NEW YORK — October 16, 2018 — Berkery Noyes, an independent mid-market investment bank, today released its third quarter 2018 mergers and acquisitions trend report for Private Equity in the Information Industry.
The report analyzes M&A activity during the three-month period and compares it with data for the six previous quarters. It features transactions by financially sponsored acquirers within the Information Industry, including purchases made by subsidiaries or platforms of private equity firms.
Berkery Noyes’ research showed that private equity volume in the Information Industry year-to-date increased seven percent compared to the corresponding timeframe in 2017, from 618 to 659 deals. Financially sponsored deal value rose three percent year-over-year, from $61.1 billion to $62.3 billion. In terms of valuations, the median revenue multiple remained constant at 2.5x whereas the median EBITDA multiple moved upward slightly from 11.8x to 12.5x.
Two of the industry’s top ten highest value deals year-to-date occurred in the third quarter. Along these lines were the announced acquisition of Dun & Bradstreet – a provider of commercial data, analytics, and insights for businesses – by an investment consortium that includes Thomas H. Lee Partners and CC Capital, for $6.7 billion; and Insight Venture Partners’ announced acquisition of Episerver, a web content management, digital commerce, and digital marketing solutions company, for $1.2 billion. These two transactions combined accounted for almost half of the industry’s aggregate sponsored value during the third quarter.
Regarding specific markets in the Information Industry, the most active acquirer in the Healthcare vertical through the first three quarters of 2018, either directly or through an affiliated business, was Arsenal Capital Partners with eight transactions. Three of these deals occurred in the third quarter: Pirana Software, which provides interfaces for a range of software tools used in pharmacometrics modeling; KMR Group, which is used in the provision and analysis of benchmarking and other data for the biopharmaceutical sector; and Metrics Champion Consortium (MCC), an association dedicated to the development of standardized performance metrics to improve clinical trials.
In terms of the Education vertical, notable acquisitions in third quarter 2018 included Alpine Investor’s announced acquisition of Riverside Clinical and Standardized Testing from Houghton Mifflin Harcourt for $140 million; CIP Capital’s investment in Carnegie Learning, a provider of math products and services, which will be merged with New Mountain Learning, a literacy, language, and digital competency skills company; and Golden Gate Capital’s acquisition of The Learning Experience, an early learning and childcare franchise that has more than 300 centers operating or under development.
Upon examination of the Finance vertical, notable acquisitions in third quarter 2018 included Lightyear Capital’s announced acquisition of a controlling stake in Augeo FI, an outsourced provider of customized loyalty program solutions for middle-market banks and credit unions, for $140 million; 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; CIP Capital-backed OnCourse Learning’s acquisition of Total Training Solutions, a provider of educational training webinars for banks, credit unions and mortgage lenders; and GTCR’s acquisition of Resitrader, a mortgage loan trading platform.
“We expect that financial sponsors will continue to drive deal activity in the middle-market, especially as some private equity groups morph into semi-strategic buyers with the advantages of scale and synergy that used to be the exclusive province of large strategics,” said James Berkery, Managing Partner at Berkery Noyes. “As their three-to-five year time horizons approach, many of the businesses acquired by private equity funds will go on the block, giving strategics who missed out the first time another bite at the apple, only this time the apple may be a little leaner and pricier.”
A copy of the PRIVATE EQUITY IN THE INFORMATION INDUSTRY M&A REPORT FOR THIRD QUARTER 2018 is available at the Berkery Noyes website.