Archive for the ‘Acquisitions’ Category
Friday, April 12th, 2013
You can see what’s hot and what’s not looking at the merger and acquisition picture in any industry, and in online and mobile, analytics, SaaS, mobile payments and food service and content firms are like spice to the big dish Internet companies these days.
Deal volume increased three percent relative to the prior quarter in online and mobile industry mergers and acquisitions in the first quarter of 2013, according to mid-market investment bank Berkery Noyes in its mergers and acquisitions trend report, but transaction value decreased 50 percent, from $15.8 billion in Q4 2012 to $7.9 billion in Q1 2013.
The SaaS/ASP segment experienced the largest quarterly rise in volume, improving 16 percent. Meanwhile, transaction volume in the E-Commerce segment increased six percent between Q4 2012 and Q1 2013.
Highest value deal
The segment’s highest value deal in Q1 2013 was Google’s announced acquisition of Channel Intelligence for $125 million.
In addition, major financial technology players completed several large Online and Mobile payments acquisitions during Q1 2013. For instance, ACI Worldwide acquired Online Resources Corporation for $203 million and FIS acquired mFoundry for $120 million.
M&A involving transactions with a large mobile component increased 33 percent over the past three months. Along these lines, there were several acquisitions in the food service information and content space.
Yahoo, OpenTable buys
This included Yahoo!’s acquisition of Alike, which enables users to make recommendations about their favorite food establishments; and OpenTable’s acquisition of Foodspotting, an application that helps users share information about particular dishes.
With four transactions, Yahoo! was the most active Online and Mobile Industry acquirer during the quarter. Several of Yahoo!’s recent acquisitions demonstrate its renewed focus on mobile under CEO Marissa Mayer .
Yahoo! has already completed three mobile transactions thus far in 2013, acquiring social news application Summly, as well as applications Alike and Jybe. In contrast, Yahoo! only made two mobile transactions last year, both of which occurred in Q4 2012.
E-marketing and Search segments
As for the E-Marketing & Search segment, M&A activity increased nine percent in Q1 2013. \
“The ability to better profile and target consumers has necessitated the development and growth of companies that can analyze shoppers’ behavior and develop appropriate offerings to the consumer,” said Evan Klein , Managing Director at Berkery Noyes.
“This shift has led to the growth of data analytics businesses and, with the need to develop deeper relationships with consumers, the growth in loyalty marketing companies.”
Just call me Larry.
Regarding the segment’s social media marketing subset, one notable acquisition in Q1 2013 was Twitter’s acquisition of BlueFin Labs.
A key goal of acquiring the social television analytics company is for Twitter to gain additional advertising revenue by leveraging viewer data. TiVo and The Nielsen Company completed E-Marketing acquisitions in 2012, both of which focused on improving the ability to measure digital audiences.
A copy of the ONLINE AND MOBILE INDUSTRY M&A REPORT FOR FIRST QUARTER 2013 is available at the Berkery Noyes website.
Thursday, April 4th, 2013
Despite a challenging year for venture capital investment in 2012, the U.S. VC-backed industry remains substantial. Better portfolio company exits and returns suggest the slump in fundraising could be over in 2013, according to Ernst & Young’s tenth annual Venture Capital Insights and Trends Report.
According to the report, there is evidence of money flowing into companies that are perceived as lower risk. For example, there is a shift away from social media towards enterprise– the companies that are attracting greater VC interest are those that provide a service and are getting paid for it, rather than those that have a good idea, but have difficulty monetizing it.
Historically, the U.S. venture industry has been dominated by investments in technology and healthcare since in the U.S. more than half of the VC pool consists of companies in these two sectors.
Healthy exit environment crucial
Though U.S. VC investment activity overall declined by 15 percent to $29.7 billion in 2012 compared with 2011, and the number of investment rounds also fell, the drop was not as pronounced, declining by only four percent to 3,363. These U.S. numbers compare to global VC declines at 20 percent in amount invested and eight percent in deals.
“While 2012 was a tough year for global venture capital, the U.S. held relatively steady,” said Bryan Pearce , Director, Venture Capital Advisory Group, Ernst & Young LLP. “However, a healthy environment for venture backed company exits will be crucial for the U.S. VC industry outlook in 2013. Equity markets have started the year positively, which suggests these better exit prospects may materialize.”
