NEW YORK — January 30, 2014 — Berkery Noyes, an independent mid-market investment bank, today released its full year 2013 mergers and acquisitions trend report for Private Equity in the Information Industry.
The report analyzes M&A activity in the private equity market during 2013 and compares it with data covering 2011 and 2012. It features transactions made by financially sponsored acquirers within the Information Industry, including purchases made by subsidiaries or platforms of private equity firms.
According to Berkery Noyes’ latest research, private equity acquisitions in the Information Industry decreased twelve percent in 2013. However, when compared to 2011, volume underwent a four percent increase. Transaction value declined six percent on a year-to-year basis, from $43.71 billion in 2012 to $41.13 billion in 2013. Hellman & Friedman completed two of the industry’s top five highest value deals over the past year. The largest of Hellman & Friedman’s transactions in 2013 was the acquisition of Scout24 Group, an online marketplace, for $2.02 billion. Deutsche Telekom will retain a 30 percent stake in Scout24 Group as part of this divestiture.
Regarding overall valuations, the median revenue multiple increased from 1.8x in 2012 to 2.3x in 2013, while the median EBITDA multiple improved from 9.8x in 2012 to 11.5x in 2013. These were the highest median enterprise multiples on an annual basis throughout the three years covered in the report.
Vista Equity Partners was the industry’s most active financial sponsor during 2013 with eighteen transactions. This included the acquisitions of The Active Network, an event management software company, for $946 million; Websense, which specializes in cyber security and malware protection, for $942 million; Omnitracs, an integrated fleet management application, for $800 million; and Greenway Medical Technologies, a provider of software solutions and services to the ambulatory healthcare market, for $644 million.
In terms of specific sectors in the Information Industry, TA Associates was the Finance vertical’s most active acquirer in 2013 with six transactions. Meanwhile, TPG Capital was the Healthcare vertical’s most active acquirer with eight transactions. TPG Capital was also responsible for the largest deal in the Education vertical with the acquisition of TSL Education from Charterhouse Capital Partners for $549 million.
As for secondary buyouts, or transactions completed between private equity firms, deal volume decreased 27 percent in 2013. This followed a 34 percent rise between 2011 and 2012. Of note in 2013, two of the Information Industry’s five highest value secondary buyouts occurred in the Insurance subsector. This consisted of Hellman & Friedman’s acquisition of Applied Systems from Bain Capital for $1.8 billion and Kohlberg Kravis Roberts & Co.’s (KKR’s) acquisition of Mitchell International from Aurora Capital for $1 billion.
“Many financial buyers are still waiting for the right opportunity to put their excess capital to work, which in certain instances has been sitting on the sidelines for quite some time,” said John Shea, Managing Partner at Berkery Noyes. “Likewise, given that interest rates have remained at historic lows, the lending environment for debt financed transactions continues to be favorable for borrowers.” Shea continued, “Along with solid gains in the equity market throughout the past year and a heightened sense of confidence among many investors, the conditions for buyout activity over the near-term are encouraging.”
A copy of the PRIVATE EQUITY IN THE INFORMATION INDUSTRY M&A REPORT FOR FULL YEAR 2013 is available at the Berkery Noyes website.