MASiV&2014:&The&M&A&Silicon&Valley&Gathering&...MASiV&2014:&The&M&A&Silicon&Valley&Gathering& Global...

MASiV 2014: The M&A Silicon Valley Gathering


The Key M&A Market Driver: CEO Confidence!

Source: Vistage CEO Survey, responses from 1,601 U.S. CEOs, surveyed between December 9 and December 18, 2013


Global Tech Acquisitions!

Source: Capital IQ

In Dollar Volume (Billions)

$0

$100

$200

$300

$400

$500

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

M&A IPO


Global Software and Internet Acquisition Activity – Last Ten Years!

Source: Capital IQ

1,951

2,814

3,758

2,524

3,436 3,834

$-‐

$50

$100

$150

$200

$250

$300

-‐

1,000

2,000

3,000

4,000

5,000

# of TransacYons

$ Value of Announced TransacYons ($B)


Source: Capital IQ

Top-25 Acquirers in Software – Announced Acquisitions, Last Five Years !

49 42 41

39 29 28 27 27 26 25 24

22 22 22 21

19 17 16 16 15 15

13 13 13

Google IBM

Oracle Facebook

Yahoo! Autodesk Twi^er Nuance Zynga Apple

Salesforce Microsoa Accenture j2 Global

SAP VMware

Internet Brands eBay ADP

CA Technologies Citrix Systems

Synopsys Adobe Intuit AOL

100+


Source: Capital IQ

Breakdown of Software-Internet Transactions by Transaction size – Last five years!

$1 Billion or More 95 <1%

$500M -‐ $1 Billion 93 <1% $100M -‐ $500M,

501 2%

$100M or Less 5,128 21%

Undisclosed 18,245 76%


Source: Capital IQ

Valuations in M&A – Avg. Multiples of Revenue!

1.0x

2.1x 2.1x

2.8x

1.7x

3.4x

5.5x

4.3x 4.7x 4.9x

0x

2x

4x

6x

2009 2010 2011 2012 2013

Top 50 TransacYon MulYples -‐ All Tech

Top 50 TransacYon MulYples -‐ Soaware and Internet


Thoughts on What’s Going On Around Us!

•  PerspecYve -‐ Five Years Ago – January, 2009:

MySpace was bigger than Facebook and generated $490M revenue

Nokia and RIM were the #1 and #2 smartphone manufacturers: 59% market share

Tablets were a “failed market” -‐ Newton

Web access was 85% from PC’s

(And in the general economy, we were on the precipice of the next Great Depression)


So What’s Happened in Five Years?


A Watershed Moment … !

•  High-‐growth marketplaces 2.0 -‐ Uber, Etsy, AirBnB, etc

•  High-‐growth social mobile apps -‐ Snapchat, Foursquare, Tinder, Yelp, etc

•  New finance plasorms – Square, Bitcoin, Lending Club, etc

Companies that are unable to innovate their way into these new markets must acquire, or they risk being marginalized, commodiYzed, or being made obsolete.

•  New content plasorms – SpoYfy, Hulu, Neslix, etc

•  And others – health, travel, cloud storage, etc


Revs EBITDA Cash Enterprise Value

Google $59.6 $21.5 $54.7 $336

Facebook $7.6 $4.5 $9.3 $138

Yahoo! $4.4 $1.5 $1.8 $40

Twi^er $639M $52M $1.8B $32B

Selected Financial InformaYon (All $ in billions except Twi^er)


Google!


Google!•  Google’s challenges:

•  How do you conYnue to innovate at such a large scale? •  What do you do with all that cash? •  Search as it exists today may not look the same in 5 years

•  Google’s opportunity: •  Contextual search and adverYsing •  Google play (payments)

•  SYll the most important acquirer in the land -‐ $48B cash; $1B EBITDA monthly; invesYng across industries, geographies and stages

•  18 announced acquisiYons in 2013; most notable was Waze; Eight roboYcs acquisiYons

•  Strategic growth areas for Google: 1.  Search and Display adverYsing 2.  YouTube, Android, and Chrome 3.  New businesses to drive adopYon and innovaYon -‐ Social, Commerce, and

Enterprise


Yahoo!•  Comeback acquirer of the year – 28 acquisiYons in 15 months

•  Marissa & Jackie Reses reinvenYng the company largely through acquisiYon

•  Buying stock, talent and technology -‐ invesYng in Yahoo’s core strength – content

•  Tumblr – big bet, jury is sYll out.

•  $1.8B cash to do more now; remaining 24% stake in Alibaba may bring $20B later

• What they need: •  Big bets to move the needle now, and great integraYon •  SpeculaYve, emerging growth bets to to build the company’s future •  More talent acquisiYons to bring more good people into the company

•  PotenYal big buys: Pinterest, Foursquare, Zynga, Hulu, Millenial Media, something clever and unexpected in the content space?


Facebook!

•  $7B revenues TTM, $2B EBITDA, $9B Cash + Short Term Investments

•  Solved the mobile problem – half of revenue now coming from mobile adverYsing; great personal informaYon; ideally situated for contextual search

•  2013: Seven announced acquisiYons; four of which were mobile-‐related

•  Strategic Need:

-  Address fragmenYng mind share caused by new mobile social networks like Snapchat, Pinterest, Nextdoor

-  Diversify beyond their core social product -  Targets: Yelp, Opentable, Pandora or SpoYfy, Blackberry, Yahoo!


Twitter!

•  Public offering put $1.8B on Twi^er’s balance sheet

•  Key strategic prioriYes: -  Increase user engagement and growth; revenue growth - Engagement with the TV industry

•  One of the most acYve and acquirers in 2013: 9 AcquisiYons

•  AcquisiYon OpportuniYes: •  More mobile / mobile ad-‐tech acquisiYons •  More entertainment acquisiYons •  Build a Yahoo!-‐like eco-‐system •  Partner with another large content company

-  Ad management, opYmizaYon, reporYng: Mo-‐Pub

-  TV: Trendrr -  Contextual: Spindle -  Big Data: Lucky Sort

-  Back-‐end technical: Ubalo - Music: We are hunted -  User-‐Generated-‐Content: Vine -  Talent: Boilerplate


The Next Five Years!

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