2Q10 Marketing, Information and Digital Media Transaction Activity Up 12 Percent; Deal Value Up 43 Percent on a Quarter-Over-Quarter Basis

2Q10 Review: 226 Transactions Totaling $12.6 Billion

Mergers and acquisitions and investment activity in 2Q10 in the Marketing, Information and Digital Media industries grew 12 percent compared to the prior quarter. Aggregate transaction value increased 43 percent – primarily due to Pearson’s $3.4 billion sale of Interactive Data Corp. to Silver Lake Partners and Warburg Pincus. During 2Q10, Petsky Prunier tracked 226 transactions for a total of $12.6 billion across seven broad segments: Interactive Advertising, Advertising & Promotion, Out-of-Home & Specialty Media, Marketing Technology, Digital Media, Software & Information and Marketing Services. Marketing Technology was the most active segment with 69 transactions, while Software & Information, with $5.0 billion in deal value, was the highest value segment. Strategic buyers accounted for the largest portion of overall activity, with 123 transactions (54 percent of the quarter’s total) worth an estimated $5.7 billion (46 percent of the total). Venture and growth capital investors announced 93 transactions for $1.1 billion, with nearly three quarters of the activity concentrated in the Marketing Technology and Digital Media segments. While only ten private equity buyout transactions were announced, the deals accounted for $5.8 billion in value.

M&A and Investment Activity

Marketing Technology was the most active segment in 2Q10, with 69 transactions and approximately $2.6 billion in value. IBM’s $1.4 billion acquisition of Sterling Commerce from AT&T was the largest transaction in this segment. Online Targeting/Optimization was the most active subsegment with 12 deals, including four acquisitions and eight investments worth $167 million. Transactions included Google’s acquisition of Invite Media for $70 million, GSI Commerce’s acquisition of FetchBack, MyBuys’ acquisition of Veruta, Time Warner Investments’ $8 million investment in Simulmedia and Bessemer Venture Partners’ $7 million investment in Criteo.

Software & Information was the highest value segment, bolstered by two large acquisition announcements. In addition to Interactive Data Corp.’s take-private, Madison Dearborn Partners acquired a 51 percent interest in TransUnion for approximately $1 billion.

Other Active Segments

Digital Media was the second most active segment in 2Q10 with 65 transactions, including 35 acquisitions and 30 investments, valued at approximately $2 billion. The eCommerce subsegment led the way with 18 transactions for $907 million. With 16 transactions worth $522 million, Social Games was the second most active subsegment. The Social Media and Niche Content subsegments combined had 23 transactions for approximately $397 million. Control transactions included Rakuten’s acquisition of Buy.com and PriceMinister for $250 million and $248 million, respectively, Warner Brothers Entertainment’s $160 million acquisition of Turbine and Yahoo!’s acquisition of Associated Content. Among investments, Zynga raised $147 million from SoftBank, Groupon took in $135 million in a round led by Digital Sky Technologies and Vitacost.com raised $61million from Great Hill Partners in a PIPE.

Gilt Groupe raised another $35 million from General Atlantic, Playdom extended its first round financing by raising an additional $33 million from Bessemer Venture Partners and HauteLook.com raised $31 million from Insight Venture Partners.

The Interactive Advertising segment had 49 transactions for approximately $1.3 billion in value. Within it, Interactive Agency was the most active subsegment with 13 transactions for approximately $573 million. There were also 11 small transactions in the Ad Networks/Exchanges subsegment for $72 million. Activity in the segment included Hearst Communications’ acquisition of iCrossing, Bankrate.com’s acquisitions of NetQuote and CreditCards.com, for a reported $205 million and $145 million, respectively, Providence Equity Partners’ 25 percent stake in Cox Auto Trader, Riverside Company’s acquisition of Mansell Group and Beyond Commerce’s acquisitions of AdJuice and WebYES!. In addition, Tremor Media raised $40 million from Draper Fisher Jurvetson, Reply! received another $15 million from Hercules Technology Growth Capital and Brightcove raised $15 million from Accel Partners.

Buyer & Investor Activity

Strategic buyers accounted for a majority of the deals in 2Q10, announcing 123 transactions for approximately $5.7 billion. Compared to the previous quarter, deal volume remained flat; however aggregate transaction value decreased 18 percent. Google was the most active strategic buyer with six announced transactions. GSI Commerce acquired four businesses, of which two of the targets were represented by Petsky Prunier (FetchBack and MBS Insight). MDC Partners acquired two public relations agencies and one direct response media buying firm. Bankrate strengthened its reach in the insurance and credit cards online lead gen verticals by acquiring NetQuote and CreditCards.com.

Private equity buyout firms announced ten transactions for a total of $5.8 billion, up from seven transactions worth $835 million in 1Q10. Other buyout transactions announced during the quarter included Thomas H. Lee & Company’s acquisition of inVentiv Health for $1.1 billion, Criterion Capital Partners’ acquisition of Bebo from AOL for $10 million, Great Hill Partners’ acquisition of Educaedu S.L. and Austin Ventures’ acquisition of Exopolis.

Venture and growth capital investors announced 93 transactions worth an estimated $1.1 billion. Compared to 1Q10, deal volume and transaction value increased by 31 percent and four percent, respectively. Accel Partners and Mayfield Fund were the most active financial investors, announcing three investments each in the quarter. Bessemer Venture Partners, Draper Fisher Jurvetson, Great Hill Partners, Investor Growth Capital, Lightspeed Venture Partners, Madrona Venture Group, RRE Investors, Spark Capital and Village Ventures each announced two transactions.

IPO Activity

Despite the volatility in financial markets, four venture capital-backed companies, including Nielsen Holdings ($1.8 billion), Toys R Us ($800 million), Affinion Group Holdings ($400 million) and Qlik Technologies ($100 million), filed registration statements with the SEC. Among companies with securities in registration, Convio, Motricity and ReachLocal each priced their respective offerings below the initial filing range, while SPS Commerce priced its shares within the initial offering price range. Motricity’s shares slid 7.5 percent on its first day of trading, while shares of Convio, ReachLocal and SPS Commerce gained, on average, 14 percent.