Transaction volume increased three percent over the past three months, from 1,066 to 1,097. Overall industry value fell 58 percent, from $152.6 billion to $63.5 billion. The median revenue multiple declined from 2.4x to 2.1x, while the median EBITDA multiple moved downward from 16.3x to 12.5x.
Of note, five of the Information Industry’s top ten largest acquisitions last year occurred during Q4 2015. These five transactions had a combined value of $93.6 billion. If excluded, value gained eight percent from Q4 2015 to Q1 2016. Aggregate value also rose 31 percent on a year-over-year basis. The top ten largest transactions year-to-date accounted for 48 percent of the industry’s total value in Q1 2016, compared to 70 percent in Q4 2015.
Regarding the industry’s three broad-based horizontal markets, Online & Mobile saw a 12 percent quarterly gain in volume. The number of deals in the mobile application subsector rose 35 percent, from 88 to 115 transactions.
In the Software horizontal, volume increased seven percent in Q1 2016. Two of the horizontal’s top ten highest value deals in Q1 2016 were backed by financial sponsors. Both acquisitions occurred in the Niche segment, which is targeted to specific vertical markets. Meanwhile, the Business Software segment, which consists of software designed for general business practices and not specific industry markets, experienced an 18 percent improvement in deal flow.
As for the Media & Marketing horizontal, volume decreased six percent on a quarterly basis. However, the Marketing segment underwent a 15 percent increase in volume. Deal activity in the Entertainment segment improved 16 percent. In terms of value, six of the industry’s top ten largest acquisitions in Q1 2016 were Media related.