M&A SNAPSHOT

Q2 2011
JULY 2011

M&A SNAPSHOT
OVERVIEW COMMENTARY
M&A activity in Q2 2011 continues to show good overall tone. M&A activity within the crucial $25 million - $1 billion transaction value range in our sector is up 15% in median transaction size, while M&A volume was slightly down by 10%. The overall M&A volume (all transaction sizes) within our sector was up by 6% from the previous quarter. This quarters marquee deal was clearly Microsofts $6b acquisition of Skype. The return of the IPO has also emerged as an important tone setter this quarter, as evidenced by the successful IPO of LinkedIn and Pandora and IPO lings by Groupon and Zynga. Google remains the most active acquirer in the quarter with six acquisitions. eBay, and subsidiary PayPal, followed suit with a total of four acquisitions. So what are the big themes? Digital marketing, e and m-commerce and marketing analytics continue to be extremely active, comprising roughly 30% of the activity within the $25mm-$1b transaction size range. The game sector also continues as an active area of M&A comprising 15% of the transactions this quarter. Traditional carrier infrastructure also was active. Ericsson announced the $1b acquisition of Telcordia and AMDOCS its $211mm acquisition of Bridgewater Systems. Carriers continue to make massive investments in building network capacity. The need for network capacity is driven by the proliferation of smartphones and tablets as well as increasing consumption of video over these networks. Strong emerging companies with great technology are particularly attractive to carrier infrastructure providers. This past quarter, Architect Partners has published its M&A Alert on fteen of the most important transactions in the quarter.

FOLLOWING ANALYSIS
M&A DASHBOARD: NOTABLE ACQUIRERS: M&A TRANSACTIONS: OTHER NOTABLE TRANSACTIONS:
SUMMARY OF QUARTERLY ACTIVITY IN NUMBERS AND TONE ACTIVE INFLUENTIAL BUYER ACTIVITY SUMMARY OF TRANSACTIONS BETWEEN $25MM-$1B IN VALUE SUMMARY OF NOTABLE TRANSACTIONS WITHOUT ANNOUNCED VALUE OR ABOVE $1B.

COMING SOON
ANALYSIS OF VC-BACKED M&A EXITS

M&A DASHBOARD
COVERAGE MARKET TONE
Architect Partners tracks M&A activity within the Good. Deepening base of acquirers. converging Internet | mobile | digital media sectors. Transaction volume solid. Generally The following assessment is focused on M&A balanced buyer/seller dynamics. transactions with announced values of between $25mm and $1B as these typically represent successful business-building endeavors. 2009 2010 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
68 68 41 46 53 38 53 40 $14

2011 Q1
68

Q2
61

M&A Exits (#).................................................

$9 $6 $11

$14

$12 $6

$12

$12

$5 27

Total Consideration Paid ($b)....................

18 7 10 5

17 12

18

23

16

Venture-Backed M&A Exits (#)................

$100

$146 $85

$128 $75 $100 $98

$105

$98

$113

Median Transaction Size ($mm)...............

41% 48% 55% 43% 38% 45% 52% 49% 48% 49%

U.S.-based Target (%).................................

!"#$ !"#$$ !%#$$ !"&$ !'($ !%&$

All Internet | Mobile | Digital Media M&A Exits(1)(#)....

Note: 1) Includes all internet | mobile | digital media transactions regardless of transaction value. Transaction values within a range are presented as a mid-point value

NOTABLE ACQUIRERS
The following acquirers are generally active or inuential buyers within the Internet | mobile | digital media sectors. Below, we highlight announced acquisitions in the second quarter of 2011.

ACQUIRER

# 6 3 3 3 3 2 2 2 2 2 2 2

TARGET

NOTABLE ACQUIRERS (continued)

ACQUIRER # 2 2 1 1 1 1 1 1 1 1 1 1 TARGET

M&A TRANSACTIONS: $25MM-$1B

Below highlights M&A transactions that have announced values of between $25mm and $1b announced in Q2 2011 within the converging Internet | mobile | digital media sectors.

