JEGI H1 2015 M&A Overview: 2015 on Pace for Media, Marketing & Tech Deals
New York, NY July 1, 2015 – Mergers & acquisitions in the media, information, marketing, software and tech‐enabled services sectors saw robust activity through the first half of 2015, with 1,125 transactions announced at a total value of $53.7 billion. Deal activity and value sustained the brisk levels of 2014, which saw 1,078 deals totaling $56.3 billion in the comparable period, according to The Jordan, Edmiston Group, Inc. (JEGI) (www.jegi.com), the leading independent investment bank across these core markets.
Large Deals in H1 2015
These sectors saw 11 transactions surpass $1 billion in value during the first half of 2015. Announced deals include the:
- Verizon $4.8 billion acquisition of digital media company AOL
- Cox Automotive $4.5 billion acquisition of DealerTrackTechnologies, provider of web‐based marketing solutions to the automotive retail industry.
- Verisk Analytics $2.8 billion acquisition of Wood Mackenzie, global energy, metals and mining research and consultancy group.
- SS&C Technologies $2.5 billion acquisition of Advent Software, provider of vertical applications for the financial services industry.
- Bain Capital $2.4 billion acquisition of Blue Coat Systems, provider of security and networking solutions.
- Expedia $1.7 billion acquisition of online travel site Orbitz.
- LinkedIn $1.5 billion acquisition of Lynda.com, provider of online educational videos for individuals to learn business, software, technology and creative skills
- Raytheon $1.3 billion acquisition of Websense, provider of computer security software.
- TPG Capital, Fosun Industrial Holdings and Caisse de dépôt et placement du Québec joint $1.2 billion acquisition of Cirque du Soleil, creator of consumer entertainment shows.
- EMC $1.2 billion acquisition of Virtustream, provider of cloud computing management software, infrastructure as a service and managed services.
- Lexmark International $1 billion acquisition of Kofax, provider of capture and business process management software.
Software & Tech‐Enabled Services
Software & Tech‐Enabled Services led all sectors in number and value of transactions, with 708 deals valued at $28.4 billion for the first half of the year. The chart below left shows a breakdown of deal volume by sub‐sector for this highly active sector.
Application software was the most active sub‐sector, accounting for one‐third of deal volume. IT services and distribution (18%) was the second most active sub‐sector, followed by mobility (11%), IT outsourcing (9%) and information management (8%).
The chart below right shows a further breakdown of application software. Within this sub‐sector, vertical applications (29%) and enterprise resource planning (19%) were the two most active segments, followed by customer relationship management (15%) and business intelligence (13%). The most significant application software transaction in the first half of 2015 was Cox Automotive’s $4.5 billion acquisition of DealerTrack Technologies.
Marketing Services & Technology
Marketing Services & Technology was the second most active sector, with 278 transactions worth $12.7billion in H1 2015. Just over half of sector transactions occurred in the traditional agency, digital agency and marketing technology sub‐sectors.
However, marketing technology was the leader by far in deal value. Besides the DealerTrack acquisition by Cox Automotive, other large transactions in this sub-sector included Twitter’s acquisition of TellApart, an online predictive marketing platform for shoppers with cross-device retargeting and promotions, for $533 million in April, and Pitney Bowes’ acquisition of Borderfree, provider of cross-border e-commerce solutions, for $465 million in May.
Data & analytics also accounted for a substantial amount of deal value through the first half of 2015, with a handful of large transactions, including MasterCard’s acquisition of Applied Predictive Technologies, provider of cloud-based predictive analytics software solutions, for $600 million in April, and Kantar/WPP’s investment in comScore, provider of digital media measurement and analytics, for approximately $255 million in February.
M&A activity in the U.S. continues at a brisk pace, due largely to positive economic trends and rising confidence in the corporate sector. According to the National Federation of Independent Business May 2015 report, small business owner optimism hit a five‐month high in May. Hiring increased in each of the first five months of the year, and business owners expect solid profit increases for the year.
Companies are flush with cash and robust debt markets continue to offer historically low interest rates. As stated by PricewaterhouseCoopers in Forbes, “Corporate boards are deploying record amounts of cash to increase returns, and high stock prices are emboldening buyers and sellers. The strong U.S. economy and rising confidence signals a strong finish to 2015, making it another record year for M&A value since 2007 and the doldrums of the financial crisis.”
Of course, we are wary of Greece and the potential for economic crisis in the Eurozone, as well as the impending default in Puerto Rico, which somewhat limits our ability to look askance at the European financial overseers. However, 2015 is proving very active for JEGI, with a number of recent and pending transaction announcements.
This week, JEGI completed the sale of the Dodge Data & Analytics (a Symphony Technology Group portfolio company) industry‐leading construction and architecture brands to BNP Media. In early June, the firm advised Thomson Reuters on the divestiture of its Fiduciary Services and Competitive Intelligence business to Broadridge Financial Solutions. Just prior to that, JEGI represented digital marketing agency 3Q Digital in its sale to Harte Hanks.
