Financial Technology M&A Update November 2015

Transcription

1 Technology and Digital Media Investment Banking M&A Advisory Financial Technology M&A Update November 2015 November 23, W. Sunset Blvd, Suite 500 West Hollywood, CA (310) TechMediaMergers.com

2 Solganick & Co. (formally Generation Equity Advisors, LLC) is an independent investment banking and M&A advisory firm focused exclusively on the global Software, IT Services and Digital Media industry sectors. We cover the Financial Technology sector comprehensively as a part of our larger Software and IT Services M&A practice. We advise buyers and sellers of companies and efficiently execute M&A transactions that help increase shareholder value. Our professionals have advised on $20+ billion in M&A transactions to date and have current clients and relationships globally with entrepreneurs, companies and leading private equity firms within the sectors we cover. Aaron Solganick, CEO Michael Okayo, Associate Darryl Tan, Analyst 8560 West Sunset Blvd, Suite 500 West Hollywood, CA (310) x101 aaron@solganickco.com Table of Contents: M&A Update Page 3 Global M&A Deal Value and Volume Page 4 M&A Activity: Financial Technology Page 4 Top Venture Capital Investors in Fintech Page 5 Publicly Traded Financial Technology Firms (Valuation Table) Page 6 Selected M&A Transactions Announced, Nov 2015 Page 7, 8 M&A Spotlight: All Web Leads / InsuranceQuotes.com Page 9 M&A Spotlight: Intercontinental Exchange / Trayport Page 10 Sources for our research and data include: Dealogic, Thomson Reuters, S&P Capital IQ, Company Websites, SEC Filings, MergerMarket, Mercer Capital, Berkery Noyes DISCLAIMER The information contained herein is of a general nature and is not intended to address the circumstances of any particular company, individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. We perform our own research and also use third party research. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. This is not an offer or recommendation to buy or sell securities nor is it a recommendation to merge, acquire, sell or exit a specific company or entity. We do not hold any equity or debt position in any of the securities listed herein as of the date of this report. Page 2

3 M&A Update Global M&A Volume Surpasses $4.2 Tr in 2015 Worldwide Global M&A volume surpassed $4.2 tr for the first time on record, the highest volume since 2007 ($3.59 tr). Third quarter M&A alone was over $1tr, marking the first consecutive trillion-dollar plus quarter for worldwide M&A in fifteen years. Technology is the most targeted sector in 2015 with YTD high volume of $631.7bn, 53% higher than the previous record high of $412.8bn set in Healthcare is second with a YTD record high volume of $549.4bn and a YTD record share of total M&A at 14%. 10bn+ deals accounted for 37% of global M&A volume, almost double the five year average share of 21%, and was the highest market share on record. United States U.S M&A volume has reached $2.03tr for 2015 YTD, a 55% increase from This accounts for 48% of the total global M&A of $4.22bn, the highest share since Despite expectations of an impending Federal Rate increase in late 2015 or early 2016, 2015 is already the biggest year for US targeted M&A deals. For the second consecutive period, Healthcare is the top industry for volume, with $454.9bn announced so far in Technology ranks second with $424.5bn, a more than double increase from 2014 YTD and also an annual record high volume. Dell's $65.7bn pending acquisition of EMC Corp, announced in October, 2015 is the largest deal in this sector. U.S inbound M&A totals $371.5bn in 2015, the highest on record. The highest inbound acquiring nation is Canada, with a record high of $85.5bn, followed by the U.K with $72.9bn, the highest volume since 2000 YTD ($77.6bn). Financial Technology Within the Financial Technology sector, highgrowth areas like mobile payments, personal wealth management and marketplace lenders continued to attract attention from investors and strategics. Within Fintech, IPO activity slowed in Q but M&A activity was up 7% in the first three quarters of 2015 compared to Total transaction volume in Q increased approximately 9% over Q2 2015, and total transaction value within the sector more than doubled. For Q3, 2015 the median revenue and EBITDA multiples for the sector stood at 3.2x and 15.2x respectively. The largest transaction to date in 2015 was Fidelity National's acquisition of Sungard Data Systems Inc., a software maker for financial institutions. The deal was valued at $9.1 billion. (See Solganick & Co. Q Software M&A update for more details) Page 3

