2013-10-08 Berkery Noyes Releases Information Industry M&A Report For Third Quarter 2013

NEW YORK — October 8, 2013 — Berkery Noyes, an independent mid-market investment bank, today released its third quarter 2013 mergers and acquisitions trend report for the Information Industry.

The Information report features companies in the Media and Marketing, Software, and Online and Mobile Industries. It analyzes M&A activity during the first three quarters of 2013 and compares it with data for the six previous quarters.

The Information Industry experienced a six percent increase in transaction volume over the past three months, with a total of 930 deals in third quarter 2013. Aggregate value rose 41 percent, from $50.6 billion to $71.2 billion. This gain in value was mainly attributable to the announced merger of Publicis and Omnicom. If the proposed Publicis-Omnicom merger is excluded, overall value would have stayed about the same. In terms of valuations, the industry’s median revenue multiple from 2012 through the first three quarters of 2013 experienced an uptick from 1.9x in to 2.1x, while the median EBITDA multiple moved slightly from 9.9x to 10.2x.

Both Publicis and BMC Software, after being involved in two of the three largest transactions year-to-date, made several smaller acquisitions in third quarter 2013. Publicis remained an active acquirer aside from the Omnicom merger with seven additional transactions in third quarter 2013. BMC Software, following its acquisition by a private investor group for nearly $7 billion in the previous quarter, completed two acquisitions of its own in third quarter 2013: Partnerpedia, a provider of mobile enterprise applications to IT customers; and KineticGlue, an enterprise social collaboration startup.

As for the horizontal markets in the report, the Online and Mobile component of the Information Industry saw volume remain nearly constant in third quarter 2013. Meanwhile, deal flow across the entire Software market underwent a four percent increase over the past quarter. Transaction volume in the Media and Marketing horizontal also improved six percent. Within the overall industry’s Lifestyle & Entertainment segment, M&A activity increased ten percent. The segment’s largest deal both in third quarter 2013 and year-to-date occurred in the video game subset. This consisted of the announced management buyout of Activision Blizzard for $8.2 billion.

In addition, there were several other segments of the Information Industry that showed growth on a quarter-to-quarter basis. This included a 15 percent volume increase in the Financial Services & Accounting segment, as well as a 46 percent corresponding gain in value. Along these lines, five of the Financial Services & Accounting segment’s ten highest value deals thus far in 2013 occurred in the third quarter. The largest of the five transactions was Davis + Henderson Corporation’s acquisition of Harland Financial Solutions for $1.2 billion.

“Deal volume and median multiples have both been on an upward trajectory this year,” said James Berkery, Chief Information Officer at Berkery Noyes. “Many buyers are showing an interest in technologies with a large moat that will give them a leg up over their competition and are willing to pay a premium to stay ahead of the curve.” Berkery continued, “There remains the potential for an increase in M&A activity ahead as both strategic acquirers and financial sponsors continue to regain confidence in the marketplace.”

A copy of the INFORMATION INDUSTRY M&A REPORT FOR THIRD QUARTER 2013 is available at the Berkery Noyes website.