December 1, 2014 PRIVATE EQUITY VALUATIONS CONTINUE INCREASING THROUGHOUT THE INFORMATION INDUSTRY

Berkery Noyes’ third quarter 2014 Private Equity report showed that the number of acquisitions in the Information Industry declined eight percent from second to third quarter 2014. However, deal volume year-to-date increased 24 percent compared to the corresponding timeframe in 2013.

The number of transactions involving an online component has continued to rise over the years, from 51 percent in 2011 to 59 percent in 2014 year-to-date. There has been a sizable increase in median multiples during this period as well. The median revenue multiple over the past 45 months improved from 1.8x to 2.4x, while the median EBITDA multiple increased from 9.1x to 12.4x.

The largest transaction in third quarter 2014 was Vista Equity Partners’ acquisition of TIBCO Software, a provider of infrastructure and business intelligence software, for $4.0 billion. There was one other deal that reached the $1 billion threshold in the quarter, which also occurred in the Business Software segment. This consisted of Thoma Bravo’s acquisition of Compuware Corporation, a provider of enterprise software and IT services, for $2.1 billion.

There were also several notable private equity deals in the Infrastructure Software segment in third quarter 2014. This included Veritas Capital Partners’ acquisition of BeyondTrust in the cyber-security subsector for a reported $310 million and Siris Capital Group’s acquisition of Junos Pulse, which is Juniper Networks’ mobile security business, for $250 million.

As for the Media and Marketing horizontal, private equity volume increased in the B2B Publishing and Information segment. Financial sponsors were responsible for 28 percent of the segment’s volume year-to-date, as opposed to 14 percent of volume throughout the first three quarters of 2013.

Notable deals in the B2B Publishing and Information segment in third quarter 2014 included Symphony Technology Group’s acquisition of McGraw Hill Construction, which provides data, news, and insights to construction professionals, for $320 million; Shamrock Capital Advisor’s acquisition of Questex Media Group, a business information and events company; and Observer Capital’s acquisition of SourceMedia, which publishes a variety of financial trade publications.

“Having succeeded with early-round investments, many private equity players are increasing their acquisition activity, going head to head with strategic buyers and stepping up to the higher multiples,” said John Shea, Managing Partner at Berkery Noyes. “Awash in cash and under pressure to use it, these funds are bidding aggressively for high-quality assets, courting sellers with full valuations.”