4 Global M&A Deal Value and Volume Source: Dealogic M&A Activity: Financial Technology Deal Activity First Nine Months 2015 First Nine Months 2014 % Increase # of Deals % Total Reported Deal Value ($ mil) 34, % Median Reported Deal Value ($ mil) % Source: Mercer Capital Page 4

5 Top Venture Capital Investors in Fintech Investor confidence and interest in Fintech continued to climb in 2015 as Venture Capital firms remained active in the field. Since 2012, 992 different VC investors have participated in at least one of the 1,250 total rounds raised by Fintech startups, and roughly half of these investors have been active in the space. YTD 2015, Venture Capital invested in Fintech stands at a record $5.75 billion, compared to 2012 s $1.46 billion. As the median deal size reached $7.8 million this year, Fintech deals with VC participation have seen a median post-money valuation of more than $71 million. Below is a table of the top Venture Capital investors in global fintech space since 2012 : Firm Deal Count Description Blockchain Capital 24 Blockchain Capital is a San Francisco based, pioneer and premier venture capital firm focused on investing in Blockchain enabled technology companies. Sequoia Capital 22 Sequoia Capital is a venture capital firm focused on seed stage, early stage, and growth stage emerging technology companies across the U.S., China, India and Israel. Digital Currency Group 22 Digital Currency Group builds, incubates and seeds bitcoin and blockchain technology related companies. DCG operates and owns the industry s leading bitcoin brokerage firm, Genesis Trading, and the largest digital currency asset management firm, Grayscale Investments SV Angel 18 SV Angel is a San Francisco-based angel firm helping startups with business development, financing, M&A and other strategic advice. Index Ventures 17 Index Ventures is a Europe and San Francisco based global venture capital firm focused on making investments in information technlogoy and life sciences companies. Ribbit Capital 17 Ribbit Capital is a Palo Alto based venture capital firm that invests globally in unique individuals and brands who are aiming to disrupt financial services. Source: PitchBook, Crunchbase Page 5

6 Payments Publicly Traded Financial Technology Firms Valuation Table Ticker Stock Price Market Cap EV/Revenue EV/EBITDA American Express Company AXP B 3.24x N/A Blackhawk Networks HAWK B 1.60x 17.29x Discover Financial Services DFS B 5.40x N/A Fiserv, Inc. FISV B 5.00x 16.22x Global Payments Inc. GPN B 3.82x 17.57x Heartland Payment Systems HPY B 1.30x 16.68x MasterCard Inc MA B 11.20x 19.59x PayPal Holdings Inc. PYPL B 4.50x 21.08x Total System Services Inc. TSS B 4.08x 16.81x Vantiv, Inc. VNTV B 3.43x 15.27x VeriFone Systems, Inc. PAY B 1.92x 13.80x Visa Inc V B 13.62x 19.75x Average 4.93x 17.41x Median 3.95x 17.05x Software Ticker Stock Price Market Cap EV/Revenue EV/EBITDA DH Corp. (Davis + Henderson) DH B 4.04x 15.90x Intuit INTU B 6.16x 23.75x SS&C Technologies Holdings, Inc. SSNC B 10.72x 32.38x Average 6.97x 24.01x Median 6.16x 23.75x Transaction Processing and Outsourcing Ticker Stock Price Market Cap EV/Revenue EV/EBITDA ADP ADP B 3.48x 16.70x DH Corp. (Davis + Henderson) DH B 4.04x 15.90x Diebold, Inc DBD B 0.94x 12.33x Fidelity National Information FIS B 3.62x 13.96x Services Inc. Fiserv, Inc. FISV B 5.00x 16.22x Jack Henry & Associates JKHY B 4.89x 13.94x Average 3.66x 14.84x Median 3.83x 14.93x *All data and stock prices as of November 20, 2015 market close. Source: Capital IQ, Yahoo! Finance Page 6

