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December 11, 2012
Private Company Financial Intelligence
Copyright © 2012 PrivCo Media LLC. All Rights Reserved.
U.S. Private Market M&A Overview (<$500M)
Speaker Background
Sam Hamadeh PrivCo’s Founder and CEO Founded and sold the online job
and career information leader Vault.com
MBA in Finance from Wharton and a JD from the University of Pennsylvania Law School
Extensive background in finance and private company research with experience at Morgan Stanley and Goldman Sachs
Copyright © 2012 PrivCo Media LLC. All Rights Reserved.
PrivCo: The Leader in Private Company Financial Intelligence
PrivCo is the first and only provider of financial and business data on major privately held companies.
PrivCo provides detailed financial and business data on over 128,000 major private companies – and over 43,000 private market deals - in a single searchable source.
Data on private company investors, M&A deals, VC funding, and more.
PrivCo acts as a Bloomberg for major private companies.
Copyright © 2012 PrivCo Media LLC. All Rights Reserved.
Copyright © 2012 PrivCo Media LLC. All Rights Reserved.
M&A Activity Declines In 2012
• According to PrivCo data, U.S. private company middle market M&A totaled $37.5 Billion in Q3 2012, down 21% from Q3 2011
• Similarly, deal volume fell 16% from 3,290 in Q3 2011, to 2,764 in Q3 2012• For the Q3 last twelve months (LTM), private middle market M&A totaled $144 Billion, down 16%
from $167 billion for LTM Q3 2011
$35.7
$45.7$47.7
$37.5
$32.6(-8.0%)
$36.5(-19.9%)
$37.5(-21.2%)
800
1,300
1,800
2,300
2,800
3,300
3,800
$0
$10
$20
$30
$40
$50
$60
Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012
Num
ber o
f Tra
nsac
tions
$ In
Bill
ions
US Mid Market Deal Value & Volume (< $500 M)
Deal Value Deal Volume
Copyright © 2012 PrivCo Media LLC. All Rights Reserved.
M&A Activity Declines In 2012 (Cont.)• After what seemed to be recovery in 2010 & 2011, 2012 has proven to be a fragile marketplace
given the drop in deal volume and transaction value
$35.7
$45.7$47.7
$37.5
$32.6(-8.0%)
$36.5(-19.9%)
$37.5(-21.2%)
800
1,300
1,800
2,300
2,800
3,300
3,800
$0
$10
$20
$30
$40
$50
$60
Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012
Num
ber o
f Tra
nsac
tions
$ In
Bill
ions
US Mid Market Deal Value & Volume (< $500 M)
Deal Value Deal Volume
Copyright © 2012 PrivCo Media LLC. All Rights Reserved.
Top Corporate Buyers (Deal Value <$500M) 2011-2012
48
31
19 19 19 17 16 16 15 15 12
0
10
20
30
40
50
60
Top Private Company Corporate Buyers - 2011-12
Middle Market Deals
Copyright © 2012 PrivCo Media LLC. All Rights Reserved.
Target Acquiror Deal Price EV/Rev
Hyper Marketing Inc. Alliance Data Systems $460,000,000 1.5x
Fleet One, LLC Wright Express Corp. $369,000,000 6.6x
Bytemobile Citrix Systems $435,000,000 7.2
PowerReviews, Inc. Bazaarvoice, Inc. $151,900,000 13.0x
Airborne Health, IncSchiff Nutrition International, Inc
$150,000,000 1.3x
Demandforce, Inc. Intuit, Inc. $423,500,000 11.3x
ID Analytics Lifelock $185,970,000 6.5x
Select Strategic Buyer Transactions (2012)
Copyright © 2012 PrivCo Media LLC. All Rights Reserved.
• Middle Market private equity activity as a percentage of total volume has steadily increased over the past 3 years, with a greater percentage of 2012’s deals being sponsor backed, despite the slow down in transaction value
Financial Buyer (Deal Value <$500M) 2010-2012
$158.6 $166.5$144.2
44% 45% 50%
0
50
100
150
200
2010 2011 LTM 2012
$'s I
n Bi
llion
s
Total Deal Value Private Equity Deal Value
Copyright © 2012 PrivCo Media LLC. All Rights Reserved.
