The 451 2011 Tech Banking Review
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Transcript of The 451 2011 Tech Banking Review
Tech M&A Banking Review2011
ANALYZING THE BUSINESSOF ENTERPRISE IT INNOVATION
FEBRUARY 2012
451 RESEARCH: M&A KNOWLEDGEBASE I © 2012 451 RESEARCH, LLC AND/OR ITS AFFILIATES. ALL RIGHTS RESERVED.
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ABOUT THE 451 M&A KNOWLEDGEBASEThe 451 M&A KnowledgeBase is a transaction database that offers precise categoriza-tion of technology-related M&A deals for more than 600 sectors, along with proprietary estimates of valuations for key unannounced private transactions — with linkage to our proprietary analysis of deal rationales and the outlook for additional related transactions. The KnowledgeBase incorporates insight from more than 45 analysts of 451 Research.
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TABLE OF CONTENTS
SECTION 1: REPORT INTRODUCTION & OVERVIEW 1
1.1 SPENDING AND ACTIVITY BOTH UP AGAIN IN 2011 . . . . . . . . . . 2
FIGURE 1.1: Technology Advisory At A Glance: US Advisory In 2011 By Deals And Dollars . . . . . . . . . . . . . . . . 3
FIGURE 1.2: Technology Advisory At A Glance: US Advisory In 2011 By Deals And Dollars . . . . . . . . . . . . . . . . . . . 4
SECTION 2: BANKING LANDSCAPE 5
FIGURE 2.1: Expected Changes In Investment Banking Landscape: Banker Survey . . . . . . . . . . . . . . . . . . . . . 6
FIGURE 2.2: Expected Change In Pipeline Of Sell-Side M&A Mandates, 2006-2011 . . . . . . . . . . . . . . . . . . . . . . 6
2.1 M&A ADVISORY MARKET SHARE BY CATEGORY: BOUTIQUES CONTINUE TO TAKE MARKET SHARE FROM BULGE BANKS. . . . . . . 7
FIGURE 2.3: M&A Advisory Market Share By Investment Bank Category 2011 . . . . . . . . . . . . . . . . . . . 7
FIGURE 2.4A: Investment Bank Market Share: Advised Spending By Bank Category – 2008-2011 . . . . . . . . . . . . . . . 8
FIGURE 2.4B: M&A Advisory Market Share By Investment Bank Category . . 8
SECTION 3: ADVISING ON DEALS THAT REALLY MATTER 9
FIGURE 3.1: Who’s Selling To Whom: Sell-Side Advisers To The Big 10 In 2011 . . . . . . . . . . . . . . . . . . . . . 9
FIGURE 3.2: Advisers To Three Or More VC-Backed Targets In 2011 . . . . 9
Using This Report And The 451 M&A Knowledgebase To Help Select The Right Deal Advisers . . . . . . . . . . . . .10
SECTION 4: TOP TECH DEALMAKERS 2011 11
FIGURE 4.1: Leading Advisers To US IT Transactions By Deal Value . . . . 11
FIGURE 4.2: Leading Advisers To US IT Transactions Ranked By Number Of Deals . . . . . . . . . . . . . . . . . . . 11
IV TECH M&A BANKING REVIEW 2011© 2012 451 RESEARCH, LLC AND/OR ITS AFFILIATES. ALL RIGHTS RESERVED.
SECTION 5 12
5.1 SECTOR LEADERS 2011: APPLICATION SOFTWARE, INFORMATION MANAGEMENT & INFRASTRUCTURE MANAGEMENT . . . . . . . . . 12
5.2 SECTOR LEADERS 2011: INTERNET CONTENT & COMMERCE . . . . . . . 13
5.3 SECTOR LEADERS 2011: IT OUTSOURCING & BUSINESS SERVICES . . . . 14
5.4 SECTOR LEADERS 2011: MOBILITY . . . . . . . . . . . . . . . . 15
5.5 SECTOR LEADERS 2011: SECURITY & ENTERPRISE NETWORKING . . . . . 16
5.6 SECTOR LEADERS 2011: SEMICONDUCTORS . . . . . . . . . . . . . 17
5.7 SECTOR LEADERS 2011: STORAGE, SYSTEMS & MEDIA TECHNOLOGIES . . 18
5.8 SECTOR LEADERS 2011: HOSTED SERVICES . . . . . . . . . . . . . 19
SECTION 6: MORE INFORMATION ON THE TECH M&A BANKING REVIEW 20
451 RESEARCH: M&A KNOWLEDGEBASE 1 © 2012 451 RESEARCH, LLC AND/OR ITS AFFILIATES. ALL RIGHTS RESERVED.
SECTION 1Report Introduction & Overview
As expected, the list of top 10 advisers by deal value in our 2011 tech banking league table was dominated by the bulge-bracket banks. Most of the notable names in tech banking retained their top 10 status, with little shuffling among the rankings. A couple of new banks cracked the top 10 list in our 2011 tech banking league table, but the first- and second-place finishers remained unchanged from 2010.
Morgan Stanley was again the number one adviser to US technology deals by both number and value of deals. The number of transac-tions Morgan Stanley advised on (30) remained unchanged from 2010; however, the total value for those deals rose nearly 20% to $39bn last year. Meanwhile, Goldman Sachs, which took the number two seat in our league table, advised on 22 transactions in 2011 worth a total deal value of $32bn. As it did in the previous year, Morgan Stanley worked six of 2011’s 10 largest transactions, while Goldman Sachs had a hand in just four. But both of the top two banks had their own strengths. Morgan Stanley dominated software advisory, while Goldman Sachs topped security and networking. We’d note that our ranking was built from data using only US-based targets, excluding telecommunications, where deals were announced in 2011, rather than completed. Advised deal value and volume includes aggregated buy- and sell-side credits.
