May 4, 2015 INFORMATION INDUSTRY VALUATIONS RISE, WHILE FINANCIAL SPONSORS PICK UP THEIR PACE OF DEAL ACTIVITY

According to Berkery Noyes’ Information report for Q1 2015, transaction volume in the Information Industry experienced a four percent decrease on a quarter-to-quarter basis. Aggregate deal value remained almost constant at $45.5 billion. The median revenue multiple increased from 2.3x to 2.7x, while the median EBITDA multiple moved upward from 11.3x to 12.1x.

In terms of financial sponsors, volume improved 19 percent in Q1 2015. Two of the industry’s top ten highest value deals were backed by private equity firms during the quarter, as opposed to five in Q1 2014. The largest financially sponsored transaction in Q1 2015 was Bain Capital’s acquisition of enterprise security company Blue Coat Systems for $2.4 billion. An investor group led by Thoma Bravo previously took Blue Coat private in 2011 for $1.1 billion.

Deal activity in the Media & Marketing horizontal decreased 11 percent in Q1 2015. This followed a 16 percent rise in Q4 2014. Two of the Information Industry’s five largest private equity backed transactions year-to-date occurred in the horizontal. This consisted of GTCR and Adams Outdoor Advertising’s acquisition of Fairway Outdoor Advertising for $575 million and Providence Equity Partners’ acquisition of Clarion Events for $307 million.

In addition to SS&C Technologies, notable recent deals in the Capital Markets segment included BATS Global Markets’ acquisition of KCG Hotspot FX, a foreign exchange currency trading venue, for $365 million; Bridgepoint’s acquisition eFront SA, which provides software solutions focused on enterprise risk management and alternative investments, for $327 million; and Temenos Group’s acquisition of Multifonds, a fund administration software company, for $260 million.

Moreover, the number of transactions in the Capital Markets segment increased 25 percent during the quarter and more than doubled when compared to the same time period in 2014. Q1 2015 was also the segment’s most active period throughout the past five quarters.

“Having successfully shed non-core assets and many of them flush with cash, major strategic players are looking to grow through vertical acquisitions that extend their reach into existing markets,” said James Berkery, Chief Information Officer at Berkery Noyes. “By deepening their penetration into their customers’ business, these companies are redefining the customer relationship from that of buyer-seller (price sensitive, vulnerable to competition) to something like strategic partner (loyal, long-lived and profitable).”