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elcome to the NewYear! And, thank you
for making last year such astrong one for us. As youmay know, we were named“Middle Market InvestmentBanking Firm of the Year”and won other awards, aswell. We’re keeping goodcompany, as you can see bythe table on page 6. We’reproud of our successes…andintend to keep it up.
Several of you have askedfor my outlook on mid-markettech m&a. While I detectsome anxiety in the air, I amon record as reasonablybullish in our niche. It isn’tbecause I haven’t noticedthe credit crunch impactingsome mega deals. It’sbecause, globally, while thevalue of m&a deals is down,the volume of deals is up.Smaller deals are still gettingdone! (It also helps us thatwe work internationally).You can read my commentsin The Wall Street Journal(“Tech Merger Meter”) inInside Reference Data (“TheFuture of m&a”) and on ourweb site.
We’ve already closed fourdeals in 2008. We startedright after the New Yearwith the completion of thesale of the Hemscott Group
(London) to Morningstar. Aprofile of Veronis SuhlerStevenson, which controlledHemscott, is on page 3. Aweek later, Reuters completedthe acquisition of our client,StarMine Corporation. Wenegotiated this deal as Reuterswas being acquired by theThomson Corporation. Then,we announced that NetikLLC acquired the CapcoReference Data Services(CRDS) and replaced TheBank of New York Mellonwith Symphony TechnologyGroup as the primary investorin the business. Shortly afterthat, Bankrate acquired ourclient Lower Fees, which hasan interesting patent-pendingplatform to help managecomplex real estate fees.
While I can’t predict what2008 will bring, we’ve made
some recent staff additionsto help us be ready, includingJason Panzer, former SkaddenArps deal lawyer, JCF CFOand FactSet VP BusinessDevelopment (more onpage 6); Brian Siebenburgenformerly with PWC; MikeGuadano and GeorgeNanidzhanyan. We lookforward to working withyou in the New Year.
Sincerely, Ken Marlin, Managing Partner
Marlin & Associates
Transaction Advisory and Strategic Consulting to the Digital Information EconomyWinter 2008
Dear Clients and Friends:W
arlin & Associates wasagain awarded top
honors by The M&A Advisor,a conference producer and newsletter publisherfor buyers and sellers ofmiddle-market firms.
In December, Marlin wasnamed “Middle MarketInvestment Banking Firm ofthe Year.” Marlin also wasrecognized for leading threeother middle-market deals-of-the-year (below $100M):“International/ Cross BorderDeal of the Year,” “FinancialServices Deal of the Year,” and“Computer and InformationTechnology Deal of the Year.”
In July, The M&A Advisornamed Marlin “Middle MarketFinancing Agent of the Year –Equity,” and also presentedthe firm with awards in threemiddle-market financingdeal-of-the-year categories.
The M&A Advisorrecognizes top deal-makersserving the $10 million to $1 billion (sales) market.“Deal of the Year” awardsare based on the importance,difficulty, unique characteristics,and industry impact of eachtransaction.
“Middle MarketInvestmentBanking Firm of the Year”
M
Marlin’s Michael 2Maxworthy
Mergers & Acquisitions 2Transactions
Profile: Veronis 3Suhler Stevenson
Brainpower N.V. 4Case Study
Gaining Leverage in 5the m&a Process
M&A Welcomes 6New Team Members
Financial Adviser Ratings 6’08 Starts With Four 7Transactions
In This Issue
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“Middle Market Cross-border Deal ofthe Year.”
Max has advised numerous otherMarlin & Associates clients, includingStarMine on its recent sale to Reuters;Vista Equities’ acquisition of GlobalEnergy Decisions; and Ipreo’s recentsale of Hemscott to Morningstar (storyon page 7).
He is a former director for theUpward Bound Program at BinghamtonUniversity and is a member of the YoungExecutives Board for the National DownSyndrome Society. He holds degrees inFinance and Management InformationSystems from the School of Managementat Binghamton University.
Inside M&A:Michael Maxworthy
ichael “Max” Maxworthy, one ofInvestment Dealer’s Digest
Magazine’s “40 Under 40” list of topinternational deal-makers, co-foundedMarlin & Associates with Ken Marlin andtwo others, in 2002.
