Learning and Education Technology Update Q1 2019

May 23, 2019 - Solganick & Co. has published its latest Learning and Education Technology (EdTech) M&A Update for Q1 2019.  The following summarizes the report:

• 106 Learning & Education Technology transactions were announced in Q1 2019; approximately 53% were minority PE deals.

• $5.8 billion in Q1 2019 in announced transaction value is driven by PE majority deals.
• Companies focused on the Corporate market comprised of approximately 45% of transactions announced in Q1 2019.
• The industry saw a healthy mix of activity across all domains in Q1 2019, with Career & Recruiting comprising 25%, Learning and Training 17%, Administrative 17%, Tutoring, Training & Certification 14% of total transactions.
• Q1 2019 deals announced include the $1.75 billion Turnitin.com acquisition by Advance Publications and Reverence Capital Partners acquisition of Blackbaud’s Transact division for $700M.

The full report can be accessed and downloaded here: Solganick Learning and EdTech M&A Update Q1 2019

For more information or to inquire about an M&A transaction please visit our website at: Solganick & Co.

Digital Media M&A Update, Q1 2016

Solganick & Co. Issues Its Latest Digital Media M&A Update for Q1 2016

April 2016 – Solganick & Co. has issued its latest Digital Media industry M&A Update for Q1 2016.  Below are the key highlights of the report:

• Overall M&A activity across the digital media industry remains robust YTD 2016. Several notable billion dollar deals were announced in Q1 2016, encompassing entertainment, media, and advertising industries, etc.
• In Q1 2016, the largest transaction in the Digital Media sector recorded for a total deal value of $3.5 bn was Dalian Wanda’s acquisition of Legendary Entertainment. It’s the largest cross border culture acquisition in history. Other prominent billion dollar acquisitions include Comscore’s acquisition of Rentrak, which reached a post money valuation of $1.2B.
• Within AdTech and Digital Marketing, the M&A environment remained favorable. In Q1, AdTech totaled 131 deals, capital invested amount to close to 3 billion in this sector alone. and in Digital Marketing, a total of 169 deals were recorded for a total deal value of 2.4 Billion, for a median deal size of $25.27 mm.

Digital Media M&A Drivers 2016

As the culmination of most of the trends of the past 5 years, there are several big trends that are happening this year in digital media.

Global Mobile: The rapid adoption of mobile devices and changes in communication and messaging is altering the shape of traditional business models. These new forms of communication and messaging are bringing new types of multichannel and multimedia content. For example, in the print market business model is changing because of the growing adoption of mobile devices, they are moving into creating new print requirement and opportunities such as mobile print solution and loud printing services. (source: Gartner) Mobile is everywhere and has bypassed desktop/laptops all together. Companies are starting to project brand DNA in mobile applications, and user experience has never been more critical.

Content Distribution: While content is still vitally important, content distribution becomes more critical than ever. Getting content onto the mobile devices of your audiences has become the next big frontier. Brands are experimenting new distribution platfoms like Snapchat, while other distribution platforms like Netflix is getting into content business. Such trends will continue grow in 2016, as music, video, movies, TV, photos, long-form articles, advertising will rise and fall with effective and efficient distribution.

Big Data Big Intelligence: Big data can be a big mess without an intelligence plan. Data needs to be turned into actionable business insights in order to truly aid decision-making. In addition to providing insights, such intelligence can drive content and distribution.

Virtual Reality: VR is becoming this year’s digital media headline story. We know Facebook acquired Oculus for $2 billion in 2014, but Oculus is not alone. Virtually all major consumer electronics giants will flood the market with millions of permium VR headset at price points that will drive adoption akin to the early days of game consoles. For major studios and the creative community in general, VR presents a tantalizing new mega-commercial opportunity to thrill consumers with new forms of story-telling, such as Jaunt, a bay-area company that closed a massive $65 million round of financing in 2015 from the likes of media giants Disney and ProSeiben, made the biggest splash on the creator side.

