Consumer Electronics
M&A Report
March 2014
Consumer Electronics M&A Report – Welcome!
Welcome to the inaugural edition of the Intrepid Investment Bankers LLC Consumer Electronics M&A Report. This newsletter is
designed to provide updated information on select M&A transactions, public company valuations, and other trends impacting
middle market companies in the consumer electronics industry. We hope it will serve as a useful tool for your business and any
future deal-making activity. Please enjoy and feel free to pass it along to others in the consumer electronics industry.
Gary Rabishaw, Managing Director and Head of the Consumer Electronics Practice
Adam Abramowitz, Senior Vice President and Co-Head of the Consumer Electronics Practice
Recently Announced Transactions
Jawbone Round II – Jawbone, developer of the Jambox Bluetooth speaker and UP fitness band, will be
raising $250 million in a new investment round led by Rizvi Traverse Management, valuing the company
at $3.3 billion post-money. Previously, Jawbone raised $375 million of financing and we expect this new
round to further fuel its growth ahead of an IPO or sale.
Google Adds Nest Labs – Google announced the acquisition of Nest Labs, known for its intelligent
thermostats and connected home devices, for approximately $3 billion. Prior to the transaction, Nest
was rumored to be raising $150 million in a Series D round with an implied valuation of $2 billion.
This deal provides Google with a new growth category of connected devices and world-class
engineering and design talent with an Apple pedigree.
Device Makers Change Hands – Lenovo Group agreed to acquire Motorola Mobility Holdings from
Google for $2.9 billion in late January 2014. Lenovo surpassed Dell as the world’s largest PC
manufacturer in June 2013, according to IDC, in part due to growth of the ThinkPad line of laptops that it
acquired from IBM in 2004. The Chinese manufacturer plans to use the Motorola platform to strengthen
its position in the growing handset market. The transaction follows Microsoft’s announced acquisition of
Nokia’s Devices & Services business for $5.0 billion.
GoPro Files Confidential IPO – GoPro, maker of rugged and portable cameras used in extreme
sports, has filed a confidential IPO in a secretive process through the JOBS Act reserved for
businesses with under $1 billion of revenue. The high-growth company sold 2.3 million cameras in
2012 generating generated over $500 million of revenue. GoPro founder Nick Woodman remains
the majority shareholder with a 77% stake after selling 9% to Foxconn Technology in late 2012 in a
transaction that valued the business at $2.25 billion.
Dolby Acquires Doremi Labs – Dolby Laboratories signed a definitive agreement to acquire Doremi Labs, the
leading provider of digital cinema video playback solutions. Doremi Labs’ technology will complement Dolby's
Atmos object-based sound platform. Consideration for the transaction includes $92.5 million of cash plus $20
million in contingent consideration to be earned over four years.
In Case You Missed It…
Holiday Cheer for CE – Sales of PCs, TVs, tablets and headphones during the
holiday season collectively rose 3.7% to $9.5 billion, The NPD Group reported,
compared to a rise of just 1% from 2011 to 2012. Read more here.
Harman Reviving Infinity Audio – Infinity Audio will launch its
first major product since 2008 and has announced a five-year
partnership with rock band Linkin Park. Infinity also has a new
social-media campaign underway. Read more here.
Building Value in Your Business
Many factors will influence a
Company’s valuation and salability.
Each month we will highlight ways
in which to raise investor interest
and enhance the value of your
company:
Customer Concentration
Wearables Catch On – Wearables reached a new level of consumer awareness at
more than 50%, with 28% of consumers likely to buy a device in the near future,
according to The NPD Group. Despite widespread awareness, adoption rates may be
held back by form factor, cost and durability. Read more here.
Best Buy Profits in Q4 – Best Buy posted fourth-quarter profits
that topped analysts’ estimates after cutting expenses and
increasing sales through its online store. Read more here.
Tablet Ownership Continues Growth In U.S. – The Consumer Electronics
Association (CEA) reports that 44% of online U.S. consumers owned tablets as of
December 2013, an increase of 6% from the previous year. Read more here.
Beats Music Acquires Topspin Media – Beats Music adds
Topspin Media, a platform allowing artists to connect with fans and
promote merchandise, as it looks to expand and add functionality
to its music streaming service. Read more here.
