The Information Industry report is defined by Berkery Noyes as covering all Media and Marketing, Software, and Online and Mobile companies. It analyzes M&A activity in the first half of 2012 and compares it with activity for the four previous six-month periods from 2010 to 2011.
Although worldwide M&A activity decreased 22 percent according to Thomson Reuters, total volume in the Information Industry increased six percent, rising from 1,646 to 1,741 transactions. At the same time, overall transaction value fell two percent. The Energy segment – which primarily includes Software companies that service electricity, fossil fuel, alternative energy, and energy utility companies – improved 61 percent in first half 2012, making it the segment with the largest increase in volume. The median revenue multiple in the Information Industry decreased from 2.0x in second half 2011 to 1.6x in first half 2012, while the median EBITDA multiple dropped from 11.6x to 10.0x.
The number of Information Industry transactions with a big data component tripled during the last six months. The most active acquirer in this space was Opera Solutions, a predictive analytics company, with three transactions. The Infrastructure segment of the Software Industry contained several big data deals as well. For example, VMware acquired Cetas Software, which offers big data analytics solutions to online enterprises, and Cisco announced its acquisition of Truviso, an analytics software company. IBM was also one of the most active big data acquirers during the two and a half years covered in this report. The information technology company acquired Vivisimo, a provider of software that automates data discovery, in first half 2012. IBM also acquired i2 Limited in 2011 and Coremetrics and Netezza Corporation in 2010.
Companies in the Media and Marketing Industry appear to be making strategic big data acquisitions as well. For instance, W2O Group, a network of marketing, research, and communication firms, acquired Ravel to enhance its analytics abilities. Ravel, a startup founded in 2010, allows businesses to gain insight from large datasets. “One of Ravel’s sponsored offerings is an open source graph database called GoldenOrb, which is a cloud-based project modeled after both Hadoop and Google’s Pregel system,” said James Berkery, Chief Information Officer at Berkery Noyes. “As evidenced by the sheer number of Hadoop startups, the potential for M&A involving big data companies looks promising.”
M&A volume relating to Online and Mobile photography companies tripled relative to second half 2011. The largest related transaction was Facebook’s announced acquisition of Instagram for $1 billion. The product nature of the deal was similar to AOL’s March acquisition of Hipster, an iOS and Android photo sharing app, for an undisclosed sum. Facebook, in addition to Instagram, acquired the team from Lightbox, an Android photo sharing app. Meanwhile, the largest associated financially sponsored transaction was Kohlberg Kravis Roberts & Co.’s acquisition of Fotolia, a stock photography site, for $150 million.
Many other photo sharing transactions with smaller or undisclosed values have been occurring as well. For example, Shutterfly, an Internet-based social expression and publishing service, is planning to acquire Kodak Gallery’s online photo sharing platform for nearly $24 million and has already acquired Photoccino, a photo software company. In the month prior to Shutterfly’s announced transaction, Imaging Spectrum acquired Express Digital Graphics, a company that tailors its products to professional photographers.
A copy of the FIRST HALF 2012 M&A REPORT FOR THE INFORMATION INDUSTRY is available at the Berkery Noyes website.