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      MERGERS AND ACQUISITIONS UPDATES FROM BERKERY NOYES

    Wednesday
    Feb242016

    HEALTHCARE IT COMPANIES REMAIN IN HIGH DEMAND FROM BOTH STRATEGIC AND FINANCIAL ACQUIRERS

    Berkery Noyes' Healthcare report for full year 2015 indicated that total transaction volume increased 15 percent on a year-to-year basis. Aggregate value gained four percent, from $16.44 billion to $17.08 billion. Regarding valuations, the median revenue multiple improved from 2.4x to 2.7x, while the median EBITDA multiple remained nearly constant at 13.8x.

    Deal volume in the Healthcare IT segment improved 21 percent in 2015. The Healthcare IT segment accounted for almost half of the industry’s aggregate volume, and strategic acquirers comprised 82 percent of the Healthcare IT volume.

    Notable Healthcare IT transactions in the top ten list included IBM Watson Health’s acquisition of Merge Healthcare Incorporated, a provider of medical image handling and processing, interoperability and clinical systems, for $1.03 billion; and Cardinal Health’s acquisition of Navihealth, a post-acute care software company that helps physicians manage bundled payments, for $290 million.

    Other high profile Healthcare IT deals outside the top ten were Computer Programs and Systems’ acquisition of Healthland, a provider of integrated technology solutions to rural community and critical access hospitals, for $250 million; Quality Systems’ acquisition of HealthFusion, a developer of web-based, cloud computing software for physicians, hospitals and medical billing services, for $165 million; and Roper Industries’ acquisition of Strata Decision Technology, a cloud-based financial analytics and performance platform that is used by healthcare providers, for $140 million.

    Upon examination of other markets covered in the report, the segment with the largest yearly rise in volume was Medical Education, which more than doubled from 18 to 39 transactions. The Healthcare Business Services segment experienced a 19 percent increase, from 81 to 96 deals. M&A activity in the combined Pharma segments declined 17 percent, from 52 to 43 acquisitions.

    “For all the recent talk of increased deal flow, there still remains a lack of high-quality opportunities of scale in the market today,” said Tom O’Connor, Managing Director at Berkery Noyes. “However, once an attractive opportunity of scale comes out there is no lack of buyers at robust prices. The credit environment is still favorable for attractive deals of scale, particularly those where a high percentage of revenue is recurring.” O’Connor added, “Companies of scale with rapid revenue growth are perfect bolt-ons for strategic buyers, and many of the large private equity groups have come down market looking for new platforms to buy and build.”

    According to Jonathan Krieger, Managing Director at Berkery Noyes, "Strategics continue to acquire businesses to build out their product portfolio and broaden their customer footprint. Healthcare constituents continue to seek niche software vendors that promote interoperability, structure clinical data, improve outcomes and reduce costs."

    Monday
    Feb222016

    FINANCIAL TECHNOLOGY VOLUME AND VALUE SHOWS MAJOR UPWARD TREND

    Berkery Noyes’ Financial Technology report for full year 2015 showed that transaction volume rose 14 percent on a year-to-year basis. Aggregate value more than doubled, from $27.81 billion to $63.78 billion. FIS’ acquisition of financial software company SunGard Data Systems for $9.1 billion was the industry’s largest deal since 2012, when Intercontinental Exchange acquired NYSE Euronext for $10.18 billion.

    The Payments segment, after rising 46 percent in 2014, saw volume decrease 21 percent in 2015. In terms of value, five of the industry’s top ten largest deals during the year occurred in the segment. The highest value Payments transaction in 2015 was Global Payments’ announced acquisition of Heartland Payment Systems, which offers payment processing services to merchants, as well as those in several vertical markets such as the education sector, for $4.31 billion.

    The number of deals in the Capital Markets segment increased 42 percent over the past year, making it the sector with the largest yearly gain. Intercontinental Exchange was responsible for two of the segment’s top ten highest value deals during the year with the acquisition of Interactive Data Corporation, a provider of financial market data and analytics, for $7.45 billion; and Trayport, which offers energy trading solutions to traders, brokers and exchanges, for $646 million.

    “Significantly, the median revenue and EBITDA multiples in the Capital Markets sector during 2015 have trended well above those of the entire financial technology industry,” said Peter Ognibene, Managing Director at Berkery Noyes. “While it took this sector the longest to recover from the financial crisis, buyers are piling in now and really driving up prices. We’re also seeing an increased number of software providers who have a recurring revenue business model.”

