Enterprise Data & Analytics

Private Equity is Bullish on Enterprise Data and Analytics – Our March M&A Update.

March 2018

Dear Clients and Friends,

The report found below gives our sense of the current m&a trends, values and deals in the four segments of the Enterprise Data and Analytics sector that we follow and sometimes lead.

A month ago, we noted the acquisition of 55% of Thomson Reuters by Blackstone Group – valuing the firm at $20bn. In a news cycle that includes Qualcomm‘s attempted/aborted $130bn takeover of Broadcom, the Thomson Reuters deal didn’t give rise to much press. But we noticed. In the Enterprise Data and Analytics world a $20bn transaction is huge. And this was by a PE firm! In the early 2000’s PE represented around 25% of m&a deal volume. But now PE firms make up more than 40% of deals in our world.  That’s the most since 2010. And from where we sit, they are just getting started. 

Thoma Bravo is raising a $10bn fund for tech deals; Vista Equity has an $11bn tech fund; Silver Lake has a $15bn tech fund; and Softbank announced that $93bn (!!) has been committed against a $100bn target. And they are not alone. Carlyle, CVC, Francisco Partners, Golden Gate, Goldman Sachs, KKR, TPG, Warburg Pincus and a dozen other PE firms have or are raising multi-billion dollar pools to chase cloud, Blockchain, SaaS, PaaS, AI, and more technologies key to the EDA space. High valuations seem to be slowing none of this. Banks are eager to lend, interest rates may be up a bit – but are still low; and there is competition – not only from other PE firms but also from strategics including Apple, IBM, Microsoft, Oracle, Salesforce and SAP– and a host of smaller firms.

We expect the strategics to remain active EDA acquirers. As profits rise, taxes decline, and some part of the $2.6 trillion in overseas cash is repatriated, they can hardly sit on the sidelines. But the absolute number of public software companies in this space is nearly half of what it was a few years ago as public companies have consolidated and been taken private; while the number of tech IPOs remains few. And now, they have to compete with some very hungry private equity players.

It’s a good time to be a seller…

A few of the more interesting deals this month include:

  • Exponent Private Equity acquired the Talent Assessment business of CEB (Arlington, VA) from Gartner for $400mm,
  • LogMeIn (NASDAQ:LOGM) agreed to acquire Jive Communications for $342mm with an additional $15mm based on performance over a 2-year period,
  • CITIC Capital Partners (Hong Kong) and Caixin Global (Beijing, China) agreed to acquire Global Market Intelligence Division (“GMID”) from Euromoney Institutional Investor for $181mm, valuing the company at 12x LTM operating profit,
  • Google (NASDAQ:GOOGL) agreed to acquire Xively from LogMeIn for $50mm,
  • xMatters (San Ramon, CA) raised $40mm in a Series D funding round led by Goldman Sachs Private Capital Investing.

Please find our full Enterprise Data & Analytics March report below.

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