2
GP BULLHOUND YEAR IN REVIEW 2011 M
&A
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
PR
IVA
TE
PL
AC
EM
EN
TS
SECONDARY SALE
March
SOLD TO
April
SALE OF
MINORITY STAKE
May
MANAGEMENT
BUYOUT
August
ACQUIRED
PORTFOLIO OF
September
SEARCH UNIT
SOLD TO
November
SALE OF GIMV STAKE
& PRIMARY CAPITAL
RAISE
November
SALE OF STAKE TO
December
COMMON STOCK
OFFERING
April
PRIVATE
PLACEMENT
UNDISCLOSED
October
CONVERTIBLE
BOND PLACEMENT
November
PRIVATE
PLACEMENT
QUALCOMM
PENTECH
July
PRIVATE
PLACEMENT
KTH CHALMERS CAP.
SIXTH AP FUND
July
PRIVATE
PLACEMENT
ETF
June
CONVERTIBLE
DEBT PLACEMENT
December
PRIVATE
PLACEMENT
UNDISCLOSED
May
RE
SE
AR
CH
RE
PO
RT
S
EV
EN
TS
January
Technology
Predictions
for 2011
April
Social
Commerce
May
Russian
Internet
June
Mobile
Payments
October
Market
Update
October
Mobile
Gaming
November
Water
November
eBooks
8 Breakfast
Roundtables
throughout year
3
Revenue
Time Valley of Death
Angels Founders
Venture Capital Strategic Investors
Public Markets
Seed Capital
A
B
C
Mezzanine
Early Stage Later Stage
IPO
Secondary Offerings
The Chasm The Wall
Seed or Start-up: Market research and product development. Little or no revenues Early Stage: Funding full-scale operations and selling products/services. Not yet profitable Later Stage: Funding expansion and new products. Near break-even
THE FINANCING LIFECYCLE
4
TYPICAL FINANCING ROUND COMPANY REQUIREMENTS
Impressive team of founders
Go to market strategy
Credible business plan
Clear value proposition
Early proof of concept
Experienced management team
Strong sales capabilities
Successful execution of business plan
Scalability
Commercialisation strategy
Proven senior management with an experienced second
line
Developed sales channels
Plan to move the business to the next level
Defined market offering
Fully developed business model
Seed/Round A Financing Expansion Round Late Stage Round
Time
Value
5
TECH PRIVATE PLACEMENT SECTOR ACTIVITY
TRANSACTION VALUE AND NUMBER
Source : GP Bullhound, Capital IQ. European private targets only. As of 23 January 2012.
» Cleantech sector up 109% in
2011 vs. 2010, driven by an
increase in average
transaction size (e.g. Grupo T-
Solar $182m and Sorgent.e
Holding $50m)
» Digital media sector attracting
less capital in 2011 vs. 2010,
but more active with 297
transactions
» Semiconductor sector
considerably down, due to
large transactions in 2010
» Software sector down nearly
flat
AVERAGE TRANSACTION SIZE
$340m
$755m $650m
$203m
$3,533m
$2,368m
$613m
$971m
$399m
$860m
$433m$203m
$3,927m$4,099m
$1,470m$1,747m
2007 2008 2009 2010
Cleantech Digital Media Semiconductor Software
Mergers & Acquisitions
$2,597m $4,198m $2,006m $4,680m $2,770m Total TV:
6
23.6%
48.5%
12.5%
76.8%
(10.0%)
(40.8%)
3.4%
(11.4%)
(46.5%)
121.2%
0.5
50.5
100.5
150.5
200.5
250.5
300.5
May-11 Jun-11 Jun-11 Jul-11 Aug-11 Sep-11 Sep-11 Oct-11 Nov-11 Nov-11 Dec-11 Jan-12 Jan-12 Feb-12 Mar-12 Mar-12 Apr-12
TripAdvisor Inc. Yelp, Inc. Angie's List, Inc. Demandware, Inc. Zynga, Inc.
