2018-10-09 Berkery Noyes Releases Online and Mobile Industry M&A Report For Third Quarter 2018
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NEW YORK — October 9, 2018 — Berkery Noyes, an independent mid-market investment bank, today released its third quarter 2018 mergers and acquisitions trend report for the Online and Mobile Industry. The report analyzes M&A activity during the three-month period and compares it with data for the six previous quarters.
Total volume increased nine percent on a quarterly basis. Aggregate value over the past three months fell 44 percent, from $80.2 billion to $45 billion. However, overall value nearly tripled in the second quarter. Regarding valuations, the median revenue multiple from 2017 through the first three quarters of 2018 improved from 2.0x to 2.5x while the median EBITDA multiple remained almost constant at 11.4x.
Transaction volume in the SaaS & Cloud segment rose nine percent from second to third quarter 2018. This followed a 28 percent rise in the first quarter. SaaS & Cloud acquisitions received a median revenue multiple of 3.1x thus far in 2018.
Three of the industry’s top ten largest deals year-to-date occurred in the third quarter, two of which were SaaS-based transactions. Along these lines were Adobe Systems’ announced acquisition of Marketo, a cloud platform for B2B marketing engagement, for $4.8 billion; and State Street Corporation’s announced acquisition of Charles River Systems, a provider of investment management front office tools and solutions, for $2.6 billion.
Other notable SaaS transactions in the third quarter included Cisco Systems’ acquisition of Duo Security, which offers unified access security and multi-factor authentication delivered through the cloud, for $2.4 billion; and Amadeus IT Group’s announced acquisition of Travelclick, which serves mid-chain and independent hotels with business intelligence, reservations, bookings, guest management, and other solutions, for $1.5 billion. In terms of high profile, non-tech acquirers, shared workspace provider WeWork completed a deal in the segment with the acquisition of Teem, a cloud-based meeting room scheduling and workplace analytics company, for a reported $100 million. Outside of the segment WeWork acquired Designation, a User Interface (UI) and User Experience (UX) digital design program, through the Flatiron School (WeWork acquired the Flatiron School in 2017); and Conductor, an SEO and marketing intelligence platform, during the quarter.
M&A activity in the E-Commerce segment improved 26 percent, making it the sector with the largest quarterly gain. Notable E-Commerce deals in third quarter 2018 included Walmart’s announced acquisition of Cornershop, an online marketplace for on-demand delivery from supermarkets, pharmacies and specialty food retailers, for $225 million; 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; Amazon’s acquisition of Tapzo, a payment and personal assistant platform based in India; and 7-Eleven’s acquisition of a majority stake in Tipple, an Australian alcohol delivery company.
As for the E-Marketing & Search segment, volume stayed about constant over the past three months. This followed a nine percent increase in the second quarter. Notable segment transactions during the third quarter included the previously mentioned Marketo acquisition for $4.8 billion; and Insight Venture Partners’ announced acquisition of Episerver, a web content management, digital commerce, and digital marketing solutions company, for $1.2 billion. Additional segment deals by high profile acquirers included Deloitte Digital’s acquisition of Magnetic, an artificial intelligence (AI) company that uses machine learning to deliver advertising solutions; and Lithium Technologies’ merger with Spredfast, a social software platform that manages and integrates social content.
“The ability to better profile and target consumers has necessitated the development and growth of companies that can analyze shoppers’ behavior and develop appropriate offerings to the consumer,” said Vineet Asthana, Managing Director at Berkery Noyes. “This shift has led to the growth of data analytics businesses and, with the need to develop deeper relationships with consumers, the growth in loyalty marketing companies.”
Upon examination of other areas covered in the report, volume in the Communications segment increased seven percent on a quarterly basis. High profile segment transactions in the third quarter included SS&C Technologies’ announced acquisition 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 Atlassian’s acquisition of OpsGenie, an incident management platform used by DevOps and IT-operations teams to manage critical IT alerts and incidents, for $295 million.
The number of mobile application deals gained five percent during the third quarter. This followed a 31 percent rise in the second quarter. Mobile transactions by high profile acquirers in the past quarter included GrubHub’s announced acquisition of LevelUp, an analytics, loyalty, and rewards-based mobile platform that connects restaurants and guests, for $390 million; Electronic Arts’ acquisition of Industrial Toys, an independent game studio that creates mobile games; and Proctor & Gamble’s acquisition of Pressbox, a mobile and web application used for dry-cleaning and laundry services.
A copy of the ONLINE AND MOBILE INDUSTRY M&A REPORT FOR THIRD QUARTER 2018 is available at the Berkery Noyes website.