Private Equity Information Industry Merger & Acquisition Trends

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Financially sponsored M&A in the Information Industry improved 13 percent over the past twelve months and 34 percent relative to 2010. In contrast, transaction volume in the Information Industry as a whole, including deals completed by strategic acquirers, underwent only a three percent gain between 2011 and 2012.

2012 KEY HIGHLIGHTS

• The most active financial sponsor in the Information Industry in
2012 was Vista Equity Partners with 12 transactions. Vista’s
largest industry transaction during the year was its acquisition
of Misys plc for $2.02 billion.
• The top ten highest value deals in 2012 accounted for 51
percent of aggregate transaction value. The Carlyle Group was
involved in two of the industry’s three largest private equity
transactions, representing 15 percent of deal value in 2012.
• There were 68 transactions in the Health & Pharmaceutical
segment of the Information Industry in 2012. Two of these
deals reached the $1 billion threshold: Veritas Capital Partners’
acquisition of Thomson Reuters’ Healthcare Business for $1.25
billion and One Equity Partners’ acquisition of M*Modal for
$1.06 billion.

2012 KEY TRENDS

• Total transaction volume in 2012 increased by 13 percent over
2011, from 413 to 465.
• Total transaction value in 2012 rose by 11 percent over 2011,
from $36.74 billion to $40.79 billion.
• The median revenue multiple declined from 1.8x in 2011 to 1.4x
in 2012. Meanwhile, the median EBITDA multiple improved from
9.1x to 9.7x.

M&A MARKET OVERVIEW

Berkery Noyes tracked 1,224 transactions between 2010 and 2012,
of which 358 disclosed financial terms, and calculated the aggregate
transaction value to be $84.17 billion. Based on known transaction
values, we project values of 866 undisclosed transactions to be
$15.51 billion, totaling $99.68 billion worth of transactions tracked
over the past three years.

In the Media and Marketing portion of the Information Industry, the
most active financial sponsor by volume between 2010 and 2012,
either directly or through an affiliated business, was Veronis Suhler
Stevenson with 25 transactions. Six of these occurred in 2012.

Education Industry Merger & Acquisition Trends

Berkery Noyes full report

Financial sponsors accounted for 30 percent of volume and 63 percent of value in 2012, compared to 25 percent of volume and 51 percent of value in 2011. Higher-Ed Media and Tech was the segment with the most notable volume increase, rising 59 percent since 2011. One of the segment’s largest deals over the course of 2012 was John Wiley & Sons’ acquisition of Deltak edu for $220 million.

2012 KEY HIGHLIGHTS

• Apollo Global Management, LLC’s announced acquisition of
McGraw-Hill Education was the largest industry transaction in
2012, with an acquisition price of $2.62 billion.
• With six transactions, Pearson was the industry’s most active
acquirer in 2012. Pearson’s largest transaction during the year
was its acquisition of EmbanetCompass for $650 million.
• The combined Professional Training Institutions and Technology
segments accounted for 31 percent of the overall industry’s
transaction volume. In addition, strategic buyers represented
71 percent of this sector’s deal flow.
• There were 74 financially sponsored transactions with an
aggregate value of $4.33 billion, representing 30 percent of
the total volume and 63 percent of the total value, respectively.

2012 KEY TRENDS

• Total transaction volume in 2012 stayed nearly the same compared
to 2011, from 251 to 250.
• Total transaction value in 2012 decreased by 44 percent over 2011,
from $11.93 billion to $6.66 billion.
• The median revenue multiple between 2011 and 2012 remained
constant at 1.6x. The median EBITDA multiple declined from
12.0x in 2011 to 10.3x in 2012.

M&A MARKET OVERVIEW

Berkery Noyes tracked 729 transactions between 2010 and 2012,
of which 243 disclosed fi nancial terms, and calculated the aggregate
transaction value to be $24.43 billion. Based on known transaction
values, we project values of 486 undisclosed transactions to be
$2.01 billion, totaling $26.44 billion worth of transactions tracked
over the past three years.