Qatalyst Partners, the ‘bulge boutique’ led by Frank Quattrone, is again to be lauded as a top 10 firm. In 2010, Qatalyst landed in the lower half of the top 10, but it catapulted to the number three position in 2011. The firm advised on 18 deals worth a total $31.8bn, placing the bank just $250m shy of Goldman’s total advised value. The leading boutique bank’s boost last year came from working two of 2011’s largest transactions: Google’s $12.5bn purchase of Motorola Mobility in August and Texas Instruments’ $6.5bn reach for National Semiconductor in April. In all, Qatalyst led the rankings in both the mobility and semiconductor sectors.
Barclays Capital retained its fourth-place position thanks to its work on Motorola Mobil-ity’s sale to Google. What’s notable is that Barclays nearly doubled its workload in both volume and value, working eight deals worth $15bn in 2010 and 14 transactions valued
ABOUT THE TECH M&A BANKING REVIEW
The core objective of the Tech M&A Banking Review is to help buyers and sellers identify financial advisers that have experience in relevant markets, which should make for a more efficient deal. The report draws on data from The 451 M&A KnowledgeBase, a transactions database that focuses exclusively on the IT and communications sectors. The KnowledgeBase tracks 30,000 M&A deals that are searchable by more than 600 technology segments, enabling industry professionals to identify advisers that have worked on comparable transactions in those sectors. Additionally, the KnowledgeBase provides analysis of important enterprise IT deals and offers proprietary estimates of undisclosed deal value or trailing revenue for key transactions.
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at $28bn in 2011. Bank of America Merrill Lynch’s rank also remained unchanged at number five, with 22 deals worth slightly more than $25bn.
Lazard, which was absent from 2010’s top 10, ranked sixth, due almost entirely to its work on the Motorola Mobility sale (almost 95% of its $13.1bn total is attribut-able to advising Google on that transaction). Credit Suisse Securities slid one notch to the seventh position, although its $12.8bn worth of advisory credits was up slightly from 2010’s total. Centerview Partners, a newcomer to the top 10 list, finished less than $200m behind Credit Suisse, despite working only two deals the entire year. JP Morgan tumbled six positions from its 2010 rank to land in ninth place, a continued fall from 2009, when the firm led the rankings by advised deal value. Citigroup Global Markets took a more modest drop, dipping from the ninth position in 2010 to tenth in 2011. JP Morgan and Citigroup each advised on only one of the top 10 tech transactions of 2011.
1.1 SPENDING AND ACTIVITY BOTH UP AGAIN IN 2011
Overall spending and deal volume in tech M&A for all deals, including telecom and regardless of whether or not an adviser was involved, were both on the upswing again in 2011, although the spike was not as dramatic as it was in 2010. Spending rose 17% to $219.2bn, up from $186.6bn in 2010. The number of transactions in 2011 ticked up 13% to 3,696 from the 3,261 we saw in 2010. Focusing specifically on US-based targets (excluding telecom), the gains were a bit more modest, with spending up 11% to $115.2bn and deal volume up 7% to 2,055.
In our annual 451 Research Tech Banking Outlook Survey of senior bankers, conducted in December 2011, we asked bankers about their pipeline in 2012, and two-thirds expected an increase in sell-side mandates, down from 84% the previous year.
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FIGURE 1.1: TECHNOLOGY ADVISORY AT A GLANCE: US ADVISORY IN 2011 BY DEALS AND DOLLARS ($M)
30
20
15
10
5$0 $5,000 $10,000 $15,000 $20,000
Houlihan Lokey
Credit Suisse
UBS
Bank of America $25,236
Deutsche Bank
ArchPoint
Morgan Stanley $38,967
JP Morgan
Barclays $27,790
Pagemill
Jordan Edmiston
Boutique Midmarket Bulge Bracket Bulge Boutique
Goldman Sachs $32,124
Petsky Prunier
GCA Savvian
Madison Park Group
KippsDeSanto
Morgan Keegan
Robert W. Baird
Stifel Nicolaus Weisel
America’s Growth Capital
Jefferies
N/A
TOTAL KNOWN DEAL VALUE ADVISED ($M)
TOTA
L A
DVIS
ED D
EALS
BANK CATEGORY
Qatalyst Partners $31,875
EvercoreRBC Capital Markets
Signal Hill
Raymond JamesWilliam Blair
Citigroup
Wells FargoBMO Capital Markets
Needham
Montgomery
Healthcare Growth Partners
Moelis
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FIGURE 1.2: TECHNOLOGY ADVISORY AT A GLANCE: US ADVISORY IN 2011 BY DEALS AND DOLLARS ($M)
The graphic is limited to banks that advised on three or more transactions announced in 2011. Space limitations do not allow us to display the many other advisory firms that participated in less than three technology M&A transaction in 2011.
