Marketing, Media, Technology and Service Industries M&A and Investment Activity: 3Q10-3Q11 ($ in Billions)

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1 FOR IMMEDIATE RELEASE 60 Broad Street 38 th Floor New York NY (212) Fax (212) Contact: Amy LaBan (212) Q11 Marketing Media Technology and Service Industries Transaction Activity Up 4 Percent; Up 9 Percent on a Quarter-Over-Quarter Basis 3Q11 Review: 771 Totaling $43.4 Billion Digital Media/Commerce was the Most Active Segment in 3Q11 with 306 ; Software & Information was the Highest Value Segment in 3Q11 with $22.9 Billion in September (New York NY) Mergers and acquisitions and investment activity in the Marketing Media Technology and Service industries grew 4 percent in the third quarter of 2011 while aggregate transaction value increased 9 percent compared to 2Q11. During the quarter Petsky Prunier tracked 771 transactions for a total of $43.4 billion across six broad segments: Digital Advertising Agency/Consulting Marketing Technology Digital Media/Commerce Software & Information and Marketing Services. Digital Media/Commerce was the most active segment with 306 transactions and Software & Information was the highest value segment with $22.9 billion in deal value. Strategic buyers accounted for nearly half of the quarter s activity with their transactions accounting for 46 percent of the total value. As compared to the previous quarter private equity buyout transactions in 3Q11 increased as a percentage of the quarter s total deal value as a result of three +$1 billion deals within the Marketing Technology and Software & Information segments increasing the value of buyout transactions to 22 percent of total deal value in 3Q11 up from 14 percent of total value in 2Q11. Venture and growth capital investors announced 385 transactions for 17 percent of the total value. Marketing Media Technology and Service Industries M&A and Investment Activity: 3Q10-3Q11 ($ in Billions) Marketing Media Technology and Service Industries 3Q11 M&A and Investment Activity ($ in Millions) DOLLAR VALUE $43.4 $39.7 Marketing Services $1587 Digital Advertising $1353 Digital Media/ Commerce $8146 DEAL VOLUME $25.3 $20.0 $ Software & Information $22874 Marketing Technology $7449 Agency/ Consulting $2029 M&A and Investment Activity by Segment During the third quarter of M&A and investment transactions worth approximately $8.1 billion were announced in the Digital Media/Commerce segment leading both M&A and investment activity across Petsky Prunier s six segments. As with the previous quarter the most active subsegment was Social Media/Apps which accounted for one quarter of deal activity. Within M&A activity 128 deals were announced worth $4.2 billion in value. Next to Social Media/Apps the highest M&A value subsegments were ecommerce worth $1.3 billion and Gaming worth $1.1 billion. Acquisitions in the quarter included KAR Auction Service s $210 million acquisition of OPENLANE at 2.1x revenue and Electronic Arts $750 million acquisition of PopCap Games. Among venture capital and growth equity investments Social Media/Apps and ecommerce accounted for a combined 29 percent of the total investment activity while activity in Mobile Content increased by approximately 70 percent from the previous quarter. The largest investment was Silver Lake Partners and Digital Sky Technology s $1.6 billion investment in Alibaba Group at reportedly a $32 billion valuation. Page 1

