- 1. Software Equity Group, LLC858 509-2800
www.softwareequity.com Software Equity Group, LLC 2012
2. Disclaimer The information contained in this Report is
obtained from sources we believe to be reliable, but no
representation or guarantee is made about the accuracy or
completeness of such information, or the opinions expressed herein.
Nothing in this Report i intended to be a recommendation of a
specific security Rt is i t d d t b d ti fifi it or company or
intended to constitute an offer to buy or sell, or the solicitation
of an offer to buy or sell, any security. Software Equity Group LLC
may have an interest in one or more of the securities or companies
discussed herein. Financial data provided by Capital IQ.id d b C it
l IQ This Report may not be reproduced in whole or in part without
the expressed prior written authorization of Software Equity Group,
L.L.C. Software Equity Group, LLC 2012 3. About Our Firm Industry
leading boutique investment bank, founded in We Do Deals.1992,
representing public and private software andinternet companies
seeking: Strategic exitg Growth capital Buyout Inorganic growth via
acquisition Buy and sell-side mentoring Fairness opinions and
valuations Clients span virtually every technology,
productcategory, delivery model and vertical market td li d l dti
lk t Global presence providing advice and guidance tomore than
2,000 private and public companiesthroughout US, Canada, Europe,
Asia-Pacific, Africaand Israel Strong cross functional team
leveraging transaction, cross-functionaloperating, legal and
engineering experience Highly referenceable base of past clients
Software Equity Group, LLC 2012 4. Mobile Software Product
Categories Mobile CategoriesDescriptionExample Companies Technology
focused on advertising display (creative, rich
media,Advertisinggetc) and infrastructure to connect ads with
publishers (Ad networks, exchanges, DSPs, SSPs, etc). Collect,
analyze, deliver and manage mobile traffic data
includingAnalyticsusage trends, device, OS, ad types, etc. from
native and the Mobile web. App stores, unique applications that
dont fit into a specificApps category, custom application job
shops.Commerce Focused on facilitating mobile retail, excluding
payment platforms.Communications Messaging, Group Messaging, VoIP,
video over IP, etc. Platforms that enable write once, run anywhere
where th output Pl tfth t bl it hhthe t tDevelopmentis native
and/or mobile web. Includes specialty platformsPlatformsfocused on
special vertical, like gaming, retail, etc.Focus on needs of
enterprise, via private application stores,Enterprise papplication
development platforms, device management(MDM), l(MDM) telecom
expense management (TEM) productivity, etc.(TEM),d i i Apps and
services focused on music, video, images, etc.
OtherEntertainmentservices include cloud sync and access anywhere
solutions. Does not include games as its a big enough category onto
its own.GamesSocial, MMPG, gaming platforms, etc. Software Equity
Group, LLC 2012 5. Mobile Software Product Categories (cont)Mobile
Categories Description Example Companies Health Apps focused on
health care, fitness, etc.Back office billing, messaging, policy
control, video and web Infrastructure optimization, video codecs,
transcoding, content managementsystems, etc. Location B Lti Based
dExtensive use of location in application or service or strictly aE
tifl ti i li ti i t i tllocation based service used by others to
create location based Services applications.Focused on selling to
the customer, post advertisement (destination g Marketinglanding
site, communication tools/messaging, sweepstakes, polls,etc). Also
includes market segmentation/targeting, CRM, etc.Enable payments
(digital or physical) via smartphones serving Payments merchants.
Also, serving the banking sector supporting deposits,bill pay, etc.
Security Antivirus, filtering, device location, etc.Focused on
social networks or highly social services, including Social social
games which will also be counted in the gaming category games,
category.Firms focused squarely on enabling the mobile web.