6
5
4
3
2$0 $100 $200 $300 $400 $500
Boutique Midmarket Bulge Bracket Bulge Boutique
N/A
TOTAL KNOWN DEAL VALUE ADVISED ($M)
TOTA
L A
DVIS
ED D
EALS
BANK CATEGORY
Corum
DecisionPoint
St. Charles Capital
Lazard $13,166
Harris Williams
CHILDS Advisory PartnersMooreland
BB&T
Bowen Advisors
Catapult Advisors
WWC SecuritiesBoston Meridian
Triple TreeCanaccord Genuity
Oppenheimer $959
Spurrier Capital Partners
Sagent
ThinkEquity
Ernst & Young $654
Pacific Crest
Lincoln International LUMA Partners
Q Advisors
Software Equity Group
Morgan Joseph TriArtisan
GrowthPoint Technology
Berkery Noyes
GridleyCogent Growth Partners
The McLean Group
Portico CapitalJanney Montgomery Scott
Craig-HallumHeadwaters
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SECTION 2Banking Landscape
The number of investment banks advising on at least one US tech transaction in 2011 hit an all-time high of 197, a 20% jump from the prior year. However, established tech banks shouldn’t be afraid of what at first glance seems like an influx of tech advisers. While we did see a number of new names pop up on our list of financial advisers, the majority – 88 – of these firms printed only one tombstone in 2011. To us, this reads as either lifestyle firms that were satisfied with doing only one deal per year, or that the one tech transaction each of these banks announced was a simple one-time move outside of their core industry focus. We wouldn’t be surprised if many of these firms don’t announce any technology prints in 2012. In fact, tech bankers overall expect the number of boutique banks to dwindle this year. In our latest Banking Outlook Survey, 60% of respondents said they expect an increase in the failure or shutdown of boutiques in 2012, while only 6% expected a decrease.
There were some success stories, however. Headwaters MB, which renewed its tech practice in late 2010, announced seven deals in 2011. And after a quiet 2010, Boston Meridian printed three transactions last year. LUMA Partners, which was founded in 2010 and worked two deals that year, announced a half-dozen transactions in 2011. And new bank CODE Advisors, which was formed in early 2010 and announced its first deal at the end of the year, announced another transaction last year. Although it hasn’t yet announced an advisory credit, another new entrant is La Honda Advisors, set up by David Ketsdever, former head of tech investment banking at Cowen and Company.
As we saw a number of new entrants, we also witnessed a sprinkling of consolida-tion in the industry. In December 2011, Duff & Phelps announced that it would acquire Palo Alto, California-based boutique investment bank Pagemill Partners to expand its own tech practice. More recently, in January, Raymond James & Associates announced that it was buying Morgan Keegan, which itself had picked up tech boutique Revolu-tion Partners in December 2008. And although not technically an acquisition, all four bankers of Newforth Partners’ M&A team have joined Woodside Capital Partners.
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FIGURE 2.1: EXPECTED CHANGES IN INVESTMENT BANKING LANDSCAPE: BANKER SURVEY
Source: The 451 Tech Banking Outlook Survey, December 2011
FIGURE 2.2: EXPECTED CHANGE IN PIPELINE OF SELL-SIDE M&A MANDATES, 2006-2011
2006 2007 2008 2009 2010 2011
INCREASE 84% 70% 39% 68% 84% 64%
INCREASE 25%+ 58% 31% 9% 39% 37% 33%
DECREASE 4% 13% 34% 19% 2% 12%
Source: The 451 Tech Banking Outlook Survey, 2006-2011
-100% -75% -50% -25% 0 25% 50% 75% 100%
Withdrawal of top-20 banks from tech banking
Failures or shutdowns of boutiques
Entry of new boutique startups
Acquisitions of US boutiques by larger banks
Acquisitions of US boutiques by non-US firms
Entry to US market by non-US banks
Mergers among boutiques of similar size
IPOs of US or non-US investment banks
20112010
Percentage of bankers saying activity: Will decrease Will increase
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2.1 M&A ADVISORY MARKET SHARE BY CATEGORY: BOUTIQUES CONTINUE TO TAKE MARKET SHARE FROM BULGE BANKS
In 2011, boutique and bulge boutique banks together took a 10% market share from the bulge bracket, while full-service banks’ share remained relatively unchanged. The top 20 busiest banks, which are comprised of players from all banking categories, advised on 91% of 2011 deal flow by value, up from 86% in 2010. Altogether, some 197 banks advised on at least one transaction in 2011 – 46 more than in 2010. A total of 126 boutique banks advised on at least one tech deal in the US in 2011, up from 96 the previous year. Boutique-advised transactions accounted for a total of $14.6bn worth of deals, or 14% of the total value of advised acquisitions.
We divide the banking market into four main categories: bulge, full-service midmarket, bulge boutique and boutique.
Bulge bracket – After shooting up to a 74% market share in 2009, this group’s share shrank to 66% in 2010, and fell again in 2011 to 57%, the sector’s lowest share ever.
Full-service midmarket – The segment’s share fell to13%, its average over the past five years.
Boutiques – Banks in this sector advised on 304 transactions, 30 more that in 2010 and 110 more than in 2009.
Bulge boutiques – These high-profile advisory firms posted the most dramatic increase of the year, resulting in these six non-bulge banks taking a 16% market share.
FIGURE 2.3: M&A ADVISORY MARKET SHARE BY INVESTMENT BANK CATEGORY 2011 ($B)
Bulge Bracket (9)
Bulge Boutique (6)
Full-Service Midmarket (40)
Boutique (96)
$14.6
$17.2
$13.1
$60.3
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FIGURE 2.4A: INVESTMENT BANK MARKET SHARE: ADVISED SPENDING BY BANK CATEGORY – 2008-2011
FIGURE 2.4B: M&A ADVISORY MARKET SHARE BY INVESTMENT BANK CATEGORY
2008 2009 2010 2011
BOUTIQUE 11% 6% 10% 14%
BULGE BOUTIQUE 6% 11% 10% 16%
FULL-SERVICE MIDMARKET 14% 9% 15% 12%
BULGE BRACKET 69% 74% 66% 57%
Definitions:
Bulge Bracket: Bank of America, Barclays, Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs, Morgan Stanley, JP Morgan, UBS
Bulge Boutiques: High-end boutiques – Blackstone, Evercore, Greenhill & Co., Lazard, Moelis, Qatalyst
Full-Service Midmarket: Midmarket broker-dealers
Boutiques: Small firms focusing wholly or in large part on M&A advisory
2008 2009 2010 2011
80%
70%
60%
50%
40%
30%
20%
10%
0%
Perc
ent
of M
arke
t Sh
are
Bulge Bracket Full-Service Midmarket
Bulge Boutique Boutique
9%
69%
14%
10%
6%
11%
6%
74%
10% 10%
15%
66%
57%
14%16%
12%
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SECTION 3Advising On Deals That Really Matter
This section of the Tech M&A Banking Review lists bankers that assisted sellers of tech nology companies within certain important categories in the past year. The tables below include:
Investment banks that helped sell companies to the large and active acquirers on 451 Research’s Big 10 list.