ANNOUNCED DATE

BUYER

TARGET

TRANSACTION VALUE ($MM)

TARGET DESCRIPTION

AP INSIGHT SM M&A ALERT

VCBACKED

NON-SERVICE PROVIDER TRANSACTIONS 1 05/06/2011 Guoco Group The Rank Group $893 Provides online gaming and betting services.

04/27/2011

CoStar Group

LoopNet

$752

Operates an online marketplace for commercial real estate.

04/25/2011

Silver Lake Partners, Shah Capital Partners TPG Capital

SMART Modular Technologies PRIMEDIA

$684

Manufactures subsystems for LCD, embedded memory modules and embedded computing products used by OEMs of communication systems, POS terminals and gaming devices. Online consumer directories for apartment and rental property sectors.

05/15/2011

$525

06/15/2011

DG FastChannel

MediaMind Technologies AdMeld

$524

Provides digital advertising campaign management platform (including online, mobile and rich media). Provides a Supply Side Platform (SSP) which helps online publishers both automate the sale of and optimize the value of their ad inventory. Develops chipsets for mobile devices including tablets, smartphones and 3G/4Gconnected handhelds. Online dating services.

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06/13/2011

Google

$400

05/09/2011

NVIDIA

Icera

$367

05/30/2011

Match.com

Meetic

$363

10

04/06/2011

Dish Network

Blockbuster, Substantially All Assets Kosmix

$321

Assets of Blockbuster comprises the brand name, a library of more than 125,000 titles, stores, DVD vending kiosks, by-mail and digital businesses. Offers software that enables search, filtering, discovery and categorization of large amounts of real-time online data. Owns and operates online shopping website and shopping television channel under the brand name MOMO. A fabless semiconductor company, provides radio frequency (RF) semiconductor front end solutions that enable wireless connectivity. Provides online wagering products to the sports and horse race betting market.

11

04/18/2011

Wal-Mart Stores

$300

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12

04/08/2011

Wealth Media

Fubon Multimedia Technology SiGe Semiconductor

$296

13

05/17/2011

Skyworks Solutions

$295

14

05/26/2011

Sportingbet Australia

Centrebet International

$283

15

06/10/2011

KDDI

Web Money

$254

Offers online payment services.

Note: Transaction values within a range are presented as a mid-point value

M&A TRANSACTIONS: $25MM-$1B (continued)

# 16 ANNOUNCED DATE 04/26/2011 BUYER Pearson TARGET SchoolNet TRANSACTION VALUE ($MM) $230 TARGET DESCRIPTION Provides Web-based instructional management suite for K12 school districts, enabling users to assess student and school performances. Offers subscriber data management (SDM) solutions for mobile operators. AP INSIGHT SM M&A ALERT VCBACKED

17

06/17/2011

AMDOCS

Bridgewater

$211

18

04/28/2011

Symphony Technology Group BigBen Interactive

Shopzilla

$165

Offers an online shopping comparison engine, which allows shoppers to search, compare and purchase online. Designs and develops mobile phone handsets. Enables consumer brands, telecom operators, MVNOs, retailers, and distributors to create their own line of mobile handsets. Offers VoD content management and distribution platform.

19

05/20/2011

Modelabs

$157

20

04/11/2011

KIT digital

ioko365

$135

21

04/20/2011

eBay

Where

$135

Offers a mobile application that enables consumers to discover, save and share favorite local places and events. A multi-channel retailer, engages in selling products to consumers through television home shopping channels and the Internet. Designs and manufactures integrated systems for the DPI, femtocell, and 3G/LTE wireless markets. Enables network equipment providers to deploy next generation networks. U.S.-based. Operates an online poker gaming website.

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22

04/20/2011

Inflexion Private Equity Partners RadiSys Corporation

Ideal Shopping Direct

$124

23

05/02/2011

Continuous Computing

$120

24

05/04/2011

International Game Technology Visa

Entraction

$113

25

06/09/2011

Fundamo

$110

Enables carriers and financial institutions to deliver mobile financial services in developing countries. Offers a social gaming platform that allows game players to play, discover and share iOS and Android mobile games. Develops online games.

