Media Technology – Strategic Industry Analysis

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Media Technology – Strategic Industry Analysis
Investment Bankers
Media Technology –
Strategic Industry Analysis April 8, 2015
Jonathan Hodson-Walker
508.651.2194
[email protected]
Nicolas McCoy
508.651.2441
[email protected]
Timothy Sousa
508.545.1380 x154
[email protected]
Gregory Ucich
508.545.1380 x152
[email protected]
32 Pleasant Street
Sherborn, MA 01770
www.silverwoodpartners.com
Member FINRA and SIPC
Key Strategic Topics
1
Strategic Perspectives & Industry Model
2
Silverwood Top 10 Trends in Video
3
Current Deal Environment – Valuation Analysis
Copyright Silverwood Partners 2001 - 2015
2014
Page 1
Leading Media Technology Investment Bank
Selected Media Technology Engagements
 Silverwood is highly active in media technology transaction flow
 Firm has worked with many leading media technology companies – advising or
selling businesses to some of the premier companies in the industry
September 2013
A functional beverage company has received an
investment from:
Has acquired
Has been acquired by
Has been acquired by
Has been acquired by
Strategic Financial
Advisory
The undersigned acted as financial advisor
to Genstar Capital, LLC.
The undersigned initiated this transaction
and acted as exclusive financial advisor
to Autocue Limited.
The undersigned initiated this transaction
and acted as financial advisor
to eyeon Software, Inc.
The undersigned initiated this transaction and
acted as exclusive financial advisor
to Manzanita, Inc.
The undersigned acted as exclusive
strategic financial advisor to
ViewCast Corporation.
Copyright Silverwood Partners 2001 - 2015
2014
Page 2
Silverwood – Deep Experience, Expertise
Dedicated Team – Significant Presence at NAB
Strategic Thought Leadership and Industry Perspectives … A Very Substan al Amount of Ac vity
Outsourced R&D
Source: Silverwood Es mates, last 18 months
Representa ve Public Processes
The Broadcast Opportunity
Representa ve Trade Sales
$5B
Representa ve smaller vendor
transac ons
November 29, 2012
Jonathan Hodson-Walker
Managing Partner
508-651-2194
[email protected]
$3.5B
Joshua Stinehour
Senior Vice President
508-651-8134
[email protected]
Representa ve, Private Equity
Transac ons
Industry Revenue
32 Pleasant Street
Sherborn, MA 01770
www.silverwoodpartners.com
(As Percentage of Revenue)
“…[David] Ross currently fields
‘between one and three calls every
week’ from companies who want to
be bought. ‘That’s been going on for
a shockingly long period of me.’”
‐ David Ross, CEO Ross Video
Source: TVNewsCheck
Immediate ra onaliza on of
opera ng expenses (trade shows)
Geographic Expansion
Immediate incremental pipeline of
business in target region
Accelerates lengthy, expensive
process of organic expansion
S&M 30% ‐ 40%
R&D 10% ‐ 20%
Strategic
Industry Analysis
Global Business, High‐Touch Customers
Gain local sales exper se, market
knowledge
April 2012
Jonathan Hodson-Walker
508.651.2194
[email protected]
Nick McCoy
508.651.2441
[email protected]
Joshua Stinehour
508.651.8134
[email protected]
Brian Zapf
508.651.8135
[email protected]
Copyright Silverwood Partners 2012
Apr 10
Apr 11
Apr 12
Apr 13
?
Credit
Market
Equity
Markets
Media Tech
Industry
Factors
M&A Market Indicators Followed by Silverwood
32 Pleasant Street
Sherborn, MA 01770
www.silverwoodpartners.com
Page 30
Apr 09
Economic
Ac vity
G&A 10%
Member FINRA and SIPC
Copyright Silverwood Partners 2012
Apr 08
Confidence
Level
Investment Bankers
Mi gate development and market
introduc on risks
Substan al number of
smaller companies quietly
for sale
Apr 07
Typical Income Statement Metrics
Accelerate me to market
A number of ongoing or
recently completed public
evalua ons of alterna ves
Representa ve IPOs
What Happens in 2013 – M&A Market?
M&A Straigh orward Ra onale
Over Half of Industry Revenue Involved with M&A
A number of high‐
profile transac ons
Investment Bankers
Member FINRA and SIPC
Copyright Silverwood Partners 2012
Page 12
Page 22
Regularly Host, Attend, and Speak at Industry Events
Ongoing Dialogue With Industry Leaders and Investors
Call +1 (508) 651‐2194 to schedule a meeting at NAB
Copyright Silverwood Partners 2001 - 2015
Page 3
Media Finance & Investor Conference
Investment Bankers
Panel Moderator: Jonathan Hodson‐Walker,
Managing Partner, Silverwood Partners
For Session Access Contact Kathy Foster at [email protected] or 508‐545‐1380 x 153
Copyright Silverwood Partners 2001 - 2015
Page 4
Market Size by Segment
Broadcast and Media Market Size – $39B
In Billions of USD
49%
Services
% Total Industry Revenue
% of Product
Revenue
0%
1.2
Acquisition and Production
23%
10%
2.4
Content and
Communication
Infrastructure
6%
20%
1.5
12%
30%
40%
1.9
Audio
Storage
8%
10%
50%
6.4
1.0
Playout and Delivery
Systems
Automation
and
Control
33%
60%
70%
5%
80%
90%
0.7
Test,
Quality Control,
Monitoring
4.6
Post
Production
Products
$ Revenue (B)
Services, $19.1
4%
100%
The Global Broadcast Market to Reach $44.3B by 2017
 Services (49% of total) represented the largest portion of market revenue – size





and share of total expected to increase with strategic trends of SaaS, outsourcing
Acquisition and Production, Playout and Delivery total over 55% of product sales
– both expected to gain with more devices for video production, consumption
Content & Communications Infrastructure – segment expected to decrease in
size with shift to IP video transmission in production operations
Storage – requirements increasing but decline in storage costs offsetting growth
Post Production – price sensitive market under significant margin pressure
Audio, System Automation & Control, Test & Measurement – relatively stable
Source: IABM and IABM DC Market Sizing research.
