Kohlberg Kravis Roberts & Co., Technology Crossover Ventures and Silver Lake Partners’s announced acquisition of GoDaddy. com was the largest transaction for 2011, with an acquisition price of $2.25 billion. The median revenue multiple remained nearly the same, going from 1.7x in 2010 to 1.8x in 2011, while the median EBITDA multiple decreased from 10.2x to 9.1x.
The most active acquirer for 2011 in the Information Industry was Google with 25 acquisitions, including 5 in the Fourth Quarter: Clever Sense, RightsFlow, Apture, Katango, and SocialGrapple. Overall, Google had 58 Information acquisitions from 2009 to 2011. The median revenue multiple increased from 1.7x in 2010 to 2.1x in 2011, while the median EBITDA multiple increased from 10.5x to 12.0x. Total transaction volume in 2011 increased by 17 percent over 2010, from 2639 to 3098.
Providence Equity Partners’ acquisition of Blackboard for $1.71 billion, completed in the third quarter of 2011, was the second largest Education deal in 2011. This transaction exemplifies how interactive learning and the evolving delivery of content are changing the Education marketplace. One of the most prolific acquirers by value between 2009 and 2011 was Providence Equity Partners, with a combined total of over $3 billion in the industry.
Based on value, the most active market segment that Berkery Noyes tracked between 2009 and 2011 was Healthcare IT with $10.25 billion worth of transactions. Median revenue and EBITDA multiples fell from 2010 to 2011. The median revenue multiple decreased from 2.0x to 1.6x, while the median EBITDA multiple went from 11.6x to 9.0x. Although total transaction value declined 9 percent over the last twelve months, total transaction volume increased 15 percent, from 255 to 292 this year.
The median revenue multiple increased from 2.2x in 2010 to 2.6x in 2011. Although transaction volume gained only 2 percent, transaction value increased 43 percent over 2010, from $20.52 billion to $29.78 billion. There has been a consistent improvement in the number of Capital Markets transactions, which was the only segment that saw an increase from 2010 to 2011. Indeed, the most active market segment tracked by Berkery Noyes between 2009 and 2011 was Capital Markets with 254 transactions, 100 of which were announced or closed in 2011.
Microsoft Corporation’s acquisition of Skype Technologies SA, a portfolio of Silver Lake Partners, was the largest transaction for 2011, with an acquisition price of $9.08 billion. There were 1531 strategic transactions, an increase of 33 percent compared to 2010. In addition, median revenue and EBITDA multiples increased from 2010 to 2011. The median revenue multiple went from 1.9x to 2.4x, a 26 percent rise, while the median EBITDA multiple increased from 11.4x to 12.5x.
There were 199 financially sponsored transactions with an aggregate value of $22.40 billion, representing 14 percent of the total volume and 26 percent of the total value, respectively. Total transaction volume in 2011 increased by 10 percent over 2010, from 1313 in 2010 to 1450 this year. “Companies involved with cloud computing and SaaS are showing strong levels of M&A activity,” said managing director Christopher Young of Berkery Noyes.
The largest announced transaction for 2011 was West Australian Newspapers’ acquisition of Seven Media Group, a portfolio company of Kohlberg Kravis Roberts & Co., for $4.15 billion. Transaction value saw a gain of 47 percent over the last twelve months, from $38.51 billion to $54.70 billion. According to Berkery Noyes research, the median revenue multiple went from 1.5x to 1.9x in 2011. The median EBITDA multiple moved slightly from 10.4x to 10.6x, representing a 51 percent increase over 7.0x in 2009.
The most active acquirer through Q3 2011 was Thomas H. Lee Partners with 13 acquisitions, 3 of which occurred in Q3 2011. Median EBITDA multiples from 2010 to the first nine months of 2011 went from 10.7 to 11.0, a 3 percent increase, while median revenue multiples remained the same at 1.8.
Q3 2011 transaction volume increased 6 percent over Q2 2011. Transaction value, meanwhile, decreased 21 percent, indicating a greater number of small and mid-sized deals. Median EBITDA multiples went from 11.9 in Q2 2011 to 13.8 in Q3 2011, a 16 percent increase, and median revenue multiples moved from 2.2 to 2.3.
According to managing director John Guzzo, the increase in the number of closed transactions “is a direct result of an increasingly more active private equity market, overall pent-up supply of companies wishing to sell, and a strategic buyer market that continues to shore-up product suites and customer bases through acquisitions.”