Top Financial Buyers (Deal Value <$500M) 2011-2012
18 1817
15 15
8 8 87
6
0
2
4
6
8
10
12
14
16
18
20
The Riverside Company
Carlyle Group
Gores Group
TA Associates
H.I.G. Private Equity
Sun Capital Partners
TPG Capital LP
Blackstone Group
Platinum Equity
Marlin Equity
Partners
Top Private Company Financial Buyers - 2011-2012
Middle Market Deals
Copyright © 2012 PrivCo Media LLC. All Rights Reserved.
Target Acquiror Deal Price EV/Rev
Young Innovations, Inc.
Linden Capital Partners $314,000,000 3.0x
Oriental Trading Company, Inc.
Berkshire Hathaway Inc $500,000,000 1.0x
Dick Clark Productions
Guggenheim PartnersMandalay Sports Ent.Mosaic Media Group
$370,000,000 N/A
Intelligrated, Inc. Permira Advisors $500,000,000 1.3x*
Fogo de Chao Holdings LLC
Thomas H. Lee Partners $400,000,000 N/A
Sundance Holdings Brentwood Associates $125,000,000 0.8x
Benihana Inc. Angelo, Gordon & Co. $296,000,000 0.9x
Select Financial Buyer Transactions (2012)
* Estimated
Copyright © 2012 PrivCo Media LLC. All Rights Reserved.
• Average Enterprise Values in 2012 have increased year over year, up over 10% in Q2 2012• The drop off in value in Q3 reflects global M&A declines, due to macroeconomic uncertainty and
market chill ahead of the pending US Elections, in addition to an increase in deals under the $66 million anti-trust threshold
Average Enterprise Value of Transactions (Deal Value <$500M) 2011-2012
$103.7 $115.9 $116.4
$99.0
$107.3(+3%)
$128.5 (+11%) $108.6
(-6%)
$-
$20.0
$40.0
$60.0
$80.0
$100.0
$120.0
$140.0
Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012
$ In
Mill
ions
Average Enterprise Value
Average Enterprise Value
Copyright © 2012 PrivCo Media LLC. All Rights Reserved.
Top 10 Industries For Private Market Deals
Rank Industry
1 Software
2 Insurance
3 Services
4 Banking
5 Health Care & Related Medical
6 Internet Services
7 Information Technology
8 Social Media
9 Advertising & Marketing
10 Mobile Applications
Copyright © 2012 PrivCo Media LLC. All Rights Reserved.
Top 10 Geographies For Private Market Deals
Rank City
1 New York
2 San Francisco
3 Houston
4 Chicago
5 Austin
6 Atlanta
7 Dallas
8 Los Angeles
9 Seattle
10 San Diego
Copyright © 2012 PrivCo Media LLC. All Rights Reserved.
The Magic $66 Million Threshold
• In 2012, PrivCo data shows that an increased percentage of private companies are being sold for deal values between $55 and $66 million
• No HSR Act notification is required if the value of voting securities and assets held as a result of the transaction is below this $66 million threshold
• PrivCo data also indicates that companies (especially those owned by individuals and families), have been looking to sell by the end of 2012, even at haircut valuations, to avoid the $66 million HSR FTC review and close before 2013’s tax reform
Copyright © 2012 PrivCo Media LLC. All Rights Reserved.
Conclusions
• Middle market private company transaction value and volume is down in 2012
• Private equity funds continue to focus on the middle market, with 2012 showing an increase in transaction value attributed to private equity sales and acquisitions
• Strategic Buyers will look for lower middle market add-ons, to avoid $66 million HSR FTC review
• Cautious outlook for 2013 given fiscal cliff negotiations, tax rate increase, European debt crisis and macro instability
Copyright © 2012 PrivCo Media LLC. All Rights Reserved.
AM&AA 2013 Winter Conference
The Middle Market Our World of Opportunity in 2013
2013 Winter ConferenceJanuary 14 -17, 2013 Hilton Miami Downtown
Contact AM&AA for more [email protected]
312-856-9590MandAconnection.org
For a demonstration of the PrivCo private company and deals platform, please contact M&A Client Manager [email protected] or 518-256-7452
Copyright © 2012 PrivCo Media LLC. All Rights Reserved.
Private Company Financial Intelligence
For access to PrivCo’s weekly M&A and Venture Capital newsletter, register for free at www.privco.com
To contact Sam Hamadeh directly, email: [email protected]
For information on the AM&AA , please contact [email protected] or call 877-844-2535