Internet Ad Market Update 2013 Year-End Review

Confidential

Internet Advertising Market Update

2013 Year-End Review

Headwaters TMT Group

Member FINRA

2Confidential

• Innovation in the Internet Advertising ecosystem is being driven by emergence and confluence of mobile, video, social and programmatic, causing market participants to scramble to adapt to evolving customer demands

• Current view of the Internet Advertising landscape remains overly complex requiring unnecessary differentiation, confusing customers

• Expect marketers to gravitate to broader integrated platforms that improve effectiveness and efficiency of media planning, buying and selling online advertising

• As a result, we expect continued consolidation as leaders assemble more complete solutions from companies that are actually products / point solutions

• However, because larger, usually public, buyers often require scale, we expect to see more private to private transactions in 2014 as companies seek to improve competitive positioning and path to liquidity

Key Themes for Internet Advertising in 2014

3Confidential

Executive Summary

Capital Markets – In 2013, U.S. Internet Advertising companies outperformed their international counterparts, the S&P 500, NASDAQ, and MSCI Europe indices. In 2013, U.S. Internet Advertising increased by 38%. International Internet Advertising companies recently experienced a sharp increase in performance.

Trading Multiples – At the end of 2013, U.S. Internet Advertising companies were trading at a median LTM revenue multiple of 3.3x, while International Internet Advertising companies were trading a median LTM revenue multiple of 2.5x.

IPO Activity – In 2013, 6 IPOs were completed in the Internet Advertising space. Several 2013 Internet Advertising IPOs have increased from their IPO price. As of the year end, Marketo, Rocket Fuel, and Criteo have increased 185%, 112%, and 10%, respectively, since their market debuts.

M&A Activity – M&A activity rose steadily during 2013, but decreased 7% over 2012. Volume rose from 16 transactions in 1Q 2013 to 28 in 4Q, the highest quarter since 3Q 2011.

Investment Activity – Investment volume rose 24% in 2013 over 2012. Investment volume remained steady throughout 2013, reaching a high of 50 transactions in 2Q and a low of 47 in 4Q. While deal value rose consistently throughout the first 3 quarters, it fell sharply in the fourth due to a lack of large, late-stage investments.

4Confidential

Capital Markets Performance

Since 2011, U.S. Internet Advertising companies (+88.9%) have outperformed the NASDAQ (+55.2%), S&P 500 (+45.3%), International Internet Advertising companies (+60.2%), as well as MSCI Europe (+20.3%)

Int'l. Internet Advertising Companies: +60.2%

NASDAQ:+55.2%

MSCI Europe: +20.3%

S&P 500: +45.3%

U.S. Internet Advertising Companies: +88.9%

_______Source: Capital IQ as of 12/31/13; refer to public comps for constituents

(30.0%)

(10.0%)

10.0%

30.0%

50.0%

70.0%

90.0%

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Recent Internet Advertising IPOs Are Outperforming

$13.00

$29.00$31.00

$37.07

$61.49

$34.20

$0.00

$10.00

$20.00

$30.00

$40.00

$50.00

$60.00

$70.00

$ per share

IPO05/17/13

Initial Pricing Range$11 – $13

Closing as of12/31/13



IPO09/20/13


IPO10/30/13


6Confidential

5.8x

8.4x

1.8x

11.6x

2.5x

18.0x

7.8x

3.3x 3.3x

5.4x

1.1x2.0x

0.6x

3.5x

0.5x

0.0x

4.0x

8.0x

12.0x

16.0x

20.0xLTM Revenue Multiple

12.4x

7.0x

3.8x

12.6x

3.9x

0.5x 0.6x 0.3x 1.2x 0.3x0.0x

2.0x

4.0x

6.0x

8.0x

10.0x

12.0x

14.0x

LTM Revenue MultipleLTM Revenue Multiple

Internet Advertising Comparable Public Companies

_______Source: Capital IQ as of 12/31/13; companies arranged by descending enterprise value

International Internet Advertising Companies

U.S. Internet Advertising Companies

Median:3.3x

Median:2.5x

7Confidential

Public Comparables: Internet Advertising

_______Source: Capital IQ

Trading Metrics($ in millions, except per share data) Stock

Price 52-Week Price Range Market Enterprise EV / Revenue EV / EBITDA

Company Ticker 12/31/13 Low High Cap. Value LTM CY 2013E CY 2014E LTM CY 2013E CY 2014E

U.S. COMPANIES

Google Nasdaq:GOOG $1,120.71 $695.52 $1,121.71 $380,528 $332,929 5.8x 5.6x 4.8x 18.9x 15.5x 12.9x

Yahoo! Nasdaq:YHOO 40.44 18.89 41.05 41,749 40,016 8.4x 9.0x 8.8x 33.7x 26.4x 25.4x

IAC/InterActive Nasdaq:IACI 68.65 38.20 70.44 5,686 5,584 1.8x 1.8x 1.7x 10.4x 9.5x 8.2x