Groupon, Inc. Yandex N.V. HomeAway, Inc. Pandora Media, Inc. LinkedIn Corporation
RECENT TMT IPO PERFORMANCE – VERY MIXED
Source: Capital IQ
Rebased to
100
IPOs performance from the +122% for Linkedin since IPO to the (41%) and (47%) for
Groupon and Pandora Media. Facebook next.
7
Date Amount Raised
($m) EV/LTM
Revenue(1)
Jan-12 230 27.2x
Dec-11 228 7.5x
Nov-11 107 15.7x
Aug-11 114 8.5x
Jul-11 88 15.4x
Jul-11 1,000 4.1x
Jun-11 700 4.0x
Apr-11 1,304 12.9x
Mar-11 216 7.7x
Feb-11 235 4.8x
Jan-11 353 18.4x
SELECTED RECENT TMT IPOS IN THE US AND EUROPE
Source: Capital IQ
1) As at 23 April 2012
IPOs on US Stock Exchanges IPOs on European Stock Exchanges
US superstar TMT IPOs raise more and happen more often than in Europe
Date Amount Raised
($m) EV/LTM
Revenue(1)
Apr-12 20 n.a.
Mar-11 239 6.0x
Dec-10 11 1.9x
Jun-10 15 2.8x
Feb-10 893 4.2x
Sep-09 158 1.9x
8 Source: Preqin
55.9 53.1 48.9 51.1
62.2
97.8
81.4
107.5
121.7
141.3
149.2
128.7 126.5
211.7
123.7
194.9
173.6
206.1
124.1
166.0
77.2
94.8
54.8
69.3
77.0
54.8
72.5
53.8
64.9
82.8
44.8
52.4 46.3
0
50
100
150
200
250
Q12004
Q22004
Q32004
Q42004
Q12005
Q22005
Q32005
Q42005
Q12006
Q22006
Q32006
Q42006
Q12007
Q22007
Q32007
Q42007
Q12008
Q22008
Q32008
Q42008
Q12009
Q22009
Q32009
Q42009
Q12010
Q22010
Q32010
Q42010
Q12011
Q22011
Q32011
Q42011
Q12012
All Private Equity Fundraising by Quarter (Q1 2004 – Q1 2012) Aggregate Capital
Raised ($bn)
PE FUNDRAISING FAR FROM PEAK…YOUR CHANCE
9
THE INTERNET IS A WAVEY SPACE…TIMING IS EVERYTHING
Source: ComScore
2008 2007 2006 2009 2010 2011
Widgets / Personalised
home pages
“Personalise
your web”
“Too slow
and clunky”
“Only private
equity geeks
use it”
Video Sharing Local Group Buying
“Tremendous
viral growth”
“Crap videos”
“Legal
concerns”
“You Tube
kills all the
others” ?
“Finally
cracked local
monetisation
”
“Groupon is
killing
competition”
“Unsustainable
margins”
Interest /
Valuations
Why it happens…
Audience before business model (video sharing, social networks)
Business model before audience (mobile data)
“Rush to Oklahoma" turns into "winner-takes-it-all“ (search, social networks, group - vouchering?)
