Harris Williams Overview
Harris Williams (“HW”) Global Advisory Platform
- Founded in 1991
- 330+ professionals across eight offices globally
- 21st record year in 2018
- 10 industry groups
HW Technology, Media & Telecom (“TMT”) Group Focus Areas
Vertical Focus Areas
- Compliance Software
- CRM and Member Management Software
- Data and Analytics
- Enterprise Software
- Human Capital Management
- Infrastructure and Security Software
- IT and Tech Enabled Services
- Managed Services, Hosting, Data Center Solutions
- Online Marketing, Data, and Research
Horizontal Focus Areas
- Architecture, Engineering, and Construction
- eCommerce and Retail Software
- Education Technology
- Energy Technology
- Facilities and Real Estate Technology
- Financial Technology
- Government Technology
- Healthcare IT
- Industrial and Supply Chain Software
Select Recent HW TMT Transactions
Select IDM M&A Transactions – 1Q 2019
McDonald’s Acquisition of Dynamic Yield
- Dynamic Yield provides an AI-powered personalization platform intended to deliver individualized experiences at every customer touchpoint.
- The Company integrates data from all touchpoints in real-time to offer customer data management, personalization, predictive targeting, recommendations, optimization, and behavioral messaging across web, mobile, apps, and email.
- The acquisition will enable McDonald’s to provide a more personalized customer experience by varying outdoor digital Drive Thru menu displays to show food based on time of day, weather, current restaurant traffic and trending menu items.
Unilever’s Acquisition of graze
- graze provides an online food platform designed to offer healthy and nutritionally balanced food products.
- The Company specializes in a service that delivers customized snack mixes to consumers and has expanded into the retail, eCommerce, and direct-to-consumer channels.
- The acquisition strengthens the commitment to Unilever’s Sustainable Living Plan (USLP), which aims to help more than a billion people take action to improve their health and well-being by 2020.
DiscoverOrg’s Acquisition of ZoomInfo
- ZoomInfo provides a subscription-based SaaS platform designed to provide business-information.
- The Company’s platform optimizes sales and marketing channels for professionals in order to identify business opportunities, locate talent, and conduct research. Its semantic search engine scours the business web to catalog information which it then organizes into comprehensive profiles.
- The acquisition will help sales, marketing, and recruiting professionals access the most trusted and comprehensive B2B data available in the market.
Roper Technologies’ Acquisition of Foundry
- Foundry provides software technologies used to deliver award-winning visual effects and 3D content for the digital design, visualization, and entertainment industries.
- The Company is deeply embedded across the creative pipeline to support a large ecosystem of users across the globe. Clients include Pixar, ILM, MPC, Walt Disney Animation, Mercedes, Adidas, and Google.
- The acquisition enhances Roper’s long term commitment to serve the complex needs of its customers through continued product improvement, R&D and technological innovation, and partnerships with global leaders in the industry.
ShopRunner’s Acquisition of Precognitive
- Precognitive provides a SaaS-based platform designed to detect and prevent fraud in online retail.
- The Company’s platform integrates device intelligence, advanced behavioral analytics, and a real-time decision engine, enabling organizations to identify and stop fraud at the time of each transaction.
- The acquisition leverages industry-leading algorithms to combat what has been a pressing issue that has taken a toll on eCommerce revenue and interfered with retailers’ ability to offer a seamless and safe shopping experience for customers.
IDM Acquisition Activity – Strategic Acquirers
Most Active Strategic Acquirers of IDM Assets by Volume1
- Activity increased slightly in 1Q 2019 from Q4 2018 due in part to a lower interest rate environment and easing fears of market volatility.
- Strategics are continuing to pay a premium for assets that align with their corporate strategies.
- The most active strategic acquirers of IDM assets made a combined seven acquisitions in 1Q 2019, the annualized 2019 total of 28 is just shy of the 30 acquisitions made in 2018.
- Google (Alphabet) and Facebook outpaced all other notable strategic buyers, Google and Facebook both adding two acquisitions in 1Q 2019.
Global Strategic Acquirer IDM M&A Activity by Volume1
- 1Q 2019 saw a significant increase in M&A activity from the prior quarter with strategic M&A activity increasing by 29 transactions quarter-over-quarter.
- In addition to continued expansion, 1Q 2019 activity experienced a volume increase of 40% from 1Q 2018.
- However, 1Q 2019 activity is still down 41.2% from the four-year high of 228 deals back in 2Q 2015.
IDM Acquisition Activity – Private Equity
Most Active Private Equity Buyers of New IDM Platforms by Volume1
- The 10 most active private equity investors in IDM assets remained very active with 15 acquisitions completed in 1Q 2019 up from 11 acquisitions in 4Q 2018.
- Vista Equity Partners remains one of the more prolific acquirers of new IDM platforms, logging three additional IDM acquisitions in 1Q 2019.
Global Private Equity New IDM Platforms M&A Activity by Volume1
- IDM M&A volume increased significantly in 1Q 2019 more than doubling the eight deals from 4Q 2018.
- While private equity IDM M&A volume increased significantly from the prior quarter it remains consistent to slightly above other Q1’s over the past four years, indicating that financial sponsors remain active and aggressive.
Note: Includes control new platform investments only. Excludes add-on acquisitions.
Online Marketing – M&A Market Summary
- Online Marketing M&A moderately increased in volume from the previous quarter.
- Strategics again dominated M&A activity in the sector, but had a consistent number of transactions, financial sponsors more than doubled their activity from 3 deals to 8 deals.
- Median multiples increased 43% quarter-over-quarter rising above the historical mean.
