JEGI Q1 2013 M&A Overview: Q1 2013 Driven by Marketing Services and Interactive Transactions
New York, NY April 2, 2013 – The media, information, marketing, healthcare and technology sectors saw 353 transactions in the first quarter of 2013 for a total value of $7.5 billion, slightly down in volume from 374 deals in Q1 2012. Following a year‐end surge in M&A driven by impending tax changes, the value of deals announced in the first quarter of 2013 declined 38% from $12.2 billion in Q1 2012, with fewer large transactions, according to The Jordan, Edmiston Group, Inc. (JEGI) (www.jegi.com), the leading independent investment bank specializing in M&A advisory services across these core markets. Q1 2013 saw only fourteen transactions pass the $100 million mark, compared to eighteen deals in the first quarter of 2012, with just one 2013 deal over $500 million – Expedia’s acquisition of a 61% stake in Trivago, a hotel search web site, for approximately $627 million.
Deal volume in Q1 was driven by a wave of smaller transactions in Marketing & Interactive Services, which led the charge with 118 transactions and $2.5 billion of deal value, accounting for about one third of the total deals and value for the quarter. The B2C Online Media and Healthcare Information & Technology sectors followed, with 53 and 52 deals, respectively, and each over $1 billion in deal value, while Mobile Media & Technology followed with 41 deals worth approximately $800 million.
Deals of Size
The largest deal of the quarter was Expedia’s acquisition of Trivago, as noted above. The Database & Information Services sector saw the second largest deal, Thomson Reuters’ acquisition of UK legal know‐ how provider Practical Law Company, which The Telegraph estimates was between $300 and $450 million. Marketing & Interactive Services accounted for six of the fourteen $100+ million deals of the quarter, including the:
- Citi Venture Capital International (CVCI) acquisition of SourceHOV, a business process outsourcing and consulting company, for an undisclosed sum;
- Court Square Capital Partners acquisition of Vestcom International, a producer of in‐store shelf‐ edge communications products for retailers and brand manufacturers, for $300 million;
- Google acquisition of Channel Intelligence, a provider of technology services to drive online purchases, for $125 million;
- Swiftpage acquisition of Sage Software’s Sage ACT! and Sage SalesLogix contact management and customer relationship management platforms for $101.2 million;
- Sterling Partners acquisition of PlattForm Advertising, a provider of marketing and enrollment‐ management services to colleges and universities, for an undisclosed sum; and
- Rockbridge Growth Equity and Falcon Investment Advisors acquisition of Triad Retail Media, a provider of online advertising and media programs for retailer and e‐commerce web sites.
The Healthcare Information & Technology sector accounted for three of the largest deals of the quarter, including the:
- Allscripts Healthcare Solutions acquisition of a 75% stake in dbMotion, a provider of connected healthcare solutions, for $235 million;
- Athenahealth acquisition of Epocrates, subscription‐based provider of mobile drug reference tools and electronic health records, for $215 million; and
- Sutherland Global Services acquisition of Apollo Health Street, developer of IT‐based solutions for healthcare organizations, for $183 million.
In the B2C Online Media sector, AllThingsD estimates the Amazon acquisition of Goodreads, a web site that allows members to search and browse books, share recommendations, join book clubs and more, to be worth approximately $150 million. The remaining two $100+ million deals of Q1 2013 were in the Mobile Media & Technology sector: Opera Software’s acquisition of Skyfire Labs, creator of mobile video optimization platforms for wireless carriers and device makers, for $155 million; and Fidelity National Information Services’ acquisition of a 78% stake in mFoundry, a mobile payment platform, for $120 million.
Following a historically strong second half of 2012, with expected tax changes in 2013 motivating sellers to complete deals before year end, Q1 of 2013 was anticipated to see a drop‐off in M&A activity. Q1 2013 M&A was driven by smaller transactions, as many companies looked to acquire talent (or “acqui‐hire”) and technologies to grow and evolve their businesses. JEGI’s third annual Media Growth Survey shows that nearly 50% more companies in the $10‐$50 million revenue range are planning an acquisition in 2013, as compared to 2012. Many of these companies are looking for new process technologies, content engines and tools for manipulating and packaging data.