Copyright Silverwood Partners 2001 - 2015
2014
Page 5
Silverwood Strategic Heat Index
Strategic Buyer M&A Perspective by Sector
Red Hot:
High Strategic Interest
Acquisition &
Production
Post Production
Moderate:
Average Strategic Interest
Content & Communications Infrastructure
Audio
Storage
Cold:
Less Strategic Interest
System Automation & Control
Playout & Delivery Platforms
Test, QC & Monitoring
Cameras
Graphics/
Branding
Hardware
Based Links
Consoles
Near-line/ Offline Storage
Business
Management
Systems
Integrated
Playout
Multiviewers
Camera
Lenses
Transcoding
Routing
Switchers
Processing/
Monitoring
Playout
Servers
Library and
Storage
Management
Offline/
Streaming
Video
Test
Measurement
Mobile Video
Transport
Video Editing
Software
Modular
Interfacing
Intercom/
Talkback
Production
Servers
Playout
Automation
Encoders
IP Video
Transport
Microphones
Workflow
Automation
Transmitters
Monitors
Digital Asset
Management
Content
Recognition,
Second Screen
Drones
Switchers
Content Security
SaaS, Software, Technology Enabled Services
Copyright Silverwood Partners 2001 - 2015
2014
Page 6
Click
to editVideo
Master
title style
Silverwood
Industry
Model
Acquisition &
Production
Cameras - ENG
Post Production
Graphics &
Branding
Content & Communications Infrastructure
Communication Links
Audio
Consoles
Storage
Near-line/Off-line
and Archival Storage
System Automation & Control
Broadcast Business
Management
Systems
Playout & Delivery Platforms
Integrated
Playout (Channel
in a Box)
Test, QC & Monitoring
Multiviewers
Routing Switchers
Processing/ Monitoring
Cameras - Studio
Ingest/
Transcoding/
Streaming
Playout/
Transmission
Servers
Signal Processing/
Interfacing/ Modular
Test &
Measurement
Library & Storage
Management
[Atempo]
Off-line / Streaming
Video Delivery
Platforms
Playout Automation
Intercom/ Talkback
Camera Lenses
Transmission
Encoders
Production
Servers
Microphones
Production
Switchers
Video
Editing
Workflow/ Asset
Management
Video Transport
Transmitters
Monitors (speakers)
[Screen
Service]
Page 7
Silverwood Top 10 Video Industry Trends
Strategic Trends Driving the Video Industry – Social, Mobile, Advertising
 New media ecosystem growing in parallel and merging with traditional media
ecosystem
 Principal intersection points – mobile, OTT, multiscreen, ad tech
1. Continued fragmentation of channels and content
2. Unraveling of the cable bundle
3. Growing importance of online TV consumption
4. Video – the killer app for mobile
5. Social media: virtual video “word of mouth”
6. Content discovery in a fragmenting media environment
7. Programmatic advertising
8. Security in the connected video ecosystem
9. Growth of video in the enterprise
10. Collapse in pricing for specialized video equipment
Copyright Silverwood Partners 2001 - 2015
2014
Page 8
Fragmentation – Content, Channels, Audience
Exponential Increase in the Number of TV Channels Over Time; More
Content on More Platforms to More Users – Audience Fragmentation
 Traditional cable companies have seen their overall subscribership drop by ~3%
per quarter from the first quarter of 2012 to the second quarter of 20141
 More companies targeting OTT/virtual MSO offerings with and without STBs –
Amazon, Apple, Google, Hulu, Netflix, Roku, Sling, Sony (PS), Tivo, many others
 Content providers experimenting with direct-to-consumer
 Impact of explosion in Internet media channels and new media platforms TBD
1.
