September 30, 2013 AFTER AN ACTIVE 2012, FINANCIAL SPONSORS SHOW CAUTION IN 1ST HALF 2013

According to Berkery Noyes’ Private Equity report for first half 2013, M&A activity underwent a 15 percent decrease over the past six months, from 234 to 198 transactions. However, volume in the aggregate Information Industry remained nearly constant when deals completed by strategic acquirers are taken into consideration. The peak for financially sponsored transaction volume during the past two-and-a-half years occurred in first half 2012, whereas value reached its zenith in second half 2012.

The median revenue multiple moved slightly from 1.9x in second half 2012 to 2.0x in first half 2013, while the median EBITDA multiple improved from 9.9x to 11.2x. At the same time, private equity deal value fell from $24.45 billion to $18.99 billion, a 22 percent decline.

The largest transaction in first half 2013 was BMC Software’s announced acquisition by a private investor group, led by Bain Capital and Golden Gate Capital, for $6.81 billion. This was the highest value deal in the Information Industry over the last 30 months. Financial sponsors in the industry’s horizontal Software market accounted for 43 percent of deal value in first half 2013, compared to just 23 percent in first half 2012.

As for the Media and Marketing portion of the Information Industry, the largest deal in first half 2013, either by a strategic or private equity acquirer, was BC Partners’ announced acquisition of Springer Science & Media for $4.42 billion. Meanwhile, the highest value transaction in the Exhibitions, Conferences, and Seminars subset was also backed by a financial sponsor. This consisted of Onex Corporation’s acquisition of Nielsen Expositions for $950 million.

“Rising equity values might be influencing the expected valuations of some potential sellers,” said John Shea, Managing Partner at Berkery Noyes. “This is one possible factor contributing to the relative slowdown in activity at the moment. However, the good news is that many financial sponsors currently have a surplus of capital available and are seeking opportunities to invest, especially in the middle-market.”