2012 was a banner year for the leveraged finance market. Total volume for the year ended at $812 billion, surpassing the previous high of $679 billion in 2007. Lenders continue to show strong interest in the media, information, marketing, healthcare and technology sectors, with significant liquidity.
In this favorable environment, JEGI expects 2013 will see a diverse and active pool of buyers among strategic companies and private equity firms, both of which still have significant amounts of capital that they need to put to work. These key trends, along with JEGI’s active pipeline of new deal opportunities, suggest that M&A will continue to be robust across the media, information, marketing, healthcare and technology markets through 2013.
M&A Highlights for Q1 2013
The number of deals for the b2b online media and technology sector rose 11% in the first quarter of 2013, as compared to Q1 2012, bringing the total number of deals announced up to 21. Deal value was almost flat, at $198 million for the quarter. Notable 2013 deals included: CoreLogic’s acquisition of CDS Business Mapping, a provider of Internet mapping and application development, for $78 million; Back Stage’s acquisition of Sonicbids, a web site that helps bands connect with people who book or license music worldwide, for $15 million; and LexisNexis’ acquisition of Knowledge Mosaic, an online information resource for law firms.
B2c online media and technology was the third most active sector for M&A in Q1 2013, with 53 transactions at a total value of $1.2 billion. However, the number of deals and value declined 24% and 21%, respectively, vs. Q1 2012. Although Q1 2013 saw a lot of activity, the smaller deals did not offset the large transactions in Q1 2012, including International Game Technology’s $412 million acquisition of Internet casino game developer Double Down Interactive; General Atlantic’s acquisition of a 30% stake in the online advertising business of Axel Springer for $313 million; and Meredith’s $175 million acquisition of Allrecipes.com, an online social network for user‐generated recipes. Notable deals in Q1 2013 not already mentioned above included France Telecom’s acquisition of the remaining 51% stake in Dailymotion, a video sharing portal, for approximately $90 million; and Live Nation Entertainment’s acquisition of Beatport, an online platform for mp3 downloads, for $50 million. This sector also saw acquisitions from other large public companies, including Target’s acquisition of Cooking.com; AOL’s acquisition of gdgt; and Gannett CareerBuilder’s acquisition of Vietnam Online Network (VON).
M&A activity for the business‐to‐business media sector remained modest, with eight transactions in Q1 2013 at a total value of $102 million. In the quarter, Catalyst Investment Managers acquired Reed Business Information Australia for $42 million; Euromoney Institutional Investor acquired financial publisher Insider Publishing for $25 million; and I HS acquired Energy Publishing, a publisher of various newsletters and databases for the US and international coal and energy industries.
The consumer magazines sector saw 11 transactions at a total value of $183 million in Q1 2013. The most notable deal was NC2 Media’s $75 million acquisition of Lonely Planet Publications, a publisher of travel guidebooks, digital books, city guides, and maps. Other deals in the quarter included I‐5 Publishing’s acquisition of Bowtie, a lifestyle magazine publisher, for $10 million; and Guggenheim Partners’ acquisition of Prometheus Global Media, publisher of The Hollywood Reporter, Billboard and other popular titles.
The database and information services sector saw a falloff in deals announced and deal value, down 40% and 88%, respectively, in the first quarter of 2013 vs. Q1 2012. In Q1 2012, deal value for the sector was primarily driven by the $3.3 billion take‐private of Transunion by Advent International and GS Partners. The sector, however, did not see any billion dollar deals in Q1 2013, with the most notable deal being Thomson Reuters’ acquisition of Practical Law Company, as noted above. Other deals included Wilmington Group’s acquisition of NHiS Limited, a provider of market intelligence and insight to the pharmaceutical sector, for $14.2 million; and Asset International’s acquisition of financial services research company Investor Economics.