Disclosed median enterprise value multiples for all segments
combined in this report during the last 36 months were 1.8x
revenue and 10.4x EBITDA.

Based on volume, the most active market segment that Berkery
Noyes tracked between 2010 and 2012 was K-12 Media and Tech
with 145 transactions.

Berkery Noyes 2012 Information Industry Mergers and Acquisitions Trend Report

Berkery Noyes has just released its Information Industry report for full year 2012, which covers merger and acquisition (M&A) trends over the past three years.

Click here to view the industry’s median multiples, as well as transaction data from the rest of the report.

For a comparative analysis of specific deals, visit MandAsoft.com, Berkery Noyes’ online M&A transaction database.


INFORMATION INDUSTRY: The Production and Provision of Content


2012 KEY HIGHLIGHTS

• The most active acquirer in 2012 was WPP Group, plc with 42
transactions. WPP’s largest transaction during the year was its
announced acquisition of AKQA for $540 million.
• There were 465 financially sponsored transactions in 2012 with
an aggregate value of 49.70 billion, representing 14 percent of
the total volume and 31 percent of the total value, respectively.

2012 KEY TRENDS

• Total transaction volume in 2012 increased by three percent
over 2011, from 3,317 to 3,412.
• Total transaction value in 2012 decreased by 10 percent over
2011, from $171.41 billion to $153.53 billion.
• The median revenue multiple moved slightly from 2.0x in 2011
to 1.9x in 2012. The median EBITDA multiple fell from 11.5x in
2011 to 10.0x in 2012.
• Four of the Information Industry’s top ten highest value deals were
backed by fi nancial sponsors in 2012, compared to two in 2011.

M&A MARKET OVERVIEW

Berkery Noyes tracked 9,529 transactions between 2010 and
2012, of which 3,028 disclosed financial terms, and calculated
the aggregate transaction value to be $353.99 billion. Based on
known transaction values, we project values of 6,501 undisclosed
transactions to be $86.04 billion, totaling $440.03 billion worth
of transactions tracked over the past three years.

Disclosed median enterprise value multiples for all segments
combined in this report during the last 36 months were 1.8x
revenue and 10.7x EBITDA.

The largest transaction tracked by Berkery Noyes since 2010
was HP’s acquisition of Autonomy plc for $10.24 billion in 2011.
Based on value, the largest acquirer, either directly or through
an affi liated business between 2010 and 2012, was Microsoft
Corporation with 12 transactions. Microsoft’s highest value deal
in 2012 was its acquisition of Yammer for $1.20 billion.

Venture Capital Investment in mHealth for 2012 Totaled $907.7 Millio

Venture capital investment in the mHealth sector totaled $907.7 million for 2012 according to data compiled by Mobile Health Market News. Investment during the fourth quarter of 2012 came to $200.7 million, down just six percent from Q3. For Q4, the leading sector by far was HCIT which accounted for 45% of mHealth investment dollars during the quarter. HCIT also led the other subsectors for the year capturing just under 46% of investment.

The second most popular subsector for investment in 2012, as well as in Q4, was monitoring taking in $191.2 million for the year (or 21% of total capital) and $62.4 million in the fourth quarter (or 31% of total capital).

For the year, consumer apps came in third place among the subsectors with a total investment of $120.7 million or 13%. However, investment in this subsector was dominated by the $100 million investment that went to Castlight Health in Q2. For the fourth quarter, third place went to companies that develop wellness apps and tools. The subsector netted $27.6 million in Q4. For the year, wellness ranked fourth with total investments of $101.4 million.

