Resources

Deal Maven
Volume 5, July 2013
Download PDF

Digital Media, Information & Technology M&A Review - H1 2013

Sector M&A Activity

M&A deal activity in Digital Media, Information & Technology increased nearly 40% in the first half of 2013 compared to the same period in 2012, reports Coady Diemar Partners, a leading boutique investment bank serving clients in these and other growth sectors. The total number of announced deals increased to 856 in the first half of 2013 from 613 in the first half of 2012.

On a dollar value basis $61.8 billion of M&A transactions for digital companies have been announced thus far in 2013 compared to $64.4 billion in the first half of 2012, a decrease of 4%. This compares favorably to a decrease of 9% in announced worldwide M&A value so far this year relative to the same period in 2012.

Sector M&A Transaction Stats

We track M&A deal activity in eight sectors of the Digital Media, Information & Technology market.

The three sectors with the greatest number of announced transactions were Agency & Marketing, Information and Digital Content, the same three most active sectors during the first half of 2012.


The three most active sectors in the first half of 2013 on a dollar value basis were Digital Content, Software and Information, the three largest sectors in the first half of 2012 as well.

The following pie charts present the transaction value and percentage of aggregate deal value for each sector for the first half of 2012 and 2013.


The three sectors that demonstrated the highest percentage increase in deal activity were Ad Tech & Services, Software and Mobile.

Transaction Size

Transaction data is reported or estimated based on industry sources for a relatively small percentage of total deal volume. For the first half of 2013, M&A purchase price data is available for 228 announced deals, 26.7% of the total, and for 245 deals representing 40% of transaction activity in the first half of 2012.

The chart on the top of the following page presents the number of announced transactions by different size groupings above $50 million for those transactions where purchase price data is available. There were 80 transactions greater than $50 million in the first half of 2013 compared to 119 for the same period in 2012. Transactions in excess of $50 million in value account for nearly 96.9% of announced and disclosed deal value in 2013 compared to 96.6% for the first half of 2012.


The largest transactions, those with a transaction value in excess of $1.0 billion, represent the majority share of total transaction value. There were 12 M&A transactions above $1.0 billion in deal value thus far in 2013, accounting for 68.4% of total deal value, compared to 16 transactions in the first half of 2012, accounting for 57.1% of total value.

Finally, approximately 18.2% of the deal value in 2013 is represented by transactions greater than $250 million and less than $1.0 billion in value, compared to 28% for the first half of 2012.

Transactions involving strategic acquirers represented 73.1% of the total aggregate reported deal value above $50 million thus far in 2013, compared to 82.3% in the first half of 2012, while Private Equity deals accounted for approximately 23.8% of the deal activity above $50 million in 2013 compared to 14.4% in the first half of 2012.

The Largest Deals

A chart of the top 10 largest announced deals thus far in 2013 follows.

The largest announced transaction this period is Comcast‘s buy-in of the remaining 49% stake in NBC Universal Media, sooner than originally anticipated, from GE for $16.7 billion. This price implies enterprise value multiples for the company of 1.7x LTM revenues and 9.3x LTM EBITDA.

The second largest transaction is the acquisition of publicly-traded BMC Software, a leading provider of IT management software solutions, for $6.9 billion by a consortium of private equity firms including Bain Capital, Golden Gate, Insight Ventures and the Government of Singapore Investment Corp. Enterprise value purchase multiples are estimated at 3.1x LTM revenues and 11.2x LTM EBITDA.


After the NBC Universal and BMC Software transactions, the other largest transactions reflect continued consolidation in the software and digital media sectors by established industry participants and two private equity deals for private companies controlled by other private equity firms.

Most Active Acquirers

The three most active acquirers during the first half of 2013 were Yahoo!, WPP and Facebook.


The big change in this line-up is Yahoo!, with 12 deals, reflecting new leadership and a renewed commitment to re-gaining leadership in both digital media and digital advertising technology. Yahoo‘s largest announced acquisition of Tumblr for $1.1 billion (substantially all cash) is primarily designed to grow Yahoo‘s combined audience to more than one billion visitors monthly. Tumblr is one of the fastest- growing digital media networks with more than 300 million monthly unique visitors and 120,000 daily signups. Yahoo! has also acquired a number of advertising technology companies with a particular focus on mobile.

WPP was the second most active acquirer during the first half of 2013 with 10 announced M&A transactions. WPP continues to acquire advertising and marketing agencies and technology firms around the globe.

Finally, Facebook and Dentsu, both with 6 announced transactions, were tied for the third most active acquirer thus far in 2013. Facebook continues its active acquisition program; it was the most active acquirer in the first half of 2012, notably acquiring digital ad-server Atlas from Microsoft. Dentsu joins WPP, IPG and Omnicom, all among the top 10 most active acquirers, acquiring smaller ad and marketing agencies around the globe with increased aggregate deal activity among them compared to 2012.

The top 10 most active acquirer list also includes a number of leading digital media companies and typically active acquirers, including Google, Twitter and IAC.

Deal Activity Over Time

The chart below presents quarterly M&A deal activity in Digital Media, Information & Technology since 2012 for both number of transactions and aggregate deal value.


The second quarter of 2012 was the most active from a transaction value perspective while the first quarter of 2013 was the most active from the perspective of total number of announced deals. There is considerable variability in sector activity level from one quarter to another.

Wrap-Up

M&A deal activity in Digital Media, Information & Technology increased nearly 40% the first half of 2013 compared to the same period in 2012. Announced deal value declined 4% compared to a 9% decline for the worldwide M&A market. Strategics were the most active acquirers during this period, representing 73.1% of announced transactions with available data although private equity‘s share of announced transaction value increased from 14.4% to 23.8%, when compared to the first half of 2012.

M&A transaction activity in Digital Media, Information & Technology is driven by factors unique to each acquirer and seller and also by competitive dynamics including fundamental shifts in consumer behavior associated with internet usage, mobility and the adoption of social media. We have written widely on these topics and encourage a visit to www.coadydiemar.com to access Deal Maven, Media Maven, RandomBits and other publications via the Resources tab.

About Coady Diemar Partners

Coady Diemar is a leading boutique investment banking firm providing mergers and acquisitions, private capital markets and strategic advisory services to growth companies in digital media, information & technology and other industries.

We offer a breadth of transaction experience and expertise, industry knowledge and institutional relationships and provide clients creative solutions and unparalleled access to ideas and capital. We are acutely sensitive to the specific and unique requirements of each client and opportunity.

Visit our website www.coadydiemar.com to learn more about Coady Diemar Partners and to download presentations on digital and traditional media and technology and also the M&A and private capital markets. Contact Colin Knudsen at colin@coadydiemar.com or Chris Ensley at chrise@coadydiemar.com for additional information or to arrange a meeting.

If you would like to be added to our email distribution list for periodic industry and market commentary, please contact Arian Omid at arian@coadydiemar.com.

This announcement is neither an offer to sell nor a solicitation to buy securities. This announcement appears as a matter of record only.


TOP