Group Buying M&A 2010-2011

GROUP BUYING While daily deal M&A activity has climbed, valuation multiples have plummeted and investor confidence in the space is waning. When applying M&A transaction valuation multiples to Croupon and LivingSocial, the two are significantly below previously speculated valuation ranges. Is this a sign of bigger problems in the daily deal industry? M&A 2010-2011 Get the entire Daily Deal M&A Report, visit - www.cbinsights.com/daily-deal-valuations $$- DAILY DEAL ACQUISITIONS INCREASED (A LOT).. ACQUIRER 31 DAILY DEAL M&A TRANSACTION HISTORY 12 COMPANIES 72 ACQUIRED I0 Acquisition activity is being driven by existing players fortifying & expanding buying technological capabilities as well as new players entering the space. An overabundance of daily deal companies and a softer August 2011 financing environment has markets and May 2010 Note: Chart shown does not reflect two deals completed in 2009 and three deals completed through September 12, 2011. helped give acquirers more leverage. SSOURCE: CBINSIGHTS.COM -$$4 .WHILE DEAL VALUATION MULTIPLES GOT PUMMELED.. Valuation Multiples M&A valuation multiples hit a high in QI 2011 coinciding with euphoria about Groupon's impending IPO. Sentiment soured significantly after Groupon released its financials and so less than (Q3' 11 vs. Q1' 11) 136% 140% Price per Subscriber two quarters later, price per subscriber and price per voucher multiples have dropped precipitously. Price per Voucher SOURCE: CBINSIGHTS.COM -$$4 A SLEW OF ACQUIRERS ARE MAKING THE SPACE VERY CROWDED YMOOLALA cal YAR Cacrowdsavings SUGARINC The big boys. Groupon and LivingSocial, have been the most active acquirers since '09. But the list of acquirers includes 29 other firms, and there are numerous firms rumored to be eyeing the space suggesting the space may get even more crowded. livingsoci JUICE COM amazon.com deals GROUPON GHE THANGOO CO gle Reach RIMing wedcal Local SOURCE: CBINSIGHTS.COM -$$4 MORE THAN JUST VCs JUMPED ON THE DAILY DEAL BANDWAGON.. While VCs are about 50% of financing deal volume, the rocketship growth of Groupon attracted more than just venture money. Angel investors and growth equity investors, as would be expected, participated as did some unusual suspects in the form of private equity firms and hedge funds. VENTURE CAPITAL ANGEL GROWTH EQUITY CORPORATION PRIVATE EQUITY CORPORATE VENTURE INCUBATORIACCELERATOR HEDGE FUND I OTHER 46% 30% 6% 3% 3% 2%2% 8% RESERVE NOTE THE UNITED S TATES OF AMER IC A EEDERAT DOLLAR- SOURCE: CBINSICHTS.COM -$$4 .BUT THE OUTLOOK FOR FUNDING LOOKS UNCERTAIN NO. OF INVESTMENTS IN DAILY DEAL INDUSTRY Groupon-mania drove up the number of financing deals in 02 2011, but deal volume has 35 30 come back to normal levels. Concerns about the viability of the daily deal model, the capital required to scale daily deal companies and 20 macro-economic centered concerns 15 on consumer spending have also served to deflate some daily deal optimism. 02 2010 03 2011 SOURCE: CBINSIGHTS.COM $$$ Get all the valuation multiples, acquisition and investment data U : Visit - www.cbinsights.com/daily-deal-valuations A : The entire 2010-2011 Daily Deal / Group Buying Industry M&A Activity and Valuation Multiples Report contains time-series data on: * Valuation multiple data Iprice per subscriber paid and price per voucher paid) • Implied valuations for Groupon and LivingSocial based on observed multiples * Details on all 72 M&A trasactions • Deal term statistics - cash vs. stock • Ranking of daily deal acquirers by # of transactions • Investment funding statistics • Details on 180 investars who've funded daily deal companies * 30 companies rumored to be eyeing acquisitions in the daily deal space • 6l potential daily deal acquisition targets A CBINSIGHTS. Number of Investments