NEW YORK — July 23, 2018 — Berkery Noyes, an independent mid-market investment bank, today released its half year 2018 mergers and acquisitions trend report for the Information Industry.
The Information report features companies in the Media & Marketing, Software, and Online & Mobile Industries. It analyzes M&A activity during the first half of 2018 and compares it with the four previous six-month periods from 2016 to 2017.
Total transaction volume declined six percent on a half year basis, with a total of 2,093 deals in first half 2018. Aggregate value lost three percent, from $173.96 billion to $168.42 billion. The peak for volume throughout the past two-and-a-half years occurred in first half 2017, whereas value reached its zenith in second half 2016.
Regarding the three horizontal markets covered in the report, the number of transactions in the Software horizontal decreased three percent. However, acquisition activity in the Infrastructure segment gained 11 percent. The Software horizontal’s top three highest value deals year-to-date also occurred in the Infrastructure segment. Along these lines were KKR’s announced acquisition of BMC Software, which offers cloud and IT management solutions to enterprises, for $8.5 billion; Microsoft’s announced acquisition of GitHub, which provides code hosting services that allow developers to build software for open source projects, for $7.5 billion; and Salesforce’s announced acquisition of MuleSoft, which provides a platform for building application networks that connect enterprise apps, data, and devices, for $5.94 billion.
Upon examination of high profile acquirers in first half 2018, Microsoft was active with the previously mentioned acquisition of Github; artificial intelligence (AI) companies Bonsai and Semantic Machines; education technology start-ups Flipgrid and Chalkup; PlayFab, a provider of services for cloud-connected games; and game development studios Playground Games, Ninja Theory, Undead Labs, and Compulsion Games.
In the Online & Mobile horizontal market, volume moved downward one percent. Looking at value, five of the horizontal’s top ten largest deals in first half 2018 occurred in the E-Commerce segment, making it the best represented sector in the top ten list.
M&A volume in the mobile application subsector saw a four percent increase during the half year period. Mobile-based deals that reached the $1 billion threshold year-to-date included Chinese e-commerce platform Meituan’s announced acquisition of Mobike, a bike sharing company that allows users of its mobile app to reserve and unlock bikes, for $3.4 billion; and PayPal’s announced acquisition of iZettle, a mobile payments company used by small businesses, for $2.43 billion.
As for specific Online & Mobile sectors, there continues to be active interest in job sites and recruiting marketplaces. One high profile deal in first half 2018 was Recruit Holdings’ announced acquisition of Glassdoor, a job listings and recruiting marketplace, for $1.2 billion. This followed several major acquisitions in this space during the past several years, for instance Apollo Group Management and Ontario Teachers’ Pension Plan Board’s acquisition of Career Builder, a job board and talent acquisition solutions company, for $475 million in 2017; and Randstad Holding’s acquisition of Monster Worldwide for $429 million in 2016.
Deal flow in the Media and Marketing horizontal decreased ten percent during the half year period. Meanwhile, the Internet Media segment experienced a 19 percent gain, making it the sector with the horizontal’s largest increase in first half 2018. Notable Internet Media transactions in first half 2018 included Indian conglomerate Reliance Industries’ announced acquisition of digital music streaming service Saavn for $104 million, and the subsequent merger of Saavn with JioMusic, which is now valued at over $1 billion; Penske Media Corporation’s acquisition of SheKnows Media, a women’s lifestyle digital media company; Google’s sale of Zagat, a restaurant review service, to recommendation platform The Infatuation for an undisclosed amount (note that Google acquired Zagat for $151 million in 2011); and Seven West Media’s sale of its 50 percent stake in Yahoo!7 to Verizon subsidiary Oath.
“Strategic buyers and investors are making acquisitions and investments to either fill/enhance a product or service void in their offerings or as a platform acquisition,” said James Berkery, Managing Director at Berkery Noyes. “This robust level of activity is a result of the significant amounts of cash held by operating companies and financial investors. Strategic acquirers are looking to enhance revenue growth and facilitate the transition of any legacy businesses through acquisition.”
A copy of the INFORMATION INDUSTRY M&A REPORT FOR HALF YEAR 2018 is available at the Berkery Noyes website.