Over-the-Top Content and Multi-Platform Networks: Last year, NBC invested $200 million into Vox media and another $200 million in Buzzfeed, it went all-in with OTT. It also announced a stand-alone subscription service, Seeso in Jan, 2016. Another trend to look for is media companies move beyond YouTube into the land of Facebook and Snapchat. There’s gold in those mobile-first vertical hills populated by a particularly rabid and underserved digital-native customer base.

You can download the complete report here: Digital Media M&A Update (Q1 2016)

Solganick & Co. is a leading investment bank and M&A advisory firm focused exclusively on the technology and digital media industry sectors. For more information go to: www.solganickco.com

Software M&A Update, Q1 2016

Solganick & Co. issues its Software M&A Update for Q1 2016

April 2016 - Solganick & Co. issues its latest software industry M&A update for Q1 2016. The following summarizes the key highlights of the report:

• Despite a broader global M&A slump, activity within Technology remained robust for the first quarter. According to Dealogic, as of March 2016, global Technology M&A stood at $71.4bn with 1,535 deals, the highest YTD level since 2000 and up 53% on 2015 YTD ($46.6bn). It is the second most targeted sector entering 2016, accounting for 12% of global M&A volume and 26% of activity.
• In particular, deal activity within the U.S. software segment increased. 406 deals with a total invested capital of $26.09 bn was recorded for the U.S. Software industry in Q1 2016. This represents a growth of 48.9% in value compared to Q1 2015 (473 deals with total invested capital of $17.52 bn).
• M&A activity within the software segment was led by a few mega transactions this quarter. They include: Microsoft’s acquisition of Xamarin, Resmed’s acquisition of Brightree, Cisco’s acquisition of Jasper Technologies, and Insight Venture Partner’s buyout of Diligent Corporation (see M&A and Buyout Spotlight sections for more details).
• The median Implied Enterprise Value/Revenue and Implied Enterprise Value/EBITDA for the U.S. Software Industry stood at 3.4x and 11.3x respectively.
• Even as the global M&A landscape experiences a gradual cool down and deals re-balance towards a more sustainable level, we expect deal activity within Technology, particularly Software, to remain robust. In the Software segment, we have identified two key technological trends that are expected to drive consolidation and/or acquisitions: the emergence of the Internet of Things (IoT) and Cognitive Technologies or Artificial Intelligence (AI).

You can read more and download the complete report here: http://www.solganickco.com/solganick-co-issues-software-ma-update-for-q1-2016/

Solganick & Co. is a leading boutique investment banking and M&A advisory firm focused exclusively on the software, IT services and digital media industry sectors. For more information, go to: www.solganickco.com

Internet and Digital Media M&A Update (January 2015)

Merger & acquisition deal values in digital media, information & technology rose 48% in 2014 compared with 2013. The aggregate total value of announced M&A deals rose to $224 billion in 2014 from $151 billion in 2013. There were approximately 2,240 acquisitions announced in digital media, information & technology last year -- up from 2,020 in 2013 -- and activity should continue to pick up in 2015.

Agency & marketing, information and digital content were the top three most active sectors last year, remaining steady from 2013 and 2012. Software, mobile, and digital content provided higher exit valuations in 2014. Announced deals in software represented $48 billion or 21.7% of the total -- up from $27 billion and 17.7% in 2013 -- followed by mobile, digital content and information, evenly distributed and each accounting for between 17.8% and 15.0% of the total.

Facebook's WhatsApp acquisition for $19.7 billion substantially increased the value of mobile M&A’s. While WhatsApp represents the largest deal, there were 48 M&A transactions above $1 billion in deal value last year, accounting for 61.9% of total reported deal value, compared with 34 transactions in 2013, accounting for 59.2% of total deal value. There were 28 deals in search and digital media sectors that included search, search engine optimization or paid-search marketing, and 178 deals categorized as digital agencies.

Google, Yahoo, Publicis, and WPP Groupe were the most active acquirers in 2014.

Overall, 2014 was an active year in the advertising technology sector, with 100 M&A transactions representing $7.5 billion in value, more than 3x the value of deals in 2013. Publicis Groupe's acquisition of digital agency Sapient for $3.7 billion was announced in November 2014. With advertisers wanting to use fewer vendors, we expect to see an increase of M&A activity around larger companies looking to gobble up smaller ones with specific services, as they attempt to become full-service providers.

