Digital, Media & Internet Monitor Q1 2019 Thomas Egli | Managing Director Tobias Schultheiss | Managing Director Sam Fuller | Managing Director Tel: +41 43 499 43 41 Tel: +49 69 20 434 64 16 Tel: +44 20 7484 40 40 [email protected] [email protected] [email protected] Alexander Grünwald | Managing Director Christopher Jones | Managing Director Simon Lord | Managing Director Communication regarding this Tel: +41 43 499 43 43 Tel: +44 20 7484 40 40 Tel: +44 845 505 43 43 newsletter should be directed to [email protected] [email protected] [email protected] [email protected] GCA’S RECENT DIGITAL, MEDIA, INTERNET & TECHNOLOGY TRANSACTIONS RELEVANT TRANSACTIONS CLOSED IN LAST 3 QUARTERS 2 GCA’S GLOBAL TRACK RECORD IN THE DIGITAL, MEDIA & INTERNET SECTOR EUROPE NORTH & CENTRAL AMERICA ASIA 3 SUMMARY – DIGITAL, MEDIA & INTERNET SECTOR (1/2) SECTOR PERFORMANCE & VALUATION M&A AND IPO ACTIVITY o Share price performance was positive across all subsectors, o The number of deals in Q1 2019 increased to 266 compared to particularly for Payment (+36.6%), Marketplaces (+33.5%) and 252 in the previous year’s first quarter. E-commerce & Marketing Solutions (+29.6%) which posted the highest returns in Q1 2019. In contrast, Consumer/B2C Services o The total sector deal value (disclosed) at EUR 84.4bn was (+3.6%), Diversifieds & Portals (+7.3%), Gambling (+11.8%) and significantly higher than the previous year’s first quarter of Customer Acquisition (+12.0%) had the lowest increases. The EUR 6.0bn. FIS announced this quarter’s largest transaction by overall positive trend in media and technology stock returns acquiring Worldpay for EUR 43.6bn (11.1x Sales and 28.1x was driven by positive geopolitical signs, signals from the EBITDA), while the acquisition of First Data for EUR 41.4bn (4.8x Federal Reserve to be patient in a further increase in interest Sales and 12.5x EBITDA) by Fiserv was the second largest. Other rates and strong M&A activity level, including a number of large transactions include Liberty Expedia Holding’s acquisition by M&A deals. Expedia Group for EUR 21.7bn, the acquisitions of Ultimate Software for EUR 11.0bn and of Scout24 for EUR 6.5bn, both by o EV/EBITDA valuations (2019) significantly increased in every a Hellman & Friedman - Blackstone consortium and Ellie Mae’s subsector with Gaming (+42.9%), Social Networks & acquisition by Thoma Bravo for EUR 3.7bn. Communities (+33.2%) and Travel (+31.8%) showing the largest gains, while Consumer/B2C Services (+6.3%), Customer o 2 IPOs were completed in Q1 2019 with overall proceeds of EUR Acquisition (+10.4%) and Gambling (+10.6%) had the smallest 0.1bn, a lower value and volume compared to Q1 2018, during increase in EV/EBITDA valuations. Increased valuations can which there were 9 IPOs in the Digital, Media & Internet sector mostly be attributed to stronger market performance. with a value of EUR 0.9bn. BMIT Technologies dominates the quarter’s gross proceeds with a value of EUR 49m. o EV/Sales valuations (2019) showed an increase in nearly all subsectors. Gaming (+34.6%), Inventory-based (+33.9%) and E- o Overall, multiples have increased across nearly all subsectors commerce & Marketing Solutions (+31.0%) rose the most. mostly due to stronger market performance. Whereas M&A Consumer/B2C Services (-2.1%) was the only subsector that experienced a significant increase in terms of value, IPO posted a decline in sales valuation. activities slowed down in value and volume this quarter. Note: Multiples based on latest available financial statements; 1) These transactions are not included in total sector deal value and volume Source: Capital IQ (01-Apr-2019); Mergermarket 4 SUMMARY – DIGITAL, MEDIA & INTERNET SECTOR (2/2) ACQUIRED ACQUIRED ACQUIRED ACQUIRED ACQUIRED ACQUIRED PAYMENT PROCESSING E-COMMERCE AND ONLINE FITNESS AND HUMAN CAPITAL REAL ESTATE AND CLOUD-BASED MORTGAGE SERVICES PAYMENT SOLUTIONS TRAVELING MANAGEMENT SOLUTIONS AUTOMOTIVE MARKETPLACE FINANCE PLATFORM Transaction Value: EUR 43.6bn Transaction Value: EUR 41.4bn Transaction Value: EUR 21.7bn Transaction Value: EUR 11.0bn Transaction Value: EUR 6.5bn Transaction Value: EUR 3.7bn Seller: Public Seller: KKR Seller: Public Seller: Public Seller: Public Seller: Public EV/Sales: 11.1x EV/Sales: 4.8x EV/Sales: 1.7x EV/Sales: 9.5x EV/Sales: 10.3x EV/Sales: 7.0x EV/EBITDA: 28.1x EV/EBITDA: 12.5x