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      MERGERS AND ACQUISITIONS UPDATES FROM BERKERY NOYES

    Entries in Peter Ognibene (16)

    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.”

    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.”

    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
    Aug032015

    CAPITAL MARKETS TRANSACTION VOLUME REBOUNDS STRONGLY IN FIRST HALF 2015

    Berkery Noyes’ Financial Technology report for first half 2015 indicated that total transaction volume decreased seven. Aggregate deal value increased 17 percent, from $16.21 billion to $18.90 billion. When compared to first half 2014, volume rose 14 percent and value gained 63 percent. The peak for volume throughout the last 30 months occurred in second half 2014 while value reached its zenith in first half 2015.

    The median revenue multiple increased from 2.8x in second half 2014 to 4.5x in first half 2015. Of note, deals during the last two-and-a-half years with enterprise values above $160 million received a median revenue multiple of 4.5x and median EBITDA multiple of 16.2x, whereas those in the $10-$20 million range had a median revenue multiple of 1.7x and median EBITDA multiple of 9.0x.

    The segment with the largest increase in volume during first half 2015 was Capital Markets with a 31 percent rise, from 58 to 76 deals. Four of the top ten deals also occurred in the Capital Markets segment.

    Notable related transactions included SS&C Technologies’ acquisition of Advent Software, a provider of portfolio management software, for $2.6 billion; Playtech’s acquisition of Plus500, an online FOREX trading platform that serves retail customers, for $697 million; and BATS Global Markets’ acquisition of KCG Hotspot FX, a FOREX trading venue and electronic communication network, for $365 million.

    “An increased appetite for technology spending at financial institutions is presenting vendors with good pipelines and an increased array of legacy tech sellers,” stated Peter Ognibene, Managing Director at Berkery Noyes. “In addition, regulatory pressures are requiring more transparency pertaining to risk assessment and valuation methods.”

    The overall industry’s decrease in volume over the past six months was attributable in major part to a 41 percent decline in the Payments segment. This came in the aftermath of a 46 percent increase in second half 2014, which was the segment’s highest point over the past two-and-a-half years.

    “The payments sector had many license-and-maintenance legacy business models, which are good, but not always the most attractive to buyers,” said John Guzzo, Managing Director at Berkery Noyes. “Today, companies prefer subscription based business models. Moreover, as companies continue to pursue electronic bill payment and online payments to eliminate paper bills, the payments industry may see more mergers in that space in the future.”

    Monday
    Jul132015

    ONLINE AND MOBILE DEAL ACTIVITY REMAINS ROBUST, REACHES NEW HEIGHTS IN FIRST HALF 2015

    According to Berkery Noyes’ Online and Mobile report for first half 2015, transaction volume increased 12 percent over the past six months. Aggregate value rose nine percent, from $64.55 billion to $70.27 billion. The median revenue multiple decreased from 2.6x to 2.3x, while the median EBITDA multiple declined from 13.7x to 10.3x. The peak for both volume and value over the last 30 months occurred in first half 2015.

    The most active segment year-to-date was SaaS & Cloud with 406 transactions, which represented a 16 percent increase compared to second half 2014. This was the segment’s highest level of activity on a half year basis during the past two-and-a-half years. Regarding valuations, SaaS & Cloud deals in first half 2015 received a median revenue multiple of 3.5x.

    M&A volume in the E-Commerce segment improved ten percent in first half 2015. Five of the industry’s top ten largest acquisitions year-to-date were also E-Commerce related. As for specific E-Commerce subsectors, notable deals in the online food delivery market included Just Eat’s acquisition of Menulog Group for $687 million; Delivery Hero’s acquisition of Yemeksepeti for $589 million; and Yelp’s acquisition of Eat24 for $134 million.

    The number of deals in the consumer application subsector increased 12 percent, from 119 to 133. Meanwhile, one of the largest mobile-based payments transactions in first half 2015 was PayPal’s acquisition of mobile wallet platform Paydiant for $280 million in the B2B subsector. Samsung also completed a mobile payments deal with the acquisition of LoopPay, a digital wallet solution.

    “Currently there is no dominant player in the mobile payments space, but giants like Apple, Google and PayPal are vying for control,” said Peter Ognibene, Managing Director at Berkery Noyes. “It is also important to note that mobile payments alone may not provide a value-added service for consumers. However, companies that can integrate a full range of products with their mobile payments platform provide a compelling reason for both consumers and merchants to adopt the technology.” Ognibene continued, “Another complimentary development in mobile payments landscape, the acceptance of host card emulation (HCE) by MasterCard and Visa, will further facilitate the expansion of mobile payments.”