Concentration is an inherent risk of
any business, particularly in the
CE space where Amazon, Best
Buy and Walmart dominate the
landscape. As a private business
owner, it is critical to minimize
overreliance on any one customer
by targeting multiple distribution
channels and building international
sales. Try to keep your customers
below 30% of revenue where
possible. If a customer exceeds
this threshold, try to diversify
products among different buyers
and categories in order to mitigate
a potential buyer concern and
lessen a risk factor in your
business.
Newegg Challenges Amazon Prime – Newegg announced Newegg
Premier, a subscription plan with free three-day shipping and free returns
for $49 per year. Premier, currently in a beta test stage, comes amid
rumors of an imminent price increase to Amazon Prime memberships.
Read more here.
U.S. TV Shipments Plummet – U.S. TV unit shipments declined 9% from 2012 to 2013,
as domestic consumers continued to hold off purchases through most of the year,
according to a new report from IHS Technology . Read more here.
Sony’s Credit Lowered to Junk – Moody’s downgraded Sony’s credit
rating to Ba1 – one level below investment grade. The rating reflects
Sony’s struggle to gain share in the smartphone and tablet markets
while TV sales decline. Read more here.
RadioShack Struggles Through Holidays – RadioShack plans to close
1,100 stores after holiday sales through the retailer declined by more
than 20% year over year. Read more here.
Samsung Unveils New Devices at Mobile World Congress –
Samsung displayed the Galaxy S5, the Gear 2, Gear Neo and Gear Fit
health band in Barcelona. Read more here.
Publicly Traded Consumer Electronics Companies ($ in thousands)
Last Twelve Months
Company
Revenue Growth
Enterprise Value / LTM
Enterprise Value
Market Cap
Revenue
Gross Margin
EBITDA Margin
1-year
3-year
Revenue
EBITDA
$446,951
$1,854
$16,446
$121,679
$470,756
$3,710
$9,324
$162,212
$173,992
$6,714
$51,228
$213,903
37.4%
20.8%
23.4%
39.8%
32.5%
0.4%
4.4%
22.8%
5.7%
(29.6%)
2.9%
13.7%
31.6%
(10.0%)
(0.4%)
13.9%
2.6x
0.3x
0.3x
0.6x
7.9x
NM
7.4x
2.5x
Entertainment Technology
Dol by La bora tori es , Inc.
DTS Inc.
Rovi Corpora tion
Ti Vo Inc.
$3,606
$314
$3,049
$794
$4,250
$360
$2,378
$1,624
$904
$118
$538
$406
89.8%
92.3%
82.8%
57.8%
33.1%
15.4%
33.7%
2.2%
(3.3%)
18.0%
2.3%
33.7%
(1.4%)
13.1%
(0.2%)
22.8%
4.0x
2.7x
5.7x
2.0x
12.0x
17.3x
16.8x
NM
Electronic Accessories
Ga rmi n Ltd.
Ha rma n Interna tiona l Indus tri es , Inc.
Logi tech Interna tiona l SA
Pa ra metri c Sound Corpora tion (Turtle Bea ch)
Skul l ca ndy, Inc.
VOXX Interna tiona l Corpora tion
ZAGG Inc.
$9,131
$6,850
$2,082
$659
$201
$441
$131
$10,460
$7,079
$2,462
$563
$236
$317
$128
$2,632
$4,744
$2,107
$202
$239
$829
$219
53.5%
26.5%
34.5%
31.5%
45.3%
28.9%
39.7%
24.8%
8.7%
6.0%
12.2%
8.7%
6.2%
15.7%
(3.1%)
11.9%
(2.6%)
(2.3%)
(14.7%)
3.0%
(17.0%)
(0.7%)
10.9%
(3.4%)
30.1%
18.5%
13.1%
42.3%
3.5x
1.4x
1.0x
3.3x
0.8x
0.5x
0.6x
14.0x
16.5x
16.5x
NM
9.7x
8.5x
3.8x
Connected Home
Control 4 Corpora tion
Nortek Inc. (Core Bra nds )
Uni vers a l El ectroni cs Inc.