M&A Highlights for H1 2015
The b2b media and technology sector declined in deal volume in the first half of 2015, with 44 transactions vs. 60 deals in H1 2014, while deal value fell to $3.1 billion from $3.6 billion. Notable Q2 2015 transactions included LinkedIn’s $1.5 billion acquisition of Lynda.com and BNP Media’s acquisition of industry‐leading brands Engineering News‐Record (ENR), Architectural Record, and SNAP from Dodge Data & Analytics for an undisclosed sum (a JEGI transaction).
The consumer media and technology sector saw 100 transactions in H1 2015, compared to 2014’s 92 deals. Deal value rose 18% to $9.1 billion, including Verizon’s $4.8 billion acquisition of AOL. Other notable deals in the second quarter of 2015 were: Sequential Brands’ acquisition of Martha Stewart Living Omnimedia, provider of various digital brands, products and services, for $353 million; CoStar’s acquisition of Network Communications, online provider of local information to consumers involved in buying, leasing and renovating a home, for $170 million; and GameStop’s acquisition of Geeknet, online seller of collectibles, apparel, electronics, toys and other retail products, for $134 million.
The database and information services sector remained relatively flat in number of deals announced in H1 2015 with 31, compared to 2014’s 32 deals. Deal value, however, rose significantly in 2015 to $3.9 billion, due to Verisk Analytics’ $2.8 billion acquisition of Wood Mackenzie in the first quarter of the year. Notable deals in Q2 2015 included: Dun & Bradstreet’s acquisition of Dun & Bradstreet Credibility Corp, provider of services for businesses to access payment history, credit scores and other information, from Great Hill Partners for $350 million; Archer Capital’s acquisition of Dun & Bradstreet Australia, provider of credit information and debt management services in Australia and New Zealand, for $170 million; and Broadridge Financial Solutions’ acquisition of Thomson Reuters’ Fiduciary Services and Competitive Intelligence business for an undisclosed amount (a JEGI transaction).
The exhibitions and conferences sector saw an increase in deal volume with 42 transactions in the first half of 2015 vs. 30 in the same period of 2014. Deal value rose exponentially to $2.5 billion in 2015, compared to $291 million in 2014, led by the $1.2 billion acquisition of Cirque du Soleil by a group of investors. Other notable transactions for Q2 2015 included: IMG Worldwide’s acquisition of Professional Bull Riders, provider of bull riding sports events, from Spire Capital Partners and HarbourVest Partners for a reported $100 million; Tarsus Group’s acquisition of PAINWeek, an annual conference for pain medicine specialists, for $28 million; and Direct Travel’s acquisition of Creative Group, provider of management services for meetings, events, incentives, product launches and technology solutions, for an undisclosed sum.
Although the marketing services and technology sector continues to be very active, deal volume and value declined in H1 2015 vs. 2014. The current period saw 278 transactions, compared to 307 in H1 2014. Deal value totaled $12.7 billion for the first half of this year, down from $16.8 billion this time last year, mainly due to several large transactions in 2014. Beyond the notable deals highlighted in the Marketing Services & Technology section above, other deals of note for the quarter included: Vista Equity’s announced acquisition of a majority stake in Mediaocean, a leading advertising software company that enables users to bridge traditional and digital media, that valued Mediaocean at a reported $720 million; NetSuite’s acquisition of Bronto Software, a cloud‐based marketing and email platform for online retailers and multi‐channel merchants, for $200 million; and Solera Holdings’ acquisition of DMEautomotive, a direct marketing company for automobile dealers and aftermarket franchises, for $143 million.
M&A activity for the mobile media and technology sector rose in both number of deals announced and deal value in the first half of 2015, to 87 transactions and $2.4 billion in value vs. 2014’s 66 deals and $2.2 billion in value. Notable Q2 2015 deals included: Zomato Media’s acquisition of NexTable, a reservation and table management platform for the iPad, for a reported $52 million; WPP’s acquisition of mobile ad platform Medialets for a reported $22 million; and Sizmek’s acquisition of mobile ad platform StrikeAd for $12 million.
The software and tech‐enabled services sector remained flat in terms of deal volume, with 708 transactions in the first half of 2015 vs. 707 in 2014. Deal value declined slightly from H1 2014, but still came in at a strong $28.4 billion in value, led by a few mega transactions, which are listed in the Software & Tech‐Enabled Services section above. Other notable 2015 transactions included: Silver Lake’s acquisition of Cast & Crew Entertainment Services, provider of payroll services to the entertainment industry, for $700 million; CA Technologies’ acquisition of Rally Software Development Corp, provider of enterprise‐class software and services solutions to drive business agility, for $480 million; and Francisco Partners’ acquisition of ClickSoftware Technologies, provider of enterprise resource planning and workforce management software, for $438 million.