Max and Ken had worked togetherat Veronis Suhler Stevenson, the MediaMerchant Bank, where he headed theresearch team that provided in-depthresearch on companies, industries,transactions and valuations.
He began his investment bankingcareer 10 years ago as a ResearchAssistant at Morgan Stanley and as aFinancial Analyst at American InternationalGroup. Since then, he has advised clients
“Globally, 2007 was a strong year for DigitalInformation Economy company mergers andacquisitions. In spite of the well-known credit woes,most industry participants continued to generatestrong profitable growth, which contributed toimpressive sale prices—for good companies.U.S. buyers and investors remained active in themarket and a strong Euro attracted a number ofinternational buyers.”
on many successful mergers, acquisitions,capital raises, strategic partnerships,valuations and public debt offerings.
Among other important deals, Maxhelped lead the M&A team that advisedBrainpower S.A. (Netherlands/Switzerland) on its sale to BloombergLP—the only financial technologyacquisition in Bloomberg’s history. In2006, the Brainpower/Bloombergtransaction was recognized as the“Middle Market Financial TechnologyDeal of the Year.”
He also advised Hugin ASA (Norway)on its sale to Euronext just as Euronextitself was being acquired by the NYSE.That transaction was recognized as the
M
— Michael Maxworthy, Co-Founder, Marlin & Associates
An avid skier andmotorcyclist, Max thriveson challenging situations.
0
5
10
15
20
25
’98 ’99 ’00 ’01 ’02 ’05’03 ’06 Q1 ’07 Q2 ’07 Q3 ’07 Q4 ’07’04
Implied EV / Trailing Revenue Implied EV / Trailing EBITDA Total Number of Annual Transactions
Trim
Mea
n M
ultip
les
100
0
200
300
400
500
Num
ber
of T
rans
actio
ns
Digital Information Economy Mergers and Acquisitions
These figures may be skewed by the inclusion of certain high multiple Internet-related transactions.Sources: Marlin & Associates, PQ Media, Capital IQ
Marlin & Associates Highlights © 2008 Marlin & Associates New York LLC.
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eronis Suhler Stevenson (VSS), apremier mid-market private equity
firm with a $2.8 billion portfolio, is focusedsolely on the media, communications,information and education industriesin North America and Europe. Thefirm’s professional staff includes formeroperating executives and investmentbankers with specific media industryexperience to assist its portfolio companieswith business planning and development,acquisitions, financing and structuring.
Through more than 700 transactionsover the past 25 years, VSS has gaineda reputation as a knowledgeable, value-added investor, more akin to a strategicpartner than strictly a financial investor.Their formula for building long-termvalue is to start with a solid platformcompany, led by a strong managementteam and help them make acquisitionsof like-kind businesses. Eventually theyseek to exit and obtain superior resultsfor investors. Applying this approach,the firm has invested in 58 platformcompanies and 235 add-on acquisitionsthroughout its history.
VSS engaged Marlin & Associates tohelp them divest certain assets withinIpreo Holdings LLC, a VSS portfoliocompany which is a leading globalprovider of capital markets and investorrelations solutions.
“We chose Marlin because theirknowledge of, and relationships within, thefinancial information sector is extremelydeep,” says Nick Veronis, ManagingDirector, Veronis Suhler Stevenson.
The M&A team provided expertstrategic and financial advice that helpedVSS present the three core Hemscottbusinesses in ways that were easy forbuyers to understand; identify potentialbuyers for each of the businesses; andmanage a challenging process involvingmultiple parties from multiple countriesand assisted with multiple simultaneousnegotiations. Seven months after engagingM&A, all three Hemscott units wereacquired in a single transaction byMorningstar, Inc., (NASDAQ: MORN)a leading provider of independentinvestment research.
“Marlin did a great job of graspingthe key issues and then proactivelyhelping to resolve them, particularlywhen it came to technology-relatedmatters. It’s a tribute to Ken’sbackground in the industry and hisdirect experience in managing financialinformation and technology businesses—not many bankers have that hands onexperience,” says Veronis. “He alsoknew the landscape very well, and anyelements that he wasn’t familiar with hegot a handle on quickly.”
