Summer is upon us – with no m&a doldrums in sight. The U.S. dollar value of m&a activity in the first quarter was up more than 20% over the same period in 2014, which itself was a strong year. It continues apace. The value of announced global tech m&a deals through May is at the second-highest level on record. The value of announced global healthcare deals through May is at the highest level on record. Despite turmoil in some parts of the world, U.S. buyers continue to hunt abroad as well as domestically (Dealogic says that the value of U.S. acquisitions into EMEA is at the highest level on record). We are also seeing significant m&a interest by European and Asia/Pacific buyers – note our recent announced deal in which we advised a Dublin-based firm (Information Mosaic) in a sale to a London-based buyer (Markit). See press release here: http://bit.ly/1S1OI8n
As is usually the case, while the mega-deals dominate the headlines, mid-market transactions make up the bulk of the activity (78% – according to PitchBook).
To us it all comes down to confidence: for the right deal, investors and buyers are confident enough in their own immediate future to be willing to give up the certainty of cash and debt capacity for the promise of future rewards. They are confident that the right investment or acquisition really will bring those rewards. It certainly helps that cash is plentiful for many larger investors and buyers (balance sheets are swelling, debt costs are low) and alternative uses of that cash are often few (earnings on undeployed cash is low and organic growth is challenging).
In this environment it should be no surprise that enterprise values are up. Our Market Update focuses on our current sense of the m&a values, activities and trends for the dozen plus sectors that we follow and sometimes lead. As you will see, values expressed as a multiple of revenue and of EBITDA are at levels that we have not seen for a few years. This gives some sellers the motive and the opportunity to monetize years of hard work. Several examples are described on the report below – a few highlights are listed below:
Zenefits raised $513mm in a Series C funding led by new investors Fidelity Investments and TPG Growth – valuing the company at $4.5 billion;
- Shopify (NYSE:SHOP) sold 7.7mm shares, raising a total of $131mm at an implied market valuation of approximately $1.3bn;
- Sabre Technology Enterprises Ltd. acquired the remaining 65% stake in Abacus International Pte Ltd for approximately $410mm in cash;
- Pitney Bowes (NYSE:PBI) agreed to acquire Borderfree for $372mm – valuing the company at an implied 3.0x LTM revenue;
- HgCapital acquired a majority stake in The Foundry Visionmongers Ltd. from Carlyle Europe Technology Partners for £200mm (~$306mm);
- Elbit Systems Ltd. (NASDAQ & TASE:ESLT) acquired NICE Systems Ltd.’s cyber and intelligence division for approximately $160mm;
- Broadridge Financial Solutions (NYSE:BR) agreed to acquire the Fiduciary Services and Competitive Intelligence unit from Thomson Reuters Lipper for an undisclosed sum; and
- Markit (NASDAQ:MRKT) agreed to acquire our client, Information Mosaic, for an undisclosed sum.
Marlin & Associates is one of the most active firms advising buyers and sellers of U.S. and international middle-market firms that provide software, data, and related services. The firm is based in New York City, with offices in San Francisco, CA, Washington, D.C., and Toronto, Canada. It has been the recipient of numerous awards including “Boutique Investment Bank of the Year,” “Middle-Market Investment Bank of the Year,” “Middle-Market Financing Agent of the Year – Equity,” and “TMT Advisory Bank of the Year.” Marlin & Associates’ team of professionals has advised over 200 information technology transactions.
To read the rest of our June Market Update, please click here: http://bit.ly/1Qlwv8p