Market Update

Will the Europeans Kill Europe? Our October 2017 Market Update

October 2017

Dear Clients and Friends,

Our report below 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 you will see, many recent transactions are cross-border. We care because about half of our transactions involve non-US companies.   

Last week, buried in the news about the mass killing in Las Vegas, the plight of those affected by hurricanes, Russian hacks of the US Election, the future of DACA, and possible changes to US tax law, was news that the European Commission has ordered Luxembourg to recapture €250mm in “illegal” tax benefits from Amazon. That followed their requirement for Ireland to reclaim €13bn from Apple. The EC is also reported to be rewriting tax rules for technology companies – possibly taxing revenue instead of profit. Did the EC learn nothing from Brexit? People care about sovereignty.   

In my book, I have a chapter titled “Seek Foreign Entanglements”. I wrote that in most technology-based industries, companies can’t achieve long-term success without looking beyond their own borders. I also wrote that this effort should not require giving up your cultural identity – or your ability to control your destiny – and that’s a principle the EC should consider – before they foster the next Brexit.

Promoting the free movement of goods, currency and people across borders is a good thing. Depriving countries of their ability to attract employment or to determine tax policies that are in their long-term self-interest is another. And it won’t work.

So, as I reflect, on whether or not the US Congress is going to do anything of consequence about the many important issues they face and whether the US Secretary of State really believes our President is a moron, I can only encourage those in Brussels and in DC to contemplate the consequences before they kill the Unions they so cherish.

As you will see from the report found below, m&a deal values – domestic and cross-border – remain strong. With some smarter thinking in Brussels, it can continue. Some of the more interesting deals include:

  • Hellman & Friedman (San Francisco, CA) agreed to acquire Nets (CPSE:NETS) of Denmark for $5.3bn, implying an enterprise value of $6.4bn and valuing the company at an implied 5.3x LTM revenue and 19x LTM EBITDA,
  • Nasdaq (NASDAQ:NDAQ) agreed to acquire eVestment for $705mm, valuing the company at an implied 8.7x LTM revenue,
  • Pivotal Payments from Montreal, Canada, raised equity funding from Novacap and Caisse de dépôt et placement du Québec (“CDPQ”) at a post-money valuation of CAD 525mm (~$430mm),
  • Shenzhen Suishou Technology from China raised $200mm in a Series C round of funding led by new US investor KKR,
  • Algomi from London, UK, raised an undisclosed amount of funding from new investor S&P Global.

Please see our October Market Update Below.

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