M&A SNAPSHOT

Q3 2012
OCTOBER 2012

M&A SNAPSHOT
OVERVIEW COMMENTARY
Following an increase in activity in the previous quarter, we saw a dip in M&A activity for Q3. Within the $25 million - $1 billion transaction value range, M&A activity was down by 22% from the previous quarter. However, acquirers spent $16b in total, 14% higher than the $14b spent in Q2. Median transaction size decreased by 16% from $127mm last quarter to $107mm this quarter. While a bit disappointing overall, we still characterize the M&A market as healthy, just a bit muted. Google was the most active acquirer this quarter, closing ve very diverse transactions ranging from social marketing platform provider Wildre Interactive to professional photography editing company Nik Software. Another top acquirer for Q3 was IAC (InterActiveCorp), who acquired two web content businesses (About.com and DateHookUp.com), along with VC-backed Yext, which provides pay-per-call local advertising service utilizing speech recognition. The evolution of video and collaborative applications plays an important role in this quarter, accounting for 16% of the total transactions within the $25mm-$1b transaction value range. For example, Salesforces acquisition of GoInstant enables a freemium service that allows users to remotely collaborate on the same web page without the need of a plug-in. Media G3s $70mm acquisition of HEXA 2, an interactive social media platform, integrates telepresence capabilities with VoIP and instant text functionalities. The largest transaction of Q3 was Carlyle Groups acquisition of Getty Images for $3.3b, a company that distributes stock photographs, video footage and digital images to media outlets and organizations around the world. The transformation of marketing and commerce also continues to be major M&A theme. The marquee commerce transaction this quarter was Cielos acquisition of Merchant e-Solutions for $670mm and the marquee marketing transaction was Googles acquisition of Wildre Interactive for $350mm. Other notable deals include Digital Rivers acquisition of LML Payment Systems, Navarres acquisition of SpeedFC, CityGrids acquisition of Felix and TiVos acquisition of TRA. This past quarter, Architect Partners has published its M&A Alert on eleven of the most strategic transactions in the quarter.

FOLLOWING ANALYSIS
M&A DASHBOARD: NOTABLE ACQUIRERS: M&A TRANSACTIONS: OTHER NOTABLE TRANSACTIONS:
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.

COMING SOON
ANALYSIS OF VC-BACKED M&A EXITS

M&A DASHBOARD
COVERAGE
Architect 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. Q2
38 40

MARKET TONE
Balanced. Decreased activity from Q2 but overall healthy tone in the M&A market. Generally balanced buyer/seller dynamics. 2010 Q3
68 53

Q4

Q1
68

2011 Q2 Q3
61 63

Q4
57

Q1
41

2012 Q2
57

Q3
44

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

$12 $6 $12

$14

$12

$11

$9

$12

$14

$16

$5
27

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

17 12 18
23 23

16

19
12 16 15

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

$100 $98 $105

$98

$113 $80

$75

$90

$103

$127

$107

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

55% 45% 52% 49%

48%

49%

52% 42%

56% 46%

47%

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

457$
362$$ 372$$ 368$ 341$

482$

450$

417$
352$

440$ 364$

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

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 lings and public information

NOTABLE ACQUIRERS
The following acquirers are generally active or inuential buyers within the Internet | mobile | digital media sectors. Below, we highlight announced acquisitions in the third quarter of 2012.

ACQUIRER

# 5 3 3 3 2 2 2 2 2 2 2 2

TARGET

NOTABLE ACQUIRERS (continued)

ACQUIRER # 2 2 2 2 2 1 1 1 1 1 1 1 1
5

TARGET

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

Below highlights M&A transactions that have announced values of between $25mm and $1b announced in Q3 2012 within the converging Internet | mobile | digital media sectors.
# ANNOUNCED DATE BUYER TARGET TRANSACTION VALUE ($MM) TARGET DESCRIPTION AP INSIGHT SM M&A ALERT VCBACKED

NON SERVICE PROVIDER TRANSACTIONS 1 08/13/2012 The Carlyle Group LP; China Everbright Ltd; CITIC Capital Partners; CDH Investments; FountainVest Partners Syniverse Technologies Focus Media Holding $915 Operates LCD network using audiovisual digital displays in China. !

07/03/2012

MACH S..r.l.

$694

Provides business process solutions for telecommunications companies to secure and develop roaming revenue streams. It also delivers mobile content services, as well as supplies integration and e-procurement solutions. Internet-based e-commerce company that provides payment solutions for financial institutions and merchants. !

07/02/2012

Cielo

Merchant e-Solutions

$670

08/07/2012

Verisk Analytics

Argus Information & Advisory Services, LLC

$425

Provides benchmarking, scoring solutions, analytics, and customized services to financial institutions for making marketing and risk management decisions.

07/27/2012

Apple

AuthenTec

$396

Provides mobile and network security solutions for enterprise, government, and consumer markets.

07/02/2012

Sony

Gaikai

$380

Gaikai streams video games from remote servers, which perform all the heavyduty processing before sending compressed audio and video back to the user.

