From: "Dan Primack"

Name: Dan Primack

Email Address: Dan_Primack@fortune.chtah.com

Subject: Term Sheet -- Thursday, December 9

Date: 09-12-2010 15:03:33

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Fortune Finance Street Sweep Term Sheet Economics Tech Wall Street Washington

The Term Sheet by Dan Primack

Thursday -- December 9, 2010

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Random Ramblings

Running a bit behind this morning, so just some quick notes to kick off your Thursday:

*** As promised, I did more research yesterday on the (likely-defunct) capital gains cliff, which had been

expected to significantly boost M&A activity in 2010. Specifically, the theory had been that owners and

investors – particularly in the lower/middle-markets -- would look to cash out before higher capital gains

rates take hold.

Anecdotal evidence was that this phenomenon only occurred around the margins, and domestic private

equity data provided by Thomson Reuters seems to back that up.

It showed that PE firms have announced and/or completed fewer sub-$1 billion deals so far in 2010 than

they did during similar periods in either 2008 or 2009. Year-to-date volume is off 2% from last year, and

nearly 7% if you only include deals with values below $500 million. Aggregate disclosed deal value is

higher, but this argument was about the masses rushing to the exits, not better grosses for the select few

who chose to do so.

Thomson Reuters also provided data for all M&A of U.S. targets under $1 billion (i.e., not just PE

sponsored), with similar results.

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*** Interesting theory from a venture capitalist, vis-à-vis his industry’s walking dead. He said that one

way to separate the contenders from pretenders is to see which firms have raised new funds in the 2008-

2010 time period. Those who have are still alive and kicking. Those who haven’t are on their way out.

There obviously will be some exceptions on both sides, but it’s not a bad rule of thumb…

*** In related news: Always On this week released its list of the “top 100 venture capital firms.” Amazingly,

firms like Worldview Technology Partners and VSP Capital are included. If you can’t make new

investments, you aren’t a top venture capital firm.

*** I received a ton of thoughtful emails on yesterday’s discussion of founder stock taxation. Keep them

coming for tomorrow’s Feedback column. Also, it seems that Vic Fleischer is on a short vacation. He

promises to be in touch (i.e., defend his argument) upon return.

*** Self-promotion alert: Last night I guested on This Week in Venture Capital, the live online talk show

hosted by Mark Suster. We talked recent deals, DST, Kleiner, Groupon, carried interest and more. You can

watch a replay here.

6 things to read @Fortune.com

� Pre-Marketing, including Plan B for greentech VCs, why Groupon snubbed Google, Daniel Ellsberg

on WikiLeaks, PIKs prompt defaults and where the most financially-savvy Americans live.

� Nin-Hai Tseng: Beware $90 oil

� David Lerner: Are super-angels extinct?

� Shelley DuBois: Q&A with Tom Steyer, the jolly green banker

� Paul Keegan: Have you caught gold fever?

� Colin Barr: Is the bull market for bonds dead at the tender age of 30?

The Big Deal

Factual, a Santa Monica, Calif.-based collaborative data platform, has raised $25 million in Series A

funding. Andreessen Horowitz and Index Ventures co-led the round, with participation from SV Angel

and Mike Ovitz. Andreesen Horowitz and Index both participated in an earlier seed round for Factual, but

did not have an option on the Series A. Instead, it was a competitive deal with multiple term sheets.

The company was launched by Gil Elbaz, whose previous effort got scooped up by Google and eventually

became the basis for AdSense.

Here's how it works: Factual allows the crowd to upload data sets on virtually any topic into its system, and

also allows users to correct existing records. Think of it as a Wikipedia for structured data, with paying

customers able to merge data sets and insert them into customized applications.

For more on the deal, check out my Q&A with Ben Horowitz.

VC Deals

NetProspex Inc., a Waltham, Mass.-based provider of data-as-a-service solutions for B2B sales and

marketing professionals, has raised $5.5 million in funding from Edison Ventures. www.netprospex.com

ViKi, a community-powered site that allows users to watch TV and movies in their own language, has

raised $4.3 million in Series A funding. Backers include Greylock Partners, Andreessen Horowitz, Charles

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River Ventures and Neoteny Labs. The company has offices in Singapore and Silicon Valley. www.viki.com

Sofie Biosciences, a Culver City, Calif.-based developer of agents and devices for the molecular imaging

of disease, has raised $2 million in new VC funding from firms like the Cycad Group. www.sofiebio.com

Ortho Kinematics, an Austin, Texas-based spine diagnostics startup, has raised $2 million in VC funding.