VSS looks for prospective portfoliocompanies with strong management,proprietary data and/or applications,high recurring cash flow, and thepotential to execute add-ons.
“This is a good time to have capitaland a flexible approach to deploying it,”
says Veronis. “We are entering aperiod that may present some interestingopportunities and VSS’s goal is topartner with owners and operatorswho want to take their companies tothe next level. We would happily useMarlin again—both on the sellside orthe buyside—and plan to maintainregular contact with them.”
Profile:Veronis Suhler Stevenson
V
“This is a good time tohave capital and a flexibleapproach to deploying it.We are entering a periodthat may present someinteresting opportunities.”
Building the next generation of leadingmiddle-market media companies
“We chose Marlin because their knowledge of, andrelationships within, the financial information sector isextremely deep.” — Nick Veronis, Managing Director,
Veronis Suhler Stevenson
“Marlin did a great job ofgrasping the key issues andthen proactively helping toresolve them.”
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rainpower offered leading edgetechnology, but it was not an easy
company to understand or to value.M&A helped communicate a clear valueproposition and conducted a processthat produced multiple bidders andsuperior results.
Headquartered in the Netherlands,publicly traded in Germany, with keyemployees in Switzerland and many ofits largest customers in Italy, Switzerlandand Germany, Brainpower N.V. wasnot a simple company to understandfrom the outside.
Brainpower had developed a world-class platform aimed at meeting the needsof European asset managers whosemultiple portfolios often contained avariety of financial securities issued indifferent currencies and countries.
After years of battling on their own,the idea of partnering with an organizationwith ample resources began to appeal tothe founders. When several acquisitionovertures ended without a deal, theysought professional advice.
“We met with strategic advisors inEurope and the U.S and evaluatedthem on criteria such as: track record,experience in financial technology,‘chemistr y’ and the amount of highlevel attention we could expect,” saysRocco Pellegrinelli, Brainpower’s CEO.
“When we tallied the scores, M&Awas far ahead of all the others. Theyclearly know the space, who to talk toand how to close a deal.”
M&A crafted Brainpower’s valueproposition and helped present it to theright people in a format that was easyto understand.
“We showed that Brainpower’s re-investment in technology and productenhancements was beginning to payoff,” says M&A Managing Partner, KenMarlin. “From our knowledge of theindustry, we knew that Brainpower’sportfolio tools and analytics wereuniquely suited to serve a market thatwas attracting some very big players.Even though the company’s profits werenot strong, we were confident that aclear presentation of their strengthswould interest several key players andnet a fair price.”
M&A arranged meetings with sixcompanies from the U.S., France andthe U.K. Within a month, three submittedserious bids, including Bloomberg, theultimate winner.
Although Bloomberg is not knownfor making strategic acquisitions, M&Abelieved that they would be open tothe idea. “Over the years, we haveshown Bloomberg several deals thatthey seriously considered,” saysMarlin. “We knew what they werelooking for and had their confidencethat we would not present anythinginappropriate.”
Negotiations and due diligencewere conducted in three languages.Nevertheless, just six months from thefirst negotiations, the transaction wascompleted at a premium of 59% toBrainpower’s volume-weighted averagetrading price during the previous threemonths. The total price was about fivetimes Brainpower’s reported revenuefor the prior calendar year.
“M&A’s strategy, advice and followthrough enabled us to get the bestpartner, terms and price and to close inrecord time,” says Pellegrinelli.
“Selling Brainpower was all aboutmessage, connections and experience,”recalls Pellegrinelli. “If you don’t have astrategic advisor who understands themarket, is adept at positioning the assetsof the company and is experienced atclosing successful deals, you’ll have ahard time getting in front of the rightbuyer or getting an appropriate price.Fortunately, we had M&A.”
Case Study:Brainpower N.V.
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“They clearly know thespace, who to talk to andhow to close a deal.”
Proper positioning, industry credibilityand a compelling message lead to asuccessful transaction.
“Selling Brainpower was allabout message, connectionsand experience.”
“Fortunately, we had M&A.”
