PRIVATE EQUITY IN INFORMATION M&A FOR 2011

The Private Equity trends report covers transactions made by financially sponsored acquirers within the Information Industry – defined as media, software, and online & mobile companies – including acquisitions made by subsidiaries or platforms of private equity firms.

"Although deal volume involving PE fluctuated throughout 2011, our data does present a healthy year to year improvement," said Berkery Noyes Managing Partner John Shea. "Both the value and volume of deals have shown an average of 20% growth for three years in a row, which is heartening to see. Let’s hope this trend continues and is an early indicator of an improving overall economy."

FULL YEAR 2011 TRENDS REPORTS - HEALTHCARE M&A

These managing director quotes pertain to our Pharma & Healthcare Industry report:

 “In 2011, M&A-driven expansion of strategic healthcare technology and information platforms by major players, some private equity-backed, continued as a dominant trend, stated Jeffrey Smith, Managing Director in Berkery Noyes’ Healthcare and Life Sciences group. “This trend will continue in 2012, offering an active market, competitive sales processes, and excellent valuation opportunities for independently-owned companies providing software, information, data, communications and services solutions to the healthcare and life science industries.”

“The healthcare information and technology (“HIT”) mergers and acquisitions market was robust in 2011 as buyers looked to acquire rapidly growing companies, principally software enabled solutions (SaaS and Cloud enabled), in highly attractive niches to accelerate their own growth and offer fuller suites of world class products to the dynamic and growing healthcare marketplace,” said Tom O'Connor, Managing Director in Berkery Noyes’ Healthcare and Life Sciences group. “In 2012, we expect to see an increased deal flow and attractive prices for sellers from both strategic and financial buyers, but strategic buyers, like in 2011, will dominate the buyer universe.”

According to Jonathan Krieger, Managing Director in Berkery Noyes’ Healthcare and Life Sciences group, “the number of HIT transactions increased for the 3rd consecutive year and valuation multiples continued to rise. The enactment of the HITECH Act has catalyzed the adoption of IT by both payors and providers and has resulted in a very favorable M&A market for private companies that wish to pursue liquidity events.”

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.”