March 17, 2014 VALUATIONS CONTINUE TO RISE FOR PRIVATE EQUITY DEALS

According to Berkery Noyes’ latest research, private equity acquisitions in the Information Industry decreased twelve percent in 2013. However, when compared to 2011, volume underwent a four percent increase. Transaction value declined six percent on a year-to-year basis, from $43.71 billion in 2012 to $41.13 billion in 2013.

Hellman & Friedman completed two of the industry’s top five highest value deals over the past year. The largest of Hellman & Friedman’s transactions in 2013 was the acquisition of Scout24 Group, an online marketplace, for $2.02 billion. Deutsche Telekom will retain a 30 percent stake in Scout24 Group as part of this divestiture

Regarding overall valuations, the median revenue multiple increased from 1.8x in 2012 to 2.3x in 2013, while the median EBITDA multiple improved from 9.8x in 2012 to 11.5x in 2013. These were the highest median enterprise multiples on an annual basis throughout the three years covered in the report.

In terms of specific sectors in the Information Industry, TA Associates was the Finance vertical’s most active acquirer in 2013 with six transactions. Meanwhile, TPG Capital was the Healthcare vertical’s most active acquirer with eight transactions. TPG Capital was also responsible for the largest deal in the Education vertical with the acquisition of TSL Education from Charterhouse Capital Partners for $549 million.

“Many financial buyers are still waiting for the right opportunity to put their excess capital to work, which in certain instances has been sitting on the sidelines for quite some time,” said John Shea, Managing Partner at Berkery Noyes. “Likewise, given that interest rates have remained at historic lows, the lending environment for debt financed transactions continues to be favorable for borrowers.” Shea continued, “Along with solid gains in the equity market throughout the past year and a heightened sense of confidence among many investors, the conditions for buyout activity over the near-term are encouraging.”