The largest ad tech deal in 2014 was Alliance Data's $2.4 billion acquisition of Conversant, formerly known as ValueClick, an affiliate marketing firm that enables companies to personalize ads and target users based on previous Internet searches. Conversant's technology will become an extension of Alliance Data's loyalty marketing services capabilities.

Yahoo’s $640 million acquisition of video ad provider BrightRoll (Nov 2014) was another move into video advertising.

M&A will not slow in 2015. We see all of the economic elements for a strong M&A marketplace for 2015: an improving economy, strong balance sheets, low interest rates, current IPO filings and a rising stock market.

For the complete report go here: Internet and Digital Media M&A Update (January 2015)

M&A Update - IT Services, Cloud and Managed Services (August 2014)

Mergers and Acquisitions (M&A) deal volume increased by 39% year-over-year (YOY) and 15% successively to 872 deals and at corporate volume reported 806 deals, reporting its fourth consecutive increase, up 17% successively and year-over-year rise of 41%. Cloud and smart mobility have been responsible for about 42% of technology deals, with the global technology M&A rising by 57% to (USD) $52.4 billion this year, according to a new report by Ernst & Young. The report noted that the disclosed value of M&A deals rose by 70% to $119 billion during the second half of 2014, while the value dropped 21% in 2Q14 compared to Q1.

During the quarter, private equity (PE) volume dropped by 6% consecutively following five consecutive quarterly increases, while rose 16% YOY and its aggregate value reached $5.9 billion, declined 55% sequentially and 58% YOY.

In addition, the average value of PE deals reached $266 million, reporting 41% drop sequentially and 58% YOY, marking the lowest level in three years. However, the overall average deal value declined 24% consecutively and 7% YOY to $231 million, the report added.

Overall, global technology M&A is on path for a record year in 2014. Technology companies are cash rich, and interest rates are low. Buyers are in full force looking to acquire companies that are strategic to their business and growth initiatives. In addition, the IPO market has open its gates again in 2014 which feeds further M&A transactions.

There were several M&A transactions announced within the IT services, cloud and managed services sectors in July and August 2014. We expect it to continue into the rest of 2014 and into 2015.  Cloud services firms are in high demand for private equity firms because they like their recurring revenue and longer term contracts. We have been in recent contact with a number of private equity firms that continue to express a strong interest in acquiring cloud services firms.

We are seeing average valuation ranges from 0.8x to 1.0x TTM revenues and 6.0x – 9.0x TTM EBITDA for most IT services firms including project based systems integrators and IT consulting firms. The more profitable, the larger the revenues and higher amounts of recurring revenue have commanded higher transaction premiums. Cloud, managed and hosting services providers are currently commanding a an average valuation ranging from 1.9x – 2.3x of TTM revenues and 7.2x – 9.4x TTM EBITDA multiples YTD 2014.

M&A Valuation Multiples - August 2014

	IT Services	Cloud, Managed and Hosting Services	VAR
Enterprise Value/Revenue (ttm)	0.8x – 1.0x	1.9x – 2.3x	0.2x – 0.4x
Enterprise Value/EBITDA (ttm)	6.0x – 9.0x	7.2x – 9.4x	6.0x - 7.7x

For the full report, please go here: http://generationequityadvisors.com/wp-content/uploads/2014/08/GEA-IT-Services-Cloud-and-Managed-Services-MnA-Update-Aug-2014.pdf        

First Half 2014 Shows Further Upswing in Technology M&A Transactions

We noted a further uptick in announced mergers and acquisitions for technology companies in Q2 2014.  Technology mergers and acquisitions worldwide more than doubled in the first half of 2014, with deals worth $383.4 billion in that span, up 122% from the year-earlier figure, according to Mergermarket.

The majority of technology deals happened in the U.S., trailed by the Asia Pacific.

More than half of the M&A activity this year was during Q2 2014. The value of M&A's in Q2 tripled to $200.9 billion from $67 billion in Q2 2013.