    As for other markets covered in the report, acquisition activity in the Banking segment increased 35 percent, from 62 to 85 deals. The largest Banking transaction in 2015 was Diebold’s announced acquisition of Wincor Nixdorf, a provider of IT solutions and services to banks and the retail sector, for $1.8 billion. Regarding the Insurance segment, volume increased 22 percent, from 51 to 62 transactions. The largest Insurance related deal in 2015 was Vista Equity Partners’ acquisition of Solera Holdings in the property and casualty (P&C) sector for $6.25 billion.

    “New database technologies are improving the ability of debt servicers to assemble disparate pieces of information about consumers, making it easier and more cost-efficient to locate and contact them,” said John Guzzo, Managing Director at Berkery Noyes. “Mortgage servicers are also experiencing greater demand for more targeted and frequent borrower communication, including email, text messaging and more complex print and mail offerings.” Guzzo continued, “Innovations have aided lenders and debt servicers in the ability to obtain, store and transfer data about consumers and their debts. When licensing technology or subscribing to third-party technology is not an option, outsourcing business processes has become a viable solution and growing trend as well.”

    Tuesday
    Feb162016

    ONLINE AND MOBILE DEAL VALUE PICKS UP MOMENTUM IN THE SECOND HALF OF 2015 

    According to Berkery Noyes’ Online and Mobile report for full year 2015, transaction volume increased 12 percent on a year-to-year basis. Aggregate deal value gained 19 percent, from $131.16 billion to $156.49 billion. Five of the top ten largest transactions in 2015 occurred during the fourth quarter. These five deals, with a combined value of $22.79 billion, accounted for 15 percent of the industry's aggregate value. The median revenue multiple decreased from 2.4x to 2.2x, while the median EBITDA multiple declined from 13.1x to 10.0x.

    The SaaS & Cloud segment was responsible for the overall industry’s largest yearly rise in volume with a 21 percent increase. SaaS & Cloud acquisitions from 2013 through 2015 saw a median revenue multiple of 2.6x and median EBITDA multiple of 11.9x.

    M&A volume in the E-Commerce segment increased 16 percent in 2015. Upon examination of value, the largest E-Commerce acquirer in 2015 was online travel company Expedia with a combined total of $4.94 billion paid in transaction value.

    Transaction activity in the E-Marketing & Search segment declined three percent throughout the last 12 months. This followed a 19 percent improvement from 2013 to 2014. Deal flow remained strong in the ad tech sector during 2015, as indicated by notable transactions such as Twitter’s acquisition of TellApart for $653 million; Nielsen’s acquisition of eXelate for $200 million; The Rubicon Project’s acquisition of Chango for $122 million; and AppNexus’ acquisition of Yieldex, for $100 million.

    “Companies that can differentiate their offerings from the average digital and mobile-based ad tech players are performing well,” said Vineet Asthana, Managing Director at Berkery Noyes. “Potential acquirers include large telecommunications firms, traditional B2B media companies, and offline data providers that are looking for a digital platform. Furthermore many advertising networks without programmatic technology capabilities want to expand their suite of solutions to help better automate their marketing campaigns.” 

    The Communications segment underwent an 11 percent improvement in volume. Notable segment deals in 2015 included Siris Capital Group’s acquisition of Premiere Global Services, Inc. (PGi), a provider of collaboration software and services, for $979 million; Cisco Systems’ announced acquisition of Acano Limited, a conferencing software business, for $700 million; and Atos’ announced acquisition of Unify, an integrated communications company, for $427 million.

    In terms of other notable industry trends, there were several deals completed by high profile acquirers in 2015 relating to the Internet of Things (IoT). This included Cisco Systems’ acquisition of ParStream, IBM’s acquisition of StrongLoop, Autodesk’s acquisition of SeeControl, and Amazon’s acquisition of 2lemetry.

    Monday
    Jan252016

    MEDIA AND MARKETING DEAL VOLUME RISES THROUGHOUT MOST INDUSTRY SEGMENTS

    Berkery Noyes’ Media and Marketing report for full year 2015 indicated that deal volume improved eight percent on a year-to-year basis. Aggregate value gained 12 percent, from $97.07 billion to $109.01 billion. In terms of valuations, the median revenue multiple moved slightly from 2.0x to 1.9x, while the median EBITDA multiple decreased from 11.0x to 8.7x.

