VC-BACKED M&A SNAPSHOT

Q4 2011
JANUARY 2012

VC-BACKED M&A SNAPSHOT

OVERVIEW COMMENTARY
Consistent with Q4 2011 overall M&A activity, the VC-backed M&A activity also shows a good overall tone. Median transaction size increased by 19% from $80 to $95, although VC-backed M&A exits within the $25mm and $1b range decreased by 17% from 23 to 19 in Q4 2011. Summary observations for the quarter include: 1. Oracles $1b+ acquisition of Endeca represents the largest VC-backed transaction this quarter. 2. The median return on invested capital was a healthy 5.7x(a) 3. Six transactions that provide >7.0x invested capital multiple returns to investors are provided below: Buyer / Seller RedHat/Gluster Oracle/Endeca VistaPrint/Webs Apple/Anobit RIM/NewBay Nuance/Swype Trx Value/ Inv. Cap 16.5x 15.6x 10.7x 8.2x 7.5x 7.4x Seller Description Cloud management software Enterprise search and BI software Online website creation Flash memory chipset for mobile devices Cloud-based mobile content sync Keyboard text input for touchscreen devices

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

LISTING OF TRANSACTIONS.

VC-BACKED

4. Non-U.S. sellers comprised 27% of transactions. companies were backed by local region VCs.

Four out of six of these

(a) Note: Data pertains to 17 transactions in the quarter (out of a total of 22), where both acquisition price and total invested capital were disclosed. 22 transaction also includes Oracles $1b+ acquisition of Endeca.

VC-BACKED M&A SNAPSHOT - SUMMARY

COVERAGE
Architect Partners tracks venture capital-backed M&A activity within the converging Internet | mobile | digital media sectors. The 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.

MARKET TONE
Quality businesses with momentum attract close assessment although buyers generally remain prudent and move at a moderate pace.

Q1

2010 Q2 Q3
26 20

Q4
20

Q1

2011 Q2 Q3
27

Q4
21

3 17

4 27

4 18 16
23 23

2 19

Venture-Backed M&A Exits

(#)1...........................................

12

$4.2

$3.4 $2.3 $1.4

$3.2

$3.4

$3.6 $2.3

Total Consideration Paid ($b)2,4...........................................

$135 $124
$103 $104 $80 $95

$70

$70

Median Transaction Size ($mm)2,4.......................................

85% 67% 74% 75% 63% 64% 67% 73%

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. 4) Transaction values with a range are presented as a mid-point value

VC-BACKED M&A SNAPSHOT - TRANSACTIONS

Below, we highlight Venture Capital-backed transactions this quarter. This list contains transactions with $25mm and $1b values and other notable transactions including Oracles >$1b purchase of Endeca and Adobes acquisitions of Auditude and Ecient Frontier. MULTIPLE OF ACQUISITION INVESTED TARGET M&A TARGET ACQUIRER PRICE ($mm) CAPITAL ($mm) INV. CAPITAL VENTURE CAPITAL FIRMS LOCATION ALERT
$1,075 $69 15.6x

$400 $315 $268 $172 $140 $118 $103 $100 $99 $90 $88 $80 $70 $62 $52 $42 $40 $37 $30

$49 $67 $41 $70 $9 $11 $14 $14 $22 NA $13 $14 $22 $73 $26 $52 NA NA $26 (a) (a)

8.2x 4.7x 6.5x 2.5x 16.5x 10.7x 7.4x 7.5x 4.4x NA 6.5x 5.7x 3.3x 0.9x 2.0x 0.8x NA NA 1.2x

Note: a) Represents public company at time of acquisition.

VC-BACKED M&A SNAPSHOT - TRANSACTIONS (continued)

TARGET ACQUIRER ACQUISITION PRICE ($mm)
NA NA

INVESTED CAPITAL ($mm)

$26 $6 Average Median

MULTIPLE OF INV. CAPITAL VENTURE CAPITAL FIRMS

NA NA 6.1x 5.7x

TARGET LOCATION

M&A ALERT