http://idcee.org/p/marco-rodzynek/
Marco Rodzynek is the founder of NOAH Advisors, a London-based corporate finance boutique focusing on M&A and raising capital for Internet and technology companies. He also initiated the NOAH Conference to bring together leaders, innovators and investors from the Internet industry to a one-day annual event.Prior to NOAH, Marco was an Executive Director at Lehman Brothers (acquired by Nomura in late 2008) in their Media Investment Banking Group. He has been an investment banking advisor to Internet and media companies for over 12 years in Europe. Since early 1998, he has been involved in 30 announced M&A deals with a total transaction value of over $95 billion.
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3. NOAH Advisors - Europe’s Leading Internet Corporate Finance Boutique Selected Completed NOAH Transactions
May 2012 April 2012
Unique Industry Know-How Core Investment Banking Competence
Sale of a 100%-stake in
100% focused on Internet companies, covering The NOAH team has 25+ years of media 150 million growth equity investment from
over 25 sub-verticals in this highly complex investment banking experience
industry - Routine execution of M&A and financing for a 50% stake alongside Fotolia’s Founders and
to
- 15+ years active coverage of leading European transactions with sizes of several billion euros
Additional $150 million senior debt financing
Internet companies and investors The team has been working together closely for 7 Total $300 million investment
Deep understanding of industry dynamics and years (including 6 years at Lehman Brothers) Financial Advisor to Fotolia and its Shareholders Financial Advisor to Toprural and its Shareholders
thinking of industry leaders 8 successfully completed NOAH Advisors
Ability to add value beyond banking advice transactions underline successful transfer of
- Facilitates overall process and minimizes competencies to the Internet sector November 2011 July 2011
management distraction Sale of a majority stake in Sale of a majority stake in
Unmatched Network and Relationships Full Commitment - We Are Entrepreneurs!
to
NOAH Advisors is globally very well connected The NOAH team are entrepreneurs and focused to
and has direct access to virtually all key players in on growing the business and establishing a Quants Financial Services AG
the industry reputation for excellence Exclusive Financial Advisor to
- Knowledge of and strong relationships with Full commitment to deliver top quality results in grupfoni and its Shareholders Advisor to EnGrande
potential buyers’ key decision makers short time frames
- Coverage of over 500 companies and 4,000 Highly success-based compensation structures
individuals align interests of clients and NOAH Advisors, and April 2011 April 2011
- Proactively finds and unlocks attractive demonstrate conviction to deliver top results Sale of a majority stake in
investment opportunities for leading have acquired a majority stake in
investors (e.g. Bigpoint)
Annual NOAH Conference
for $350m from
to
The NOAH Advisors Core Team Exclusive Advisor to Advisor to Yatego
Summit Partners and TA Associates
Marco Yoram Jan
Rodzynek Wijngaarde Brandes
December 2009 April 2009
Managing Director Director Director
Partial sale of $80m partial sale of
and Founder
to
to
Contact Details Contact Details Contact Details
marco.rodzynek@noah-advisors.com yoram.wijngaarde@noah-advisors.com jan.brandes@noah-advisors.com Valuing Softonic at €175m
UK Mobile: +44 77 85 330 330 UK Mobile: +44 79 17 084 784 German Mobile: +49 174 2010 984
Advisor to Softonic Advisor to Fotolia
Swiss Mobile: + 41 79958 1512
3
4. Introduction to the NOAH Conference Draft NOAH Conference 2012 Program
The NOAH Conference is an annual Internet event taking place once a year in Start - End Session Format
London, focused on top management from Internet start-ups to global media Day 1 (6 th
November)
companies as well as senior investment professionals 8:50 - 8:55 Welcome Note & Introduction Welcome Speech
8:55 - 9:10 The State of European Internet Interview
