NEW YORK — October 14, 2016 — Berkery Noyes, an independent mid-market investment bank, today released its third quarter 2016 mergers and acquisitions trend report for the Financial Technology and Information Industry.

The report analyzes M&A activity for the sector during the first three quarters of 2016 and compares it with data covering 2015. This market includes information and technology companies in Capital Markets, Payments, Banking, Insurance, and other related financial services.

Transaction volume year-to-date increased seven percent compared to the corresponding timeframe in 2015. Aggregate deal value also improved seven percent, from $42 billion to $44.9 billion. In terms of year-over-year valuations, the median revenue multiple decreased from 3.2x to 2.2x, which was close to the industry’s median of 2.4x throughout the entire timeframe covered in the report. The median EBITDA multiple moved downward from 15.2x to 12.1x.

M&A activity in the Capital Markets segment declined 17 percent on a quarterly basis, from 35 to 29 acquisitions. The overall industry’s largest deal during the third quarter was CBOE Holdings’ announced acquisition of BATS Global Markets for $3.6 billion. This continued a trend of consolidation involving major exchanges, such as Deutsche Börse Group’s announced merger with the London Stock Exchange Group for $14.7 billion and Nasdaq’s announced acquisition of The International Securities Exchange for $1.1 billion earlier this year. Also of note, these were three of the industry’s top five largest deals thus far in 2016. With a combined value of $19.4 billion, these three acquisitions accounted for 43 percent of the industry’s aggregate value year-to-date.

Other notable Capital Markets related transactions in third quarter 2016 included E*TRADE Financial Corporation’s acquisition of OptionsHouse, an online stock and option broking company that provides trading platforms for retail and institutional options traders and investors, for $725 million; McKinsey’s acquisition of PriceMetrix, a data and analytics company focused on the wealth and asset management sector; Institutional Shareholder Services’ acquisition of iiWisdom, a provider of interactive governance solutions; and S&P Global Platts’ acquisition of PIRA Energy Group, which offers a broad range of energy research and forecasting products and services.

The number of deals in the Payments segment underwent a 16 percent quarter-to-quarter decrease, from 37 to 31 acquisitions. However, the segment year-to-date experienced a 32 percent increase relative to the same time period in 2015. The largest Payments transaction in third quarter 2016 was MasterCard’s announced acquisition of VocaLink, which develops and operates payments infrastructure solutions, for $924 million. Meanwhile, one new acquirer in the space was restaurant chain SUBWAY with the acquisition of Avanti Commerce, an order, payment, and customer engagement platform used by a wide variety of restaurants.

“Many strategic acquirers are looking to enhance their product suites by acquiring leading-edge mobile payments, wallet, and commerce companies,” said Peter Ognibene, Managing Director at Berkery Noyes. “In addition, card providers and merchants are seeking to reduce fraud related costs by acquiring the best technology available. As EMV capable systems reduce in-person fraud, fraudsters will shift their focus online, thus requiring the adoption of even more advanced technology.”

“More companies are following the trend in which consumers are adopting other ways to pay at the point of sale,” said John Guzzo, Managing Director at Berkery Noyes. “As a result, merchants are using point-of-sale tablets and mobile-based payment systems in the hopes of increasing efficiency, boosting sales, and improving the customer experience at retail locations.” Guzzo continued, “The payments sector has very strong proprietary technology vendors, but some of them lack the sales and distribution forces needed. When this is the case it can often make sense for them to align with larger payments companies.”

As for other industry sectors, there was a 25 percent year-over-year volume increase in the Insurance segment, from 48 to 60 deals. There was a seven percent rise in the Banking segment, from 61 to 65 transactions. Notable Banking deals during third quarter 2016 included First American Financial Corporation’s acquisition of RedVision Systems, a national provider of title and real property research; Ant Financial’s acquisition of Eye Verify, which develops eye-based biometric solutions for mobile devices, for a reported $100 million (note that Ant Financial is a payments affiliate of Alibaba); and Capital Square Partners’ acquisition of a 55 percent stake in Indecomm Global Services, a technology-enabled services and outsourcing company that serves clients in mortgage, banking, and other sectors, for $90 million.

A copy of the FINANCIAL TECHNOLOGY AND INFORMATION INDUSTRY M&A REPORT FOR THIRD QUARTER 2016 is available at the Berkery Noyes website.