Select IDM M&A Transactions - 3Q 2018

screen_shot_2018-11-26_at_11.40.02_am.pngSiriusXM's Acquisition of Pandora

  • Pandora provides an internet radio platform that generates tailored playlists based on users’ favorite artists and songs.
  • The Company analyzes hundreds of attributes within each recording as part of its proprietary Music Genome Project, delivering highly personalized music to its 70 million monthly active users.
  • Sirius’ acquisition of Pandora creates the world’s largest audio entertainment company, producing considerable revenue synergy potential across SiriusXM’s base of more than 36 million subscribers and Pandora’s base through the creation of unique audio packages and other cross-promotional opportunities.

screen_shot_2018-11-26_at_11.42.16_am.pngAdobe's Pending Acquisition of Marketo 

  • Marketo provides digital marketing software that includes solutions for CRM lead management, email, mobile, and consumer/customer marketing.
  • Taken private by Vista Equity in 2016 for $1.6B, the Company’s platform provides tools that drive marketing engagement, automation, and attribution power for clients across a diverse set of industries.
  • The acquisition will combine Marketo’s multi-channel capabilities with Adobe’s expansive behavioral data to deliver new solutions across analytics, content, personalization, advertising, and commerce to the Adobe Experience Cloud.

screen_shot_2018-11-26_at_11.43.50_am.pngThomas H. Lee Partners' Acquisition of Dun & Bradstreet

  • Dun & Bradstreet provides a comprehensive set of commercial data analytics, research, and insights solutions to businesses worldwide to accelerate sales, lower costs, manage risk, and transform operations.
  • The Company’s database contains more than 300 million business records worldwide, helping risk and finance, operations and supply, and sales and marketing professionals make more informed decisions.
  • The acquisition enables continued growth for the Company, increasing operational efficiencies and improving the D&B customer experience through enhanced business solutions.

screen_shot_2018-11-26_at_11.45.46_am_0.pngSalesforce's Acquisition of Datorama

  • Datorama provides a cross-channel marketing analytics platform created to connect data, report across channels and campaigns, and surface insights real-time.
  • The Company’s marketing integration engine optimizes performance by making data actionable with goals, pacing, alerts, reports, and AI-powered insights to analyze marketing holistically.
  • Following the acquisition, Salesforce will leverage Datorama’s data integration and intelligence capabilities to enhance its Marketing Cloud, strengthening its ability to empower brands.

screen_shot_2018-11-26_at_11.47.54_am.pngIPG's Acquisition of Acxiom Marketing Solutions

  • Acxiom Marketing Solutions provides customer and information management services that allow brands, agencies, media, and technology partners to harness data to improve every customer interaction.
  • A leading provider of consumer-related data solutions, the Company serves over 2,000 global clients, recognizes over 2.2 billion connected consumers, and manages 20 billion customer records.
  • The acquisition enhances IPG’s service offerings in data strategy and management, performance media and analytics, further diversifying its revenue and earnings.

IDM Acquisition Activity - Strategic Acquirers

Most Active Strategic Acquirers of IDM Assets by Volume1

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  • Activity increased slightly in 3Q 2018, and 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 10 acquisitions in 3Q 2018, bringing the total acquisition count amongst these acquirers to 23 in YTD 2018.
  • Google (Alphabet) and Booking Holdings outpaced all other notable strategic buyers, Google adding one acquisition and Booking Holdings two in 3Q 2018 to bring their combined YTD acquisition total to eight.

Global Strategic Acquirer IDM M&A Activity by Volume1

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  • 3Q 2018 saw a slight increase in M&A activity from the prior quarter with strategic M&A activity increasing by seven transactions quarter-over-quarter.
  • In addition to continued expansion YTD, 3Q 2018 YTD activity experienced a volume increase of 7.3% from 3Q 2017 YTD.
  • However, 3Q 2018 activity is still down 41.2% from the four-year high of 228 deals back in 2Q 2015.

Note: Includes control investments only. 

IDM Acquisition Activity - Private Equity

Most Active Private Equity Buyers of New IDM Platforms by Volume1

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  • The 10 most active private equity investors in IDM assets remained very active with six platform acquisitions completed in 3Q 2018 and a total of 24 YTD 2018.
  • Vista Equity Partners remains one of the more prolific acquirers of new IDM platforms, logging three additional IDM acquisitions in 3Q to bring their YTD 2018 acquisitions total to eight.

Global Private Equity New IDM Platforms M&A Activity by Volume1

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  • IDM M&A has maintained and continues to trend around a historical mean of 16 deals per quarter. 
  • Private equity IDM M&A volume remained consistent quarter-over-quarter with financial sponsors staying active and aggressive. 

Note: Includes control new platform investments only. Excludes add-on acquisitions.

Online Marketing - M&A Market Summary

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  • Online Marketing M&A moderately decreased in volume from the previous quarter.
  • Strategics again dominated M&A activity in the sector while private equity activity held constant between quarters.
  • Median multiples increased 47% quarter-over-quarter rising above the historical mean.

