NEW YORK — January 24, 2018 — Berkery Noyes, an independent mid-market investment bank, today released its full year 2017 mergers and acquisitions trend report for Private Equity in the Information Industry.

The report analyzes M&A activity in the private equity market during 2017 and compares it with data covering 2015 and 2016. It features transactions made by financially sponsored acquirers within the Information Industry, including purchases made by subsidiaries or platforms of private equity firms.

According to Berkery Noyes’ latest research, private equity volume in the Information Industry increased 20 percent on a yearly basis, from 672 to 809 deals. Total sponsored value saw a slight uptick, from $64.54 billion to $65.58 billion.

Regarding valuations, the median revenue multiple year-over-year improved from 2.0x to 2.5x, while the median EBITDA multiple moved upward from 11.1x to 12.8x. Over the past three years, deals in the $10-$20 million range received a median enterprise value multiple of 1.6x revenue, compared to 3.2x revenue for those in the $160 million and above range.

The horizontal Software market saw a 22 percent yearly increase in private equity deal activity. Six of the top ten largest Software deals in 2017 were backed by financial sponsors. Thoma Bravo was responsible for two of these transactions with the acquisition of Barracuda Networks, a provider of cloud-enabled security and data protection solutions, for $1.38 billion; and Lexmark International’s enterprise software business, which is comprised of Kofax, ReadSoft and Perceptive, for $1.35 billion.

Other notable deals completed by Thoma Bravo during the year included DigiCert’s acquisition of Symantec’s website security and related public key infrastructure solutions for $950 million (DigiCert is backed by Thoma Bravo); Planview, which develops project management and workforce collaboration tools, for $800 million; and Frontline Education, a provider of cloud-based software solutions for recruiting, hiring, time and attendance, substitute management, and professional growth to school districts in the U.S.

The Finance vertical underwent a 12 percent increase in volume during the past year. The largest sponsored deal in the Finance vertical in 2017 was Vista Equity Partners’ announced 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 (note that Misys and DH will operate under the new brand name Finastra).

The Healthcare vertical experienced an 24 percent year-to-year increase in private equity volume. Private equity firms represented slightly less than one-quarter of Healthcare volume but half of value in 2017. Three of the industry’s top five largest deals in 2017 were backed by financial sponsors. These three transactions, with a combined total disclosed value of $9.72 billion, accounted for nearly one-third of the industry’s total value during the year.

The Education vertical witnessed private equity volume stay nearly the same on an annual basis. Nine of the Education vertical’s top ten highest value transactions during the year were backed by financial sponsors. Four of these nine transactions occurred in the combined Professional Training Technology and Services segments. The largest Professional Training related deal in 2017 was Blackstone Group and Canada Pension Plan Investment Board’s announced acquisition of Ascend Learning, which offers educational content and online tools for students, educational institutions and employers, with a particular focus on healthcare and other licensure-driven occupations, for $2 billion.

“The M&A climate has been favorable for private equity acquirers, as indicated by the increase in deal activity,” said James Berkery, Managing Partner at Berkery Noyes. “Strategic buyers backed by financial sponsors are actively seeking transactions that will satisfy their PE owners’ investment objectives. Many of these buyers are securing attractive financing packages, which could give their PE backers extra flexibility to make add-on investments with more equity.”

A copy of the PRIVATE EQUITY IN THE INFORMATION INDUSTRY M&A REPORT FOR ­­FULL YEAR 2017 is available at the Berkery Noyes website.