Private equity M&A activity in the information technology industry fell 15% in the first half of the year, according to a study from Berkery Noyes. Transactions totaled 234, compared with 198 in the second half of 2012. Deal volume by strategic acquirers, however, was largely flat.
BERKERY NOYES RELEASES PRIVATE EQUITY IN THE INFORMATION INDUSTRY M&A REPORT FOR
HALF YEAR 2013
NEW YORK — July 25, 2013 — Berkery Noyes, an independent mid-market investment bank, today released its half year 2013 mergers and acquisitions trend report for Private Equity in the Information Industry.
The report analyzes M&A in the private equity market for the first half of 2013 and compares it with activity in the four previous six-month periods from 2011 to 2012. It features transactions made by financially sponsored acquirers within the Information Industry, including purchases made by subsidiaries or platforms of private equity firms.
M&A activity in the report underwent a 15 percent decrease over the past six months, from 234 to 198 transactions. However, volume in the aggregate Information Industry remained nearly constant when deals completed by strategic acquirers are taken into consideration. The peak for financially sponsored transaction volume during the past two-and-a-half years occurred in first half 2012, whereas value reached its zenith in second half 2012.
The median revenue multiple moved slightly from 1.9x in second half 2012 to 2.0x in first half 2013, while the median EBITDA multiple improved from 9.9x to 11.2x. At the same time, private equity deal value fell from $24.45 billion to $18.99 billion, a 22 percent decline. The largest transaction in first half 2013 was BMC Software’s announced acquisition by a private investor group, led by Bain Capital and Golden Gate Capital, for $6.81 billion. This was the highest value deal in the Information Industry over the last 30 months.
Financial sponsors in the industry’s horizontal Software market accounted for 43 percent of deal value in first half 2013, compared to just 23 percent in first half 2012. Although attributable in part to the BMC Software transaction, there were several other large private equity backed software deals in first half 2013. This included Vista Equity Partners’ acquisition of Websense for $942 million, which was the largest software deal in the cyber security subset since 2011, when Thoma Bravo acquired Blue Coat Systems for $1.15 billion.
As for the Media and Marketing portion of the Information Industry, the largest deal in first half 2013, either by a strategic or private equity acquirer, was BC Partners’ announced acquisition of Springer Science & Media for $4.42 billion. Meanwhile, the highest value transaction in the Exhibitions, Conferences, and Seminars subset was also backed by a financial sponsor. This consisted of Onex Corporation’s acquisition of Nielsen Expositions for $950 million.
“Rising equity values might be influencing the expected valuations of some potential sellers,” said John Shea, Managing Partner at Berkery Noyes. “This is one possible factor contributing to the relative slowdown in activity at the moment. However, the good news is that many financial sponsors currently have a surplus of capital available and are seeking opportunities to invest, especially in the middle-market.”
A copy of the PRIVATE EQUITY IN THE INFORMATION INDUSTRY M&A REPORT FOR HALF YEAR 2013 is available at the Berkery Noyes website.
About Berkery Noyes
Berkery Noyes is an independent investment banking advisory firm servicing the information industry. The firm specializes in mergers and acquisitions advisory, debt and equity financing, and financial consulting services for companies in the $10 million to $500 million range. Since its founding by Joseph W. Berkery in 1983, Berkery Noyes has worked with corporate clients to grow through acquisition, divest non-core assets, and maximize shareholder returns through strategic transactions and restructurings. For private owners, Berkery Noyes helps create liquidity and execute timely exit strategies that achieve their personal and professional objectives. The firm’s research teams publish acquisition activity in the respective sectors they follow on MandAsoft.com.
Securities services are offered through Berkery Noyes Securities, LLC. For more information, visit www.berkerynoyes.com.