NEW YORK — July 17, 2017 — Berkery Noyes, an independent mid-market investment bank, today released its half year 2017 mergers and acquisitions trend report for the Financial Technology and Information Industry.

The report analyzes M&A activity during the first half of 2017 and compares it with the four previous six-month periods from 2015 to 2016. This market includes information and technology companies in Capital Markets, Payments, Banking, Insurance, and other related financial services.

Total transaction volume increased 19 percent in on a half year basis. Aggregate deal value rose 76 percent, from $10.66 billion to $18.76 billion. The peak for volume throughout the last 30 months occurred in first half 2016 whereas value reached its zenith in second half 2015. Also of note, Deutsche Börse Group’s merger with London Stock Exchange Group for $14.68 billion, which was announced in first half 2016, was blocked by European regulators earlier this year.

The median revenue multiple over the past six months improved from 1.9x to 2.3x. Over the last two-and-a-half years, deals in the $10-$20 million range received a median enterprise value multiple of 1.2x revenue, compared to 1.6x revenue for those in the $20-$80 million range and 4.1x revenue for those in the $80 million and above range.

Deal activity in the Capital Markets segment saw a seven percent increase in first half 2017. Notable segment transactions year-to-date included London Stock Exchange Group’s announced acquisition of The Yield Book and Citi Fixed Income Indices from Citigroup, which will enhance London Stock Exchange’s data and analytics capabilities of its Information Services Division and its FTSE Russell Franchise, for $685 million; and Factset Research Systems’ acquisition of BISAM, which offers analytics software, client reporting, data management, and other solutions to the investment management sector, for $205 million. As for other high profile Capital Markets acquirers, Moody’s Corporation completed two transactions during the half year period with the acquisitions of Bureau van Dijk Electronic Publishing, a provider of business intelligence and company information, for $3.27 billon; and SCDM, which offers analytical tools for participants in securitization markets and primarily serves European-based clients.

Transaction volume in the Payments segment experienced a nine percent rise relative to second half 2016. Notable Payments deals year-to-date included First Data Corporation’s announced acquisition of CardConnect, a provider of payment processing and technology solutions, for $750 million; FleetCor Technologies’ announced acquisition of Cambridge Global Payments, which offers integrated B2B cross-border payment services, for $675 million; GTCR’s acquisition of Sage Payment Solutions, a provider of payment processing and merchant acquiring solutions in North America, for $260 million; and PayPal’s announced acquisition of TIO Networks, a cloud-based bill payment processing company, for $233 million.

“Companies that have cornered any technology related to security, mobile wallets or Near Field Communication (NFC) technology are attractive to acquirers,” stated Peter Ognibene, Managing Director at Berkery Noyes. “Moreover, in an increasingly interconnected global economy, commercial cross-border revenue is rising and the need for payment solutions like virtual prepaid services for international commerce is becoming more widespread. The total accessible market operations open to third party providers has also risen due to pressure put on incumbent consumer credit providers by regulatory action.”

The segment with the largest increase in volume during first half 2017 was Banking with a 41 percent gain. Notable segment deals over the past six months included Zoopla Property Group’s acquisition of Hometrack, a provider of residential property market insights and analytics, for $152 million; Temenos Groups’ announced acquisition of Rubik Financial Limited, which offers banking, financial services and collections software solutions, primarily to financial institutions in Australia, for $54 million; and Optimal Blue’s acquisition of Comergence, a provider of third-party oversight solutions in the mortgage industry, which followed GTCR’s acquisition of Optimal Blue in 2016 for $350 million.

“We’re observing several areas where technology innovation is occurring in the mortgage sector, which is drawing the interest of acquirers,” said John Guzzo, Managing Director at Berkery Noyes. “One example is CRM and lead generation, which applies to the borrower in what they see from loan officers and lending institutions. These technologies are very much in demand, whether it’s for internal bills or customer acquisition, because you’re no longer seeing a borrower walk into a bank.”

Guzzo continued, “There is also more back-office technology innovation related to compliance, especially with the Dodd-Frank Act and Consumer Financial Protection Bureau (CFPB) guidelines. Banks are under pressure to make sure they are compliant. Many times, especially with middle-sized and smaller banks, they don’t have the actual budget to create their own compliance technology so they rely on third-party companies to provide compliance solutions. This, along with the use of third-party technology to ensure their whole lending lifecycle is working in a compliant manner, is another big driver of innovation by the larger banks.”

A copy of the FINANCIAL TECHNOLOGY AND INFORMATION INDUSTRY M&A REPORT FOR HALF YEAR 2017 is available at the Berkery Noyes website.