2 Software & Information was the highest value segment with $22.9 billion in deal value and the third most active segment behind Marketing Technology with 53 percent of the quarter s total transaction value. The segment s M&A activity accounted for 14 percent of the quarter s 386 M&A deals. Market Research was the most active subsegment with 14 M&A deals announced for approximately $1.3 billion. There were a total of 64 investments in the segment worth $828 million in 3Q11. As with the previous quarter the most active subsegment was Infrastructure Software which contributed 30 percent to the quarter s total investment deal activity. The largest investment in the Software & Information segment was New Enterprise Associates $136 million investment in Cvent an event survey and marketing solutions provider. Marketing Technology was the second most active segment in 3Q11 with 167 deals and was also the third highest value segment worth $7.4 billion. The most active subsegments for M&A activity were Social Technology Content Management and Mobile Technology collectively with 26 deals worth $965 million. The largest acquisitions included KKR s $2.3 billion buyout of Go Daddy Software and Web.com s $756 million acquisition of domain registrar and hosting provider Network Solutions at 2.8x revenue. Social Technology and Analytics & Reporting were the most active subsegments for investment activity for the second quarter in a row with 15 and 13 investments respectively worth a combined $928 million. In Agency/Consulting combined M&A and investment activity increased from the previous quarter by 32 percent with 75 deals announced for approximately $2 billion in 3Q11. Digital Agency was the most active subsegment for M&A activity with 22 deals worth $296 million. General Agency also continued to be active with eight M&A deals worth approximately $115 million. M&A transactions in the segment included Williams Lea Group s acquisition of Tag Worldwide and SapientNitro s $41 million acquisition of DAD. In 3Q11 there were 12 investments in Agency/Consulting worth approximately $163 million. Investments included Bessemer Venture Partners $40 million investment in Jasper Infotech JMI Equity s $30 million investment in BrightLine Partners and WPP Group s $25 million investment in Just Marketing International. There were 71 deals announced in Digital Advertising during 3Q11 for an 8 percent increase from the previous quarter. In contrast the aggregate value of transactions in the segment increased by 39 percent from last quarter to approximately $1.4 billion driven by strategic buyer activity. M&A activity which accounted for 36 acquisitions worth $718 million was led by the Mobile Marketing subsegment with 10 acquisitions. The largest M&A transaction in the segment was ValueClick s $295 million acquisition of Dotomi a display advertising company. The Mobile Marketing subsegment led investment activity with 10 announced investments worth approximately $74 million. Select investments within Digital Advertising included Sina s $66.4 million investment at nearly 14x revenue in China-based digital video company Tudou Holdings which also raised $174 million in its initial public offering and Digital Sky Technology s $50 million investment in ZocDoc. A total of 35 transactions were announced in the Marketing Services segment in 3Q11 for approximately $1.6 billion a substantial increase in both deal volume and value as compared to the previous quarter s 16 deals valued at $593 million. Acquisition activity was led by the Printer subsegment with eight deals worth $120 million. The largest Marketing Services transaction in 3Q11 was GENCO Supply Chain Solutions $512 million acquisition of ATC Technology at 1.1x revenue and 7.2x EBITDA. In 3Q11 there were seven investments announced in the segment worth approximately $93 million. Select investments included Mazimiles $8 million investment in World Wide Loyalty System and ebay s $6 million investment in Shipwire a logistics and air freight company. Continuing a trend from recent quarters strategic buyers accounted for approximately half of all deals in 3Q11 with 354 transactions for approximately $26.7 billion. Compared to 2Q11 strategic deal volume increased by 10 percent. Google was the most active strategic buyer with seven transactions followed by Amazon.com BuyWithMe CrowdSavings.com ebay Electronic Arts Publicis Groupe R.R. Donnelley and Twitter with three transactions each. Page 2

3 3Q11 Most Active Strategic Buyers by Buyer Number of Representative Targets Google 7 DailyDeal.de PittPatt Punchd Scooplet The Dealmap Zagat Survey Zave Networks Amazon.com 3 ParAccel Pushbutton The Book Depository BuyWithMe 3 Edhance Scoop St. TownHog.com CrowdSavings.com 3 DealDaddies.com Get Grouby QpunDay.com ebay 3 Appchee Applications Shipwire Zong Electronic Arts 3 Bight Games Ohai Popcap Games Publicis Groupe 3 Big Fuel Communications DPZ Spillman/Felser/Leo Burnett R.R. Donnelley 3 Genesis Packaging & Design LibreDigital Sequence Personal Twitter 3 Bac ktype Bagc heck Julpan Affiliated Computer Services 2 Education Sales Management XL World Autodesk 2 Instructables.com Pixlr Chegg 2 Student of Fortune Zinch Live Gamer 2 BrandPort GamerDNA MDC Partners 2 Concentric Pharma Advertising Laird + Partners Private equity buyout firms announced 32 transactions for a total of $9.4 billion. Compared to the previous quarter activity decreased by 33 percent while deal value increased 67 percent. Significant buyout transactions announced during the quarter included KKR s $2.3 billion buyout of Go Daddy Software Providence Equity Partners $1.6 billion buyout of Blackboard and Bain Capital s $1.3 billion buyout of MYOB an accounting software company. Venture and growth capital investors announced 385 transactions worth approximately $7.4 billion. Both deal volume and transaction value were flat compared to 2Q11. Andreessen Horowitz was the most active financial investor making eight investments while Accel Partners Intel Capital Kleiner Perkins Caufield & Byers and Sequoia Capital each made seven. IPO Activity IPO activity declined significantly in 3Q11 versus the previous quarter. There were two IPOs in the Marketing Media Technology and Service industries both within Digital Media/Commerce. Zillow priced above its initial filing range and traded above its first-day pricing. China-based online video website Tudou priced at the midpoint of its initial filing range and closed down 12 percent after its first day of trading. 2Q11 saw 11 IPOs eight of which closed above their first day pricing. A number of companies that were expected to complete IPOs this quarter have held back due to unstable markets. Despite financial market volatility both M&A and investment activity remain strong noted John Prunier partner at Petsky Prunier LLC. Acquisition and investment activity is three times the level it was at this point in Many investment themes have emerged this year but none more prominent than the pursuit of scale. That perspective is relative to each buyer but it is particularly notable on the high end where 10 of the largest deals in 2011 account for a quarter of this year s deal value compared to just 15 percent in Note: All values as of 5 p.m. Eastern Time 09/29/11. Transaction values include only reported up-front cash payments and do not account for any potential future performance-based compensation. Quarterly M&A and Investment Activity by Segment (3Q10-3Q11) Most Active Marketing Services s Loyalty/Retention Printer Database/Analytics Call Center Logistics Fulfillment Lettershop Offline Lead Generation 1 15 Retail Services Ad Specialty/Premiums Collections Data Processing/Enhancement Total Page 3