Primarily Webbrowser companies as the web platform developers are
in theDevelopment Platform category. Software Equity Group, LLC
2012 6. High Level Mobile Software M&A Historical Mobile
Software M&A by Year Historical Mobile Software M&A by
Quarter 250 201020112012 20580 70wareM&ATransactionseM&A70
67 2005960 54#ofMobileSoftware Transactions 15050404036 10081273021
# ofMobileSoftw2050201310 002010 2011*Q1Q2Q3Q4 2011 Mobile Software
M&A By Product Category 1H 2012 Mobile Software M&A By
Product Category 10 Categories within Other, all less than 5% of
total mobile software M&Abil ftMobileMarketingMobileMarketing
13% 17%MobileApps 24% MobileEnterprise 29%MobileGaming
MobileInfrastructure13%
MobileAdvertisingMobileAppsMobileInfrastructure12%MobileAdvertisingMobileDevelopmentPlatforms
7%10% MobileDevelopmentPlatforms 6% MobileEntertainment10%
MobileEntertainment6%MobilePayments 7% 8% MobilePayments 7%
7%MobileOtherMobile Other 7%9%7%MobileOther 7 Categories within
Other, all less than 5% of total mobile software M&A Software
Equity Group, LLC 2012 7. Select Active Mobile Software
BuyersBuyerAcquisitions Software Equity Group, LLC 2012 8. Select
Active Mobile Software BuyersBuyerAcquisitions Software Equity
Group, LLC 2012 9. Select Active Mobile Software
BuyersBuyerAcquisitions Software Equity Group, LLC 2012 10. Select
Mobile Software M&A Transactions and Deal StructuresBuyerB
TargetTt Date DEV EV/Rev EV/RCash C h Stock S k Earnout E Notes N
Buongiorno is an Italian mobile content provider with a sizeable
customer base of 2 billion across 57 countries. Buongiorno offers
services such as gaming, music, casual content and mobile 5/14/2012
$322.0M $322 0M 1.0x 1 0x $262.5M$262 5M$111.9M $111 9M payments
either di t t consumers or throught ith direct to thh carrier
partnerships. NTT DOCOMO , like many other carriers around the
world, continues to expand outside its core business into content
and services through acquisitions. Gree , a 1.7 billion dollar
gaming company with headquarters in Japan, continues to expand
Japan outside of its home market and into Western markets with its
acquisition of Funzio , a mobile 5/1/2012$210.0M$210.0Mgame
developer based in San Francisco . The Funzio acquisition comes on
the heels of Grees acquisiion of OpenFeint, a mobile social gaming
platform. SingTel , a wireless carrier based in Singapore,
purchased Amobee to expand beyond their traditional services.
Amobee, a provider of mobile ad networks, enables SingTel to
monetize content 4/13/2012 $320.0M10.7x $320.0Musing targeted
advertising to its 430 million users across Asia. SingTel stated
its goal is to become the leading mobile advertising company in
Asia Pacific and among the top three companies worldwide. Monitises
presence in the mobile banking and payment sector makes their
acquisition of Clairmail, a leading US provider of mobile banking
and payments, a natural fit as they seek global 3/26/2012 $174.4M
$174 4M10.0x10 0x$174.4M $174 4M expansion. Together, expansion
Together they have 13 million registered users over four continents
and will provide mobile banking services for one-third of the top
50 U.S. financial institutions. The mobile banking sector is
undergoing tremendous innovation from Companys like Monitise, who
provide the banking infrastructure, and others who interface more
directly with the consumer such as Square, PayPal, Google and
others. Software Equity Group, LLC 2012 11. Select Mobile Software
M&A Transactions and Deal StructuresBuyerB TargetTt Date
DEVEV/RevEV/R Cash C hStockS k EarnoutE NotesNOperas acquisition of
Mobile Theory indicates theyare consolidating within the mobile
sector to helpthem better compete against companies likeGoogle and
other full-service solutions. Companies 2/16/2012 $18 0 - $50 0M
$18.0 $50.0M$18.0M $18 0M $32.0Mlike Google and Apple are lowering
their prices,forcing other companies to change their
strategieswithin the Mobile Ad space. Both Mobile Theoryand 4th
Screen Advertising focus on rich-mediaadvertising solutions and
will benefit Opera byexpanding their current advertising
business.4th Screen Advertising is one of the worlds leadingpremium
mobile advertising agencies. In order tostrengthen their offering
for advertisers across 2/16/2012 $8.0M - $14.5M$8.0M $6.5Mboth the
U.S. and Europe, Opera wants to addmore demand-side advertising
services. Theaddition of Mobile Theory and 4th ScreenAdvertising
allows Opera to command a largerinternational presence.WorkLight
sWorkLights native mobile application platform isone of a handful
of mobile platforms targeting theenterprise market as opposed to
the developerecosystem. The strategy and product is a perfect
1/31/2012 $70.0M20.0xfit with IBMs enterprise orientation.