Exit activity is also an important pre-condition for an uptick in fund-raising by VC firms. While global exits of VC backed companies declined by 27 percent in terms of amount raised and by 30percent based on the number of IPOs, the number of VC-backed IPO exits and the capital raised in the U.S. were relatively stable, after adjusting for the Facebook IPO proceeds of $6.8 billion.
Companies exiting via IPO are typically more advanced than those exiting via M&A. The median amount raised prior to IPO of$78.4 million and time to exit of 7.4 years, far exceeds the respective figures of $16.7 million and 5.1 years for M&A exits.
A number of venture capitalists who participated in the recent Southeast Venture Conference (SEVC) in Charlotte, NC, noted that most firms today are going to exit via M&A and should consider that from the very beginning.
VC model is realigning
VC firms are rethinking their investing strategies favoring investing smaller investments, at a later stage and on tougher terms.
This shift reflects two trends – the substitution for VC fund money in early stage companies by Angel investors, incubators/accelerators and corporate initiatives as well as a need to demonstrate a shorter time to exit in order to return capital to their investors, show a track record of success and, thus, start the process of opening and raising a new fund.
“The flow of capital being returned to LP investors has slowed significantly, which in turn has restricted investors’ ability to re-invest in new funds,” added Pearce. “Therefore, investors are showing a preference for the most successful ‘brand’ name funds, seeking out depth of experience and track record. They are also demanding better terms from VC funds, while the funds are requiring portfolio companies to meet stricter milestones and meet tighter time frames.”
Increasing role of corporate venture
Corporate venture investing is on the rise surpassing pre-dotcom levels in 2012. Corporate venture activity is especially strong in the IT sector and being driven by a combination of healthy corporate cash balances and corporate seeking external innovation due to the rapid pace of technological change as the rise of mobile, big data and cloud computing has created a disruptive business environment.
Corporations are eager to invest in venture-backed companies that can help them fill the innovation deficit in their strategy and innovation capabilities. The link between corporate investment and ultimate acquisition, however, is not always present in the U.S. In all sectors in the US only 2 percent of companies were acquired by an existing corporate investor in 2011 and 2012.
“In 2012, corporates cemented their important role in the VC ecosystem,” continued Pearce. “Where they choose to make an investment, typically in the later stage in the U.S., the valuation of the business in that round was usually greater than in companies at a similar stage with no corporate investor.”
U.S. Regional Outlook
As of January 2013, $167.9 billion was invested in 8,288 companies. Investment remains heavily weighted towards Silicon Valley –since 2000, cumulative equity raised in the Bay Area of $62.2 billion exceeds the total raised in New York, New England and Southern California - the next largest hotbeds – combined.
These same areas also ranked top five globally in terms of number of deals. New York witnessed the largest increase of active VC investors, approximately 150 percent in 2012 compared to 2006.
At the SEVC in March, one VC noted that it took substantially more investment dollars to get those West Coast firms to an exit. East Coast firms, he noted, used their capital more efficiently. A number of VCs at the event said they were actively seeking to diversify geographically and specifically interested in regions such as the Mid-Atlantic and the Southeast.
The data in our Turning the corner: Global venture capital insights and trends 2013 report has been sourced from Dow Jones VentureSource.
Wednesday, March 6th, 2013
The technology, financial services and healthcare sectors, among others, expect an increase in their companies’ or clients’ deal activity in 2013 compared to 2012. according to a survey conducted by KPMG LLP, the U.S. audit, tax and advisory firm.
Smaller, mid-market deals are driving the trend because they’re simpler to execute, but other dynamics contribute. Many firms have plenty of cash on their balance sheets and favorable credit terms are available.
Of the more than 400 survey respondents, 60 percent said that they would do more deals this year than last year.
The simpler financing terms associated with smaller deals, as compared to both large transactions and the megadeals, will drive middle-market M&A activity in the balance of 2013, according to 24 percent of the poll population.
Smaller, mid-market deals driving activity
However, 49 percent of respondents felt that collectively, simpler financing terms, fewer risks and integration challenges, as well as the less complexity of due diligence that’s needed for deals valued under $250 million, will serve as the catalyst for a deal market dominated by middle-market activity in 2013.
In fact, 22 percent of survey respondents indicated that in 2013 thus far, the deal market is already experiencing a high volume of middle-market activity; they also acknowledged favorable credit terms (11 percent) and elevated levels of cash on corporate balance sheets (eight percent) as driving the recent deals in the marketplace.
Corporate buyers have the advantage in the M&A space over private equity buyers (six percent) halfway through the first quarter of 2013.