Bankers advising VC-backed sellers.
As with all of the information in this report, we provide this data to help sellers and buyers make more informed decisions when choosing investment bankers.
FIGURE 3.1: WHO’S SELLING TO WHOM: SELL-SIDE ADVISERS TO THE BIG 10 IN 2011
CISCO Boston Meridian, RBC Capital Markets
DELL Bank of America, Deutsche Bank, JP Morgan
EMC America's Growth Capital
GOOGLE Centerview Partners, Barclays, GCA Savvian, Headwaters, Peter Solomon, Qatalyst Partners, Sikich Investment Banking
HEWLETT-PACKARD Bank of America, Citigroup, Goldman Sachs, JP Morgan, Jefferies, Qatalyst Partners, UBS
IBM Credit Suisse, Goldman Sachs, Jefferies, Qatalyst Partners, Shea & Company. Union Square Advisors
MICROSOFT Goldman Sachs, JP Morgan
ORACLE Morgan Keegan, Morgan Stanley, Portico Capital
SAP Morgan Stanley
YAHOO Evercore, GCA Savvian (2), LUMA Partners
Note: Global targets, including telecommunications Source: The 451 M&A KnowledgeBase
FIGURE 3.2: ADVISERS TO THREE OR MORE VC-BACKED TARGETS IN 2011
America's Growth Capital GrowthPoint Technology Pacific Crest
ArchPoint JP Morgan Pagemill
Arma Partners Jefferies Piper Jaffray
Bank of America Jordan Edmiston Qatalyst Partners
Canaccord Genuity Montgomery Raymond James
Corum Mooreland Redwood Capital
Deutsche Bank Morgan Keegan Signal Hill
Evercore Morgan Stanley Spurrier Capital Partners
GCA Savvian Needham Stifel Nicolaus Weisel
Goldman Sachs Oppenheimer ThinkEquity
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USING THIS REPORT AND THE 451 M&A KNOWLEDGEBASE TO HELP SELECT THE RIGHT DEAL ADVISERS
Getting good deals done in the IT sector is a complicated process. The number of potential acquirers is often large and diverse. The technology landscape itself is complex and volatile, with new technologies and business models periodically disrupting the market. The entry of private equity (PE) and international buyers adds further complexity.
A major objective of the Tech M&A Banking Review is to assist buyers and sellers in choosing appropriate banking or legal advisers for their technology transactions. Buyers and sellers also can do their own research on advisers in The 451 M&A Knowl-edgeBase, the transactions database that provides the data used in this report.
Here are some ways to use this report and the KnowledgeBase to find advisers with relevant experience:
Find bankers or attorneys with experience in specific sectors: Locating advisers experienced with the ins and outs of a specific sector is one of the most impor tant tasks for a buyer or seller. 451 Research takes great care in assigning transac tions to our more than 600 sector categories. Use our sector tables in this report to find top advisers by sector. Use the KnowledgeBase for more customized research, as illustrated in the final bullet point below.
Identify advisers experienced in dealing with key disruptive technologies and business models: In addition to tracking transactions by sector, the KnowledgeBase can guide advisers to companies that follow certain business models or industry ‘themes’ that are not industry segments, per se. For example, the KnowledgeBase tracks acquired companies that employ open source or SaaS business models or whose offerings are related to cloud computing or regulatory or financial compliance.
Find professionals who have worked with key acquirers or on signature deals: A seller targeting a big-name acquirer is likely to benefit from working with a banker or attorney who’s been up the learning curve with that buyer in the past. Within a matter of minutes, the KnowledgeBase can generate a list of advisory firms that have advised sellers to Microsoft, Google, Cisco or any other acquirer.
‘Roll your own’ search using the KnowledgeBase: Use the database to generate a list of advisers that have worked on PE-related deals or have advised VC-backed sellers. Look for advisers for any combination of more than 600 sectors and subsectors, geographies, date ranges and vertical markets ranging from travel to healthcare. Or find advisers to small, large or midsized deals, to transactions that had earnout arrangements, or to all-stock or all-cash acquisitions.
In sum, while this report offers a snapshot of deal adviser activity, The 451 M&A KnowledgeBase offers hundreds of additional ways to slice and dice the data in order to locate the most appropriate bankers in the complex world of IT M&A.
