Gridley & Company LLC M&A Survey: Information Services Deals Expected to Heat Up in 2010

NEW YORK, Feb. 16 /PRNewswire/ -- A new survey conducted by New York-based boutique investment bank Gridley & Company LLC ("Gridley & Co.") reveals a high level of optimism for mergers and acquisitions (M&A) in the information services industries with more than 80 percent of respondents noting they would be active in information services deals as a likely "buyer" or "seller" in 2010, with 23 percent of participants responding as a "buyer," 37 percent responding as a "seller" and 22 percent responding as "both."

When asked what type of transaction they plan on in 2010, 29 percent said they would acquire a private company, 28 percent noted they would be involved with a sale of a company, 19 percent responded with a sale of a portfolio company and 28 percent said they would be fundraising in 2010. Participants were also particularly bullish on an expected increase in public company deals in 2010. More than 75 percent of respondents noted they expect to see more public company strategic deals this year.

That positive sentiment was also captured in responses on the overall M&A environment with nearly 85 percent of those surveyed expecting 2010 domestic deal volume to increase over last year, with more than 65 percent saying volume will grow by more than 10 percent in 2010 and 23 percent responding that volume will increase more than 25 percent.

"Clearly our respondents are feeling more confident about their companies and about the overall economy. We seem to have turned a corner and the M&A markets are rapidly improving," said Linda Gridley, Founder and CEO of Gridley & Co. and host of Gridley's Ninth Annual Information, Marketing, Internet, Financial Technology & Outsourcing Services Conference held last month at the Jumeirah Essex House in New York City. "These statistics back up what we've been hearing from our clients and network – dealmakers are looking to ensure their businesses are positioned for growth as the economy turns around, and M&A will play a major role in their plans."

Gridley's M&A survey was designed to gain insight into deal activity and trends in the Internet services, marketing services and financial technology sectors of the information services industry over the next 12-18 months. Gridley surveyed approximately 80 senior executives from these sectors. The respondents also revealed that in 2010, the Internet and marketing services sectors is where most buyers and sellers expect to be active. Not surprisingly, when asked which Internet company (AOL, Google, Microsoft and Yahoo) would execute the highest number of deals, 67 percent answered Google, 21 percent responded Microsoft and 8 percent answered AOL.

Of the private equity investors who participated in the survey, 50 percent of respondents said they expected to do up to five deals in 2010, while 28 percent answered they would anticipate making between five to ten transactions this year. Survey respondents also uniformly noted their increased confidence in the M&A lending environment. 64 percent expected the lending environment to continue to improve and 22 percent believed it would even out at current levels.

Regarding valuations, Linda Gridley remarked, "This year valuations will be more balanced for buyers and sellers versus years past when expectations were hard to meet. If companies were valued at 12x in 2007, most likely they will be in the range of 7x-10x in 2010. These more reasonable valuations should also encourage more deal activity."

Gridley's recent conference in early January featured presentations from approximately 30 leading private companies in the information services sector, as well as discussion panels featuring industry leaders. Since 2004, 150 private companies have presented at Gridley & Company's Annual Conference with nearly 45 percent going on to do successful liquidity events. This year's conference drew attendance from over 475 senior executives and financial investors, representing approximately 320 companies and private equity firms.

About Gridley & Company LLC

Gridley & Company is a New York based boutique investment bank that provides financial advisory services to companies in the Information Services industry with a specific focus on the following sectors: Marketing, Internet, Financial Technology and Outsourcing Services. Industry professionals rely on and look to Gridley for insights on M&A through proprietary annual events and its semi-annual newsletter, The Compass, which is received by over 2,200 industry professionals. Gridley's knowledge-based investment banking approach combined with its specialized expertise in information services results in optimal advice for clients and highly successful transactions. For more information, please visit www.gridleyco.com.

SOURCE Gridley & Company LLC