Rocco Pellegrinelli, Brainpower CEO: “M&A openedthe door for us at Bloomberg and other firms and
got us talking to the right people.”
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Gaining Leveragein the m&a Process?
short time ago, we were approachedby the CEO of a large technology
company that was having trouble sellingone of its divisions. The seller couldn’tget the buyer to closure, let alone getthem to increase the offer. The buyercouldn’t get the seller to agree on aprice or other terms. The deal haddragged on for months and frustrationwas rampant. No one was adequatelymotivated to get the deal done. Thebuyer had cash and wasn’t in a hurry.The seller wanted closure but on theirown terms. To us, the problem wasclear: no one had any “leverage.”
We hear about lack of leverage allthe time, yet, somehow we seem toget deals done in a reasonable timeperiod, and at reasonable values. Areour deals so different? Not really—it’s our process that is different. Inour view, increasing the odds for asuccessful transaction is a matter ofproactively managing the process andknowing how to gain and use leverage.The better you understand andmanage the drivers of leverage, thehigher your probability of success.
“Fit” Matters
When we work with a seller or a buyerof a business, part of our job is to identifythe parties that we believe should beexcited about the potential fit and—here’s the key—help them see that fit.
If the other side doesn’t see that buyingor selling the business will benefitthem, the deal will not happen—regardless of the price. Fit matters.
For example, imagine you want toget a new suit to wear at animportant event. You go to a storeand the store owner tells you aboutthe fabulous fabric and workmanshipon one suit. Do you buy it? Not if itdoesn’t fit. Not if it’s not the size,color or style you want. Not if it doesn’tfit your self image.
So, in order to get leverage, it iscritical to understand how well themerchandise fits the buyer’s needs.Whether we are working with a buyeror a seller, our first step is to assess,understand and manage the otherside’s perception of that fit.
“Scarcity” Confers Leverage
Once “fit” is established, a buyer gainssome leverage when the seller perceivesthem as the only or best buyer outthere. Conversely, a seller gains someleverage when the buyer perceivesthat this business is the best fit for theirneeds and that finding another as goodwon’t be easy.
In both cases, leverage is significantlyincreased by the perception of scarcity.When there are many buyers, no oneof them has much leverage. That’s whywe advise sellers to run “auctions.” Onthe other hand, when we advise buyers,
A
we try to avoid auctions. If there areother businesses that would equally fitthe buyer, then the sellers won’t havemuch leverage. Managing the perceptionof scarcity is critical to gaining andmaintaining leverage.
“Imminent Loss” Completesthe Ultimate Leverage
So, how much should you pay forthat “scarce” business that “fits” yourneeds so perfectly? It’s simple: As littleas you have to – and not a penny more.And how much should you sell for?As much as you can get—and not apenny less. But, how do you achievesuch Nirvana? By managing the lastelement of leverage: the perceptionof “imminent loss.”
Ultimately, the buyer gets the mostleverage when the seller sees that heis unique—and may soon be gone.Similarly, the seller gets the mostleverage when the buyer comes tobelieve that others are waiting to buythe business and once that happensit will be gone forever. It is theperception of fit and scarcity combinedwith imminent loss that produces theultimate leverage.
For us, it really comes down tomanaging the perception of supplyand demand in an intelligent, competitivemarket place. In the next issue ofHighlights we’ll discuss how we approachand manage this disciplined process.
How to get the other sideto come to reasonable terms —
in a reasonable time frame.
Managing the perception ofscarcity is critical to gainingand maintaining leverage.
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Welcome Aboard:Brian and Mike
ith the addition of Jason Panzer,formerly Vice President of Business
Development for FactSet ResearchSystems Inc. (NYSE:FDS), Marlin &Associates affirms its position as one ofthe leading financial and strategicadvisors to U.S. and internationalmiddle-market digital information andtechnology companies.
“Jason’s extensive U.S. and internationaltransaction expertise and long-term focuson the digital information economy hasgiven our firm another ‘unfair’ competitiveadvantage,” says Ken Marlin, M&A’s founderand Managing Partner. “He is a greataddition and brings a lot to our team. Weare very pleased that he chose to join us.”