07/31/2012

Google

Wildfire

$350

Social marketing platform that enables brands and marketing agencies to create social campaigns, communicate with social audiences, and measure social media performance.

07/17/2012

Samsung

CSR plc, Handset Connectivity and Location Development Operations and Technology About.com

$310

Develops semiconductor chipsets for Bluetooth, WiFi and location technology. U.K.-based.

08/26/2012

IAC Search & Media

$300

Operates a content site covering topics such as health care, parenting, travel, cooking, technology and hobbies.

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

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

# ANNOUNCED DATE BUYER TARGET TRANSACTION VALUE ($MM) TARGET DESCRIPTION AP INSIGHT SM M&A ALERT VCBACKED NON SERVICE PROVIDER TRANSACTIONS 10 08/06/2012 Turner Broadcasting System Bleacher Report $200 Publishes entertaining sports content. !

11

09/25/2012

Amaya Gaming Group

Cadillac Jack

$167

Designs, manufactures and markets games and systems. It offers server-based and stand-alone electronic video reel games, slot management systems and Latin style bingo games. Operates as a media company offering a portfolio of kids, family and pop-culture entertainment brands.

12

07/22/2012

DreamWorks Animation SKG

Classic Media

$155

13

08/13/2012

Actian Corporation

Pervasive Software

$153

Delivers software to manage, integrate, and analyze data in the cloud.

14

07/19/2012

Penguin Group (USA)

Author Solutions

$116

Offers publishing services and online educational resource for authors.

15

09/24/2012

Digital River

LML Payment Systems

$102

Provides electronic payment, risk management and authentication services to customers that use Internet to receive or send payments in Canada and the United States. Develops a shared web-browsing solution. The company allows customers, business partners, and colleagues to easily meet in online sessions, browse the web, and interact in real-time, as if seated side-by-side. Offers NorthStar, a hardware and software localization solution, which enables mobile devices to navigate in indoor environment. !

16

07/09/2012

salesforce.com

GoInstant

$76

17

09/17/2012

iRobot Corporation

Evolution Robotics

$74

18

08/08/2012

MediaG3

HEXA 2

$70

Provides HEXA2, a live interactive social media integrated with telepresence platform that provides many-to-many video conferencing, VoIP, instant text, Twitter, Facebook, content manager, conversion server, and virtual board room solutions to its clients. Provides e-commerce services to online retailers and manufacturers.

19

09/28/2012

Navarre

SpeedFC

$63

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

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

# ANNOUNCED DATE BUYER TARGET TRANSACTION VALUE ($MM) TARGET DESCRIPTION AP INSIGHT SM M&A ALERT VCBACKED NON SERVICE PROVIDER TRANSACTIONS 20 08/21/2012 Axel Springer Digital Classifieds GmbH allesklar.com AG $62 Operates as a Web directory for the business-to-business markets.

21

07/17/2012

Autodesk

Socialcam

$60

Develops a video sharing application for capturing, editing and sharing videos from smartphones.

22

08/01/2012

FEI Company

Visualization Sciences Group

$55

Develops and delivers 3D visualization toolkits and software solutions for engineers, scientists, and application developers worldwide

23

07/04/2012

Mediapost SA

Adverline S.A.

$45

Engages in the provision of Internet advertising services in France. It also involves in the sale of advertising space; publishing of Internet content; and the provision of electronic and micro payment services, as well as offers accommodation services. Provides technology, software development, distribution, publishing, and game operation services for the online games and virtual worlds industry.

24

08/07/2012

Wargaming Public Company

BigWorld Pty

$45

25

08/08/2012

Tangoe

Symphony Teleca Corporation, Telecommunications Expense Management Business Edifice Information Management Systems

$44

Offers solutions in the areas of enterprise mobility, SaaS/cloud enablement, product quality management, rationalization and software management.

26

08/07/2012

SPS Commerce

$38

Provides cloud-based supply chain performance solutions with more than 500 customers worldwide.

27

07/02/2012

Arqiva

Spectrum Interactive

$36

Provides managed payphones, public Internet desks and wireless fidelity (WiFi) services in the United Kingdom and Germany.

28

08/20/2012

CityGrid

Felix

$30

Pay-per-call local advertising service using speech recognition technology to listen to all the calls received by a local business.

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

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

# ANNOUNCED DATE BUYER TARGET TRANSACTION VALUE ($MM) TARGET DESCRIPTION AP INSIGHT SM M&A ALERT VCBACKED NON SERVICE PROVIDER TRANSACTIONS 29 07/26/2012 Brightcove Zencoder $30 Provides web-based video encoding software as a service, designed to quickly convert any video into web and mobile compatible formats. !

30

09/20/2012

SingTel Digital L!fe

Pixable

$27

Provides a solution that enables users to create and print photo books using the photos on Facebook.

31

07/10/2012

Tomorrow Focus AG

Webassets BV

$26

Operates online hotel and travel review portal Zoover.

32

09/25/2012

Definition 6

Synaptic Digital

$25

Serves as a multichannel video creation and distribution company helping brands to tell their stories across earned, owned, and paid media.

