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
In Dollar Volume (Billions)
$500
$400
$300
$200
$100
$0
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
M&A
IPO
Source: Capital IQ
MASiV 2014: The M&A Silicon Valley Gathering
Global Software and Internet Acquisition Activity – Last Ten Years
5,000
$300
3,834
3,758
4,000
$250
3,436
$200
2,814
3,000
# of Transactions
2,524
$150
2,000
1,951
$100
1,000
-
$ Value of
Announced
Transactions ($B)
$50
$-
Source: Capital IQ
MASiV 2014: The M&A Silicon Valley Gathering
Top-25 Acquirers in Software – Announced Acquisitions, Last Five Years
Google
IBM
Oracle
Facebook
Yahoo!
Autodesk
Twitter
Nuance
Zynga
Apple
Salesforce
Microsoft
Accenture
j2 Global
SAP
VMware
Internet Brands
eBay
ADP
CA Technologies
Citrix Systems
Synopsys
Adobe
Intuit
AOL
100+
49
42
41
39
29
28
27
27
26
25
24
22
22
22
21
19
17
16
16
15
15
13
13
13
Source: Capital IQ
MASiV 2014: The M&A Silicon Valley Gathering
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
MASiV 2014: The M&A Silicon Valley Gathering
Valuations in M&A – Avg. Multiples of Revenue
6x
5.5x
4.9x
4.7x
4.3x
4x
3.4x
2.8x
2.1x
2.1x
1.7x
2x
1.0x
0x
2009
2010
2011
2012
2013
Top 50 Transaction Multiples - All Tech
Top 50 Transaction Multiples - Software and Internet
Source: Capital IQ
MASiV 2014: The M&A Silicon Valley Gathering
Thoughts on What’s Going On Around Us
• Perspective - 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
Web access was 85% from PC’s
Tablets were a “failed market” - Newton
(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 platforms – Square, Bitcoin, Lending Club, etc
• New content platforms – Spotify, Hulu, Netflix, etc
• And others – health, travel, cloud storage, etc
Companies that are unable to innovate their way into these new markets
must acquire, or they risk being marginalized, commoditized, or being made obsolete.
MASiV 2014: The M&A Silicon Valley Gathering
Selected Financial Information
(All $ in billions except Twitter)
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
Twitter
$639M
$52M
$1.8B
$32B
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 continue 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 advertising
• Google play (payments)
• Still the most important acquirer in the land - $48B cash; $1B EBITDA monthly; investing
across industries, geographies and stages
• 18 announced acquisitions in 2013; most notable was Waze; Eight robotics acquisitions
• Strategic growth areas for Google:
1. Search and Display advertising
2. YouTube, Android, and Chrome
3. New businesses to drive adoption and innovation - Social, Commerce, and
Enterprise
MASiV 2014: The M&A Silicon Valley Gathering
Yahoo
• Comeback acquirer of the year – 28 acquisitions in 15 months
• Marissa & Jackie Reses reinventing the company largely through acquisition
• Buying stock, talent and technology - investing in Yahoo’s core strength –
content
• Tumblr – big bet, jury is still 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 integration
• Speculative, emerging growth bets to to build the company’s future
• More talent acquisitions to bring more good people into the company
• Potential 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 advertising; great
personal information; ideally situated for contextual search
• 2013: Seven announced acquisitions; four of which were mobile-related
• Strategic Need:
-
Address fragmenting mind share caused by new mobile social networks like
Snapchat, Pinterest, Nextdoor
-
Diversify beyond their core social product
- Targets: Yelp, Opentable, Pandora or Spotify, Blackberry, Yahoo!
MASiV 2014: The M&A Silicon Valley Gathering
Twitter
• Public offering put $1.8B on Twitter’s balance sheet
• Key strategic priorities:
- Increase user engagement and growth; revenue growth
- Engagement with the TV industry
• One of the most active and acquirers in 2013: 9 Acquisitions
- Ad management, optimization, reporting:
Mo-Pub
- TV: Trendrr
- Contextual: Spindle
- Big Data: Lucky Sort
• Acquisition Opportunities:
• More mobile / mobile ad-tech acquisitions
• More entertainment acquisitions
• Build a Yahoo!-like eco-system
• Partner with another large content company
-
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