JEGI 2014 M&A Overview: M&A Surges in 2014 to Pre‐Crisis Levels, Driven by Mega Deals
New York, NY January 6, 2015 – 2014 saw a return to pre-financial crisis levels for mergers and acquisitions across the media, information, marketing and technology sectors, with 1,481 M&A transactions announced for a total value of $128.3 billion. Deal volume increased by a modest 6% over 2013, but deal value nearly doubled against 2013’s $66.7 billion, due in large measure to mega transactions like Facebook’s $19.7 billion acqui-sition of mobile messaging app WhatsApp. And, with strong Q4 activity and an active M&A pipeline, 2015 is likely to continue the 2014 pace, according to The Jordan, Edmiston Group, Inc. (JEGI) (www.jegi.com), the leading independent investment bank specializing in these core markets.
Marketing Services & Technology was the most active sector in 2014, with 602 transactions worth $39.7 billion, accounting for 41% of total deal volume and 31% of value for the year. Healthcare Information & Technology was the distant runner-up, with 234 transactions totaling $27.9 billion in value. Mobile Media & Technology was the third sector to surpass $20 billion in value in 2014, coming in at $24.7 billion for the year, primarily due to the Facebook/WhatsApp transaction.
Mega Deals in 2014
2014 saw 18 deals hit the $1 billion+ mark, including eight transactions in the Marketing Services & Technology sector. The balance of the $1 billion+ deals fell within Mobile Media & Technology, Healthcare Information & Technology, B2C Online Media & Technology, Education Information & Technology and Database & Information Services. These 18 $1 billion+ deals alone accounted for more than half of 2014’s total deal value – without these, 2014 deal value would have decreased by approximately 8% over the total in 2013.
JEGI Closings in Q4 2014
JEGI saw a very active year in 2014, closing 16 transactions across the media, information, marketing and technology sectors, with six deals announced in the last quarter, including (JEGI client listed first):
- The sale of both onPeak and Travel Planners, two leading event housing software and services providers serving the global tradeshow and corporate event industries, to GES, a subsidiary of Viad Corp. in October (JEGI managed two separate sales of onPeak and Travel Planners to close on the same date as a prepackaged rollup);
- The sale of RTM Productions, a TV and digital content production, distribution and marketing platform specializing in automotive tech programming, to Raycom Media in October;
- The sale of MarketCast, a leading provider of entertainment marketing insights and analytics and a portfolio company of Shamrock Capital Advisors, to RLJ Equity Partners in November; and
- The sale of IRON Solutions, a leading software and data provider to the agriculture market, to Trimble (NASDAQ: TRMB), announced in December.
Looking Ahead to 2015
JEGI expects robust M&A activity to continue in 2015, primarily due to the steady progress of the US economy and the improving economic outlook. Unemployment is at its lowest level since mid-2008, as businesses gain confidence and begin spending again. Resulting improvements in the labor markets, along with plunging oil prices and lower costs at the gas pump, have stimulated consumer confidence. According to the Thomas Reuters and University of Michigan Index of Consumer Sentiment, US consumer confidence reached its highest point in December since January 2007.
Globally, the US is expected to lead as the strongest economy in 2015. US GDP grew at an annual rate of 5% from July through September 2014, the fastest growth for any quarter in over a decade. Brisk growth is expected to continue for 2015 at 3.1%, according to the National Association for Business Economics.
Another indicator is JEGI’s a very robust pipeline of active engagements heading into 2015, which points to another busy year for M&A.
M&A Highlights for 2014
The B2B online media and technology sector saw 2014 deal value rise to $2.9 billion over 65 transactions vs. $601 million for 57 deals in 2013, driven by the recent acquisition by Adobe of online stock photography community Fotolia for $800 million and Walt Disney’s acquisition of Maker Studios for up to $950 million in Q1. Other notable transactions in Q4 2014 included the Genstar Capital acquisition of BidClerk and iSqFt, two search and lead gen platforms for the commercial construction industry, which Genstar merged for an undisclosed amount, and QuestionPro’s acquisition of RapidEngage, a survey application to engage web site visitors, for an undisclosed amount.
