Infrastructure Software Valuation Metrics
Amber Stoner
Sales and EBITDA multiples in the overall Infrastructure space are up from this time last year with nearly all subsectors increasing in valuations. Security still leads the pack in sales valuations, and while there was a drop in multiples in the endpoint subsector, its EBITDA multiples are still the highest among Infratructure’s six subsectors.
In one of the larger mega deals of the quarter, HP spent $3B to get wireless networking provider, Aruba Networks, at a 3.7x revenue multiple. The deal combines Aruba’s wireless mobility solutions with HP’s switching portfolio, enabling HP to provide simple, secure networking solutions to its enterprise customers.
Over the last quarter, both PE and strategic buyers have shown an increased appetite for cybersecurity providers. Thoma Bravo sold networking and security provider, Blue Coat, founded by successful Corum client Joe Pruskowski, to Bain Capital for $2.4B, a 3.7x revenue multiple. And Proofpoint gobbled up Emerging Threats, a network anti-malware and threat detection SaaS provider, for $40M, bolstering its advanced threat detection capabilities.
Israeli companies stood out as both buyers and sellers in Q1. Israeli enterprise networking company, Allot Communications acquired Spanish security as a service company Optenet for $12M. And Bottomline Technologies grabbed Intellinx, an Israeli behavior tracking security software company, for nearly $85M, to combat cyber fraud.
And in an example of two of our top 10 tech trends overlapping, we have a deal highlighting security software for IoT devices. British chip designer ARM bought Dutch internet of things security software provider, Offspark, for nearly $2M. As security concerns continue to be a barrier to IoT adoption, expect more deals in the space in the upcoming months.
Ivan, what’s happening in the Vertical market?
Vertical Software Valuation Metrics
Ivan Snook
Wavering Vertical multiples have climbed since the dip in January, with EBITDA multiples at 12 month highs thanks in large part to healthcare, automotive and real estate subsectors. Real estate jumped to the top valuations among strategics as well.
Within this sector is Rodacom, who provides software for managing real estate companies, and was bought by Concept Media, owner of French real estate listing site, logic-immo.com. In a similar deal, Auction.com made the winning bid for Channel and its real estate liquidation, asset and workflow management SaaS.
Related to real estate are the subsectors AEC and Energy/Environment, where we saw two deals in energy use management for buildings. Utilities provider Centrica British Gas purchased AlertMe.com for $100 million for its home-oriented energy monitoring, and Diss tech Controls, who covers intelligent energy use for major facilities, was bought by Acuity Brands, a lightbulb manufacturer in Atlanta, for $252 million.
Stepping away from building-related software, we’ve seen several acquisitions related to our top ten trend, digital currency flow -- which is proving to be international in scope.
In what was nearly a megadeal spotlight at $927 million, London-based Skrill, known for its Moneybookers online payment service, was bought by rival Optimal Payments to create a global player in the digital wallet category. Back in the States, Paypal bought mobile payments tech provider Paydiant for $280 million. And in Tokyo, messaging app LINE also expanded its mobile payments tech in its acquisition of WebPay Holdings.
For software processing somewhat larger sums of money, there were several other deals in financial services sector. TwoFour Systems, whose software processes transactions on the ForEx, was bought by Broadridge Financial for $32 million. Swiss-based Temenos, who offers a broad range of software to the financial sector, made two moves to enter the SaaS market:
First to Pennsylvania for Akcelerant for $50 million in cash, and then to Luxembourg for Multifonds at $263 million, a valuation of 17 and a half times EBITDA. In 2014, only 5% of Temenos’ revenue was from SaaS products, whereas Akcelerant and Multifonds each had over 75% of their sales in SaaS. This move reflects Temenos’ goal to increase its recurring revenue and to extend its reach into North America.
Speaking of organizations needing better financial management is our government subsector, where Opus Inspection bought Drew Technologies and their vehicle inspection instruments and software for $30 million cash plus a $4.4 million earnout.
And that brings us to the consumer market. Alina?