Yahoo! (NASDAQ:YHOO), Google (NASDAQ:GOOG) and Facebook (NASDAQ:FB) have been especially active in M&A this year as they all expand into new businesses and technologies. The telecommunications sector also showed a heavy uptick as it further consolidated.


For more information regarding Technology M&A, please contact us: mergers@generationequityadvisors.com


Generation Equity Advisors is a Los Angeles based technology and digital media M&A advisor and investment banking firm. Its professionals have completed over $20 billion in M&A transactions and are experienced investment bankers. For more information about Generation Equity Advisors, please go to: www.generationequityadvisors.com

Technology Mergers on Upswing in Q1 2014

2014 is off to a strong start for technology M&A announcements. We noted a number of new transactions announced in January and early February 2014. According to several M&A research reports and surveys, including KPMG's 2014 M&A Survey, we expect a solid year for technology M&A announcements.  These efforts will reflect a better global economy and market conditions than were available in previous years. In addition, the top reasons as to why we will see more M&A transactions in 2014 include:

• Large amounts of cash sitting on corporate balance sheets and in PE funds
• Opportunities in emerging markets
• Availability of credit and favorable terms
• Improved customer (and executive) confidence
• Improving equity markets
• Improved employment numbers
• Recovery of certain industry sectors, including financial services

A well executed integration plan, reasonable deal price/value, effective due diligence and positive economic conditions are all important factors in M&A success.

We see an uptick in dealflow for the first half of Q1 2014 within software, IT services, cloud services, digital media and financial technology and expect it to increase further.

Due to this expected uptick for M&A in 2014, Generation Equity Advisors plans to continue its growth and efforts to lead and advise on technology M&A transactions by adding additional talent and expertise to its experienced staff.  In addition, it plans to form strategic partnerships with companies that can enhance its M&A reach to the global markets.

For further information, please contact its M&A team at mergers@generationequityadvisors.com

Tarang Shah will be a speaker at the Mobile Host Show - The Mobile Summit for Hospitality and Retail

Tarang Shah, Managing Director at Generation Equity Advisors, will be speaking at the 2013 Mobile Host Show - The Mobile Summit for Hospitality and Retail held in Las Vegas, NV on May 23, 2013 at The Mirage Hotel and Casino.



He will be covering the subject "The Future of Mobile Payments for Hospitality and Retail." Mobile payments, also known as mobile money or mobile wallet, are expected to be one of the greatest growth areas in the near future. We will sort through all the options that compose mobile payments and what you can expect from future technologies that will drive sales.


The presentation will be posted on the www.generationequityadvisors.com website shortly after the event.


About Tarang Shah

Tarang Shah is a Managing Director at Generation Equity Advisors, a Los Angeles-based independent investment bank and mergers & acquisitions advisory firm focused exclusively on technology companies, where he covers the mobile technology sector.  He is a former Softbank venture capital professional as well as a former program manager for Ericsson,  Qualcomm and NEC. Mr. Shah holds two degrees in Engineering and two MBA degrees. You can contact Tarang Shah at tshah@generationequityadvisors.com for more information.

Generation Equity Advisors Expands its Technology M&A team, hires Tarang Shah and Nicolas Teboul

Los Angeles, CA - Generation Equity Advisors, LLC ("GEA") a leading technology and digital media focused investment bank and M&A advisor, announced the hiring of two new professionals to expand its M&A practice.  It hired Tarang Shah as a Managing Director and Nicolas Teboul as a Vice President.

"We are very pleased with our latest additions to our technology M&A team," noted Aaron Solganick, CEO and Founder of Generation Equity Advisors.  "Our efforts to build a premier technology focused M&A firm is on track. Both Tarang Shah and Nicolas Teboul will add significant value to our clients M&A and growth initiatives."

Prior to joining GEA, Tarang Shah was a venture capital and investment banking professional and author of an entrepreneurship and venture investing book, “Venture Capitalists At Work” (http://amzn.com/B006C9EM1Q). He is currently advising growth companies on fundraising, growth strategy and M&A.