NOAH’s goal is to create a marketplace for the European Internet eco-system to 9:10 - 9:20 Overview of Conference Work Shops Presentation
discuss key trends, generate business and facilitate investment transactions 9:20 - 9:50 Champion League Company Presentation
Over the past 3 years numerous high-profile speakers presented at NOAH, including 9:50 - 10:20 Disruption: Music Keynote
10:20 - 10:30 How to Structure Sales Successfully Keynote
over 100 CEOs 10:30 - 11:00 How to Win Customers Keynote & Panel
The NOAH Conference was founded in 2009 by Marco Rodzynek and is organised by 11:00 - 11:15 Angel Investing Interview
the NOAH Advisors team with sponsorship from some of the world’s leading 11:15 - 11:55 Rising Stars Company Presentation
11:55 - 12:30 Who Will Win the Mobile Industry War Keynote & Panel
financial investors 12:30 - 13:45 Lunch
13:45 - 14:15 Early Game Changers Company Presentation
14:15 - 14:30 The eBay Turnaround Story Keynote & Interview
NOAH 2012 on 6-7 November – Book Your Ticket Now! 14:30 - 15:00 Israel Panel - Part I: Innovation Keynote & Panel
15:00 - 15:30 Champion League Founder & CEO
The conference will again take place at Old Billingsgate in London 15:30 - 16:05 Internet Investing Panel
The NOAH Party on will take place at the iconic Battersea Power Station 16:05 - 16:40 Internet in Russia Panel
16:40 - 17:00 Champion League Company Presentation
For updates, please check: www.noah-conference.com 17:00 - 17:10 Keynote: Unlocking the Long Tail of Knowledge Keynote
17:10 - 17:45 How to Hire and Scale an Organisation Keynote & Panel
17:45 - 18:15 Rising Stars Company Presentation
18:15 - 19:15 Bowl Food and Drinks
21:30 - 1:30 NOAH Party at the Battersea Power Station
Day 2 (7 th November)
9:00 - 9:10 Markafoni Transformation Keynote & Interview
9:10 - 9:40 Champion League Company Presentation
9:40 - 10:00 Disruption: Gaming Keynote & Interview
10:00 - 10:30 Early Game Changers Company Presentation
10:30 10:40 Keynote: Innovation in TV - Media for Revenue/Equity Deals Keynote
10:40 10:50 Company Presentation: Viewster Company Presentation
10:50 - 11:15 Panel Discussion: The Future of Free TV Panel
11:15 - 11:55 Rising Stars Company Presentation
11:55 - 12:30 How to do Online Payment Keynote & Panel
12:30 - 14:00 Lunch
12:30 - 14:00 ProSiebenSat.1: SevenVentures Pitch Day Jury Member
14:00 - 14:15 How to Build a Big Business with M&A Keynote
14:15 - 14:30 Axel Springer's Internet Strategy Presentation
14:30 - 15:05 Leading Women and Their Start-Ups Panel
15:05 - 15:20 Israel Panel - Part II: Finding EBITDA in the Holy Land Panel
15:20 - 15:40 Disruption: Navigation Presentation
15:40 - 16:20 Rising Stars Company Presentation
16:20 - 16:45 How to Analyse Traffic Keynote
16:45 - 17:25 Early Game Changers Company Presentation
17:25 - 18:55 Networking Drinks & Canapés
4
5. Reaching to New Limits … We Are Proud to Be Here
Guys, It is Really Finally
Let’s Go! Hot Here Here!
5
6. Where Does the Exit Market Stand
European exit markets have been relatively quiet from an IPO and Trade Sale perspective
Modest exit activity levels with relative unspectacular deals, with the exception of Skype
Lack of large buyout and take privates. Internet debt market in its infancy
Some recent expensive European Internet IPOs like Ocado led to more investor caution. Perform Group is a
pleasant exception. They are like the European version of the Linkedin IPO (expensive but well performing)
Permira and Axa Private Equity consolidated European online flight market with OdigeO, the combination of
Opodo, Go Voyages and eDreams
KKR acquired 50% of Fotolia in a leverage recap valuing the company above $500 million
Significant interest by buyout groups to acquire sizeable Internet companies, among others:
- Silver Lake, Providence, Apax, Advent, KKR, Permira, GA, TA, Summit, TPG, HF, Bridgepoint
M&A process are run proprietary with a very targeted buyers group. Long processes are set to fail
NOAH Advisors estimates that there are over 50 European Internet Companies worth over $500m
US private company valuations for “hyped” stories are off the chart, but not always deliver in the public
market, e.g. Demand Media, Facebook, Zynga, Pandora, etc.
