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2012 Tech M&A Report

2277 Private Tech Companies Acquired in 2012

In deals with disclosed valuations, $46.8B was paid for private tech companies. 30% of deals account for 80% of that value. Eight private companies purchased for more than $1 billion in 2012 with 6 being US-based. The year saw 190 M&A transactions per month on average.
Tech Companies Go It Alone In a big surprise, 76% of tech companies acquired in 2012 had not raised institutional investment prior to acquisition. While there were no bootstrapped or only angel-funded billion dollar exits, it is clear that there are a lot of tech companies being formed who are able to grow by reinvesting their own profits or via angel financing. Google and Facebook Most Active Acquirers Massachusetts Not a Top 3 Destination for Acquirers The two tech juggernauts did 12 private tech company acquisitions in 2012. Five of Facebooks acquisitions were talent acquisitions . Google and Cisco were most frequent disclosers of private company valuations . Avnet was the surprise in the top 10 most active acquirers with a string of small, mostly tuck-in acquisitions. 50% of Exits are Less than $50 Million While there is much fanfare when the billion dollar exits happen, they represent 2.5% of all private tech company acquisitions in 2012 (translation: they dont happen often). More than 50% of deals are less than $50M and more than 80% of the acquisitions are less than $200M. Getting Strategic Odd Man Out 94% of acquisitions were made by strategic buyers. Financial sponsors comprise a small 6% of deal volume. 49 of 50 states saw at least one acquisition. Guess who didnt. It rhymes with Mouth Nakota. Mass remains a top market for tech VC despite losing some of its mojo to NY which has usurped the #2 spot. On the M&A front, Mass was somewhat surprisingly not in the top 3 for private tech company acquisitions in 2012 as it got edged out narrowly by Texas for the #3 spot. India Crashes the International League Tables The UK led international markets with the most private tech company acquisitions in 2012 followed by Canada which has a lot of momentum as of late on both the financing and exit front. Rounding out the top 3 markets globally was India suggesting that the entrepreneurial tech community is becoming more established. The West Side is the Best Side California saw the most private tech companies acquired in 2012 which should not be all that surprising given that a majority of tech investment (both deals and dollars) goes to Cali. However, the dominance of Cali was something to behold as the state had more private tech companies acquired in 2012 than the next five states combined.

This is the first report to look exclusively at the acquisitions of private tech companies. Yes, public tech company acquisitions are excluded. Why? Inclusion of public company acquisitions skews the data A few public mega deals (or lack thereof) gives a picture of the tech M&A landscape which is far from representative. For investors, this is your future For angels, VC, growth equity and private equity investors, these are the comparable transactions and trends that youll need to know about as you think about your own portfolio For corporates, this is where innovation is happening For corporate acquirers and innovation/strategy teams, private tech company M&A has often become a way to spur innovation in the parent organization. And so private tech company M&A offers a glimpse into the industry, size of deal and geographic trends worth knowing about.

Whats Included? The only deals included in this report are acquisitions of private tech companies by strategic buyers or financial sponsors (private equity). While we track take-private transactions (LBOs) where a public company is taken private, those are not included in this report.
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2012 Tech M&A Report

2277 Private Tech Companies Were Acquired in 2012

The year began strong but saw quarterly activity drop on a sequential basis. 94% of companies were acquired by strategic acquirers with the remaining 6% taken out by private equity firms.

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2012 Tech M&A Report

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2012 Tech M&A Report

331 Private Tech Companies Acquired for $46.8B

For transactions with disclosed valuations, 30% of acquisitions account for 80% of the total value of deals.

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2012 Tech M&A Report

Eight Private Tech Companies Acquired for $1B+

Over 50% of acquisitions are less than $50M showing how elusive the billion dollar acquisitions are. Of the 8 billion dollar plus tech acquisitions, 7 were acquisitions by strategics highlighting the strong cash positions of many of techs largest companies. Two of the eight billion dollar private tech exits were outside the US.

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2012 Tech M&A Report

Only 24% of Companies Raised Funding Prior to Exit

The vast majority of tech companies acquired did not raise outside institutional capital. Suggesting that many tech firms who reach exit are able to do so on the back of financing from angels or by funding themselves out ofprofits.

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2012 Tech M&A Report

Facebook & Google Most Active Private Company Acquirers

Google and Cisco most often disclose the valuations of private tech companies they acquire. Of 12 Facebook acquisitions, 5 were talent acquisitions and 10 of 12 were in California. Avnet surprises with its entry into the top 10.

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2012 Tech M&A Report

Medians: $16.6M Raised Acquired for $73.5M

The distribution of private tech company acquisitions shows a great deal of variability in the amount of money raised and the valuation received. On average, companies raised $25.4M and were acquired for an average of $172.0M. Note: Medians are a better measure

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2012 Tech M&A Report

Web & Mobile Commerce Sees Most Acquisition Activity

eCommerce/mCommerce see the highest level of acquisition activity followed by ad related businesses. Fifteen different industries saw more than 30 acquisitions showing the diversity of tech sub-areas seeing activity.

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2012 Tech M&A Report

Cali Sees More Acquisitions Than Next 5 Markets Combined

49 of 50 states see at least 1 private tech company acquired in 2012. South Dakota is only state that didnt see any. NYs tech scene which has seen a VC resurgence moving it to #2 in the rankings for financing also comes in at #2 for private tech company M&A. Of the largest 20 acquisitions in 2012, 10 were in the US and of those 6 were in California.

State Acquisitions (2012) Washington 50 Colorado 45 Florida 43 New Jersey 41 Pennsylvania 39 Virginia 36 Georgia 34 Ohio 34 Oregon 29 Arizona 27 Minnesota 24 Utah 20 Maryland 19 North Carolina 18 Michigan 15 Connecticut 14 Kansas 11 Missouri 11 Tennessee 11 Nevada 11 Wisconsin 10 New Hampshire 10
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State Acquisitions (2012) Indiana 10 South Carolina 7 Alabama 7 DC 7 Vermont 5 Maine 5 Louisiana 4 Idaho 4 Iowa 4 Montana 4 Hawaii 3 Oklahoma 3 Wyoming 3 Rhode Island 3 New Mexico 3 Kentucky 3 Nebraska 3 Delaware 2 North Dakota 1 Alaska 1 Arkansas 1 Mississippi 1

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2012 Tech M&A Report

Finance Capital, NY, Sees Fewest Private Equity Acquisitions

Illinois has highest percentage of tech acquisitions by private equity firms but none of the top 5 states has more than 10% of acquisitions by financial sponsors.

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2012 Tech M&A Report

NY Sees Highest Share of Internet Acquisitions

Texas and Illinois see highest portion of deals to computer hardware. Overall, Texas most diversified across tech sectors.

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2012 Tech M&A Report

International Activity Led by UK; India Cracks Top 5

Three European countries make up the top 5. Canada which has a resurgent VC industry is also seeing healthy tech M&A activity. India is sole emerging economy to crack the top 5 with 53 private tech companies from the country acquired in 2012.

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2012 Tech M&A Report

PE Purchases of Intl Tech Companies Less Frequent

Of the top 5 Intl countries, Germany sees the most love from PE firms as they make up 10% of acquisitions. India see the least, at only 2%. Overall, private equity acquisitions of international tech companies were slightly less frequent than what was seen in US tech company acquisitions.

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2012 Tech M&A Report

India Leads in Share of Internet & Mobile Deals

France and Canada see highest share of non-internet/mobile software companies being acquired. Germany leads in share of semiconductor/chip M&A transactions. Of the international deals with disclosed valuations, 3 of the 5 biggest deals were in noninternet/mobile software.

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