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      MERGERS AND ACQUISITIONS UPDATES FROM BERKERY NOYES

    Entries in Acquisitions (142)

    Thursday
    Mar092017

    SPONSORED TRANSACTIONS DOMINATING VALUE IN THE HEALTHCARE INFORMATION AND TECHNOLOGY INDUSTRY

    Berkery Noyes’ Healthcare report for full year 2016 revealed that total transaction volume remained constant on a year-to-year basis. Aggregate value gained 75 percent, from $17.47 billion to $30.51 billion. Excluding IMS Health’s merger with Quintiles Transnational Holdings for $8.75 billion, value rose 25 percent. As for strategic acquirers, the number of deals improved three percent, from 351 to 363. Private equity backed volume fell 12 percent, from 101 to 89.

    Regarding private equity, three of the top five and six of the top ten highest value acquisitions in 2016 were completed by financial sponsors. The industry’s largest private equity backed deal during the year was Blackstone Group’s announced acquisition of TeamHealth, a provider of outsourced physician staffing solutions for hospitals in the U.S., for $6.02 billion in the Healthcare Business Services segment.

    Other notable sponsored deals in the Healthcare Business Services segment included EQT’s acquisition of Press Ganey Associates, a healthcare performance improvement company that offers patient experience measurement, performance analytics and strategic advisory solutions, for $2.4 billion; and Bain Capital’s announced acquisition of Epic Health Services, a provider of pediatric skilled nursing, therapy, developmental services, and home adult home healthcare services.

    Deal volume in the Healthcare IT segment decreased five percent on an annual basis. This followed a 20 percent rise in 2015. Strategic acquirers were dominant and comprised 86 percent of Healthcare IT volume over the past year. The segment was also responsible for five of the overall industry’s top ten highest value deals in 2016.

    "One of the most active spaces in healthcare M&A is behavioral health," said Jon Krieger, Managing Director at Berkery Noyes. "It's a high growth, fragmented market driven by very favorable industry tailwinds."

    “We continue to see workflow tools that make practicing medicine, performing a clinical trial or smoothing the operations of healthcare entities as areas with lots of entrepreneurs developing unique solutions,” stated Tom O’Connor, Managing Director at Berkery Noyes. “In addition, there’s a high level of interest in solutions that help move hospitals and other healthcare organizations off client server, on premise solutions to SaaS and cloud opportunities. This entails lower upfront cost, less IT hassles and a better environment for updates.”

    Upon examination of additional markets covered in the report, the combined Pharma IT, Pharma Business Services, and Pharma Information segments saw a 76 percent increase, from 45 to 79 transactions. Deal flow in the Pharma IT nearly doubled, from 25 to 47 transactions. “The pharmaceutical market is experiencing strong demand in the areas of pharma technology, proprietary data, compliance tools, and drug safety information,” added Jeffrey Smith, Managing Director at Berkery Noyes.

    Monday
    Feb272017

    FINANCIAL TECHNOLOGY DEAL VALUE DRIVEN BY THE CAPITAL MARKETS SEGMENT

    Berkery Noyes’ Financial Technology report for full year 2016 showed that transaction volume remained about constant on a year-to-year basis. Aggregate value decreased 26 percent, from $65.29 billion to $48.41 billion. Relative to 2014, volume improved 15 percent and value gained 72 percent.

    M&A volume in the Capital Markets segment, after rising 43 percent in 2015, declined seven percent over the past year. Four of the industry’s top five deals by value during the year involved major exchange operators in the Capital Markets segment.

    Meanwhile, notable Capital Markets deals in 2016 below the $1 billion threshold included E*TRADE Financial Corporation’s acquisition of OptionsHouse, an online stock and option broking company that provides trading platforms for retail and institutional options traders and investors, for $725 million; and Ally’s acquisition of TradeKing, an online brokerage and digital wealth management company, for $275 million.

    The Payments segment experienced an 18 percent rise in volume in 2016. Upon examination of value, three of the industry’s top ten largest acquisitions during the year occurred in the segment. “Worldwide markets are rapidly developing modernized credit and transfer infrastructure, adding further growth to an already sizeable market,” said Peter Ognibene, Managing Director at Berkery Noyes. “Ecosystem players are also pushing hard on experimenting with beta technologies particularly associated with mobile telephony, social media and peer-to-peer, digital and crypto-currency.” Ognibene continued, “Key business problems to be solved include fraud detection and elimination, utilization of multiple payment methods, aggregation of as many customer streams as possible, convergence of industry utilization and global growth of electronic payments.”

