Well, it wouldn’t be a week in TMT if we weren’t talking about Capita so let’s get it out of the way. This week, they picked up the assets of Constructionline from the Government for €45m. Constructionline is essentially a database of 23,000 pre-qualified suppliers to the construction industry utilised by around 8,000 buyers and Capita has been operating the business under a concession agreement. The business reported operating profit of €5.5m in the year to December 2014, representing an EBITDA multiple of 8.5x. Capita sees a bigger market in construction for the business under corporate ownership, as well as the opportunity to extend out into other vertical markets.
If there’s one market that everybody is talking about being hot for M&A in 2015, it’s FinTech – and this week saw a couple of deals that were a case (or two cases) in point. The first, on Tuesday, saw Belgian banking software operator Crealogix pick up UK business MBA Systems for an undisclosed amount. MBA is a web-based provider of information and transaction systems to the securities and wealth management industries and the deal extends Crealogix’s position in the important UK market as well as accelerating its move into subscription services.
The following day, FinTech was on the agenda again when PE investor Bridgepoint announced that it was acquiring eFront in a €300m transaction. eFront – which is based in France and was taken private by Francisco Partners in 2011 – is a provider of software to the PE, real estate investment, banking and insurance industries, and is recognised as a leader in the PE market. Presumably this gave Bridgepoint the opportunity to try before they bought!
In another PE-fuelled transaction, this week saw the (not altogether unexpected) announcement that Accel-KKR would merge two of its investments, Stockholm-based EPiServer and New Hampshire-based Ektron, to create a “digital engagement” business with around 8,800 customers in 30 countries. The deal had been mooted since Accel-KKR invested in EPiServer late last year. And digital engagement? Well, EPiServer is best known for its digital marketing and eCommerce solutions, whilst Ektron’s focus is web content engagement. Accel-KKR thinks that the combination of commerce and content is a compelling one in a fast-growing market.
Another key market for M&A in 2015 (continuing on from a bumper 2014) is Big Data analytics, and Microsoft ensured that the pace of M&A was sustained this week when it picked up Revolution Analytics. Revolution’s software, which was built at and spun out of Yale University in 2007, helps companies use R – an open source programming language used to build predictive models.
In a slightly less predictable transaction, this week also saw Harman International – a business better known for its audio products for the home and car – adding an entirely new dimension to its offering by acquiring software services business Symphony Teleca. But there’s logic in there somewhere. Symphony Teleca helps businesses to rapidly design and develop products and technologies at the convergence of device, sensors, cloud and data – essential for a rapidly evolving automotive industry which is increasingly reliant on innovative technology to differentiate in a crowded marketplace.