BANK TECHNOLOGY AND SOFTWARE M&A

There have been several recent software mergers and acquisitions in the bank technology segment. 

The largest by far was Misys’ announced merger with Temenos Group, a provider of banking software systems to a diverse array of financial institutions, for approximately $2 billion. However, just today, Temenos was granted an additional four weeks by a UK takeover panel to prepare its offer. If the merger talks are cancelled, Misys has stated that it plans to evaluate other approaches.

A related bank technology transaction was Sopra Group’s announcement that it will buy a majority stake in Callatay & Wouters. Sopra will then merge Callatay & Wouters’ banking software package with its own products to create a new banking software outlet.

Another February deal in this space was Integrated Bank Technology’s acquisition of Beacon Software. Beacon supplies software and hosted solutions, including in-house internet and mobile banking services, to community financial institutions.

WEALTH MANAGEMENT M&A

There were two similar deals last week relating to wealth management in the capital markets space.  

SEI Investments announced its acquisition of select assets from NorthStar Systems. With a greater level of front-office automation now in place, this transaction will allow the investment processing company to strengthen its portfolio of business outsourcing solutions. SEI identified a pressing need for additional technology to help with its new Global Wealth platform.

A related transaction was Envestnet’s announced acquisition of Tamarac. Envestnet provides a wide array of wealth management software and advisory solutions to financial advisors. This acquisition will enable Envestnet to integrate Tamarac’s expertise within the Registered Investment Advisors (RIA) marketplace.

Nearly a week prior, Envestnet announced its acquisition of Prima Capital Holding, a company that offers due diligence, research applications, and modeling services to financial services firms in the wealth management industry.

Our 2011 Financial Technology M&A press release noted a robust level of capital markets activity and an increase in consumer focus on wealth management strategies.

FULL YEAR 2011 TRENDS REPORTS

Berkery Noyes has released eight Full Year 2011 Trends Reports. Here is some commentary from our managing directors based on the first four reports.

Media & Marketing Industry:

“The Media and Marketing Industry is continuing its strong recovery from a slow Fourth Quarter in 2010,” said Evan Klein, Managing Director at Berkery Noyes. “Marketing services and digital media companies have all benefited from a large increase in internet advertising revenues in 2011, and look to be promising segments for driving M&A activity.”

Software Industry:

“Companies involved with cloud computing and SaaS are showing strong levels of M&A activity,” said managing director Christopher Young of Berkery Noyes. “Going into 2012, more businesses will seek to convert from owning and maintaining licensed software to utilizing subscription based cloud solutions. Two of the largest Software deals in 2011, SAP’s acquisition of SuccessFactors and Oracle’s acquisition of RightNow Technologies, demonstrate an ongoing interest of integrating enterprise applications with cloud.”

Online & Mobile Industry:

“M&A activity for social media and analytics companies continues to grow as a broader range of players seek to capitalize on this evolution in media and marketing communications,” said Kathleen Thomas, Managing Director at Berkery Noyes. “The world’s largest retailer, Walmart, entered the market in April with their $300 million acquisition of Kosmix Corporation, and Kosmix, now known as @WalmartLabs, has already completed four deals.”

Financial Technology Industry:

“At present we are seeing destructive creativity going on in a number of financial service sectors,” said Peter Ognibene, Berkery Noyes managing director. “For instance, smart phones have become digital wallets and are enabling a host of banking and other mobile commerce activities. There has also been an increase in consumer focus on wealth management strategies. And as always in times of turmoil and uncertainty – there is a desire for more precise and forward looking risk management tools, especially enterprise-wide.”

THIRD QUARTER 2011 TRENDS REPORTS

Berkery Noyes has released its Third Quarter 2011 Trends Reports. We’ve listed some commentary from our managing directors here.

Media & Marketing Services Industry:

“Interestingly, DPZ was Publicis Groupe’s third acquisition this year in Brazil,” said Berkery Noyes managing director Evan Klein. “As one of the top ten ad markets in the world, I have to think Brazil will continue to garner interest from advertising agencies in the near term."

Software Industry:

“While Hewlett Packard’s offer for Autonomy Corporation PLC highlighted the attractive e-discovery sector, there has been a long history of acquisitions at high transaction multiples in the sector,” said Berkery Noyes managing director Mary Jo Zandy. “This historical trend is expected to be accentuated in the next twenty-four months as the consolidation in the high growth e-discovery market continues. Many of the smaller privately-held companies, some with cloud technologies, are attractive acquisitions for the existing large players and potential new entries.”

Online & Mobile Industry:

Regarding companies that operate in the mobile and online space tracked by Berkery Noyes, managing director Kathleen Thomas notes, “Google made 26 acquisitions in 2010, so with 21 acquisitions through the third quarter, 2011 looks to be another strong year for the industry giant. Overall transaction volume and EBITDA multiples are up significantly from 2010.”

Financial Technology & Information Industry:

“The increase in the number of closed transactions in the third quarter is a direct result of an increasingly more active private equity market, overall pent-up supply of companies wishing to sell, and a strategic buyer market that continues to shore-up product suites and customer bases through acquisitions,” said managing director John Guzzo.

Pharma and Healthcare Information and Technology Industry:

“PerkinElmer has demonstrated the vast potential for informatics and software integration into laboratory environments,” said managing director Jeffrey Smith. "The need to integrate scientific tools, effectively manage knowledge, and organize workflow within laboratory settings is becoming even more crucial for clients of organizations such as PerkinElmer."

Education Industry:

“M&A volume started to look up during the third quarter when a number of large deals were announced,” said John Shea, managing partner at Berkery Noyes. “Hellman & Friedman’s announced plans to acquire SunGard Data Systems' higher education segment and Providence Equity’s acquisition of Blackboard are greater in value than what’s been done in the entire first half. These transactions highlight the innovation that digital technologies are bringing to both the K-12 sector as well as institutions of higher education.”

Private Equity in the Information Industry:

“Notably, two of Thomas H. Lee Partners’ third quarter transactions were related to healthcare. Ignite Health, whose ultimate parent is THL, and Intermedix, which is a consumer and healthcare subsidiary of THL, both made acquisitions. Private equity activity in healthcare technology is likely to be strong going into the near future, as evidenced by Blackstone’s acquisition of Emdeon and Vista Equity Partners’ acquisition of Sage Software in the third quarter,” said managing director Tom O’Connor.

Information Industry:

“It’s an encouraging sign that transaction volume in the Information Industry, examined on a quarterly basis, remains well above its 2010 levels. There has been a consistent trend upward for median EBITDA and revenue multiples too,” said CIO James Berkery. “Indeed, both multiples showed improvement for the third consecutive quarter.”