Monday, September 21, 2015

Berkery Noyes Information Industry M&A Report For Half Year 2015


Berkery Noyes has released its half year 2015 mergers and acquisitions trend report for the Information Industry.

The Information report features companies in the Media & Marketing, Software, and Online & Mobile Industries. It analyzes M&A activity during the first half of 2015 and compares it with the four previous six-month periods from 2013 to 2014.

Total transaction volume rose five percent since second half 2014. Aggregate value was nearly flat at $112.63 billion. Of note, the peak for volume throughout the past two-and-a-half years occurred in first half 2015, whereas value reached its zenith in first half 2014. In terms of valuations, the median revenue and median EBITDA multiple over the past six months remained about constant at 2.3x and 11.6x, respectively. The industry’s largest transaction in first half 2015 was Permira and CPP Investment Board’s acquisition of Informatica, a provider of enterprise data integration software and services, for $4.77 billion.

Regarding the three horizontal markets covered in the report, the number of transactions in the Software horizontal experienced a three percent uptick. As for software used within specific vertical industries or “Niche Software,” volume increased 11 percent. Four of the horizontal’s top ten highest value deals year-to-date were located in the Niche segment. Two of these four acquisitions took place in the Capital Markets sector.

Deal volume in the Infrastructure Software segment stayed about the same during the half year period. This followed a 32 percent increase in second half 2014. Three of the horizontal’s top five largest deals in first half 2015 were completed in the segment, two of which occurred in the cyber-security subsector.

In the Online & Mobile horizontal market, transaction volume improved 12 over the last three months. The SaaS & Cloud segment underwent a 16 percent rise in volume, which was the most active period for SaaS & Cloud on a half year basis throughout the past two-and-a-half years. Meanwhile, SaaS & Cloud deals in first half 2015 received a median revenue multiple of 3.5x, compared to 2.3x for the entire Online & Mobile market.

M&A volume in the consumer application subsector increased 12 percent, from 119 to 133 transactions. Notable mobile-based deals in first half 2015 included clothing manufacturer Under Armour’s acquisition of MyFitnessPal, a digital health mobile application focused on nutrition, for $474 million; Ola’s acquisition of TaxiforSure, a taxi rental aggregator, for $200 million; and Dropbox’s acquisition of CloudOn, which allows users to create and edit documents on mobile devices, for $100 million.

Deal flow in the overall Media and Marketing horizontal increased two percent over the past six months. The horizontal’s largest transaction in first half 2015 was Verizon Communications’ acquisition of AOL for $4.13 billion in the Internet Media segment. Internet Media volume also saw a 25 percent rise, from 208 to 259 deals. In addition to AOL, notable segment deals during first half 2015 included Houghton Mifflin’s acquisition of Scholastic Corporation’s Education and Technology Services business for $575 million; CoStar Group’s acquisition of Apartment Finder, a rental listing marketplace, for $170 million; and Facebook’s acquisition of TheFind, a personalized shopping engine, as the social network looks to bolster its digital advertising business.

Marketing transaction volume underwent a four percent increase in first half 2015. In addition, deals in the digital marketing subsector represented 45 percent of the segment’s overall activity in first half 2015. Japanese advertising company Dentsu was the overall industry’s most active acquirer with nine transactions year-to-date.

“Drawn by strong valuations, once reticent sellers are showing increased receptivity to good offers,” said James Berkery, Chief Information Officer at Berkery Noyes. “Acquirers are motivated by the need to find new growth avenues and are mindful of those nimble, entrepreneurial upstarts nibbling at the edges of their markets.” Berkery continued, “Meanwhile, companies of every stripe are finding ways to package content with the tools and technology that make it easier to access, manipulate, analyze, and distribute information. Most of those who succeed in the solutions business, as the content-plus-tools convergence is often called, do so by acquiring, rather than building, the components they do not own.”

2 comments:

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  2. Meanwhile, companies of every stripe are finding ways to package content with the tools and technology that make it easier to access, manipulate, analyze, and distribute information.
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