March 2, 2015 PRIVATE EQUITY M&A VOLUME IMPROVES ACROSS THE INFORMATION INDUSTRY

Berkery Noyes’ Private Equity report for full year 2014 report showed that acquisitions in the Information Industry increased 22 percent. Total transaction value gained 20 percent on a year-to-year basis, from $42.94 billion to $51.50 billion. Regarding valuations, the median revenue multiple remained constant at 2.1x, while the median EBITDA multiple improved from 12.0x in to 13.7x.

The Information Industry’s horizontal Software market saw a 19 percent rise in private equity deal activity, from 257 to 305 transactions. In terms of specific vertical markets, the industry’s most active private equity acquirers in the Healthcare sector in 2014 were Thoma Bravo and Blackstone Group with four transactions each. The largest financially sponsored deal in the Healthcare IT subsector was Vista Equity Partners’ acquisition of Advanced Computer Software Group, which offers patient management software to healthcare providers, back-office systems for businesses, and outsourced information technology services, for $1.11 billion.

The Education vertical’s most active acquirer in 2014 was Providence Equity Partners with 11 transactions. At the same time, Insight Venture Partners was the most acquisitive financial sponsor within the K-12 marketplace with four transactions. The two largest overall deals in the Education vertical in 2014 and the only ones to reach the $1 billion threshold were both completed by private equity firms as well. This consisted of Charterhouse Capital Partners’ acquisition of Skillsoft for $2.3 billion in the Professional Training Technology subsector and Hellman & Friedman’s acquisition of Renaissance Learning for $1.1 billion in the K-12 Media and Tech subsector.

Also of note, four of the five highest value deals in the capital markets portion of the Finance vertical in 2014 were backed by financial sponsors. The largest of these transactions was Centerbridge Capital Partners’ acquisition of IPC Information Systems, a provider of trading communication technology, from Silver Lake Partners for $1.2 billion.

As for secondary buyouts, or transactions completed between private equity firms, deal volume increased 39 percent, returning to its 2012 level. The most active acquirer in the secondary buyout subsector in 2014 was Thoma Bravo with five transactions. Thoma Bravo’s largest industry secondary buyout during the past year was its acquisition of Travelclick, a provider of cloud-based hotel management software, from Genstar Capital for $930 million.

“Private equity firms in the Information Industry are paying reasonable prices for quality assets,” stated James Berkery, Chief Information Officer at Berkery Noyes. “With sizeable pots of use-it-or-lose-it cash to invest, they generally view the more sensible valuations as a buying opportunity, while others see that it’s still possible to consolidate a number of smaller acquisitions into a large enough roll-up to interest the major strategic buyers or potentially take them public.”