August 18, 2014 PRIVATE EQUITY VOLUME AND VALUE RISES FOR THE THIRD CONSECUTIVE HALF YEAR PERIOD

Berkery Noyes has released its Private Equity report for first half 2014. According to the firm’s analysis, deal volume underwent an 18 percent increase on a half-to-half year basis. Total value rose from $23.35 billion to $28.10 billion, a 20 percent gain. The peak for private equity transaction volume and value during the past two-and-a-half years occurred in first half 2014. The median revenue multiple declined from 3.0x to 2.5x, while the median EBITDA multiple improved slightly from 9.7x to 10.8x.

Of note, eight of the Information Industry’s top ten highest value private equity deals in first half 2014 were secondary buyouts. Two of these transactions reached the $1 billion threshold. This consisted of Hellman & Friedman’s acquisition of Renaissance Learning, from Permira, for $1.1 billion and Kohlberg Kravis Roberts & Co.’s (KKR’s) acquisition of Internet Brands, from Hellman & Friedman and JMI Equity, also for $1.1 billion.

Other high value secondary buyouts included Blackstone Group and Goldman Sachs’ Merchant Banking Division’s acquisition of Ipreo, from KKR, for $975 million and Thoma Bravo’s acquisition of Travelclick, from Genstar Capital, for $930 million. 

As for the Media and Marketing horizontal, private equity transaction value increased from 26 percent to 38 percent of total Media and Marketing value. The overall Information Industry’s largest transaction in first half 2014 was Leonard Green & Partners and CVC Capital Partners’ acquisition of Advantage Sales and Marketing for $4.2 billion. Financial sponsors also accounted for 11 percent of the horizontal’s aggregate transaction volume but 26 percent of volume within the B2B Publishing and Information segment.

“We expect that financial sponsors will continue to drive deal activity in the middle-market, especially as some private equity groups morph into semi-strategic buyers with the advantages of scale and synergy that used to be the exclusive province of large strategics,” said John Shea, Managing Partner at Berkery Noyes. “As their three-to-five year time horizons approach, many of the businesses acquired by private equity funds will go on the block, giving strategics who missed out the first time another bite at the apple, only this time the apple may be a little leaner and pricier.”