Digital Media M&A: Q2 2015 Report

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LUMA partners Digital Brief 003 Q2 2015 Market Report

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LUMA’s Singular Focus on Digital Media Mobile Digital Content Media Ad  Tech Marke2ng Technology MarTech Ø  LUMA’s  exper,se  is  at  the  intersec,on  of  Media,   Marke,ng  and  Technology Ø  At  this  intersec,on  exists: §  Digital  Content:  content  sites,  MCNs,  game   publishers,  aggregators §  Ad  Tech:  display,  search,  video,  mobile,  social,   content  marke,ng/na,ve,  connected  TV §  MarTech:  data,  analy,cs,  sales  and  marke,ng   automa,on,  email,  predic,ve  tools,  commerce   technology,  shopper  marke,ng,  payments Ø  Mobile  prolifera,on  has  a  major  impact  on  these   markets  and  LUMA  is  deeply  knowledgeable  on   mobile

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Overall Commentary on Consolidation Ø  In  our  first  Market  Update  (click  here  hKp:// bit.ly/1Hqqbqd),  we  reported  59  acquisi,ons  in   digital  media,  highlighted  by  strategic  buyers  in   Commerce,  Ad  Tech  and  Consumer  Internet Ø  The  deals  we  track  in  this  report  fall  into  one  of   four  categories: §  §  §  §  Large  (over  $500  mm) Medium  ($100  –  $500  mm) Small  ($20  –  $100  mm) Sub  $20  mm  exits  are  considered  tech  and  team  deals,   capitula,ons,  or  undisclosed

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U.S. Digital Media M&A Activity by Sector #  of  Transac2ons 31 14 11 31 Q2  2014 15 13 21 13 14 25 21 22 23 Q3  2014 Q4  2014 Q1  2015 Q2  2015 Ad  Tech Source: LUMA Partners 16 23 MarTech Digital  Content Ø  Digital  media  M&A  picked  up  this   quarter  with  16  more  acquisi,ons   from  last  quarter  and  19  more   compared  to  the  same  period  last   year

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A Growing Robust Pool of Strategic Buyers CONSUMER  INTERNET COMMERCE CRM  SOFTWARE INTERNET  ORIGINALS MARKETING  TECH TELCO Right Time Decisioning of Consumer Data   MEDIA (Ad Tech and MarTech) MARKETING DATA TECH  SERVICES Ø  So^ware  solu,ons  that   enable  decisioning  of   consumer  data  is  a   capability  that  aKracts   deep  pocketed   strategics  from  a  wide   variety  of  industries Ø  Many  companies  from   Ad  Tech  and  MarTech   have  developed  these   capabili,es

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Digital Media M&A Activity by Strategic Buyers Q2  2015 Strategic  Buyers  Transac2ons 4% 11% 11% 7% 15% 11% 4% 15% 22% Ø  The  most  ac,ve  strategic  buyer   categories  were  Telco,  Marke,ng   Consumer  Internet Technology,  Media,  and  Consumer   Commerce Internet,  represen,ng  over  48%  of   Telco all  deals  in  digital  media  and   Media marke,ng  this  quarter Marke,ng  Tech Tech  Services Ø  A^er  siang  out  last  quarter,  Telco   Internet  Originals companies  including  Comcast  and   CRM  So^ware Verizon  led  some  of  the  industry’s   Marke,ng most  significant  deals Total  Transac2ons  =  75 Source: LUMA Partners

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Ad Tech M&A Activity #  of  Transac2ons 23 16 16 8 Q3  2014 20 5 3 3 Q4  2014 Q1  2015 Q2  2015 9 Q2  2014 19 Over  $100mm Source: LUMA Partners Under  $100mm Ø  Observa2ons §  Ad  Tech  M&A  con,nued  with  23   acquisi,ons  this  quarter §  Of  the  23  deals,  6  involved   mobile  adver,sing  and  app   marke,ng   Ø  Looking  Ahead  –  Loca2on  Tech §  With  the  prolifera,on  of  mobile   devices,  marketers  are  trying  to   find  a  reliable  iden,fier  to  target   consumers  across  devices §  We  expect  to  see  consolida,on   focused  on  loca,on  data  which   serves  as  the  mobile  equivalent   to  the  web  cookie  that  enables   rich  mobile  targe,ng