4 Most Active Digital Advertising s Mobile Marketing Online Lead Generation Ad Networks/Exchanges Digital Video Services Search Marketing Affiliate/CPA Network Game Advertising Total Most Active Marketing Technology s 3Q10 4Q10 1Q11 2Q11 3Q11 Social Technology Content Management Analytics & Reporting Mobile Technology Commerce Management BI tools Online Targeting/Optimization Ad Serving CRM Website Creation/Hosting /Messaging Software SEM/SEO tools Subtotal Other Total Other subsegments include Content Delivery Net work Creative Production Platform Dat a Quality Internet Service Providers Market ing Asset Management Media Management System MRM/Workflow Management Product /Price Soft ware Search & Discovery Segment ation/data Mining SFA/Lead Management Teleservices/eServices and Web t o Print Most Active Agency/Consulting s Digital Agency General Agency Social Agency Design Agency Experiential Marketing DM Agency Specialty Agency B-to-B Agency 4 40 Public Relations Healthcare Agency Branded Communications Promotion Agency Subtotal Other Total Ot her subsegments include Et hnic/ M ult icultural Agency DR M edia Buying and M edia Planning/Buying Most Active Digital Media/Commerce s Social Media/Apps ecommerce Mobile Content/Apps Digital Promotion/Coupon Gaming Niche Content Classifieds/Auctions/P-to-P Local Search Digital Place-Based Media Comparison Shopping Vertical Search Web Search/Portals Subtotal Other Total Other includes Domain Portf olio/marketplace and Virtual Goods Page 4

5 Most Active Software & Information s Infrastructure Software Market Research ERP Software HC-Providers Software Marketing Consulting Financial Software Financial Engineering Software HR Software Marketing Data Credit/Risk Software Engineering Consulting 2 16 Subtotal Other Total Ot her subsegments include Financial Consult ing Geo-Demo Consult ing Geo-demographic Soft ware Geo-demographic Inf ormat ion HC-Payors Consulting HC-Payors Software HC-Providers Consulting Healthcare-BioPharma Information Healthcare-Payors Information Healthcare-Providers Information HR Information HR Consult ing IT Legal Inf ormation Legal Consult ing M anagement Consult ing Product/ Price Informat ion Product/ Price Consulting and Software NEC About Petsky Prunier LLC Petsky Prunier ( is one of the leading investment banks serving the marketing media technology and service industries including businesses focused on digital advertising digital media ecommerce marketing technology software information marketing services and agencies and consultancies. Our firm s mergers and acquisitions and private placements advisory services reflect a unique blend of product specialization and industry expertise. Together with strategic consulting firm Winterberry Group ( a Petsky Prunier company the organization represents one of the largest industry-specific advisors providing strategic and transactional services. Securities transactions are processed through Petsky Prunier Securities LLC. Page 5