NEW YORK — October 11, 2017 — Berkery Noyes, an independent mid-market investment bank, today released its third quarter 2017 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 the first three quarters of 2017 and compares it with data for the six previous quarters.
Deal volume in the Information Industry declined nine percent over the past three months. Aggregate value increased five percent, totaling $58.4 billion. Relative to the first three quarters of 2016, volume year-to-date improved two percent while value fell 22 percent.
As for the horizontal markets in the report, volume in the Online & Mobile component of the Information Industry decreased nine percent during the third quarter. When compared to the first three quarters of 2016, Online & Mobile volume year-to-date declined four percent.
The number of mobile application deals stayed about the same over the prior quarter. There were several high profile deals involving mobile solutions for the transportation sector. Lyft was one notable related acquirer in the third quarter with the acquisitions of YesGraph, which builds customer-centric referral programs; and DataScore, which specializes in customer acquisition and retention. This followed several mobile transportation transactions earlier in the year, such as Uber rival Gett’s acquisition of Juno USA, a ridesharing application, for $200 million (note that Gett received a $300 million investment from Volkswagen in 2016); and car manufacturer Audi Group’s announced acquisition of Silvercar, a mobility technology car rental company with a particular focus on corporate vehicles services and airport car rentals.
In terms of notable non-traditional acquirers in the Online & Mobile horizontal, home furnishing retailer Ikea announced its acquisition of Taskrabbit, an on-demand services platform company; and supermarket chain Albertson’s acquired Plated, a meal kit delivery subscription service.
Deal flow across the Software horizontal fell nine percent on a quarterly basis. Software volume remained about constant relative to the corresponding period in 2016. Private equity firms represented slightly less than one-quarter of volume but almost one-half of value throughout the first three quarters of 2017.
One ongoing trend has been strong demand for companies pertaining to the Internet of Things (IoT). Notable IoT related transactions during third quarter 2017 included Itron’s acquisition of Silver Spring Networks, which offers connectivity platforms and solutions to utilities and cities, for $840 million; Sierra Wireless’ announced acquisition of Numerex, a provider of managed machine-to-machine enterprise solutions, for $116 million; General Electric’s announced acquisition of IQP Corporation, a firm that makes tools for developing apps without writing any computer code; Schneider Electric’s acquisition of nxtControl, a developer of software solutions for industrial and building automation; and Samsung’s acquisition of Perch, which creates home monitoring software that repurposes old smartphones into security cameras.
M&A activity in the Infrastructure segment increased 16 percent over the past three months. Notable Infrastructure deals during third quarter 2017 included SAP Hybris’ announced acquisition of Gigya, a customer identity and access management solutions company, for a reported $350 million; and Cisco Systems’ acquisitions of Springpath, a provider of hyperconvergence software that enables server-based storage systems, for $320 million; and Observable Networks, which offers cloud-native network forensics security applications delivered as a service. This followed several high-profile transactions completed by Cisco earlier in the year, such as AppDynamics, an application performance management and IT analytics company, for $3.9 billion; Viptela, a software-defined wide area network (SD-WAN) company, for $610 million; and MindMeld, an artificial intelligence (AI) startup that helps business build conversational interfaces, for $125 million.
Transaction volume in the Media & Marketing horizontal decreased two percent over the past quarter. M&A activity year-to-date improved four percent compared to the same timeframe in 2016. The overall industry’s largest transaction in third quarter 2017 and year-to-date occurred in the horizontal: Discovery Communications’ announced acquisition of Scripps Networks Interactive, a developer of lifestyle content for television and the Internet, for $11.9 billion. This was the only third quarter deal to reach the top ten list of highest value acquisitions thus far in 2017.
“Having successfully shed non-core assets and many of them flush with cash, major strategic players are looking to grow through vertical acquisitions that extend their reach into existing markets,” said James Berkery, Chief Information Officer at Berkery Noyes. “By deepening their penetration into their customers’ business, these companies are redefining the customer relationship from that of buyer-seller (price sensitive, vulnerable to competition) to something like strategic partner (loyal, long-lived and profitable).”
A copy of the INFORMATION INDUSTRY M&A REPORT FOR THIRD QUARTER 2017 is available at the Berkery Noyes website.