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Ad Tech – Notable Deals Enterprise Value $4.4bn $33mm N/A $40mm $720mm Vista  Equity  Partners  acquired  Mediaocean,  a  leading  workflow  and  planning   automa,on  company,  to  further  develop  its  digital  video  and  TV  products $10mm N/A By  acquiring  analy,cs  company  Proximic,  ComScore  now  has  pre-­‐bid   solu,ons  that  offer  greater  transparency  in  programma,c  adver,sing $18mm $533mm TwiKer’s  mobile  ad  capabili,es  will  become  more  sophis,cated  a^er   integra,ng  with  TellApart’s  retailer-­‐focused  retarge,ng  technology $33mm Source: Crunchbase Capital Raised N/A Acquirer N/A Comments With  AOL’s  adver,sing  technology,  Verizon  will  be  able  to  mone,ze  its   customer  data  through  more  advanced  cross-­‐device  targe,ng The  acquisi,on  of  mobile  ad  serving  and  measurement  company  Medialets  represents   WPP  and  the  agency  world’s  mission  to  provide  more  technology  services  to  marketers Comcast’s  acquisi,on  of  Visible  World  marks  the  company’s  early   investments  in  addressable  and  programma,c  TV

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MarTech M&A Activity #  of  Transac2ons 15 Ø  Observa2ons §  Social  “LUMAcorn”  Sprinklr   con,nued  its  M&A  tear  with   three  transac,ons  (NewBrand,   Scup,  GetSa,sfac,on) §  NetSuite  entered  digital   marke,ng  with  acquisi,on  of   ESP  Bronto Ø  Looking  Ahead  –  Predic2ve  Tech §  Predic,ve  analy,cs  deals   ramped  up  in  Q2  (C9,  Applied   Predic,ve  Technologies,   Coldlight,  Spliporce) §  We  expect  predic,ve  analy,cs   to  be  a  hot  area  across  tech   ver,cals  –  including  sales  &   marke,ng 7 4 Q2  2014 10 11 7 2 3 2 Q3  2014 Q4  2014 Q1  2015 Over  $100mm Source: LUMA Partners 12 Under  $100mm Q2  2015

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MarTech – Notable Deals Enterprise Value $600mm MasterCard  acquired  Applied  Predic,ve  Technologies  which  offers  cloud-­‐based   predic,ve  analy,cs  that  are  used  for  marke,ng  and  pricing  strategies N/A $395mm The  acquisi,on  of  Borderfree  provides  Pitney  Bowes  with  marke,ng  and  interna,onal     e-­‐commerce  technology  as  the  company  expands  into  digital  commerce  services $0 $200mm NetSuite  will  integrate  Bronto’s  marke,ng  automa,on  system  with  its  SuiteCommerce   technology,  a  cloud-­‐based  omni-­‐channel  commerce  plaporm $36mm N/A InsideSales.com  will  combine  its  cloud  technology  with  C9’s  predic,ve  analy,cs  to   create  the  first  predic,ve  cloud  solu,on  that  addresses  the  en,re  sales  funnel N/A $4bn The  acquisi,on  of  Dealertrack  and  its  digital  marke,ng  services  for  dealerships  will   enable  Cox  Automo,ve  to  create  a  broader  suite  of  tools  for  the  automo,ve  industry N/A $5.3bn Informa,ca,  a  leading  enterprise  data  integra,on  vendor,  will  be  taken  private  to  focus   on  its  cloud  integra,on  and  data  management  offerings $37mm Source: Crunchbase Capital Raised $154mm Acquirer N/A The  merged  company  Magne,c  will  combine  first  and  third-­‐party  data  to  give  clients  a   complete  view  of  their  marke,ng  campaigns  throughout  the  customer  life-­‐cycle Comments

