Financial Technology, Data, and Analytics

Dear Clients and Friends:

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

Data analytics is a necessary first step in the evolution to having machines prescribe solutions to vexing real world problems. It is the foundation to move up the technology curve through things such as natural language processing, process automation, machine learning, and ultimately artificial intelligence (“AI”).  Gartner talks about the analytics “maturity model” – a chain of evolution in analytics, ranging from descriptive to diagnostic to predictive, and culminating with prescriptive. However you want to think of it, most firms are just scratching the surface. The future is clearly before us.

As indicated by a recent flurry of capital raises by firms such as Coveo, Lucidworks, and ThoughtSpot many firms are using creative versions of cognitive search tools to improve the effectiveness of search and knowledge discovery. (Gartner calls these “insight engines”.) It’s far from prescriptive at this point. But it is a giant leap from today’s search – and several steps closer to prescriptive analytics driven by true AI. 

We’re bullish on this trend. We see too many enterprises that think they should be providing AI–based solutions when first they need to solve the challenges of digital transformation – and intelligent search. The answer may well be to first focus on offering cognitive search solutions that are easier to develop, and easier for users to adopt and implement across the enterprise.

Such solutions can work with an abundance of disparate data sources, including both structured and unstructured data, with high degree of reliability, provide contextual recommendations and enhance user experience. Prescriptive AI will come – later – when the other building blocks are in place.

We continue to be very active in the space and recently, advised MSCI on its sale of FEA to Allegro. A few of the more interesting deals this month include:

• Fuze (Boston, MA) raised $151mm in an equity funding round led by Summit Partners,
• ThoughtSpot (Palo Alto, CA) raised $145mm in a Series D funding round at a $1bn valuation,
• NICE (TASE:NICE) agreed to acquire Mattersight for $117mm, valuing the company at an implied 2.5x LTM revenue,
• YouGov (AIM:YOU) agreed to acquire the remaining 80% in SMG Insight it did not already own for GBP21mm (~$28.1mm) implying an enterprise value of ~$34.8mm and valuing the company at an implied 4.25x LTM EBITDA,
• KKR (New York, NY) agreed to acquire BMC Software for an undisclosed sum,
• IBM (NYSE:IBM) acquired Armanta for an undisclosed sum,
• Fitch (New York, NY) agreed to acquire Fulcrum Financial Data for an undisclosed sum.
• Resurgens Technology Partners (Atlanta, GA) agreed to acquire Assurance Software for an undisclosed sum.

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