NEW YORK — October 15, 2012 — Berkery Noyes, an independent mid-market investment bank, today released its third quarter 2012 mergers and acquisitions trend report for Private Equity in the Information Industry.
The report analyzes M&A activity in the private equity market during the first three quarters of 2012 and compares it with data covering 2011. It features transactions made by financially sponsored acquirers within the Information Industry, including purchases made by subsidiaries or platforms of private equity firms.
Although transaction volume in the Information Industry as a whole was down 10 percent in third quarter 2012, private equity was less negatively impacted. Berkery Noyes’ research showed that the number of private equity acquisitions in the Information Industry decreased four percent during the last three months, while at the same time gaining in value from $11.4 billion to $12.5 billion. Furthermore, transaction volume year-to-date improved 11 percent compared to the same timeframe in 2011. The median revenue multiple from 2011 through the first three quarters of 2012 declined from 1.8x to 1.3x, but the median EBITDA multiple increased from 8.8x to 9.5x.
Of particular note, there was a significant rise in the number of secondary buyout deals throughout the first three quarters of 2012. This portion of the market, which consists of portfolio companies being sold between private equity firms, underwent a 17 percent increase relative to the corresponding period in 2011. In addition, secondary buyout volume thus far in 2012 has increased 55 percent when contrasted with the first three quarters of 2010.
Two of the highest value deals in the report, both in third quarter 2012 and year-to-date, occurred between private equity firms. The largest related transaction was The Carlyle Group’s announced acquisition of Getty Images from Hellman & Friedman for $3.3 billion. Another deal surpassing the $1 billion threshold was Hellman & Friedman’s announced acquisition of Wood Mackenzie, a portfolio company of Charterhouse Capital Partners, for $1.08 billion. These two transactions followed Advent International and GS Capital Partners’ announced acquisition of TransUnion, a portfolio company of Madison Dearborn Partners, for $3.2 billion in first quarter 2012.
“Financial sponsors in general are being cautious and pursuing deals with less risk,” said John Shea, Managing Partner at Berkery Noyes. “Nonetheless, the fear of higher capital gains taxes in 2013, along with the looming fiscal cliff, is having a noticeable impact on M&A activity at the moment. Moreover, many private equity firms are still seeking opportunities to deploy investment funds that they raised before the downturn a few years ago.”
A copy of the PRIVATE EQUITY IN THE INFORMATION INDUSTRY M&A REPORT FOR THIRD QUARTER 2012 is available at the Berkery Noyes website.