December 8, 2014 INFORMATION INDUSTRY DEAL VALUE REACHES NEW HEIGHTS IN THIRD QUARTER 2014

According to Berkery Noyes’ third quarter 2014 Information report, aggregate value gained 31 percent, from $48.7 billion in second quarter 2014 to $63.9 billion in third quarter 2014. In terms of valuations, the industry’s median revenue multiple from 2013 through the first three quarters of 2014 experienced an uptick from 2.1x to 2.4x, while the median EBITDA multiple moved slightly from 11.2x to 11.0x.

The largest transaction in third quarter 2014 was SAP’s acquisition of Concur Technologies, a provider of travel and expense management solutions, for $7.6 billion. This followed SAP’s acquisition earlier in the year of Fieldglass, a provider of vendor management software that helps companies manage contingent labor. SAP has completed several notable cloud-based acquisitions in the workforce management space over the past few years. 

As for the horizontal markets in the report, volume in the Online & Mobile component of the Information Industry fell 12 percent in third quarter 2014. However, when compared to the first three quarters of 2013, Online & Mobile transaction volume year-to-date rose nine percent. Deal flow across the entire Software market, after increasing 16 percent from first to second quarter 2014, declined 12 percent in third quarter 2014. Regarding specific growth areas, the Infrastructure Software segment underwent a nine percent rise. Transaction volume in the Media & Marketing horizontal experienced an 11 percent quarterly decrease. Meanwhile, the number of deals in the Internet Media segment increased five percent throughout the past three months.

“There appears to be sufficient momentum to drive steady improvement across the information spectrum,” said James Berkery, Chief Information Officer at Berkery Noyes. “Companies that have shed non-core assets, rationalized their revenue mix around high-margin products, and maintained investment in new products and processes are well positioned for growth.”

Berkery continued, “Given the favorable economic climate, large strategics in general are finding it easier to strengthen their balance sheets, improve earnings, and generate cash to invest in core business activities. Some strategic players will use the cash to retire their debt. However, a good cash position and strong stock prices will make others more likely to seek acquisitions that can provide new customers, new technologies or access to new markets, and these often entail niche businesses that bolt on or tuck into existing operations.”