“Fear of Missing Out”: crowd psychology of investors
10
THE EVOLUTION IN ECOMMERCE
Bricks and Mortar E-Commerce
Generalist Etailing Specialist Etailing
“Traditional” E-Commerce Social E-Commerce
Private Sales Daily Deals
Retail
11
E-COMMERCE 2.0 FUELLING M&A MARKET
$146bn
$150bn
$162bn
$183bn
$203bn
2008 2009 2010 2011 2012
Consolidation of established online sectors, expansion into new product retail and evolution of business models driving exits
Flash Sales
New
models
Mature
models
Shop $112m
$200m
$318m
WESTERN EUROPEAN ECOMMERCE REVENUES
Source: eMarketer, Capital IQ, GP Bullhound
Note: excludes financial services and event ticket sales
KEY TRANSACTIONS
Tailored eCommerce
$195m
$200m
Group Shopping
Undisclosed
12
$639m
$826m
$1,025m
$1,213m
$1,372m
$1,526m
2009 2010 2011 2012 2013 2014
FUNDAMENTAL SHIFT IN WEB USAGE - SEARCH TO SOCIAL
Media /
Entertainment
Video
Social Gaming
$550m
Music
Source: eMarketer, Capital IQ, GP Bullhound
Note: excludes financial services and event ticket sales
Broad consumer base, new monetisation strategies and cross-platform opportunities – key drivers for M&A activity in the casual
gaming space
GLOBAL SOCIAL GAMING REVENUES KEY TRANSACTIONS
$308m
$100m
$85m
13
MOBILE TO OVERTAKE DESKTOP BY 2014
mCommerce
Mobile
$240m
$41m $115m
$12bn
0.0
0.5
1.0
1.5
2.0
2.5
2007 2009 2011 2013 2015
Internet Users (bn)
Desktop Internet users Mobile Internet users
2008 2010 2012 2014
Source: Morgan Stanley Research, Capital IQ, GP Bullhound
Infrastructure for commercial mobile business models finally established
GLOBAL MOBILE AND DESKTOP INTERNET USERS KEY TRANSACTIONS
IPO
$150m
Mobile
Advertising $200m
Private Placement
$119m
$100m
16
GLOBAL APPEAL
Foreign acquirers re-entering European markets /
North American acquisitions now exceeding 2007 levels
84% 83%
87%
82% 80%
14% 14%
10%
14% 18%
1% 2% 2% 3%
1% 1% 1% 1% 1% 1%
Europe North America Asia Other
Source: Capital IQ, GP Bullhound. Represents announced transactions with European target
2007 2008 2009 2010 2011
17
CASH RESERVES DRIVING M&A
CASH & ST INVESTMENTS FOR KEY TECHNOLOGY PLAYERS ($m)
Source: US Federal Reserve, Capital IQ, press as of January 2012
US NONFARM NONFINANCIAL CORPORATE BUSINESS – TOTAL LIQUID ASSETS ($bn)
» The amount of cash and
marketable securities large
corporations hold has been
on the rise over the last three
years
» In the US, the amount of
liquid assets held by
nonfinancial corporations is
the highest to date, at c.$2.1
trillion
0
10,000
20,000
30,000
40,000
50,000
60,000Jan-12
Jan-11
Jan-10
0
500
1,000
1,500
2,000
2,500
2005 2006 2007 2008 2009 Q1 2010 Q2 2010 Q3 2010 Q4 2011 Q1 2011 Q2 2011 Q3 2011
18
FIND OUT WHO’S BUYING
Source: Deutsche Bank, Mergerstat, CapitalIQ, GP Bullhound
Top Technology Acquirers, 2005 - 2010
Apple, $29
Dell, $731
Cisco, $534
EMC, $750
HP, $2,016
Google, $649
Intel, $1,461
IBM, $1,021
Microsoft, $918 Oracle, $2,156
Qualcomm, $144
0
10
20
30
40
50
60
70
80
0 2 4 6 8 10 12
Nu
mb
er
of
Tra
ns
ac
tio
ns
Bubble size corresponds to average deal size of disclosed transactions ($,M)
19
PRIVATE TECH M&A SECTOR ACTIVITY
» Cleantech sector up
considerably in 2011 2010,
mainly due to larger
transactions (for example
Iberdrola’s acquisition of
Iberdrola Renovables)
» Digital media sector flat
» Semiconductor sector down
considerably driven by smaller
acquisitions
» Software sector slightly up,
with larger average
transaction size
$340m
$755m $650m
$203m
$3,533m
$2,368m
$613m
$971m
$399m
$860m
$433m$203m
$3,927m$4,099m
$1,470m$1,747m
2007 2008 2009 2010
Cleantech Digital Media Semiconductor Software
Mergers & Acquisitions
TRANSACTION VALUE AND NUMBER
AVERAGE TRANSACTION SIZE
$21,908m $36,469m $13,988m $7,220m $8,043m Total TV:
Source : GP Bullhound, Capital IQ. European private targets only. As of 23 January 2012.
21
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