HW&Co. Recent IDM Deals Spotlight

SSI / Research Now

HW&Co.’s TMT Group advised HGGC and its portfolio company, SSI, on its merger with Research Now

Overview and Key Value Drivers

  • The newly formed entity, Research Now SSI, is a leading global provider of technology-enabled data collection and survey delivery solutions to market research  firms, consulting firms, and other end-clients

  • Research Now SSI’s online, mobile, and offline capabilities deliver more than 60+ million completed surveys per year

  • Global platform with strong and growing presence in over 40 countries and 20+ offices worldwide

Deal Notes

  • Existing investors, Court Square Capital Partners and HGGC, will remain owners of the combined business, now known as “Research Now SSI”

  • The combined entity becomes the largest provider of online panel data and technology-based research solutions based on opted-in data

Digital Room

HW&Co.’s TMT Group advised Insight Venture Partners and its portfolio company, Digital Room, Inc., on its sale to H.I.G. Capital

Overview and Key Value Drivers

  • Digital Room is a leading online B2B printing solutions provider serving the large and growing short-run print market in the U.S.
  • Across 13 highly-referenceable eCommerce brands, the Company maintains a robust portfolio of customizable upload & print products, ranging from brochures to yard signs
  • DRI also operates a trade printing platform, providing fulfillment to other online and offline printers, and white-label solutions serving enterprise customers

Deal Notes

  • H.I.G. Capital acquires Digital Room from Insight Venture Partners, who originally acquired Digital Room in 2010

  • With the support of H.I.G., Digital Room is well positioned to continue to expand through both the Company’s organic and inorganic growth initiatives

M&A Transactions

Select IDM M&A Transactions1,2

Apple’s pending acquisition of Shazam

Announced December 11, 2017

  • The Shazam app uses the microphone on a smartphone or computer to identify almost any song playing nearby, then points users to places they can listen to it in the future, such as Apple Music or Google’s YouTube.

  • Shazam complements the Apple Music platform by enhancing its music discovery capabilities, building upon its prior integration with Siri by more formally being leveraged across iOS.

  • Additionally, it is thought that Apple is particularly interested in the machine learning algorithms that enable Shazam to identify audio clips, as well as the augmented reality technology that enables users to discover content based upon images captured via the Shazam app.

Marlin Equity Partners’ pending acquisition of Bazaarvoice

Announced November 27, 2017

  • Bazaarvoice, Inc. (Nasdaq: BV), is a leading provider of consumer-generated content (“CGC”), advertising, and personalization solutions.
  • On a monthly basis, more than 500 million consumers utilize Bazaarvoice to view and share authentic consumer-generated content, including ratings and reviews, as well as curated visual content, across 5,500 brand and retail websites.
  • Marlin will provide Bazaarvoice with additional financial resources and strategic support that will help accelerate growth, drive product innovation, and allow the company to continue delivering best-in-class solutions to its customers.

Meredith Corporation’s acquisition of Time Inc.

Announced November 26, 2017

  • Time Inc. is a leading multi-platform consumer media company that engages over 230 million consumers globally every month.
  • In 2014, Time Inc spun off of Time Warner Inc., the publisher of the eponymous current affairs magazine "Time Magazine."
  • Time Inc.’s expansive portfolio of leading brands and a digital business of scale with growth potential, complemented by Meredith’s growing television broadcasting business will produce strong cash flow for the combined company.

bpost’s acquisition of Radial

Announced November 16, 2017

  • Radial is a leading player in omnichannel commerce technology and operations, enabling brands and retailers to profitably exceed retail customer expectations.

  • Radial has partnered with hundreds of retailers and brands to simplify their post-click commerce and improve their customer experiences.

  • Radial brings instant scale, credibility and a distinctive set of expertise and capabilities from the advanced US eCommerce market to bpost.

Electronic Arts’ pending acquisition of Respawn Entertainment

Announced November 9, 2017

  • Respawn Entertainment, founded in 2010 by the team behind the multi-billion dollar franchise “Call of Duty”, is an independent videogame development studio based in Los Angeles, California.
  • Respawn is the creator and developer of the critically-acclaimed Titanfall franchise that energized the first-person shooter genre with its innovative gameplay.
  • Respawn will join EA’s Worldwide Studios organization, a global creative collective of leading game development studios bringing to life an unmatched portfolio of top games and services across all major platforms.

IDM Acquisition Activity – Strategic Acquirers

Most Active strategic Acquirers of IDM Assets by volume1

  • The most active strategic acquirers of IDM assets made a combined six acquisitions in 4Q 2017, bringing the total acquisition count amongst these acquirers to 36 in 2017.

  • Though activity slowed slightly in 4Q 2017, strategics are continuing to pay a premium for assets that align with their corporate strategies.

  • Google continues to outpace all other notable strategic buyers, adding another two acquisitions to bring their 2017 acquisition total to eleven.

Global Strategic Acquirer IDM M&A Activity By Volume1

  • 4Q 2017 saw a slight fall in M&A activity over the prior quarter with strategic M&A activity decreasing by 8 transactions quarter-over-quarter.

  • Despite relative consistency over the past three quarters, 4Q saw a three-year low in M&A activity.

  • 2017 has followed a similar year-over-year trend to 2016, with second, third and fourth quarter activity posting fewer transactions than the first quarter.