RocketFuel Nasdaq:FUEL 61.49 29.00 68.56 2,356 2,257 11.6x 9.7x 5.4x NM NM NM

ValueClick Nasdaq:VCLK 23.37 18.62 32.25 1,584 1,724 2.5x 3.0x 2.8x 7.7x 7.8x 7.4x

Marketo Nasdaq:MKTO 37.07 17.20 39.80 1,653 1,520 18.0x 16.1x 12.1x NM NM NM

Responsys Nasdaq:MKTG 27.41 6.00 27.79 1,625 1,517 7.8x 7.5x 6.3x NM NM 46.8x

comScore Nasdaq:SCOR 28.61 13.84 29.86 992 931 3.3x 3.3x 2.9x 39.3x 15.8x 13.4x

Constant Contact Nasdaq:CTCT 31.07 11.75 31.36 1,015 907 3.3x 3.2x 2.8x 38.8x 19.8x 15.7x

Jive Software Nasdaq:JIVE 11.25 9.65 18.48 860 753 5.4x 5.2x 4.2x NM NM NM

QuinStreet Nasdaq:QNST 8.69 5.41 9.71 383 346 1.1x 1.2x 1.1x 11.1x 8.4x 8.7x

Marchex Nasdaq:MCHX 8.65 3.47 10.00 324 299 2.0x 2.0x 1.8x NM 23.1x 19.2x

ReachLocal Nasdaq:RLOC 12.71 10.27 17.39 370 284 0.6x 0.6x 0.5x 29.6x 9.9x 7.5x

Marin Software NYSE:MRIN 10.24 8.50 19.95 361 256 3.5x 3.3x 2.7x NM NM NM

Local.com Nasdaq:LOCM 1.58 1.44 2.37 36 43 0.5x 0.5x 0.4x NM 9.2x 4.6x

High 18.0x 16.1x 12.1x 39.3x 26.4x 46.8x

Mean 5.0x 4.8x 3.9x 23.7x 14.5x 15.4x

Median 3.3x 3.3x 2.8x 24.3x 12.7x 12.9x

Low 0.5x 0.5x 0.4x 7.7x 7.8x 4.6x

INTERNATIONAL COMPANIES

Baidu Nasdaq:BIDU $177.88 $82.98 $181.25 $62,247 $58,294 12.4x 11.3x 8.2x 27.6x 25.9x 20.0x

Yahoo Japan TSE:4689 5.56 2.64 5.67 31,996 26,754 7.0x 7.3x 6.7x 12.2x 13.3x 12.2x

Rakuten JASDAQ:4755 14.87 6.36 15.57 19,590 19,497 3.8x 4.0x 3.5x 16.1x 16.8x 14.1x

Yandex Nasdaq:YNDX 43.15 16.60 43.65 14,471 14,102 12.6x 11.4x 8.9x 29.3x 25.6x 20.2x

Criteo Nasdaq:CRTO 34.20 28.27 45.00 2,108 2,070 3.9x 3.4x 2.5x NM NM 31.3x

Hi-Media ENXTPA:HIM 2.58 2.26 3.10 115 133 0.5x 0.5x 0.5x 8.9x 7.2x 6.0x

Sedo Holding XTRA:LKI 3.93 1.86 4.17 120 113 0.6x NM NM 15.7x NM NM

TradeDoubler OM:TRAD 2.91 1.84 3.70 123 94 0.3x 0.3x 0.3x 9.7x 6.9x 6.2x

Weborama ENXTPA:ALWEB 13.07 12.39 23.07 46 42 1.2x 1.2x 1.1x 11.4x 8.8x 6.5x

ad pepper media Int'l XTRA:APM 1.57 1.07 1.67 33 20 0.3x 0.3x 0.3x NM 2.3x NM

High 12.6x 11.4x 8.9x 29.3x 25.9x 31.3x

Mean 4.3x 4.4x 3.6x 16.4x 13.3x 14.6x

Median 2.5x 3.4x 2.5x 13.9x 11.1x 13.2x

x Low 0.3x 0.3x 0.3x 8.9x 2.3x 6.0x

8Confidential

Public Comparables: Internet Advertising (Cont.)