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Digital Content M&A Activity #  of  Transac2ons 14 12 2 Q2  2014 11 13 9 4 3 Q3  2014 Q4  2014 Over  $100mm Source: LUMA Partners 29 Q1  2015 Under  $100mm 2 Q2  2015 Ø  Observa2ons §  Technology  is  transforming     publishing  from  an  art  to  a   science,  driven  by  data §  There  were  5  deals  involving   publishers  acquiring  new   ver,cals  and  technology Ø  Looking  Ahead  –  Deep  Linking §  Google  and  Apple  will  debut   deep  linking  in  their  next  major   OS  releases  to  enable  seamless   user  experiences  across  apps   §  Deep  linking  will  have  a   transforma,ve  impact  on   distribu,on  and  mone,za,on  of   apps  and  digital  content

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Digital Content – Notable Deals Enterprise Value Comments N/A Alibaba  sold  its  U.S.  shopping  site  11  Main  to  Open  Sky  in  a  deal  that  shows   Alibaba’s  con,nued  interest  in  penetra,ng  the  U.S  consumer  market N/A N/A Uber  has  acquired  some  of  Microso^  Bing’s  mapping  technology  in  order  to   create  its  own  proprietary  map  as  it  tries  to  build  a  full  stack  product   $289mm $1.5bn By  buying  online  learning  company  Lynda.com,  LinkedIn  is  adding  educa,on   to  its  core  business  of  connec,ng  job  seekers  with  new  opportuni,es $24mm Source: Crunchbase Capital Raised N/A Acquirer ~100mm Microso^  has  acquired  6Wunderkinder,  the  maker  of  to-­‐do  list  app  Wunderlist,  to  add   another  popular  app  and  team  to  its  growing  porpolio  of  consumer  focused  products

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Q2 2015 Stocks Performance – Ad Tech Ø  Ad  Tech  Enjoys  Posi2ve  Quarter §  Investors  have  finally  warmed  up   to  the  sector.  Ad  tech  stocks   were  collec,vely  up  3%  at  the   end  of  the  quarter §  Only  three  stocks  are  trading   down  a^er  only  three  stocks   traded  up  in  Q1 40% 30% 20% 10% 0% -­‐10% -­‐20% -­‐30% -­‐40% 01-­‐Apr-­‐15 MM   Note:  Market  Data  as  of  6/30/15 15-­‐Apr-­‐15 TUBE   29-­‐Apr-­‐15 RUBI TRMR 13-­‐May-­‐15 MXPT 27-­‐May-­‐15 YUME 10-­‐Jun-­‐15 FUEL CRTO 24-­‐Jun-­‐15 MRIN Ø  The  Verizon-­‐AOL  Ripple  Effect §  Verizon’s  acquisi,on  of  AOL  and   its  programma,c  adver,sing   technology  is  expected  to  have  a   posi,ve  ripple  effect  on  the   sector

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Q2 2015 Stocks Performance – MarTech Ø  MarTech  Rebounds §  MarTech  stocks  climbed  5%  this   quarter  a^er  falling  2%  in  the   prior  quarter Ø  Highlights §  Marke,ng  and  sales  automa,on   companies  (CRM,  MKTO,  HUBS)   con,nue  to  lead  the  sector §  Together  they  were  up  over  41%   this  quarter 40% 30% 20% 10% 0% -­‐10% -­‐20% -­‐30% -­‐40% 01-­‐Apr-­‐15 15-­‐Apr-­‐15 CRM Note:  Market  Data  as  of  6/30/15 MKTO 29-­‐Apr-­‐15 HUBS 13-­‐May-­‐15 BCOV   27-­‐May-­‐15 BV CTCT 10-­‐Jun-­‐15 DWRE   24-­‐Jun-­‐15 JIVE