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26

04/21/2011

GREE

OpenFeint

$104

27

04/25/2011

Changyou.com

Shenzhen 7Road Technology Colored World

$101

28

06/10/2011

Lai Chee Ying, Jimmy Director and the Chairman of Next Media eBay

$100

An animation production company.

29

06/06/2011

Magento

$94

Offers an open-source e-commerce software suite that allows merchants to launch, customize and manage their online stores. Develops videogame software and distributes videogame titles.

30

05/10/2011

Marvelous Entertainment

AQ Interactive

$90

Note: Transaction values within a range are presented as a mid-point value

M&A TRANSACTIONS: $25MM-$1B (continued)

# 31 ANNOUNCED DATE 06/01/2011 BUYER Polycom TARGET Hewlett-Packard Company, Visual Collaboration Business Flixster TRANSACTION VALUE ($MM) $89 TARGET DESCRIPTION Video conferencing business. AP INSIGHT SM M&A ALERT VCBACKED

32

05/04/2011

Warner Bros. Home Entertainment Group ValueClick Media

$75

Operates as an online community for movie fans.

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33

04/25/2011

Greystripe

$70

Mobile advertising network.

34

04/07/2011

Marchex

Jingle Networks

$61

Operates 1-800-FREE411, an ad-supported directory assistance service for consumers to find free listings on the phone. Provides online advertising services including consumer behavioral and demographic targeting, advertisement designing and optimization and campaign performance analysis services. MerchantCircle helps local merchants promote and manage their businesses. Services include helping local merchants build an online presence via inclusion in MerchantCircles Yelp-like online directory. Offers Jukebox technology platform that is used to connect consumer electronic products to Internet radio and music services through Internet and home network media sources. Offers online travel services.

35

04/11/2011

Ozura World

Tatto

$60

36

05/26/2011

Reply!

MerchantCircle

$60

37

05/18/2011

Standard Microsystems

BridgeCo

$54

38

04/28/2011

China Satcom Guomai Communications Perfect World

Besttone E-Commerce

$54

39

05/30/2011

Cryptic Studios

$50

Develops and markets massively-multiplayer online games (MMOGs).

40

05/24/2011

DealerTrack

eCarList

$45

Provides Web-based inventory management and distribution platform including vehicle pricing analytics, and search and marketing solutions for car dealers. Offers software that allow online publishers and bloggers to integrate services and applications of their choice into their website through customized web-based toolbars. Offers mobile content and entertainment services.

41

05/23/2011

Conduit

Modular Patterns

$45

42

04/19/2011

Buongiorno

DadaNet

$44

43

04/01/2011

DG FastChannel

MIJO

$41

Enables bilingual delivery for digital spot content including electronic press kit, broadcast verification, fiber optic and satellite feed, voice casting and online archiving. Designs semiconductor chips for the fiber-optics communications industry.

44

04/06/2011

Gennum

Nanotech Semiconductor TweetDeck

$40

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45

05/24/2011

Twitter

$40

Enables users to categorize and organize their tweets into topic or group-specific columns.

Note: Transaction values within a range are presented as a mid-point value

M&A TRANSACTIONS: $25MM-$1B (continued)

# 46 ANNOUNCED DATE 06/23/2011 BUYER Alliance Films TARGET Maple Pictures TRANSACTION VALUE ($MM) $39 TARGET DESCRIPTION Acquires, produces and distributes filmed entertainment. AP INSIGHT SM M&A ALERT VCBACKED

47

04/11/2011

E-mail Vision

smartFOCUS Group

$39

Provides an online and multichannel marketing application suite.

48

04/21/2011

NeuStar

49

06/03/2011

Moog

Evolving Systems, Numbering Solutions Assets Crossbow Technology

$39

Evolving Systems Numbering Solutions Assets comprises solutions that simplify operators operations support systems (OSS) architectures. Manufactures and supplies wireless sensor networks and inertial sensor systems.