_______Source: Capital IQ

Operating Metrics($ in millions, except per share data)

LTM Revenue Growth LTM Revenue EBITDA

Company Ticker As Of '12A-'13E '13E-'14E GM LTM CY 2013E CY 2014E LTM CY 2013E CY 2014E

U.S. COMPANIES

Google Nasdaq:GOOG Sep 2013 19% 16% 57% $57,386 $59,560 $69,339 $17,599 $21,528 $25,850

Yahoo! Nasdaq:YHOO Sep 2013 (11%) 3% 70% 4,760 4,430 4,553 1,187 1,518 1,578

IAC/InterActive Nasdaq:IACI Sep 2013 9% 8% 66% 3,064 3,042 3,286 539 587 681

RocketFuel Nasdaq:FUEL Sep 2013 117% 81% 46% 195 232 420 NM NA 3

ValueClick Nasdaq:VCLK Sep 2013 (13%) 6% 63% 684 574 608 224 220 233

Marketo Nasdaq:MKTO Sep 2013 62% 33% 58% 85 94 126 NM NA NA

Responsys Nasdaq:MKTG Sep 2013 24% 19% 53% 194 203 241 13 24 32

comScore Nasdaq:SCOR Sep 2013 12% 12% 68% 279 285 319 24 59 69

Constant Contact Nasdaq:CTCT Sep 2013 13% 13% 71% 277 285 322 23 46 58

Jive Software Nasdaq:JIVE Sep 2013 28% 23% 62% 139 146 179 NM NA NA

QuinStreet Nasdaq:QNST Sep 2013 (9%) 3% 18% 303 301 308 31 41 40

Marchex Nasdaq:MCHX Sep 2013 8% 9% 39% 151 149 163 4 13 16

ReachLocal Nasdaq:RLOC Sep 2013 13% 14% 50% 502 517 589 10 29 38

Marin Software NYSE:MRIN Sep 2013 29% 22% 59% 73 77 94 NM NA NA

Local.com Nasdaq:LOCM Sep 2013 (3%) 12% 29% 90 95 107 NM 5 9

INTERNATIONAL COMPANIES

Baidu Nasdaq:BIDU Sep 2013 45% 37% 73% 4,698 5,174 7,068 2,112 2,250 2,913

Yahoo Japan TSE:4689 Sep 2013 (3%) 9% 88% 3,818 3,642 3,986 2,193 2,005 2,187

Rakuten JASDAQ:4755 Sep 2013 (4%) 13% 93% 5,132 4,936 5,567 1,211 1,164 1,381

Yandex Nasdaq:YNDX Sep 2013 30% 27% 75% 1,119 1,239 1,577 481 550 700

Criteo Nasdaq:CRTO Sep 2013 NA 39% 35% 534 600 836 18 37 66

Hi-Media ENXTPA:HIM Jun 2013 2% 5% 21% 243 261 275 15 19 22

Sedo Holding XTRA:LKI Sep 2013 NA NA 18% 187 NA NA 7 NA NA

TradeDoubler OM:TRAD Sep 2013 (9%) 1% 23% 321 321 324 10 14 15

Weborama ENXTPA:ALWEB Jun 2013 11% 9% 16% 36 36 39 4 5 7

ad pepper media Int'l XTRA:APM Sep 2013 (3%) (1%) 43% 71 70 69 NM 9 NM

9Confidential

Internet Advertising M&A Trending at Historical Levels

_______Source: 451 Group; includes transactions with disclosed, estimated, undisclosed transaction valuesTop 3 acquisitions with disclosed transaction values

Average LTM Revenue Multiple 2011 2012 20137.8x 11.4x 6.1x

Top 3 Acquisitions by Quarter ($M) – Target / Acquirer

1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13

Radian6 / Salesforce

($326)

MediaMind / DG

($517)

EyeWonder / DG

($66)

Efficient Frntr. / Adobe($400)

iContact / Vocus($179)

Buddy Media / Salesforce

($689)

Wildfire / Google($350)

Eloqua / Oracle($956)

Channel Intel / Google($125)

ExactTarget / Salesforce($2,500)

DG (assets) / Extreme Reach

($485)

Responsys / Oracle

($1,607)

Goviral / Aol.

($74)

Greystripe / ValueClick

($70)

Vovici / Verint($57)

Interclick / Yahoo!($270)

Kontexto / Sargas($10)

Demandforce / Intuit

($423)

SPEED FC / Navarre

($50)

Pardot / ExactTarget

($95)

Akamai(asset) / MediaMath

($25)

Neolane / Adobe($600)

Adap.tv / Aol.

($465)

Dealer.com / DealerTrak

($987)

Kwkly / Reply!

($1)

Tatto Media / Ozura World

($60)

Prospectiv / Affinion

($30)

Searchteria / GMO AD

($3)

LeadFormix / Callidus

($9)

Vitrue / Oracle($325)

TigerLead / Move($22)

ClickMotive / DealerTrak

($61)

i-design Grp. / Cardtronics

($13)

Mkt. Leader / Trulia($355)

Locu / GoDaddy

($70)

A. Knowledge / NeuStar($119)

28 28

32

27 25 24

26 26

16

23

27 28

$401

$758

$201

$673 $218

$1,690

$457

$1,180

$163

$3,463$1,098

$2,789

0

5

10

15

20

25

30

35

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

1Q 2011 2Q 2011 3Q 2011 4Q 2011 1Q 2012 2Q 2012 3Q 2012 4Q 2012 1Q 2013 2Q 2013 3Q 2013 4Q 2013

# Deals$ in millions Deal Volume Deal Value ($M)

10Confidential

Top Acquirers in Internet Advertising Market

Buyer # Acquisitions Total Value ($M) Targets

Yahoo! 6 335.5 5to1.com, AdMovate, Bread Labs, Interclick, Lexity, Ztelic

Adobe 5 1,000.0 Auditude, Demdex, Efficient Frontier, Neolane, Search Discovery

Google 5 475.0 Admeld, Channel Intelligence, Incentive Targeting, Wildfire, Zave Networks

