NEW YORK — January 15, 2015 — Berkery Noyes, an independent mid-market investment bank, today released its full year 2014 mergers and acquisitions trend report for the Financial Technology and Information Industry.

The report analyzes M&A activity for the sector during 2014 and compares it with data covering 2012 and 2013. This market includes information and technology companies in Capital Markets, Payments, Banking, Insurance, and other related financial services.

Transaction volume experienced an eight percent rise over the past year, with a total of 371 deals in 2014. Meanwhile, there was a 19 percent increase in the number of deals backed by financial sponsors, from 62 to 74 transactions. Aggregate value increased from $27.37 billion to $28.70 billion, a five percent gain. The median revenue multiple improved from 2.3x to 3.0x, while the median EBITDA multiple rose from 11.9x to 13.3x. The upswing in valuations was driven in large part by Payments deal activity.

The Payments segment underwent a 44 percent rise in volume on a year-to-year basis. Moreover, four of the industry’s top five largest deals in 2014 occurred in the segment. The industry’s highest value transaction was Bain Capital, Advent International, and ATP Private Equity Partners’ acquisition of Nets Holding A/S, a provider of payments, information, and digital identity solutions, for $3.14 billion. Regarding the mobile payments subsector, the largest deal in 2014 was Intuit’s acquisition of Check for $360 million.

Transaction volume in the Capital Markets segment fell nine percent throughout the past year. This followed a 17 percent improvement from 2012 to 2013. In terms of value, four of the industry’s top ten largest deals in 2014 occurred in the segment. The largest Capital Markets transaction during the year was Centerbridge Capital Partners’ acquisition of IPC Information Systems, a provider of trading communication technology, for $1.2 billion. Other notable deals in the segment included the acquisitions of Ipreo Holdings for $962 million and Deal Logic for $700 million. Ipreo, a provider of market intelligence, data, and technology solutions was acquired by Blackstone Group and Goldman Sachs’ Merchant Banking Division from Kohlberg Kravis Roberts & Co. (KKR). This followed KKR’s acquisition of Ipreo for $425 million in 2011. Deal Logic, a data and analytics provider for financial institutions, was acquired by a consortium led by The Carlyle Group.

As for other markets covered in the report, deal activity in the Banking segment declined eight percent relative to 2013. However, this marked a return to its 2012 level. One notable deal in the space was Reed Elsevier’s acquisition of FircoSoft, which offers anti-money laundering and screening software, for $199 million.

“Banks are facing numerous financial pressures, including tighter profit margins and increased operating demands,” said Peter Ognibene, Managing Director at Berkery Noyes. “Some factors contributing to these conditions are uncertainty about the regulatory environment and the ability to maintain compliance without too severely impacting the bottom line.” Ognibene continued, “A fully integrated payments approach has the potential to inspire new product development and improve service levels. Payment hubs and ACH electronic transfer payments can also lead to economies of scale. And in order to counteract fees passed onto customers, banks have recognized the need to improve their payment offerings to better compete with one another.”

“Big corporations tend to wait for one or two smaller companies to compete with similar payments technologies, then focus on the one that survives as a company to approach for a potential acquisition,” said John Guzzo, Managing Director at Berkery Noyes. “In other instances, a company may be wiser to continue concentrating on its own core competencies and simply lease good technology because developing e-wallets or point of sale technology is an expensive endeavor.” Guzzo continued, “Payments companies may also be on the lookout for acquisition targets that provide compliance or security for card-not-present transactions, particularly as the U.S. shifts to EMV cards at the physical point of sale. Having technology to verify and authenticate the person on the phone or initiating an online transaction is going to be a huge area.”

A copy of the FINANCIAL TECHNOLOGY AND INFORMATION INDUSTRY M&A REPORT FOR FULL YEAR 2014 is available at the Berkery Noyes website.