    As for other markets covered in the report, acquisition activity in the Banking segment decreased 13 percent on an annual basis, from 90 to 78 deals. This followed a 45 percent increase in 2014.

    “There are several significant drivers impacting the evolution of mortgage technology,” stated John Guzzo, Managing Director at Berkery Noyes. “This includes restoring consumer confidence, decreasing the volume of delinquent loans, stabilizing the debt markets and adhering to new regulatory guidelines.” Guzzo continued, “Mortgage technology vendors and outsourcers offering solutions that provide better quality control, promote process efficiencies, facilitate borrower communication and improve regulatory compliance are in demand by investors and acquirers. Moreover, acquirers are looking for products to round-out their solutions suite and to gain customers and market share.”

    Tuesday
    Jan312017

    E-COMMERCE TRANSACTION VOLUME RISES IN THE ONLINE & MOBILE INDUSTRY

    According to Berkery Noyes’ Online and Mobile report for full year 2016, volume saw a one percent uptick on a year-to-year basis, totaling 2,874 transactions in 2016. Aggregate deal value gained 12 percent, from $157.99 billion to $177.35 billion.

    The number of acquisitions in the consumer mobile application subsector remained about constant from 2015 to 2016. Notable mobile-based transactions in the gaming sector during 2016 included Tencent Holdings’ acquisition of Supercell, the Finnish maker of the “Clash of Clans” game, for $8.6 billion; and a Chinese consortium’s announced acquisition of Playtika, a social and mobile games company headquartered in Israel, for $4.4 billion.

    Additional mobile deals by high profile acquirers in 2016 were Microsoft’s announced acquisition of Swiftkey, which provides predictive keyboard technology for Android and iOS devices, with a reported purchase price of approximately $250 million; Gopro’s announced acquisition of video editing apps Replay and Splice for $105 million; Snap (formerly known as Snapchat) with the acquisition of Vurb, a mobile search and discovery engine, for a reported $110 million; and Bitstrips, which allows users to create personalized emojis and carton avatars, for a reported $100 million; and CNN’s announced acquisition of Beme, a social media app founded by YouTube star Casey Neistat, for a reported $25 million.

    The E-Commerce segment was responsible for the overall industry’s largest yearly rise in volume with an 11 percent increase. One of the most high profile E-Commerce transactions during the past year was Wal-Mart’s acquisition of Jet.com, an online retailer, for $3.3 billion, as the retail giant looks to bolster its online operations to better compete with Amazon and others.

    Other notable segment deals included Salesforce’s acquisition of Demandware, a provider of digital commerce solutions used by retailers, for $2.66 billion; Ctrip’s announced acquisition of Skyscanner, a global travel search site that offers online comparisons for millions of flight, car hire and hotel prices, for $1.74 billion; Thoma Bravo’s acquisition of Trader Corporation, a digital automotive marketplace, for $1.22 billion; and Alibaba Group’s acquisition of a controlling stake in Lazada, an E-Commerce platform that serves consumers in Southeast Asia, for $1 billion.

    As for other sectors covered in the report, volume in the Communications segment stayed nearly the same on a yearly basis. Meanwhile, deal activity in the E-Content segment decreased eleven percent year-over-year. This followed a 21 percent rise in 2015. Transaction activity in the E-Marketing & Search segment increased three percent throughout the last 12 months. 

    “Given the market’s emphasis on data and the increased demand for analytics solutions, companies in this sector should expect to see premium valuations,” said Vineet Asthana, Managing Director at Berkery Noyes. “Before, marketers had few data points and completely relied on humans to source leads. As we moved toward the digital era, the amount of data points that a typical marketer has to interpret every day has skyrocketed.” Asthana continued, “Machine learning has the ability to extract patterns from huge volumes of data which have high velocity and variety. Predictive analytics and machine learning are transforming the way marketers evaluate and respond to consumer activity in milliseconds and cross channel digital marketing is rapidly taking hold.”

    Tuesday
    Jan242017

    TRANSACTION VALUE SURGES IN THE MEDIA & MARKETING INDUSTRY

    Berkery Noyes’ Media and Marketing report for full year 2016 showed that deal volume declined five percent on a year-to-year basis. Aggregate value more than doubled, from $105.67 billion to $272.17 billion. The rise in value was due in major part to AT&T’s announced acquisition of Time Warner for $105.27 billion, or $85.4 billion if net debt is excluded.

    This was the highest value deal ever tracked by Berkery Noyes in the Media & Marketing Industry. If the Time Warner deal is omitted, overall value increased 58 percent. The Time Warner transaction is being referred to as a vertical merger, in that two different kinds of businesses are being combined. AT&T is planning to diversify its business beyond telecommunications with Time Warner’s vast array of programming.