Oracle 4 2,888.7 Eloqua, Involver, Responsys, Vitrue

DG 4 597.6 EyeWonder, MediaMind, Peer39, Republic Project

Salesforce 3 3,515.0 Buddy Media, ExactTarget, Radian6

Top Acquirers by Volume – Three or More Acquisitions, 2011 – Present

Buyer Total Value ($M) Targets

Salesforce 3,515.0 Buddy Media, ExactTarget, Radian6

Oracle 2,888.7 Eloqua, Involver, Responsys, Vitrue

DealerTrack 1,048.5 Dealer.com

Adobe 1,000.0 Auditude, Demdex, Efficient Frontier, Neolane, Search Discovery

DG 597.6 EyeWonder, MediaMind, Peer39, Republic Project

Aol 539.1 Adap.tv, goviral

Extreme Reach 485.0 DG (assets)

Google 475.0 Admeld, Channel Intelligence, Incentive Targeting, Wildfire, Zave Networks

Intuit 423.5 Demandforce

Trulia 355.0 Market Leader

Yahoo 335.5 5to1.com, AdMovate, Bread Labs, Interclick, Lexity, Ztelic

Vocus 179.0 iContact

Top Acquirers by Total Transaction Value – Greater than $100M, 2011 – Present

_______Source: 451 Group as of 12/31/13

11Confidential

Internet Advertising M&A Case Study

On December 20, 2013

ACQUIRED

Transaction Overview:• $1.6 billion acquisition of Responsys by Oracle

• $27 per share, $1.5 billion Enterprise Value• Responsys had $194.3 million LTM revenue at the time of acquisition, putting

the LTM revenue multiple at 7.7x• Per share purchase price represents a 38% share premium over the last trading

day• At 1,084 employees, consideration per employee is $1.4 million

Target Description• Provides email marketing campaign design, management and analytics software

and SaaS for businesses. Also provides related marketing professional services.

Transaction Commentary:• The board of Responsys has approved the transaction. Shareholders will have

the chance to vote on the deal early 2014.• This is Oracle’s second major acquisition in the online marketing space,

following its 2012 acquisition of Eloqua• According to the acquirer press release, “By bringing together Responsys and

Oracle Eloqua in the Marketing Cloud, for the first time CMOs that support industries with B2C or B2B business models will be equipped to drive exceptional customer experiences across marketing interactions and throughout the customer lifecycle from a single platform.”

_______Source: 451 Group, New York Times, Acquirer Press Release, Forbes

12Confidential

Internet Advertising Investment Volume Remains Steady

Top 3 Investments by Quarter ($M)

1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13

Adknowledge($200)

Dianping.com($100)

Adchemy($61)

BrightRoll($30)

Marin ($30)

AVITO.ru($75)

Dianping.com($60)

Emailvision($30)

AppNexus($75)

Brand Ntwk($68)

Droga5($220)

Komli Media ($30)

Videology($30)

MediaV($50)

Reply!com($41)

Radiate Media($22)

Resonate Ntwk($22)

XL Marketing($70)

Say Media($27)

BloomReach($25)

Infusionsoft($60)

Videology($60)

Videology($68)

BrightTab($27)

Centro($23)

Invidi($40)

Tremor Video($37)

Moment Sys.($20)

BrightEdge($12)

LifeStreet($66)

Visible Tech.($24)

theAudience($20)

OpenX($25)

BrightEdge($43)

SugarCRM($40)

Simulmedia($25)

_______Source: PitchBook; includes transactions with disclosed, estimated, undisclosed transaction valuesTop 3 investments with disclosed investment values

49 48 45

37 36

48

36 36

48 50

48 47

$497$460

$366

$266$200

$563

$286$257

$375

$485

$546

$287

0

10

20

30

40

50

60

0

100

200

300

400

500

600

700

800

900

1Q 2011 2Q 2011 3Q 2011 4Q 2011 1Q 2012 2Q 2012 3Q 2012 4Q 2012 1Q 2013 2Q 2013 3Q 2013 4Q 2013

# investments $ in millionsInvestment Volume Investment Value ($M)

13Confidential

Top Investors In Internet Advertising Market

_______Source: PitchBook through 12/31/13; number of investments may include follow-on investments in same target

Investor Investments Targets

First Round Capital 1833Across, Altruik, DoubleVerify, elicit, Flurry, HandShakez, Jirafe, Moat, Nomi, Percolate Industries, Say Media, Solve Media,VigLink