At SoftBank Capital, a venture capital fund, Mr. Shah helped with investments in mobile, digital media and enterprise software startups totaling $50 million. In his venture career, he has reviewed 1,000+ startups and served as a board member and CEO advisor for dozen plus startups. His primary responsibility at SoftBank included deal sourcing, diligence and support of the U.S. west coast and to provide business development support to software and mobile portfolio companies. He worked side by side with the fund partners in all aspects of deal lifecycle including sourcing, diligence, term sheet negotiations, board participation, growth strategy and exits and acquisitions.

He led diligence for SoftBank Capital’s investments in ThumbPlay (mobile content), xAD (mobile search/directory), AdInFuse (mobile advertising), PureVideo (web video), Foomojo (virtual pets), DanceJam (dance video), Insider Pages (user reviews; acquired by Citysearch) and Communicado (enterprise VoIP) and served as a Board observer for AdInFuse (acquired by Velti; LSE-AIM:VEL), Foomojo, Communicado (acquired by Americom and Tone Software) and DanceJam.

At Bank of America, Tarang served as SVP of Startup Innovation and was responsible for strategic partnership development and risk/opportunity assessment of the tech startups in mobile payment, commerce and other emerging technology verticals. He also built a startup risk assessment practice leveraging his venture model and conducted 80+ startup/private vendor risk diligences.

Mr. Shah started his career as a product marketing manager for Qualcomm’s CDMA technology where he marketed CDMA technology to wireless carriers in Asia Pacific and won two product marketing awards. At Ericsson, he was a technical marketing manager and marketed 3G technology to customers worldwide. He was promoted to lead Ericsson’s first 3G (CDMA2000) wireless system of $200M in R&D as a systems product manager, which he helped bring to market with leading customers like China Unicom and Tata Wireless (India). At Ericsson, he was a go-to-guy for business cases for new products and technologies and secured funding for CDMA450, a $15M R&D product line. Tarang led commercialization of this product line with a cross-functional team of 30 members and secured customer trials around the world before joining SoftBank Capital in 2005.

He passed the CFA Level II in 2005 and holds MBA from Thunderbird and an MBA and BSEE from Gujarat University (India). He has developed a venture model, Startup Analysis Model (SAM) for assessing success potential of the startups. Tarang is also co-founder of a VC consulting firm Ariants and startup assessment firm Startup Meter (www.startup-meter.com).

Mr. Shah is based in Newport Beach, CA and will cover the mobile software, applications and internet sectors.

Nicolas Teboul is an experienced technology investment banker and joins GEA from Demers Beaulne (Montreal), G4 Solutions (Montreal) and Alternative Finance (Paris) where he focused on the origination of and execution of technology industry mergers and acquisitions. 

Mr. Teboul earned an MBA degree from Cornell University, a Master's degree in Economics from Institut d’Etudes Politiques de Paris (France) and a Bachelor's of Administration degree in Corporate Finance from Universite Paris Dauphine, Paris (France).

Mr. Teboul will be based in both Ithaca, NY and Montreal, Canada and will cover technology companies in the Northeast U.S., Canada and France. He is fluent in French and English.

About Generation Equity Advisors, LLC

Generation Equity Advisors is a leading technology and digital media focused investment bank and M&A advisor. Based in Los Angeles, CA, the firm specializes in providing M&A origination and execution for software, IT services, digital media, internet and mobile software companies globally. Its professionals have completed over $20 billion in transactions to date and are experienced M&A professionals.

www.generationequityadvisors.com

www.techmediamergers.com

Private Technology Companies Leading M&A with 2,277 Deals Completed in 2012

According to research and analytic's firm CB Insights, private technology firms announced 2,277 M&A deals globally in 2012. In deals with disclosed valuations, $46.8B was paid for private technology companies. 30% of deals account for 80% of that value. Eight private companies purchased for more than $1B in 2012 with 6 being US-based. The year noted 190 M&A transactions per month on average for technology companies.