$32

50

04/07/2011

Blinkx

Burst Media

$31

Provides advertising network and advertising inventory management solutions.

51

05/16/2011

Yahoo!

5to1

$28

Provides a proprietary advertisement publishing platform that enables media publishers to manage and sell their advertising space inventory using a publisheronly controlled advertising platform. Develops mobile application for Nokia, LG, Samsung, BlackBerry, and Android mobile devices.

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52

04/10/2011

Google

PushLife

$25

Note: Transaction values within a range are presented as a mid-point value

M&A TRANSACTIONS: $25MM-$1B (continued)

# ANNOUNCED DATE BUYER TARGET TRANSACTION VALUE ($MM) TARGET DESCRIPTION AP INSIGHT SM M&A ALERT VC-backed Exits SERVICE PROVIDER TRANSACTIONS 1 05/31/2011 IMI Investments, Fondi Italiani per le Infrastrutture Cellcom Israel Metroweb $632 Operates a fiber optic network in Italy.

06/13/2011

NetVision

$455

A communication services provider in Rosh HaAyin, Israel.

06/13/2011

Time Warner Cable

06/27/2011

Axa Private Equity

Telecommunications Management, Cable Systems Outremer Telecom

$260

Offers cable television services in Kentucky and Tennessee.

$252

Fixed-line and mobile telecommunications service provider in Paris, France.

05/10/2011

Backbone, TIP Gestion

SCT Telecom

$142

Offers telecommunication services in France. Provides VoIP, call routing and IP packet management. France-based. Provides telecommunication services in Croatia. Services include cable television, Internet, and phone services. Operates as an IP communications provider for enterprises in Kentucky.

06/08/2011

VIPnet

Bnet Hrvatska

$136

04/20/2011

West Corporation

Smoothstone IP Communications OnFone

$120

05/11/2011

TDC

$60

Provides wireless Internet solutions and fixed-line telephony services to private customers. Denmark-based. Offers telecommunication and internet services. Germany-based.

05/19/2011

euNetworks

Lambdanet Communications Deutschland, Lambdanet Communications

$50

Note: Transaction values within a range are presented as a mid-point value

10

M&A TRANSACTIONS: OTHER NOTABLE

A number of important transactions were announced in the second quarter of 2011 with consideration in excess of $1b or with unannounced transaction values.
# 1 2 ANNOUNCED DATE 05/10/2011 06/14/2011 BUYER Microsoft Ericsson TARGET Skype Global Telcordia Technologies TRANSACTION VALUE ($MM)
$9,225

TARGET DESCRIPTION Skype offers video and voice communications via PC or mobile devices. Provides communications service providers Business Support Systems (BSS) and Operations Support Systems (OSS), helping them efficiently plan and manage their fixed line and wireless networks. Develops placeshifting solutions enabling users to access and enjoy entertainment content from multiple devices. Develops enterprise collaboration software that can be easily integrated with other enterprise applications and allow employees to collaborate and share knowledge in real time Offers SaaS-based software which extracts actionable intelligence from unstructured customer-generated content. Provides mobile payment solutions for merchants. Allows customers to purchase goods using their mobile phones. A Web site that offers tools to record personal data and create data visualizations. Provides a Web-based scheduling software service. Develops online presentation software, which allows users to develop and share presentations. Owns and operates an online local business feedback platform. Provides online price comparison shopping services. Develops television and mobile applications.

AP INSIGHT SM M&A ALERT

VC-backed Exits

$1,150

06/18/2011

Google

SageTV

05/31/2011

VMware

SocialCast

04/05/2011

KANA Software

Overtone

6 7 8 9 10 11 12

04/28/2011 04/27/2011 04/27/2011 04/26/2011 04/26/2011 04/26/2011 04/25/2011

PayPal Facebook Research In Motion VMware Google Nextag Yahoo!

Fig Card Daytum Tungle SlideRocket TalkBin Guenstiger.de IntoNow

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Note: Transaction values within a range are presented as a mid-point value

11