SV Angel 15Booshaka, ContextLogic, Custora, Fullscreen, Heap, Moat, Nomi, NowSpots, Percolate Industries, Pipewise, SteelHouse, TT Labs, Tubular Labs, Vungle, Wibidata,

Greycroft Partners 1433Across, elicit, Netsertive, Nomi, Performance Horizon Group, Radiate Media, Resonate Networks, Skimbit, SteelHouse,TagMan

New Enterprise Associates 11 BloomReach, Compass Labs, Lattice Engines, Referly, Say Media, SugarCRM, Videology, WibiData

Intel Capital 11 BrightEdge Technologies, Delivery Agent, HookLogic, Kaltura, Movable, PerspecSys, Sprinklr, Zamplus Technology

Sequoia Capital 10 AgilOne, Dianping.com, Flite, Innovid, Kenshoo, Lattice Engines, Taykey

Accel Partners 10 AdRoll, AVITO.ru, Dealer.com, Etsy, Genius.com, myThings, Nomi, OpenX Software

Draper Fisher Jurvetson 9 4Info, Komli Media, MomentFeed, SugarCRM, Tremor Video, Virool, Yodle

Lerer Ventures 9 Bloglovin, GraphEffect, Moat, OrderGroove, Percolate Industries, Tapad, Tubular Labs

Bain Capital Ventures 8 BloomReach, HookLogic, Linkable Networks, Persado, TargetSpot, TellApart

Battery Ventures 8 BrightEdge Technologies, Kontagent, Sprinklr, Tealium

Norwest Venture Partners 8 Act-On Software, Extole, Komli Media, Turn

Top Investors by Volume, 2011 – Present

14Confidential

Internet Advertising Investment Case Study

On October 24, 2013

INVESTED IN

Transaction Overview:• $30 million investment in Komli Media by Draper Fisher Jurvetson, Helion

Venture Partners, Nexus Venture Partners, Norwest Venture Partners, and Peepul Capital

• Series E round of funding • Valuation indisclosed

• $97 million in total outside investments after the funding

Target Description:• Provider of a digital advertising and technology company helping marketers

to reach and acquire their audiences and publishers.

Transaction Commentary:• The capital comes from new investor Peepul Capital, along with former

investors DFJ, Helion, Nexus, and Norwest• According to Peepul Capital, “The funding should help Komli consolidate its

position in India and Southeast Asian markets.”• Komli has used previous proceeds to make a number of acquisitions, including

the recent acquisition of Admax• According to the CEO, the Company will continue to work on its ATOM

platform, and wants to do much of the current building in-house, although small purchases in the next few months are not completely ruled out.

_______Source: PitchBook, Live Mint, Ad Exchanger

15Confidential

Headwaters Is Your Premier Choice

• We are seasoned bankers, technologists, and strategists• Relevant transaction expertise

• Completed multiple Internet Advertising (“IA”) and Mobile Marketing & Advertising (“MMA”) transactions with many strategic acquirers and investors

• Strong relationships with key strategic parties

• Sector focus and industry experience means we are in frequent communication with likely interested acquirers and investors

• Over 350 Companies covered in Internet Advertising, 150 in MMA

• Direct market coverage gives us unique insights regarding:

• Strategic targets and investors ▪ IA & MMA IP / value chain

• Competitive and adjacent market activity ▪ Growth markets

• Highly customized process to fit specific dynamic context

• One size fits all auction processes not the best in IA or MMA

• We run a focused, intelligent process with proper company positioning tailored to specific acquirers selected for premium valuation

• We think “outside the box” – complex situations require creative solutions

HAS BEEN ACQUIRED BY

Financial Advisor tothe Seller


Financial Advisor to the Seller


Financial Advisor to the Seller



HAS DIVESTED SPECIFIC ASSETS TO


INVESTMENT BANK OF THE YEAR

2012 TMT DEAL OF THE YEAR <$100M

2012 INTERNATIONAL DEAL OF THE YEAR

INVESTMENT BANK OF THE YEAR


A DIVISION OF


16Confidential

15+ Years of Internet Advertising Success





IPO

Lead Manager

IPO

Lead Manager

IPO

Lead Manager

HAS ACQUIRED

Fairness Opinion to the Buyer




A DIVISION OF








IPO

Co-Manager



2013

_______Certain transactions executed by Headwaters TMT bankers at prior firms

Current Pipeline

ProjectLeader

Social Intent Targeting

Cross Platform AdNetwork

Sell-Side Advisor

ProjectPrime

Digital Publishing Solutions

Software Platform

Sell-Side Advisor

ProjectDynamite

Mobile Marketing

AutomationPlatform

Sell-Side Advisor

ProjectRocket

Internet Advertising

Local Online MarketingSolutions

Sell-Side Advisor

17Confidential

Contact Us

www.headwatersmb.com

Gary MoonManaging Director

Head of Technology, Media &

Telecom Investment Banking

Office: (415) 766-3862

Cell: (650) 515-8734

[email protected]