451 RESEARCH: M&A KNOWLEDGEBASE 11 © 2012 451 RESEARCH, LLC AND/OR ITS AFFILIATES. ALL RIGHTS RESERVED.
SECTION 4Top Tech Dealmakers 2011
FIGURE 4.1: LEADING ADVISERS TO US IT TRANSACTIONS BY DEAL VALUE
VALUE ($M) NUMBER 2010 RANK
1 Morgan Stanley $38,967 30 1
2 Goldman Sachs $32,124 23 23 Qatalyst Partners $31,875 18 104 Barclays $27,790 14 45 Bank of America $25,236 22 56 Lazard $13,166 4 117 Credit Suisse $12,815 19 68 Centerview Partners $12,672 2 299 JP Morgan $12,085 20 310 Citigroup $8,645 9 911 UBS $7,822 15 712 Houlihan Lokey $7,086 18 2613 Jefferies $6,191 16 1214 Deutsche Bank $4,872 17 815 RBC Capital Markets $4,611 13 1316 Evercore $4,374 14 2017 Blackstone $3,160 2 1818 Wells Fargo $3,048 8 4119 Peter Solomon $2,551 2 N/A20 Moelis $1,946 6 62
FIGURE 4.2: LEADING ADVISERS TO US IT TRANSACTIONS RANKED BY NUMBER OF DEALS
NUMBER VALUE ($M) 2010 RANK
1 Morgan Stanley 30 $38,967 1
2 Goldman Sachs 23 $32,124 23 Bank of America 22 $25,236 54 JP Morgan 20 $12,085 245 Credit Suisse 19 $12,815 136 Qatalyst Partners 18 $31,875 317 Houlihan Lokey 18 $7,086 128 Deutsche Bank 17 $4,872 159 Jefferies 16 $6,191 310 UBS 15 $7,822 1711 GCA Savvian 15 $538 912 America's Growth Capital 15 $290 713 Pagemill 15 $290 614 Barclays 14 $27,790 2015 Evercore 14 $4,374 6016 RBC Capital Markets 13 $4,611 2717 Signal Hill 13 $115 1018 Morgan Keegan 12 $478 2819 Raymond James 10 $1,870 1820 William Blair 10 $480 8
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SECTION 55.1 SECTOR LEADERS 2011: APPLICATION SOFTWARE, INFORMATION
MANAGEMENT & INFRASTRUCTURE MANAGEMENTTOP DEALMAKERS BY DEAL VALUE
VALUE ($M)
NUMBER 2010 RANK
1 Morgan Stanley $14,005 13 6
2 Bank of America $8,771 7 2
3 Barclays $8,254 8 1
4 JP Morgan $6,266 6 5
5 Citigroup $5,145 4 N/A
6 RBC Capital Markets $4,545 9 12
7 Credit Suisse $4,401 10 7
8 UBS $3,000 2 9
9 Blackstone $3,000 1 17
10 Goldman Sachs $2,826 6 3
TOP DEALMAKERS BY DEAL VOLUME
NUMBER VALUE ($M)
2010 RANK
1 Morgan Stanley 13 $14,005 4
2 Credit Suisse 10 $4,401 9
3 RBC Capital Markets 9 $4,545 52
4 Barclays 8 $8,254 13
5 Bank of America 7 $8,771 7
6 BMO Capital Markets 7 $1,035 65
7 Morgan Keegan 7 $448 28
8 Pagemill 7 $31 5
9 JP Morgan 6 $6,266 8
10 Goldman Sachs 6 $2,826 1
*Advisers ranked by number of deals advised, then (in case of a tie) by total deal value of those deals.
SECTOR MEDIAN MULTIPLES*
*Multiple of deal value / TTM revenue
3.5
3.0
2.5
2.0
1.5
1.0
6.0
5.0
4.0
3.0
2.0
1.0
Med
ian
mul
tiple
for
advi
sed
targ
ets
Med
ian
mul
tiple
for
non-
advi
sed
targ
ets
2009 2010 2011
Num
ber
of d
eals
$50
$40
$30
$20
$10
$0
650
600
550
500
450
400
M&A TREND
Valu
e of
dea
ls ($B
)
2009 2010 2011
100%
80%
60%
40%
20%
0%
100%
80%
60%
40%
20%
0%
PERCENT OF TRANSACTIONS WITH AT LEAST ONE ADVISER ON EITHER SIDE
Valu
e of
dea
ls
Num
ber
of d
eals
2009 2010 2011
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5.2 SECTOR LEADERS 2011: INTERNET CONTENT & COMMERCE
TOP DEALMAKERS BY DEAL VALUE
VALUE ($M)
NUMBER 2010 RANK
1 Morgan Stanley $4,298 4 1
2 Goldman Sachs $2,920 2 2
3 Peter Solomon $2,551 2 NA
4 Evercore $2,270 5 10
5 UBS $2,230 4 6
6 JP Morgan $1,728 4 36
7 Qatalyst Partners $1,248 4 NA
8 Allen & Co. $1,079 2 14
9 Bank of America $902 4 8
10 Deutsche Bank $688 3 38
TOP DEALMAKERS BY DEAL VOLUME
NUMBER VALUE ($M)
2010 RANK
1 GCA Savvian 7 $28 15
2 Evercore 5 $2,270 22
3 Morgan Stanley 4 $4,298 2
4 UBS 4 $2,230 21
5 JP Morgan 4 $1,728 16
6 Qatalyst Partners 4 $1,248 NA
7 Bank of America 4 $902 4
8 Montgomery 4 $280 38
9 Petsky Prunier 4 NA 7
10 Deutsche Bank 3 $688 38
*Advisers ranked by number of deals advised, then (in case of a tie) by total deal value of those deals.