B2C online media and technology deal value rose substantially in 2014 to a total value of $15 billion, despite a 20% decline in volume, due to several mega deals, including the Cox Enterprises $1.8 billion acquisition of a 25% stake in AutoTrader Group in Q1; Priceline’s $2.5 billion acquisition of OpenTable in Q2; and the Gannett acquisition of a majority stake in Classified Ventures, valued at $2.5 billion, in Q3. Notable deals in Q4 2014 included the: Great Hill Partners acquisition of online travel site Momondo for $129 million; RTL Group acquisition of 71% of StyleHaul, an online video community that provides make-up and style tutorials, for approximately $107 million; and Hearst acquisition of a 25% stake in teen YouTube channel AwesomenessTV from DreamWorks Animation for approximately $81 million, valuing the company near $325 million.
Deal value also sharply increased in the business-to-business media sector in 2014, up to $3.2 billion, from $452 million in 2013. Deal volume remained fairly steady with 38 transactions in 2014 vs. 34 in 2013. The increase in value was due to UBM’s $972 million acquisition of b2b media company Advanstar Communications in Q4, as well as the Apax Partners acquisition of a 50% stake in Trader Media for approximately $979 million in Q1. Other notable deals in the fourth quarter of 2014 included the United Communications Group acquisition of Buyouts and VCJ Publications & Events, Thomson Reuters’ editorial and conference franchise for the private equity and venture capital industry, for $5 million, and SouthComm Communications’ acquisition of 11 public safety and security publications and related web sites from Cygnus Business Media for an undisclosed amount.
The consumer magazines sector slowed overall in 2014 with 31 transactions, compared to 37 in 2013, and deal value down 6% to $1.6 billion. Notable Q4 2014 deals included the: Postmedia Network Canada acquisition of the English language operations of Sun Media from Quebecor, which include specialty publications, newspapers and digital properties, for $282 million; Rockbridge Growth Equity acquisition of CurtCo Robb Report, publisher of lifestyle, consumer product, real estate and travel publications, for approximately $60 million; and Bertelsmann acquisition of a 25% stake in European printing and publishing company Gruner + Jahr for an undisclosed sum.
Deal volume in the database and information services sector was flat in 2014, with 70 transactions vs. 69 in 2013, while deal value rose by 15% to $6.9 billion. Notable deals in the fourth quarter of 2014 included the: Hearst acquisition of a 30% stake in credit ratings agency Fitch Group for $2 billion; Carlyle Group acquisition of Dealogic, an online resource for investment banking and capital markets professionals, for $485 million; Solera Holdings acquisition of automotive database CAP Automotive for $464 million; and Trimble acquisition of agriculture software and data provider IRON Solutions for an undisclosed sum (a JEGI transaction).
M&A activity in the education information, technology and training sector declined in both deal volume and value in 2014, 11% and 23% respectively, totaling 72 transactions at $5.4 billion. Notable deals in Q4 2014 included the: Bertelsmann acquisition of Relias Learning, provider of online training programs in healthcare, law enforcement and human services, from Vista Equity and LLR Partners; Rhone Capital acquisition of Global Knowledge Training, provider of IT and business skills training services, from MidOcean Partners; and Ebix acquisition of Oakstone Publishing, provider of continuing education and certification for healthcare professionals, from BV Investment Partners.
Deal volume in the exhibitions and conferences sector slowed this year, with 53 transactions, compared to 64 in 2013. Deal value fell significantly, dropping from $3.8 billion in 2013 to $1.1 billion in 2014, due to a few large transactions in 2013, including the $950 million Onex acquisition of Nielsen Expositions (JEGI advised Onex in this deal), $946 million Vista Equity acquisition of event management software company Active Network, and $900 million Goldman Sachs acquisition of event services company PSAV. Notable transactions for the fourth quarter of 2014 included the: Informa acquisition of US trade show operator Hanley Wood Exhibitions for $375 million; GES (Viad) acquisition of onPeak and Travel Planners, two leading event housing software and services providers, for an undisclosed sum (JEGI transactions); and i2i Events acquisition of Money20/20, an event for the financial services sector, for an undisclosed amount.
