M&A Trends in Technology & Life Sciences Prepared for San Diego Venture Group November 2013 Capstone Partners Investment Banking Advisors WORLD CLASS WALL STREET EXPERTISE. BUILT FOR THE MIDDLE MARKET. TM BOSTON CHICAGO LONDON LOS ANGELES PHILADELPHIA SAN DIEGO SILICON VALLEY 2012 AWARD WINNER: GLOBAL INVESTMENT BANKING BOUTIQUE FIRM OF THE YEAR
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San Diego Venture Group; M&A Event Nov 2013; Capstone
Is there a buyer for every company? What do you have to do get your company ready for an exit? Should you hire a banker? Sell out soon or go for it all? Find out more by checking out the presentation we delivered at the event Thursday, November 21.
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M&A Trends in Technology & Life Sciences
Prepared for San Diego Venture Group
November 2013
Capstone PartnersInvestment Banking Advisors
WORLD CLASS WALL STREET EXPERTISE. BUILT FOR THE MIDDLE MARKET.TM
Capstone PartnersInvestment Banking Advisors
BOSTON ¡ CHICAGO ¡ LONDON ¡ LOS ANGELES ¡ PHILADELPHIA ¡ SAN DIEGO ¡ SILICON VALLEY
2012 AWARD WINNER: GLOBAL INVESTMENT BANKING
BOUTIQUE FIRM OF THE YEAR
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Observations and Recommendations Tech & Telecom M&A Trends
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U.S. M&A Dollar Volume: Technology & Telecom
n Tech & Telecom M&A reached nearly $160B in the U.S. in the last twelve months } Recent upswing driven primarily by PE funds becoming more aggressive in tech (i.e, Dell)
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San Diego M&A Dollar Volume: Tech & Telecom
n Banner Year for San Diego Tech & Telecom M&A with more than $10B in deals } Public target M&A driven by 4 large deals ranging from $900M to $4.0B in size } Private target M&A driven by 3 large deals ranging from $350M to $1.0B in size
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U.S. M&A Transaction Volume: Tech & Telecom
n 2,100-2,300 M&A transactions per annum in the U.S. in Tech & Telecom } Internet & Software account for approximately 65% of the mix
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San Diego M&A Transaction Volume: Tech & Telecom
n San Diego M&A transaction volume is typically 30-40 transactions per year } San Diego mix slightly more Hardware oriented than national average (Qualcomm effect?)
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Median LTM Revenue Multiples: Internet & Software
n Internet & Software median multiples have been expanding, reaching 3.9x for LTM } 25% of deals are being done at revenue multiples of 5.5x or higher
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Median Revenue Multiples by Segment: Hardware
n Median Hardware multiples have remain conservative at 1.3x revenue } Not surprising that Hardware segments are attracting far less capital
Sorted by LTM Revenue Multiple Excludes deals with Target company revenue less than $2M
Ann. Date Buyer Target Segment Target Description Deal Value
LTM Revenue Multiple
Multiple on $
Invested
Premium to 1 Mo
Prior
2/11/13 Cloud & IT
Infrastructure
Provides storage virtualization capacity and performance management software for use in virtual server and desktop environments for businesses.
$185M 92.3x 8.3x NA
8/15/13 Cloud & IT
Infrastructure
Provides financial anti-fraud software and SaaS to businesses globally. Also provides anti-malware, endpoint integrity and mobile device security software.
$900M 25.7x 90.0x NA
1/23/13 Carrier Back
Office
Provides mobile network management software for wireless telecommunication operators worldwide. $475M 15.8x 55.9x NA
12/5/12 Mobile OS & Utility
Software
Provides enterprise mobile device management software and software-as-a-service (SaaS) for businesses. $327M 14.2x 5.1x NA
4/3/13 Wireless Network
Equipment
Provides 3G, LTE and WiFi base stations and related management software for wireless telecom service providers globally.
$310M 13.7x 3.8x NA
11/18/12 Cloud & IT
Infrastructure
A cloud-based wireless networking company, deploys wireless network infrastructures. $1.2B 12.0x 15.0x NA
6/27/13 Mobile / Local
Marketing
Provides marketing automation, social media marketing, mobile marketing, customer analytics and campaign management software to businesses globally.