    The Internet Media segment underwent a 19 percent increase in deal activity. Online shopping giant Alibaba Group was a notable segment acquirer with the announced acquisition of Youku Tudou, a Chinese-based Internet television platform that enables users to search, view and share video content across multiple devices, for $3.37 billion. Alibaba, in which Yahoo! owns a 15 percent stake, also completed a related deal in 2014 when it acquired a 60 percent stake in ChinaVision Media Group, a television and film producer.

    The Marketing segment experienced a six percent rise in volume. Of note, there were no Marketing acquisitions that made the industry’s top ten list of highest value deals during the year, as opposed to four in 2014.

    The segment with the largest year-to-year rise in volume was Exhibitions, Conferences, and Events. This sector saw volume increase 33 percent, from 85 to 113 acquisitions. The most active related acquirer in 2015, either directly or through an affiliated business, was Providence Equity Partners with six transactions.

    M&A activity in the Entertainment segment, after rising six percent during 2014, remained constant over the past year. Regarding value, the segment’s largest transaction in 2015 was Activision Blizzard’s acquisition of King Digital Entertainment, creator of the well-known mobile game Candy Crush Saga, for $5.9 billion.

    Deal flow within the B2B Publishing and Information segment improved 11 percent on a yearly basis. In addition, the B2B segment had the industry’s largest rise in value, more than doubling from $9.38 billion to $23.01 billion. This gain was due in part to Intercontinental Exchange’s acquisition of Interactive Data Corporation, a provider of financial market data and analytics, for $7.45 billion.

    “There has been a steady uptick in media mergers and acquisitions activity, with more deals on the horizon and a positive outlook going forward,” said Vineet Asthana, Managing Director at Berkery Noyes. “Companies with a balance of revenue streams, some recurring revenue and more subscription type products in the mix are especially attractive to acquirers.”

    Tuesday
    Jan192016

    SOFTWARE VALUE MAKES SIGNIFICANT STRIDES AS VALUATIONS REMAIN STRONG

    Berkery Noyes’ Software report for full year 2015 showed that deal volume experienced a nine percent year-to-year increase, with a total of 2,028 transactions in 2015. Overall value gained 72 percent, from $123.74 billion to $213.20 billion. This rise was attributable in major part to Dell’s announced acquisition of EMC Corporation for $67.48 billion, which was the highest value deal ever recorded in the industry.

    The EMC acquisition accounted for almost one-third of the industry’s aggregate value in 2015. If excluded, total value gained 18 percent on a yearly basis. With this transaction, Dell is looking to combine its server businesses with EMC’s storage and virtualization assets, enabling it to better compete beyond the PC market with a wider range of products. Also of note, Michael Dell and Silver Lake Partners took Dell private in 2013 for $24 billion.

    In terms of valuations, the median revenue multiple declined from 2.7x to 2.4x, while the median EBITDA multiple improved from 12.0x to 13.8x. Deals in the $10-$20 million range over the past three years received a median enterprise value multiple of 2.3x revenue, whereas those above $160 million had a median enterprise value multiple of 3.6x revenue.

    Financial sponsors were responsible for five of the industry’s top ten largest deals in 2015. Three of these five transactions occurred in the Infrastructure segment. This consisted of The Carlyle Group’s announced acquisition of Veritas Technologies Corporation, a storage and server management software solutions business, for $8 billion; Permira and CPP Investment Board’s acquisition of Informatica, a provider of enterprise data integration software and services, for $4.77 billion; and Thoma Bravo and Silver Lake Partners’ announced acquisition of SolarWinds, an IT management software and monitoring company, for $4.38 billion.

    Meanwhile, the number of deals in the Business Software segment, which consists of software designed for general business practices and not specific industry markets, increased 12 percent. The most active acquirer in the Business segment in 2015 was Microsoft with seven transactions.

    “With the increased adoption of cloud and SaaS environments even software companies are recognizing the innate ability to integrate rather than develop everything,” said James Berkery, Chief Information Officer at Berkery Noyes. “It stands to reason as more software solutions appear on the web that the proliferation of the API has begun to create an integration market unto itself. A sort of API marketplace with brokered solutions, tech enabled services and niche applications is poised to capitalize.”