A brief US M&A overview presented by GroupArgent and ResultsArgent, highlighting that the M&A window is open for business and providing the four "must-hear" pieces of advice for tech companies looking to exit.

1. How to Win in
Tech M&A
in 2014
A Brief US M&A Overview
November, 2013


2. GroupArgent / Results Argent Current M&A
Our transactions span the globe. Below is a representation of current M&A
engagements, many of which are cross-border
Eastern
Europe
Western
Europe
North
America
Middle East &
North Africa
South
America
Asia
Sub-Saharan
Africa
Australia &
New
Zealand
Target
Location
Acquirer
Location
2


3. Much has Changed in 10 years...
MOBILE:
Smartphone
sales beat PC
sales for the
first time ever
Within the past 10 years, we have seen
the widespread adoption of wifi,
invention of social media, revolutionization of what it means to be “mobile”
and landmark M&A and IPO events as
technology giants work to gain and
maintain market share
LOCAL:
Groupon
launches
FINTECH:
Square is
launched
MOBILE:
Apple
introduces
first iPhone
MOBILE:
Amazon
introduces
Kindle
2008
WIFI:
Intel
adds
Wifi to
chips
SEARCH:
Google
IPOs
2004
M&A:
eBay
acquires
Skype
for
$2.5bn
2005
VIDEO:
Skype
launches
2003
SOCIAL
MEDIA:
Facebook
launches
VIDEO:
YouTube
launches
M&A:
Google
acquires
YouTube
for
$1.6bn
2006
MICROBLOGGING
/ NEWS:
Twitter
launches
2007
SEARCH:
Google
processes
over 1tn
URLs
CLOUD:
Dropbox’s
launches
Source(s): Internet Research
3
2009
2010
TABLET:
Apple
introduces
first iPad
SOCIAL:
Instagram
launches
2011
M&A:
Microsoft
acquires
Skype for
$8.5bn
IPO:
Groupon
IPOs
($700m
raised /
$13bn
valuation)
2012
IPO:
Facebook is
3rd largest
IPO ever
($16bn
raised /
$104bn
valuation)
M&A:
Facebook
acquires
Instagram
for $1bn
M&A:
Google
acquires
Motorola
for $12.9bn

2013
MOBILE:
Apple
releases its
6th gen
iPhone;
RIM faces
market
difficulties
M&A: Dell is
taken
private in a
$5.5bn LBO

4. …and Markets are Back on The Rise
As the S&P and Nasdaq have reached 10-year highs, the IPO market has responded, with
2013 launching over 180 IPOs and raising $45bn, the highest deal values since 2007
S&P 500
NASDAQ
Twitter raised $1.82bn in
its IPO, bringing 2013 total
deal volume to $45bn+
1900
1700
IPO deal volume ($bn)
5000
4500
1500
$43
1300
$42
$49
$39
$34
1100
900
5500
$25
$15
$36
$42
$45
4000
3500
3000
2500
$22
2000
700
1500
500
1000
2003
2004
2005
16%
2006
2007
2008
The average first day pop in
2013, the highest level
within the last 10 years
Source(s): Renaissance Capital
4
2009
2010
9
2011
2012
2013 YTD
Companies that have raised
more than $1bn in their IPOs,
the largest number in 5 years


5. Top Tech IPOs Raised $21bn+ Since 2012
1
May – 2012
$16bn raised @ $38/sh
2
Nov – 2013
$1.8bn raised @ $26/sh
3
Oct – 2012
$733m raised @ $28/sh
4
Jun – 2013
$395m raised @ $17/sh
Jun – 2012
$240m raised @ $18/sh
10
Jul – 2013
$191m raised @ $21/sh
11
Mar – 2012
$162m raised @ $19/sh
12
5
9
Sep – 2013
$162m raised @ $9/sh
13
Jan – 2012
$132m raised @ $13/sh
14
Sep – 2013
$131m raised @ $26.50/sh
15
Apr – 2012
$120m raised @ $16/sh
Sep – 2013
$304m raised @ $20/sh
6
Apr – 2012
$264m raised @ $17/sh
7
Jul – 2012
$260m raised @ $42/sh
8
May – 2013
$254m raised @ $31/sh
Source(s): Dealogic, Internet Research
5


6. Tech M&A Market is Back Open for Business
Tech M&A has seen a steady increase throughout 2013, with a significant boost in 3Q 13
due to the Software subsector
IPO deal volume ($bn)
$29
$33
$28
$21
$21
$14
$10
1Q 12
2Q 12
Software
3Q 12
Internet
4Q 12
Semiconductor
1Q 13
IT Services
2Q 13
3Q 13
Hardware / Networking
As software becomes increasingly cloud-based and thus accessible to a wider enterprise audience, driving robust
recurring revenues, acquirers seek software companies with technology that target specific solutions yet can be
integrated into larger offerings
Source(s): PWC, 451 Research
6


7. Multiples Are Up
Software companies continue to receive the highest multiples in 2013, while Hardware /
Networking, Internet, and Semiconductor companies enjoyed significant boosts to their
multiples
Enterprise Value / Revenue Multiples
2012
8.0x 8.2x
2013
5.3x
3.4x
1.6x
1.4x 1.3x
IT Services
4.7x
Semiconductor
4.0x
2.3x
Internet
Hardware /
Networking
6.0x
Average 2012 Multiple
Across Subsectors
Source(s): 451 Research
Note(s): Excludes acquisitions of non-US targets
3.3x
7
Software / SaaS
Average 2013 Multiple
Across Subsectors