For more details and analysis, download the full report
mHealth_VC_Report_Q4_2012_By_MHMN

For prior Venture Capital Reports, see visit the mHealth Library

VENTURE M&A AND IPO MARKET ACTIVITY DROPS AS 2012 ENDS

Dow Jones VentureSource: M&As Sees Fewest Exits since 2009;

IPOs Raise Largest Amount since 2000 Despite Decrease in Deals

Despite positive signs in the first half of 2012 for initial public offerings (IPOs) of venture-backed companies in the U.S., both IPOs and mergers and acquisitions (M&As) of venture-backed companies ended the fourth quarter down from the same quarter last year. During 2012, 483 mergers, acquisitions, buyouts, and IPOs raised $51.5 billion, a 19% decrease in deal activity and 7% decrease in the overall amount raised from the 594 exits in 2011.

“At the beginning of 2012, IPO deal activity increased dramatically as companies sought to capitalize on the blockbuster potential surrounding the Facebook IPO,” said Maryam Haque, senior research analyst for Dow Jones VentureSource. “As Facebook’s performance underwhelmed investors, enthusiasm appears to have turned into caution in the IPO market. Exits dropped 19% in the fourth quarter compared to last year.”

In the fourth quarter of 2012, 121 exits raised $10.6 billion, a decrease in activity from the 149 exits that raised $12.6 billion a year ago.

IPOs Raise Most Capital since 2000; Business & Financial Services Industry Dominates

Fifty venture-backed companies raised a record $11.2 billion through public offerings in 2012, the most since 2000 and a 109% increase from $5.4 billion raised by 46 IPOs in 2011. The increase in capital can be attributed to Facebook Inc.’s second quarter IPO, which was the largest of the year and accounted for 61% of the $11.2 billion.

Business and financial services proved the most active industry in 2012 with 11 IPOs raising $1.4 billion, a 175% increase in the number of IPOs and a 221% increase in capital raised in 2011. Two companies in the business support services sector took the top spot for the fourth quarter: Workday Inc. and LifeLock Inc.

“Public-market investors have shifted away from consumer-focused Web companies in recent months,” said Zoran Basich, editor of Dow Jones VentureWire. “Enterprise software companies with solid revenue models have become more attractive, especially as some of those companies have performed very well in their debuts.”

Eight IPOs raised $1.2 billion in the fourth quarter, a 48% decrease from the $2.4 billion raised by 10 IPOs in the same quarter last year. Twenty-six U.S. venture-backed companies are currently in IPO registration, two of which filed in the fourth quarter.

The median amount of time it took a company to reach an IPO increased 16% to 7.4 years in 2012 from 6.4 years in 2011, while the median amount of venture capital raised prior to liquidity dropped 5% to $78.4 million in 2012.

M&As Struggle throughout Year, Seeing Fewest Exits since 2009

Acquisition activity declined in 2012, ending with the fewest exits since 2009. Throughout 2012, 403 M&As raised $37.4 billion, a 24% decrease in M&A activity and a 23% decrease in capital raised since 528 M&As garnered $48.4 billion in 2011.

Healthcare companies accounted for six of the top 10 M&As for the fourth quarter of 2012, though the healthcare industry represented just 15% of this year’s M&A activity with 66 U.S. ventured-backed companies acquired.

The largest M&A of the year was Liberty Dialysis LLC, which was acquired by Fresenius Medical Care AG & Co. KGaA for $1.7 billion. Cisco Systems Inc.’s $1.2 billion acquisition of Meraki Inc. was the largest acquisition of the fourth quarter and the second largest of the year.

Buyouts of venture-backed companies by private equity firms ended on a more positive note, with 30 companies acquired for $2.9 billion in 2012, a 50% increase in number of exits from 2011 when 20 companies were purchased for $1.4 billion.

For information on Dow Jones VentureSource’s research methodology, visit http://bit.ly/VSFAQs. For general information about Dow Jones Private Markets, visit http://www.dowjones.com/privatemarkets

U.S. AND EUROPE RAISE FEWER PRIVATE EQUITY FUNDS IN 2012

Dow Jones LP Source: U.S. Private Equity Funds Raise Most Capital since 2008 Despite Drop in Number of Funds; Median Fund Size Increases for both Regions

Limited partners showed less support for U.S. and Europe private equity funds in the latter half of 2012, leading to an overall yearly decline in funds raised for both regions, according to Dow Jones LP Source.

