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MASiV 2014: The M&A Silicon Valley Gathering
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
MASiV 2014: The M&A Silicon Valley Gathering
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
MASiV 2014: The M&A Silicon Valley Gathering
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)
MASiV 2014: The M&A Silicon Valley Gathering
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+
MASiV 2014: The M&A Silicon Valley Gathering
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%
MASiV 2014: The M&A Silicon Valley Gathering
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
MASiV 2014: The M&A Silicon Valley Gathering
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)
MASiV 2014: The M&A Silicon Valley Gathering
So What’s Happened in Five Years?
MASiV 2014: The M&A Silicon Valley Gathering
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
MASiV 2014: The M&A Silicon Valley Gathering
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)
MASiV 2014: The M&A Silicon Valley Gathering
Google!
MASiV 2014: The M&A Silicon Valley Gathering
Google!
MASiV 2014: The M&A Silicon Valley Gathering
Google!
MASiV 2014: The M&A Silicon Valley Gathering
Google!
MASiV 2014: The M&A Silicon Valley Gathering
Google!
MASiV 2014: The M&A Silicon Valley Gathering
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
MASiV 2014: The M&A Silicon Valley Gathering
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?
MASiV 2014: The M&A Silicon Valley Gathering
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!
MASiV 2014: The M&A Silicon Valley Gathering
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
MASiV 2014: The M&A Silicon Valley Gathering
The Next Five Years!