$385
$2,149
$587
$466
$1,107
$664
$129
$2,244
$529
50.3%
30.0%
28.6%
6.4%
9.1%
9.9%
17.3%
0.6%
14.3%
19.7%
6.4%
16.9%
3.0x
1.0x
1.1x
NM
10.5x
11.2x
Diversified Electronics Manufacturing
JVC KENWOOD Corpora tion
Hon Ha i Preci s i on (Foxconn)
Pa na s oni c Corpora tion
Pi oneer Corpora tion
Sha rp Corpora tion
Sony Corpora tion
$653
$33,118
$32,847
$1,406
$13,938
$29,853
$303
$36,008
$28,961
$801
$5,246
$17,876
$3,058
$124,168
$73,833
$4,751
$27,930
$74,448
26.7%
8.6%
27.1%
19.8%
18.0%
22.5%
4.7%
4.5%
8.4%
6.9%
6.3%
4.6%
1.2%
(2.1%)
(7.9%)
7.8%
0.9%
14.5%
(4.7%)
12.3%
(0.9%)
1.8%
(3.5%)
1.3%
0.2x
0.3x
0.4x
0.3x
0.5x
0.4x
4.5x
6.0x
5.3x
4.3x
8.0x
8.7x
Mobile Device Manufacturing
Appl e Inc.
HTC Corpora tion
LG El ectroni cs Inc.
Sa ms ung El ectroni cs Co. Ltd.
TEV / Revenue Multiples
20.0x
4.0x
16.0x
3.2x
TEV / Revenue
TEV / EBITDA
TEV / EBITDA Multiples
12.0x
8.0x
Google acquires Nest
2.4x
Control4 IPO
1.6x
Turtle Beach IPO
4.0x
0.8x
0.0x
0.0x
Mobile Device Manufacturing
Entertainment Technology
Electronic Accessories
Connected Home
One-Year Stock Performance
Diversified Electronics Manufacturing
Three-Month Stock Performance
30%
100%
24.3%
19.3%
55.3%
50%
22.0%
7.3%
0%
(16.4%)
Average Stock Performance
Average Stock Performance
66.1%
15.7%
15%
3.0%
0%
(8.9%)
-15%
-50%
Mobile Device
Manufacturing
Entertainment
Technology
Electronic
Accessories
Connected Home
Diversified
Electronics
Manufacturing
Note: Indices calculated on an equally-weighted basis; All data sourced from S&P Capital IQ; “NM” stands for “Not Meaningful”
Mobile Device
Manufacturing
Entertainment
Technology
Electronic
Accessories
Connected Home
Diversified
Electronics
Manufacturing
Intrepid’s Consumer Electronics and Professional Entertainment Products Practice
Connected Home
Lifestyle Electronics
• Control
Systems
• Home
Automation
• Mobile
Devices
• Lighting
• Networking
• Mobile
Accessories
Pro Audio / Musical
Instruments
Audio
• Wearables
• Loudspeakers
• Apple/iOS
Ecosystem
• Custom Installation
• Studio
monitors
• Sound
Reinforcement
• Microphones • Musical
Instruments
• Mixing
• Audio Technologies
• Cases
• Headphones
Consoles
• Live Sound
a portfolio company of
has been acquired by
a portfolio company of
a portfolio company of
a portfolio company of
has been acquired by
has been acquired by
an affiliate of
has been acquired by
has been acquired by
*
*
*
Linear Corporation, a subsidiary of
*
*Represents transactions executed by principals of Intrepid at prior securities firms.
Practice Team
Gary Rabishaw
Adam Abramowitz
Greg Passani
Managing Director
grabishaw@intrepidib.com
Senior Vice President
aabramowitz@intrepidib.com
Analyst
gpassani@intrepidib.com
11755 Wilshire Boulevard, Suite 2200
Los Angeles, California 90025
Phone: 310.478.9000 • Fax: 310.478.9004
www.intrepidib.com Member FINRA/SIPC
About Intrepid Investment Bankers LLC
Intrepid Investment Bankers LLC, headquartered in Los Angeles, provides high impact and differentiated advice to middle market
business owners and mission critical execution for maximizing value in capital transactions. Intrepid's services include M&A
advisory, equity and debt capital raises and strategic advice in complex transactions. The firm serves entrepreneur and familyowned businesses, financial sponsors and major corporations. Collectively, the senior banker team at Intrepid brings over 180
years of mergers and acquisitions advisory experience in over 350 transactions spanning a broad range of industries. Intrepid
augments its international capabilities through its membership in M&A International Inc., an exclusive global alliance of independent
middle market M&A advisory firms in 39 countries, which completed over 330 transactions worldwide in 2013. www.intrepidib.com
Member FINRA/SIPC.