SECTOR MEDIAN MULTIPLES*
$15
$12
$9
$6
$3
$0
500
450
400
350
300
250
M&A TREND
Valu
e of
dea
ls ($B
)
Num
ber
of d
eals
2009 2010 2011
100%
80%
60%
40%
20%
0%
100%
80%
60%
40%
20%
0%
PERCENT OF TRANSACTIONS WITH AT LEAST ONE ADVISER ON EITHER SIDE
Valu
e of
dea
ls
Num
ber
of d
eals
2009 2010 2011
*Multiple of deal value / TTM revenue
3.0
2.5
2.0
1.5
1.0
0.5
5
4
3
2
1
0
Med
ian
mul
tiple
for
advi
sed
targ
ets
Med
ian
mul
tiple
for
non-
advi
sed
targ
ets
2009 2010 2011
14 TECH M&A BANKING REVIEW 2011© 2012 451 RESEARCH, LLC AND/OR ITS AFFILIATES. ALL RIGHTS RESERVED.
5.3 SECTOR LEADERS 2011: IT OUTSOURCING & BUSINESS SERVICES
TOP DEALMAKERS BY DEAL VALUE
VALUE ($M)
NUMBER 2010 RANK
1 Citigroup $2,980 4 3
2 Bank of America $2,904 3 11
3 Goldman Sachs $2,840 3 2
4 Houlihan Lokey $2,254 6 18
5 Morgan Stanley $950 2 1
6 UBS $855 3 6
7 Credit Suisse $816 3 3
8 Stifel Nicolaus Weisel $431 3 23
9 Raymond James $397 2 15
10 Jefferies $386 4 13
TOP DEALMAKERS BY DEAL VOLUME
NUMBERVALUE ($M)
2010 RANK
1 Houlihan Lokey 6 $2,254 16
2 KippsDeSanto 6 $233 6
3 Robert Baird 5 $268 4
4 Citigroup 4 $2,980 7
5 Jefferies 4 $386 5
6 Lincoln International 4 $290 28
7 Signal Hill 4 $115 N/A
8 Cogent Growth Partners 4 N/A N/A
9 Bank of America 3 $2,904 9
10 Goldman Sachs 3 $2,840 3
*Advisers ranked by number of deals advised, then (in case of a tie) by total deal value of those deals.
SECTOR MEDIAN MULTIPLES*
100%
80%
60%
40%
20%
0%
100%
80%
60%
40%
20%
0%
PERCENT OF TRANSACTIONS WITH AT LEAST ONE ADVISER ON EITHER SIDE
Valu
e of
dea
ls
Num
ber
of d
eals
2009 2010 2011
*Multiple of deal value / TTM revenue
1.5
1.2
0.9
0.6
0.3
0
1.5
1.2
0.9
0.6
0.3
0
Med
ian
mul
tiple
for
advi
sed
targ
ets
Med
ian
mul
tiple
for
non-
advi
sed
targ
ets
2009 2010 2011
$20
$16
$12
$8
$4
$0
500
450
400
350
300
250
M&A TREND
Valu
e of
dea
ls ($B
)
Num
ber
of d
eals
2009 2010 2011
451 RESEARCH: M&A KNOWLEDGEBASE 15 © 2012 451 RESEARCH, LLC AND/OR ITS AFFILIATES. ALL RIGHTS RESERVED.
5.4 SECTOR LEADERS 2011: MOBILITY
TOP DEALMAKERS BY DEAL VALUE
VALUE ($M)
NUMBER 2010 RANK
1 Qatalyst Partners $12,740 2 1
2 Barclays $12,500 1 N/A
3 Centerview Partners $12,500 1 N/A
4 Lazard $12,500 1 N/A
5 Harris Williams $415 1 N/A
6 Wells Fargo $415 1 N/A
7 Morgan Stanley $104 1 N/A
8 Houlihan Lokey $45 1 5
9 Northland Securities $45 1 N/A
10 Headwaters $42 1 N/A
TOP DEALMAKERS BY DEAL VOLUME
NUMBERVALUE ($M)
2010 RANK
1 Qatalyst Partners 2 $12,740 6
2 Barclays 1 $12,500 N/A
3 Centerview Partners 1 $12,500 N/A
4 Lazard 1 $12,500 N/A
5 Harris Williams 1 $415 N/A
6 Wells Fargo 1 $415 N/A
7 Morgan Stanley 1 $104 N/A
8 Houlihan Lokey 1 $45 7
9 Northland Securities 1 $45 N/A
10 Headwaters 1 $42 N/A
*Advisers ranked by number of deals advised, then (in case of a tie) by total deal value of those deals.
SECTOR MEDIAN MULTIPLES*
100%
80%
60%
40%
20%
0%
100%
80%
60%
40%
20%
0%
PERCENT OF TRANSACTIONS WITH AT LEAST ONE ADVISER ON EITHER SIDE
Valu
e of
dea
ls
Num
ber
of d
eals
2009 2010 2011
*Multiple of deal value / TTM revenue
5
4
3
2
1
0
10
8
6
4
2
0
Med
ian
mul
tiple
for
advi
sed
targ
ets
Med
ian
mul
tiple
for
non-
advi
sed
targ
ets
2009 2010 2011
$20
$16
$12
$8
$4
$0
100
90
80
70
60
50
M&A TREND
Valu
e of
dea
ls ($B
)
Num
ber
of d
eals
2009 2010 2011
16 TECH M&A BANKING REVIEW 2011© 2012 451 RESEARCH, LLC AND/OR ITS AFFILIATES. ALL RIGHTS RESERVED.
5.5 SECTOR LEADERS 2011: SECURITY & ENTERPRISE NETWORKING
TOP DEALMAKERS BY DEAL VALUE
VALUE ($M)
NUMBER 2010 RANK
1 Goldman Sachs $2,487 3 1
2 Jefferies $1,300 2 30
3 Bank of America $612 1 14
4 JP Morgan $225 2 4
5 Boston Meridian $210 3 N/A
6 Houlihan Lokey $162 2 24
7 Blackstone $160 1 N/A
8 Morgan Stanley $89 1 2
9 ArchPoint $82 1 N/A
10 KPMG $72 1 N/A
TOP DEALMAKERS BY DEAL VOLUME
NUMBERVALUE ($M)
2010 RANK
1 Goldman Sachs 3 $2,487 2
2 Boston Meridian 3 $210 N/A
3 Jefferies 2 $1,300 12
4 JP Morgan 2 $225 4
5 Houlihan Lokey 2 $162 27
6 America's Growth Capital 2 $35 1
7 Bowen Advisors 2 N/A N/A
8 Bank of America 1 $612 5
9 Blackstone 1 $160 N/A
10 Morgan Stanley 1 $89 3
*Advisers ranked by number of deals advised, then (in case of a tie) by total deal value of those deals.