7 Selected M&A Transactions Announced, November 2015 Announced Date Deal Summary Seller Buyer (or Investor) FinTech Sector Amount ($MM) 11/23/2015 Diebold has Agreed to Acquire Wincor Nixdorf for $1.8 bn 11/22/2015 Equifax Agrees to Acquire Veda for Approximately $1.8 bn 11/19/2015 Lightspeed POS Acquires SEOshop 11/19/2015 Velocity Acquires Uncover 11/19/2015 Blackhawk Network Acquires DIDIX Gifting & Promotions 11/17/2015 On-Site.com Acquires Ellipse Communications 11/17/2015 Optima Healthcare Secures Financing from Alpine Investors 11/17/2015 OptumRx Acquires AxelaCare Health 11/17/2015 AGF Acquires Majority Stake in FFCM 11/16/2015 Ultimus Fund has Agreed to Acquire Huntington Asset Services 11/16/2015 Ultimus Fund has Agreed to Acquire Unified Financial Services 11/16/2015 Undisclosed Investor has Agreed to Acquire NXSystems 11/16/2015 Upland Software Acquires Ultriva 11/16/2015 Nelnet has Agreed to Acquire 92.5% Stake in ALLO Communications for $46.25 mm Wincor Nixdorf AG Diebold Payments / 1,800.0 Veda Advantage Equifax Banking / Lending 1,800.0 SEOshop LightSpeed Retail Payments / Uncover Velocity Payments / DIDIX Gifting & Promotions Ellipse Communications Optima Healthcare AxelaCare Health Blackhawk Network Payments / On-Site.com Banking / Lending Alpine Investors Harvest Partners, LLC; OptumRx FinHCIT FinHCIT FFCM AGF Ltd Huntington Asset Services Unified Financial Services Ultimus Fund Banking / Lending; Ultimus Fund Banking / Lending; NXSystems Payments / Ultriva Upland Software Financial Mgmt ALLO Communications Nelnet Banking / Lending 46.2 Page 7

8 Announced Date Deal Summary Seller Buyer (or Investor) FinTech Sector Amount ($MM) 11/16/2015 Intercontinental Exchange has Agreed to Acquire Trayport for $650 mm in Stock 11/13/2015 Mercer Advisors Acquires Spruce Hill Capital 11/12/2015 ALPHAEON has Agreed to Acquire Integrity Digital 11/12/2015 Mergermarket Group Acquires C6 Intelligence 11/11/2015 Broadridge Acquires QED Financial Systems 11/11/2015 Necessity Funding Acquires Zoom-Cash's Legal Funding Payment System 11/11/2015 Tullett Prebon has Agreed to Acquire ICAP s Global Brokering Business for $1.7 bn 11/11/2015 HomeServices of America Acquires Allie Beth Allman & Associates 11/11/2015 Consortium of Investors Acquires Majority Stake in Fawry 11/10/2015 PracticeMax Acquires Medical Corporation of America 11/10/2015 Aspiriant and Hokanson Associates has Agreed to Merge 11/9/2015 Netcetera, Swisscard and Aduno Group forms SwissWallet 11/9/2015 GE Healthcare Acquires The Camden Group 11/9/2015 Verifone Systems has Agreed to Acquire InterCard AG Trayport Intercontinental Exchange Spruce Hill Capital Mercer Advisors Integrity Digital ALPHAEON FinHCIT C6 Intelligence Mergermarket Group Banking / Lending; QED Financial Systems Zoom-Cash's Legal Funding Payment System ICAP s Global Brokering Business Allie Beth Allman & Associates Fawry Medical Corporation of America Hokanson Associates SwissWallet The Camden Group Broadridge Necessity Funding Banking / Lending; Payments / Tullett Prebon HomeServices of America Egyptian-American Enterprise Fund; EME International; Helios Investment Partners; International Finance Corporation; MENA LTV PracticeMax Aspiriant Aduno Group; Netcetera; Swisscard AECS GE Healthcare Banking / Lending Payments / FinHCIT Financial BPO; Payments / FinHCIT InterCard AG Verifone Systems Payments / ,660.0 Page 8

