The Information Industry report features companies in the Media and Marketing, Software, and Online and Mobile Industries. It analyzes M&A activity during 2012 and compares it with data covering 2010 and 2011.
According to Berkery Noyes' latest research, the Information Industry experienced a three percent uptick in volume since 2011, from 3,317 to 3,412 transactions. There was a similar year-to-year percentage rise across each market examined in the report. Although transaction volume improved slightly over the past twelve months, the overall number of industry transactions increased 22 percent relative to 2010.
Deal value in the Information Industry decreased 10 percent on a yearly basis, from $171.41 billion in 2011 to $153.53 billion in 2012. The median revenue remained nearly constant at 1.9x, while the median EBITDA multiple declined from 11.5x to 10.0x. Four of the report's top ten highest value transactions in 2012 were backed by financial sponsors, compared to two in 2011.
M&A volume in the Marketing and Advertising segment of the Information Industry remained nearly constant between 2011 and 2012. However, it surpassed Lifestyle and Entertainment as the largest information market tracked by Berkery Noyes in 2012. One of the report's highest value transactions was Dentsu's acquisition of Aegis Group, a media and digital communications company, for $4.86 billion. Communications services group WPP was the Information Industry's most active acquirer during the year, accounting for 42 transactions. Please note that the report only includes acquisitions in which the targets are disclosed.
Dell was also an active acquirer and completed nine industry transactions in 2012. Several of Dell's software acquisitions indicate how companies whose primary business is making servers, storage, and other data center products are looking to innovate and diversify through acquisition as their client base starts moving data centers onto the cloud. This trend was highlighted in part by Dell's acquisitions of Wyse Technology, Make Technologies, and Clerity Solutions throughout the year.
In addition, deal volume pertaining to companies in the Energy segment increased 29 percent between 2011 and 2012, from 48 to 62 transactions. The segment's two largest deals were both backed by private equity firms and had transaction values of $1 billion each. This consisted of Hellman & Friedman's announced acquisition of Wood Mackenzie, a research firm focused on the oil, gas, and mining market, as well as Apax Partners and JMI Equity's acquisition of Paradigm, a software company serving the oil and gas exploration and production space.
As for the Online and Mobile portion of the Information Industry, transaction volume in the web app development subsector increased 18 percent relative to 2011. This was attributable to several factors such as the growing popularity of HTML5, responsive web design, and the push toward greater enterprise mobility.
"There has been an ongoing discussion in the M&A world about Technology Enabled Services," said James Berkery, Chief Information Officer at Berkery Noyes. "As an overarching term that is distinct from more defined concepts such as cloud or Software as a Service (SaaS), Technology Enabled Services combine business process outsourcing (BPO) concepts with proprietary technologies that go hand in hand with a company's offerings."
According to Berkery, "Although the service in SaaS implies that hosting the software is the service, there is typically no personal service in the traditional sense. Technology Enabled Services use and implement the software for the client, an approach that encourages the provider to implement the product beyond introduction and training." Berkery continued, "These companies are taking on the responsibility of making sure all of the data points are entered, reported and acted upon as they were designed to be, which ensures the user obtains the maximum benefit of the product."
A copy of the INFORMATION INDUSTRY M&A REPORT FOR FULL YEAR 2012 is available at the Berkery Noyes website.
About Berkery Noyes
Berkery Noyes is an independent investment banking advisory firm servicing the information industry. The firm specializes in mergers and acquisitions advisory, debt and equity financing, and financial consulting services for companies in the $20 million to $500 million range. Since its founding by Joseph W. Berkery in 1983, Berkery Noyes has worked with corporate clients to grow through acquisition, divest non-core assets, and maximize shareholder returns through strategic transactions and restructurings. For private owners, Berkery Noyes helps create liquidity and execute timely exit strategies that achieve their personal and professional objectives. The firm's research teams publish acquisition activity in the respective sectors they follow on MandAsoft.com.
Securities services are offered through Berkery Noyes Securities, LLC. For more information, visit www.berkerynoyes.com.
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