Underlying fundamentals improving
“The underlying fundamentals in the deal market are improving, with the combination of a stabilizing U.S. economy, favorable credit terms, open debt markets, and high cash balances paving the way for an increase in M&A volume this year,” said Dan Tiemann , Americas lead for KPMG’s Transactions & Restructuring practice.
“As a result, companies may be highly motivated to execute transactions that drive their growth agendas, including deals that allow for business transformation and optimize new operating models.”
Effect of new regulations
When asked what effects new regulations might have on their ability to do deals in 2013, 21 percent of the poll population stated that they will cause integration challenges during the M&A process and in post-deal phases for their companies and clients.
Eighteen percent cited that new regulations have temporarily delayed their ability to do deals, followed by seven percent who have delayed M&A activity indefinitely; however, another seven percent cited they will actively pursue deals because of new regulation.
The breakdown of respondents includes M&A professionals in the following sectors: technology (17 percent); financial services (17 percent); healthcare (14 percent); diversified industrials (nine percent); energy (eight percent); and consumer markets (seven percent).
Tuesday, February 26th, 2013
By Allan Maurer
While landing a round of venture financing can help drive a startup’s growth, the best venture firms bring more than money to the table when they make a deal.
Justin Reger, a principal at LLR Partners, a middle market private equity firm with more than $2 billion under management, says that the first step his firm takes following its investments – whether as a majority or minority investor – is set-up a strategic planning session.
Reger, who manages LLR’s technology practice and previously an investment banker with Citigroup focused on technology, about the added value investors provide their portfolio companies at the upcoming Southeast Venture Conference in Charlotte, NC, March 13-14.
First: strategic planning
“Soon after we close a deal,” says Reger, we hold a two-day offsite strategic planning session, first for one-year and then for three. We hire a moderator who knows the industry.”
LLR starts by sharing its due diligence findings with the company and its management team. “We put that on the table and build the strategic plan with the team. We don’t say what they could do. It’s more to create a framework. Then we build up operations and tactics to support the plan.”
LLR then revisits the plan with the company each year. Some have accomplished their goals, some have not. The plan is updated annually.
Second: augment management teams
Next, LLR looks at a company’s management team. “Often, teams are incomplete,” says Reger. “They may have a solid CEO, a CFO, and maybe a head of sales. They may not have a product or marketing manager. We don’t look to replace senior management, but rather to augment the bench from our network.”
That is often guided by the results found by an outside assessment firm hired during LLR’s due diligence process. “They identify key areas that need to be upgraded or augmented to drive value.”
Third: Getting to $100 Million
Next, LLR looks at the company’s finance function, where infrastructure is “typically lacking,” says Reger. “The typical company we invest in has a strong product in a well defined market, but has to breakthrough from $10 million to $15 million in revenue to $100 million.”
Fourth: M&A possibilities
Reger says LLR also sometimes “Serves as an outsource M&A arm for the company. We canvas the network of adjacent players and make calls, qualify opportunities, work with management to see if it’s a fit and help with integration.”
Many companies in which LLR invests also benefit from channel partner development, Reger notes. “There is an ecosystem of larger players, resellers, OEM sales channels and a portfolio company’s ultimate acquirer might be in that system. The IBMs, SAPs, and HPs of the world. We have pretty good contacts at those organizations.”
Tuesday, February 26th, 2013
Washington, DC made this years list of the top ten cities for private tech M&A at number 7.
PrivCo has released rankings of the Top U.S. Cities For Private Tech M&A, based on the number of private tech companies acquired in 2012.
PrivCo has provided its Exclusive Top 10 Ranking below, with Silicon Valley ranking as the #1 metro area with 226 private tech company acquisitions in 2012.
Ranked just behind it were New York (Ranked #2) & Boston (Ranked #3).
San Diego, Research Triangle miss top ten
Interestingly, up-and-coming tech hubs like New York City, Los Angeles, and Atlanta are challenging traditional leaders like Raleigh-Durham’s “research triangle” and biotech hub San Diego, who missed this year’s Top 10 U.S. Cities For Private Tech M&A.
Top 10 U.S. Cities For Private Tech M&A in 2012
(Ranked By Total Number of U.S. Private Tech Companies Acquired in Each Metro Area)
1. Silicon Valley
2. New York
4. Los Angeles
7. Washington, D.C. (Arlington)
To access PrivCo’s 350 page 2012 Private Tech M&A Industry Report:
Wednesday, February 20th, 2013
By Allan Maurer
The mobile app economy is a big deal right now, with app developers commanding higher than average salaries and companies stumbling over each other to get on the mobile bandwagon. But, in five years, says Ron Shah, vice president at the Stripes Group venture firm, “many people will bypass apps altogether.”
