Tag: league table

Aftershocks on the tech M&A banking landscape

Brenon Daly

Contact: Brenon Daly

In our report on the 2009 league table, we noted that Wall Street had been rocked by an earthquake in 2008 but that the smaller aftershocks were continuing to ripple across the tech banking landscape. Another one of those was felt Monday, when Thomas Weisel Partners agreed to sell itself to a rather old-line institution, Stifel Financial, for around $300m in stock. The deal, which is slated to close this quarter, would add TWP’s investment banking business, with its focus on tech, healthcare and alternative energy, to Stifel, which is known more for its transactions involving financial institutions and real estate.

In 2008, we counted 11 acquisitions of firms involved with tech M&A, including powerhouses such as Bear Stearns, Lehman Brothers and Merrill Lynch. The number of deals in 2009 dropped, as did the size of them. There were just five purchases of investment banks with tech practices last year, including the pickup of Cowen and Co by hedge fund Ramius Capital and Raymond James & Associates’ acquisition of Lane, Berry & Co.

As we look at the league table, we’re struck by the fact that Stifel is adding a pretty busy tech advisory shop by buying TWP. (If you would like a copy of our 2009 league table report, just email me.) Last year, TWP finished tied for 12th place (with Citigroup) in terms of the number of IT transactions that it worked on. On a pro forma basis, adding Stifel’s four deals to the 10 that TWP banked would put the combined entity at 14 IT transactions, tied for fifth place.

If anything, TWP has picked up its pace this year. It has already worked on five deals worth more than $1.2bn, including sole sell-side credit on the pending $755m sale of Phase Forward to Oracle. Additionally, it’s been arguably the most-active midmarket underwriter of tech IPOs. TWP is sole bookrunner for offerings from SciQuest as well as SPS Commerce, which was one of the few IPOs last week that actually finished above water. It is also co-lead on Tangoe, which filed earlier this month, and Convio, which is slated to price this week.

Consistency pays off for JP Morgan

Brenon Daly

Contact: Brenon Daly

Continuing its steady climb up the rankings, JP Morgan Securities emerged as the busiest adviser for US technology deals in 2009. The bank, which worked on three of the four largest transactions last year, moved up from third place on The 451 Group’s league table in 2008 after not even figuring into the top 10 in the previous year. Unlike many of its rivals that owe their standing to one or two key transactions in a specific sector, JP Morgan figured highly across a broad swath of the technology market.

It was that consistency – in a year plagued by inconsistency and uncertainty – that allowed the bank to slightly edge Goldman Sachs, which held onto second place for the second consecutive year. The aggregate value of the 11 deals that JP Morgan advised on last year totaled $23.9bn, just ahead of Goldman Sachs’ total of 15 transactions valued at $22.6bn. Rounding out the podium, Morgan Stanley stands as one of the only major banks that actually bumped up the number of deals and the total value of those transactions, year over year. Look for our full report, including leaders for a half-dozen specific sectors, in tonight’s MIS sendout.

451 Group League Table

Bank 2009 ranking 2008 ranking
JP Morgan 1 3
Goldman Sachs 2 2
Morgan Stanley 3 7
Bank of America Merrill Lynch 4 4
Citigroup 5 5

Source: The 451 M&A KnowledgeBase

‘Animal spirits’ stir M&A market

Brenon Daly

Contact: Brenon Daly

The M&A market is back. OK, not really. But looking at this week’s deal flow, one could forget that spending on acquisitions plummeted 85% in the first three months of the year. (We recently noted that Q1 2009 was the first time since we began tracking tech M&A in January 2002 that we saw a quarter without a deal worth more than $1bn.) Literally as soon as the calendar flipped to April, we saw one 10-digit transaction, and that’s been followed by three others.

Of course, most people point to Oracle’s pending purchase of Sun Microsystems as evidence that ‘animal spirits’ (as Keynes would say) are starting to stir again. That purchase stands as the largest IT transaction since Hewlett-Packard’s $13.9bn acquisition of EDS last May. (Yesterday we reported how Oracle’s planned pickup has reshuffled our league table, at least in the early going of 2009.) Another way to view the mammoth size of the deal is to consider that the $260m break-up fee in Oracle-Sun is larger than all but 15 of the announced deal values so far this year. (As an aside, we would note that the $260m represents 3.5% of the deal value, which is a point above where many other transactions come in.)

However, there were other signs of life in the sector this week beyond that big acquisition. Well-known buyer Symantec returned to the market for the first time in a half-year, paying what we understand was $18m for Mi5 Networks. Also, private equity players notched a pair of deals. And we even saw an unsolicited bid for a public company. We would note that it wasn’t a run at some micro-cap company that no one has ever heard of, much less owns shares in. Emulex is a 30-year-old vendor that earns money and typically trades about three million shares each day. Broadcom offered $9.25 for each share of Emulex, for a total equity value of $764m. However, Emulex stock has been trading above $10 since the offer.

New face at the head of the league table

Brenon Daly

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