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Key Startup Financings to Watch Lead Investor Capital Raised Valuation N/A $63mm $1.2bn AppNexus’  latest  round  of  funding  will  aid  its  expansion  into  the  fast-­‐ growing  programma,c  video  market $100mm N/A Banjo  is  ramping  up  its  enterprise-­‐class,  real-­‐,me  data  products  a^er   successfully  transi,oning  from  its  consumer-­‐facing  origins $210mm $2bn Business  management  company  Domo,  which  lets  users  connect  and  visualize  data,   came  out  of  stealth  in  April  with  a  run-­‐rate  of  $100  million  and  1,000  customers $186mm $11bn Pinterest  is  rolling  out  its  highly  an,cipated  “buy  buKon”  to  enable  users  to   directly  purchase  products  from  the  social  bookmarking  site $125mm N/A $160mm $2.8bn In  just  two  years,  popular  workplace  messaging  app  Slack  has  over  one   million  daily  ac,ve  users  and  is  growing  5%  every  week $526mm $8.5bn Spo,fy  closed  another  large  round  of  funding  amid  increased  compe,,on   and  as  it  plans  to  expand  into  digital  video  for  the  first  ,me $100mm $1bn N/A Source: Crunchbase Comments RetailNext,  a  retail  analy,cs  company  that  collects  data  from  in-­‐store   cameras,  smartphones,  and  POS  systems,  plans  to  expand  interna,onally Twilio,  a  provider  of  cloud  communica,ons  infrastructure,  surpassed  a  $100   million  run  rate  last  year  and  works  with  over  500,000  developers  

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Introducing the LUMAcorns What  do  you  call  a  startup  on  the  LUMAscapes   that  makes  it  to  the  $1  billion  valua,on  mark? corn

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LUMA’s Recent M&A Deals Ø  LUMA  Ac2vity §  LUMA  announced  the  MyBuys   merger  with  Magne,c,  following   the  Yieldex  sale  to  AppNexus Ø  A  Look  Ahead §  We  have  never  been  busier  and   an,cipate  a  rise  in  the  number  of   deals  coupled  with  an  increase  in   the  size  of  deals  as  industry   consolida,on  con,nues  or  even   accelerates

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LUMA’s Differentiated Value Proposition Ø  LUMA  has  developed  a  differen,ated  value   proposi,on  based  on: LUMA partners §  §  §  §  §  Focus Exper,se Objec,ve  Credibility Trust Performance Ø  LUMA  has  built  a  differen,ated  global  brand   Ø  We  leverage  our  brand  to  op,mize  financial   and  strategic  objec,ves  of  select  quality  clients  

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LUMA’s Differentiated Strategic Approach TARGET STRATEGIC Ø Rather  than  pitch  inventory,  LUMA  op,mizes  outcomes  for  quality  growth           companies  by  making  matches  with  strategic  buyers Industry   Trends Compe,,ve   Landscape Build Strategy Capabili,es Exis,ng   Assets Partner Acquire Geo  or   Size   Filter Target   Selec,on Ini,al   Approach Integra,on Close   Transac,on Nego,ate   Transac,on Due  Diligence LUMA partners Acts  as   consultant  to   strategic   decision  makers Acts  as   banker  to   target   company Ø This  approach  makes  LUMA  an  excellent  choice  if  companies  receive  inbound  interest

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LUMA’s Content-Driven, Expert-Based Approach LUMAscapes DISPLAY MOBILE VIDEO SOCIAL NATIVE SEARCH MARTECH COMMERCE (over  3  million  views   from  175  countries) STRATEGIC BUYERS GAMING Publica2ons (over  750,000  views) Color by Numbers: A"Valua'on"Framework"for"the"Ad"Tech"Sector" May$2014$ DISCLAIMER: LUMA Securities, a wholly-owned subsidiary of LUMA Partners, has acted as co-managing underwriter for and may pursue underwriting or other advisory assignments with companies mentioned in this report or in the sector.!! Digital  Briefs Conference   Keynotes Corporate   Teach-­‐ins Completed   Deals

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LUMA partners lumapartners.com lumacapitalpartners.com Access. Insights. Execution. New York | San Francisco | Palo Alto

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