VC-BACKED M&A SNAPSHOT

Q2 2012
JULY 2012

VC-BACKED M&A SNAPSHOT

OVERVIEW COMMENTARY
Consistent with overall M&A activity, in Q2 2012, VC-backed M&A activity also showed a positive tone. In Q2 2012, there were 16 transactions within the $25mm-$1b range, up 33% from Q1 2012. Acquirers paid $3.7b to purchase VCbacked companies, double the amount from Q1 2012. Median transaction size was $152mm, up 18% from Q1 2012. Summary observations for the quarter include: 1. Microsofts $1.2b acquisition of Yammer and Facebooks $1b acquisition of Instagram were the two largest VC-backed exits this quarter. 2. The median return on invested capital was a healthy 8.1x(a) 3. Eight transactions that provide >8.0x invested capital multiple returns to investors are provided below: Buyer / Seller Trx Value/ Invested Cap Seller Description Multichannel marketing for SMBs Online document sharing Online photo sharing Online local listing aggregator Social media marketing platform Mobile advertising platform Enterprise social collaboration Social media marketing platform

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

Intuit/Demandforce 42.4x LinkedIn/SlideShare 39.7x Facebok/Instragram 17.2x ConstantContact/SinglePlatform 17.0x Oracle/Vitrue 9.1x GainTech/Coresonic 8.8x Microsoft/Yammer 8.5x Salesforce/BuddyMedia 8.1x

4. Non-U.S. sellers comprised 16% of transactions. Three of these four companies were backed by local region VCs.

(a) Note: Data pertains to 17 transactions in the quarter (out of a total of 25), where both acquisition price and total invested capital were disclosed.

VC-BACKED M&A SNAPSHOT - SUMMARY

COVERAGE MARKET TONE
Good. Increased activity with healthy tone. Quality Architect Partners tracks venture capital-backed M&A activity businesses with momentum will continue to attract strong within the converging Internet | mobile | digital media sectors. interest. Strategic-driven transactions command premium The following assessment is focused on venture capital-backed exits. 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 2011 2012 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
26 20
3 17 8

27 20
4 27 4

25 21
2

16
4

Venture-Backed M&A Exits (#)1.............

12

18

23

23

16

19

12

16

$4.2 $3.4 $2.3 $1.4 $3.2 $3.4

$3.6 $2.3 $1.8

$3.7

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

$135 $70 $70 $124 $103 $104 $129 $80 $95 $152

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

85% 67% 74% 75% 63% 64% 67% 73% 75% 84%

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 notable VC-backed M&A transactions where consideration paid was >$1b or 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 Q2 2012s Venture Capital-backed M&A transactions. This list contains transactions within the range of $25mm to $1b values. We also include Microsofts $1.2b acquisition of Yammer and other notable transactions with undisclosed values. MULTIPLE OF ACQUISITION INVESTED TARGET M&A TARGET ACQUIRER PRICE ($mm) CAPITAL ($mm) INV. CAPITAL VENTURE CAPITAL FIRMS LOCATION ALERT
$1,200 $1,000 $745 $435 $424 $300 $210 $152 $119 $118 $90 $85 $65 $40 $40 $35 $29 ND ND ND $142 $58 $92 $56 $10 $33 $70 $41 $3 (a) $12 $5 (a) $7 $24 $4 $6 $3 $22 $65 8.5x 17.2x 8.1x 7.8x 42.4x 9.1x 3.0x 3.7x 39.7x NA 7.5x 17.0x NA 5.7x 1.7x 8.8x 4.8x NA NA NA

Note: a) Represents public company at time of acquisition. Source: Architect Partners, Capital IQ and Public Information

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

TARGET ACQUIRER ACQUISITION PRICE ($mm)
ND ND ND ND ND

CAPITAL ($mm)
$3 $46 $32 $4 $55 Average Median

INVESTED

MULTIPLE OF INV. CAPITAL VENTURE CAPITAL FIRMS

NA NA NA NA NA 12.3x 8.1x

TARGET LOCATION

M&A ALERT

Note: a) Represents public company at time of acquisition. Source: Architect Partners, Capital IQ and Public Information