Financial Technology, Data, and Analytics

Dear Clients and Friends,

Please see our latest update on m&a trends for the four segments of the Enterprise Data and Analytics sector that we follow, and sometimes lead, below. In December we wrote a blog post on why Data & Analytics failed the pundits predicting the outcome of the Brexit referendum and our recent Presidential Election. A few weeks ago, in our Fintech Market Update, we noted that, in spite of the fears raised by many of these same pundits, following both events, interest rates did not skyrocket – they fell; and securities markets did not crater; they rose. The sky has not fallen…yet… 

There are many drivers of this continued growth. Among them, we note three:

The first is simply optimism. We meet with buyers, sellers, and investors every day and it is clear that in the aggregate, most are willing to bet that our institutions and sanity will prevail regardless of the breathless pronouncements of politicians and pundits. I hope they are correct. If that optimism should fail  – watch out for falling objects from the sky.

The second driver of growth is the abundance of cash. There is over $1 trillion of committed, unspent capital available for m&a transactions out there – and a lot of people whose job is to spend it as long as the values are rising….

The third driver of growth is the continued impact of innovation – particularly the continued refinement, expansion, and adoption of software tools that take advantage of advances in Artificial Intelligence and Machine Learning, and then combine those with Big Data analytic capabilities to offer disruptive solutions to real problems. This is where our current market report shines its brightest light.

As you will see from the report that follows, in a market characterized by optimistic buyers with plenty of cash and debt capacity who are chasing the few truly innovative firms that have reached scale, transaction values have continued to be strong – particularly among the growing Enterprise Data and Analytics companies with market values below $500 million. And that’s our world.

At the same time, we note that this is not a rising tide that lifts all boats. It is a discriminating tide that is lifting those boats that are proven and sturdy. Or, to mix a metaphor, lifting values for those technology-based firms that have reached scale, are growing rapidly, addressing unmet needs of large markets, with a proprietary, defensible product. The report that follows notes many of these firms as well as recent m&a values and trends. 

Some recent interesting transactions include:

• Gartner (NYSE:IT) acquired Corporate Executive Board (“CEB”) for $2.6bn in cash, implying an enterprise value of $3.3bn and valuing the company at an implied 3.5x LTM Revenue and 17x LTM EBITDA,
• Atlassian (London, UK) acquired Trello for $425mm,
• Affiliates of The Carlyle Group (NasdaqGS:CG) and the Indian Hill Group acquired Claritas from Nielsen (NYSE:NLSN) for an undisclosed sum,
• Verisk Analytics (NasdaqGS:VRSK) acquired Arium Limited for an undisclosed sum,
• Parabellum Capital (London, United Kingdom) acquired Razor Risk from TMX Group for an undisclosed sum,
• A company owned by Pierre Feligioni, one of QuantHouse’s original founders, acquired QuantHouse from S&P Global for an undisclosed sum.