135 Main St

Suite 800

San Francisco, CA 94105

John BatdorfManaging Director

Head of Software & Internet

Investment Banking

Office: (415) 926-7454

Cell: (415) 847-8805

[email protected]

135 Main St

Suite 800

San Francisco, CA 94105

Sun Jen YungManaging Director

Head of Digital Media & Internet

Investment Banking

Office: (917) 297-8716

[email protected]

41 West Putnam Ave

1st Floor

Greenwich, CT 06830

18Confidential

Disclaimer

Disclosure: This newsletter is a periodic compilation of certain economic and corporate information, as well ascompleted and announced merger and acquisition activity. Information contained in this newsletter should notbe construed as a recommendation to sell or buy any security. Any reference to or omission of any reference toany company in this newsletter should not be construed as a recommendation to buy, sell or take any otheraction with respect to any security of any such company. We are not soliciting any action with respect to anysecurity or company based on this newsletter. The newsletter is published solely for the general information ofclients and friends of Headwaters MB, LLC. It does not take into account the particular investment objectives,financial situation, or needs of individual recipients. Certain transactions, including those involving early stagecompanies, give rise to substantial risk and are not suitable for all investors.

This newsletter is based upon information that we consider reliable, but we do not represent that it is accurateor complete, and it should not be relied upon as such. Prediction of future events is inherently subject to bothknown and unknown risks, and other factors that may cause actual results to vary materially. We are under noobligation to update the information contained in this newsletter. Opinions expressed are our present opinionsonly and are subject to change without notice. Additional information is available upon request. Thecompanies mentioned in this newsletter may be clients of Headwaters MB, LLC. The decisions to include anycompany in this newsletter is unrelated in all respects to any service that Headwaters MB, LLC may provide tosuch company. This newsletter may not be copied or reproduced in any form, or redistributed without the priorwritten consent of Headwaters MB, LLC. The information contained herein should not be construed as legaladvice.

19Confidential

Appendix4Q 2013 Internet AdvertisingPrecedent M&A Transactions

20Confidential

4Q 2013 Precedent M&A TransactionsEV ($M)

EV/LTM Revenue

EV/LTM EBITDA

High $1,500.5 7.7x 106.9x

Mean 298.0 6.1x 106.9x

Median 19.5 6.1x 106.9x

Low 1.4 4.4x 106.9x

Date Target Target Description Acquirer(s)EnterpriseValue ($M)

EV /LTM Rev.

EV /LTM EBITDA

12/20/13 Responsys, Inc.Provides email marketing campaign design, management and analytics software and SaaS for businesses. Also provides related marketing professional services.

Oracle Corporation 1,500.5 7.7x 106.9x

12/19/13Dealer Dot Com, Inc. [dba Dealer.com]

Provides automotive advertising and advertising enablement software and SaaS for car dealerships. Products include web design software, hosting services, CRM, inventory management, SEO, email, social media marketing and lead generation.

DealerTrack Holdings, Inc.

987.0 4.4x --

12/16/13 TargetSpot Inc.Provides audio, video, banner and text advertising services within online radio content for advertisers.

Radionomy SA -- -- --

12/16/13YourWebBrand Pte. Ltd. [dba Fisheye Analytics]

Provides media monitoring and reporting SaaS for businesses, governments and sports organizations in Asia and Europe. Software tracks mentions on news sites, blogs, discussion forums and social media sites.

Kantar Media -- -- --

12/12/13 Insightera Ltd.Provides inbound and outbound marketing personalization SaaS that enables marketing departments to use customer analytics to customize marketing content for prospective customers.

Marketo 19.5 -- --

12/06/13Crystal Semantics Limited

Operates online advertising networks that use webpage text recognition software, rather than cookies, to place targeted ads. Service is sold to advertising agencies and content publishers.

24/7 Media, Inc. [WPP Group plc]

3.0 -- --

12/03/13Ciashop Solucoes para Comercio Eletronico S.A.

Provides e-commerce deployment SaaS that enables businesses to deploy websites with online stores. Software integrates with businesses' existing ERP systems, and includes content and product management, SEO, marketing and payments features.

TOTVS S.A. 7.0 -- --

11/27/13Shortcuts Software Ltd.

Provides business management, appointment booking, automated marketing and POS software for hair and beauty salons, spas and cosmetology schools worldwide. Software is also available as a mobile application.

Jonas Software [Constellation Software]

-- -- --

11/21/13 TentailProvides advertising campaign creation and management and search maarketing software for businesses. Software enables targeted advertising based on current inventory.

Pure Auto LLC [dba PureCars.com]

-- -- --

_______Source: 451 Group

21Confidential


EV/LTM Revenue

EV/LTM EBITDA

High $1,500.5 7.7x 106.9x

Mean 298.0 6.1x 106.9x

Median 19.5 6.1x 106.9x

Low 1.4 4.4x 106.9x


EV /LTM Rev.