EV/EBITDA: 11.3x EV/EBITDA: 88.0x EV/EBITDA: 23.7x EV/EBITDA: 59.6x Announced: 18/03/19 Announced: 16/01/19 Announced: 04/02/19 Announced: 04/02/19 Announced: 18/01/19 Announced: 12/02/19 Note: Multiples based on latest available financial statements; 1) Negative EV/EBITDA multiples considered as n/m Source: Capital IQ (01-Apr-2019); Mergermarket 5 RECENT DEVELOPMENT OF ONLINE SUBSECTOR VALUATIONS MEDIAN TOTAL RETURN1) MEDIAN SALES MEDIAN EV/SALES -10MEDIAN-5 0 EBITDA5 MEDIAN EV/EBITDA (LAST 3 MONTHS) 2019 ESTIMATE 2019 VALUATION 2019 ESTIMATE 2019 VALUATION 1 Champions 24.3% (0.4%) 22.1% (1.4%) 22.4% 2 Inventory-based 19.0% (0.2%) 33.9% 0.0% 15.1% Marketplaces 33.5% (0.5%) 21.5% (1.1%) 23.0% Travel 19.1% (0.7%) 24.8% 2.4% 31.8% 3 Diversifieds & Portals 7.3% (0.2%) 6.1% (1.5%) 13.3% Content Monetization 20.1% (1.7%) 14.2% (1.1%) 14.8% Social Netw. & Cmtys 17.7% 0.1% 29.8% (3.9%) 33.2% Gaming 23.1% 1.4% 34.6% (4.4%) 42.9% Gambling 11.8% (1.4%) 7.5% (2.8%) 10.6% 4 Classifieds 21.1% (0.2%) 15.1% (1.2%) 15.0% Customer Acquisition 12.0% 0.1% 10.7% (0.3%) 10.4% Oth. Online Marketing 21.2% (0.4%) 24.6% (6.5%) 19.9% E-comm. & Mktg. Solutions 29.6% 0.5% 31.0% (6.9%) 19.9% 5 Consumer/B2C Services 3.6% (1.0%) (2.1%) (4.8%) 6.3% Payment 36.6% 0.4% 26.2% (1.1%) 29.9% Note: Multiples with values over 50x deemed not meaningful and excluded from analysis; 1) Median total return based on share prices adjusted for cash dividends, stock splits, rights offerings and spin-offs Source: Capital IQ (01-Apr-2019) 6 M&A AND IPO OVERVIEW IN THE DIGITAL, MEDIA & INTERNET SECTOR1) (1/3) TRANSACTIONS Number of 500 transactions Internet Software and Services 333 311 Internet Retail 279 266 66 243 252 252 250 72 217 227 47 65 48 71 56 57 68 267 239 204 210 196 187 160 159 208 0 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 Q4 183) Q1 19 90 84.4 Size of Internet Software and Services transactions 16.0 Internet Retail 2) 11.5 (in EURbn) 7.6 9.2 7.4 10 4.6 6.0 6.8 0 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 Q4 183) Q1 194) 90 84.4 Over 1000m 16.0 500 - 1000m 11.5 250 - 500m 7.6 9.2 7.4 6.8 10 4.6 6.0 Under 250m 0 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 Q4 183) Q1 194) Note: 1) Target located in Europe or North America; 2) Includes only transactions for which financial details are publicly available; 3) Not including Red Hat and Tribune Media acquisitions; 4) Not including Liberty Expedia Holdings, Ultimate Software and Ellie Mae acquisitions Source: Capital IQ (01-Apr-2019) 7 M&A AND IPO OVERVIEW IN THE DIGITAL, MEDIA & INTERNET SECTOR1) (2/3) TRANSACTIONS WITH EUROPEAN TARGETS IN Q4 2018 Origins of United Kingdom Origins of North America 2) targets RoE 19% buyers 14% 25% RoW3) 9% Denmark France 4% 18% Sweden 5% Poland Germany Europe 5% 13% 77% Netherlands Spain 5% 6% TRANSACTIONS WITH NORTH AMERICAN TARGETS IN Q4 2018 Origins of Origins of Europe Canada RoW3) 3% targets 11% buyers 11% United States North America 89% 86% Note: 1) Target located in Europe or North America; 2) RoE = Rest of Europe; 3) RoW = Rest of the World Source: Capital IQ (01-Apr-2019) 8 M&A AND IPO OVERVIEW IN THE DIGITAL, MEDIA & INTERNET SECTOR1) (3/3) IPOs Number of 15 IPOs Internet Software and Services 11 Internet Retail 10 9 8 7 7 5 5 3 2 2 0 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 Value of IPO 4 3.52) Internet Software and Services proceeds Internet Retail (in EURbn) 3 2.1 2 1.8 1.1 0.8 0.9 1 0.6 0.0 0.1 0 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 Note: 1) Company located in Europe or North America; 2) Includes Snap’s IPO of EUR 3.2bn Source: Capital IQ (01-Apr-2019) 9 DIGITAL, MEDIA & INTERNET: HOW WE DEFINE THE UNIVERSE 1 Champions 2 E-commerce & Travel Champions Inventory based Marketplaces Travel # of companies 11 # of companies 24 # of companies 11 # of companies 12 Combined EV Combined EV Combined EV Combined EV (EURbn) 4'639.6 (EURbn) 106.0 (EURbn) 104.2 (EURbn) 55.7 3 Content & Communities Social Network Diversified & Portals Content Monetization Gaming Gambling & Communities # of companies 18 # of companies 6 # of companies 12 # of companies 15 # of companies 12 Combined EV Combined EV Combined EV Combined EV (EURbn) 715.6 Combined EV (€bn) 21.1 (EURbn) 70.0 (EURbn) 117.5 (EURbn) 40.3 4 Marketing & Classifieds Customer E-commerce & Classifieds Other Online Marketing Acquisition Mrkt.