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      MERGERS AND ACQUISITIONS UPDATES FROM BERKERY NOYES

    Entries in Acquisitions (149)

    Monday
    Oct262015

    VOLUME, VALUE, AND VALUATIONS TRENDING UPWARD IN THE FINTECH INDUSTRY

    Transaction volume in Berkery Noyes’ Financial Technology and Information report for third quarter 2015 increased nine percent over the past three months. Aggregate deal value more than doubled, from $9.5 billion to $20.9 billion.

    This was the peak for value throughout the past year-and-a-half on a quarterly basis and was attributable in large part to FIS’ announced acquisition of financial software company SunGard Data Systems for $9.1 billion. In terms of valuations, the median revenue multiple from 2014 through the first three quarters of 2015 improved slightly from 3.0x to 3.2x, while the median EBITDA multiple rose from 13.3x to 15.2x.

    M&A activity in the Capital Markets segment increased nine percent over the previous quarter and 58 percent year-to-date when compared to the corresponding timeframe in 2014. Deutsche Börse Group completed the segment’s two largest deals during third quarter 2015 with the acquisition of 360T, a provider of web-based trading technology, for $796 million; and joint ventures STOXX and Indexium, two European-based index groups, from SIX Group for $701 million.

    Other notable Capital Markets related transactions included FactSet Research Systems’ acquisition of Portware, a developer of broker-neutral automated trading solutions, for $265 million; Computer Sciences Corporation’s acquisition of Fixnetix, a provider of outsourced high speed trading, data and IT services, for $113 million; Playtech’s acquisition of Ava Trade, a foreign exchange trading platform, for $105 million; DMA Corporation’s acquisition of Baker Hill Corporation, which offers relationship management, credit-origination and risk management solutions, for $100 million; and Blackrock’s acquisition of FutureAdvisor, an technology-enabled digital wealth management company. “Big data is increasing the demands on trading, modeling, executing, and portfolio management,” said Peter Ognibene, Managing Director at Berkery Noyes. “The variety of risk profiling and stress testing that financial institutions will be subjected to requires more analytical capabilities.”

    There was also a 16 percent year-over-year volume increase in the Banking segment, from 44 to 51 transactions. Notable segment deals during third quarter 2015 included Envestnet’s acquisition of Yodlee, a financial data aggregator and provider of online financial tools, for $590 million; and SS&C’s acquisition of Primatics Financial, an accounting, forecasting, regulatory reporting, reserving and stress testing solutions company, for $122 million. SS&C completed a major deal earlier in the year as well with the acquisition of Advent Software, a provider of portfolio management and accounting systems software, for $2.6 billion.

    “Banks and credit unions are encountering a new regulatory framework, in which improved technology and automated solutions are increasingly necessary to maintain compliance,” stated John Guzzo, Managing Director at Berkery Noyes. “Regulations are having a noticeable impact on electronic record keeping, social media monitoring, and oversight of traditional marketing practices. The greater focus on enforcement is encouraging financial institutions to become more proactive in meeting regulatory mandates.”

    Monday
    Oct192015

    ONLINE AND MOBILE DEAL VOLUME RISES ON A YEAR-OVER-YEAR BASIS

    Total volume in Berkery Noyes’ Online and Mobile report for third quarter 2015 declined seven percent on a quarterly basis, from 713 to 663 transactions. Aggregate value fell 17 percent, from $45.5 billion to $37.7 billion. When compared to the first three quarters of 2014, the number of deals year-to-date rose 15 percent while value remained about constant.

    M&A activity in the E-Commerce segment decreased seven percent relative to the second quarter. However, this represented an eight percent rise year-to-date compared to same time period in 2014. The largest E-Commerce deal in third quarter 2015 and year-to-date was home shopping channel QVC’s acquisition of Zulily, an online retailer that primarily serves millennial moms, for $2.1 billion. Traditional retailers have also been looking to strengthen their online presence by making acquisitions with a focus on the millennial market. For example, department store chain Nordstrom completed a related deal in 2011 with the acquisition HauteLook, which offers flash discount sales, for $180 million.

    The number of mobile application deals, after remaining about constant from first to second quarter 2015, declined 13 percent in the third quarter with a total of 96 transactions. High profile acquirers in the mobile space during the third quarter included Adidas’ acquisition of Runtastic, a fitness tracking application, for $239 million; Accenture’s acquisition of Chaotic Moon Studios, a mobile software design and development studio; and Snapchat’s acquisition of Looksery, a face tracking and modification application, for a reported $150 million.

