February 4, 2013 M&A VOLUME IN THE INFORMATION INDUSTRY UNDERGOES MODEST GAIN IN 2012

Berkery Noyes has released its Information Industry M&A Report for Full Year 2012. It features companies in the Media and Marketing, Software, and Online and Mobile Industries.

The Information Industry experienced a three percent uptick in volume since 2011, from 3,317 to 3,412 transactions. Although transaction volume improved slightly over the past twelve months, the overall number of industry transactions increased 22 percent relative to 2010.

Deal value decreased 10 percent on a yearly basis, from $171.41 billion in 2011 to $153.53 billion in 2012. The median revenue remained nearly constant at 1.9x, while the median EBITDA multiple declined from 11.5x to 10.0x. Four of the report’s top ten highest value transactions in 2012 were backed by financial sponsors, compared to two in 2011.

Dell was an active acquirer and completed nine industry transactions in 2012. Several of Dell’s software acquisitions indicate how companies whose primary business is making servers, storage, and other data center products are looking to innovate and diversify through acquisition as their client base starts moving data centers onto the cloud. This trend was highlighted in part by Dell’s acquisitions of Wyse Technology, Make Technologies, and Clerity Solutions throughout the year.

“There has been an ongoing discussion in the M&A world about Technology Enabled Services,” said James Berkery, Chief Information Officer at Berkery Noyes. “As an overarching term that is distinct from more defined concepts such as cloud or Software as a Service (SaaS), Technology Enabled Services combine business process outsourcing (BPO) concepts with proprietary technologies that go hand in hand with a company’s offerings.”

According to Berkery, “Although the service in SaaS implies that hosting the software is the service, there is typically no personal service in the traditional sense. Technology Enabled Services use and implement the software for the client, an approach that encourages the provider to implement the product beyond introduction and training.” Berkery continued, “These companies are taking on the responsibility of making sure all of the data points are entered, reported and acted upon as they were designed to be, which ensures the user obtains the maximum benefit of the product.”