Enterpriseadoption of mobile applications has laggedconsumer
adoption dramatically, but IBMsacquisition of WorkLight is a strong
indicator thatenterprises are getting serious about mobile
andtittii b t bildlooking for solutions from their
technologyproviders..The CardStar acquisition is consistent
withConstant Contacts strategic goal of expandingwallet share
within their large (~500,000) SMBcustomer base. Constant Contact
has evolvedfrom purely e-mail marketing to surveys, eventmarketing,
social media monitoring/campaigns andnow mobile loyalty/coupons.
CardStar enablesConstant Contact to offer their SMB customers the
1/19/2012 $5.8M $5.8Mability to reach mobile consumers with
timely,location based couponing/loyalty- another arrow inthe
proverbial quiver to offer Constant Contactscustomer base In order
for this acquisition to bebase.successful, the solution must be
drop dead simple,given the lack of technical sophistication
andresources within Constant Contacts base SMBcustomers whereby
~70% have 10 Software Equity Group, LLC 2012 12. Select Mobile
Software M&A Transactions and Deal Structures Buyer BTargetTt
Date D EV EV/RevEV/R Cash C hStockS kEarnout ENotesN Synchronoss
will leverage Miyowas social networking capabilities to expand its
product offering, adding social capabilities to its 1/5/2012
$45.5M-$59.0M3.6x-4.6x $45.5M $13.5M ConvergenceNow Plus+ platform
and its Network Address Book. This transaction is similar to the
Myriad Group/Synchronica acquisition two days prior and reflects
the growing interest in adding social capabilities to existing
mobileservices Synchronicas business is primarily mobile messaging
solutions based on open industry standards. Its flagship product,
Mobile Gateway, provides p sh email s nchroni ation pro ides push
email, synchronization, instant 1/3/2012 $45.1M2.7x$45.1M
messaging, backup and restore to popular social networking
services. Myriad acquired Synchronica to bolster its thrust in the
mobile social networking domain as it attempts to capitalize on the
success of a major partnership with Vodaphone. Nuance acquired
Vlingo to expand its focus on voice enabling mobile devices. Nuance
is rumored to be the supplier of the underlying voice recognition
engine for the popular Siri application on the iPhone. The
acquisition of Vlingo provides 12/20/2011Nuance with an application
it can marry with its powerful speech recognition capabilities to
create its own Siri competitor for Android. It will be interesting
to see how Google responds, given Ericresponds Schmidts recent
admission that Siri, and others its like, is a threat to Googles
search market. Velti has been highly acquisitive recently, making
seven acquisitions over the past three years. Veltis goal is to
become a global leader in mobile marketing and advertising,
acquiring companies for 11/15/2011 $25 0M $59 0M 1 3x 3
0x$25.0M-$59.0M 1.3x 3.0x$20.0M $20 0M$5.0M $5 0M $34.0M $34
0Mgeographical reach product capabilities and reach, vertical
competency. The impetus behind this deal was MIGs retail/payment
competency, customer base (little overlap with Veltis existing
base) and the management team.IBM/Worklight financial details are
estimated Software Equity Group, LLC 2012 13. Select Mobile
Software M&A Transactions and Deal StructuresBuyerB TargetTt
Date DEVEV/RevEV/RCashC hStock S k Earnout E Notes N Facebook has
been outspoken regarding the difficulties of developing native
applications for mobile devices. The Company is a major supporter
11/8/2011 for mobile devices. The Company is a major supporter and
adopter of HTML5 as it attempts to simplify mobile development and
push the entire ecosystem forward. Strobe, an HTML5 apps developer,
fits nicely within this strategy. * Deal structure unknown on date
