructure services. UK-based.

!

24 11/02/2012 Bravofly SA Red Universal de Marketing y Bookings Online, S.A.

$95 Operates a travel website that deals with the contracting, technical organization and formalization of bookings for flights, combined trips, cars and hotels. Spain-based.

25 11/19/2012 Viggle AdaptiveBlue $79 Offers users with a browser add-on for use on various pages around the web and mobile apps to check-in to TV shows, movies, music and books, as well as to see what their friends are consuming in real-time.

26 11/20/2012 SEVA MIPS Technologies $75 Provides industry-standard processor architectures and cores for home entertainment, networking, mobile and embedded applications.

27 12/16/2012 Ströer Out-of-Home Media

Ströer Interactive GMBH And freeXmedia GmbH And 50.4% Stake In Business Advertising

$65 Provides online marketing services. Germany-based. !

28 12/19/2012 Sberbank PS Yandex.Money $60 Develops and provides payment solutions for Internet users. Also offers an application programming interface for developing various payment features. Moscow-based.

29 12/19/2012 Clearlake Capital Group THQ, Substantially All Assets

$60 Develops and publishes interactive entertainment software for various game systems, personal computers, wireless devices and the Internet.

9



#ANNOUNCED


AP INSIGHTSM

M&A ALERTVC-

BACKED


30 12/16/2012 VeriFone Systems EFTPOS New Zealand $59 Offers card based payment solutions and face to face, integrated, interfaced, online and mobile EFTPOS. New Zealand-based.

31 10/02/2012 DealerTrack Holdings ClickMotive $57 Develops and delivers interactive marketing software primarily for the automotive industry.

!

32 12/27/2012 Synchronoss Technologies Ireland

NewBay Software $56 Products include LifeCache Connect, a suite of SDKs that enables developers to accelerate the implementation, deployment and upgrade of device applications. Ireland-based.

33 11/19/2012 INSIDE Secure AuthenTec, Embedded Security Solutions Division

$48 Designs, develops and sells encryption-related security hardware intellectual property (IP) and software.

34 10/24/2012 Yelp Qype $47 Operates as a user-generated local review site in Europe. Germany-based. !

35 12/12/2012 NCsoft Corporation NC West Holdings $47 Operates as a holding company and through its subsidiaries develops and publishes online games.

36 10/02/2012 Motorola Mobility Holdings

Viewdle $45 Provides computer vision technology for face detection, facial recognition, and augmented reality, as well as an SDK for the iOS platform. Its mobile application enables consumers to automatically tag and share photos and videos to Facebook and other social networks.

!

37 11/05/2012 Bazaarvoice Longboard Media $44 Enables brands to target consumers across shopping publishers, mobile commerce apps and retailers, as well as brands and retailers to present their message to consumers.

38 11/12/2012 NQ Mobile Beijing Feiliu Jiutian Tech

$41 Develops mobile applications for Interest-based online communities including mobile technology, automotive, health care, entertainment, books, games and others. China-based.

39 11/08/2012 Perion Network SweetIM Technologies $41 Offers SweetIM, a fun upgrade for web based applications, including Windows Live Messenger, Yahoo and AIM & ICQ instant messenger applications. Israel-based.

10



#ANNOUNCED


AP INSIGHTSM

M&A ALERTVC-

BACKED


40 10/10/2012 CafePress EZ Prints $40 Offers a suite of business programs to create personalized products, web tools and applications that enable customers’ digital content into physical photo products by adding their photos, text and choosing from a library of designs.

!

41 12/07/2012 Yahoo Japan Carview $36 Engages in Internet advertising business providing used car appraisal and brokerage related advertising services. Japan-based.

42 11/21/2012 Actian Versant $36 Enables an object database management system designed to support multi-user commercial applications in distributed computing environments.

43 10/09/2012 3D Systems INUS Technology $35 Develops 3D scan data processing software. South Korea-based.

44 10/15/2012 LFP Broadcasting LLC New Frontier Media $34 Engages in the provision of transactional television services and distribution of general motion picture entertainment.

45 12/21/2012 Wildcard Trans Infotech $34 Designs and develops payment software solutions. Singapore-based.

46 10/01/2012 Amaya Gaming Group Ongame Network $25 Provides online poker software solutions. Gibraltar-based.

47 10/09/2012 Third Point LLC; Penske Media

Reed Business Information, Variety

$25 Operates a worldwide entertainment news source.

48 12/21/2012 Meetic Massive Media $25 Operates as a digital media company. UK-based.

11



#ANNOUNCED


AP INSIGHTSM

M&A ALERTVC-

BACKED

SERVICE PROVIDER TRANSACTIONS

1 11/07/2012 Sprint Spectrum; SprintCom

U.S. Cellular, Business Operations in Parts of Five States

$480 Wireless business with 585,000 subscribers in the Midwest, including St. Louis and U.S. Cellular's home market of Chicago.