100%
80%
60%
40%
20%
0%
100%
80%
60%
40%
20%
0%
PERCENT OF TRANSACTIONS WITH AT LEAST ONE ADVISER ON EITHER SIDE
Valu
e of
dea
ls
Num
ber
of d
eals
2009 2010 2011
SECTOR MEDIAN MULTIPLES*
*Multiple of deal value / TTM revenue **Median multiple for unadvised targets unavailable for 2010
5
4
3
2
1
0
20
16
12
8
4
0
Med
ian
mul
tiple
for
advi
sed
targ
ets
Med
ian
mul
tiple
for
non-
advi
sed
targ
ets
2009 2010 2011
$20
$16
$12
$8
$4
$0
150
120
90
60
30
0
M&A TREND
Valu
e of
dea
ls ($B
)
Num
ber
of d
eals
2009 2010 2011
451 RESEARCH: M&A KNOWLEDGEBASE 17 © 2012 451 RESEARCH, LLC AND/OR ITS AFFILIATES. ALL RIGHTS RESERVED.
5.6 SECTOR LEADERS 2011: SEMICONDUCTORS
TOP DEALMAKERS BY DEAL VALUE
VALUE ($M)
NUMBER 2010 RANK
1 Qatalyst Partners $15,048 6 N/A
2 Goldman Sachs $13,859 4 5
3 Morgan Stanley $11,983 4 1
4 Credit Suisse $5,170 2 N/A
5 Houlihan Lokey $4,319 3 12
6 Barclays $4,220 2 10
7 Bank of America $3,635 2 N/A
8 UBS $1,399 3 N/A
9 JP Morgan $1,194 3 3
10 Needham $679 5 9
TOP DEALMAKERS BY DEAL VOLUME
NUMBERVALUE ($M)
2010 RANK
1 Qatalyst Partners 6 $15,048 N/A
2 Needham 5 $679 6
3 Pagemill 5 $157 7
4 Goldman Sachs 4 $13,859 8
5 Morgan Stanley 4 $11,983 2
6 Houlihan Lokey 3 $4,319 15
7 UBS 3 $1,399 N/A
8 JP Morgan 3 $1,194 5
9 Credit Suisse 2 $5,170 N/A
10 Barclays 2 $4,220 13
*Advisers ranked by number of deals advised, then (in case of a tie) by total deal value of those deals. SECTOR MEDIAN MULTIPLES*
100%
80%
60%
40%
20%
0%
100%
80%
60%
40%
20%
0%
PERCENT OF TRANSACTIONS WITH AT LEAST ONE ADVISER ON EITHER SIDE
Valu
e of
dea
ls
Num
ber
of d
eals
2009 2010 2011
*Multiple of deal value / TTM revenue
**Median multiple for unadvised targets unavailable for 2010
2.5
2.0
1.5
1.0
0.5
0
2.5
2.0
1.5
1.0
0.5
0
Med
ian
mul
tiple
for
advi
sed
targ
ets
Med
ian
mul
tiple
for
non-
advi
sed
targ
ets
2009 2010 2011
$30
$24
$18
$12
$6
$0
120
100
80
60
40
20
M&A TREND
Valu
e of
dea
ls ($B
)
Num
ber
of d
eals
2009 2010 2011
18 TECH M&A BANKING REVIEW 2011© 2012 451 RESEARCH, LLC AND/OR ITS AFFILIATES. ALL RIGHTS RESERVED.
5.7 SECTOR LEADERS 2011: STORAGE, SYSTEMS & MEDIA TECHNOLOGIES
TOP DEALMAKERS BY DEAL VALUE
VALUE ($M)
NUMBER 2010 RANK
1 Bank of America $5,360 3 6
2 Goldman Sachs $5,240 3 30
3 Morgan Stanley $4,770 2 2
4 JP Morgan $1,800 2 3
5 Jefferies $1,282 2 10
6 Atlas Advisors $1,200 1 N/A
7SunTrust Robinson Humphrey
$1,200 1 N/A
8 Credit Suisse $600 1 N/A
9 Wells Fargo $600 1 N/A
10 Deutsche Bank $520 1 N/A
TOP DEALMAKERS BY DEAL VOLUME
NUMBERVALUE ($M)
2010 RANK
1 Bank of America 3 $5,360 4
2 Goldman Sachs 3 $5,240 30
3 America's Growth Capital 3 $125 15
4 Morgan Stanley 2 $4,770 1
5 JP Morgan 2 $1,800 2
6 Jefferies 2 $1,282 8
7 UBS 2 $306 6
8 Houlihan Lokey 2 $82 11
9 Pagemill 2 $70 16
10 GrowthPoint Technology 2 $6 21
*Advisers ranked by number of deals advised, then (in case of a tie) by total deal value of those deals.
