July 28, 2014 PAYMENTS M&A REMAINS A BRIGHT SPOT IN THE FINANCIAL TECHNOLOGY INDUSTRY

Aggregate transaction volume in Berkery Noyes’ Financial Technology report underwent an 11 percent decrease in first half 2014. Total deal value fell 27 percent, from $15.15 billion to $11.07 billion. The median revenue multiple between second half 2013 and first half 2014 increased from 2.5x to 3.5x, while the median EBITDA remained nearly constant at 15.5x.

When compared to first half 2013, the overall industry’s volume increased six percent and value stayed about the same. The peak for volume throughout the past 30 months occurred in second half 2013.

The overall industry’s decrease in volume over the past six months was attributable in large part to the Capital Markets segment, which saw the number of deals fall 30 percent. This came in the aftermath of a 19 percent increase between first and second half 2013, which was the segment’s highest point over the past two-and-a-half years.

Deal activity in the Payments segment saw a five percent decline in first half 2014. This followed a 64 percent increase between first and second half 2013.

In terms of transaction value, six of the industry’s top ten largest deals year-to-date were Payments related. The largest deal in the mobile Payments subsector in first half 2014 was Intuit’s acquisition of Check for $360 million.

“End-users of financial technology solutions tend to be diverse, often global, and well capitalized institutions with significant IT spend at their disposal and unbridled enthusiasm and requirements for new, cutting-edge technology particularly those that drive alpha, reduce costs or assist in compliance,” stated Peter Ognibene, Managing Director at Berkery Noyes. “As a result, private equity firms as well as strategics that are looking to extend their product offerings in an ever expanding and rapidly changing market are showing a high level of interest in making acquisitions. The return on investment for financial technology and information customers is high, encouraging users to view these technologies as not only productivity solutions but also profit generators.”