Dear Clients and Friends,
Our report found here contains an update on m&a deals, values, and trends in the dozen+ segments of the information technology industry that we follow, and sometimes lead.
As we have previously noted, one of the biggest challenges – and one of the largest opportunities – in our industry today revolves around the ability to capture and analyze the massive amounts of structured and unstructured data. A big part of the challenge is that the volume keeps growing. Connected homes, offices, cities and cars, health and financial systems, video, augmented reality, automated factories, artificial intelligence and cloud based services all contribute. According to Cisco, cumulative global data is expected to grow 24% per year for a long time. (Read more here.)
We have often discussed the role of Big Data Analytics to help us process and understand much of this data. But the ability of any software to process the data is limited by the speed at which that data is received and that’s where 5G wireless technology comes in.
Our industry is used to a wired world. For most participants, wireless is for mobile apps – mostly consumer oriented. But with the speed of 5G wireless approaching 1 gigabyte per second, our assumptions regarding wireless applications (including B2B) need to be reexamined. Yes, fiber (now typically 50 – 100 Mbps) will improve to rival – and probably surpass – 5G at some point. But fiber isn’t everywhere. Meanwhile wireless 5G is touted to deliver peak speeds much faster than most conventional wired systems – and as much as 100 times faster than 4G. Those are speeds that can facilitate the vast majority of InfoTech applications including remote surgery and augmented reality headsets for emergency responders. Cisco forecasts that, by 2021, wired devices will account for 37% of global traffic, while Wi-Fi and mobile devices will grow to account for 63% of traffic, up from 49% in 2016.
The Chinese are at the forefront of 5G – rolling out 5G networks in Guangzhou, Hangzhou, Shanghai, Suzhou and Wuhan this year. South Korea is aiming for 2019. The US probably won’t have a full 5G system in place before 2020. But it’s coming. InfoTech companies that position themselves to take advantage of 5G speeds will be the desirable ones of the future. Count on it.
As you will see in our June Market Update found here, m&a activity in the dozen sectors that we follow and sometimes lead is strong.
A few of the more interesting recent transactions over the past month include:
- PayPal (NASDAQ:PYPL) agreed to acquire iZettle for $2.2bn, valuing the company at an implied 19.8x LTM revenue,
- Adobe (NASDAQ:ADBE) agreed to acquire Magento for $1.7bn valuing the company at an implied 11.2x LTM revenue,
- Intercontinental Exchange (NYSE:ICE) agreed to acquire TMC Bonds for $685mm,
- Fuze (Boston, MA) raised $151mm in an equity funding round led by Summit Partners,
- ThoughtSpot (Palo Alto, CA) raised $145mm in a Series D funding round at a $1bn valuation,
- Deutsche Börse (XTRA:DB1) agreed to acquire GTX ECN from GAIN Capital Holdings for $100mm, valuing the company at an implied 4.4x 2017 revenue.