In summary, the following technology M&A trends were reported in 2012:

• 76% of technology companies acquired in 2012 had not raised institutional investment prior to acquisition.
• More than 50% of M&A deals are less than $50M and more than 80% of the acquisitions are less than $200M.
• (Only) Eight private technology companies acquired for $1B+
• California noted the most private technology companies acquired in 2012, followed by New York (#2) and Texas (#3).
• Google and Facebook were the most active acquirers announcing 12 acquisitions.
• 94% of acquisitions were made by strategic buyers. PE firms and financial sponsors comprised a small 6% of deal volume.
• The UK led international markets with the most private technology company acquisitions in 2012 followed by Canada (#2) and India (#3).
• On average, companies raised $25.4M and were acquired for an average of $172.0M.
• Medians: companies raised $16.6M and were acquired for $73.5M (medians are a better measure).
• eCommerce/mCommerce announced the highest level of acquisition activity followed by ad related businesses. Fifteen different industries saw more than 30 acquisitions showing the diversity of technology sub-areas seeing activity.

Overall, we expect the technology M&A market to improve in 2013. Especially in the U.S. where its economy is in recovery mode.

IT Services M&A Update - Q4 2012

Generation Equity Advisors has published its latest IT Services M&A Update for Q4 2012.

IT Services M&A Transaction Highlights

Buyers in the IT Services sector were very active in Q4 2012.

Highlights of IT Services M&A transactions in Q4 2012 include:

ü  CSC sells three of its divisions including its Italy unit, Credit Services unit and its Australian IT Staffing unit.

ü  Deloitte acquires two companies: The Monitor Group and Recumbinant Data Corp.

ü  Cognizant acquires six C1 Group subsidiaries in Germany and Switzerland.

ü  Hitachi Consulting acquires Celerant Consulting (Jan 2, 2013).

ü  AON Hewitt acquires Workday specialist IT services firm OmniPoint.

ü  PriceWaterhouseCoopers acquires Govt. IT services firm Ray Group International.

We believe companies in the IT Services sector will continue to consolidate in 2013 as the economy improves globally and uncertainty is settled.  China and Brazil are likely active buyers of U.S. based companies looking to expand. Although, we noted a number of U.S. based IT Services firms active in 2012. We expect this trend to continue in 2013.

Q4 2012 – M&A Update

Q4 2012 was not as disappointing as Q2 and Q3. Comparing October and November 2011 to the same period in 2012, announced deal value increased by 29% to US$394 Billion. Deal announcements, which fell by 15% to 1,801 in the period, have been slower to recover. Nonetheless, there were a few pockets of noteworthy activity – the U.S. Presidential Election followed by uncertainty in the U.S. “fiscal cliff” negotiations in Congress did not help M&A activity overall.

Technology companies, striving to keep their competitive edge alongside industry giants like Apple and Google, continue to use M&A to expand in-house innovation and operational capacity with an increased focus on more transformative acquisitions.

Cisco Systems announced three acquisitions in November 2012 alone and five total acquisitions for Q4 2012. These deals, carrying sizeable price-tags, aim to broaden Cisco’s networking equipment capabilities. The company’s largest acquisition helped Cisco move to acquire cloud computing company Meraki for US$1.2 Billion. The deal will help to expand Cisco’s Wi-Fi deployment models and reduce service costs to mid-market clients.

For the complete report, go to:  www.generationequityadvisors.com

 

Generation Equity Advisors, LLC

10940 Wilshire Blvd, Ste 1600

Los Angeles, CA 90024

 

Internet and Digital Media M&A Update - November 2012

We noted a number of recent M&A and financing announcements in the Internet and Digital Media industry sectors over the past few months.

 

Most notably, the following transactions were announced:

 

• Priceline to acquire Kayak for $40/share in cash & stock, or $1.8 billion (Nov 8, 2012).
• Eyeing An IPO, marketing software giant HubSpot raises $35M For international growth, M&A and more from Altimeter Capital, Cross Creek Capital, and previous investors. It has raised a total of $100 million since its founding in 2006 (Nov 5, 2012).
• Disney acquires Lucas Film for $4.05 billion (Oct 30, 2012).
• Yahoo! acquires Stamped for an undisclosed amount (Oct 26, 2012).
• Yelp pays $50 million to acquire its European rival, Qype (Oct 24, 2012).
• Microsoft invests $300 million in Nook Media (Oct 5, 2012).
• Google acquires Frommers, Viewdle, Snapseed, Nik Software, Wildfire Interactive and VirusTotal.com (Aug - Nov 2012).
• Facebook acquires Threadsy, a social aggregator and maker of social marketing tool Swaylo (Aug 24, 2012).
• IAC acquires About.com for $300 million from the New York Times (Aug 26, 2012).