The largest transaction through the 1st 3 Quarters of 2011 was Hellman & Friedman’s announced acquisition of SunGard Higher Education from SunGard Data Systems for $1.78 billion during Q3 2011. This will result in a merger under a new holding company with Datatel, an existing Hellman & Friedman portfolio company.
Transaction value increased 205 percent over the previous quarter, which can be explained by Blackstone Group’s announced acquisition of Emdeon for $3.03 billion.
Median EBITDA multiples rose from 13.0 to 13.8 since Q2 2011, a 6 percent increase, while median revenue multiples went from 2.6 to 2.1, a 19 percent decline. The largest announced transaction for Q3 2011 was Kohlberg Kravis Roberts & Co. and Silver Lake Partners’ acquisition of GoDaddy.com for $2.25 billion.
Transaction value, which increased 179 percent in the second quarter, fell 23 percent. Median EBITDA multiples were nearly unchanged for the quarter at 13.6, as were revenue multiples at 2.3. The largest transaction for the third quarter as well as the 1st 3 Quarters of 2011 was the acquisition of Autonomy by HP for $10.28 billion.
Enterprise value multiples have been rising on a yearly basis for the Media and Marketing Services Industry. Q3 2011 transactions commanded a median EBITDA multiple of 14.5, a 58 percent increase over the previous quarter, and a revenue multiple of 2.2, which continues to be the highest revenue multiple in the last seven quarters.
Transaction volume and aggregate value rose considerably over the 2nd Half of 2010. Transaction volume gained 11 percent in 1st Half 2011, rising to 171, while value rose 21 percent in the first half, reaching $11 billion. Thomas H. Lee Partners also announced the highest valued transaction this half, the pending acquisition of Acosta, Inc., a subsidiary of AEA Investors LP, for $2 billion.
Even in this challenging deal climate, median revenue multiples for the industry have risen for the fourth consecutive half year. Pearson was not only the most active acquirer for 1st Half 2011, but also the most active acquirer in the two and a half years covered in this report, making 17 disclosed transactions.
Reed Elsevier and LLR Partners both announced three transactions this half year, tying as the most active acquirers in the space. While deal volume increased by seven percent to 143 transactions announced this half year, total aggregate deal value fell 28 percent to $3.4 billion from $4.8 billion in 2nd Half 2010. Despite this, both median deal value and median EBITDA multiples rose over the same time period.
Although total transaction volume for the period remained largely unchanged, transaction value nearly tripled, jumping from $7.0 billion in 2nd Half 2010 to $19.5 billion this period. The 187 percent increase can be attributed primarily to Deutsche Börse Group’s announced merger with NYSE Euronext for $12.4 billion.
A strong recovery continued into 1st Half 2011. Median EBITDA multiples rose 50 percent over the six-month period and median revenue multiples increased by 54 percent. Both of these figures represent new highs of the periods analyzed in this report.
Robust growth over the past two and a half years continued across the last six months. Price multiples rose in accordance with this increased activity. 1st Half 2011 transactions commanded a median EBITDA multiple of 15.3 and a revenue multiple of 2.1. Both of these numbers represent 30-month highs for the segment.
Total transaction value was up 68 percent over the previous six months, jumping from $17.3 billion to $28.9 billion. This was due, in large part, to five transactions valued over a billion occurring in 1st Half 2011, while Full Year 2010 saw only four transactions in the billion dollar range.
Median transaction values, revenue multiples, and EBIDTA multiples all made noticeable gains over 2nd Half 2010. “The Software space clearly recovered from what was a slow first quarter,” said managing director Chris Young.
Of note, seven of first quarter’s 10 largest transactions fell into the category of Niche Software, which includes companies in the healthcare, financial services, construction, and energy industries.
Q1 2011 transaction volume exceeded each quarter of 2010 in the Online & Mobile Industry, while aggregate transaction value rose 37 percent over Q4 2010, from $10.5 billion to $14.4 billion.
Internet media reported the largest gain by sector for the quarter, rising over 44% from 63 transactions to 91, as the popularity of media-enabled devices like smart phones and tablets continues to grow.
Aggregate transaction value rose 65 percent, yet it remains lower than the 15 month high of Q3 2010. Transaction volume in Q1 2011 has increased 10 percent over Q4 2010, with the 595 transactions seen this quarter being the highest total of any quarter in the past 15 months.
Large, active financial buyers have focused their acquisitions on adding to existing portfolio companies rather than the acquisition of new, stand alone investments. Indeed, over 80 percent of their transactions have been incorporated into existing investments, where across the acquisition landscape in the Information Industry, the number has been closer to 60 percent.