9 M&A Spotlight Austin s All Web Leads Makes $165 Million Acquisition November 6, Austin-based All Web Leads said Friday that is has agreed to acquire InsuranceQuotes.com, Bankrate Inc. s insurance division, in a $165 million purchase that is due to close by year s end. Founded in 2005, the company has $110 million in annual revenue and has grown to become the largest private company in the industry. It currently has 400 employees in Austin, its sole location, and expects to grow its headcount with the acquisition, according to Cortney Johnson, the firm s chief financial officer. We are not quite ready to share our hiring projections but anticipate a significant number of local hires as we work through our integration, Johnson said in an to the American-Statesman. InsuranceQuotes.com, formerly known as Bankrate Insurance, has the industry s largest network of insurance agents and an online process that allows consumers to request and compare insurance quotes from multiple companies. Bill Daniel, CEO of All Web Leads, said the acquisition allows the firm to bring its premium products to many thousands of new insurance agents and agency customers across the U.S. We expect to bring all of our customers a level of performance and service surpassing anything they have experienced before, Daniel said in a written statement. After the acquisition is final, All Web Leads clients will include the top 20 U.S. property and casualty insurance carriers, most of the largest U.S. health insurers and more than 30,000 individual insurance agents and agencies in all 50 states. Kenneth Esterow, Bankrate s president and CEO, said the sale will allow Bankrate to focus on the firm s two core businesses credit cards and banking as well as growth opportunities in the senior-care market. Genstar Capital, a San Francisco private equity firm, acquired All Web Leads earlier this year. Source: Page 9

10 M&A Spotlight Intercontinental Exchange to Acquire Trayport from BGC Partners and GFI for $650 Million in Stock November 16, 2015 Intercontinental Exchange (NYSE: ICE), the leading global network of exchanges and clearing houses, announced today that it has entered into a definitive agreement to acquire Trayport for $650 million in ICE common stock. Trayport is a subsidiary of GFI Group, which was acquired by BGC Partners in March Trayport licenses its technology platform to serve brokers for electronic and hybrid trade execution primarily in the European over-the-counter (OTC) utility markets. The transaction will enable ICE to provide new services to the European OTC energy markets, including European power, natural gas and coal. Based in London, Trayport will continue to serve its customers - including energy producers and consumers, brokers, exchanges and clearing houses - with its existing technology platform. As part of ICE, Trayport will offer customers access to a broader range of risk management and analytics services as the OTC markets evolve. It will benefit from ICE s global technology infrastructure and its expertise in managing secure data. In addition, as energy markets in Asia continue to develop, ICE expects to extend the platform to support the development of these OTC markets. The agreement was unanimously approved by the Boards of Directors of both companies. The transaction is expected to close in the first quarter of 2016, subject to the completion of closing conditions and receipt of applicable regulatory approvals. Summary financial details of the transaction include: The $650 million purchase price will be paid with 100% equity consideration comprising approximately 2.5 million shares of ICE common stock. Trayport s last twelve months (LTM) net revenues were approximately $80 million and LTM adjusted EBITDA margins were above 50%, as of September 30, ICE anticipates an immaterial impact to 2016 adjusted earnings per share. Source: Acquire-Trayport-BGC-Partners-GFI Page 10

11 Solganick & Co. (formally Generation Equity Advisors, LLC) is an independent investment bank and M&A advisory firm focused exclusively on the global Software, IT Services and Digital Media industry sectors. We advise buyers and sellers of companies and efficiently execute transactions to increase shareholder value. Our professionals have advised on $20+ billion in M&A transactions to date and have current relationships globally with companies as well as leading private equity firms. Please contact us for information regarding this report or to inquire about an M&A transaction: Aaron Solganick, CEO Michael Okayo, Associate Darryl Tan, Analyst 8560 W. Sunset Blvd, Suite 500 West Hollywood, CA (310) TechMediaMergers.com Follow Us on Twitter: TechMediaMerger Page 11