6
9. European Internet Pioneers & Global Leaders
Some business models were invented or most successfully executed in Europe
Company Segment Company Segment
Innovative payment platform Remote access
Largest pure-play fashion Retailer Open-source database
Enterprise software FX
Social networking for people you
Vertical ad network (soccer)
don’t know
Betting VoIP
Free to play online gaming Legal music service
Toolbars Global hotel comparison leader
Freemium anti-virus Private sales
Payment instalments Personal loans
9
10. Europe Is Unique
Countries & Poupulation Investors
Russia and Eastern European market larger Less VC money available and harder to get
than Western Europe funding
10 Largest Western European countries:
- 50m+: Germany (81.5m), France (65.3m), Serial entrepreneurs and angel investors
U.K. (62.7m), Italy (61.0m) dominate the scene as in the US
- 20-50m: Spain (46.8m), Ukraine (45.1m),
Cultural differences, e.g. not anyone wants
Poland (38.4m), Romania (21.9m),
to get rich, different work ethics / intensity
- 10-20m: Netherlands (16.8m), Portugal levels
(10.8m)
10 Largest cities, many local markets:
- 3m+: London (7.8m), Berlin (3.5m), Madrid
(3.3m)
- 1m+: Rome (2.8m), Paris (2.2m), Hamburg
(1.8m), Warsaw (1.8m), Budapest (1.7m),
Vienna (1.7m), Bucharest (1.6m)
10
12. NOAH Study – Companies Included
The market cap of post-2000 Internet bubble IPOs is ~2.3x larger in the US than in Europe
US Market Cap: $70bn European Market Cap: $30bn
Nov-09 Nov-11
Oct-01 Feb-12 Oct-10
Feb-12 Mar-12 Jan-11
Dec-10 Aug-06
Nov-10 Jul-07
May-12 Nov-11 Jun-11
Jul-10 Apr-11 Mar-06
May-11 May-09
Nov-05 Mar-05 Dec-06
Jun-11 Feb-10 May-10
May-11 Dec-09 May-08
Feb-12 Jul-11 Dec-11 IPO Date = EBITDA Negative
Note: Market caps as of 12-Oct-12.
12
13. Company Size and Valuation Growth
US company universe valued 2.3x higher than European one
However, EU companies performed 4.5x better since IPO than the US group
European Internet IPOs are cheaper than US Internet IPOs
Average Market Cap ($bn) Average Share Price Performance since IPO
Average market cap of across sampled firms Average share price increase since IPO of sampled firms
4.4
36%
1.9
8%
US Europe US Europe
Sources: Bloomberg, FactSet, 4-traders, NOAH Advisors. We excluded Asos (up 11,175% since IPO)
13
14. VC Funding is Less Developed in Europe
European public companies have relied less on VC money than US ones
VC investment per company and in % of current market cap significantly
lower in Europe compared to the US
However, there are also fewer winners in Europe (less exits)
Average VC Funding Raised ($m) VC Funding as % of Market Cap
Average amount of venture capital raised across sampled Average of venture capital raised as a percentage of current
firms market capitalisation of sampled firms
367 17.1%
71
1.9%
US Europe US Europe
Sources: Bloomberg, FactSet, 4-traders, NOAH Advisors.
Excluded Tradedoubler and Ocado for Europe. 14
15. A Look at the Largest VC Backed Companies
Over-promised and under-delivered? They jumped several hurdles in our valuation chain
VC Capital Raised ($bn) Share Price Performance since IPO
2,240 (48.6%)
1,140 (73.6%)
860 (75.7%)
510 (0.5%)
471 (63.1%)
Source: Bloomberg, FactSet, 4-traders & NOAH Advisors.
15
16. High Profile Venture Backed Companies
European VC is waking up or rather has been awakened by many US investors
Company Last Round Raised Selected Investors Company Last Round Raised Selected Investors
Mar-11 $218m Feb-09 $65m
June-11 $188m Jan-12 $63m
Dec-11 $166m Apr-12 $62m
Feb-12 $145m Mar-11 $59m
Jul-07 $130m Feb-12 $58m
Apr-12 $129m Jun-09 $53m
Sep-07 $117m Jun-12 $47m
May-11 $114m May-10 $23m
Feb-12 ~$100m
Sources: Crunchbase, NOAH Advisors.
16
18. Not Every Deal is Created Equal
Valuation is only one side of the medal
Valuation Drivers
Process objectives:
Loss of Control / New Investor Rights - Fast process with limited disruptions / leaks Significant premium for (path to) control
- Premium valuation Governance and exit rights
Governance rights - Minority investment with limited rights (no
- Board seats / Information rights liquidation preference, no path to control, (Perceived) competition in process
- Veto rights customary governance rights, exit rights TBD) Operational out-performance during the
Management commitment to stay Key success factors in creating: process
Path to control for new investor? - Growth profile and supportive KPIs Due diligence findings
- Call option - Equity story: simple terms with 3-5 key
points Macro-economic and M&A environment
- First right of refusal
Performance-based earn-outs/ratchets - Access to, understanding of and relationship Quality of motivation of management
with relevant contacts at key potential Availability of debt leverage
Exit rights
investors. Trust matters the most!
