NEW YORK — July 24, 2018 — Berkery Noyes, an independent mid-market investment bank, today released its half year 2018 mergers and acquisitions trend report for the Financial Technology and Information Industry.

The report analyzes M&A activity during the first half of 2018 and compares it with the four previous six-month periods from 2016 to 2017. This market includes information and technology companies in Capital Markets, Payments, Banking, Insurance, and other related financial services.

Total transaction volume increased 15 percent on a half year basis. Aggregate deal value rose 34 percent, from $24.27 billion to $32.53 billion.

The median revenue multiple, after rising from 2.6x in first half 2017 to 4.5x in second half 2017, declined to 1.8x in first half 2018. Over the last two-and-a-half years, the median revenue multiple was 2.3x. Deals in the $10-$40 million range during this timeframe received a median enterprise value multiple of 1.5x revenue, compared to 2.3x revenue for those in the $40-$160 million range and 4.2x revenue for those in the $160 million and above range.

Deal activity in the Capital Markets segment underwent a 40 percent increase in first half 2018, making it the sector with the largest rise in volume. Notable segment transactions year-to-date included Blackstone Group led consortium’s announced acquisition of a 55 percent stake in Thomson Reuters Financial & Risk division for $11 billion; Ion Group’s announced acquisition of Fidessa, which provides software and services for investment management systems, analytics, and market data that serves both the buy-side and sell-side, for $2.02 billion (outbidding Temenos Group’s announced acquisition a few months prior); IHS Markit’s announced acquisition of Ipreo Holdings, which offers financial market information and software with a focus on alternative assets, for $1.86 billion; and Intercontinental Exchange’s acquisition of TMC Bonds, a fixed income marketplace that supports anonymous trading across multiple protocols, for $685 million.

“The growth of electronic trading has driven investor demand for access to multiple asset classes, lower trading costs and improved analytics and data management, prompting financial services and diversified banking investment in innovative new alternative investment platforms to meet these demands,” said Peter Ognibene, Managing Director at Berkery Noyes. “Moreover, top-tier companies in the financial services and diversified banking sectors are either sitting on considerable cash holdings or have designated investment arms with the sole purpose to invest and partner with innovative companies to diversify their product offerings and stay ahead of the latest trends in technology and finance.”

Transaction volume in the Payments segment improved nine percent relative to second half 2017. Notable Payments deals year-to-date included SilverLake and P2 Capital Partners’ acquisition of Blackhawk Network, a physical and digital gift card and prepaid payments network, for $3.62 billion; PayPal’s announced acquisitions of iZettle, a mobile payments company that offers small businesses with portable point-of-sale solutions, for $2.43 billion as well as Hyperwallet, a digital payout provider aimed at the sharing and gig economies, for $400 million; Visa’s announced acquisition of Fraedom, which provides payments and transaction management solutions for financial institutions and their corporate customers, for $200 million.

As for other market sectors covered in the report, the Banking segment saw a slight uptick, from 47 to 51 deals. The largest Banking related transaction in first half 2018 was Warburg Pincus’ announced acquisition of a majority stake in Fiserv’s lending solutions business for $419 million. Meanwhile, the Insurance segment also experienced an uptick in volume, from 32 to 36 deals.

“Because a primary goal for many large vendors is to create end-to-end solutions, mortgage technology platforms that add to existing overall systems and help the acquirer create critical mass are some of the most valuable investments, stated John Guzzo, Managing Director at Berkery Noyes. “The ability to offer a universal product to lenders and servicers, as well as to the secondary markets, is a trend that is rapidly gaining momentum.” Guzzo added, “It’s easy enough to see the real attractive targets to that end: automated valuation model providers, broker price opinion providers, property data solutions, and appraisal management companies. All of these segments are hot areas where we expect to see even more M&A activity in the near future.”

A copy of the FINANCIAL TECHNOLOGY AND INFORMATION INDUSTRY M&A REPORT FOR HALF YEAR 2018 is available at the Berkery Noyes website.