While deals are still getting done, they are taking longer to complete as buyers are cautious yet opportunistic during an uncertain economic period
New York, NY (Vocus) October 31, 2008
Updata Advisors, Inc., a leading investment bank for the information technology industry, released today its quarterly report for Q3 2008 on mergers and acquisitions activity. The report covers the five sub-sectors tracked by Updata: infrastructure software, enterprise application software, security, IT services and Internet. Deal volume of 202 transactions is up slightly over the 194 transactions announced in Q2, but enterprise value on announced transactions is down 51% from Q2's $31 billion, according to the report. Overall valuations continue to trend downward, with median multiples of enterprise value over trailing twelve months' revenue down 17% from Q2 2008.
"While deals are still getting done, they are taking longer to complete as buyers are cautious yet opportunistic during an uncertain economic period," said Ira Cohen, Managing Partner at Updata Advisors. "The climate tends to favor strategic versus financial buyers, as they continue to seek key acquisitions to capture market share, expand product portfolios or reach new customer segments. We're also seeing selected cross-border activity with U.S. targets."
Trends and activities covered in the report include:
*]Private equity deals are down 43% among the M&A transactions tracked by Updata this quarter versus last quarter.
*]41% of the transactions for this quarter were cross-border deals. Among the cross-border deals that Updata tracked this quarter, 37% involved a U.S. target company versus only 17% for similar transactions in Q2 of 2008.
*]M&A trends vary by sub-sector. Financial technology transactions represented 43% of all enterprise application software deals tracked by Updata in the quarter, driven by acquisitions of processing, lending, consumer protection and identity theft solutions.
*]Total enterprise value for enterprise application software and security M&A is up from Q2 2008. Median multiples of enterprise value over trailing twelve months' revenue are up from last quarter in infrastructure software and security.
The full report is available online on Updata Advisors' web site at: http://www.updataadvisors.com/Advisors_Newsletters/Quarterly_Reports/itma_review_october08.asp
About Updata Advisors:
Based in New York, New York and Reston, Virginia, Updata Advisors is a leading investment bank specializing in mergers, acquisitions, private placements, fairness opinions and corporate restructurings for the information technology industry. Updata creates Greater Outcomes® for clients measured in growth, innovation and shareholder value. Since 1987, the firm has advised on over $15 billion in transactions for application and infrastructure software, internet, security and IT services companies. Updata Advisors is perennially ranked among the top five advisors in transaction volume to companies in the Computer Software, Supplies & Services industry, according to Factset Mergerstat. For more information, visit http://www.updataadvisors.com.