Median EBITDA and revenue multiples have increased from 2009, with the EBITDA multiple rising 36 percent from 8.1 to 11.0 and the revenue multiple rising 50 percent from 1.2 to 1.9. Total transaction value increased by 81 percent over 2009, from $6.43 billion in 2009 to $11.62 billion in 2010. Total transaction volume also increased, with a 13 percent gain over 2009, from 199 in 2009 to 224 in 2010.
Aggregate deal value increased 49 percent in 2010, from $3.96 billion in 2009 to $5.92 billion in 2010. Median deal value also increased dramatically from 2009. The post secondary technology segment increased from 7 transactions to 20 in 2010, a 186 percent increase. Financial acquirers represented 28 percent of transaction volume but 62 percent of aggregate transaction value.
Both total transaction volume and value saw increases this year. Total transaction volume increased by 30 percent from 183 in 2009 to 238 in 2010. Total transaction value increased by 27 percent from $16.14 billion in 2009 to $20.52 billion in 2010. Capital Markets remained the largest segment by deal volume in 2010, yet only Insurance has made gains in each of the past four years.
Strategic acquirers have been the most common acquirer in the Information Industry. Financially sponsored transactions rose 39 percent by value over 2009 while losing 2 percent in volume over 2009. The median revenue and EBITDA multiple increased over 2009, with the revenue multiple rising to 1.8 and the EBITDA multiple to 11.2, a 29 percent increase over the 8.7 of 2009.
Google was far and away the most active acquirer in the online space, with 22 acquisitions in 2010. Both total transaction volume and value saw increases this year. Total transaction volume increased by 63 percent from 679 in 2009 to 1108 in 2010, while total transaction value increased by 72 percent from $25.95 billion in 2009 to $44.61 billion in 2010.
"For the first time in the 10 years we have been tracking the Software Industry, ASP, SaaS, or Cloud technologies have represented nearly 50% of the acquired companies," said James Berkery, CIO of Berkery Noyes.
The median revenue multiple of transactions in 2010 rose 28%, from 1.4 in 2009 to 1.8 in 2010. The median EBITDA multiple also rose from 6.9 in 2009 to 10.4 in 2010, a 51% increase. In addition, the decrease in transaction value may be more properly attributed to the large deals of 2009 rather than a lackluster 2010.
Median multiples have increased dramatically from Q2 to Q3 2010, with median EBITDA multiples rising 43 percent from 10.5 to 15.1, and median revenue multiples rising 21 percent, from 1.9 to 2.3 from Q2 to Q3 2010.
Deal value, volume and multiples have remained relatively constant from Q2 to Q3 2010, however Thoma Bravo LLP has emerged as the most active acquirer within the information industry, making 9 acquisitions through Q3 2010.
Transaction value has increased 43 percent over Q2 2010 from 48 to 69 transactions in Q3 2010. Multiples have made similar gains, with median EBITDA multiples rising 41 percent from 8.1 to 11.5 and median revenue multiples 58 percent from 1.2 to 1.9.
Transaction volume is up 42 percent, from 36 to 51 transactions, and transaction value is up 302 percent, from $537 million to $2.2 billion worth of acquisitions.
Despite decreased transaction value and volume from Q2 to Q3 2010, the first nine months of 2010 have already surpassed 2009 in transaction value, $16 to $18 billion, and has nearly done so in transaction volume. With 181 transactions in the industry for the full year 2009, 2010 has already seen 175 transactions.
While total transaction volume continues to make modest gains, growing by 11%, total transaction volume grew considerably, from $11.2 to $17.1 billion, a 52 percent increase. The top ten transactions by value in the 1st nine months of 2010 now include 6 from Q3 2010, which may explain the jump in transaction value.
Software saw conservative growth in deal value and deal volume from Q2 2010, yet median multiples have made significant gains over the previous year.
The Media Industry saw an increase in both transaction value and multiples. Deal value increased 80 percent in Q3 over Q2 2010, from $5.2 to $9.4 billion. Median EBITDA multiples rose from 7.0 to 10.5 from 2009 to the first nine months of 2010, a 50 percent increase, and median revenue multiples rose from 1.4 to 1.8 in Q3 2010, a 28 percent increase.
Revenue multiples in the Education Industry continued their strong upward trend, rising 38% to 1.8, which represents a 200% growth from the low of 0.6 in 1st Half 2009. Despite strong growth in revenue multiples, transaction volume decreased for the fifth straight half-year period, falling 14%, from 86 in 2nd Half 2009 to 74 in 1st Half 2010.
