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Corp. Development, Family Offices, Private Equity

M&A Success Isn’t About Luck — It’s About Taking Control

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B2B fintech M&A is alive and well in the middle market (see more in this recent blog post). Values and volumes remain strong. Companies continue to innovate and grow. Interest from both strategics and financial sponsors, in the US and abroad, remains high. The M&A values and trends in the dozen plus sectors of the information technology industry that we follow have remained at the relatively high levels that we’ve been seeing since about late 2014 (see more in our recent M&A report).

For some, the question has been: “When will it end?” For others: “Is this the right time to be a buyer — or a seller?”

To this we have several responses. These tips apply whether you’re in the fintech space or another middle market industry.

First: Don’t trust the pundits. They were wrong on Brexit, wrong on Trump, and have no clue when this cycle will end; neither do we. But we do know that it will end. We have not yet conquered economic cycles. Don’t fool yourself.

Second: Don’t generalize. Some firms will do well in a tough economy; some won’t. Some market niches are just opening and have lots of room to grow; some niches are rapidly being overtaken by events, technology or consolidation and won’t be around much longer. In the words of General James Mattis, when he commanded Marine Corps forces in Iraq: “You cannot allow any of your people to avoid the brutal facts. If they start living in a dream world, it’s going to be bad.”

Third: Take control. Don’t be a victim. Successful deal making is about controlling the timing — not about luck. Whether you are a buyer or a seller, the timing of M&A decisions is in your hands. If you are serious about selling, take advantage of buyer interest and momentum. Don’t be passive. If you are serious about buying, look beyond recent past performance. Buying low and selling high is an easy-to-parrot mantra that few actually follow. Instead they wait too long to sell in strong markets; and they prevaricate buying in weaker ones. It’s clear that those who have a clear goals; a clear plan to achieve those goals; and are willing to act decisively while those around them flail have better results than most others. Luck is not a plan.

Fourth: It’s all about the future. Value is driven by perceptions of your ability to drive future growth over the long term; not about past results. Focus on what it will take to make the company’s future bright. That’s where the money is…

The report found here includes data on many of the most recent M&A deals, values, and trends in the dozen plus sectors that we follow.

A few of the more interesting recent deals include:

  • Gartner (NYSE:IT) acquired Corporate Executive Board (“CEB”) for $2.6bn in cash, implying an enterprise value of $3.3bn and valuing the company at an implied 3.5x LTM Revenue and 17x LTM EBITDA,
  • QuoVadis agreed to sell a majority interest in the company to WISeKey, a leading Swiss cybersecurity and Internet of Things (IoT) company. Marlin & Associates acted as an exclusive financial and strategic advisor to QuoVadis and its principal owner, ABRY Partners,
  • TMX Group (TSX:X) agreed to sell its extranet and wireless infrastructure business (“Atrium”) to the Intercontinental Exchange (NYSE: ICE). Marlin & Associates acted as an exclusive financial and strategic advisor to TMX,
  • OpenGamma received a strategic investment from the Japan Exchange Group (“JPX”), Accel Partners, NEX (formerly known as ICAP), Euclid Opportunities and ex-SunGard CEO Cristóbal Conde. Marlin & Associates acted as an exclusive financial and strategic advisor to OpenGamma and its investors,
  • Advise Technologies was acquired by Compliance Solution Strategies, a governance, risk management and compliance (“GRC”) platform backed by CIP Capital. Marlin & Associates acted as an exclusive financial and strategic advisor to Advise Technologies.

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