Case Study: Drillinginfo

Harris Williams' TMT Group announces that it is advising Drillinginfo (“DI”), a portfolio company of Insight Venture Partners, on its pending sale to Genstar Capital (“Genstar”).

 

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For more information on this transaction, please contact Jeff Bistrong, Tyler Dewing, Luke Semple, or Scott Reinig

 

  • Drillinginfo is a leading provider of integrated software, data, and analytics solutions to the global energy, power, and commodities markets.
  • The Company provides a fully integrated, SaaS platform delivering actionable intelligence over mobile, web, and desktop platforms to analyze and reduce risk, conduct competitive benchmarking, and uncover market insights.
  • Following the acquisition, Genstar will support DI’s continued development through organic and inorganic initiatives to consolidate data onto its existing platform, broaden its product mix, expand its geographic footprint, and accelerate entry into adjacent market segments.

About Drillinginfo

  • Founded in 1999, Drillinginfo delivers business critical insights to the energy, power, and commodities markets. The Company combines its best-in-class SaaS platform with industry-leading data and energy analytics to provide actionable intelligence in real-time to exploration and production (“E&P”), oilfield services, midstream, utilities, trading and risk, and capital markets companies to be more collaborative, efficient, and competitive. The Company offers a suite of products and services that provide the predictive tools and technology needed to drive exploration decisions, evaluate rapidly evolving opportunities, and achieve better, faster results for its 3,500 customers.

Select Software M&A Transactions – 2Q 2018

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Trimble’s acquisition of Viewpoint

  • Viewpoint provides construction management software to over 8,000 clients in the global construction and capital project markets.
  • The Company’s software allows its clients to integrate operational and data workflows across locations, resulting in more informed decision making, delivering increased project profitability.
  • The acquisition of Viewpoint will extend Trimble’s client base into general, specialty, and heavy civil contractors while providing their workflow solutions to clients across the construction lifecycle.

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Dassault Systèmes’ pending acquisition of Centric Software

  • Centric Software provides product lifecycle management (“PLM”) software solutions to more than 600 globally recognized brands in the fashion, apparel, luxury, and retail sectors.
  • The Company’s PLM software enables customers to rapidly respond to evolving consumer trends by digitizing the production process, resulting in increased efficiency, compressed time to market, and streamlined operations across the supply chain.
  • Following the acquisition, the two companies will leverage their deep industry expertise to accelerate the digital transformation of companies looking to optimize their production process and enhance operational efficiencies.

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Roper Technologies’ acquisition of PowerPlan

  • PowerPlan provides software and solutions for asset-centric companies to optimize their financial performance and achieve regulatory compliance.
  • The Company’s software platform integrates highly detailed financial and operational data to help enhance operational efficiency, minimize tax obligations, improve cash flow, and mitigate compliance risk.
  • Following the acquisition, Roper will support PowerPlan’s management team to continue growing their innovative product suite, loyal customer base, and strong cash profile.

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Francisco Partners’ acquisition of Renaissance Learning

  • Renaissance Learning provides cloud-based assessment, analytics, and learning solutions to educators and administrators in more than one-third of U.S. schools and over 70 countries.
  • The Company’s solutions help educators analyze, customize, and plan personalized learning paths for students, creating energizing learning experiences and enhanced educational outcomes.
  • Following the acquisition, Francisco Partners will support Renaissance in evolving its solution suite and expanding its global presence.

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Accel-KKR’s acquisition of Sageworks

  • Sageworks provides web-based lending, credit, and portfolio risk management software to financial institutions and accounting firms.
  • The Company’s software suite enables banks and credit unions to accurately manage credit portfolios to reduce potential credit and regulatory risk.
  • Post acquisition, Accel-KKR will support Sageworks’ software platform, while combining it with its existing portfolio company Banker’s Toolbox, to deliver increasing value to its financial institution client base.

Software Acquisition Activity – Strategic Acquirers

Most Active strategic Acquirers of Software Assets by Volume1

(# of Transactions)

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  • The 10 most active strategic software acquirers registered 40 acquisitions through 1H 2018. Activity among large strategic acquirers is on pace with 2017 levels.
  • Microsoft has been the most active strategic acquirer through 1H 2018, completing 10 acquisitions. The recent acquisitions of Semantic Machines and Bonsai AI highlights Microsoft’s focus on next-generation artificial intelligence and machine learning tools for developers.

Global Strategic Acquirer Software M&A Activity By Volume1

(# of Transactions)

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  • Globally, strategic software M&A registered 381 acquisitions in 2Q 2018, remaining in line with the prior four quarters.
  • Strategic acquirers remain highly active as management teams continue to view inorganic growth initiatives as a viable value-creation strategy. Many diversified software companies are pursuing vertical specific software acquisitions as they look to expand into new end-markets.

 

Software Acquisition Activity – Private Equity

Most Active Private Equity Buyers of New Software Platforms by Volume1

(# of Platform Transactions)

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  • The 10 most active software investors completed 35 new platform investments in 1H 2018.
  • Francisco Partners was the most active software private equity firm through 1H 2018, completing six platform acquisitions and three add-on acquisitions.
  • Notable private equity platform acquisitions include Vista Equity Partners’ acquisition of LogicMonitor and Thoma Bravo’s acquisition of Nintex Global.

Global New Platform Private Equity Software M&A Activity by Volume1

(# of Platform Transactions)

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  • Globally, private equity buyers registered 102 new software platform investments in 2Q 2018, a 13% increase from 1Q 2018.
  • Private equity investment across the software sector continues to exhibit strong momentum as dry powder remains at all-time highs and fundraising activity for technology funds continues.

