The US equity markets are now officially in the midst of the second longest continuous rise ever – and they just keep on ticking.
It’s been more than 2,700 calendar days since the 2009 bottom – without a 20% pull back.
Can it continue? Can we surpass the to 3,452 day bull market that ended with the tech market crash in 2000? Maybe we can – at least in the dozen+ sectors of the information-technology industry that we follow and sometimes lead.
Every week, we talk to the CEOs, Board members, investors and others connected with a wide range of information-technology companies of all sizes, from startups to mega-billion dollar multi-national behemoths – and the funny thing is – most are totally pragmatic.
Their businesses may not all be growing at huge rates. But most are solidly growing – and profitable.
It’s not 1999, when many savvy investors and owners recognized that the transaction values of many tech-related companies could not be justified by expected future cash flows.
Then, it was all about limited supply and irrational demand. But now, most buyers and sellers are coming to agree on values that are rationally based.
Yes, there are always those high profile irrational Unicorn values (Theranos?) and a few the over-the top transaction values – often paid by firms that can well afford the risk ($26 billion for LinkedIn? $3.2 billion for Jet.com? Really?) But they are the exceptions.
Verizon’s $4.8 billion price for Yahoo! is a better example; it’s a rational price for a perfect strategic fit.
As you will see from our report, found here, top line growth, increasing profit and strong market positions are driving rational values in the information technology sector.
And so far it shows no sign of abating. We’re keeping a sharp eye on it. Details on sector performance as well as on some of the more notable recent transactions can be found here, in our August 2016 Market Update Report.
A few of those transactions include:
- Verizon (NYSE:VZ) agreed to acquire Yahoo (NASDAG:YHOO) for $4.83bn,
- Onex Corporation (TSX:OCX) and Baring Private Equity Asia agreed to acquire Thomson Reuters’ Intellectual Property & Science business for $3.55bn,
- BM&FBovespa (BOVESPA:BVMF3) acquired a 10% stake in Bolsa de Valores de Colombia for MXN 39.8bn (~$2.1bn),
- AVG Technologies N.V. (NYSE:AVG) agreed to acquire AVAST for $1.5bn,
- MasterCard (NYSE:MA) agreed to acquire 92.4% of VocaLink for approximately $920mm (700 mm GBP),
- Thoma Bravo agreed to acquire Imprivata for approximately $544mm,
- Blackboard Inc. (Washington, D.C.) agreed to acquire Higher One Holdings for $260mm,
- Nuance Communications (NasdaqGS:NUAN) agreed to acquire TouchCommerce for an implied enterprise value of $215mm,
- Evolent Health (NYSE:EVH) agreed to acquire Valence Health for approximately $145mm, and
- Oracle (NYSE:ORCL) agreed to acquire NetSuite (NYSE:N) at a 19.0% premium to the prior day’s trading price. The transaction valued NetSuite at an implied enterprise value of $8.7bn or 10.3x LTM revenue