State of Technology Capital Markets October 1, 2015
LBO Purchase Price Multiples & Equity Contribution Large Corporate Purchase Price Multiples 2006 2007 2008 2009 2010 2011 2012 2013 2014 1H15 2Q15 0.0x 2.0x 4.0x 6.0x 6.6x 8.0x 7.9x 8.1x 8.2x 8.3x 8.4x 10.0x 8.8x 9.3x 9.6x 9.7x 9.8x 12.0x Senior Debt/EBITDA Sub Debt/EBITDA Others Equity/EBITDA Source: Capital IQ Middle Market (1) Purchase Price Multiples 2006 2007 2008 2009 2010 2011 2012 2013 2014 1H15 2Q15 0.0x 2.0x 4.0x 6.0x 8.0x 7.9x 8.5x 8.6x 10.0x 8.9x 8.8x 9.1x 9.5x 9.8x 9.8x 10.1x 10.5x 12.0x Senior Debt/EBITDA Sub Debt/EBITDA Others Equity/EBITDA Source: Capital IQ Note: (1) Middle Market defined as businesses with less than $50M of EBITDA 2
Average Debt Multiples of Middle Market LBO Loans (1)(2) Middle Market LBO Debt Multiples 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 1H15 2Q15 0.0x 1.0x 2.0x 3.0x 3.3x 3.4x 4.0x 3.8x 3.8x 4.0x 4.1x 4.2x 4.3x 4.3x 4.5x 4.5x 4.7x 4.7x 5.0x 4.8x 4.8x 4.9x 5.1x 5.2x 5.3x 5.6x 6.0x 1LD/EBITDA 2LD/EBITDA Other Sr. Debt/EBITDA Sub Debt/EBITDA Source: Capital IQ Note: (1) Middle Market LBO loans are on purchase price with less than $50M EBITDA (2) Excludes media and telecommunication loans; EBITDA adjusted for prospective cost savings or synergies 3
Middle Market Private Equity Landscape U.S. Deal Flow by Year ($ in billions) $500 $400 $300 $200 $399 $352 $303 $288 $274 $261 $229 $100 $204 $159 $84 $0 1H’15 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015* Capital Invested ($B) # of Deals Closed Source: Pitchbook U.S. Private Equity Fundraising ($ in billions) $200 175 175 145 $160 138 106 $120 83 $80 $140 $124 $113 $120 $106 $40 $66 $- 2010 2011 2012 2013 2014 2015 Est. 2015 First Half Fundraising Funds Raised # of Funds Closed Source: Pitchbook 4
Technology-Related Equity Outperforms Market DJIA, NASDAQ Composite and S&P 500 Comparison 120 China Oil & Gas Drop and Concerns Correction 115 110 105 +0.8% 100 (4.0%) 95 (6.6%) 90 85 80 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 ^SPX - Share Pricing ^DJC - Share Pricing ^COMP - Share Pricing Source: Capital IQ 5
Overview of Venture Activity Global Technology Venture Activity by Quarter ($ in millions) 3,873 3,852 3,767 4000 $60,000 3,692 3,718 3,666 3,687 3,477 3,308 3,250 $50,000 3,030 2,980 2,898 $51,329 3000 2,461 $40,000 $43,219 $38,827 $37,912 $36,980 2000 $30,000 $27,953 $20,000 $22,866 $20,927 1000 $20,136 $18,793 $18,685 $17,486 $17,478 $16,747 $10,000 0 $0 Q1'12 Q2'12 Q3'12 Q4'12 Q1'13 Q2'13 Q3'13 Q4'13 Q1'14 Q2'14 Q3'14 Q4'14 Q1'15 Q2'15 Internet Mobile & Telecom Fin Tech Software (Non-Internet) Ad Tech Other Source: CB Insights Commentary Despite a slight decline in global YTD 2015 volumes, funding activity within the Technology sector has steadily increased since the recession 2014 represented the largest year for VC activity within the Technology sector since 2000 The total value of the VC funding in 2015 is on pace to break 2014’s record year of $142 billion - Source: CB Insights 6
Global Software and Technology Services M&A Activity Deal Volume by Buyer Type June YTD Deal Volume by Buyer Type Buyer Not 1,400 Cross-Border Disclosed 106 Financial 7% 1,200 90 83 1% 84 91 1,000 Financial 70 101 71 70 69 68 62 66 6% 76 800 1,227 Cross-Border 600 1,144 1,140 Strategic 936 930 912 932 869 836 939 953 944 1,077 1,085 13% 400 200 Strategic 0 73% Strategic Buyer Financial Buyer Source: Capital IQ Source: Capital IQ Commentary Strategic buyers have consistently accounted for 90%+ of Software and Technology Services transactions since 2012 Strategic buyers have also accounted for approximately 75% of the deal value, on average, since 2012 - Deal value for transactions led by strategic buyers rose to $34.2B in Q2 2015 from $28.0B in Q2 2014 - Financial buyers led an all-time high 106 M&A transactions in Q2 2015 compared to 91 in Q2 2014 and 76 in Q2 2013 Source: Capital IQ 7
Global Software and Technology Services M&A Activity (continued) Deal Volume by Sub-Sector Notable Announced 1H 2015 Transactions 1,400 96 73 81 82 86 Internet Software 1,200 54 45 Application Software 71 44 69 69 211 85 78 64 86 44 64 and Services 1,000 64 228 64 240 52 46 196 189 47 46 48 47 53 51 43 188 194 183 307 800 154 202 172 187 176 287 169 272 293 271 244 600 246 230 266 Acquirer 231 251 245 243 230 400 586 665 563 601 549 490 443 472 468 459 440 431 200 401 406 0 Target Transaction $589 $350 $200 $438 Internet Software and Services Application Software Value Million Million Million Million IT Consulting and Other Services Data Processing and Outsourced Services Other Source: Capital IQ Commentary Internet Software and Services has represented the largest category of Software and Technology Services M&A activity, accounting for approximately 50% of total transactions since 2012 Transaction volume has grown to 665 in Q2 2015 compared to 549 in Q2 2014 and 406 in Q2 2013 - Internet Software and Services and Application Software have consistently remained the top two sectors in terms of deal value Deal value totaled $39.0B for Internet Software and Services and $10.1B for Application Software in Q2 2015 - Source: Capital IQ 8
Global Software and Technology Services M&A Activity (continued) Buyer Deal Volume by Region Increasing Demand from Asian Strategics 1,400 Q-o-Q Notable Recent 82 74 Compounded 88 Transactions Involving 54 62 1,200 76 52 Growth by 36 65 Asian Strategics 42 66 56 60 63 69 163 197 214 200 283 57 83 1,000 35 Region 30 73 50 25 43 35 27 33 99 135 110 126 111 114 158 155 147 30 25 (’12 - YTD ’15) 800 323 304 358 341 333 Acquirer 294 292 288 276 257 259 249 294 289 US & 600 0.6% Canada 400 528 483 492 496 464 464 485 465 509 586 532 536 558 573 200 Europe 0.9% Target 0 Asia / 7.8% Pacific Transaction $410 $219 United States and Canada Europe Value Million Million RoW 5.3% Asia / Pacific Rest of World Buyer Not Disclosed Source: Capital IQ Source: Capital IQ Commentary US and Canada based buyers lead M&A activity in the Software and Technology Services industry, accounting for approximately 48% of total global deals since 2012 Transactions based in the US and Canada have accounted for approximately 46% of total deal value since 2012, representing $27.8B in Q2 2015 compared to $20.0B in Q2 2014 Source: Capital IQ 9
Recommend
More recommend