2 10/25/2012 SYD Energi A.M.B.A. Telia Stofa A/S $330 Provides radio, cable TV, broadband and telephony services to residential users. Denmark-based.

3 12/04/2012 Ventura Capital Privado Maxcom Telecomunicaciones

$256 Provides voice and data services to residential and small and medium-sized business customers. Mexico-based.

4 12/06/2012 The Gores Group Harris Broadcast Communications

$225 Offers solutions that support the digital delivery, automation and management of radio and television products, systems and services for broadcasters.

5 11/16/2012 Guangdong All Access Noter Communication Technology

Shenzhen Changfei Investment

$131 Manufactures telecommunication equipment. China-based.

6 10/17/2012 Kyocera Communication Systems

Motex $127 Security software developer preventing data leaks from smartphones. Tools monitor PC use and can disconnect access when software changes or information leaks are detected.

7 12/20/2012 Telio Holding NextGenTel Holding $108 Telecom company that provides broadband access and solutions to residential and corporate customers. Norway-based.

8 11/13/2012 INT Management Service Mfone Company $98 Provides telecommunication services for customers. Offers GSM mobile phone, CDMA based wireless fixed phone and satellite broadband Internet access services. Cambodia-based.

9 11/19/2012 PT Northstar Pacific Capital

Nera Telecommunications

$73 Designs, engineers and maintains telecommunication systems and products in transmission networks and satellite communications. Singapore-based.

10 12/20/2012 CalAmp Wireless Matrix USA $53 Provides wireless data solutions and services for business critical applications and also offers mobile satellite services.

12



#ANNOUNCED


AP INSIGHTSM

M&A ALERTVC-

BACKED

SERVICE PROVIDER TRANSACTIONS

11 12/05/2012 Redknee Solutions Nokia Siemens Networks, Business Support Systems Business

$52 Provides real-time charging, rating, policy and customer care solutions to more than 130 communication service providers.

12 10/02/2012 Datalink Strategic Technologies $36 Provides data protection, virtualization, disaster recovery and data center efficiency services.

13 11/05/2012 Telecity Group Academica $36 Provides IT support, server administration, hosting and e-mail, technical information security, network and server expert, domain name, operator and network services. Finland-based.

14 11/02/2012 TeamTalk BayCity Communications

$35 Provides IPSTAR satellite based communication services, including mobile vehicle mounted broadband, disaster recovery solutions and high bandwidth permanent connections for rural or remote businesses. New Zealand-based.

15 11/28/2012 Blackfoot Telecommunications Group

Fremont Telcom and Fretel Communications

$30 Fremont Telcom provides calling cards, voice mail and custom calling services. Fretel Communications offers local exchange and communications services.

!

13

A number of important transactions were announced in the fourth quarter of 2012 with consideration in excess of $1b or with unannounced transaction values.

M&A TRANSACTIONS: OTHER NOTABLE


#ANNOUNCED


AP INSIGHTSM

M&A ALERTVC-

BACKED

1 10/15/2012 Softbank Sprint Nextel $33,326 Offers wireless and wireline communications products and services to individual consumers, businesses, government subscribers and resellers.

2 10/01/2012 Softbank eAccess $4,808 Provides broadband Internet protocol (IP) communication services. Japan-based. !

3 10/30/2012 Walt Disney Lucasfilm $4,067 Operates as a film and entertainment company.

4 12/19/2012 Arris Group Motorola Mobility, Home Business

$2,350 Division that sells television set-top boxes.

5 12/17/2012 Elliott Management Compuware $2,257 Provides software, software as a service and professional technical services.

6 11/01/2012 JDA Software RedPrairie $2,200 Provides enterprise software solutions which enable planning, optimization and execution of supply chain, merchandising and pricing processes.

7 11/06/2012 priceline.com KAYAK Software $1,798 Provides online travel search services. Operates KAYAK branded websites and mobile applications.

!

8 10/22/2012 Permira Advisers; Spectrum Equity; Permira Investments

Ancestry.com $1,609 Operates as an online family history resource. !

9 12/18/2012 Nielsen Holdings Arbitron $1,256 Offers syndicated radio ratings services to radio broadcasters, advertising agencies and advertisers. Also offers software used for accessing and analyzing its media audience and marketing information data.

10 11/18/2012 Cisco Meraki $1,200 Cloud-based wireless networking company deploying wireless network infrastructures.

!

11 10/16/2012 Microsoft StorSimple - Provides cloud-integrated enterprise storage services that deliver tiered local and cloud storage, live archiving and cloud-based data protection.

!

12 10/09/2012 Lithium Technologies Social Dynamix - Operates a cloud-based platform for social customer relationship management (CRM) and customer care solutions.

m&a snapshot q4 2012

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