TEXO Ventures led the round, and was joined by return backers PTV Sciences and Gatebridge

Investments. www.orthokinematics.com

Tripleseat Software, a Boston-based provider of event management and lead generation web applications

for restaurants and hotels, has raised $500,000 in seed funding from Dundee Venture Capital.

www.tripleseat.com

Chegg.com, a Santa Clara, Calif.-based online marketplace for textbook rentals, has acquired Cramster,

a Pasadena, Calif.-based social platform providing online homework help. No financial terms were

disclosed. Chegg has raised around $165 million in VC funding, from Ace Ltd., Foundation Capital, Kleiner

Perkins, Gabriel Venture Partners and Primera Capital. www.chegg.com

Private Equity Deals

Applus+, a portfolio company of The Carlyle Group, has offered to acquire Velosi (AIM: VELO), a global

provider of inspection, quality assurance, certification and testing services to the oil and gas industry. The

deal would value Velosi at approximately €105 million, and represents a 60.3% premium to Velosi’s

average closing price over the past month. www.carlyle.com

Cerberus Capital Management, Lone Star Funds and Fortress Investment Group are among those

planning to bid for Takefuji Corp., a failed Japanese consumer lender, according to Reuters. The deal

could be worth upwards of $955 million.

Kiss My Face, a natural personal care products brand, has raised an undisclosed amount of growth capital

funding from Caltius Equity Partners. www.kissmyface.com

Montage Partners has acquired Clowe & Cowan of El Paso Inc., a wholesale distributor of municipal and

industrial waterworks supplies. No financial terms were disclosed for the deal, which was done in

partnership with company management. www.ccelp.com

Pacific Transportation Asia, an affiliate of CLSA Capital Partners, has acquired a majority stake in OSL

Holdings, a Hong Kong-based provider of dry bulk shipping services. No financial terms were disclosed.

www.cslacapital.com

Royal Bank of Scotland reportedly has ended talks to sell Priory Group, a British operator of mental-

health and addiction clinics, to Bain Capital. Bloomberg reports that RBS now seeks to restart negotiations

with Advent International. www.rbs.com

Standard Water Group, a Chinese wastewater treatment company, has secured more than $100 million in

private equity commitments from Themes Investment Partners. It would represent the first deal for

Themes, which was founded last year by former Goldman Sachs and Och-Ziff pro Frank Yu.

TZP Capital Partners has agreed to acquire The Dwyer Group, a Waco, Texas-based holding company

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for seven residential and commercial franchise service brands. No financial terms were disclosed. Dwyer’s

franchisees and company-operated stores generate nearly $800 million in annual revenue.

www.dwyergroup.com

PE-backed IPOs

E-Commerce China DangDang Inc., a Beijing-based B2C ecommerce company in China (with an

emphasis on books), shares rose nearly 86% yesterday on its first day of trading on the NYSE. It priced its

IPO at $16 per share, and finished up at $29.91 per share. Shareholders include Tiger Global Private

Investment Partners, DCM-Doll Capital Management and IDG Technology Ventures. www.dangdang.com

YouKu, a Chinese video sharing site, shares rose 161% yesterday on its first day of trading on the NYSE.

It priced its IPO at $12.80 per share, and closed at raised around $33.44 per share. The company had

raised $110 million in venture capital funding, from firms like Brookside Capital, Chengwei Ventures,

Maverick Capital and Sutter Hill Ventures. www.youku.com

Exits

Barclays Private Equity has agreed to sell Aerocan SAS, a supplier of aluminum aerosol cans and

bottles in Europe, to Ball Corp. (NYSE: BLL). The deal is valued at around €221 million, including the

assumption of debt and other liabilities. It is expected to close next quarter. www.ball.com

Travelex, a portfolio company of Apax Partners, has agreed to sell its prepaid cash card business to

MasterCard (NYSE: MA) for £290 million. www.travelex.com

Other Deals

Dell (Nasdaq: DELL) said that it has entered talks to acquire Compellent Technologies Inc.(NYSE: CML), a provider of data storage solutions, for $27.50 per share. www.dell.com

Paychex Inc. (Nasdaq: PAYX) has agreed to acquire SurePayroll Inc., a Glenview, Ill.–basedprovider of SaaS payroll processing for small businesses. No financial terms were disclosed. www.paychex.com

Trimble (Nasdaq: TRMB) has acquired Tata AutoComp Mobility Telematics Ltd. from India’s Tata AutoComp Systems Ltd. No financial terms were disclosed. TMT provides telematics solutions and mobile resource management (MRM) services in India. www.trimble.com

Firms & Funds

G Square Capital, a mid-cap healthcare private equity firm led by former Apax pro Laurent Ganem, is

raising €250 million for its debut fund. It already has closed on €100 million, with Forbes Private Capital

Group serving as placement agent.

Moving In, Up and On

Tom DeFranco has joined placement group Madison Williams & Co. as a director in the firm’s private

capital solutions group, with a focus on the Midwestern U.S. and Canada. He is a former employee of both

Thompson Hine and Maxus Investment Group. www.madisonwilliams.com

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Mark D’Andrea has agreed to join Highbridge Capital Management in January, as head of global

institutional business development. He stepped down last month as a managing director with BlackRock.

www.highbridge.com

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