$600M 10.3x 17.3x NA
12/20/12 Finance &
Administration
Provides on-demand revenue performance management and marketing automation software solutions for businesses. $957M 9.7x 26.7x NA
3/5/13 Vertical Market -
Healthcare
Provides web-based electronic health records management software for the healthcare sector. $235M 9.4x 3.9x NA
Recent Notable Transactions in San Diego: Tech & Telecom
Sorted by LTM Revenue Multiple Excludes deals with Target company revenue less than $2M
Ann. Date Buyer Target Target Description Deal Value LTM
Revenue Multiple
Multiple on $ Invested
Premium to 1 Mo
Prior
7/12/13
Provides prepaid digital wireless services under the Cricket brand name in the United States
$4.9B 1.3x NA 158.2%
10/17/12
Engages in the development of light sources for the manufacturers of photolithography tools in the semiconductor equipment industry
$2.7B 4.2x NA 44.8%
5/20/13
Provides Web, email, and data security solutions to protect an organization’s data and users $1.1B 2.7x NA 70.1%
9/30/13
Provides member and event management, online marketing, transaction processing, HR management and CRM software and SaaS
$1.0B 2.1x NA 48.0%
9/5/13
Provides auto collision claims management and auto repair management and price estimating software and SaaS
$1.0B NA NA NA
8/23/13
Provides SaaS-based fleet management solutions for the transportation industry in North and Latin America
$800M NA NA NA
7/2/13
Provides self-service kiosks that purchase and recycle used mobile phones, tablets and MP3 players, offering cash in exchange to consumers in US $350M 11.9x 11.1x NA
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Most Active Tech & Telecom Buyers – Last 2 Years
# of Deals Notable Tech & Telecom Transactions Company Total Date Company Value Date Company Value
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Observations and Recommendations Life Sciences M&A Trends
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U.S. M&A Dollar Volume: Life Sciences
n Life Sciences M&A typically $50-80B per year in the U.S. } 2009 was on outlier due to Pfizer / Wyeth ($79.6B) and Merck / Schering-Plough ($51.4B)
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San Diego M&A Dollar Volume: Life Sciences
n Banner Year in Life Sciences M&A in San Diego with $18B in transactions } Public M&A driven by 2 very large transactions of $16.0B and $6.9B } Private M&A was driven primarily by one $1.0B deal
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U.S. M&A Transaction Volume: Life Sciences
n Life Sciences transaction volume typically 250 deals in the U.S. per annum } Bio / Pharma accounts for approximately 80% of the transactions
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San Diego M&A Transaction Volume: Life Sciences
n Life Sciences M&A transaction volume in San Diego typically 10-15 deals per year } San Diego’s Life Sciences exits are dominated by Bio / Pharma
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Median LTM Revenue Multiples: Bio / Pharma
n Median Revenue Multiple for Bio / Pharma typically ranges from 2.0-2.5x } 25% of deals are being done at revenue multiples of 3.8x or higher
n Revenue multiples less relevant because many companies are acquired pre-revenue
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Recent Notable Transactions in San Diego: Life Sciences
Ann. Date Buyer Target Target Description Deal Value LTM
Revenue Multiple
Multiple on $ Invested
Premium to 1 Mo
Prior
2/28/13
Offers molecular and cell biology reagents, endpoint PCR and other benchtop instruments and consumables
$16B 4.1x NA 22.0%
6/17/13
Focuses on developing medicines for the treatment of hormonally-driven cancers, such as prostate and breast cancer
$1B NA 8.2x NA
7/30/13
Focuses on the discovery, development and commercialization of antibiotics for serious infections
$817M 52.8x NA 66.7%
3/6/13
Engages in cGMP manufacturing, analytical development, aseptic filling into vitals and syringes and protein delivery technology
$175M 3.3x 58.3x NA
1/7/13
Engages in the development and marketing of oncology drugs to target glycans
$144M NA NM NA
1/30/13
Engages in discovering and developing agricultural solutions through genomic technologies
$85M NA 3.5x NA
2/12/13
Produces organic pharmaceutical grade cannabis compounds and extracts
$35M NA NA NA
12/11/12
Engages in developing and commercializing prescription therapeutics to treat medical conditions
$25M 2.1x NA NA
5/9/13
Joint venture between Olympus and Cytori, manufactures future generation devices based on adipose-derived stem and regenerative cell processing systems $16M NA NA NA
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Most Active Life Sciences Buyers – Last 2 Years
# of Deals Notable Tech & Telecom Transactions Company Total Date Company Value Date Company Value
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3/28/13 3/20/13 9/24/12
9/3/12 6/15/12
Cosmo Pharmaceuticals Obagi Medical Products QLT, Visudyne Business Medicis Pharmaceutical OraPharma