Big data M&As triple in 2012

Purchases of big data companies have tripled in the first six months of 2012, according to a report on merger and acquisition (M&A) activity released today.

The report, from Berkery Noyes, an independent mid-market investment bank, covers M&As in the media and marketing, software, and online and mobile sectors. The report compares activity to the four previous six-month periods from 2010 and 2011.

Overall, Berkery Noyes found the total volume of M&As in these information industries has increased six per cent in the first half of the year, rising from 1,646 to 1,741 transactions.

The software industry accounted for the majority of the big data deals. Within this, the Energy segment – which primarily includes software companies that service electricity, fossil fuel, alternative energy, and energy utility companies – had the largest increase in transaction volume, growing 61 per cent over the six month period.

The single most active acquirer so far this year in the industry was Opera Solutions, a predictive analytics company, with three transactions. However, IBM has continued the active growth it has displayed in the two and a half years since the report series.

The technology giant has added  Vivisimo, a provider of software that automates data discovery, to its portfolio this year, after acquiring companies including i2 Limited in 2011 and Coremetrics and Netezza Corporation in 2010.

According to James Berkery, chief information officer at Berkery Noyes, big data is currently a ripe breeding ground for M&As, owing to the large number of start-up companies which specialise in Hadoop – the leading big data software framework that supports data-intensive distributed applications under a free license, enabling applications to work with thousands of nodes and petabytes of data.

 This can be seen in the media and marketing industries which are also making big data acquisitions to, amongst other reasons, enhance their analytics capabilities. For example, W2O Group, a network of marketing research and communication firms, acquired Ravel, a start-up founded in 2010 which provides an open source graph database called GoldenOrb, which is a cloud-based project modelled after both Hadoop and Google's graphing processing tool Pregel. This allows businesses to gain insight from large datasets.

M&A volume also grew in online and Mobile photography companies – triple the amount in the previous six months – as the number of photo sharing transactions increases. One of the largest transactions was Facebook’s acquisition of Instagram for $1bn, in addition to their acquisition of the team from Lightbox, an Android photo sharing app.

Despite the promising M&A figures, the overall transaction value of the information industry fell two per cent – the median revenue multiple decreasing from 2.0x in the second half of 2011 to 1.6x in the first half of 2012; while the median EBITDA (Earnings before interest, taxes, depreciation, and amortization) multiple dropped from 11.6x to 10.0x.

To read the full Berkery Noyes M&A report click here.