VC-BACKED M&A SNAPSHOT

Q4 2010
JANUARY 5, 2011
VC-BACKED M&A SNAPSHOT
OVERVIEW COMMENTARY COMING SOON
As we highlighted earlier this week in our Q4 M&A Snapshot, overall M&A
activity levels in our sectors were a bit down, albeit with improving median
transaction size.  Similarly, venture capital-backed M&A volume was down by
STRATEGIC THEMES DRIVING M&A ACTIVITY
23%, although median transaction value was up significantly by 77%.

Summary observations for the quarter include:

1. The median return on invested capital was a healthy 5.9x(a)

2. There were six transactions with extraordinary high returns to investors:

Buyer / Seller EV/Rev Seller Description

J2 Communications / Protus 42.4x SaaS-based communication tools
Amex / Accertify 21.4x e-Commerce software
Salesforce / Heroku 19.4x Software development platform
eBay / Milo.com 15.0x Online retailer inventory data
DeNA / ngmoco 9.8x Social gaming

3. Total liquidity to VCs stayed consistent for the second quarter in a row.

4. Non-U.S. sellers comprised 25% of transactions.

(a) Note: Data pertains to 15 transactions in the quarter (out of a total of 20), where both
acquisition price and total invested capital were disclosed.

FOLLOWING ANALYSIS
SUMMARY OF VC-BACKED SUMMARY OF QUARTERLY ACTIVITY
IN NUMBERS AND TONE
M&A EXITS:

VC-BACKED M&A TRANSACTIONS: LISTING OF TRANSACTIONS

BETWEEN $25MM-$1B IN VALUE,
INCLUDES AP INSIGHTSM M&A ALERT
LINKS

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VC-BACKED M&A SNAPSHOT - SUMMARY
COVERAGE MARKET TONE
Architect Partners tracks Venture Capital-backed M&A activity Good. Buyer-driven dynamics still common but
within the converging Internet | mobile | digital media sectors. The seller position improving overall.
following assessment is focused on Venture Capital-backed M&A
transactions with announced values of between $25mm and $1b as
these typically represent successful business-building endeavors.
We also include transactions with unannounced values, which we
believe are within $25mm-$1b range.
2010
Q1 Q2 Q3 Q4
26
20 8 20
3 4

17 18 16
12
Venture-Backed M&A Exits (#)1......................................................................
$3.4 $3.2

$2.3

$1.4

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

$135
$124

$70 $70

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

85%
74% 75%
67%

U.S.-based Target (%)3.......................................................................................

Note:
1) Dark blue includes VC-backed M&A transactions with announced values of between $25mm and $1b.
Light blue includes VC-backed M&A transactions where consideration paid was 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 with announced and unannounced values.

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VC-BACKED M&A SNAPSHOT - TRANSACTIONS
Below, we highlight Venture Capital-backed transactions that have announced values of between $25mm and $1b, and those
that we believe to have values of between $25mm-$1b values based on the acquirer and the strategic drivers of the
transaction.
ACQUISITION INVESTED MULTIPLE OF TARGET M&A
TARGET ACQUIRER PRICE ($mm) CAPITAL ($mm) INV. CAPITAL VENTURE CAPITAL FIRMS LOCATION ALERT
$545 $61 8.9x

$525 $78 6.7x

$403 $41 9.8x

$370 $208 1.8x

$252 $13 19.4x

$212 $5 42.4x

$200 $34 5.9x

$150 $7 21.4x

$98 $18 5.4x

$97 $30 3.2x

$83 $31 2.7x

$75 $5 15.0x

$71 $19 3.7x

$52 $32 1.6x

$47 $12 3.9x

$30 -- --

-- $4 --

-- $9 --

-- $77 --

-- $70 --

Average 10.1x Average Source: Capital IQ, Architect Partners and Public Information
Median 5.9x Median
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