Confidential

The State of M&ADavid Grove

Managing PartnerVaquero Capital

2

0

100

200

300

400

500

600

SaaS and Internet Outpacing the Market

S&P 500 NASDAQ

SaaS Peer Group Internet Peer Group

The Market Conditions are Robust…

93% YoY increase in 1H13

Technology M&A deal value

61 IPOs raising $13Bn of

proceeds in 2Q13

74% and 43% YTD

increase in SaaS Software and Internet indices respectivelyJan 09 July 13

3

…Driven by Growing Confidence

62% of S&P 500 beat Q2 earnings estimates –

highest since 3Q11

$1.5T of Cash in corporate coffers

14.2 VIX Average (1H13) -- lowest since 2007

High Business Confidence

Strong Balance Sheets

Lower Volatility

4

Significant IPOs have added to Buyers

Internet / Digital Media SaaS

HistoricalBuyers

5

Premium Sales and Bright Shiny Objects

6

How Do You Achieve Premium Valuation?

Massive, often untapped markets

Ability to achieve sustainable, long-term growth

Engagement

Talent

Build v. Buy

Defensive & Strategic

Technology

Exponential growth in traffic and deep engagement

New paradigms leveraging mobile devices

Visionary teams creating new markets

Ability to understand generational shifts

Rapid market share gain

Time to market critical

Existing business model in massive emerging market

Threat to market share if competitors own

Next generation technologies

Re-inventing consumer engagement modality

Size of Market

What Is It Worth to You? Sell v. Build

7

Internet Leaders

SaaS Leaders

Hot M&A

Growth + Profitability – Risk = Valuation

Traditional Valuation Metrics

“Bright Shiny Objects”

40%Growth

40%Growth

9xRevenue

Egregious Revenue Multiples = Infinite FCF Multiples

20%FCF

50xFCF

10% FCF

8.5xRev

40xFCF

12x Rev

70xFCF

8

Deal Considerations

Structure

Stock v. Cash

Earnouts

Management & Employees

Interests & Perspectives

Board

Founder

Investors

“Tech” Companies Are Bought Not Sold

Marketing

Using financing as a trigger

9

Preparing for Exit

Start Early Hygiene Matters

Consider Exit When Financing Lawyer Up

10

Driving Competition

Negotiated Sale Auction

Targeted Auction Hybrid

11

Recent High Profile Deals

Talent

Strategic

Unique

Engagement

Location, Location, Location

Build v. Buy

Unique

Competition

Synergies

Mobile

Talent

Installed Base

Transformative

12

Establish Relationships in Advance of Exit

Build an Ecosystem of

Partners

Get to know future buyers – Don’t worry, they cant do what you do..

13

Questions?

14

Year   Target   Buyer SectorTransaction

Value LTM RevenueTV / LTM Revenue

9/9/2013 MoPub Twitter Internet - Commerce $350 NA 3.5 x

6/11/2013 Waze Google Internet - Mobile $966 NA NM

6/3/2013 ExactTarget Salesforce.com SaaS - Marketing $2,351 $317 7.4 x

5/20/2013 Tumblr Yahoo! Internet - Social $1,100 NA 13.0 x

11/23/2012 Eloqua Oracle SaaS - Marketing $958 $90 10.6 x

10/21/2012 Ancestry.com Private Investors Internet - Social $1,609 $460 3.5 x

8/25/2012 Kenexa Corp. IBM SaaS - HR $1,397 $318 4.4 x

5/31/2012 Buddy Media Salesforce.com SaaS - Marketing $745 $29 26.0 x

5/22/2012 Ariba SAP America SaaS - Commerce $4,608 $502 9.2 x

4/9/2012 Instagram Facebook Internet - Social $1,000 NA NA

2/8/2012 Taleo Oracle SaaS - HR $1,921 $315 6.1 x

12/2/2011 SuccessFactors SAP America SaaS - HR $3,764 $292 12.9 x

10/23/2011 Rightnow Technologies Oracle SaaS - CRM $1,763 $216 8.2 x

7/11/2011 PopCap Games Electronic Arts SaaS - CRM $1,301 NA NA

6/15/2012 Yammer Microsoft Internet - Social $1,200 NA NA

5/10/2011 Skype Microsoft Internet - Communications $9,325 $860 10.8 x

12/31/2012 SurveyMonkey.com Google SaaS - Marketing $794 NA NA

5/24/2012 PowerReviews Bazaarvoice SaaS - Commerce $128 $12 10.7 x

8/15/2012 Getty Images The Carlyle Group Internet - Media $3,300 NA NA

3/5/2012 Amobee Singapore Telecommunications SaaS - CRM $321 NA NA

Mean $1,945 $310 9.7 xMedian $1,251 $315 9.2 x

Valuation of Hot M&A Comps

15

Valuation of Hot Public CompaniesEV EV / Rev EV / FCF Revenue Growth FCF Margin

Internet 2014E 2015E 2014E 2015E 2014E 2015E 2014E 2015E

Angie’s List $1,180 3.0x 3.0x 23.0x 14.0x 38% 27% 15% 20%

Retail me Not $1,995 8.2x 6.8x 42.1x 33.4x 25% 21% 19% 20%

Facebook $104,617 10.8x 8.4x 48.8x 35.5x 32% 28% 22% 24%

Trulia $1,338 7.0x 5.0x 38.0x 26.0x 55% 39% 18% 19%

LinkedIn $28,587 13.4x 9.9x 90.7x 61.0x 41% 35% 15% 16%

Shutter stock $1,802 6.2x 5.0x 28.0x 20.3x 26% 26% 22% 24%

Zillow $3,217 12.0x 8.9x 76.2x 48.1x 41% 34% 16% 19%

Pandora $1,735 6.4x 4.7x NM 35.4x 37% 34% 6% 9%

Yelp $1,228 18.1x 12.3x 32.6x 18.4x 47% 38% 11% 15%

HomeAway $2,454 6.0x 5.0x 19.2x 17.0x 20% 16% 31% 30%

Mean 9.1x 6.9x 44.3x 30.9x 36% 30% 18% 20%

Median 7.6x 5.9x 38.0x 29.7x 38% 31% 17% 19%

EV EV / Rev EV / FCF Revenue Growth FCF Margin

Software 2014E 2015E 2014E 2015E 2014E 2015E 2014E 2015E

Salesforce $21,928 7.9x 6.1x 41.3x 29.1x 29% 22% 15% 15%

Workday $12,521 18.6x 12.8x NM NM 51% 46% NM NM

NetSuite $7,735 14.8x 11.3x 109.3x 62.4x 28% 30% 14% 18%

Splunk $5,999 16.0x 12.1x 86.5x 53.8x 33% 32% 19% 23%

ServiceNow $4,465 11.0x 8.0x 79.8x 44.1x 45% 36% 9% 13%

Tableau $3,201 11.3x 8.9x NM 203.5x 40% 26% NM 4%

Cornerstone $2,726 10.5x 7.6x 146.6x 43.3x 41% 38% 7% 18%

Demandware $1,215 8.9x 6.6x NM NM 36% 35% NM NM

Concur $6,099 8.4x 6.8x 113.0x 79.2x 26% 23% 8% 9%

Marketo $981 10.8x 8.5x NM NM 28% 27% NM NM

Mean 11.8x 8.9x 92.7x 73.6x 36% 31% 12% 14%

Median 10.9x 8.2x 86.5x 53.8x 35% 31% 11% 15%