 

As the end of the U.S. election clears the path to economic certainty again, we believe companies will pick up the M&A pace as large amounts of cash sits idol on balance sheets.

 

We expect 2013 to show an increase in the amount and number of M&A and IPO transactions announced in the Internet and Digital Media industry sectors.

About Generation Equity Advisors

Generation Equity Advisors is an independent investment banking and M&A advisory firm focused on the technology and digital media industry sectors exclusively. Our expertise is providing mergers and acquisition advisory services to companies, entrepreneurs, private equity firms and shareholders globally. We started in 2009 with the idea to focus on specific industry sectors and to avoid any "large firm" conflicts. We have successfully completed several M&A transactions for our clients and continue to grow into a leading global technology and digital media focused M&A advisory and investment banking firm.

Our professionals have completed over $20 billion in transactions and are highly experienced in Mergers and Acquisitions, Corporate Finance and Capital Markets. All professionals have worked with large tier-one and middle-market investment banking firms and have many years of experience managing all phases of the M&A transaction process from start to finish.

For More Info:  Generation Equity Advisors

Q2 2012 - Private Equity Investments and Exits Decrease

The latest research from PitchBook - Merrill Datasite shows that PE firms have reported a continuing decrease in both their investments and exits as of Q2 2012.

• Deal volume fell by 17% in 2Q 2012 compared to the previous quarter and has been in a steady downward trend for more than a year.
• The $51 billion invested during 2Q was the lowest for any individual quarter since 2009.
• PE firms have demonstrated an increased focus on B2B, IT, and Healthcare investing.
• Both exit volume and capital exited plummeted in 2Q 2012, declining by 16% and 42% respectively, compared to the previous quarter.

The amount of capital invested in Q2 decreased by 8% from the previous quarter but the more drastic decline came in deal volume, which fell 17%. When comparing Q2 2012 to the same period in 2011, the results are even worse: a decline of 39% in deal volume and 37% in capital invested. In fact, the $51 billion invested during Q2 was the lowest level for any individual quarter since the post-bubble year of 2009, and with just 303 deals, it was the worst quarter by
volume since before 2006.

Deal-making was fairly consistent throughout 2011, but levels have slipped through the first half of 2012. Compared to Q2 2010, deal flow was down 48% and capital invested declined 58% in Q2 2012. Halfway through the year, PE firms are on track to close just 1,332 deals in 2012, which would be the lowest level since 2003.

“For all of the headwinds facing PE and the economy at large, two irrefutable forces will continue to compel PE firms to action: the more than $430 billion in dry powder reserves and the more than 6,300 companies currently in portfolios,” says Richard A. Martin, Jr., Senior Director at Merrill DataSite. “Regardless of the macroeconomic environment, PE firms will have to act in order to exit longstanding investments and deploy capital before their investing window closes.”

In terms of capital, exit activity has been a mixed bag so far in 2012. The Energy industry has emerged as a definitive bright spot for PE exit activity. In the first half of 2012, PE firms sold 24 Energy investments for a total of $28.2 billion, which is already more than any year on record. Exit activity in Information Technology has been strong as well; firms have already realized more than $14 billion in exited investments in 2012, nearly surpassing the 2011 total. Furthermore, PE firms have already exited more Financial Services companies in 2012 than in all of 2011. On the other hand, 2012 is shaping up to be one of the slowest years in recent memory for both B2B and B2C. Halfway through the year, total exited capital in both of the industries is approximately one quarter of the amount reached in 2011.

To access the complete report (free), please go to the "Research" section at: Generation Equity Advisors

Generation Equity Advisors, LLC