SECTOR MEDIAN MULTIPLES*
*Multiple of deal value / TTM revenue
3.0
2.5
2.0
1.5
1.0
0.5
3.0
2.5
2.0
1.5
1.0
0.5
Med
ian
mul
tiple
for
advi
sed
targ
ets
Med
ian
mul
tiple
for
non-
advi
sed
targ
ets
2009 2010 2011
100%
80%
60%
40%
20%
0%
100%
80%
60%
40%
20%
0%
PERCENT OF TRANSACTIONS WITH AT LEAST ONE ADVISER ON EITHER SIDE
Valu
e of
dea
ls
Num
ber
of d
eals
2009 2010 2011
$20
$16
$12
$8
$4
$0
200
160
120
80
40
0
M&A TREND
Valu
e of
dea
ls ($B
)
Num
ber
of d
eals
2009 2010 2011
451 RESEARCH: M&A KNOWLEDGEBASE 19 © 2012 451 RESEARCH, LLC AND/OR ITS AFFILIATES. ALL RIGHTS RESERVED.
5.8 SECTOR LEADERS 2011: HOSTED SERVICES
TOP DEALMAKERS BY DEAL VALUE
VALUE ($M)
NUMBER 2010 RANK
1 Bank of America $3,052 2 N/A
2 Morgan Stanley $2,768 3 N/A
3 Barclays $2,500 2 6
4 Goldman Sachs $1,952 2 N/A
5 Credit Suisse $1,400 2 N/A
6 Deutsche Bank $782 3 N/A
7 JP Morgan $552 1 N/A
8 Wells Fargo $552 1 14
9 Raymond James $230 1 N/A
10 Bank Street Group $167 1 10
TOP DEALMAKERS BY DEAL VOLUME
NUMBERVALUE ($M)
2010 RANK
1 Morgan Stanley 3 $2,768 N/A
2 Deutsche Bank 3 $782 N/A
3 Stifel Nicolaus Weisel 3 $95 17
4 Bank of America 2 $3,052 N/A
5 Barclays 2 $2,500 7
6 Goldman Sachs 2 $1,952 N/A
7 Credit Suisse 2 $1,400 N/A
8 D.H. Capital 2 $100 4
9 RBC Capital Markets 2 N/A 2
10 JP Morgan 1 $552 9
*Advisers ranked by number of deals advised, then (in case of a tie) by total deal value of those deals.
**Transactions included in hosted services include colocation, content delivery networks, disaster recovery, Internet peering, managed hosting and Web hosting.
100%
80%
60%
40%
20%
0%
100%
80%
60%
40%
20%
0%
PERCENT OF TRANSACTIONS WITH AT LEAST ONE ADVISER ON EITHER SIDE
Valu
e of
dea
ls
Num
ber
of d
eals
2009 2010 2011
$10
$8
$6
$4
$2
$0
75
60
45
30
15
0
M&A TREND
Valu
e of
dea
ls ($B
)
Num
ber
of d
eals
2009 2010 2011
20 TECH M&A BANKING REVIEW 2011© 2012 451 RESEARCH, LLC AND/OR ITS AFFILIATES. ALL RIGHTS RESERVED.
SECTION 6 More Information On The Tech M&A Banking Review
This 451 Research report covers all IT-related M&A transactions announced – but not necessarily closed – between January 1, 2011 and December 31, 2011 that involve the purchase of 50.1% or more of targets based in the US. It does not cover joint ventures, spinoffs or minority investments unless the transaction involves the purchase of a majority of a company.
Data is drawn from The 451 M&A KnowledgeBase, a proprietary database of roughly 30,000 IT and telecom deals from 2002 to present.
This report focuses only on the IT segment, which includes the full range of products and services such as hardware, software, IT services, technology-enabled outsourcing, and Internet e-commerce and content companies. It does not include telecom carriers, telecom service providers or telecom hardware or software vendors. Our definition of IT does not include categories like electromechanical equipment, biomedical equipment or life sciences.
Transactions are valued as of the date of the deal announcement, and in the case of mergers, deal value is based on the company that is the target of the transaction. Earnouts or other contingent payments not assured at the time of announcement are not included in the deal value.
Each adviser is given credit for the full value of the transaction advised. Both merger advisory and fairness opinion credits are included; however, a given adviser that provides both merger advisory and fairness opinion for a deal is given only a single credit for that transaction.
Total deal value numbers in this report include proprietary estimates prepared by 451 Research for some transactions. The KnowledgeBase includes hundreds of deal value and TTM revenue estimates prepared by our analysts and validated with sources close to the deal. Transactions with no officially announced or estimated value are, of course, included in all deal counts.
451 Research is committed to offering the industry’s most accurate, granular and comprehensive review of technology M&A advisory activity. To ensure that we have complete coverage of all investment banks, our researchers have contacted each advisory firm at least twice to identify or validate our records of that firm’s advisory credits. Further, we have invited each firm to include us on its regular mailing list so that we can keep advisory data current in the KnowledgeBase. We can only ensure inclusion of advisory credits that are submitted to us before midnight PST on the last day of the period being measured (e.g., for our next annual report, midnight PST on December 31, 2012). The Tech M&A Banking Review reflects the 451 Research team’s best efforts to gather, compile and classify transaction data; any errors of omission or commission are unintended. For more information on how to contribute advisory information, please contact Adam Phipps at adam.phipps@ 451research.com or (415) 989-1555 x106.
451 RESEARCH: M&A KNOWLEDGEBASE 21 © 2012 451 RESEARCH, LLC AND/OR ITS AFFILIATES. ALL RIGHTS RESERVED.
The 2011 Tech M&A Banking Review was compiled and written by a team led by Adam Phipps that also included Ben Kolada, Brian Satterfield and other 451 Research M&A analysts. A special thanks to the 45-plus analysts from 451 Research and Tier1 Research who write hundreds of deal analyses every year, help validate estimated deal values and assist the M&A team in classifying acquired companies into the correct industry categories.