IT exit multiples drop

The sector remained the third most expensive in EMEA, behind only real estate and financials.

Exit multiples for information technology investments experienced a marginal decline over the past quarter, according to a new report from S&P Global Market Intelligence.

IT exits generated a 14x EBITDA multiple between July 2016 and August 2017, down from 15.2x the previous quarter, S&P’s EMEA Private Equity Market Snapshot noted. The prices sat behind only real estate and financial assets, which commanded 28x and 20.2x respectively.

Prices were impacted by several outlier transactions, including Cyan’s acquisition of Connode at 33.9x in July 2016, Silvina Aldeco-Martinez, co-author of PEMS, told Private Equity International. The previous figures were also distorted by Vivendi’s acquisition of a 70 percent stake in GameLoft at 45.2x EBITDA and Verizon’s purchase of Fleetmatics Group from Wellington Management Group at 34.1x EBITDA.

Technology investments have significantly outperformed other private equity buyouts since the recession, according to data from investment decision platform CEPRES. Deals in the sector, which includes computer hardware, telecoms and internet companies, were on average sold for an enterprise value of 11.14x EBITDA, compared with a median sale price of 9.67x EBITDA for non-tech deals.