Jason has more than ten years ofhands-on experience in mergers andacquisitions. He began his career in theMergers and Acquisitions Group at theleading global law firm of Skadden, Arps,Slate, Meagher and Flom, where he
W
Jason Panzer JoinsMarlin & Associates
FINANCIAL TECHNOLOGY: FINANCIAL ADVISER RANKINGS
Firm Number of Deals
Credit Suisse (USA) Inc. 7
Goldman Sachs & Co. 5
J.P. Morgan Securities Inc. 5
Marlin & Associates New York LLC 5
Bear Stearns & Co. Inc. 4
Lane Berry & Co. International LLC 4
Lehman Brothers Inc. 4
Citigroup Global Markets Inc. 3
Deutsche Bank Securities Inc. 3
Jeffries & Co. Inc 3
Merrill Lynch & Co. Inc. 3
Morgan Stanley 3
Wachovia Securities LLC 3
January 1, 2007 to December 31, 2007
Source: SNL Financial and Marlin & Associates. Compiled by Marlin & Associates using data as of Jan. 22, 2008.
worked on numerous transactions,including public and private mergers,stock/asset acquisitions, tender offers,LBOs and private equity investments.Some of his notable deals were the Long-Term Capital Management bailout; theCitigroup/Travelers merger; and LBOswith KKR, Soros and other top private-equity firms. Later, Jason spent three yearsas the CFO of JCF Group, a Paris-basedprovider of global earnings-estimates andother financial data. In 2004, he helped tomanage JCF’s merger with FactSet. Afterhelping to integrate the two firms, hebecame FactSet’s Vice President of BusinessDevelopment and managed the acquisitionand integration of three other businesses.
Jason has an MBA from Columbia, alaw degree from Fordham and is a CFAcharterholder. He lives in Connecticut withhis wife and two children and competes inmarathons and triathlons—when he findsthe time and energy.
efore joining M&A, BrianSiebenburgen worked at
PricewaterhouseCoopers in the FinancialDue Diligence group as an advisor toprivate equity and corporate buyers onboth small and large transactions. Amonghis more recent assignments, Brianworked with the team that supportedCerberus on several transactions,including the purchase of ChryslerCorporation. His other clients includedthe hedge fund Och-Ziff. Brian isoriginally from Cincinnati, OH. Priorto graduation, Brian worked for theCincinnati Reds and for Delta AirEliteBusiness Jets. Brian earned his BS inCommerce with concentrations inFinance and Accounting from the McIntireSchool of Commerce at the University ofVirginia. He has passed Level 1 of theCFA exam and has passed the exam tobe a Certified Public Accountant (CPA).
A native New Englander, Mike Guadanowas born and raised in Durham, NewHampshire. He graduated cum laudefrom Duke University with dual degreesin Electrical Engineering and ComputerScience, a minor in Classical Civilizations,and was a member of the ElectricalEngineering Honor Society. Aftergraduation, Mike moved to Californiaand went to work as an electricalengineer in the defense industry. For thenext few years he worked in theAdvanced Concepts Branch for a navalresearch laboratory in San Diego, wherehe designed, developed and fabricatedfully integrated prototype systems,including hardware, software andfirmware. After growing restless, Mikemoved to New York City and joinedMarlin & Associates. Whenever he canfind the time to get away, Mike likes tohead north to places like Vermont andNew Hampshire where he can do someserious skiing and hiking. He also enjoysan occasional hand or two of poker.
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EW YORK, NY (February8th,2008) Marlin & Associates
(M&A), the New York andWashington DC-based boutiqueinvestment banking advisory andconsulting firm, affirmed itsleadership in advising U.S. andinternational middle-marketdigital information and technologyfirms by starting 2008 with foursuccessful transactions. M&Ainitiated these transactions, helpedto manage the process, assistedin the negotiations and actedas strategic and financial advisors.More details can be found atwww.MarlinLLC.com.
In January, Morningstar, Inc.(NASDAQ: MORN), a leading providerof independent investment research in theUnited States and in major internationalfinancial markets, completed the previouslyannounced acquisition of M&A clientHemscott Group (London, England), awell-known provider of financial data andinvestor relations services. Hemscott was awholly owned subsidiary of Ipreo LLC,the global provider of high-quality data,expert insight, and productivity solutions toinvestment banking and corporate clients.Ipreo is majority owned by private-equityfirm Veronis Suhler Stevenson LLC. M&Aacted as the exclusive strategic and financialadvisor to the sellers.