Notable Online Marketing M&A Transactions1,5
- Thoma Bravo’s $3.7 B acquisition of Ellie Mae, a real estate software company which aims to automate the mortgage industry, demonstrates the willingness of private equity firms to make big bets on the digital transformation.
- DiscoverOrg acquired Zoom Information for $800M, which greatly increases the quality, quantity, and depth of sales and marketing data that it can provide to its customers.
Data Analytics – M&A Market Summary
- Data Analytics M&A volume increased from the prior quarter, with activity nearing levels seen in only three quarters during the past four years.
- Volume of Data Analytics transactions has nearly tripled from 1Q 2018.
- Median revenue multiples in the sector increased to 4.0x, up from the prior two quarters.
Notable Data Analytics M&A Transactions1,5
- Microsoft acquired Citus Data, enhancing its ability to better support customers’ data analytics needs for their cloud based operations. The acquisition keeps Microsoft on the leading edge of cloud data capabilities
- Informatica acquired Allsight, enabling Informatica to provide customers with AI-enabled insights, which improves their user experience and drives customer loyalty.
eCommerce – M&A Market Summary
- eCommerce M&A volume in 1Q 2019 fell from a recent high of 42 deals in 4Q 2018 to 31 deals.
- The median of the reported multiples for 1Q 2019 is hovering right above the historical mean of 3.0x.
Notable eCommerce M&A Transactions1
- In its largest acquisition to date, Airbnb acquired HotelTonight, which will enable Airbnb to cater to growing demand for same-day bookings while bolstering the Company’s footprint in the broader hospitality industry.
- eBay’s purchase of Motors.co.uk expands the company’s presence in the automotive sector and provides significantly more viewers to the listings on the site.
Media, Content & Gaming – M&A Market Summary
- There was a slight increase in the level of M&A activity in the Media, Content and Gaming from 4Q 2018 with strategics continuing to represent the majority of acquirers.
- The median reported revenue multiple decreased to 3.0x, which is more in line with the historical mean than the spike quarter in 4Q 2018.
Notable Media, Content & Gaming M&A Transactions1
- In January 2019, Epic Games acquired two businesses, Agog Labs and 3lateral, both of which bring more of the game development and creation processes in-house.
- Spark Networks’ acquisition of Zoosk greatly expands it user base and provides significant cost saving opportunities. The scale of the combined entity and the diversity of its brands will place Spark Networks in a dominant market position.
Select Recent IDM Private Placements1,4
Note: Financial information presented above represents reported capital raised only.
Public IDM Valuation Multiples by Sector1
Debt Market Overview
- Median middle market LBO loan multiples in 1Q 2019 increased slightly to 5.7x leverage.
- Middle market LBO loan volume decreased to $0.6 billion in 1Q 2019, continuing a downward trend over the past two quarters.
- Technology companies were the largest recipients of middle market LBO loans in 1Q 2019, representing 24.9% of new issuance.
- Median LBO debt percentages decreased slightly to 50% of total purchase price in 1Q 2019.
Select HW TMT Transactions
Appendix: IDM Sector Public Company Universe1
Appendix: IDM Sector Public Company Metrics1
Note: Not Meaningful (NM) represents multiples above 50.0x; Not Available (NA) means the data is unavailable.
2. PNC Capital Markets
3. S&P LCD stats
5. HW proprietary transaction information
The information and views contained in this report were prepared by Harris Williams LLC (“Harris Williams”). It is not a research report, as such term is defined by applicable law and regulations, and is provided for informational purposes only. It is not to be construed as an offer to buy or sell or a solicitation of an offer to buy or sell any securities or financial instruments or to participate in any particular trading strategy. The information contained herein is believed by Harris Williams to be reliable but Harris Williams makes no representation as to the accuracy or completeness of such information. Harris Williams and/or its affiliates may be market makers or specialists in, act as advisers or lenders to, have positions in and effect transactions in securities of companies mentioned herein and also may provide, may have provided, or may seek to provide investment banking services for those companies. In addition, Harris Williams and/or its affiliates or their respective officers, directors and employees may hold long or short positions in the securities, options thereon or other related financial products of companies discussed herein. Opinions, estimates and projections in this report constitute Harris Williams’ judgment and are subject to change without notice. The securities and financial instruments discussed in this report may not be suitable for all investors and investors must make their own investment decisions using their own independent advisors as they believe necessary and based upon their specific financial situations and investment objectives. Also, past performance is not necessarily indicative of future results. No part of this material may be copied or duplicated in any form or by any means, or redistributed, without Harris Williams’ prior written consent.
Harris Williams LLC is a registered broker-dealer and member of FINRA and SIPC. Harris Williams & Co. Ltd is a private limited company incorporated under English law with its registered office at 5th Floor, 6 St. Andrew Street, London EC4A 3AE, UK, registered with the Registrar of Companies for England and Wales (registration number 07078852). Harris Williams & Co. Ltd is authorized and regulated by the Financial Conduct Authority. Harris Williams & Co. Corporate Finance Advisors GmbH is registered in the commercial register of the local court of Frankfurt am Main, Germany, under HRB 107540. The registered address is Bockenheimer Landstrasse 33-35, 60325 Frankfurt am Main, Germany (email address: firstname.lastname@example.org). Geschäftsführer/Directors: Jeffery H. Perkins, Paul Poggi. (VAT No. awaited). Harris Williams is a trade name under which Harris Williams LLC, Harris Williams & Co. Ltd and Harris Williams & Co. Corporate Finance Advisors GmbH conduct business.