Transcript
Page 1: Exitround Asia - Echelon 2014 - Jacob Mullins

Maximizing M&A Exit Value Globally and Where Does Asia Compare

Jacob Mullins CEO & Founder, Exitround

@jacob

Page 2: Exitround Asia - Echelon 2014 - Jacob Mullins

Global M&A is on FIRE

2014 • 33% increase to $599Bn, ’13 • Most active start since 2011 • TMT M&A highest share of Global

M&A since 2006 • Technology, highest value on

opening qtr by 55% increase, ‘13

*Source: Mergermarket M&A Trend Report: Q1 2014 (link)

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$2,500,000,000• 13 years old / 1 year public • $188M VC / $162M public • $400M revenue 2013 • Thin profitability margin • 6,000 customers, Fortune 500

————————————— • Market leader • Strategic asset for growth

• Customer base • Revenue

• Horizontal platform expansionSources: Bloomberg “ExactTarget Soars in Debut After Initial Public Offering” (link) Crunchbase: ExactTarget (link Inc. “Inside ExactTarget's Journey: From IPO to $2.5 Billion Acquisition” (link)

Acq 2013 by Salesforce

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$3,200,000,000• 3.75 years old • 1.5 years product in market • $80M VC raised • $300M revenue (est.)* • ~300 employees —————————————— • Disruptive business • Top hardware team • Strong early traction in market • Owned mindshareSource: Business Insider “Nest, Google's New Thermostat Company, Is Generating A Stunning $300 Million In Annual Revenue”

Acq 2014 by Google

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$19,000,000,000• 5 years old • $58M VC raised • 450M MAU / 315M DAU • 50B messages per day • 50 employees ———————————— • Tremendous engagement • Surpassing daily global SMS traffic • Potential threat to tech majors

WhatsApp

Source: TechCrunch “Facebook Buying WhatsApp For $19B, Will Keep The Messaging Service Independent"

Acq 2014 by Facebook

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Opportunity

10x Revenue Huge Disruption

EngagementDominance$42 per MAU

Insanely engaged6.25x Revenue Industry leader

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Overall Tech M&A

Landscape

• Mega-deals are < 1% by volume

< 1% deals 88% deals

*Source: Mergermarket M&A Trend Report: Q1 2014 **Source: Woodside Capital Partners “MASiV 2014: The M&A Silicon Valley Gathering Report”

• 88% of all deals are below $100M

Doesn’t mean you can’t make money, in fact…

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Exitround: The Exit Curve

• More money does not equal higher exit • Best return on capital: $2-3M & $5-10M raise

• Consumer ROI: 9.1x average | 4.8x median • Enterprise ROI: 21.1x average | 7.5x median

• Significant increase in value after year four*Source: Exitround “The Exit Curve: Exitround’s Report On Tech M&A” 2014; exitround.com/data

exitround.com/data

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M&A Reaching Stratospheric

Heights• Coming out of global recession,

M&A augments diminished R&D • Cash rich tech “major” acquirers • Non-tech corporations realize

software is the future • Ease of starting company

creates more point solution opps • Increase in seed + angel funding

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Global Tech M&A2013 • Software is 35% of total M&A activity • $188B Tech M&A, 65% up from ’12 • Internet, IT Services & Hardware are

on the upswing ———————————————— 2014 • Tracking 41%+ higher YTD to ’13 • EY on 2014: “Tech M&A to be ‘strong’

at worst, ‘blockbuster’ at best”

*Source: PricewaterhouseCoopers “US technology deal insights Analysis and trends in US technology M&A activity 2014” MarketWatch “U.S. stock market is starting to ride a tech M&A wave”(link) EY “Global technology M&A update, 2013 Year in Review”

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Asia Tech M&A2014 • Q1 M&A value $102B, 36%+ ’13 • TMT M&A up 53% from ’13 • Inbound M&A (from abroad) at

highest levels • US Outbound M&A at highest

levels ever, $169B YTD • Technology M&A 2x 2013 levels

*Source: Mergermarket M&A Trend Report: Q1 2014 (link)

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Today’s M&A Target

Buyer Incentives • Put cash to use: $832B cash sitting w top

25-tech co’s • Internet marketshare growth slowing,

grow top-line through horizontal exp • Mobile, the new frontier • The great Cloud migration

($59B ‘09 —> $149B ’14) !Characteristics of targets • Disrupting status quo • Market leading in mindshare • Engaged users • Quick growth rate, not necessarily largest

Source: MarketWatch “U.S. stock market is starting to ride a tech M&A wave”(link)Deloitte “Top 10 Issues for Technology M&A in 2014” (link)

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Opportunity Engagement Dominance

Large opportunity in Asian markets to expand • Market share • Mobile users & engagement • Shift to SaaS models in software

Take advantage

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Actionable Insights

1. Traits of successful M&A

2. Tips for successful M&A

3. What to expect

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Fundraise or M&A ? Start early

• 2.75 years average time sellers have known buyers

• After fourth year, significant increase in M&A value

• Partners, competitors, other (banker, Exitround)

Find your champion • Identify internal business lead,

beyond corp-dev • Get on “the list” • Build trust over time

Traits of successful M&A

Source: Exitround

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Tips for successful M&APrepare for speed

• Corp docs ready to share • Employee IP

assignments & contracts

• Financing docs • Patents, IP • Key customer contracts

• Up-to-date financials Front load conversations Time-box the opportunity

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What to expect…You… Have a deck & story Shield your team Know your objectives from M&A See a long term mutual vision !Them… Poke around, to many Term sheet, to few Intense diligence Integration

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Optimize for success

• M&A at all time highs • Technology needs

increasing across industries & geographies

• Be active, be prepared • Solve a problem

• Opportunity • Engagement • Dominance

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[email protected]

exitround.com/asia@exitround

facebook.com/exitround