N
Marlin Startsthe New Year with
Four Successful Transactions
In January, M&A client StarMineCorp. was acquired by Reuters plc(LSE:RTR; NASDAQ: RTRSY), the globalinformation company. M&A acted asStarMine’s exclusive strategic andfinancial advisor. StarMine is a privatelyheld provider of analytics and equityresearch tools and objectiveperformance ratings to securitiesanalysts around the globe. StarMine isbased in San Francisco and has officesin New York, London, Paris, Boston,Chicago, Hong Kong, and Tokyo.The company received funding fromAmerican Century Ventures,Hummer Winblad Venture Partnersand Instinet Group.
In January, Netik, LLC, (London andNew York), a leading global providerof financial data warehouses to thesecurities industry, acquired theCapco Reference Data Services (CRDS)division of Capco and simultaneouslyreplaced The Bank of New YorkMellon with Symphony TechnologyGroup (STG) of San Francisco as theprimary investor in the business.Capco is a leading global provider ofintegrated transformation services andsolutions designed specifically for thefinancial services industry. M&A actedas the strategic and financial advisor toNetik’s management.
In February, M&A client Lower Fees,Inc. (aka “Fee Disclosure” of WestlakeVillage, CA) was acquired by Bankrate,Inc. (NASDAQ: RATE), which ownsBankrate.com, a leading internetconsumer banking marketplace. M&Aacted as Lower Fee’s exclusive strategicand financial advisor. Fee Disclosure,which is based in San Francisco, hasdeveloped an online platform (patentpending) to create an open marketplaceto breakout and manage complicatedvendor fees associated with themortgage process.
M&A New York Office:
330 Madison Avenue Ninth FloorNew York, NY 10017
P: 646-495-5141
F: 646-495-5144
E-mail: [email protected]
M&A Washington, DC Office:
7720 Wisconsin Avenue Suite 213
Bethesda, MD 20814
P: 301-469-0441
F: 301-468-3651
They chose us to advise them ontheir most important strategic move.
was acquired by
London, England
Paris, France
was acquired by
Chicago, Illinois
Norwalk, Connecticut
was acquired by
Washington, D.C.
Toronto, Canada
was acquired by
Austin, Texas
Port Washington, New York
was acquired by
Summit, New Jersey
Milwaukee, Wisconsin
was acquired by
Morristown, New Jersey
Denver, Colorado
a division of
M&A providedvaluation servicesfor GovPX, Inc.,
which was acquired by
Jersey City, New Jersey
London, England
invested ina new round of financing in
Boston, Massachusetts
Minneapolis, Minnesota
was acquired by
Oslo, Norway
Amsterdam, Netherlands
was acquired by
New York, New York
Bedford, MassachusettsChicago, Illinois
London, England
has sold
has acquired
San Francisco, California
Boulder, Colorado
Atlanta, Georgia
a portfolio company of
was acquired by
Jacksonville, Florida
San Francisco, California
was acquired by
Sydney, Australia
Stockholm, Sweden
was acquired by
East Sussex, England
Norwalk, Connecticut
330 Madison Avenue, 9th Floor | New York, NY 10017 T 646-495-51417720 Wisconsin Avenue, Suite 213 | Bethesda, MD 20814 T 301-469-0441
www.MarlinLLC.com
has solda majority interest to
Westport, Connecticut
Boston, Massachusetts
was acquired by
Lugano, Switzerland
New York, New York
to
Our awards in the Middle Market Category include:
Middle Market Investment Banking Firm of the Year Financing Agent of the Year – Equity
International Cross-border Deal of the Year • Financial Technology Deal of the Year • Financial Services Deal of the YearComputer and Information Technology Deal of the Year • Financing Deal of the Year – Equity
Financing – Financial Services Deal of the Year • Financing – Computer, Technology and Telecommunications Deal of the Year
was acquired by
London, England
San Francisco, California