The education information, technology and training sector saw strong growth in the number of deals announced in the first quarter of 2013 (up 75% from Q1 2012), but a decline in overall deal value (down 54% from Q1 2012). Notable deals in Q1 2013 included IAC’s acquisition of Tutor.com, online tutoring and homework help services, for $40 million; Franklin Covey’s acquisition of a 90% stake in NinetyFive 5, a subscription‐based online tool set for sales training, for $12 million; Capstone’s acquisition of Maupin House Publishing, a publisher of professional resources for educators; and Eureka Growth Capital’s acquisition of Thomson Reuters’ law school publishing division.
The exhibitions and conferences sector saw numerous smaller transactions in Q1 2013, as compared with Q1 2012. Notable deals for the quarter included: Post Capital Partners’ acquisition of corporate event planning and management firm TBA Global; Nielsen Expositions’ acquisition of Tailgating Industry Association, a premier trade event dedicated to sports licensing and tailgating products; and IMG Arts and Entertainment’s acquisition of Taste Festivals, organizer of food events, including Taste of London and The Big Feastival, for $7.7 million.
As the second most active sector in Q1 2013, the healthcare information and technology sector saw 52 transactions, with a total value of $1.6 billion. While deal activity increased 13% in Q1 2013 vs. Q1 2012, deal value decreased 22%. Still, as mentioned above, the healthcare sector saw a few large deals, including the Allscripts/dbMotion, Athenahealth/Epocrates and Sutherland/Apollo Health Street transactions. Other notable deals for Q1 2013 included PAREXEL’s acquisition of Liquent, a software and service solutions provider for life sciences companies, for $72 million; Perceptive Software’s acquisition of Acuo Technologies, a provider of software and services for medical image lifecycle management and data migration, for $45 million; and Wolters Kluwer Health’s acquisition of Health Language, a provider of software solutions that incorporate medical vocabulary and coding standards into healthcare information technology applications.
The marketing and interactive services sector continues to drive M&A activity, accounting for 118 transactions and over $2.5 billion of value in Q1 2013, albeit the number of deals and total value were down from Q1 2012 by 13% and 14%, respectively. Notable transactions in the quarter included the CVCI acquisition of SourceHOV; the Court Square Capital Partners acquisition of Vestcom International; the Google acquisition of Channel Intelligence; the Swiftpage acquisition of Sage Software’s Sage ACT! and Sage SalesLogix platforms; Sterling Partners acquisition of PlattForm Advertising; and Rockbridge Growth Equity and Falcon Investment Advisors acquisition of Triad Retail Media. Other notable deals in Q1 2013 reflect the wide range of transactions and diverse buyer pool for this sector:
- iQor’s acquisition of Cyber City Teleservices, a provider of call center outsourcing solutions;
- Twitter’s acquisition of Bluefin Labs, a social TV analytics company;
- The Elsevier acquisition of Knovel, a provider of a Web‐based application integrating technical information with analytical and search tools for scientists and engineers worldwide;
- Facebook’s acquisition of Microsoft’s Atlas DMT, a measurement platform for digital ad campaigns;
- The MediaMath acquisition of Akamai’s Advertising Decision Solutions;
- Advance Publications’ acquisition of digital agency POP Multimedia, for $25 million; and
- Sapient’s acquisition of (m)Phasize, a provider of marketing mix and cross marketing analytics solutions, for $18 million.
The number of deals and value for the mobile media and technology sector rose 32% and 17%, respectively, in the first quarter of 2013, as compared to Q1 2012. Besides the Opera Software/Skyfire Labs and Fidelity/mFoundry deals mentioned above, other notable deals during Q1 2013 included Dropbox’s acquisition of Mailbox, an email management app, for close to $100 million, according to TechCrunch; Yahoo’s acquisition of Summly, a mobile news aggregation app, for $30 million; and Phunware’s acquisition of mobile ad network Tapit Media Group, for $23 million.