In 2012, private equity firms raised 426 U.S. funds, a 6% decrease from the 453 funds raised in 2011. Despite this drop, U.S. private equity funds had a positive year overall, netting $160.4 billion, the most raised since 2008 and a 20% increase from the $133.2 billion raised last year.

“Some of the largest firms re-entered the fundraising fray in 2012, which drove up overall volume in the U.S. during the year,” said Laura Kreutzer, editor of Dow Jones Private Equity Analyst. “But the numbers are deceiving – many firms struggled to reach their targets and will probably continue to do so as more firms market new funds in 2013.”

European private equity funds performed worse in 2012, raising $58.1 billion across 157 funds, a 14% drop from 2011 when 182 funds garnered $59.2 billion.

Median fund size increases for both U.S. and Europe

Both the U.S. and Europe saw an increase in the median fund size for 2012. While the median U.S. private equity fund increased 24% to $310 million this year, the median European private equity fund grew 45% to $300 million.

The median buyout fund size in the U.S. reached $500 million in 2012, the highest on record and an 8% increase from the $464 million median reached in 2011.

Fewer U.S. buyout/corporate finance and mezzanine funds raise more capital

In the U.S., the buyout/corporate finance and mezzanine segments both raised more capital through fewer funds in 2012, accounting for the overall increase in funds raised by general partners.

Key developments within the buyout/corporate finance category in 2012 include:

* 192 funds raised $114.3 billion, a 25% growth in capital from the $91.4 billion netted by 196 funds in 2011;
* An 11% increase in the number of buyout and acquisition funds, with 88 funds raising $53.4 billion;
* Advent International Corp. raised $10.8 billion in 2012 for the largest buyout fund (Advent International GPE VII LP) of the year; and
* A 17% decrease in investment for Europe, amounting to 69 funds raising just $39 billion.

Mezzanine funds also experienced notable changes in 2012, with 26 funds in the U.S. raising $10.8 billion, a 108% increase in capital from the 32 funds that garnered $5.2 billion in 2011. The median size of U.S. mezzanine funds increased 75% from $222.5 million in 2011 to $388.8 million in 2012.

Venture Fund-Raising Holds Steady in U.S.

U.S. venture capital fund-raising remained level in 2012, ending with 154 funds garnering $20.3 billion, a 1% decrease in funds and a 1% increase in capital raised in 2011.

Other venture capital fund-raising highlights for 2012 include:

* New Enterprise Associates XIV LP, the largest U.S. venture capital fund of the year, raised $2.6 billion, accounting for 13% of the total amount raised in 2012;
* A 12% increase in the median U.S. fund size to $150 million from $134.5 million one year ago;
* 60 European venture capital funds raised $4 billion, representing a 2% decrease and 8% decrease, respectively, from 2011;
* Index Ventures VI LP, the largest European venture capital fund of the year, netted $435 million;
* An 11% increase in the median European fund size from $71.2 million in 2011 to $79 million in 2012.

LP Secondaries and Funds of Funds Spike in Europe

Although much of Europe’s private equity fundraising fell in 2012, capital raised through LP secondaries and funds of funds surged 155% and 593%, respectively. In Europe, 10 LP secondary funds raised $11.1 billion in 2012 compared to the $4.4 billion raised across three funds last year. Likewise, 12 funds of funds netted $3.3 billion this year, a significant increase from the $475 million raised by 10 funds in 2011. AXA Private Equity’s $900 million fund (AXA Private Equity Fund of Funds) and Danske Private Equity’s $846 million fund (Danske Private Equity Partners V K/S) accounted for a bulk of this increase.

Investment in U.S. secondary funds rose by 55% in 2012 to $10.5 billion, in large part from LP secondaries, while 32 fund of funds garnered $4.6 billion, a 53% decline in capital from 2011.