    Transaction volume in the Communications segment improved 42 percent, from 52 to 74 deals. One notable acquirer was Blackberry with the acquisition of Good Technology, a mobile security solutions business, for $425 million. Blackberry completed another industry deal in the first quarter with the acquisition of WatchDox, an enterprise document security company. This continues a steady pace of M&A activity for the smartphone manufacturer.

    Blackberry also completed several acquisitions in 2014 with Secusmart, a security voice and data encryption company; and Movirtu, a provider of virtual identity solutions. Regarding other high profile segment acquirers in third quarter 2015, Turner Broadcasting Systems acquired iStreamPlanet, which provides cloud-based video streaming technology, for $200 million; and Amazon Web Services acquired Elemental Technologies, a supplier of software-defined video solutions and over-the-top TV (OTT) content delivery.

    “As the decline in print advertising continues, we’re seeing certain publishers become acquisitive in the ad tech sector,” said Vineet Asthana, Managing Director at Berkery Noyes. “Programmatic buying, native advertising, and retargeting presents an opportunity for the traditional media players to reach their audiences on a variety of platforms. Moreover the ad tech space is getting crowded and should be ripe for consolidation moving forward. Acquirers in the middle market seem to be especially keen on picking up digital companies that have either a regional focus or differentiated technological offerings.” 

    Tuesday
    Oct132015

    B2B PUBLISHING AND INFORMATION DEAL VOLUME SHOWS SIGNS OF STRENGTH

    Deal volume in Berkery Noyes’ Media and Marketing report for third quarter 2015 declined six percent between second and third quarter 2015. However, the number of transactions year-to-date increased four percent compared to the corresponding timeframe in 2014. Aggregate value rose 15 percent on a quarterly basis, from $20.8 billion to $24.0 billion.

    The B2B Publishing and Information segment experienced a 38 percent improvement on a quarter-to-quarter basis, from 39 to 54 deals. Strategic acquirers were responsible for 85 percent of the segment’s volume year-to-date, as opposed to 72 percent of volume throughout the first three quarters of 2014. The largest B2B deal in third quarter 2015 was McGraw Hill Financial’s acquisition of SNL Financial, a news, data, and analysis provider, for $2.2 billion. 

    M&A volume in the Consumer Publishing segment stayed about the same with 30 transactions. The largest Consumer Publishing deal in third quarter 2015 and year-to-date was Japanese media group Nikkei’s announced acquisition of The Financial Times from Pearson for $1.3 billion. Pearson has completed several recent divestitures as it looks to focus on its global education business.

    M&A activity in the Marketing segment decreased eight percent during the third quarter. This followed a 14 percent rise from first to second quarter 2015. The highest value Marketing deal in the third quarter was comScore’s announced acquisition of Rentrak Corporation, a cross-platform media measurement firm, for $827 million. Rentrak will be merged with comScore and serve as a competitor to current leaders in the analytics and media tracking space such as Nielsen.

    Meanwhile, WPP was the overall industry’s most active acquirer year-to-date with 20 transactions, 12 of which of occurred in the third quarter. The largest of these deals was WPP Group and Providence Equity Partners’ announced acquisition of Chime Communications for $550 million. Chime Communications provides public relations, advertising, sports marketing, market research, direct marketing, and design and event management consultancy services.

    Another notable Marketing transaction during the quarter was Sony Pictures Television’s acquisition of a majority stake in IMS Internet Media Services, an ad sales and media buying firm focused on the Latin American market, for $100 million. In terms of specific subsectors, digital marketing deals accounted for 46 percent of the segment’s volume in the third quarter, a ratio that was consistent with the previous two quarters. “Deal flow in the digital marketing subsector has remained strong throughout the year,” said Vineet Asthana, Managing Director at Berkery Noyes. “The vast majority, more than 90 percent, have been completed by strategic acquirers. They are looking to supplement their organic growth, and without the pressure to exit their investments, are often focused on the long-term value of obtaining new products and services.”

    Wednesday
    Oct072015

    SOFTWARE M&A VALUE INCREASES FOR THE THIRD CONSECUTIVE QUARTER

    According to Berkery Noyes' Software report for third quarter 2015, volume underwent a slight uptick over the prior quarter, from 502 to 507 deals. The number of transactions year-to-date increased six percent compared to the corresponding timeframe in 2014. Aggregate value rose 24 percent relative to the previous quarter, from $33.8 billion to $41.7 billion. Of note, four of the highest value software transactions year-to-date occurred in the third quarter, three of which were backed by financial sponsors.