By then, Shah says, “Just accessing the web on your phone will be so much better you won’t need 79 apps. Consumers will want to download apps less and less and just things on the open web.”
Also, he notes, “Two app stores now have a chokehold on user capabilities. That’s an unnatural place to be. Companies don’t want Apple or Google sitting between them and their customers.”
Shah is focused on sourcing and executing technology, software and internet investments as well as strategy and business development with portfolio companies at Stripes, which closed its current $350 million fund early in 2012.
Participating in the Southeast Venture Conference in March
Shah is actively involved with the firm’s investments in Kareo, Netbiscuits, eMarketer, Elance, MyWebGrocer, Art.com, Folica and Perimeter.
Prior to joining Stripes Group, Ron co-founded Endgame Capital, which focuses on land investment and development in the mid-Atlantic region.
People networking at a previous Southeast Venture Conference.
He’s one of more than two-dozen venture capitalists and investors participating in the upcoming Southeast Venture Conference in Charlotte, NC, March 13-14.
Shah will talk about the merger and acquisitions environment in areas where he has expertise at the event. “We’ve invested in several companies providing deep technologically integrated services in various industries,” he says.
He expects to see media companies, which made a round of acquisitions three or four years ago, to be looking to buy again. “They’re coming up on another cycle where they need to buy again to service their customers.”
Avoiding the Deathstar approach to software
He adds, “There’s a lot of pressure for those guys to figure out how to service existing relationships in a world that looks very different from ten years ago. They need to know what customers are consuming, how they consume and so on.”
Another big trend he sees in M&A is in SaaS. “We’ve seen significant acquisitions of SaaS companies by the big guys – Oracle, IBM, SAP, Salesforce all bought several. They realize their clients are not in spending millions on the Deathstar approach to building software. People are coming from the bottom end and taking revenue from them, so they need to acquire to have cost effective offerings.”
He also notes that “In Enterprise technology, buyers have been aggressive with the evaluations they’ve been paying in core areas such as customer relationship and talent management and business intelligence.”
They can all be consolidated to some extent, he says. “We saw some of that in the marketing automation space. Then the larger players ended up getting bought: Buddy Media by Salesforce, Vitrue by Oracle.”
A process of consolidation
It’s a process, he explains. “Companies spring up in the venture space and rise to the forefront in a typical category. They buy smaller companies with innovative features. Then, if they’re playing in an interesting category, the big tech guys will buy them.”
Even after that big step in consolidation, three or four years later some of the big players realize they don’t have the right play in a category and “The cycle starts all over again,” says Shah.
Next he says mobile device analytics is likely to see some consolidation. “A lot of the core tech companies feel the need to bolster their offerings,” Shah notes.
That interest is fanned by a couple of macro trends. “People are spending less time on print and more on the web, no one can deny that, and within that, they’re spending more time on mobile devices.”
The natural conclusion? “Ad dollars will slowly migrate there because that’s where the eyeballs are, on smartphones and tablets.”
Wednesday, February 13th, 2013
PrivCo has just released its Annual Private Tech Company M&A Research Report: “The Top 100 Acquirers Of U.S. Private Tech Companies In 2012.
It includes: The Most Active Acquirers, The Companies They Acquired, What They Paid, Top 10 Target Co. Cities, Financial and Law Firm Deal Advisor League Tables, and More.” Included in this comprehensive, 350-plus page report are exclusive rankings of the most sought out M&A Law Firms for private company tech M&A deals in 2012.
PrivCo has provided its Exclusive Top 20 Ranking below, with Chicago-based international law firm Kirkland & Ellis topping the list as the #1 Law Firm in private tech M&A deals. Ranked just behind it were Weil, Gotshal & Manges (Ranked #2) & Jones Day (Ranked #3).
