masiv 2014: the m&a silicon valley gathering. the key m&a market driver: ceo confidence...
TRANSCRIPT
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)
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013$0
$100
$200
$300
$400
$500
M&A IPO
MASiV 2014: The M&A Silicon Valley Gathering
Global Software and Internet Acquisition Activity – Last Ten Years
Source: Capital IQ
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
-
1,000
2,000
3,000
4,000
5,000
$-
$50
$100
$150
$200
$250
$300
1,951
2,814
3,758
2,524
3,436 3,834
# of Transactions
$ Value of An-nounced Transac-tions ($B)
MASiV 2014: The M&A Silicon Valley Gathering
Source: Capital IQ
Top-25 Acquirers in Software – Announced Acquisitions, Last Five Years
GoogleIBM
OracleFacebook
Yahoo!Autodesk
TwitterNuance
ZyngaApple
SalesforceMicrosoftAccenture
j2 GlobalSAP
VMwareInternet Brands
eBayADP
CA TechnologiesCitrix Systems
SynopsysAdobe
IntuitAOL
4942
4139
2928
2727
2625
24222222
2119
171616
1515
131313
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 5,12821%
Undisclosed 18,245
76%
MASiV 2014: The M&A Silicon Valley Gathering
Source: Capital IQ
Valuations in M&A – Avg. Multiples of Revenue
2009 2010 2011 2012 20130x
2x
4x
6x
1.0x
2.1x 2.1x
2.8x
1.7x
3.4x
5.5x
4.3x4.7x
4.9x
Top 50 Transaction Multiples - All Tech
Top 50 Transaction Multiples - Software and Internet
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
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 platforms – Square, Bitcoin, Lending Club, 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.
• New content platforms – Spotify, Hulu, Netflix, etc
• And others – health, travel, cloud storage, etc
MASiV 2014: The M&A Silicon Valley Gathering
Revs EBITDA CashEnterprise
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
Selected Financial Information (All $ in billions except Twitter)
MASiV 2014: The M&A Silicon Valley Gathering
MASiV 2014: The M&A Silicon Valley Gathering
MASiV 2014: The M&A Silicon Valley Gathering
MASiV 2014: The M&A Silicon Valley Gathering
MASiV 2014: The M&A Silicon Valley Gathering
MASiV 2014: The M&A Silicon Valley Gathering
• 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 advertising2. YouTube, Android, and Chrome3. 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
• $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
• 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
• Acquisition Opportunities:• More mobile / mobile ad-tech acquisitions• More entertainment acquisitions• Build a Yahoo!-like eco-system • Partner with another large content company
- Ad management, optimization, reporting: 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