NEW YORK — October 21, 2013 — Berkery Noyes, an independent mid-market investment bank, today released its third quarter 2013 mergers and acquisitions trend report for Private Equity in the Information Industry.
The report analyzes M&A activity during the three-month period and compares it with data for the six previous quarters. It features transactions made by financially sponsored acquirers within the Information Industry, including purchases made by subsidiaries or platforms of private equity firms.
Berkery Noyes’ research showed that the number of private equity acquisitions in the Information Industry increased 18 percent in third quarter 2013. This reversed a downward trend in volume over the past four quarters. However, there was a 52 percent decline in overall value between second and third quarter 2013, from $20.0 billion to $9.7 billion. The peak for financially sponsored deal value during the last 21 months occurred in second quarter 2013, which was attributable in part to the acquisition of BMC Software by a private investor group – led by Bain Capital and Golden Gate Capital – for $6.8 billion.
The number of deals between private equity firms rebounded sharply in third quarter 2013. After falling 50 percent between first and second quarter 2013, secondary buyout volume improved almost fourfold over the past three months. Secondary buyouts as a percentage of the industry’s aggregate volume also saw an uptick of six percent thus far in 2013 relative to the corresponding timeframe in 2012. Meanwhile, private equity firms as sellers represented 45 percent of transaction volume during the quarter, an increase of 10 percent when compared to the industry’s historical average since 2012.
As for specific areas of M&A activity in the report, private equity transaction volume in the Healthcare vertical decreased 26 percent on a quarter-to-quarter basis. This followed a 73 percent rise between first and second quarter 2013. Also of note, the Finance vertical saw several high value transactions in third quarter 2013. Three of the segment’s deals during the quarter, when combined, accounted for about 25 percent of the industry’s aggregate value year-to-date. This consisted of Thoma Bravo’s acquisition of Intuit Financial Services in the Banking sector for $1.0 billion; TA Associates-backed Ion Trading’s acquisition of Triple Point Technology in the Capital Markets sector for $900 million; and CVC Capital Partners’ acquisition of Skrill Group in the Payments sector for a purchase price of $601 million.
The M&A climate should remain favorable for private equity acquirers, as indicated by the increase in deal activity over the past quarter. “Strategic buyers backed by financial sponsors are actively seeking transactions that will satisfy their PE owners’ investment objectives,” said John Shea, Managing Partner at Berkery Noyes. “Many of these buyers are securing attractive financing packages, which could give their PE backers extra flexibility to make add-on investments with more equity. Shea continued, “PE firms that have long been active in the information marketplace are continuing to seek quality niche businesses that fit with their existing portfolios and, at the same time, are actively seeking to cash out certain investments.”
A copy of the PRIVATE EQUITY IN THE INFORMATION INDUSTRY M&A REPORT FOR THIRD QUARTER 2013 is available at the Berkery Noyes website.