of announcement, but similar size acquisition made by Lenco one
year ago had the following terms: 11/7/2011 $36.8M* 6.5x$0.5M cash
with 4.05 million shares of common stock (worth roughly $16M on
date of deal, worth $1M roughly one year later). Earnout of $4.25M
in cash and another 5M shares of common stock (worth roughly $20M
on date of deal, worth $6M one year later) The acquisition of
Mobile Complete expands Keynotes product portfolio by adding mobile
device testing capabilities to Keynotes existing website and
application monitoring product 10/10/2011 $60.0M - $90.0M 3.0x -
4.5x $60.0M $30.0M portfolio. Mobile Complete had a roughly $20M in
revenue split 50/50 in SaaS and services. This deal is one of only
a handful of deals with reported transaction details where the
transaction was paid primarily in cash. Nuance is committed to
becoming a major player in the mobile ecosystem. The acquisition of
Swype10/7/2011$109.0M shows that Nuance is also looking to expand
beyond their core voice recognition technology and into alternative
methods for interacting with mobile devices. d i RIM has been an
active acquirer in the mobile space with 21 acquisitions in the
past three years as it attempts to revitalize its platform which is
10/6/2011$100.0Mperceived to be out of date by many. The NewBay
acquisition complements RIMs content ecosystem strategy with a
digital cloud service that competes with the iCloud on various
levels. Software Equity Group, LLC 2012 14. Select Mobile Software
M&A Transactions and Deal StructuresBuyerB TargetTtDateD
EVEV/RevEV/R Cash C h Stock S kEarnoutENotes NAdobes
acknowledgement that HTML, and itsFlash language, is the future of
mobile. Adobeaffirmed this point by announcing they would be
10/3/2011halting investment on flash mobile tools duringtheir Q3
earnings call. The acquisition of Nitobi call(PhoneGap) enables
Adobe to expand intodeveloper toolsets built on standard
programminglanguages.Expands Veltis U.S. and India footprint
andprovides access to carries and the financial 9/22/2011$19.0M
$19.0Mservices vertical vertical.Drivers behind the deal: Depth of
management, $27.5M insignificant revenue base,
complementary8/4/2011 $42.5M - $60.0M 4.8x 6.7x$4.0M$38.5M cash or
technologies, Fortune 500 client relationships stockThe acquisition
of SmartReply, an SMS marketingprovider, expands SoundBite
Communications6/6/2011 $3.2M - $13.2M 0.6x 2.6x $3.2M$10.0M mobile
marketing capabilities in the retail vertical.After this
acquisition, SoundBite announced amajor initiative to expand into
mobile marketinggiven the large market opportunity opportunity.In
an attempt to gain U.S. advertising marketshare, ValueClick has
acquired Greystripe tobolster its domestic mobile advertising.
Greystripe4/25/2011$70.6M 2.8x$70.6Moffers ValueClick both
scalability and animpressive array of brand relationships,
whichValueClick has predicted will be critical todominating thd i
ti the mobile advertising market.bil d ti ik tMotricity has stated
they intend to benefit from the $10M of acquisition of Adenyo, a
mobile marketing software 3/18/2011$150M 7.6x 11.4x$100M$50.0M$100M
cash firm, by integrating Adenyos mobile and analyticsheld in
escrow capabilities with Motricitys mCore Platform,delivering a
high value and highly relevant contentsolution set. This will make
it possible forcustomers to achieve marketing tht t hik ti through
onehhighly scalable service platform. Motricity ishoping this
acquisition will help position them tocapitalize on the growing
global data market-particularly the smartphone segment. Software
Equity Group, LLC 2012 15. To discuss the mobile ecosystem, M&A
transactionsand/or your mobile business, please contact SEG at: P:
858.509.2800 Email: [email protected] Software Equity Group,
LLC 2012
