NEW YORK — January 17, 2018 — Berkery Noyes, an independent mid-market investment bank, today released its full year 2017 mergers and acquisitions trend report for the Financial Technology and Information Industry.
The report analyzes M&A activity for the sector during 2017 and compares it with data covering 2015 and 2016. This market includes information and technology companies in Capital Markets, Payments, Banking, Insurance, and other related financial services.
Transaction volume remained almost constant on a year-to-year basis. Aggregate value rose 26 percent, from $34.01 billion to $42.69 billion. The most active acquirer in 2017, either directly or through an affiliated business, was Verisk Analytics with eight transactions. Three of these deals had disclosed values: Sequel Business Solutions for $321 million in the Insurance segment; LCI for $151 million in the Banking segment; and G2 Web Services for $112 million in the Payments segment.
In terms of valuations, the median revenue multiple increased from 1.8x to 2.8x, while the median EBITDA multiple improved from 11.4x to 15.8x. Over the past three years, deals in the $10-$20 million range received a median enterprise value multiple of 1.2x revenue, compared to 1.7x revenue for those in the $20-$80 million range and 4.2x revenue for those in the $80 million and above range.
Deal activity in the Payment segment declined 14 percent, returning to its 2015 level. Five of the industry’s top ten highest value deals during the year were Payments related. These five transactions, with a combined value of $14.14 billion, were responsible for about one-third of aggregate value in 2017. Also of note, two of these acquisitions were completed by First Data Corporation: BluePay, a provider of technology-enabled payment processing for merchants, for $760 million; and CardConnect, which offers payment processing and technology solutions to SMBs and enterprises, for $750 million.
Additional high profile segment deals over the past twelve months included U.S. based Vantiv’s announced merger with U.K. based Worldpay Group for $11.58 billion; Vista Equity Partners’ acquisition of DH Corporation, a provider of technology solutions to financial institutions, for $3.49 billion, which Vista plans to combine with its portfolio company Misys; TSYS’ acquisition of Cayan, a payment technology and merchant services company, for $1.05 billion; and FleetCor Technologies’ acquisition of Cambridge Global Payments, which offers integrated B2B cross-border payment services, for $675 million.
M&A volume in the Capital Markets segment declined seven percent over the past year. However, it retained its position over Payments as the industry’s most active sector. “Advances in automation are leading trading venues, institutional brokers, technology vendors and information providers to converge on this market and offer integrated, end-to-end solutions,” stated Peter Ognibene, Managing Director at Berkery Noyes. “Likewise, governmental and exchange level regulations are changing constantly and growing in complexity, increasing risk to financial services participants and sharpening their appetite for tools to manage risk.”
Notable Capital Markets deals during 2017 included TMX Group’s acquisition of Trayport, which offers energy trading solutions to traders, brokers and exchanges, for $725 million; Genstar Capital’s acquisition of Institutional Shareholder Services, a provider of corporate governance and responsible investment solutions to financial market participants, for $720 million; Nasdaq’s acquisition of eVestment Alliance, a content and analytics provider used by asset managers, investment consultants and asset owners to help facilitate institutional investment decisions, for $705 million; and Envestnet’s acquisition of FolioDynamix, a provider of integrated wealth management technology solutions, for $195 million.
As for other markets covered in the report, acquisition activity in the Banking segment increased 27 percent on an annual basis, from 81 to 103 deals. Notable Banking transactions over the past year included Red Venture’s acquisition of Bankrate, an online publisher, aggregator, and distributor of personal finance content, for $1.44 billion; Flagship Community Bank’s announced acquisition of BankMobile, which offers deposit products to retail customers utilizing smart phone technology and other electronic digital media, for $175 million; and Zoopla Property Group’s acquisition of Hometrack, a provider of residential property market insights and analytics used by mortgage lenders, for $152 million.
“Real estate professionals are looking for tools that will give them a competitive advantage over their rivals, whether it’s by better targeting and reaching more prospects, shortening the sales cycle process, or communicating more effectively with clients,” said John Guzzo, Managing Director at Berkery Noyes. “Homebuyers want access to accurate and timely data in a variety of forms. The shift in ad spend to digital marketing should continue in the real estate sector as firms attempt to stay ahead of the curve.”
Regarding the industry’s Insurance segment, volume decreased eight percent. This followed a 25 percent rise in 2016. The largest related deal during 2017 was Advent International’s announced acquisition of CCC Information Services, a provider of advanced software, workflow tools, and enabling technologies to automotive collision repairers, property/casualty insurance carriers, and original equipment manufacturers, for $3 billion.
A copy of the FINANCIAL TECHNOLOGY AND INFORMATION INDUSTRY M&A REPORT FOR FULL YEAR 2017 is available at the Berkery Noyes website.