    The Internet Media segment underwent a ten percent yearly decrease in deal activity. This followed a 21 percent rise in 2014. Notable segment transactions during 2016 included Microsoft’s acquisition of LinkedIn, a business social networking site, for $25.93 billion; AOL’s announced acquisition of Yahoo’s core operating business for $4.83 billion; Ctrip’s announced acquisition of Skyscanner, a global travel search site, for $1.74 billion; Ziff Davis’ acquisition of Everyday Health, a digital media company that produces content relating to health and wellness, for $465 million; and Randstad Holding’s announced acquisition of Monster Worldwide, an online jobs site, for $429 million.

    The Marketing segment, which for the purposes of this report excludes pure software-based companies, experienced a two percent yearly uptick in volume. Meanwhile, volume in the digital marketing subsector increased seven percent throughout the past twelve months.

    “Advertisers are rapidly exploring various digital options,” said Vineet Asthana, Managing Director at Berkery Noyes. “Their revenue mix continues to tilt toward digital at the expense of print, while events hold their steady level of the share of the total.” Asthana continued, “Advertisers are actively searching for media strategies that utilize multiple platforms to reach their target audiences. Historically, their core competencies have not always included mastering the intricacies of digital, print, events, and cross-media marketing. New digital platforms are creating more opportunities to reach specific target groups effectively.”

    M&A activity in the Entertainment segment increased four percent year-over-year. High profile Entertainment deals in 2016 included Lionsgate’s acquisition of Starz, a media and entertainment company that provides premium movie and original programming services, for $4.4 billion; NBC Universal’s acquisition of DreamWorks Animation, which creates animated feature films and television programs, for $4.1 billion; IMG Worldwide’s acquisition of Ultimate Fighting Championship, a professional mixed martial arts organization, for $4 billion; and Dalian Wanda Group’s acquisition of Legendary Entertainment, a media company with film, television, and digital divisions, for $3.5 billion. 

    Friday
    Jan062017

    VALUATIONS IN THE SOFTWARE INDUSTRY SHOW ONGOING SIGNS OF STRENGTH

    According to Berkery Noyes Software report for full year 2016, deal volume remained about constant on a yearly basis, with a total of 2,064 transactions in 2016. Overall value declined 28 percent, from $214.01 billion to $153.28 billion. However, if the $67.48 billion Dell-EMC acquisition in 2015 is excluded, value decreased five percent. Aggregate value in 2016 gained 23 percent relative to 2014.

    In terms of valuations, the median revenue multiple year-over-year increased from 2.4x to 2.8x, while the median EBITDA multiple moved downward from 13.3x to 12.5x. Over the past three years, deals in the $10-$20 million range received a median enterprise value multiple of 2.2x revenue, compared to 2.5x revenue for those in the $20-$80 million range and 3.8x revenue for those in the $80-$160 million range and above.

    Private equity backed volume in the Software Industry increased ten percent in 2016, from 335 to 369 acquisitions. Financial sponsors were responsible for just two of the industry’s top ten largest deals in 2016, as opposed to five of the top ten deals in 2015.

    M&A activity in the Infrastructure Software segment, after rising 20 percent in 2015, decreased eight percent in 2016. Symantec Corporation was a high profile acquirer in the segment during the past year with the acquisitions of Blue Coat, which offers advanced web security solutions for global enterprises and governments, for $4.72 billion; and the announced acquisition of LifeLock, a provider of identity theft protection products and services for consumers, for $2.36 billion.

    Other notable Infrastructure transactions throughout the past twelve months included Avast Software’s acquisition of AVG Technologies, a developer of business, mobile and PC device security software applications, for $1.3 billion; Intel’s sale of a majority stake in its cyber-security business to TPG Capital for $1.1 billion; and Google’s acquisition of Apigee, an API management platform, for $625 million.

    “After getting off to a somewhat slow start, software M&A value began to gain momentum during the latter part of 2016,” said James Berkery, Managing Partner at Berkery Noyes. “Along these lines, seven of the industry’s top ten largest transactions occurred during the second half of the year. Major players are stepping up their acquisition activity of software and technology companies, motivated by the need to find new growth avenues and mindful of those nimble, entrepreneurial upstarts nibbling at the edges of their markets.” Berkery continued, “Emboldened by a stable economic climate, some previously sidelined acquirers are taking a good look at potential targets. And drawn by strong valuations, targets are showing increased receptivity to good offers, pointing to more opportunity for everyone in the year ahead.”