MoffettNathanson
1950
1960
Broadcast
(4)
1970
1980
1990
Cable Networks
(500+)
2000
2010
Digital
(1,000,000+)
Source: LUMA Partners
Copyright Silverwood Partners 2001 - 2015
2014
Page 9
Cable Packages Starting to Unravel
The Future of Bundled Cable in Question
 The average American TV household receives
189 channels, but tunes into just 17 channels1
 Average cable bill growing at 5.8% per year,
outpacing inflation – up 30% over past 5 years2
 Increasing programming costs, particularly for
sports, driving cost escalation – cost passed on
to consumers; non-sports viewers effectively
subsidizing sports viewers
 Increasing incentive for viewers to try
alternatives and reduce cost, combined with
proliferation of OTT alternatives driving change
 Net neutrality, new business models, new
technology, new market entrants all in the mix
 Beginning in March 2016, Canadian regulatory
authorities will require cable TV providers to let
their customers pick and pay for channels after
a $35/mo. basic package
1. Time Magazine “The Cable-TV Bundle Is Finally Starting to Unravel
1. Time Magazine 2. ABC News “Average Cable Rates on the Rise”
Copyright Silverwood Partners 2001 - 2015
2014
Page 10
Growing Importance of Online TV
Younger Generations Watch the Most Online TV and Make Up the Largest
Percentage of the Total Online Adult Audience
 Online TV viewership increasingly important for content and service providers
Younger generations watch more television
online, through OTT platforms across a
suite of devices
US Monthly Online TV Program Viewers, by Age Group
170
150
OTT
Devices
Monthly Viewers
Indexed to Online
Adult Average (100)
145 141 130
108 110
Read as: (2014) Among
online adults, those in
the 18-24 bracket are
45% more likely than
average to watch TV
programs online in a
typical month
90
80 70
61 50
30
18‐24
Read as: (2014) Among
online adults, 21.5% of
monthly online TV
program viewers are
aged 18-24
???
35‐44
45‐54
55‐64
40 65+
29.0%
30%
% Share of Total
Online Adult Audience
25‐34
21.5%
20.5%
20%
14.9%
10%
9.4%
4.7%
0%
Source: Experian Marketing Services’ Winter 2014 Simmons National Consumer Study
Copyright Silverwood Partners 2001 - 2015
2014
Page 11
Video – The Killer App for Mobile
Time Spent Watching Video on Mobile Devices Doubled in 2014
 Mobile video ad spending in the US more than doubled from 2013 ($720MM) to
2014 ($1.5B) and is anticipated to reach $6B by 2018 – television advertising still
outpaces digital video 6:11
 Mobile focused new media companies experimenting with, optimizing video
experience for massive customer base – Facebook has 1.35 billion active users
 Parallel ecosystem to traditional media with real-time, user level personalization
20 percent of all online video consumption happens on mobile devices
Billions of USD
Advertising by Type
100
90
80
70
60
50
40
30
20
10
0
Recent Mobile Video Acquisitions
$2
$2
$4
$5
$6
$0
$1
$74
$65
$71
$79
$69
$76
$66
$3
$4
2013
$5
$5
$6
$6
$7
2012
2014 2015 2016 2017
Desktop Video Advertising
TV Advertising
Mobile Advertising Revenue
2018
1. Techcrunch, Why Mobile Video Advertising is Set to Explode
Copyright Silverwood Partners 2001 - 2015
2014
Page 12
Social Media – Significant Video Opportunity
Social Media – Important Customer Base for Video Monetization
 By 2018 almost 90% of tablet owners projected to regularly consume video1
 86% of mobile use is “in-application” – video a focus for social media platforms
 Facebook emerging as next major video platform – implemented Autoplay,

acquired LiveRail, Quickfire, and enabled video-view counts
In 2014, 83% of worldwide users accessed Facebook on mobile whereas only
39% accessed YouTube on mobile
 Mark Zuckerberg: “The content that people want … Five years ago it was mostly
text. Today it’s photos. Fast forward five years. It’s going to be video.” F8 DevCon
Recent Mobile Video Acquisitions
Sites/Apps Used to Watch Digital Video
Read as: 75% of connected US adults use YouTube to
watch Video
We are excited to bring QuickFire Networks
on board as we continue delivering a highquality video experience to the 1.3 billion
people who use Facebook
1. Forbes
Vine
Dailymotion
Vimeo
Hulu Plus
Instagram
Hulu
Yahoo
Netflix
Facebook
YouTube
0%
Copyright Silverwood Partners 2001 - 2015
2014
50%
100%
Page 13
Content Discovery/Recognition
Solving the Problem of Having 800 Channels and Nothing to Watch


Companies creating solutions that span capabilities across channels and devices
in face of media fragmentation and appification of delivery infrastructure
Automation, contextuality, temporality, sociality, geolocation all converged for
deep personalization and content matching – market leader yet to be determined
Each acquirer/investor
working to monetize
automatic content
discovery/ recognition
across devices
Personalized
Search
Personalized
Recommendations
Mood
Discovery
Social
Discovery
Monetization
Notable, content discovery/recognition M&A and financings
Copyright Silverwood Partners 2001 - 2015
2014
Page 14
Programmatic Advertising – Land Rush
20% of TV Advertising will be Bought Programmatically by 20181
 In a December 2014 survey, just 14% of senior ad buyers were using
programmatic TV advertising, 19% expected to start in 20151
 With online programmatic ad revenue expected to top $15B this year2 – TV
represents natural next opportunity for programmatic technology
 Multiple vendors building platforms and technology focused on programmatic
infrastructure for traditional TV market – land rush mentality for dominant position
US Share of Digital Advertising Revenue
“In seven to ten years, all TV will be streamed,
every ad will be dynamically served, targeted and
measured”
Scott Rosenberg, Roku
Early Leaders
‘This year, we’ll see real auctions running inside of
many of the apps that sit inside your Roku, your
Amazon Fire or your Apple TV”
Jeff Green, CEO of The Trade Desk
1. e-Marketer 2. Business Intelligence
Copyright Silverwood Partners 2001 - 2015
2014
Page 15
Security – Content, Systems … and Partners
Content Security; Infrastructure Security – Challenge
 The IT breach of Sony’s network, leading to the leak of confidential content, has
placed cybersecurity at the front of every corporation’s priority list
 Increased use of SaaS, outsourced services introduces complex interconnections
between systems with potentially untested and unknown vulnerabilities
 As users become more mobile, content generation increases, and the number
and sophistication of hacking attempts rises, breaches will be inevitable
“Our customers in [the broadcast] market are already planning for IP-based solution[s] that
automate complex and critical workflow systems and processes. Ensuring that these networks'
elements and content is safe and secure will become increasingly important to them.”