8. Top 2013 US Target / US Acquirer Deals
The average multiple for the top 10 deals in which a US target is acquired by a US
company is 4.4x revenue, skewed by Dell’s LBO, the biggest deal of 2013 at $24.8bn
Date
1
Feb-13
2
May-13
4
Acquirer
Target Description
Silver Lake Partners /
Michael Dell
Sep-13
3
Target
Computer & IT systems provider
Deal Value
($m)
EV /
Revenue
$24,811
0.4x
Electrical connector manufacturer
$7,200
1.9x
Systems management software
provider
$6,900
3.2x
May-13
Mortgage loan origination software
$2,900
2.0x
5
Jul-13
Intrusion detection & prevention &
anti-malware
$2,700
10.7x
6
Jun-13
Marketing automation SaaS provider
$2,500
7.6x
7
Feb-13
Session border controllers provider
$2,063
5.9x
8
Jun-13
Online automotive reference content
$1,400
3.5x
9
Feb-13
Prepaid payment cards provider
$1,400
4.1x
10
Aug-13
Commercial aviation communications
& data
$1,390
-
PE Consortium
Average
Source(s): 451 Research
Note(s): Excludes asset acquisitions
4.4x
8


9. Top 2013 US Target / European Acq. Deals
Meanwhile, US targets acquired by European companies have a higher revenue multiple
at 6.6x, although deal sizes are smaller
Date
Target
Acquirer
Target Description
Deal Value
($m)
EV /
Revenue
1
Oct-13
Device identification & anti-fraud
software
$310
14.1x
2
Jul-13
Power supply & LED driver
semiconductors
$310
-
3
Oct-13
Optical transport systems provider
$264
1.2x
4
May-13
Manufacturing operations
management software
$205
4.1x
5
Jun-13
Video surveillance systems &
recording software
$150
-
6
Apr-13
Genomic bioinformatics SaaS
$105
5.3x
7
Aug-13
Professional services automation
SaaS
$70
-
8
Jul-13
IT BSM & network monitoring SaaS
$50
7.1x
9
Feb-13
Mobile video traffic software
$50
10.2x
10
Aug-13
Operational intelligence visualization
software
$40
4.0x
Average
Source(s): 451 Research
Note(s): Excludes asset acquisitions
6.6x
9


10. Top Active Acquirers Have Changed…
While the software subsector may have the greatest deal volume, consumer-facing
companies made the most acquisitions in 2013 YTD
= 1 acquisition
2013 YTD
2012
@WalmartLabs, Automattic, CSC,
GoDaddy, IMS Health, Intel, Lexmark,
Maxim Integrated Products, Shutterfly,
TripAdvisor
Source(s): 451 Research
Note(s): Includes acquisitions involving US acquirer or US target; Excludes asset
acquisitions
10


11. …Leading to New Kids On The Block…
There are new names in the top M&A acquirers of 2013, ranging across subsectors
After making only 9
acquisitions
between 2010 and
2012, Yahoo has
jumped to 21
acquisitions, mainly
“acqui-hires”
Source(s): 451 Research
Note(s): Excludes asset acquisitions
The fast-growing
ERP company has
made 5
acquisitions,
predominantly
building out its
services for retailers
A newcomer to the
tech M&A space,
@WalmartLabs has
made 4 acquisitions
in the analytics /
social network
space to enhance
its online sales and
hire engineers
11
The privately-held
owner of
Wordpress raised
$125m in 2013 and
made 3 software
and 1 domain name
acquisition
The year after its
IPO, Proofpoint
made 4 spam /
malware
acquisitions totaling
$55m


12. …And Continuing the Acqui-Hire Trend
The most powerful people in tech are hiring their next wave of innovators by acquiring
smaller start-ups
Bread Labs
IQ Engines
Ztelic
AdMovate
Xobni
Qwiki
Bignoggins
Rondee
GhostBird
Palaran
Tumblr
Loki Studios
MileWise
Go Poll Go
Todoroo
Summ.ly
Jybe
Propeld
Snip.it
19 acqui-hires
Midnox
Mobile Technologies
Monoidics
spaceport.io
Osmeta
Hot Studio
Storylane
Flexicorp
Flutter
Wimmlabs
Waze
Wavii
DNNresearch
Marakana
Lucky Sort
Ubalo
We Are Hunted
Crashlytics
7 acqui-hires
6 acqui-hires
5 acqui-hires
Source(s): 451 Research
Note(s): Acqui-hires defined based on press articles and releases
12


13. How to Win in M&A in 2014: Blunt Advice
1
Embrace Timing
Know when your exit is available and when the valuation
is right. “Pigs get slaughtered!”
2
Be Open-Minded
Not everyone can sell to Yahoo, Google, or Microsoft so embrace non-traditional
buyers
3
Focus on Your Core Market
You can’t be something to everyone. Too many tech companies get spread thin by
concentrating on multiple things instead of doing one thing better than anyone else
4
“Good Companies are Bought, Not Sold”
Execute on your strategic plan and often the right buyer will find you
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

14. About Our Firm
We are the leading advisor to companies seeking to build and realize value in the global
marketing, technology, communications, and healthcare industries. Our services include
M&A, capital raising, and business consultancy
US Technology Bank
Global Joint Venture
AdTech
Marketing / Digital Agencies
Media / Content
E-Commerce
SaaS
AdTech
Software
Marketing / Digital Agencies
Healthcare IT
Our sole mission is to help you maximize your company’s growth and enterprise value.
Whether you need a capital partner, an exit, a door opened or just some good advice, our
experienced team will guide you through your options and help you execute to the best
possible outcome
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15. Our Global Team
Our international presence consists of ten offices throughout Europe, North America,
Latin America, Asia-Pacific, Middle East and North Africa, with headquarters in the heart
of London and New York City
Our M&A experience in every major territory across the globe is unrivalled; we have
completed more than 200 transactions over the past 22 years
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16. Thank You
