NEW YORK — October 16, 2015 — Berkery Noyes, an independent mid-market investment bank, today released its third quarter 2015 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 private equity deal volume in the Information Industry declined 17 percent from second to third quarter 2015. However, volume year-to-date increased six percent compared to the corresponding timeframe in 2014. Going back further, the number of transactions involving an online component has also continued to rise over the years, from 50 percent in 2012 to 63 percent in 2015 year-to-date.
Private equity value gained 22 percent on a quarterly basis, from $20 billion to $24.4 billion. When compared to the first quarter, deal value nearly quadrupled. Of note, seven of the industry’s top ten highest value deals year-to-date occurred in the third quarter. These seven deals combined represented almost one-half of the industry’s aggregate value thus far in 2015. In terms of valuations, the median revenue multiple from 2014 through the first three quarters of 2015 improved from 1.9x to 2.3x, while the median EBITDA multiple moved upward from 12.4x to 13.7x.
The largest transaction in third quarter 2015 and year-to-date was The Carlyle Group’s announced acquisition of Veritas Technologies Corporation, a provider of storage and server management software solutions, for $8 billion. Meanwhile, the industry’s most active acquirer year-to-date was Vista Equity Partners with 30 transactions. 12 of these 30 deals occurred in the third quarter. This included the announced acquisition of Solera Holdings for $5.8 billion, which was the highest value deal ever completed by Vista. Solera provides risk and asset management software and services to the automotive and property marketplace, which includes the property and casualty (P&C) insurance sector. In addition, Vista was responsible for a notable divestiture in the third quarter with the sale of Mitratech, an enterprise legal services provider, to TA Associates for $300 million.
Sponsored acquisitions in the Exhibitions, Conferences, and Seminars segment more than tripled on a year-over-year basis, from eight to 25 deals. Providence Equity Partners completed two segment deals during the third quarter with the acquisition of Urban Expositions and Border Security Expo through Clarion Events. Providence acquired Clarion Events, a U.K. based organizer of more than 200 events in 35 countries, for $307 million in the first quarter.
Private equity firms in the industry’s horizontal Software market accounted for 17 percent of deal volume year-to-date, which was about constant compared to the same time period in 2014. However, sponsored deal value represented 48 percent of the horizontal’s total value so far this year as opposed to 22 percent during the same period in 2014. In addition, three of the industry’s top five highest value Software transactions thus far in 2015 occurred in the third quarter. As for notable acquirers, the most active private equity firm in the Infrastructure segment through the first three quarters was Thoma Bravo with four transactions. This consisted of DigiCert, a provider of SSL certificates and management tools, and Whitebox Security, a data access and governance solutions company, in the third quarter.
“One of the main trends over the past quarter was the rise in aggregate value that accompanied the decline in volume,” said James Berkery, Chief Information Officer at Berkery Noyes. “That being said, financial sponsors continue to look for opportunities to deploy their dry powder. And with the current upswing in valuations, those who have held onto their investments for longer than initially planned might find this an opportune time to seek successful exits when appropriate and return as much capital to their investors as possible.”
A copy of the PRIVATE EQUITY IN THE INFORMATION INDUSTRY M&A REPORT FOR THIRD QUARTER 2015 is available at the Berkery Noyes website.