NEW YORK — October 29, 2014 — Berkery Noyes, an independent mid-market investment bank, today released its third quarter 2014 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 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 declined eight percent from second to third quarter 2014. However, deal volume year-to-date increased 24 percent compared to the corresponding timeframe in 2013.
Private equity value remained nearly constant on a quarterly basis at $12.0 billion. The peak for financially sponsored transaction volume during the past two-and-a-half years occurred in second quarter 2014, whereas value reached its zenith in second quarter 2013. Of note, five of the industry’s top ten highest value deals year-to-date occurred in the first quarter. These five deals combined represented almost a quarter of the industry’s aggregate value thus far in 2014.
Going back further, the number of transactions involving an online component has continued to rise over the years, from 51 percent in 2011 to 59 percent in 2014 year-to-date. There has been a sizable increase in median multiples during this period as well. The median revenue multiple over the past 45 months improved from 1.8x to 2.4x, while the median EBITDA multiple increased from 9.1x to 12.4x.
The largest transaction in third quarter 2014 was Vista Equity Partners’ acquisition of TIBCO Software, a provider of infrastructure and business intelligence software, for $4.0 billion. There was one other deal that reached the $1 billion threshold in the quarter, which also occurred in the Business Software segment. This consisted of Thoma Bravo’s acquisition of Compuware Corporation, a provider of enterprise software and IT services, for $2.1 billion.
As for the Media and Marketing horizontal, private equity volume increased in the B2B Publishing and Information segment. Financial sponsors were responsible for 28 percent of the segment’s volume year-to-date, as opposed to 14 percent of volume throughout the first three quarters of 2013. Notable deals in the B2B Publishing and Information segment in third quarter 2014 included Symphony Technology Group’s acquisition of McGraw Hill Construction, which provides data, news, and insights to construction professionals, for $320 million; Shamrock Capital Advisor’s acquisition of Questex Media Group, a business information and events company; and Observer Capital’s acquisition of SourceMedia, which publishes a variety of financial trade publications.
Financial sponsors in the industry’s horizontal Software market accounted for 17 percent of deal volume year-to-date, which was about the same compared to the same period in 2013. In addition to the high profile Business Software transactions completed by Vista Equity Partners and Thoma Bravo, there were several notable private equity deals in the Infrastructure Software segment in third quarter 2014. This included Veritas Capital Partners’ acquisition of BeyondTrust in the cyber-security subsector for a reported $310 million and Siris Capital Group’s acquisition of Junos Pulse, which is Juniper Networks’ mobile security business, for $250 million.
“Having succeeded with early-round investments, many private equity players are increasing their acquisition activity, going head to head with strategic buyers and stepping up to the higher multiples,” said John Shea, Managing Partner at Berkery Noyes. “Awash in cash and under pressure to use it, these funds are bidding aggressively for high-quality assets, courting sellers with full valuations.”
A copy of the PRIVATE EQUITY IN THE INFORMATION INDUSTRY M&A REPORT FOR THIRD QUARTER 2014 is available at the Berkery Noyes website.