Top 20 Law Firms For Private Technology M&A Acquisitions In 2012: PrivCo Rankings
(Ranked By Number of Private Tech Company Acquisitions Firm Advised On)
1. Kirkland & Ellis
2. Weil, Gotshal
3. Jones Day
4. Davis Polk
5. Fenwick & West
6. O’Melveny & Myers
7. Cleary Gottlieb
8. Wilson Sonsini
9. Greenberg & Traurig
10. Goodwin Procter
11. Alston & Bird
12. Foley & Lardner
13. Hogan Lovells
14. DLA Piper
15. Latham & Watkins
16. Shearman & Sterling
17. Simpson Thacher
18. Clifford Chance
19. Skadden, Arps
20. Morrison & Foerster
To access PrivCo’s 350 page 2012 Private Tech M&A Industry Report:
Friday, January 25th, 2013
PrivCo, the leading private company financial data provider, has just released its annual rankings of the Top 10 Largest Private-Equity Deals of the Year. Not many technology firms are among them, although EP Energy tops the list.
The Top 10 Largest Private-Equity Deals for 2012:
1. $7.2 Billion – EP ENERGY CORP (Headquarters: Houston, TX) Acquired By P.E. Buyers: Apollo, Riverstone, Access Industries, Korea National Oil Corporation
2. $6.6 Billion – CEQUEL COMMUNICATIONS (St. Louis, MO) Acquired By BC Partners, Canada Pension Plan Investment Board
3. $4.9 Billion – DUPONT PERFORMANCE COATINGS (Wilmington, DE) Acquired By Carlyle
4. $3.7 Billion – FOCUS MEDIA (Shanghai, China) Acquired By Carlyle, Fountainvest, China Everbright, CITIC Capital, Jason Nanchun Jiang
5. $3.5 Billion – HAMILTON SUNDSTRAND INDUSTRIAL (Windsor Locks, CT) Acquired By Carlyle, BC Partners
6. $3.3 Billion – GETTY IMAGES (Seattle, WA) Acquired By Carlyle, Getty Images management, the Getty Family
7. $3.2 Billion – TRANSUNION (Chicago, IL) Acquired By Goldman Sachs Capital Partners, Advent International
8. $2.7 Billion – PARTY CITY (Elmsford, NY) Acquired By Thomas H. Lee Partners
9. $2.5 Billion – MCGRAW-HILL EDUCATION (New York, NY) Acquired By Apollo
10. $2.3 Billion – USI INSURANCE (Briarcliff Manor, NY) Acquired By Onex Corporation
To access detailed Deal Terms of each of PrivCo’s Top 10 Largest Private-Equity Deals for 2012 see:
Wednesday, December 5th, 2012
Companies focused on lower risk in an uncertain economy are hesitant to do deals, so merger and acquisition deal flow is likely to remain near a 10-year low in 2013, says Ernst & Young. It expects companies to look for organic growth and smaller strategic deals next year.
M&A activity was the slowest deal-making year in a decade. The number of deals in the US dropped 10% in 2012 to 6,357 deals from 7,077 in 2011, making it the slowest year for M&A since 2002. Overall deal value slid 26% to $625.7 billion from $846.9 billion.
Next year does not look to be much different.
“In the short-term corporates are hesitant to do deals; nevertheless there is huge pressure for companies to grow in the sluggish economy and M&A opportunity exists for those companies willing to be bold in today’s market,” says Richard Jeanneret, Americas Vice-Chair, Transaction Advisory Services for the global Ernst & Young organization.
M&A left on the back burner
“Companies continue to focus on optimizing their portfolios for value creation, leaving M&A on the backburner – but those companies who do not begin positioning for growth now may miss the mark in the future.”
Fewer US companies report plans to execute an acquisition in the next year as appetite for M&A fell to 23% from 34% six months earlier, according to Ernst & Young LLP’s US Capital Confidence Barometer.
Of those companies that are planning an acquisition, 81% say they will consider deals worth US$500 million or less, suggesting that deals next year will be smaller and focused on filling strategic gaps and extending existing businesses.
Private equity (PE) firms have a slightly more positive outlook, citing improving fundraising and confidence in credit availability.
“As corporates continue to be risk averse, PE firms are the ones to watch and are a potential bright spot in 2013 as the down economy provides a good time to invest,” adds Jeanneret. “We also see indications that global investors are focused on a flight to safety and are thinking more about the US for capital deployment, as it remains one of the world’s strongest economies, even after several years of slow growth.”
Lack of opportunity was not the cause of the 2012 M&A slump. Cash is plentiful and credit is relatively available to companies with strong balance sheets, and in most sectors asset valuations were reasonable. The main reason for the lack of activity was corporate conservatism as the c-suite and boardrooms shied away from inorganic opportunities and large transformational investments, favoring an internal and strategic look at how to return value to shareholders and grow organically.
