Dear Clients and Friends,
Our report found here contains an update on m&a deals, values and trends in the industries that we follow and sometimes lead. Please click here for our full June Market Update.
Recently, we saw an interesting set of charts put out by PitchBook on m&a trends in the PE industry. We like PitchBook and respect their work. But sometimes, their data overwhelms us.
Several of the recent charts were put under the heading “An expensive market contributes to declining activity”. It showed that transaction multiples for PE-related deals have risen from 8.1x EBITDA in 2010 to 10.8x in 2017. But it’s also a different and more optimistic time than 2010. Further, multiples were 9.1x in 2011. So we’re not sure how much this rise in multiples is impacting PE m&a behavior.
Another chart showed that the percentage of IT-related PE deals that are for software firms has increased from around 25% of deals in 2006 to more than 60% of transactions today. That leads us to think about the whole issue of “mix”. Perhaps people are not exactly paying more for the same types of companies – but instead are paying more for firms with more potential. That makes sense.
PitchBook clearly showed that the number of reported transactions in the first quarter of 2017 – as well as the value of those transactions – is significantly off the torrid pace we have seen over the past three years. Can Q1 be extrapolated to the rest of the year – and beyond? We’re not sure that the two sets of facts (multiples and volume) are directly correlated. Could there be something else at work here?
So we’ll add a couple of other data points: We talk to a lot of people at PE firms who had strong Q4 last year and are now just filling their pipelines. No PE partner we talk to says that they are slowing down. And certainly our business has not slowed down. Our take: A strong economy combined with optimistic buyers and sellers contributes to buyer interest and that leads to strong prices. The deal volume we see seems to remain at a very high level. We hope it stays this way…
Some of the more interesting m&a transactions, trends and values are discussed in our June Market Update, found here. Among others, we note:
- Moody’s Corporation (NYSE:MCO) agreed to acquire Bureau van Dijk Electronic Publishing for $3.2bn, valuing the company at an implied 11.6x 2016 revenue and 22.7x 2016 EBITDA,
- First Data (NYSE:FDC) agreed to acquire CardConnect (NASDAQ:CCN) for $750mm valuing the company at an implied 4.6x LTM revenue and 27.8x LTM EBITDA,
- London Stock Exchange Group (LSE:LSE) agreed to acquire The Yield Book and Citi Fixed Income Indices from Citi for $685mm, valuing the company at an implied 6.4x 2016 revenue and 14.9x 2016 EBITDA,
- FLEETCOR Technologies (NYSE:FLT) agreed to acquire Cambridge Global Payments for $675mm,
- Apple (NASDAQ:AAPL) agreed to acquire Lattice Data for approximately $200mm,
- Asure Software (NASDAQ:ASUR) acquired iSystems from Silver Oak Services Partners for $55mm.
Please click here for our full June Market Update.
We will be attending Money20/20 Europe on June 26th-28th. To arrange a meeting there, please contact Paul Friday at paul@marlinllc.com.