John Stroup, President and CEO of Belden
Belden Buys Security Firm Tripwire
 Belden purchased Tripwire in January 2015
for $710MM – 2015E revenue of $165MM
Has
Acquired
For 4.3 x
Revenue
1. CNN, “Government hacks and security breaches skyrocket
Source: Belden
Copyright Silverwood Partners 2001 - 2015
2014
Page 16
Growing Opportunity in Enterprise Video
Enterprises Use Video in Many Different Ways; Increased Use Expected
 The most popular use of video within the enterprise is for marketing and brand
promotion; when choosing provider, enterprises care most about ease-of-use, cost
 Of the 1,300 future global business leaders under the age of 35 polled, ~61% said
they will more frequently use enterprise-class video over the next 5-10 years1
 Opportunities for low cost production systems; outsourced video management
1.
Cisco (study conducted by Redshift Research)
Video Usage By Activity
Choosing an Enterprise Video Solution
Read as: (2014) 78% of surveyed
enterprises use video for marketing
and brand promotion
#1 Ease of Use
Recruiting
35%
Help Desk or Customer Service
37%
Quarterly Calls
#2 Price
51%
Promotional Internal Iniatives
55%
Customer Webinars
60%
Employee Generated Content
60%
Executive Communications
#3 Reliability
and Scalability
62%
Onboarding & Workforce Training
64%
Training Customers, Partners and…
65%
Meetings and Internal Communications
66%
Company Events Coverage
67%
#4 Breadth of
Features
Product and Product Marketing Videos
77%
Marketing and Brand Promotion Videos
78%
0%
20%
40%
60%
80%
#5 Versatility &
Ease of Customization
100%
Source: The State of Video in the Enterprise A Kaltura Report
Copyright Silverwood Partners 2001 - 2015
2014
Page 17
Specialized Equipment Prices Falling
High-Priced Hardware Providers Under Significant Pricing Pressure
 Innovators like Blackmagic Design and NewTek continue to offer high-quality, lowcost production-grade alternatives with fast expanding product ranges
 Low price point leads to trial, increased familiarity, market share gains
Blackmagic URSA EF
$175,000
$5,995
Switchers
Cameras
Grass Valley LDX 81 4K
29x
VS.
GV Karrera K-Frame
S-Series Switcher
NewTek
Tricaster Mini HD4i
$65,000
$9,995
VS.
NewTek 3Play 425
$180,000
$21,995
 Adequate functionality –
most of the features needed
by most users most of the
time
relentless focus on
minimizing manufacturing
cost
 Technology shift to IP –
8.2x
VS.
Focus of Low-Cost Providers
 Low cost manufacturing –
6.5x
EVS 4K Replay & Zooming
Replay
Price
Difference
impending shift to video over
IP in production environment
will further assist low cost
providers
Copyright Silverwood Partners 2001 - 2015
2014
Page 18
M&A Activity – Exceptional 2014; Strong 2015
Representative Transactions
2011
2012
2013
2014
# of Transactions*
56
58
64
76
Mean
3.8x
2.3x
1.6x
1.7x
1.9x
Median
2.3x
1.4x
1.3x
1.4x
1.5x
Revenue Multiple
* Representative transactions involving media technology vendors
2015
25
Year‐to‐Date at 4/7/2015
Source : Capital IQ, Silverwood Partners estimates
Copyright Silverwood Partners 2001 - 2015
Page 19
M&A Activity – Continued Strength
M&A Market Perspectives
 2014 transaction volume exceeds 2013 when (excluding Verizon/Vodafone deal)
 Strongest first quarter for M&A since Q1 2007 – 23% YoY ($) growth in Q1 2015
Technology M&A Environment
Global M&A Activity
Information Technology and Telecommunication Services Closed M&A Transactions Since 2010; Source: CapitalIQ
Q1 2015 vs. Q1 2014; Source: Thomson Reuters
Transaction Volume (billions of USD)
Number of Transactions
900
5,700
400
5,600
350
5,500
300
5,400
250
5,300
200
5,200
150
5,100
100
5,000
50
Transaction Volume (billions of USD)
Number of Transactions
9,900
800
Number of Tansactions
Transaction Volume (billions of USD)
Transaction Volume (billions of USD)
450
5,800
8,900
700
600
7,900
500
400
6,900
300
200
5,900
100
4,900
2010
2011
2012
2013*
2014
* The Verizon/Vodafone deal accounts for ~$130B of 2013 transaction volume
4,900
2014 Q1
Copyright Silverwood Partners 2001 - 2015
2015 Q1
Page 20
Number of Transactions
500
M&A Market Indicators – Highly Favorable
April 09
April 10
April 11
April 12
April 13
April14
April 15
Confidence
Level
Economic
Activity
Credit
Market
Equity
Markets
Media Tech