Application Software – M&A Market Summary

Application Software M&A Volume1 (Global)

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Median M&A Revenue Multiples1 (Reported)

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  • Application Software M&A registered 373 transactions in 2Q 2018, representing a 30% year-over-year increase and a slight increase from the prior quarter.
  • Median reported Application Software M&A transaction multiples increased to 2.8x, the highest quarter in the last four years.

Notable Application Software M&A Transactions 1,5

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  • In 2Q 2018, strategic buyers were highly active pursuing application software targets, as vertical-specific software companies remain highly-sought after. 
  • Notable vertical-specific software transactions include Dassault’s pending acquisition of Centric Software (manufacturing), Onex’s pending acquisition of PowerSchool Group and PeopleAdmin (education), and Trimble’s acquisition of Viewpoint (construction).

 

SaaS – M&A Market Summary

SaaS M&A Volume1 (Global)

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Median M&A Revenue multiples1 (Reported)

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  • SaaS M&A registered 52 transactions in 2Q 2018, a slight decrease from the previous quarter, but a 21% increase over 2Q 2017 levels.
  • 2Q 2018 median reported SaaS transaction multiples increased to 5.0x revenue, slightly above trailing four-year averages.

Notable SaaS M&A Transactions 1,5

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  • Demand for cloud-based delivery models remains strong, resulting in continued robust M&A activity by both strategic and private equity buyers.
  • Notable 2Q 2018 SaaS transactions include SAP’s acquisition of Callidus Software and Visma’s pending acquisition of Raet.

Data and Analytics – M&A Market Summary

Data and Analytics M&A Volume1 (Global)

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Median M&A Revenue Multiples1 (Reported)

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  • Data and Analytics M&A volumes remained robust in 2Q 2018, registering 115 transactions, an 8% increase from 2Q 2017.
  • In 2Q 2018, median reported sector transaction multiples decreased to 2.7x revenue, but remain in line with two-year historical averages.

Notable Data And Analytics M&A Transactions1

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  • Data and Analytics remains a key focus area as enterprises continue to seek opportunities to leverage advanced data for operational decision making.
  • Recent examples of this trend include IHS Markit’s pending acquisition of Ipreo, Genstar Capital’s pending acquisition of Drillinginfo, and Workday’s pending acquisition of Adaptive Insights.

 

Infrastructure Software – M&A Market Summary

Infrastructure Software M&A Volume1 (Global)

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Median M&A Revenue Multiples1 (Reported)

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  • Infrastructure Software M&A registered 70 transactions in 2Q 2018, reflecting the heightened demand for infrastructure assets over the past year.
  • Median reported Infrastructure Software transaction multiples decreased to 2.8x revenue, but remained in line with historical averages.

Notable Infrastructure Software M&A Transactions1

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  • Private equity investors remain highly active buyers of infrastructure and security assets as they look to compete with established strategic acquirers in a large, but fragmented market.
  • Noteworthy private equity transactions in 2Q 2018 include KKR’s pending acquisition of BMC Software, Vista Equity Partners’ pending acquisition of LogicMonitor, and Francisco Partners’ acquisition of Bomgar.

Private Placement Activity By Software Sector

Private Placements by Software sub-Sector and New Capital Raised 1,4

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  • There were 987 private placement financings in 2Q 2018, representing a 33% increase over 2Q 2017.
  • Total reported capital continues to grow with $13.5 billion invested in 2Q 2018, up from $12.8 billion in 1Q 2018.

Private Placement Capital Raised by Round 1,4

(as percentage of total Reported private placement capital)

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  • In 2Q 2018, the majority of private capital invested was in late stage (C – later) rounds, with 45% of capital raised in Series D or later rounds.
  • Notable late stage rounds included CloudBees’ $37 million investment led by Delta-v Capital, Agari’s $40 million Series E investment led by Goldman Sachs, and BetterCloud’s $60 million Series E investment led by Bain Capital Ventures.

 

Select Recent Software Private Placements

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Select Recent Software Private Placements 1,4

Public Software Valuation Multiples by Sector

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Public Software Valuation Multiples by Sector1

Key Metrics by Sector – Comparable Public Software Companies

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Key Metrics by Sector – Comparable Public Software Companies1

Summary of Technology IPOs

Recent U.S. Technology IPO Activity (by Offering Size) 1

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  • After a slow 1Q 2018, technology IPO activity rebounded in 2Q, driven by strong market performance for technology stocks and continued investor demand for high-growth companies.
  • Notable technology IPOs in 2Q 2018 include DocuSign, Ceridian, Pivotal Software, and Carbon Black.

Offering Size at IPO (LTM) 1

(All tech IPOs over the last 12 months)

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Market Cap at IPO (LTM) 1

(All tech IPOs over the last 12 months)

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Revenue Growth (1YR Prior to IPO) 1

(All tech IPOs over the last 12 months)

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Key Performance Metrics for Recent Software IPOs

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Key Performance Metrics for Recent Software IPOs1

Debt Market Overview

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  • Median middle market LBO loan multiples through 1H 2018 were 5.4x leverage, remaining in line with the prior four quarters
  • Middle market LBO loan volume decreased slightly to $1.5 billion in 2Q 2018.

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  • The Technology sector in the middle market was the largest recipient of LBO loans through 1H 2018, representing 25.1% of new issuance.
  • Median LBO debt percentages increased remained flat at 53% of total purchase price through 1H 2018.

Select Harris Williams TMT Transactions

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Appendix

Software Sector Public Company Universe1

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Software Sector Public Company Metrics1

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1. FactSet

2. PNC Capital Markets

3. S&P LCD stats

4. PitchBook

5. Harris Williams proprietary transaction information

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