EV /LTM EBITDA

11/21/13 metrigo GmbHProvides an online display advertising network for advertisers to target consumers and businesses in Germany.

ZANOX.de AG [Axel Springer]

-- -- --

11/20/13commerceserver.net [aka Commerce Server]

Provides software that enables retailers and other businesses to create online stores and and e-commerce applications. Also provides catalog and customer profile management software.

Sitecore A/S -- -- --

11/12/13 Circle StreetProvides advertising enablement SaaS that enables businesses to advertise and provide loyalty and reward offers via mobile devices.

Valassis Communications, Inc.

-- -- --

11/12/13Emerging Media Group, Inc. [dba TRAFFIQ]

Operates a real time bidding (RTB) online advertising network for display, video, mobile and social network advertising. Also provides digital advertising campaign management and design services.

Talus Holdings, LLC -- -- --

11/06/13 AdNuboOperates as a real time bidding (RTB) online advertising network and digital advertising trading desk for businesses.

StartMeApp -- -- --

11/05/13 AzoxProvides general e-commerce software, including online sales portals, payment gateways, salesforce automation and transaction processing features, as well as outsourced transaction processing, software design and related support services.

kCentric Technologies, Inc.

-- -- --

11/05/13 SiteScoutOperates an online and mobile banner, video and rich media advertising network for businesses globally.

Centro LLC -- -- --

10/30/13Aggregate Knowledge, Inc.

Provides marketing intelligence SaaS, enabling analysis of ad placement in social networks and online for businesses and advertising agencies. Software also includes data collection, analytics and cost optimization features.

NeuStar Inc 119.0 -- --

10/24/13Adquant [fka Adotomi] (social advertising agency)

The social media advertising agency of Adquant, which provides Facebook and social media advertising placement and optimization software for businesses globally. Also provides Facebook games and applications.

Matomy Media Group -- -- --


22Confidential


EV/LTM Revenue

EV/LTM EBITDA

High $1,500.5 7.7x 106.9x

Mean 298.0 6.1x 106.9x

Median 19.5 6.1x 106.9x

Low 1.4 4.4x 106.9x


EV /LTM Rev.

EV /LTM EBITDA

10/16/13Optimal, Inc. [fka XA.net]

Provides social media advertisement creation and related CRM SaaS for businesses. Also provides related social media advertising consulting services.

Brand Networks, Inc. 35.0 -- --

10/14/13 Onavo, Inc.Provides mobile-focused web analytics SaaS and mobile applications for businesses and mobile application developers in a range of verticals. Also provides iOS apps that enable application usage tracking and data compression.

Facebook -- -- --

10/11/13 Bread Labs, Inc.Provides online social media-focused banner advertising creation services for businesses. Service also enables ad targets to access campaigns through shortened and socially shared URLs.

Yahoo! Inc. -- -- --

10/10/13 Hubbl Provides native mobile application distribution services for businesses globally. Airpush, Inc. -- -- --

10/08/13 Republic Project, Inc.Provides ad campaign creation and management SaaS for businesses and marketing and advertising agencies. Software enables agencies to produce and distribute ads through multiple channels and formats, with an emphasis on social media.

DG [fka DG Fastchannel Inc.][aka Digital Generation, Inc.]

1.4 -- --

10/07/13 Avangate BVProvides e-commerce SaaS, including website software integration, pricing optimization, marketing automation, affiliate and channel marketing, CRM and payments features, for SaaS and cloud software businesses globally.

Francisco Partners -- -- --

10/07/13 TryzensProvides general e-commerce PaaS, SaaS, hosting and consulting services for retail businesses in Europe. Software features include digital payments and social customer engagement features.

Scottish Equity Partners / Tryzens management

9.7 -- --

10/02/13 Livelink ConnectProvides one-to-one and bulk email marketing campaign creation, management and delivery SaaS for businesses.

Rocketseed Ltd. (Australian branch)

-- -- --

10/02/13 Runa, Inc.Provides real-time monitoring and sales optimization SaaS that enables retailers to analyze customer data and deliver targeted advertising and promotional offers.

Staples Inc. -- -- --


23Confidential


EV/LTM Revenue

EV/LTM EBITDA

High $1,500.5 7.7x 106.9x

Mean 298.0 6.1x 106.9x

Median 19.5 6.1x 106.9x

Low 1.4 4.4x 106.9x


EV /LTM Rev.

EV /LTM EBITDA

10/01/13 AdReady, Inc.Provides online access to online and mobile advertising networks, advertising creation SaaS and digital media marketing services for businesses.

CPXi [fka CPX Interactive]

-- -- --


24Confidential

Appendix4Q 2013 Internet AdvertisingPrecedent Investments

25Confidential

4Q 2013 Precedent Investments, $5M+

Date Target Target Description Investor(s) Deal TypeDeal Size

($M)

Company Valuation

($M)

12/20/13Kurtosys Systems

Provider of digital marketing and client-reporting tools for the financial sector. The company provides a platform that streamlines the ingestion of data into all of its technologies.