Dow Jones LP Source classifies multiple fund closings (first, interim, final) separately to provide an accurate view of the fundraising environment.

For more information about Dow Jones LP Source or Private Equity Analyst, visit http://www.dowjones.com/privatemarkets?from=pr-privatemarkets

Venture Capital Funds Raised $20.6 Billion During 2012

U.S. venture capital firms raised $20.6 billion from 182 funds during full year 2012, a 10 percent increase by dollar commitments compared to full year 2011, and a three percent decline by number of funds, according to Thomson Reuters and the National Venture Capital Association (NVCA). During the fourth quarter of 2012, 42 U.S. venture capital funds raised $3.3 billion. This level marks a 35 percent decrease by dollar commitments and a 25 percent decrease by number of funds compared to the third quarter of 2012, which saw 56 funds raise $5.1 billion during the period. The top five venture capital funds accounted for 55 percent of total fundraising this quarter, on par with the third quarter of 2012. 

Year/Quarter	Number of Funds	Venture Capital ($M)
2008	215	25,577.2
2009	162	16,187.9
2010	176	13,669.8
2011	187	18,745.7
2012	182	20,569.9
4Q'10	50	3,712.2
1Q'11	49	7,699.5
2Q'11	48	2,713.3
3Q'11	66	2,116.0
4Q'11	54	6,217.0
1Q'12	54	5,987.4
2Q'12	46	6,203.7
3Q'12	56	5,088.0
4Q'12	42	3,290.8

Source: Thomson Reuters and National Venture Capital Association

"The venture capital fundraising environment has settled into a 'new normal' which is characterized by a barbell structure of larger funds which are stage and industry agnostic on one end, and smaller, early stage, industry or region specific funds on the other," said Mark Heesen, president of NVCA. "It is on these two ends of the spectrum where capital is concentrating and successful firms are raising follow-on funds. Simultaneously, new funds continue to enter the asset class, almost exclusively at the smaller end of the spectrum. This structure, coupled with increasingly discerning limited partners, has kept the overall size of the venture industry below $25 billion each year since 2009, a size that many believe to be optimal for successful investing and maximizing returns."

There were 127 follow-on funds and 55 new funds raised during the full year 2012, a ratio of 2.3-to-1 of follow-on to new funds. During the fourth quarter of 2012, 25 follow-on funds and 17 new funds were raised, a ration of 1.5-to-1. The largest new fund reporting commitments during the fourth quarter of 2012 was from Raleigh, North Carolina-based Novaquest Pharma Opportunities Fund III, L.P. which raised $244.1 million for the firm's inaugural fund. A "new" fund is defined as the first fund at a newly established firm, although the general partners of that firm may have previous experience investing in venture capital. 

	No. of New	No. of Follow-on	Total
2008	49	166	215
2009	42	120	162
2010	61	115	176
2011	59	128	187
2012	55	127	182
4Q'10	21	29	50
1Q'11	15	34	49
2Q'11	17	31	48
3Q'11	21	45	66
4Q'11	15	39	54
1Q'12	15	39	54
2Q'12	14	32	46
3Q'12	17	39	56
4Q'12	17	25	42

Source: Thomson Reuters and National Venture Capital Association

Fourth quarter 2012 venture capital fundraising was led by Menlo Park, California-based Sequoia Capital Global Growth Fund, L.P., which raised $700 million and Portola Valley, California-based Venture Lending & Leasing VII LLC, which raised $373.1 million.

Methodology

The Thomson Reuters/National Venture Capital Association sample includes U.S.-based venture capital funds. Classifications are based on the headquarter location of the fund, not the location of venture capital firm. The sample excludes fund of funds.

Effective November 1, 2010, Thomson Reuters venture capital fund data has been updated in order to provide more consistent and relevant categories for searching and reporting. As a result of these changes, there may be shifts in historical fundraising statistics as a result of movements of funds between primary market & nation samples and/or between fund stage categories.