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

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

# ANNOUNCED DATE BUYER TARGET TRANSACTION VALUE ($MM) TARGET DESCRIPTION AP INSIGHT SM M&A ALERT VCBACKED SERVICE PROVIDER TRANSACTIONS 1 07/19/2012 Corporate Commercial Bank AD; CJSC VTB Capital, Investment Arm Vodafone New Zealand Bulgarian Telecommunication Company TelstraClear Limited $785 Engages in the development, operation, and maintenance of national fixed and mobile network and data system in Bulgaria. It provides fixed voice services, including fixed telephony services, which enables its clients to make local, longdistance, and national calls to other fixed and mobile operators. Provides voice, data, broadband Internet, mobile, managed services, and digital cable television products and services to the business, government, wholesale, and residential sectors in New Zealand. The six stations are located in five markets and reach 3.0% of the U.S. TV households. Newport Television LLC, 4 Television Stations comprises 4 television broadcasting stations affiliated with the FOX, NBC, ABC, CBS, and CW networks. Operates a television station that broadcasts news in the areas of weather, traffic, entertainment, sports, health and lifestyle.

07/12/2012

$663

07/19/2012

Sinclair Broadcast Group

Newport Television, Broadcast Assets Of Six Television Stations Newport Television, 4 Television Stations News Channel 5 Network

$413

4 5

07/19/2012 09/04/2012

Cox Media Group Journal Broadcast

$302 $215

07/16/2012

Millicom International Cellular Rogers Communications

Cablevisin Paraguay

$150

Began offering TV services in Asuncin in 1989 and is the leading provider of cable pay-TV services in Paraguay. Provides interactive and authentic sports entertainment in Canada. Its primary asset, theScore Television Network, is a national television service providing sports news, information, highlights and live event programming. Engages in the development, production and marketing of children's animated television programs. Engages in the ownership and operation of Virgilio, an Internet Service Provider in Italy. Its Internet portal offers one-stop access to information on current events, entertainment, travel, lifestyle, finances and technology. Provides roaming services and converged solutions for mobile network operators. Provides mobile solutions beyond VAS to mobile operators and service providers worldwide. It offers mobile applications, such as mobile music and online gaming solutions, voice-based and call completion applications, instant messaging and self-care services, and video applications; and data packages. TV stations in WKRC in Cincinnati; WOAI in San Antonio; WHP in the Harrisburg/Lancaster/Lebanon/York, Pa., area; WPMI and WJTC in Mobile, Ala., and Pensacola, Fla.; and KSAS in Wichita/Hutchinson, Kan. ! !

08/25/2012

Score Media

$147

8 9

08/20/2012 08/09/2012

DHX Media Libero Srl

Cookie Jar Entertainment Matrix S.p.A.

$113 $108

10 11

08/02/2012 09/17/2012

Fortissimo Capital Tech Mahindra Limited

Starhome BV Comviva Technologies

$80 $48

12

07/19/2012

Sinclair Broadcast Group

Bay Television

$40

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

10

M&A TRANSACTIONS: OTHER NOTABLE

A number of important transactions were announced in the third quarter of 2012 with consideration in excess of $1b or with unannounced transaction values.
# 1 ANNOUNCED DATE 08/15/2012 BUYER Carlyle Group TARGET Getty Images TRANSACTION VALUE ($MM) $3,300 TARGET DESCRIPTION Provides online digital imaging, still imagery, multimedia, media content collection and management services focusing on news, sports, contemporary, archival and entertainment imagery. Operates cable systems in Pennsylvania, Florida, Maryland, West Virginia, Delaware, South Carolina and New York. Operates as a yellow pages directory publisher and digital advertising provider. ! AP INSIGHT SM M&A ALERT VCBACKED

07/18/2012

Cogeco Cable

Atlantic Broadband Finance SuperMedia

$1,994

08/21/2012

Dex One

$1,554

08/13/2012

Verint Systems

Comverse Technology

$1,529

Provides software-based products for wireless, wireline and cable network communication service providers. Offers real-time data analysis and reporting software for network-driven businesses. Provides mobile payments software development kits (SDKs) for developers. !

07/23/2012

VMware

Nicira Networks

$1,260

07/17/2012

eBay

Card.io

08/13/2012

Google

Frommer's Guides

Producer of popular travel guidebooks and reviews.

07/02/2012

IAC Search & Media

nrelate Source

Offers content plugins for Websites.

09/17/2012

Google

Nik Software

Offers desktop and mobile image editing software to professional and consumer photographers. Provides location-based analytics using Wi-Fi technology.

10

09/26/2012

Cisco

ThinkSmart Technologies Threadsy

11

08/24/2012

Facebook

Offers an online integrated communication platform where users can combine their email and social network messages into a single inbox. Develops mobile payments software applications.

12

07/17/2012

PayPal

LumberLabs

13

08/08/2012

Boingo Wireless

Cloud Nine Media

Wi-Fi sponsorship and location-based advertising company.

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

11