Tech M&A Report $0 to $100M

Jacob Mullins CEO & Founder, Exitround

@jacob !

June 2014

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)

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…

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

*Source: Exitround “The Exit Curve: Exitround’s Report On Tech M&A” 2014; exitround.com/data

exitround.com/data

More capital ≠ Larger exit

• Co’s that raised $5M - $10M had larger exits than raised $10 - $50M

• Co’s that raised $3M - $5M had lower exits than those raised $1M - $3M

*Source: Exitround “The Exit Curve: Exitround’s Report On Tech M&A” 2014; exitround.com/data

The New Venture/Seed

Investing Landscape

• Seed investors can make solid return if invest early at low valuations

• Among all companies, capital raised: • $3.4M average • $1.03M median

• 56.8% of exits (sub-$100M) are <$5M • Most lucrative exits:

• $3M - $5M (17% of total) • $10M - $20M (11% of total)

*Source: Exitround “The Exit Curve: Exitround’s Report On Tech M&A” 2014; exitround.com/data

Exit Sizes that Generate Best

Returns

• Exit of $3M - $7M where returns increase • Exits of <$2M tend to lose money • On exits of $3M - $7M & $10M - $20M

avg dollar raised = $1M • Same capital required to get $3M or

$20M exit*Source: Exitround “The Exit Curve: Exitround’s Report On Tech M&A” 2014; exitround.com/data

Exits w Highest Multiple ROI

• Multiples on total cash invested: • Average = 13.6x • Median = 5.0x

• Exits w highest multiples: • $3M - $4M • $6M - $7M • $30M + *Source: Exitround “The Exit Curve: Exitround’s Report On Tech M&A” 2014; exitround.com/data

Length of Time to Build

Successful CoSignificant exit value increase after company is 4 years old

*Source: Exitround “The Exit Curve: Exitround’s Report On Tech M&A” 2014; exitround.com/data

Exiting under $100M• Best exits from ROI perspective are raises $2M - $3M &

$5M - $10M

• 88% of all technology M&A happens under $100M

• 56.8% of early tech M&A happens under $5M

• Enterprise co’s have better returns by factor of 3x

• Significant increase in value after 4 years

• Full report at exitround.com/data*Source: Exitround “The Exit Curve: Exitround’s Report On Tech M&A” 2014; exitround.com/data

exitround.com/data

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