- Liquidation preference
Key success factors for getting investors “to Funding currency and hedging cost
- IPO right the finish line”: Negotiation skills (shareholders, NOAH
- Put option - Management focus and engagement and lawyers)
- Tag and drag rights - Seamless process execution
- Minimum valuation criteria - No negative due diligence findings
- Strong performance during deal phase
18
19. Valuation Drivers in the Context of a Company’s
Development Stage: How NOAH sees the World
Market
Management Technology Users / KPIs Revenues EBITDA
Leadership
Increasing valuations – However Multiples Get More Reasonable (in Theory)
Decreasing Execution Risk and Benefit of the Doubt (Less to Hope for)
(GROWTH * MARGIN) Predictability = Valuation Multiple
19
20. Current Valuation Levels: Internet Sector Breakdown
New Economy is valued at Old Economy Prices adjusted for growth
Source: UBS, FactSet (12-Sep-12) 20
21. Current Valuation Levels: All Over the Place
Amazon enjoys a premium because of predictability
(EURm except share price) Currency Share Price Market Enterprise EV/Revenues EV/EBITDA EV/EBIT P/E
Company Country (Share Price) 12-Oct-12 Cap Value 2011 2012E 2013E 2011 2012E 2013E 2011 2012E 2013E 2011 2012E 2013E
Online large caps
Amazon.com US USD 242.36 90,144 83,820 2.1x 1.6x 1.3x 52.4x 38.1x 24.3x NM NM 65.5x NM NM NM
Apple US USD 629.71 485,674 399,787 4.0x 2.9x 2.4x 11.8x 7.9x 6.6x 12.4x 8.4x 7.1x 19.7x 13.4x 11.3x
eBay US USD 47.85 50,734 47,119 4.9x 4.1x 3.5x 14.9x 12.4x 10.8x 17.7x 15.4x 13.3x 19.1x 24.2x 21.2x
Facebook US USD 19.52 34,404 27,923 9.1x 6.9x 5.4x N/A 12.8x 9.8x N/A 17.4x 13.0x N/A NM 38.0x
Google US USD 744.75 200,390 170,734 7.1x 4.9x 3.9x 12.9x 10.7x 9.0x 14.6x 12.5x 10.6x 25.0x 20.5x 17.3x
Microsoft US USD 29.20 202,550 151,640 N/A 2.4x 2.2x N/A 5.7x 5.3x N/A 6.3x 5.8x N/A 11.8x 9.5x
Yahoo! US USD 15.88 15,478 10,215 2.8x 2.8x 2.7x 8.6x 8.5x 7.5x 15.5x 16.1x 14.0x 17.9x 16.2x 14.3x
Rakuten AsiaPac JPY - 10,424 11,901 3.0x 2.6x 2.3x 12.9x 11.0x 9.2x N/A 14.6x 11.5x NM 20.8x 17.4x
Tencent AsiaPac HKD 258.60 40,933 38,687 10.4x 6.9x 5.4x 21.9x 16.3x 12.9x 25.5x 18.7x 14.9x 30.7x 24.5x 19.2x
Yahoo! Japan AsiaPac JPY - 16,639 12,750 N/A 3.8x 3.6x N/A 6.4x 6.1x N/A 6.9x 6.4x N/A 14.9x 14.0x
Overall Mean 5.4x 3.9x 3.3x 19.3x 13.0x 10.1x 17.2x 12.9x 16.2x 22.5x 18.3x 18.0x
U.S. Mean 5.0x 3.7x 3.1x 20.1x 13.7x 10.5x 15.1x 12.7x 18.4x 20.4x 17.2x 18.6x
Asia-Pacific Mean 6.7x 4.4x 3.8x 17.4x 11.2x 9.4x 25.5x 13.4x 10.9x 30.7x 20.0x 16.9x
Sources: NOAH Advisors, 4-Traders (12-Oct-12) 21
24. Not only Google
Several groups to think about
Internet Coverage of over 10,000 industry leaders: 500 target companies and 300 investors Traditional
Large Cap TMT & Retail
Angels /
Family VC and Hedge Funds
Offices Private
Growth
Equity
Funds
Maryland
Klaus Hommels
Armira
24