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We expect M&A activity to remain steady for 2012 and
possibly uptick further if the lending environment eases globally. While Europe is in economic turmoil, the U.S.
is stabilizing. Emerging markets such as
Brazil, Argentina and China are all on the upswing and in growth mode. We expect some financial buyers (private
equity) to remain on the sidelines while strategic buyers (companies) will
acquire to capture growth. Buyout firms
accounted for around 16 percent of company takeovers in 2011.
Volatile equity markets slowed mounting U.S. deal activity in
the third and fourth quarters, following growing deal momentum in the first two
quarters of 2011. In light of concerns
over European debt and a pullback in financing, U.S. merger and acquisition
activity in the second half of 2011 was driven by well-prepared dealmakers
focused on executing acquisitive growth strategies and availability of
businesses with strong fundamentals– a key trend expected to continue into
2012, according to PwC's Year-End U.S.
M&A Outlook.
Sellers now are looking for both speed and certainty in a
deal, and also pursuing various alternative options and scenarios as they
proceed as a way of maximizing the asset’s value. With sellers in the driver's
seat, buyers must remain poised and ready when deal negotiations continue for a
prolonged timeframe. Overall, the M&A markets are on track to stabilize
further and increase overall over the next few years.
A few M&A highlights for 2011:
·
The
most active acquirers within the Software Industry through Q3 2011 were EMC Corporation and Google Inc. with 10 acquisitions each.
• Vista Equity Partners was the most active financial acquirer
during Q3 2011 with 5 acquisitions: Thomson
Reuters Trade and Risk Management Business, Sage Healthcare Inc., CompuLaw LLC,
Client Profiles, Inc. and
CyberShift, Inc.
· The
largest transaction for the third quarter as well as the 1st 3 Quarters of 2011
was the acquisition of Autonomy
Corporation plc by HP for $10.28
billion and represents a 10.8x
revenue multiple and a 24.5x EBITDA
multiple.
·
Total
transaction volume in Q3 2011 for Software companies decreased by 11% over Q2
2011, from 366 to 324 transactions.
·
Total
transaction value in Q3 2011 for Software companies decreased by 22% over Q2
2011, from $29.9 billion to $23.4 billion.
·
Median
EBITDA multiples in Q3 2011 remained largely unchanged from the last quarter,
at 13.6x.
·
Median
revenue multiples in Q3 2011 remained nearly the same, at 2.3x times revenue.
For more information and to download the full report (free), go to: www.generationequityadvisors.com