Triangle Peak Partners, True Ventures

Series C 8.0 --

12/18/13 VungleProvider of a mobile video-advertising platform. The company's ad network provides localized video advertising to app users on both Android and iOS devices, integrated for a high definition user experience.

AOL Ventures, Google Ventures, Thomvest Ventures

Series B 18.9 --

12/12/13 Simpli.fiProvider of online advertising platforms. The company offers search retargeting, site retargeting, contextual targeting, geographic targeting and reporting services.

Contour Venture Partners, Frontier Capital

Series B 16.1 --

12/11/13 SimulmediaThe company provides a targeting platform that leverages predictive technologies and anonymous viewing data from more U.S. TV viewers, to enable national advertisers to target, deliver and measure campaigns.

Allen & Co., Avalon, R&R Ventures, Time Warner, USV, Valiant Capital Partners

Series D 25.0 --

12/11/13 MomentFeedProvider of location-based marketing software and services. The company offers location-based analytics, campaign management service and social CRM service (SaaS) for companies.

Daher Capital, DFJ Frontier Fund, Double M Capital, Draper Nexus, Signia

Series A 5.5 --

12/10/13 GraphEffectProvider of social media marketing software for brands and advertising agencies. The company enables social marketers to integrate and manage their marketing programs on a single collaboration platform.

DN Capital Series B 6.0 --

12/09/13 FlurryProvider of mobile-application analytics. The company provides a platform for smartphone-application analytics and monetization, tracking more than 1 billion end-user sessions per month across iPhone, Android, Blackberry and J2ME devices.

-- Later Stage VC 12.5 --

12/04/13 wywyProvider of synchronized broadcast detection and interactivity services. The company's technology synchronizes accompanying television applications in real-time with the actual live broadcast, creating opportunities for interactive ads.

Cipio Partners Series B 7.0 --

11/19/13 SignpostThe company provides a platform to automatically create and optimize business profiles across dozens of popular websites & mobile applications, and to automate customer conversation and remarketing.

Individual Investor, OpenView Venture Partners, Scout Ventures, Spark Capital

Series B 10.6 43.1

Deal Size ($M)

CompanyVal. ($M)

High $30.0 $260.7

Mean 13.4 99.9

Median 10.3 43.1

Low 5.5 20.3

_______Source: PitchBook

26Confidential

4Q 2013 Precedent Investments, $5M+

Date Target Target Description Investor(s) Deal TypeDeal Size

($M)

Company Valuation

($M)

11/18/13 JiWireProvider of mobile broadband advertising network, delivering premium, location-driven advertising on Wi-Fi and WiMAX networks.

Comcast Ventures, Panorama Capital, Trident Capital

Series D 9.2 20.3

11/15/13 BrightTagProvider of a marketing-technology platform. The company provides a real-time data-integration platform enabling enterprise clients to leverage live data about customer activities.

Baird Capital, EPIC, I2A Fund, Pritzker Group VC, TomorrowVentures, Yahoo Japan

Series D 27.3 154.6

11/12/13Audience-Science

Provider of a platform for online marketing. The company offers technology-centric online marketing services which includes business intelligence, reporting services and audience delivery systems.


11/06/13 AppboyProvider of a marketing automation platform. The company's product enables developers to expand, engage and understand their user base.

Accelerator, Blumberg, Bullpen Capital, ICON, IDG, Individual Investor, Metamorphic, T5 Capital

Series A 7.6 20.7

11/01/13 SprinklrThe company offers a social media management system which provides social governance, social engagement, social audience management, social analytics and social integration.

Battery Ventures, Intel Capital Series C 17.5 260.7

10/24/13 Komli MediaProvider of a digital advertising and technology company helping marketers to reach and acquire their audiences and publishers.

DFJ, Helion, Nexus, NVP, Peepul Series E 30.0 --

10/17/13 ParStreamDeveloper of real-time database technology. The company provides a Big Data platform based on a proprietary algorithm that enables analysis of stored and streaming data on a massive scale.

Khosla Ventures Series B 8.0 --

10/11/13 NomiThe company provides a platform enabling retailers to create a unified view of their customers across all channels, by leveraging real-world customer behavior into existing CRM, loyalty and e-commerce platforms.

Accel Partners, First Round Capital, Forerunner Ventures, Greycroft Partners

Series A 10.0 --

10/02/13 EtouchesProvider of web-based event software management platform for corporation, small business, association, agency, educational institution, meetings and events companies.


Deal Size ($M)

CompanyVal. ($M)

High $30.0 $260.7

Mean 13.4 99.9

Median 10.3 43.1

Low 5.5 20.3

_______Source: PitchBook

Internet Ad Market Update 2013 Year-End Review

Marketing

Transcript of Internet Ad Market Update 2013 Year-End Review