december 11, 2012 private company financial intelligence copyright © 2012 privco media llc. all...

December 11, 2012

Private Company Financial Intelligence

Copyright © 2012 PrivCo Media LLC. All Rights Reserved.

U.S. Private Market M&A Overview (<$500M)

Speaker Background

Sam Hamadeh PrivCo’s Founder and CEO Founded and sold the online job

and career information leader Vault.com

MBA in Finance from Wharton and a JD from the University of Pennsylvania Law School

Extensive background in finance and private company research with experience at Morgan Stanley and Goldman Sachs


PrivCo: The Leader in Private Company Financial Intelligence

PrivCo is the first and only provider of financial and business data on major privately held companies.

PrivCo provides detailed financial and business data on over 128,000 major private companies – and over 43,000 private market deals - in a single searchable source.

Data on private company investors, M&A deals, VC funding, and more.

PrivCo acts as a Bloomberg for major private companies.



M&A Activity Declines In 2012

• According to PrivCo data, U.S. private company middle market M&A totaled $37.5 Billion in Q3 2012, down 21% from Q3 2011

• Similarly, deal volume fell 16% from 3,290 in Q3 2011, to 2,764 in Q3 2012• For the Q3 last twelve months (LTM), private middle market M&A totaled $144 Billion, down 16%

from $167 billion for LTM Q3 2011

$35.7

$45.7$47.7

$37.5

$32.6(-8.0%)

$36.5(-19.9%)

$37.5(-21.2%)

800

1,300

1,800

2,300

2,800

3,300

3,800

$0

$10

$20

$30

$40

$50

$60

Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012

Num

ber o

f Tra

nsac

tions

$ In

Bill

ions

US Mid Market Deal Value & Volume (< $500 M)

Deal Value Deal Volume


M&A Activity Declines In 2012 (Cont.)• After what seemed to be recovery in 2010 & 2011, 2012 has proven to be a fragile marketplace

given the drop in deal volume and transaction value

$35.7

$45.7$47.7

$37.5

$32.6(-8.0%)

$36.5(-19.9%)

$37.5(-21.2%)

800

1,300

1,800

2,300

2,800

3,300

3,800

$0

$10

$20

$30

$40

$50

$60

Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012

Num

ber o

f Tra

nsac

tions

$ In

Bill

ions

US Mid Market Deal Value & Volume (< $500 M)

Deal Value Deal Volume


Top Corporate Buyers (Deal Value <$500M) 2011-2012

48

31

19 19 19 17 16 16 15 15 12

0

10

20

30

40

50

60

Top Private Company Corporate Buyers - 2011-12

Middle Market Deals


Target Acquiror Deal Price EV/Rev

Hyper Marketing Inc. Alliance Data Systems $460,000,000 1.5x

Fleet One, LLC Wright Express Corp. $369,000,000 6.6x

Bytemobile Citrix Systems $435,000,000 7.2

PowerReviews, Inc. Bazaarvoice, Inc. $151,900,000 13.0x

Airborne Health, IncSchiff Nutrition International, Inc

$150,000,000 1.3x

Demandforce, Inc. Intuit, Inc. $423,500,000 11.3x

ID Analytics Lifelock $185,970,000 6.5x

Select Strategic Buyer Transactions (2012)


• Middle Market private equity activity as a percentage of total volume has steadily increased over the past 3 years, with a greater percentage of 2012’s deals being sponsor backed, despite the slow down in transaction value

Financial Buyer (Deal Value <$500M) 2010-2012

$158.6 $166.5$144.2

44% 45% 50%

0

50

100

150

200

2010 2011 LTM 2012

$'s I

n Bi

llion

s

Total Deal Value Private Equity Deal Value


Top Financial Buyers (Deal Value <$500M) 2011-2012

18 1817

15 15

8 8 87

6

0

2

4

6

8

10

12

14

16

18

20

The Riverside Company

Carlyle Group

Gores Group

TA Associates

H.I.G. Private Equity

Sun Capital Partners

TPG Capital LP

Blackstone Group

Platinum Equity

Marlin Equity

Partners

Top Private Company Financial Buyers - 2011-2012

Middle Market Deals


Target Acquiror Deal Price EV/Rev

Young Innovations, Inc.

Linden Capital Partners $314,000,000 3.0x

Oriental Trading Company, Inc.

Berkshire Hathaway Inc $500,000,000 1.0x

Dick Clark Productions

Guggenheim PartnersMandalay Sports Ent.Mosaic Media Group

$370,000,000 N/A

Intelligrated, Inc. Permira Advisors $500,000,000 1.3x*

Fogo de Chao Holdings LLC

Thomas H. Lee Partners $400,000,000 N/A

Sundance Holdings Brentwood Associates $125,000,000 0.8x

Benihana Inc. Angelo, Gordon & Co. $296,000,000 0.9x

Select Financial Buyer Transactions (2012)

* Estimated


• Average Enterprise Values in 2012 have increased year over year, up over 10% in Q2 2012• The drop off in value in Q3 reflects global M&A declines, due to macroeconomic uncertainty and

market chill ahead of the pending US Elections, in addition to an increase in deals under the $66 million anti-trust threshold

Average Enterprise Value of Transactions (Deal Value <$500M) 2011-2012

$103.7 $115.9 $116.4

$99.0

$107.3(+3%)

$128.5 (+11%) $108.6

(-6%)

$-

$20.0

$40.0

$60.0

$80.0

$100.0

$120.0

$140.0

Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012

$ In

Mill

ions

Average Enterprise Value

Average Enterprise Value


Top 10 Industries For Private Market Deals

Rank Industry

1 Software

2 Insurance

3 Services

4 Banking

5 Health Care & Related Medical

6 Internet Services

7 Information Technology

8 Social Media

9 Advertising & Marketing

10 Mobile Applications


Top 10 Geographies For Private Market Deals

Rank City

1 New York

2 San Francisco

3 Houston

4 Chicago

5 Austin

6 Atlanta

7 Dallas

8 Los Angeles

9 Seattle

10 San Diego


The Magic $66 Million Threshold

• In 2012, PrivCo data shows that an increased percentage of private companies are being sold for deal values between $55 and $66 million

• No HSR Act notification is required if the value of voting securities and assets held as a result of the transaction is below this $66 million threshold

• PrivCo data also indicates that companies (especially those owned by individuals and families), have been looking to sell by the end of 2012, even at haircut valuations, to avoid the $66 million HSR FTC review and close before 2013’s tax reform


Conclusions

• Middle market private company transaction value and volume is down in 2012

• Private equity funds continue to focus on the middle market, with 2012 showing an increase in transaction value attributed to private equity sales and acquisitions

• Strategic Buyers will look for lower middle market add-ons, to avoid $66 million HSR FTC review

• Cautious outlook for 2013 given fiscal cliff negotiations, tax rate increase, European debt crisis and macro instability


AM&AA 2013 Winter Conference

The Middle Market Our World of Opportunity in 2013

2013 Winter ConferenceJanuary 14 -17, 2013 Hilton Miami Downtown

Contact AM&AA for more [email protected]

312-856-9590MandAconnection.org

mailto:[email protected]

For a demonstration of the PrivCo private company and deals platform, please contact M&A Client Manager [email protected] or 518-256-7452


Private Company Financial Intelligence

For access to PrivCo’s weekly M&A and Venture Capital newsletter, register for free at www.privco.com

To contact Sam Hamadeh directly, email: [email protected]

For information on the AM&AA , please contact [email protected] or call 877-844-2535


http://www.privco.com/



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