May 27, 2014 INFORMATION INDUSTRY M&A VOLUME HOLDS STEADY, AS MEDIAN EBITDA MULTIPLES CONTINUE TO RISE

Berkery Noyes’ Information Industry report showed that transaction volume in the Information Industry experienced a two percent uptick on a quarter-to-quarter basis. Aggregate deal value increased 44 percent, from $47.3 billion to $67.9 billion. The median revenue multiple remained constant at 2.2x, while the median EBITDA multiple increased from 9.6x to 11.0x.

Financially sponsored deal volume in the Information Industry, after remaining nearly constant from Q3 2013 to Q4 2013, improved seven percent in Q1 2014. Five of the industry’s top ten highest value transactions in Q1 2014 were also backed by financial sponsors.

In terms of specific verticals, there were two private equity transactions in the Education market that reached the $1 billion threshold during the quarter. This consisted of Charterhouse Capital Partners’ $2.3 billion acquisition of SkillSoft, which offers cloud-based learning solutions for enterprises and governments; and Hellman & Friedman’s $1.1 billion acquisition of Renaissance Learning, a K-12 assessment and analytics company.

As for other areas of the Information Industry, management consulting firms have been showing interest in data analytics, web/mobile development, and digital marketing services companies over the past several quarters. One example during Q1 2014 was KMPG’s acquisition of Cynergy Systems, which specializes in mobile and digital strategy, design, and development. Additional transactions in this space completed in the latter part of 2013 were KPMG’s acquisition of Link Analytics, PWC’s acquisition of BGT Partners, and Deloitte’s acquisition of Banyan Branch.

“Some of the key factors prompting management consulting firms to consider M&A in this space are talent and the desire to expand their offerings,” said James Berkery, Chief Information Officer at Berkery Noyes. “In addition, it seems that many digital marketing companies are also embracing more of a consulting type model themselves. We are seeing this come to fruition with some of the acquisitions made by Publicis and WPP, in that the lines of distinction between technology and creative services have become increasingly blurred.”