2014-07-24 Berkery Noyes Releases Private Equity in the Information Industry M&A Report For Half Year 2014

NEW YORK — July 24, 2014 — Berkery Noyes, an independent mid-market investment bank, today released its half year 2014 mergers and acquisitions trend report for Private Equity in the Information Industry.

The report analyzes M&A in the private equity market for the first half of 2014 and compares it with activity in the four previous six-month periods from 2012 to 2013. It features transactions made by financially sponsored acquirers within the Information Industry, including purchases made by subsidiaries or platforms of private equity firms.

Deal volume underwent an 18 percent increase on a half-to-half year basis. Total value rose from $23.35 billion to $28.10 billion, a 20 percent gain. The peak for private equity transaction volume and value during the past two-and-a-half years occurred in first half 2014. The median revenue multiple declined from 3.0x to 2.5x, while the median EBITDA multiple improved slightly from 9.7x to 10.8x.

Of note, eight of the Information Industry’s top ten highest value private equity deals in first half 2014 were secondary buyouts. Two of these transactions reached the $1 billion threshold. This consisted of Hellman & Friedman’s acquisition of Renaissance Learning, from Permira, for $1.1 billion and Kohlberg Kravis Roberts & Co.’s (KKR’s) acquisition of Internet Brands, from Hellman & Friedman and JMI Equity, also for $1.1 billion. Other high value secondary buyouts included Blackstone Group and Goldman Sachs’ Merchant Banking Division’s acquisition of Ipreo, from KKR, for $975 million and Thoma Bravo’s acquisition of Travelclick, from Genstar Capital, for $930 million.

In terms of specific verticals, Providence Equity Partners was the industry’s most active Education acquirer with five transactions in the space year-to-date. Meanwhile, Thomas H. Lee Partners, Symphony Technology Group, and Vestar Capital Partners were the industry’s most active Healthcare acquirers with three such transactions in first half 2014.

Regarding the horizontal Software market, private equity deal volume stayed about the same at 17 percent. However, private equity deal value declined from 28 percent to 19 percent of total Software value. One notable acquirer in the Business Software segment, which is focused on general business practices and not industry specific needs, was GTCR with the acquisition of Vocus for $352 million and Cision for $164 million. GTCR is planning to combine Vocus and Cision to create a global public relations cloud-based company.

As for the Media and Marketing horizontal, private equity transaction value increased from 26 percent to 38 percent of total Media and Marketing value. The overall Information Industry’s largest transaction in first half 2014 was Leonard Green & Partners and CVC Capital Partners’ acquisition of Advantage Sales and Marketing for $4.2 billion. Financial sponsors also accounted for 11 percent of the horizontal’s aggregate transaction volume but 26 percent of volume within the B2B Publishing and Information segment. Notable private equity backed deals in the B2B segment’s database information subsector included GTCR’s acquisition of Callcredit Information Group for $586 million and Vestar Capital Partners’ acquisition of Institutional Shareholder Services for $364 million.

“We expect that financial sponsors will continue to drive deal activity in the middle-market, especially as some private equity groups morph into semi-strategic buyers with the advantages of scale and synergy that used to be the exclusive province of large strategics,” said John Shea, Managing Partner at Berkery Noyes. “As their three-to-five year time horizons approach, many of the businesses acquired by private equity funds will go on the block, giving strategics who missed out the first time another bite at the apple, only this time the apple may be a little leaner and pricier.”

A copy of the PRIVATE EQUITY IN THE INFORMATION INDUSTRY M&A REPORT FOR HALF YEAR 2014 is available at the Berkery Noyes website.