Private equity stable despite corporate decline
Despite the challenges of the global economic backdrop and less-than-robust corporate M&A activity, PE maintained its trajectory from the previous year. In 2012, the number of PE acquisitions remained consistent at 810 deals, dropping just 1% from 2011.
US PE deal value increased slightly, up 3% to $97.3 billion.7 PE saw a considerable improvement in exits, both through M&A and IPOs – they increased 13% to 365 in 2012 – an encouraging sign given their aging portfolio. PE exit value improved even more, climbing 21% in 2012 to $108.6 billion, up from $85.7 billion in 2011.
Even with improving exit opportunities, PE firms are sitting on more than $360 billion in “dry powder” to deploy; however there is a shortage of quality assets and a noticeable gap between buyer and seller price expectations, which have constrained activity.
As a result, buyout firms have struggled to attain a consistent level of activity.
Fundraising fairly active
Fundraising has been fairly active in 2012, as evidenced by the closing of the largest buyout-focused fund since the crisis. US PE firms raised $172.8 billion in committed capital in 2012, an increase of 38% over last year; though the number of funds raised was consistent with last year.
This indicates a return to larger-sized funds in the $10 billion to $12 billion range – well below pre-crisis levels, but a significant increase from prior years. Although funds are taking longer to raise, PE firms are generally obtaining commitments. According to an Ernst & Young survey, 75% of PE firms expect the fundraising environment to improve or remain stable over the coming year.
For the full Ernst&Young release with more detail, see: Ernst & Young LLP Says 2013 Deal Activity Will Remain Near 10-Year Low
Thursday, November 15th, 2012
The IntraLinks Deal Flow Indicator (“DFI”) for the third quarter of 2012, which tracks global sell-side M&A mandates and deals reaching the due diligence stage prior to public announcement, saw a 15 percent increase in global merger and acquisition (M&A) deal activity compared to Q3 2011.
All regions also showed a year-on-year positive trend for Q3 2012 over Q3 2011, with the strongest growth in North America (17 percent), with similarly positive trends in Europe/Middle East/Africa (EMEA) (12 percent,) Asia Pacific (15 percent), Latin America (10 percent).
Despite an overall increase in due diligence volume compared to Q3 2011, quarter on quarter numbers were varied, with a seven percent decrease globally.
Asia Pacific was the only region to show an increase (29 percent), after a slowdown in Q2.
North America saw the largest decline
All other regions showed declines, with North America showing the largest decrease (12 percent), while EMEA slowed by nine percent and Latin America decreased five percent.
“We’ve seen a bit of a ‘hunker-down’ mentality this quarter,” says Matt Porzio, vice president, M&A product marketing at IntraLinks.
“Dealmakers are working to close the current deal pipeline and build a new one for 2013. That has caused a lull while these deals get executed, and it seems unlikely that deals that get to market at the end of the third quarter will close by year end.”
IntraLinks’ Deal Flow Indicator results are based on the company’s involvement in a significant percentage of M&A deals in the early stages of each transaction, providing a leading perspective on global deal activity.
Thursday, November 1st, 2012
The number of technology insiders reporting an increase in M&A activity during the previous six months fell sharply compared to a previous survey in April, says global law firm Morrison & Foerster and 451 Research.
Statistically, 2012 has been an off year on the deal front. 451 Research notes that through the first three quarters, aggregate global spending on technology M&A stood at around $116 billion, down 36% from the same period a year ago and representing a 22% drop from 2010.
Global deal spending for 2012 is on track to come in at the lowest level since the recession-plagued year of 2009, breaking a two-year streak of rising expenditures
Newly released data from the M&A Leaders Survey shows that the number of tech industry executives reporting a recent jump in deal-making – 39% – was nearly identical to those experiencing a decline – 37%.
That’s a significant narrowing of the gap from April’s survey, when more than twice as many respondents reported an uptick in M&A activity (51%) compared with those who were seeing a decline (23%).
Economic uncertainty the main problem
The main reason dealmakers cite for reluctance to execute transactions? More than 70% of 300 respondents cite doubts about the sustainability of U.S. economic growth.
That worry topped even concerns about high target company valuations. Even so, 66% said price expectations of target companies are too high and hinder dealmaking.
Other factors hindering deals include: a lack of qualified targets, due diligence issues, depressed stock price of acquiring firms, and inability to get financing.
Brenon Daly, research director for M&A at 451 Research in San Francisco, noted that respondents did agree on one thing: the factors tamping down transactions in 2012.