Industry Factors
M&A Market Indicators Followed by Silverwood
Copyright Silverwood Partners 2001 - 2015
Page 21
Equity Markets at All-Time Highs
M&A Activity Strongly Correlated with Equity Markets
 NASDAQ at 4,887 approaching all-time high of 5,408
 S&P 500 at 2,067 – near all-time high of 2,117 reached on 3/2/2015
 Dow at 17,763; near all-time high of 18,024 reached on 12/23/2014
NASDAQ Composite
6000
5000
All-Time High
4000
3000
2000
1000
0
Source: Yahoo!, figures as of 4/2/2015
Copyright Silverwood Partners 2001 - 2015
2014
Page 22
Significant Private Equity Capital Available
U.S. PE Firms Aggressively Searching for Acquisitions



Over $500 billion of U.S. PE capital available for equity investment
Purchasing power 3x to 4x this amount with leverage, reinvested equity
Significant recent sector activity by PE buyers – Telestream, Vizrt, ChyronHego
Source: PitchBook; as of 2Q 2014
Copyright Silverwood Partners 2001 - 2015
2014
Page 23
Historically Low Corporate Borrowing Costs
Investment Grade Issuers – Low Yields, Low Spreads
 Single-A rated firms can borrow for 20 years at less than 400 bps
 Spread compression to Treasurys and between investment grades
 Lowers overall cost of capital and hurdle return threshold for buyers
Investment Grade Bond Yields
A
AA
AAA
400
350
Basis Points
300
250
200
150
100
50
0
2
5
10
20
Maturity (years)
Source: PitchBook; as of 2Q 2014
Copyright Silverwood Partners 2001 - 2015
2014
Page 24
Public Companies – Over 2.5X Revenue
Valuation Distribution: Enterprise Value/Revenue
0.0x
1.0x
2.0x
3.0x
4.0x
5.0x
6.0x
7.0x
8.0x
9.0x
Adobe Systems Incorporated (NasdaqGS:ADBE)
Akamai Technologies, Inc. (NasdaqGS:AKAM)
Autodesk, Inc. (NasdaqGS:ADSK)
Rovi Corporation (NasdaqGS:ROVI)
Espial Group, Inc. (TSX:ESP)
RealD Inc. (NYSE:RLD)
GoPro, Inc. (NasdaqGS:GPRO)
EVS Broadcast Equipment S.A. (ENXTBR:EVS)
DTS Inc. (NasdaqGS:DTSI)
Dolby Laboratories, Inc. (NYSE:DLB)
Semtech Corporation (NasdaqGS:SMTC)
Evertz Technologies Limited (TSX:ET)
Mirada Plc (AIM:MIRA)
Internap Corporation (NasdaqGS:INAP)
Net Insight AB (OM:NETI B)
Source: S&P Capital iQ: As of April 06, 2015
Copyright Silverwood Partners 2001 - 2015
2014
Page 25
Public Companies – 1.0x – 2.5x Revenue
Valuation Distribution: Enterprise Value/Revenue
0.0x
1.0x
2.0x
3.0x
4.0x
5.0x
6.0x
7.0x
8.0x
9.0x
Opera Software ASA (OB:OPERA)
AwoX S.A. (ENXTPA:AWOX)
Belden Inc. (NYSE:BDC)
Alticast Corp. (KOSDAQ:A085810)
Cisco Systems, Inc. (NasdaqGS:CSCO)
Prime Focus Limited (BSE:532748)
CommScope Holding Company, Inc. (NasdaqGS:COMM)
ATEME SA (ENXTPA:ATEME)
Anevia SA (ENXTPA:ALANV)
Limelight Networks, Inc. (NasdaqGS:LLNW)
Brightcove Inc. (NasdaqGS:BCOV)
TiVo Inc. (NasdaqGS:TIVO)
Wegener Corp. (OTCPK:WGNR)
Marvell Technology Group Ltd. (NasdaqGS:MRVL)
AudioCodes Ltd. (NasdaqGS:AUDC)
Harmonic Inc. (NasdaqGS:HLIT)
The Vitec Group plc (LSE:VTC)
Comtech Telecommunications Corp. (NasdaqGS:CMTL)
Sigma Designs, Inc. (NasdaqGS:SIGM)
Tata Communications Limited (BSE:500483)
Orad Hi Tec Systems Ltd. (XTRA:OHT)
Canare Electric Co. Ltd. (TSE:5819)
Avid Technology, Inc. (NasdaqGS:AVID)
ARRIS Group, Inc. (NasdaqGS:ARRS)
Vislink plc (AIM:VLK)
Source: S&P Capital iQ: As of April 06, 2015
Copyright Silverwood Partners 2001 - 2015
2014
Page 26
Public Companies – Less Than 1.0x Revenue
Valuation Distribution: Enterprise Value/Revenue
0.0x
1.0x
2.0x
3.0x
4.0x
5.0x
6.0x
7.0x
8.0x
9.0x
SeaChange International, Inc. (NasdaqGS:SEAC)
Quantum Corporation (NYSE:QTM)
Zoo Digital Group plc (AIM:ZOO)
TVLogic Corp. (KOSDAQ:A121800)
Samsung Electronics Co. Ltd. (KOSE:A005930)
Technicolor SA (ENXTPA:TCH)
Barco NV (ENXTBR:BAR)
Pace plc (LSE:PIC)
ViXS Systems, Inc. (TSX:VXS)
Sizmek Inc. (NasdaqGS:SZMK)
Image Systems AB (OM:IS)
Christie Group plc (AIM:CTG)
Sony Corporation (TSE:6758)
Concurrent Computer Corporation (NasdaqGM:CCUR)
Smart Technologies Inc. (TSX:SMA)
RealNetworks Inc. (NasdaqGS:RNWK)
Netgem SA (ENXTPA:NTG)
Optical Cable Corp. (NasdaqGM:OCC)
Dalet S.A. (ENXTPA:DLT)
Blonder Tongue Laboratories Inc. (AMEX:BDR)
International Datacasting Corporation (TSX:IDC)
Blinkx plc (AIM:BLNX)
Source: S&P Capital iQ: As of April 06, 2015
Copyright Silverwood Partners 2001 - 2015
2014
Page 27
What is the Equity Market Rewarding?