The healthcare information and technology sector, the second most active sector in terms of deal volume, increased by 12% in number of transactions in 2014 compared to 2013, up to 234 deals. Deal value in the sector rose sharply, up to $27.9 billion vs. 2013’s $10.5 billion, due to several large transactions, including the recent $12.1 billion Becton, Dickinson and Company acquisition of CareFusion, provider of various healthcare products and services, including enterprise IT, surveillance and analytics. Other notable deals in Q4 2014 included the: OptumHealth Care Solutions acquisition of health management services company Alere Health for $600 million; Catamaran acquisition of specialty pharmacy services provider Salveo Specialty Pharmacy for $260 million; and Abbott Laboratories acquisition of 3-D electrophysiological mapping company Topera for $250 million.
The marketing services and technology sector continued to lead M&A activity in 2014, with 602 transactions and $39.7 billion of value, a 26% and 71% increase over respective 2013 levels. The largest transaction in the fourth quarter of 2014 was the $3.4 billion Publicis acquisition of marketing technology company Sapient. Other notable deals in Q4 2014, which reflect the wide range of transactions and diverse buyer pool for this sector, included the:
- Siris Capital Group acquisition of Digital River, provider of end-to-end cloud-commerce, payments and marketing solutions, for $646 million
- Yahoo acquisition of Brightroll, provider of digital video advertising solutions, for $640 million
- HGGC acquisition of Survey Sampling International, provider of sampling, data collection and data analysis, from Providence Equity Partners and Sterling Investment Partners for a reported $500 million
- Oracle acquisition of DataLogix, a provider of consumer purchasing data and digital audience targeting, for an undisclosed amount reported to exceed $500 million
- BancTec acquisition of SourceHOV, a business process outsourcing and consulting company, from Citi Venture Capital International and other investors for an undisclosed sum
- Cision/GTCR acquisition of Gorkana, provider of media intelligence and insights for PR agencies, marketers and journalists, from Exponent Private Equity for approximately $323 million
- ICF International acquisition of Olson, an integrated marketing technology and digital services provider, from KRG Capital Partners for $295 million
- TPG Capital acquisition of an 18% stake in talent management agency Creative Artists Agency for a reported $225 million, valuing the company at $1.25 billion
- Rentrak acquisition of Kantar Media’s US-based TV measurement assets for $128 million
- RLJ Equity Partners’ acquisition of MarketCast, a leading provider of entertainment marketing insights and analytics, from Shamrock Capital Advisors for an undisclosed sum (a JEGI deal)
- Macromill acquisition of market research company MetrixLab for an undisclosed sum
- Kitara Media acquisition of digital ad network Future Ads for an undisclosed sum
- Kantar Media Research acquisition of IBOPE Media Information, which provides measurement and analysis of TV ratings and ad spending in Latin America, for an undisclosed sum
- Nielsen acquisition of marketing optimization software provider Affinnova for an undisclosed sum
- Raycom Media acquisition of RTM Productions, a TV and digital content production, distribution and marketing platform specializing in automotive tech programming, for an undisclosed sum (a JEGI deal)
The mobile media and technology sector declined slightly in terms of deal volume in 2014, with 141 transactions vs. 2013’s 145. Deal value, however, grew exponentially to $24.7 billion from $7.4 billion in 2013, due to the $19.7 billion Facebook/WhatsApp transaction in February. Notable Q4 2014 deals included the: Churchill Downs acquisition of mobile game developer Big Fish Games for $835 million; Twenty-First Century Fox acquisition of True[x] Media, provider of interactive ads that run in mobile games and apps, for a reported $200 million; and Microsoft acquisition of Acompli, a mobile email application, for a reported $200 million.