“Although the recession officially has been over for a couple years, the cloudy outlook for economic growth continues to have many dealmakers sitting on the sidelines, especially since so many of them feel that potential acquisition targets remain overpriced,” he says.
2013 may see a burst of deals
Pessimism is not completely the rule, though, because 49% expect acquisition activity to increase in the next six months. Only 17% expect a decrease.
Robert Townsend, co-chair of Morrison & Foerster’s Globan M&A practice says, “Given the large cash positions held by many major tech companies, along with continued rock-bottom interest rates and opportunities for companies to make some bold strategic moves, we understand the view held by many of those surveyed who expect to see a burst of deals heading into the first quarter of 2013.”
Respondents to the survey hail from all corners of the tech world. The majority of corporate respondents work in information technology businesses, including infrastructure and applications software, IT services, semiconductors, systems/hardware, telecom, Internet content and e-commerce, and hosting and managed services
Friday, October 12th, 2012
Global interactive marketing provider ExactTarget (NYSE:ET) has acquired privately-held Atlanta-based marketing automation provider Pardot extending ExactTarget’s ability to serve both business-to-business and business-to-consumer marketers worldwide.
ExactTarget paid $95.5 million in total consideration for Pardot, consisting of $85.5 million in cash and $10.0 million in ExactTarget common stock.
We’ve covered Pardot for years here at the TechJournal. The company has a unique culture that reminds us of the heady dot com era, such as a gong rung when sales are made, scooters, a pinball machine and ping pong table and more.
Pardot CEO David Cummings, active in the startup community in Atlanta, has participated in TechMedia events and Pardot presented its business plan at TechMedia’s Southeast Venture Conference.
Sells a lead-nurturing solution
“Marketers around the world are hungry for a lead nurturing solution that integrates with their broader marketing efforts and transcends the current offerings available from point solution providers,” said Scott Dorsey, ExactTarget co-founder and chief executive officer.
“With the addition of Pardot to the ExactTarget suite, we will redefine marketing automation and deliver the most scalable, comprehensive automation solution that helps both B-to-B and B-to-C marketers leverage the power of data to connect with customers across email, mobile, social media and the Web.”
Founded in 2007, Pardot is a leading software-as-a-service marketing automation platform to create, deploy and manage online lead nurturing marketing campaigns.
Featuring certified integrations with salesforce.com, NetSuite, Microsoft Dynamics CRM and SugarCRM, Pardot has a growing client list of more than 1,000 organizations, ranging from small and mid-sized businesses to divisions of large enterprise organizations. Pardot’s clients include Restaurant.com, comScore and twilio.
“Pardot has emerged as the leading provider of marketing automation for clients in the small business and mid-market,” said Adam Blitzer, Pardot co-founder and chief operating officer.
Goal remains the same
“Now as a part of the ExactTarget family, we can provide our clients with even greater capabilities, as we leverage ExactTarget’s substantial resources and industry leading cross-channel messaging platform. Our goal remains the same – to redefine marketing automation and help marketers around the globe achieve even greater results.”
Inc Magazine ranked Pardot number 172 on its Inc. 500 list of America’s fastest growing privately held companies in August.
ExactTarget will host a conference call at 5 p.m. Eastern today (Oct. 11, 2012) to discuss both acquisitions with the investment community.
To access the call from the U.S., dial 800.299.9630 or 617.786.2904 internationally. A live webcast of the call will also be available at www.ExactTarget.com/Investor.
An audio replay of the call will be available until Oct. 18, 2012 at 888.286.8010 or 617.801.6888 internationally. To access the replay, reference Conference ID 15228738.
Monday, August 27th, 2012
Now that Barry Diller’s IAC/InteractiveCorp. has agreed to buy About.com from the New York Times Co. for $300 million in cash, will the how-to and what’s-what site find it easier to make money?
About.com’s freelancers, who are decently paid by Internet standards, do stories and videos on A to Z topics – including many how-to articles and videos on everything from cooking to card games. Here’s what it offers on “Entrepreneurs,” for instance.
In statements from IAC executives, there is a lot of talk about synergies. That sometimes means companies can reduce payroll by combining certain operations.
We asked IAC’s corporate communications if Ask.com plans to keep the About.com freelancers (guides).
Justine Sacco responded via email: “Yes. Their content is what makes about such a valuable (acquisition) for ask.com.”
But the site has struggled to attract advertising and revenue.