Of the top ten transactions by value, three were financially sponsored transactions: Thomas H. Lee Partners, L.P.'s acquisition of inVentiv Health, Inc., for $909 million, Providence Equity Partners' pending acquisition of Virtual Radiologic Corporation for $282 million, and OMERS Private Equity's pending acquisition of Logibec Groupe Informatique Ltd. for $225 million.
The Fintech Industry saw a 31% increase in volume, exceeding the total volume of each of the four preceding sixth month periods. Revenue multiples experienced a 210% half-to-half increase from 2.1 in 2nd Half 2009 to 3.8 in 1st Half 2010. The Payments sector saw a 173% jump in volume from 2nd Half 2009, bolstered by several acquisitions of mobile payment technology companies.
Median revenue multiples for Private Equity M&A fell slightly in 1st Half 2010, from 2.5 to 2.2. However, this number still represents a 100% increase from the revenue multiple low of 1.1 in 1st Half 2009. Private Equity activity saw a 22% increase in volume from 117 transactions in 2nd Half 2009 to 143 transactions in 1st Half 2010.
The Information Industry saw a 21% increase in volume from 2nd Half 2009 to 1st Half 2010, yet total transaction value decreased by 10 percent from $56.62 billion to $51.23 billion during the same period. Despite this decline in aggregate value, median enterprise value has increased 19% from $20 .1 million in 2nd Half 2009 to $28.5 million in 1st Half 2010.
While multiples have decreased from 2.1 in 2nd Half 2009 to 1.8 to 1st Half 2010, the sector nonetheless saw strong growth, as evidenced by a 31% increase in volume. The segment with the largest increase was E-Marketing & Search, with a 40 percent increase from 80 transactions in 2nd Half 2009 to 112 transactions in 1st Half 2010.
Median EBITDA multiples in the Software Industry experienced a 30% increase from 11.3 in 2nd Half 2009 to 14.7 in 1st Half 2010. This is a 42% increase from the low of 8.5 in 1st Half 2009. The proliferation of smartphones, and in particular those with application oriented operating systems, has helped to drive mobile application software to rise 79% from the past half year, from 31 to 59.
The Media Industry saw a 21% increase in volume, which, coupled with a 54% increase in financially sponsored transactions, indicates a strong return from the lows of 1st Half 2009. Revenue multiples experienced a half-to-half gain with a 14% increase in the median enterprise value/revenue multiple, from 1.5 in 2nd Half 2009 to 1.7 in 1st Half 2010.
The largest transaction in the Financial Technology and Information Industry in 2009 was Fidelity National Information Services' acquisition of Metavante Technologies for $2.9 billion, which closed on October 1st. The most active buyer as measured by aggregate volume of transactions was The Carlyle Group with four transactions.
2nd Half 2009 exhibited an increase in both aggregate volume and aggregate value, versus 1st Half 2009. Half-to-half, aggregate value increased 150% from approximately $2 billion to $5 billion, and aggregate volume increased by 15% from 86 deals to 99. The 2nd Half 2009 level of activity, as measured by aggregate value and aggregate volume, is on par with 2nd Half 2007, and slightly below the peak of activity in 1st Half 2008.
Year-to-year, the Information Industry exhibited mixed trends with a volumetric decline but a slight gain in aggregate value. Total transaction volume declined by 22% from 1716 deals in 2008 to 1337 in 2009. Aggregate value increased by 3%, from $82.12 billion in 2008 to $84.31 billion in 2009.
The largest transaction in the Software Industry was Oracle's proposed acquisition of Sun Microsystems, announced April 19, for $7.1 billion. The aforementioned transaction is more than 2.4x the next largest transaction, Fidelity National Information Services' acquisition of Metavante for $2.9 billion, which closed on October 1.
Private Equity M&A activity in the Information Industry experienced a significant half-to-half gain in aggregate value and a slight half-to-half increase in aggregate volume. Aggregate value increased 8 fold from approximately $2 billion in 1st Half 2009 to approximately $16 billion in 2nd Half 2009. In terms of volume, activity increased by 8.3% from 96 deals in 1st Half 2009 to 104 in 2nd Half 2009.
2nd Half 2009 showed promise of stronger M&A markets moving into 2010, as aggregate value increased three-fold, from approximately $1 billion in First Half 2009 to approximately $3 billion during the second half. Seven of the 10 largest deals were announced in August or later, indicating positive signs regarding the debt market's appetite for quality education deals.