TEV/Rev (LTM)
Representative Public Companies
• Strategic Technology
• Sustainable Position/Strong Growth
• Strong Operating Performance
2.5x
• Good Technology, Possibly Strategic
• Near‐Term Growth
• Solid Operating Performance
1.0x
• Technology – Mature or Underappreciated
• Uncertain or Evolving Growth Story
• Mixed Operating Performance
Copyright Silverwood Partners 2001 - 2015
Page 28
Selected M&A Transactions
Date Closed Target
Buyer
Business Description (Target/Issuer)
Mar-19-2015
Vizrt Ltd.
Nordic Capital, Nordic Capital Fund VIII
LP
Mar-09-2015
ChyronHego Corporation
Vector Capital, Vector Capital IV, L.P.
Feb-17-2015
True[X] Media, Inc.
Twenty-First Century Fox, Inc.
Feb-12-2015
Video Insight, Inc.
Panasonic Corporation of North
America, Inc.
Feb-09-2015
Tweak Software, Inc.
Shotgun Software Inc.
Feb-02-2015
Yashi, Inc.
Nexstar Broadcasting Group, Inc.
Vizrt Ltd., together with its subsidiaries, provides
real-time 3D graphics, studio automation, sports
analysis, and media asset management tools for
broadcast industry worldwide
ChyronHego Corporation provides broadcast
graphics creation, play-out, and real-time data
visualization for live television, news, and sports
production
True[X] Media, Inc. provides interactive
advertisement services that run in mobile games and
streaming music application
Video Insight, Inc., a software development
company, focuses on writing digital video recording
software
EV/Sales
EV/EBITDA
318
2.3x
11.1x
112
1.9x
20.6x
200
Tweak Software, Inc. develops tools for playback
and review needs
Yashi, Inc. provides digital marketing services
Timeline Labs, LLC operates a platform for media
companies and brands to discover, display, and
measure social content and conversations
DivX, LLC develops, distributes, and licenses digital
video technologies for PC, living room, and mobile
environments
Feb-02-2015
Timeline Labs, LLC
SeaChange International, Inc.
Jan-30-2015
DivX, LLC
NeuLion, Inc.
Jan-26-2015*
RGB Networks, Inc.
Imagine Communications Corp.
Jan-15-2015
Telestream, Inc.
Genstar Capital, LLC, Genstar Capital
Partners IV, L.P.
Jan-02-2015
Tripwire, Inc.
Belden Inc.
Dec-22-2014
Faber Audiovisuals B.V.
NEP Group, Inc.
Faber Audiovisuals B.V. offers video screen and
audio-video equipment rental services
Dec-19-2014
KXRM-TV, KXTU-LD and WTTA-TV
Media General Operations, Inc.
Sinclair Broadcast Group, KXRM-TV, KXTU-LD and
WTTA-TV comprises television stations
Dec-17-2014
Vidmaker Inc.
YouTube, LLC
Vidmaker Inc. develops a social video platform
where anyone can create video and share it
everywhere
Dec-15-2014
BrightRoll Inc.
Yahoo! Inc.
BrightRoll Inc. develops and provides software that
automates digital video advertising
Source: S&P Capital iQ
EV (MM USD)
33
26
66
RGB Networks, Inc. provides multi-screen IP video
delivery and monetization solutions
Telestream, Inc. provides live and on-demand digital
media tools and workflow solutions that allow
consumers and businesses to transform video on
the desktop and across the enterprise
Tripwire, Inc. provides information technology (IT)
security and compliance management solutions for
enterprises, government agencies, and service
providers
710
4.3x
93
640
*Announced date
Copyright Silverwood Partners 2001 - 2015
2014
Page 29
Selected M&A Transactions
Date Closed Target
Buyer
Business Description (Target/Issuer)
Dec-04-2014
Nexage Inc.
Millennial Media Inc.
Dec-01-2014
Vidible, Inc.
AOL Inc.
Nov-12-2014
television 101 LLC
Strategic Global Investments, Inc.
Nov-04-2014
Dashbox Inc.
FilmTrack Inc.
Oct-31-2014
Fanhattan, Inc.
Rovi Corporation
Oct-31-2014
Doremi Labs, Inc.
Dolby Laboratories, Inc.
Oct-30-2014
OpenTV, Inc., Advanced Advertising
Business Unit
Imagine Communications Corp.
Oct-22-2014
BluWave Productions, LLC
StudioNow, Inc.
Oct-20-2014
Videoplaza AB
Ooyala, Inc.
