Millennial Media doubles on debut

Contact: Ben Kolada

Taking advantage of the emerging market for mobile advertising, platform vendor Millennial Media leapt onto the public stage Thursday, creating nearly $2bn in market value in its debut on the New York Stock Exchange. The company priced its 10.2 million shares at $13 each – the high end of its proposed range. Shares traded at about twice that level in early afternoon. Millennial Media is trading under the symbol MM. Morgan Stanley, Goldman Sachs and Barclays led the offering, while Allen & Company and Stifel Nicolaus Weisel served as co-managers.

Millennial Media, which has nearly 75 million shares outstanding, currently garners a market cap of $1.9bn. That values the company at 18 times trailing sales, in the ballpark of where we estimate Quattro Wireless was valued in its sale to Apple, but about half the valuation we believe AdMob received from Google. Those two companies are Millennial’s primary rivals, although Millennial stakes its claim as the largest independent mobile ad platform provider.

Interest in advertising technology has been building throughout both the equity and M&A markets. Earlier this month, for instance, telco SingTel announced that it was acquiring Amobee for $321m. (We estimate the startup, which provides mobile ad campaign management software, garnered roughly 9x trailing sales in its purchase by the Singapore telco giant.) Meanwhile, the Adtech pipeline is far from dry, even after a recent slew of big-ticket exits. Earlier this month, advertising intelligence firm Exponential Interactive filed its paperwork to go public. The company, which plans to trade under the symbol EXPN, increased revenue 35% last year to $169m.

New face at the head of the league table

Contact: Brenon Daly

Fittingly for a year that saw an unprecedented amount of upheaval on Wall Street, Barclays came from nowhere in 2008 to take the top spot on the 451 Group’s annual league table. And when we say it came from nowhere, we mean that literally: The British bank didn’t have a hand in a single IT deal involving a US-based company in 2007. It owes its dramatic rise to its purchase of Lehman Brothers, a bank that figured at the sharp end of the ranking for each of the past three years.

The unexpected ascent of Barclays snapped a three-year run by Goldman Sachs as busiest tech adviser, with Goldman slipping back to second place. JP Morgan Chase, boosted by its acquisition of Bear Stearns in May, rebounded to third. It was a notable comeback for JP Morgan, which had plummeted to 11th place in 2007. Furthermore, JP Morgan was one of the only major banks to actually increase both the number of deals it worked and the value of those deals, year over year.

However, we would quickly add that these banks were the best in a very bad year. Consider the fact that Barclays, which headed our 2008 ranking with $30.6bn worth of advised deals, would have barely squeaked into 10th place on our 2007 ranking. Meanwhile, Goldman’s total amount of advised deals last year ($26.8bn) was just one-third the previous year’s tally ($78bn) at the bank. (Note: We will be sending out an executive summary of the league table in the daily 451 Group email on Tuesday, with the full report available later this month.)

Overall 2008 league table standings

Rank Bank 2007 standing
1 Barclays N/A
2 Goldman Sachs 1
3 JP Morgan Chase 11
4 Citigroup 4
5 Evercore Partners 8

Source: The 451 M&A KnowledgeBase

Instant investment banks

We wrote earlier this week that Bank of America’s pending purchase of Merrill Lynch gives the Charlotte, North Carolina-based giant its first real opportunity to pick up M&A advisory work in the tech market. Well, that assessment goes double for Barclays, which plucked Lehman Brothers’ banking unit out of the rubble, and it goes triple for whichever bank – if any – snags perennial tech powerhouse Morgan Stanley. (Reports on Thursday indicated that Morgan Stanley was holding talks with Wachovia, as well as considering a sale to a European institution.)

Of course, the tech M&A business is just a side-note in the unprecedented consolidation of investment banks that’s played out this week. But it’s one that shouldn’t be overlooked. Deal flow in the tech sector has approached a half-trillion dollars in each of the past two years. Even during an off-year like 2008, we’ve already seen some $250bn worth of transactions, more than the full-year total in 2004. That’s a lot of banking fees.

To be sure, there will be a substantial amount of disruption in the tech banking business as the new owners integrate the formerly independent investment banks. (For instance, LogMeIn, which filed to go public in January, still has Lehman listed as its lead underwriter. Lehman’s new owner, Barclays, is hardly known for its equity underwriter business, much less underwriting tech offerings.) But at the very least, the acquiring banks picked up the opportunity to be relevant in a market where deals worth hundreds of billions of dollars are going to get done each year. And, thanks to these historic times, they got the chance on the cheap.