Aggregate value increased by 5% from $24.68 billion in 2008 to $25.83 billion in 2009. This increase in value is due in large part to a significant increase in the value of deals done in the E-Marketing & Search segment. The aggregate value of deals done in this segment was $3.21 billion in 2008 and $5.98 billion in 2009, an increase of 86%.
Media Industry M&A activity exhibited mixed trends in 2009 with a volumetric decline but a rise in aggregate deal value. Volume declined by 37% from 700 deals in 2008 to 441 in 2009. However, aggregate deal value increased by 12% from $32.68 billion in 2008 to $36.51 billion in 2009. This rise in overall value for the year is primarily attributable to the Comcast – NBC Universal deal, announced on December 3, which has a transaction value of $13.75 billion.
While private equity investors were responsible for only 15% fewer announced transactions during 1st Half 2009 compared to the same period of last year, the aggregate value of those transactions plummeted by 80%, the likely cause being continued tightness in the credit markets. The data indicates that while PE buyers’ appetite for transactions remains healthy, limited access to leverage has significantly reduced the enterprise values of individual deals.
The ongoing user-driven transition from traditional format to new media, which the industry has had difficulty monetizing, has compounded the effect of the global economic slowdown and resulted in a more marked decline in M&A activity than was seen in other Information industries. One bright spot in the Media Industry was the Entertainment Content segment, where aggregate transaction value grew by 10% during 1st Half 2009 to $612 million, from $557 million in the same period of 2008.
Deal activity in the Software Industry contracted in 1st Half 2009 from levels in the same period of last year. However, the rate of contraction has not been nearly as dramatic as in other Information Industry segments. Total transaction volume in 1st Half 2009 decreased by a modest 10% over 1st Half 2008, from 374 to 336 deals. Total transaction value in 1st Half 2009 decreased by 28% over 1st Half 2008, from $24.46 billion to $17.78 billion.
M&A slowed significantly throughout the Information Industry in 1st Half 2009, as the total number of announced transactions fell by 29% and aggregate value dropped by 45%, compared with the same period in 2008. These trends indicate that while desire to do deals has been tempered, it does exist; but focus has shifted to smaller, strategic transactions.
As expected, deal activity in the Online Industry as a whole has shown severe negative growth. However, in stark contrast to the overall downtrend, the number of transactions for the E-Commerce and Software as a Service (SaaS) segments has remained flat while the aggregate value of E-Commerce transactions specifically has increased by 17% from $2.81 billion in 1st Half 2008 to $3.29 billion in 1st Half 2009.
While the broader economy remains sour, our
engagements with leading strategic investors
and private equity firms indicate that interest
remains extremely strong for education
deals in 2009. Moreover, given the median
size of K-12 deals over the past several years,
tight credit markets should have a limited
impact on most prospective deals. We have
highlighted below three notable investment
themes for 2009.
Berkery Noyes tracked 495 closed
transactions in the global education
industry between 2006 and 2008. Of this
universe, 179 transactions had disclosed
enterprise values, representing $42.63
billion in aggregate value.
Total transaction volume in 2008 decreased by 13 percent over 2007, from 1716 in 2007 to 1485 in 2008. Total transaction value decreased by 70 percent, from $289.07 billion to $85.92 billion.
Disclosed median enterprise value multiples between 2006 and 2008 for all segments combined in this report was 12.34 times EBITDA (earnings before interest, tax, depreciation, and amortization) and 2.01 times revenue.
Despite a weakening economy, 2008 was a solid year for M&A in the pharma and healthcare information and technology industry. The total volume of M&A transactions in the pharma and healthcare information and technology market for 2008 increased to 156 transactions, an increase of 16% over the previous year; however, the total value decreased to just below $9 billion, a decrease of 9%.
The Software Industry’s most active buyers in 2008, based on the number of announced transactions, were Autodesk, Inc. and Oracle Corporation, each with 9 businesses acquired either directly or through a partner or affiliate.
Despite a brutal market sell-off, the failure
of more than a few financial institutions
and the onset of a sharp recession, M&A
activity in the Financial Technology
and Information industry held steady
throughout the 4th Qtr and 2008 as a
whole; at least in terms of the number of
transactions closed.
Based on value, the most active market segment between 2006 and 2008 was E-Marketing & Search with $32.49 billion worth of transactions as opposed to the least active segment being Communications with $15.92 billion worth of transactions.
The most active buyer in the Media Industry by way of volume either purchased direct or through partner or affiliated business between 2006 and 2008 with 34 transactions was United Business Media PLC.