Notable Online Marketing M&A Transactions1,5

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  • Insight Venture Partners’ $1.1B acquisition of Episerver demonstrates the rising prominence of “Customer Experience Management” and increasing digital transformation (DX) spending, a market IDC projects to reach $1.7T by 2019.
  • Accel-KKR acquired SugarCRM for $100M, a CRM software solutions provider that leverages AI, machine learning, and predictive insights to intelligently manage the full customer lifecycle.

Data Analytics - M&A Market Support

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  • Data Analytics M&A volume increased from the prior quarter, with activity levels in-line with the last three years.
  • Volume of Data Analytics transactions has increased 14% year-over-year.
  • Median revenue multiples in the sector decreased to 3.7x, down from the prior quarter but are in line with previous quarters. 

Notable Data Analytics M&A Transactions1,5

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  • CPPIB and Technology Crossover Ventures made a strategic investment in Sportradar at a valuation of $2.4B, underscoring the growing intrigue in the evolving vertical of sports data alongside Apax’s acquisition of Genius Sports Group.
  • Fortive’s acquisition of The Gordian Group enables entry into the rapidly growing facilities maintenance and management segment, while equipping Fortive with over 70 years of proprietary construction cost data amassed by Gordian.

eCommerce - M&A Market Summary

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  • eCommerce M&A volume in 3Q 2018 remained flat around the historical median of ~42 deals, increasing the number of transactions from the previous quarter.
  • The median of the reported multiples for 3Q is hovering right above the historical mean of 3.0x.

Notable eCommerce M&A Transactions1

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  • WeddingWire, backed by Permira and Spectrum Equity, merged with the publicly-traded event planning company XO Group in a transaction valued at $933M.
  • Donuts’ sale to ABRY Partners will provide the domain registry and web hosting provider capital to make future acquisitions and continue growth.
  • Amadeus’ acquisition of TravelClick enhances its presence in the hospitality sector through the addition of TravelClick’s cloud-based solutions for mid-chain and independent hotels.

Media, Content & Gaming - M&A Market Summary

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  • There was a slight decrease in the level of M&A activity in the Media, Content and Gaming from 2Q 2018 with strategics continuing to represent the majority of acquirers.
  • The median reported revenue multiple decreased to 2.5x, moving further from the historical mean of 3.5x.

Notable Media, Content & Gaming M&A Transactions1

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  • Viacom acquired AwesomenessTV, one of the early production houses funded through YouTube’s channel initiative, in a deal that bolster’s Viacom’s footprint in youth-oriented digital content, a highly-competitive focus area for the parent company of MTV and Nickelodeon.
  • AT&T acquired the remaining stake in Otter Media – a top 10 subscription video on demand (SVOC) provider it jointly founded with The Chernin Group in 2014 –and will combine Otter with WarnerMedia post close.

Select Recent IDM Private Placements1,4

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Note: Financial information presented above represents reported capital raised only.

Public IDM Valuation Multiples by Sector1

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Summary of Technology IPOs

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  • Following an active 2Q 2018, technology IPO activity slowed in 3Q as companies evaluate timing and private markets continue to offer compelling valuations.
  • Public market investors continue to value growth over profitability as evidenced by SurveyMonkey’s 42% surge on its opening day of trading.
  • Notable technology IPOs in 3Q 2018 include SurveyMonkey, Eventbrite, Domo, and Farfetch.

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Key Performance Metrics for Recent IDM IPOs1

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Survey Monkey IPO Snapshot

About SurveyMonkey

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  • SurveyMonkey is a global provider of survey software solutions designed to help collect and analyze data, enabling enterprise and consumer clients to gain valuable insights from key constituents.
  • On September 25th, 2018, the Company raised $180M in its initial public offering on the NASDAQ stock exchange, selling a total of 15M shares at $12 per share.

 

 

Financial & Valuation Information

  • LTM Revenue: $234M
  • LTM Adj. EBITDA: $59M
  • Market Cap on 9/28: $2.3B
  • EV on 9/28: $2.4B
  • Net Debt / Adj. EBITDA: 1.7x
  • EV / LTM Revenue: 10.2x
  • EV / LTM Adj. EBITDA: 40.3x

Key Performance Indicators 

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  • The Company defines the market to include all U.S. and international knowledge workers; approximately 62.5M workers in the U.S.

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Market Reaction (9/26-9/28)

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From Inception to IPO

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Source: SurveyMonkey S-1 Form

Debt Market Overview

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  • Median middle market LBO loan multiples through 3Q 2018 were 5.5x, remaining in line with the prior four quarters.
  • Middle market LBO loan volume decreased slightly to $1.5 billion in 3Q 2018.
  • In September, the Federal Reserve raised interest rates for the third time in 2018 and hinted at another before year end.

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  • Technology companies were the largest recipients of middle market LBO loans in 3Q 2018, representing 24.3% of new issuance.
  • Median LBO debt percentages slightly increased to 55% of total purchase price through 3Q 2018.

Select HW TMT Transactions

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Appendix: IDM Sector Public Company Universe1

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Appendix: IDM Sector Public Company Metrics1

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1.  FactSet

2.  PNC Capital Markets

3.  S&P LCD stats

4.  PitchBook

5.  HW proprietary transaction information

 

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