    The industry’s largest strategic transaction in third quarter 2015 was the announced acquisition of HERE, a digital mapping and location intelligence business, by car manufacturers BMW Group, Audi Group and Mercedes-Benz for $3.1 billion. HERE was created by Nokia’s $8.1 billion acquisition of Navteq back in 2008. In addition to HERE, there have been several other recent transactions focused on mapping technology such as Apple’s acquisition of Mapsense, a visualization startup, in the third quarter; and Uber’s acquisition of Microsoft’s Bing mapping unit in the second quarter.

    In terms of “Niche Software,” which is targeted to specific vertical industries, volume improved 13 percent on a quarterly basis. Deal flow in the Consumer Software segment decreased nearly one-third over the past three months. The Business Software segment, which consists of software designed for general business practices and not specific vertical industries, saw volume rise five percent.

    Deal volume in the Infrastructure segment experienced a 21 percent quarterly decline. This followed a 29 percent increase between first and second quarter 2015. Regarding high profile acquirers in the third quarter, Microsoft completed a deal in the cyber-security subsector with the acquisition of Adallom, a startup that monitors the use of cloud-based services, for $320 million. This followed Microsoft’s acquisition of security software developer Aorato in 2014 for a reported $200 million. 

    Another notable cyber-security deal during the quarter was Splunk’s acquisition of Caspida, a threat detection company, for $190 million. There were also several deals in the quarter completed by notable acquirers relating to the Internet of Things (IoT), such as IBM’s acquisition of StrongLoop and Autodesk’s acquisition of SeeControl.

    “Threats, intrusions, spam, phishing and other malicious elements show no sign of diminishing,” said James Berkery, Chief Information Officer at Berkery Noyes. “This is leading some vendors to amass a war chest of security assets through M&A.” Berkery continued, “Many organizations are also looking to mitigate information risk by shoring up authorization and authentication capabilities. This includes portal implementations through a unified single sign-on; consolidating information through more effective content management; and applying better analytics to various business processes. Moreover, those in certain vertical markets such as life sciences and financial services must address regulatory concerns as well as ongoing threats of litigation, legal discovery costs and privacy issues. Each of these factors may help spur acquisition activity going forward.”

    Wednesday
    Sep022015

    PRIVATE EQUITY VOLUME REACHES ITS HIGHEST LEVEL OVER THE PAST TWO-AND-A-HALF YEARS

    Berkery Noyes’ Private Equity report for first half 2015 indicated that deal volume increased 12 percent on a half-to-half year basis. Total value rose from $23.49 billion to $24.99 billion, a six percent gain. The peak for private equity volume during the past two-and-a-half years occurred in first half 2015, whereas value reached its zenith in first half 2014. 

    The Information Industry’s most active financial sponsor in first half 2015 was Vista Equity Partners with 12 transactions. Based on publicly disclosed values, the largest of these deals was Vista’s acquisition of Powerschool, a web-based K-12 student information system, for $350 million. Meanwhile, Marlin Equity Partners was another active private equity firm in the Software market with eight transactions year-to-date.

    Marlin's acquisitions consisted of Resolution1Security and Fidelis Cybersecurity Solutions in the cyber-security subsector; e-MDs and HomecareCRM in the Healthcare IT sector; International Business Systems in the enterprise resource planning and supply chain subsectors; Arcplan, a business intelligence and corporate performance management company; Asentinel, a telecom expense management firm; and barometerIT, a provider of IT portfolio analysis solutions.

    In terms of specific verticals, private equity volume in the Education market rose 38 percent in first half 2015, from 37 to 51 deals. Providence Equity Partners and The Riverside Company were the industry’s most active Education acquirers with three transactions each in the space year-to-date, which includes those either purchased directly or through an affiliated business. 

    Riverside acquired Health and Safety Institute, an emergency care and response training organization; C-Learning, an e-learning course developer; and Digital Ignite, a continuing education and social learning platform. Providence Equity acquired Remote-Learner UK, which provides hosting, support, consulting services to the education industry; Schoolwires, an educational website, hosting and content management provider to K-12 schools; and Endeavour College of Natural Health, a vocational training institution in the health and wellness sector. 

    “Strong balance sheets, less restrictive lending, and more plentiful private sellers are fueling deal activity,” said James Berkery, Chief Information Officer at Berkery Noyes. “Valuations have also been robust over the past few years, especially as financial sponsors compete with strategic acquires for companies that have attractive components such as recurring revenue models, high margins, continuous growth, diversified customer concentration, and proprietary technology in markets with a barrier to entry.”