Oct-08-2014
Fabrix Systems Ltd.
Ericsson
Oct-03-2014
Qumu Cloud
Qumu Corporation
Nexage Inc. provides mobile advertising solutions to
publishers and developers, media buyers, agencies,
and advertisers
Vidible, Inc. operates a video management and
exchange platform
television 101 LLC develops and produces film,
television shows, and commercial spots
Dashbox Inc. provides a Web-based, business-tobusiness workflow management system for music
synchronization licensing
Fanhattan, Inc. provides cloud-based Fan TV
products
Doremi Labs, Inc. develops and manufactures digital
cinema servers and integrated media blocks
Qumu Cloud provides a enterprise video platform
Ooyala, Inc.
Telstra Corporation Limited
Sep-30-2014
Autocue Group Ltd
Vitec Videocom Ltd
Sep-22-2014
Aviary, Inc.
Adobe Systems Incorporated
Sep-12-2014
Eyeon Software Inc.
Blackmagic Design Pty. Ltd.
Sep-11-2014
1049 Productions LLC
VIA Productions, LLC
Sep-11-2014
Manzanita Systems, LLC
DTS Inc.
Sep-11-2014
mediapeers GmbH
Deluxe Entertainment Services Group
Inc.
EV/Sales
119
3.5x
EV/EBITDA
37
112
Advertising business systems
BluWave Productions, LLC provides video and Web
production services
Videoplaza AB develops sell-side advertisement
serving and management platform for broadcasters,
video publishers, and advertising networks
Fabrix Systems Ltd. provides cloud-based scale out
storage and computing platform for applications
requiring processing and storing of large amounts of
data
Oct-01-2014
EV (MM USD)
Ooyala, Inc., a video technology company, provides
video solutions for media companies, brands,
broadcasters, enterprises, and large operators
Autocue Group Ltd. provides teleprompting solutions
to broadcast industry
Aviary, Inc. develops and provides Aviary, a
technology platform for filters and frames, creative
stickers, touch-up tools, and more
eyeon Software Inc. develops applications for the
VFX and postproduction communities
1049 Productions LLC offers film and video direction
and editing services
Manzanita Systems, LLC develops MPEG software
solutions for digital television, video on demand,
digital ad insertion, and over-the-top applications
mediapeers GmbH operates mediapeers exchange,
a Web-based business-to-business marketplace for
audiovisual content
95
5.7x
15
2.6x
360
Source: S&P Capital iQ
Copyright Silverwood Partners 2001 - 2015
2014
Page 30
Selected Private Placement Transactions
Date Closed Target
Investor(s)
Business Description (Target/Issuer)
Transaction Value (MM
USD)
Mar-23-2015
Breaker Co., Ltd.
Dream Incubator Inc., gumi ventures
Breaker Co., Ltd. develops and markets video
entertainment software for mobiles in Japan
Mar-16-2015
Viggle Inc.
Sillerman Investment Company III LLC
Viggle Inc. operates as a mobile and Web-based
entertainment marketing platform
30
3/3/2015*
Keek Inc.
AGF Investments Inc., Pinetree Capital Ltd. and
Plazacorp Ventures.
Keek Inc. operates as a mobile video social network
12
Mar-03-2015
SoMedia Networks, Inc.
Mcallister Holdings Ltd
SoMedia Networks, Inc. develops and operates cloudbased video content production platforms and video
production services for the business and news markets
1
Feb-25-2015
Lytro, Inc.
Allen & Company Inc., Investment Arm, GSV Capital
Corp., GSV Asset Management, LLC, Danhua Capital
Lytro, Inc. develops cameras for computational
photography
50
Feb-19-2015
Magic Pony Technology Ltd.
Entrepreneur First
Magic Pony Technology Ltd. develops technology for
video compression
Feb-17-2015
Applicaster Ltd.
83 North, Pitango Venture Capital
Applicaster Ltd. provides white label broadcast solutions
for cross-screen television (TV) experiences
11
Feb-05-2015
SimpleStream Ltd
Beringea LLC, Yolo Leisure and Technology plc
SimpleStream Ltd. provides a range of pre-built
streaming solutions ready for instant deployment
3
Videoo, Inc.
Krillion Ventures
Videoo, Inc. operates an online platform that
automatically connects social videos using hashtags to
form dynamic crowd-sourced playlists
2
Feb-04-2015
Taboola.com Ltd.
Comcast Ventures, Advance Publications, Inc., Groupe
Arnault SAS, Fidelity Management & Research
Company, Steadfast Capital Management LP, Marker
LLC, YJ Capital Inc.
Taboola.com Ltd. operates a content discovery platform
that serves publishers, marketers, and agencies
117
Feb-04-2015
Zoom Video Communications,
Inc.
QUALCOMM Ventures, Emergence Capital Partners,
Horizons Ventures Limited
Zoom Video Communications, Inc. offers cloud-based
video meeting and conferencing services
30
Jan-14-2015
Build Scale Inc.
