NEW YORK — October 10, 2018 — Berkery Noyes, an independent mid-market investment bank, today released its third quarter 2018 mergers and acquisitions trend report for the Financial Technology and Information Industry.

The report analyzes M&A activity for the sector during the first three quarters of 2018 and compares it with data covering 2017. This market includes information and technology companies in Capital Markets, Payments, Banking, Insurance, and other related financial services.

Transaction volume year-to-date improved 14 percent compared to the corresponding timeframe in 2017. Aggregate deal value rose 15 percent, from $36.6 billion to $42 billion. In terms of valuations, the median revenue multiple increased from 2.6x to 3.0x.

M&A activity in the Capital Markets segment declined 18 percent on a quarterly basis, from 55 to 45 acquisitions. This followed a 67 percent rise in the second quarter. Relative to the same time period in 2017, the segment year-to-date experienced a 30 percent gain in volume. Notable Capital Markets transactions in third quarter 2018 included State Street Corporation’s announced acquisition of Charles River Systems, a provider of investment management front office tools and solutions, for $2.6 billion; and SS&C Technologies’ announced acquisitions of Intralinks Holdings, which offers secure data sharing and enterprise collaboration solutions that are used by the banking and capital markets sectors, for $1.5 billion; and Eze Software, an investment management software solutions company, for $1.5 billion.

The number of deals in the Payments segment underwent a 33 percent quarter-to-quarter increase, from 30 to 40 acquisitions. Notable Payments transactions during the quarter included GrubHub’s announced acquisition of LevelUp, an analytics, loyalty, and rewards-based mobile platform that connects restaurants and guests, for $390 million; and GTY Technology Holdings’ announced acquisition of CityBase, which provides end-to-end payment solutions and digital services to utilities and government agencies, for $160 million.

“Credit unions and banks, realizing the advantage of a recurring payment system, are utilizing automatic e-bills and online banking services to generate sustained revenue from their payments business,” said John Guzzo, Managing Director at Berkery Noyes. “Consumers who regularly use e-billing services tend to have higher satisfaction rates and more prompt repayment schedules. This is important as financial institutions deal with heightened competition from third party payment providers.” Guzzo continued, “Each of these factors bodes well for M&A in the electronic bill payment & presentment (EBPP) sector.”

Meanwhile, there was an 21 percent quarterly decline in the Banking segment, from 33 to 26 transactions. This followed a 65 percent increase in second quarter 2018. Notable Banking transactions during the past three months included News Corp subsidiary Move’s announced acquisition of Opcity, a real estate lead generation technology platform that matches buyers and sellers with real estate agents, for $210 million; and Q2 Software’s announced acquisition of Cloud Lending, an integrated platform for consumer, commercial, small business, construction, and equipment leasing, for $105 million.

Regarding the industry’s broad-based governance, risk, and compliance (GRC) sector, notable third quarter deals during the past quarter included the management buyout of Asset Control, a provider of financial data management software to banks and other financial institutions, which was backed by Sovereign Capital Partners; OnCourse Learning’s acquisition of Total Training Solutions, a provider of educational training webinars for banks, credit unions and mortgage lenders; Moody’s acquisition of Omega Performance, an online credit training company used by financial services organizations; Prime Trust’s acquisition of FundAmerica, which builds SEC-compliant solutions for technology-based securities offerings; and Equifax’s acquisition of DataX, a credit reporting agency (CRA) and alternative data provider.

“The GRC marketplace as a whole is very active at the moment,” said Peter Ognibene, Managing Director at Berkery Noyes. “Many acquirers are showing a strong interest in GRC vendors that help create consistent processes for risk assessment. The focus now is on integrating technology and content across business functions, rather than relying on ad-hoc or fragmented corporate compliance systems.”

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