Synergies may boost revenue at both sites
IAC, which outbid Answers.com for the site, publishes competitor Ask.com. Greg Blatt, CEO of IAC, sees synergies he believes may help it correct that.
In a statement he said, “About.com’s content will differentiate and greatly increase the authority of Ask.com’s offerings, while Ask’s expertise in search technology and user experience will improve the discoverability of existing content on About.com.”
He added, “The complementary nature of these two businesses will provide significant synergies going forward, and thus we expect that About.com will generate more profit as a part of Ask.com and IAC than it has been able to over the last few years.”
With nearly 1,000 topic sites and more than three million unique articles, About.com is one of the most comprehensive content and reference libraries on the Internet, offering expert, quality content across 90,000 topics that helps users find solutions to a wide range of daily needs.
Globally, nearly 100 million unique users visit About.com on a monthly basis. Ask.com, with more than 100 million users globally of its own, is one of the leading search and Q&A platforms on the internet.
“This is a rare merger with true bilateral synergies,” said Joey Levin, CEO of IAC Search & Applications.
“On the one hand, the Ask.com search and content business has generated exceptional revenue and profit growth by marketing and distributing a quality consumer search and Q&A experience, and About provides Ask with a tremendous amount of quality content to further enhance that experience and the credibility of the Ask brand. ”
About.com also owns ConsumerSearch.com and CalorieCount.com
The About Group will join IAC’s Search and Applications reporting segment, joining Ask.com, Dictionary.com, Mindspark, nRelate, and Pronto. The segment has seen double-digit growth the last two years.
IAC also owns Match.com and OKCupid and has a controlling interest in Newsweek/Daily Beast Co.
Thursday, December 1st, 2011
Global cyber security spending is expected to reach$60 billion in 2011 and is forecast to grow at 10 percent every year during the next three to five years.
The U.S. accounts for more than half of all deals globally, triggered by growing cyber threats and increasing awareness among both organizations and consumers of accelerating breaches and attacks, according to a new report from PwC titled, Cyber Security M&A: Decoding deals in the global Cyber Security industry.
Total deal activity since 2008 has exceeded $22 billion globally. In the first half of 2011, there were 37 deals accounting for over$10 billion in deal value, representing a 70 percent increase compared to full year 2010.
Since 2008, the total investment in global cyber security deals has exceeded $22 billion, an average of over $6 billion in each year.
Deal activity in cyber security expected to grow
“Deal activity in cyber security is expected to continue to grow given the fragmentation of the market and the attractive growth outlook,” said Barry Jaber, PwC’s security industry leader. “Technology and IT companies are making acquisitions to differentiate their offerings while defense firms continue to do deals to diversify away from shrinking defense budgets.”
“Against the backdrop of heightened awareness of hacks and deliberate attacks on institutions by semi-organized groups, the cyber security market is undergoing significant change and attracting investment from sectors that span technology, telecommunications, defense, professional services and financial investors,” said Rob Fisher, PwC’s U.S. technology leader for transaction services.
In most regions, the private sector accounts for the majority of cyber security spending, while the U.S. is the notable exception where government spending is almost equal to the private sector.
The strong U.S. technology industry combined with the fact that the U.S. defense and intelligence budgets are significantly larger than in any other country are key market drivers.
“The U.S. is a unique market with significant cyber security spending in the public sector, particularly by intelligence and defense agencies,” said PwC’s Jaber.
The U.S. market leads in value with the majority of deals (over 50 percent) involving acquirers or targets based in North America. By comparison, Europe accounted for approximately a quarter of deal value and a third of deal volume over the same period.
“Growing threats and awareness, and changes in technology such as mobile devices and cloud computing are key drivers of spending growth in the cyber security market,” added PwC’s Jaber.
Personally, we think it is past time for major corporations to spend serious money, time and thought on protecting digital assets, including customer information. If nothing else, the rash of high level cyber-security breaches this year seem to have heightened awareness that current security measures not sufficient to meet increasing threats.
Other key drivers underpinning growth in cyber security spending include:
- Increasing cyber threats, both from new actors and new threat vectors (the paths that attacks can take).
- Greater vulnerabilities due to the more pervasive use of technology, particularly mobile devices and cloud computing.
- Increasing awareness by organizations and consumers of the threats and potential threats.
- Changes in technology driving product and service innovation of security solutions.
- Increasing regulation, particularly those enforcing the requirement to secure personal data.
- Changes in outsourcing; some organizations are increasingly relying on partners for security, while others are growing internal security spending to maintain greater levels of control.