Bessemer Venture Partners, iNovia Capital, SoftTech
VC, OMERS Ventures, Salesforce Ventures
Build Scale Inc. provides a video platform for
businesses, bloggers, and individuals to put video on
their Websites
18
2/4/2015*
Source: S&P Capital iQ
*Announced date
Copyright Silverwood Partners 2001 - 2015
2014
Page 31
Select Private Placement Transactions
Date Closed Target
Investor(s)
Business Description (Target/Issuer)
Transaction Value (MM
USD)
Jan-13-2015
Teads
Partech International, GIMV NV, Bpifrance
Investissement, Elaia Partners, Fonds Ambition
Numérique
Teads operates a platform for social video advertising
14
Dec-22-2014
Elemental Technologies, Inc.
Norwest Venture Partners, Voyager Capital, General
Catalyst Partners, Sky plc, Telstra Ventures Pty Limited
Elemental Technologies, Inc., a software company,
provides video processing solutions to pay TV
operators, content programmers, broadcasters, and
enterprise customers worldwide
15
Dec-11-2014
VideoAmp
Anthem Venture Partners, ZenShin Capital Partners,
Simon Equity, LLC, Wavemaker Partners, Third Wave
Capital
VideoAmp, Inc. develops and provides a programmatic
advertising platform
2
Nov-30-2014
RiverSilica Technologies PVT
LTD
Reservoir Investment Managers (India) LLP, Exfinity
Technology Fund - Series I
RiverSilica Technologies PVT LTD builds and markets
video distribution systems
2
Nov-24-2014
VIDCOIN
Bpifrance Investissement, Virtual Network SA, Kima
Ventures
VIDCOIN provides in-application video advertising
services
1
Nov-18-2014
Ngcodec Inc.
Belmore Capital Pty. Ltd.
Nov-10-2014
SoMedia Networks, Inc.
Mcallister Holdings Ltd
Oct-31-2014
Pocket Supernova Inc.
CyberAgent Ventures, Inc., East Ventures, 500
Startups, 500 Startups, KLab Ventures Inc.
Oct-29-2014
HouseLens Inc.
Undisclosed
Oct-22-2014
Encoding.com Inc.
Harmonic Inc., Zelkova Ventures, Metamorphic
Ventures
Encoding.com Inc. provides video encoding services
4
Oct-22-2014
Roku, Inc.
Menlo Ventures, Twenty-First Century Fox, Inc., British
Sky Broadcasting Group plc (nka:Sky plc)
Roku, Inc. offers streaming entertainment devices for
delivering entertainment to the television
25
Oct-09-2014
Sphericam
Silicon Gardens Investments, LLC, Silicon Gardens
Fund
Sphericam manufactures panoramic spherical video
cameras
Sep-23-2014
Deluxe Entertainment Services
Group Inc.
MacAndrews & Forbes Holdings, Inc.
Deluxe Entertainment Services Group Inc. provides
media and entertainment services
Ngcodec Inc. develops video encoder technology that
implements high efficiency video coding (HEVC)
standard
SoMedia Networks, Inc. develops and operates cloudbased video content production platforms and video
production services for the business and news markets
Pocket Supernova Inc. develops video-messaging
application including Unda to record videos, decorate
them with text and graphics
HouseLens Inc., a photography, videography, and
advertisement company, provides video marketing
solutions for real estate agents
1
2
100
Source: S&P Capital iQ
Copyright Silverwood Partners 2001 - 2015
2014
Page 32
Expertise, Excellence, Execution
Senior‐Level
Commitment
• Senior team members present at pitch work directly on transaction to ensure successful result
• Dedicated staff with industry knowledge and experience support senior team members
Immediately
Responsive
Industry
Knowledge
• Firm is highly selective in accepting new engagements
• Most active investment bank in the media technology industry
• Small number of transactions enables team to immediately dedicate necessary focus and resources to new engagement • Ongoing dialogue with industry executives and investors
Copyright Silverwood Partners 2001 - 2015
2014
• Unmatched industry access
Page 33
Important Information
The analysis and views expressed herein have been developed by Silverwood Partners LLC (“Silverwood”) or obtained from various third-parties.
The material contained herein, while not guaranteed, is based on information that is believed to be reliable and accurate. This strategic industry
analysis (“Strategic Analysis”) is prepared for general circulation and is circulated for general information only. It is not and is not intended to be a
“Research Report” as defined by NASD Rule 2711 of the Financial Industry Regulatory Authority (“FINRA”) effective as of the date hereof or as
amended. Specifically, this Strategic Analysis does not provide information reasonably sufficient upon which to base an investment decision as it
does not have regard to the particular investment objectives, financial situation and the needs of any person or entity who may receive this document.
Silverwood does not assess for any particular investor the suitability of any particular investment or the potential value of any particular investment.
None of the information contained herein constitutes a recommendation or a solicitation by Silverwood or a recommendation or solicitation that any
particular investor should purchase or sell any particular security in any amount, or at all. Investors should seek financial advice regarding the
appropriateness of investing in the securities of any company mentioned in this Strategic Analysis and should understand that statements regarding
future prospects may not be realized. Past performance is not necessarily a guide to future performance. This Strategic Analysis is not intended to
provide tax, legal, or investment advice.
Neither the information nor any opinion expressed herein constitutes an offer, or an invitation to make an offer, to buy or sell any securities or any
options, futures or other derivatives related to such securities. Silverwood, its partners, members, officers, employees, contractors, referral sources or
members of their families may have a long or short position in any securities of the companies mentioned in this Strategic Analysis or in related
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certain companies mentioned in this report when employed by other firms. Furthermore, consultants to or referral sources for Silverwood, or former
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Copyright Silverwood Partners 2001 - 2015
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