NEW YORK — January 13, 2015 — Berkery Noyes, an independent mid-market investment bank, today released its full year 2014 mergers and acquisitions trend report for the Information Industry.
The Information report features companies in the Media & Marketing, Software, and Online & Mobile Industries. It analyzes M&A activity during 2014 and compares it with data covering 2012 and 2013.
According to Berkery Noyes’ latest research, there was an eight percent increase in deal volume, with a total of 3,954 transactions in 2014. Deal value in the Information Industry gained 38 percent on a year-to-year basis, from $162.54 billion to $224.44 billion. The industry’s median revenue multiple saw an uptick from 2.1x in 2013 to 2.3x in 2014, while the median EBITDA multiple moved slightly from 11.2x to 11.0x.
Regarding the three horizontal markets in the report, volume in the Media & Marketing portion of the Information Industry remained nearly constant. However, its value increased 22 percent, from $75.22 billion to $91.45 billion. Of note, the Marketing segment’s value more than tripled over the past year. There were four Marketing transactions above $2 billion in 2014, compared to one such deal in 2013.
As for the Software horizontal, deal activity improved 14 percent throughout the past twelve months. Four of the horizontal’s top ten highest value deals in 2014 occurred in the Business Software segment, which is software designed for general business practices and not specific industry markets. This made it the best represented Software segment in the top ten list. In addition, two of the Software horizontal’s top ten largest deals were backed by private equity firms, both of which occurred in the Business Software segment. This consisted of Vista Equity Partners’ acquisition of TIBCO Software for $4.11 billion and Thoma Bravo’s acquisition of Compuware Corporation for $2.05 billion.
The Online & Mobile horizontal market underwent a 12 percent increase in volume between 2013 and 2014. In terms of high profile Online & Mobile transactions, there were several notable deals involving real-time bidding (RTB) technology, such as Alliance Data’s acquisition of Conversant for $2.34 billion and Millennial Media’s acquisition of Nexage for $108 million. Major acquirers were active in the online real estate information marketplace as well. This included included Zillow’s acquisition of Trulia for $2.91 billion and News Corp’s acquisition of Move, which operates Realtor.com and other websites, for $950 million. The travel sector also experienced its share of newsworthy deals in 2014. Along these lines, Expedia acquired Wotif Group, an Australian based operator of online travel brands in the Asia-Pacific region, for $499 million; and TripAdvisor acquired Viator, which provides travelers with online and mobile access to thousands of tours and activities, as well as traveler submitted reviews, photos, and videos, for $200 million.
As for the mobile application subsector, deals in the business-to-business subsector improved 18 percent, from 193 to 228. Transactions involving consumer applications increased eight percent, from 217 to 234. Google completed several transactions in 2014 that pertain to artificial intelligence (AI) technology, such as JetPac, a mobile application that creates city guides based on public Instagram photographs, as it potentially looks to incorporate AI technology into its image search and map services; and Emu, a mobile messaging application that relies on AI for its virtual assistant platform. Moreover, Google acquired AI company DeepMind for $401 million outside of the mobile application subsector.
“There are many motivated acquirers competing for good properties at the moment,” said James Berkery, Chief Information Officer at Berkery Noyes. “Buyers are usually attracted to companies that can demonstrate a high growth rate, strong margins, good free cash flow, and a diversified customer base, among other factors. Although careful not to overpay, they are sometimes willing to stretch to a premium price when they have a valid, compelling and strategic reason to do so.” Berkery continued, “Along with maintaining confidence in the fundamentals of the market, this helps to explain the general upward trend in median enterprise value multiples in the Information Industry over the past several years.”
A copy of the INFORMATION INDUSTRY M&A REPORT FOR FULL YEAR 2014 is available at the Berkery Noyes website.