VC-BACKED M&A SNAPSHOT

Q4 2013


January 10
th
2014
lNTERNET
[
MOPlLE
[
DlGlT/L MEDl/
1.




2.



3.


4.








5.
OVERVIEW COMMENTARY

Venture-backed M&A exits continued the ascending momentum from Q3 and
followed overall Q4 M&A trends (see our Q4 2013 M&A Snapshot). We saw 17
VC-backed M&A transactions within the $25mm - $1b range, up 21% from the
previous quarter. Total consideration paid for VC-backed companies inched
up 3% to $3.7 billion and geographic deal distribution remained at 76% U.S.-
based target acquisitions. Median VC-backed transaction size decreased a
modest 10% to $150 million. Annually, 2013 saw 17% less VC-backed M&A
exits (54) and a 7% decline in total consideration paid ($11.5 billion).

Summary observations for the quarter include:

We saw 8 premium value exits within VC-backed M&A in Q4. Premium
value is dened as achieving greater than 5 times invested equity capital, or
greater than 5 times the estimated last 12 month revenue (see our Premium
Value M&A Infographic for details).

The largest venture-backed exit this quarter was Softbank and Gung Hos
$1.5 billion acquisition of Clash of Clans developer Supercell, representing a
10.8x investment return.

The median return on invested capital was 4.5x
(a)
- a sharp 46% decline
from the previous quarter (8.4x).

Three transactions within the $25mm - $1b value range provided >10.0x
invested capital returns to investors:







U.S. sellers comprised 76% of total VC-backed transactions within Q4 2013.

FOLLOWING ANALYSIS

SUMMARY OF VC-BACKED
M&A EXITS:


VC-BACKED M&A TRANSACTIONS:



SUMMARY OF QUARTERLY ACTIVITY
IN NUMBERS AND TONE


L I S T I N G O F V C - B A C K E D
TRANSACTIONS.
VC-BACKED M&A SNAPSHOT
Trx Value/
Invested Cap

19.7x
14.8x
10.7x
Seller Description

Enterprise cloud management
Online platform for vehicles
Data management app
(a) Note: Data pertains to 16 transactions in the quarter (out of a total of 17), where both
acquisition price and total invested capital were disclosed between the $25mm - $1b range.
Buyer / Seller

CSC / ServiceMesh
Dealertrack / Dealer.com
Facebook / Onavo Mobile
2
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 between $25mm and $1b as
these typically represent successful business-building
endeavors.
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

MARKET TONE
Positive. The number of VC-backed exits and total
consideration paid in Q4 both increased, with a
slight 10% decline in median transaction size. Sharp
46% decline in median return on invested capital.
Venture-Backed M&A Exits (#)
1
............................




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




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




U.S.-based Target (%)
3
.............................................
21
2011
Q4
16
25
2012
Q1 Q2 Q3 Q4
20
15
VC-BACKED M&A SNAPSHOT - SUMMARY
75%
84%
73% 75%
12
16 15
12
9
5
3
$129
$152
$76
$112
$1.8
$3.7 $3.8
$3.1
4
14
13
2013
Q1 Q2 Q3 Q4
3
18
12 11
14
17
2
2
1
$123
$150
$166
$150
$2.1 $2.1
$3.6 $3.7
71% 72%
76% 76%

Source: Architect Partners, Capital IQ and Public Information
VC-BACKED M&A SNAPSHOT - TRANSACTIONS
Below we highlight Q4 2013s venture capital-backed M&A exits within the $25mm to $1b value range, including one $1b+ exit.
4

Source: Architect Partners, Capital IQ and Public Information
VC-BACKED M&A SNAPSHOT - TRANSACTIONS (Continued)
5

Source: Architect Partners, Capital IQ and Public Information
VC-BACKED M&A SNAPSHOT - TRANSACTIONS (Continued)
6
lNTERNET
[
MOPlLE
[
DlGlT/L MEDl/