IDM Acquisition Activity – Private Equity Investors

Most Active Private Equity Investors of New IDM Platforms by Buyout Volume1

  • The ten most active private equity investors of new IDM assets remained very active with 11 platform acquisitions completed in 4Q 2017 and a total of 30 in 2017.
  • Vista Equity Partners remains one of the more prolific acquirers of new IDM platforms, logging two additional IDM acquisitions in 4Q 2017: Jamf and Datto.

Global NEW Platform Private Equity IDM M&A Activity by Buyout Volume1

  • Following a low of 9 deals in private equity activity in 2Q 2016, IDM M&A volume has maintained and continues to trend between 10 and 15 deals per quarter.

  • Private equity IDM M&A volume remained consistent quarter-over-quarter with financial sponsors still keeping active and aggressive.

Online Marketing – M&A Market Summary

M&A Market Summary1

  • Online Marketing M&A deal volume rebounded slightly from the previous quarter.

  • Strategics again dominated M&A activity in the sector while private equity activity held constant between quarters.

  • Median multiples stayed flat quarter-over-quarter continuing to set valuation precedents lower in the sub-sector.

Notable Online Marketing M&A Transactions1

  • While strategics continue to represent the majority of total buyers, private equity investors maintained robust activity in the vertical, marked this quarter by Bain Capital's acquisition of Asatsu-DK.

  • Dentsu’s acquisition of Swirl underscores the Company’s recent efforts to expand its North American presence.

  • Following its acquisition of RetailMeNot, Harland-Clarke-backed Valassis continues to enhance its digital presence through the purchase of MaxPoint.

Data Analytics – M&A Market Summary

M&A Market Summary1,6

  • Data Analytics M&A volume remained consistent through the end of 2017, with activity levels in-line with the last two years.
  • As in prior quarters, the majority of acquisitions (90%+) have been strategic buyers, with financial buyers only accounting for two of the quarter’s transactions.
  • Median revenue multiples in the sector decreased to 3.0x, down from the previous quarter but are in line with previous quarters.

Notable Data Analytics M&A Transactions

  • eBay’s acquisition of Terapeak allows the eCommerce giant to leverage data around supply, demand, and pricing in order to give merchants better information to sell their goods.

  • TIBCO Software’s two acquisitions will help the Company strengthen its portfolio of analytics products, allowing businesses to get analytic solutions into production faster than competitors’ offerings.

eCommerce – M&A Market Summary

M&A Market Summary1,6

    • eCommerce M&A volume in 4Q 2017 saw a trend back towards the historical median of ~42 deals, reversing course from the previous quarter.
    • Strategic buyers remain heavily active in the space comprising ~90% of all buyers in 4Q 2017.
    • Reported multiples are hovering slightly below the historical mean.

    Notable ecommerce M&A Transactions

    • Target’s acquisition of Shipt, continues the theme of brick-and-mortar expansion into online delivery.
    • Comcast-backed online ticket company, Fandango, gained additional market share through its acquisition of Viacom-backed Movietickets.com.
    • BrandShop’s sale to Beringer Capital will provide the full service digital commerce provider needed capital to scale its services to additional Fortune 1000 clients.

    Media, Content, and Gaming – M&A Market Summary(1)

    M&A Market Summary1

      • There was a slight decrease in the level of M&A activity in the Media, Content, and Gaming from 3Q 2017 with strategics continuing to represent the majority of acquirers.
      • The median reported revenue multiple increased to 2.3x, slightly rising closer to historically higher multiples.

      Notable Media, Content, and Gaming M&A Transactions

      • Apple’s acquisition of Shazam comes amidst elevated activity in the music streaming space with Pandora seeking a potential outside investment and Spotify pursuing a direct listing.
      • Meredith Corp., a Koch Brothers backed-entity, acquired Time, Inc., illustrating the continued demand for premium publishing assets from high-net worth individuals and family offices.

      Select Recent IDM Private Placements7

      Public IDM Valuation Multiples by Sector1

      Key Metrics by Sector – Comparable Public IDM Companies1

      Summary of Technology IPOs

      • Technology IPOs rebounded in 4Q 2017 after the underperformance of Snap and Blue Apron in 3Q 2017, which caused many potential IPO candidates to re-evaluate timing.

      • As the stock market completes one of its best years in history, driven largely by outperforming technology stocks, both technology startups and unicorns are increasingly viewing the public markets as a potentially interesting source of liquidity.

      • Notable technology companies such as Spotify and Dropbox, both who have already filed for an IPO, will test the IPO markets in 2018.

      Key Performance Metrics for Recent IDM IPOs 1

      Debt Market Overview

      • Median middle market LBO loan multiples in 2017 increased slightly to 5.5x leverage.
      • Middle market LBO loan volume decreased to $1.1 billion in 4Q 2017, bringing total volume in 2017 to $6.8 billion.

      • Technology companies were the second largest recipients of middle market LBO loans in 2017, representing 15.5% of new issuance.
      • Median LBO debt percentages increased slightly to 53% of total purchase price in 2017.

      HW&Co.’s TMT Group: M&A Advisor of Choice for Market Leading Technology Companies

      1. FactSet

      2. Business Wire

      3. PNC Capital Markets

      4. S&P LCD stats

      5. PitchBook

      6. HW&Co. proprietary transaction information

      7. Crunchbase

       

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