latest-news-headlines Market Intelligence /marketintelligence/en/news-insights/latest-news-headlines/pe-buyers-drive-june-infotech-m-a-as-morgan-stanley-advisers-cash-in-65382955 content esgSubNav
In This List

PE buyers drive June infotech M&A as Morgan Stanley advisers cash in

Blog

Banking Essentials Newsletter: September 18th Edition

Loan Platforms: Securing settlement instructions and prioritising the user experience

Blog

Navigating the New Canadian Derivatives Landscape: Key Changes and Compliance Steps for 2025

Podcast

MediaTalk | Season 2 | Ep. 29 - Streaming Services, Linear Networks Kick Off 2024/25 NFL Showdown


PE buyers drive June infotech M&A as Morgan Stanley advisers cash in

A flurry of 10-figure private equity deals boosted M&A activity in the information technology space during June, with Morgan Stanley advising on some of the largest transactions.

While there were no megadeals for the month, deal values in general maintained strength as five transactions crested the $1 billion mark.

There were 236 information technology transactions announced in June, according to data from S&P Global Market Intelligence. While that was flat compared to May, it was 65.0% above June 2020.

As the year progresses, comparisons get more difficult, since June marks the beginning of a return to business in sector deal activity amid the pandemic.

Easily topping out the list of announced transactions was a go-private deal for data analytics and management company Cloudera Inc. Private equity firms Clayton Dubilier & Rice LLC and KKR & Co. Inc. will put up $5.00 billion in transaction value, which includes $2.39 billion in debt financing. Equity for the acquisition lands at $16 per share.

That represents a meager $1-per-share return from Cloudera's IPO price four years ago, but it is still a slightly above-average valuation when held against comparable deals, according to 451 Research, an offering of S&P Global Market Intelligence. Other take-private transactions for low-growth software providers generally landed below 5x trailing revenue. By comparison, the private equity firms will pay 5.2x trailing revenue for Cloudera.

The deal includes an expansive roster of financial and legal advisers, including Morgan Stanley, which Cloudera will return to after working with the firm in its $2.11 billion acquisition of Hortonworks Inc. Morgan Stanley charged the software company $17.5 million in advisory fees on that deal, while seller Hortonworks paid Qatalyst Partners LP $34.5 million.

Morgan Stanley will be Cloudera's only financial adviser in its sale to Clayton Dubilier & Rice and KKR, and it will also provide a fairness opinion. But the private equity firms listed seven financial advisers: Bank of America Corp., Citigroup Inc., Cowen & Co. LLC, GCA Advisors LLC, JPMorgan Chase & Co., Perella Weinberg Partners LP and William Blair.

SNL Image

Morgan Stanley stayed very busy in the sector through June. The firm advised on four of the five largest deals, including Thoma Bravo LLC's $1.64 billion acquisition of QAD Inc. In addition to Morgan Stanley, QAD also retained Moelis & Co. Private equity firm Thoma Bravo tapped Barclays PLC for the deal.

Thoma Bravo has been aggressively growing its technology investments. Its portfolio is comprised of 75.3% technology, media and telecommunications companies, and a sizable portion of that was added in 2020 when the private equity firm grew its managed assets by 73.5% to $78.11 billion, according to S&P Global Market Intelligence. QAD will put another enterprise software company under the firm's umbrella.

Sector-focused private equity firm Symphony Technology Group LLC is also adding current to the deal flow with its $1.20 billion acquisition of a FireEye Inc.'s products business, leaving the cybersecurity company its services business.

That transaction will advance Symphony's position in the technology, media and telecommunications space, where it holds 82.8% of its $1.26 billion assets under management. More specifically, it extends the firm's reach in cybersecurity, where, in other multibillion-dollar transactions, Symphony recently added McAfee Corp.'s enterprise business and RSA Security LLC.

In both those transactions, Symphony tapped advisers from Jefferies Financial Group Inc. and UBS Group AG, and it will put those same firms to work on its FireEye deal. The seller tapped The Goldman Sachs Group Inc. advisers.

FireEye's services business operates under what will become the company's new corporate name, Mandiant. The products business being sold has been in decline, which will leave FireEye with a higher growth operation. Meanwhile, Symphony will land the FireEye name, as well as an inexpensive cybersecurity asset, valued at just 2.2x trailing revenue, according to 451 Research.