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Joe Anto

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Industry Trends

Arm's Market Debut Soars, but Can It Break Free from Mobile Dominance?

Arm, a leading semiconductor design company, faces challenges as it expands beyond mobile phones despite a successful market debut, that saw shares surge 25% to a nearly $69 billion valuation. While dominating the mobile chip market, Arm has only a 10% share in data-center chips and isfacing concerns about neutrality, geopolitical tensions, competition from open-source chips, and the need to tap into AI-chip demand and other electronic devices.1

Tech M&A Rejuvenates as AI Boosts Valuations

Dealmaking in the tech sector is on the upswing, driven by the burgeoning popularity of artificial intelligence (AI). Significant AI-related acquisitions, like Databricks' $1.3 billion purchase of MosaicML and Thomson Reuters' $650 million acquisition of Casetext, are elevating valuations within the tech industry. The Nasdaq Composite Index has climbed by 32%, indicating a rebound from 2022’s challenges such as regulatory uncertainty and escalating interest rates. Record-high private equity capital points to a heightened potential for deal activity.2

Tech Titans Clash: Google's $10 Billion Antitrust Showdown

In the largest antitrust trial in decades, the U.S. Justice Department alleges that Google's substantial payments to secure default search engine status on web browsers and mobile devices stifled competition. Google reportedly pays more than $10 billion annually to companies like Apple for these agreements. The case's outcome could reshape the tech industry's landscape, impacting the dominance of tech giants and influencing future competition dynamics in the tech, media, and telecom sector.3

Comcast Expedites Hulu Stake Sale to Disney

Comcast is accelerating the sale of its remaining 33% stake in Hulu to Disney, moving the date up to September 30th. The deal, potentially valued at $30 billion, may encompass more than just Hulu's standalone value, offering synergies with other services. Given Hulu's 48.3 million subscribers, this move reflects shifting dynamics in the streaming industry, and enhances Disney's strategic flexibility.4

OpenAI Considers Share Sale

OpenAI is in talks with investors for a potential share sale that could value the AI startup at up to $90 billion, nearly triple its earlier valuation this year. Microsoft, owning 49% of OpenAI, forecasts it to achieve $1 billion in revenue in 2023 and to generate substantial income in 2024.This move to raise capital is expected to allow employees to sell existing shares, potentially making OpenAI one of the world's highest-valued startups, behind SpaceX and ByteDance.5

Largest Transactions Closed

  • Target
  • Buyer
  • Value($mm)
  • Black Knight, Inc.
  • Intercontinental Exchange, Inc.
  • $14,885.78
  • Washington Commander's NFL franchise
  • Harris-Blitzer Sports Entertainment Group
  • $6,050.00
  • Scopely, Inc.
  • Savvy Games Group
  • $4,900.00
  • Apptio, Inc.
  • International Business Machines Corporation
  • $4,600.00
  • ForgeRock, Inc.
  • Thoma Bravo, L.P.
  • $2,341.53
  • Radius Global Infrastructure, Inc.
  • Public Sector Pension Investment Board; EQT AB (publ)
  • $1,836.35
  • Syntellis Performance Solutions, LLC
  • Strata Decision Technology, L.L.C.
  • $1,400.00
  • Mosaic ML, Inc.
  • Databricks, Inc.
  • $1,300.00
  • Absolute Software Corporation
  • Crosspoint Capital Partners, LP
  • $917.76
  • Rovio Entertainment Oyj
  • Sega Europe Limited
  • $754.38

Other Financial Buyer Transactions Closed

  • Target
  • Buyer
  • Value($mm)
  • Casetext, Inc.
  • Thomson Reuters Corporation
  • $350.00
  • TESSCO Technologies Incorporated
  • Lee Equity Partners, LLC; Twin Point Capital LLC
  • $163.64
  • Cloudco Entertainment, LLC
  • IVEST Consumer Partners
  • $100.00
  • Loop Payments, Inc.
  • J.P. Morgan Investment Management Inc.
  • $8.00
  • Focus Learning Corporation
  • The Brydon Group
  • n/a
  • Tomorrow
  • BV Investment Partners, L.P.; Half Helix
  • n/a
  • ClearCompany, LLC
  • Gemspring Capital LLC
  • n/a
  • Manufacturing Automation & Software Systems Group, Inc.
  • The Brydon Group
  • n/a
  • JBL Solutions, LLC
  • Valsoft Corporation Inc.
  • n/a
  • Rident Royalties, Inc.
  • Round Hill Music LP
  • n/a

Other Strategic Buyer Transactions Closed

  • Target
  • Buyer
  • Value($mm)
  • FM:Systems Group, LLC
  • Johnson Controls International plc
  • $610.00
  • Quotient Technology Inc.
  • Neptune Retail Solutions
  • $505.50
  • WBBH-TV in Fort Myers, Florida
  • Hearst Corporation
  • $220.54
  • Sealing Technologies, Inc.
  • Parsons Corporation
  • $200.00
  • SERVERS.COM Inc
  • CloudOne Digital LLC
  • $200.00
  • Mode Analytics, Inc.
  • ThoughtSpot, Inc.
  • $200.0
  • Google Domains Assets
  • Squarespace, Inc.
  • $180.00
  • OnCore Consulting LLC
  • Gcom Software LLC
  • $175.00
  • Tagger Media, Inc.
  • Sprout Social, Inc.
  • $140.00
  • Paperspace Co.
  • DigitalOcean Holdings, Inc.
  • $111.00

 

Source S&P Capital IQ as of 10/11/2023 and PCE Proprietary Data

PCE Transactions

Contacts

Joe Anto

New York Office

407-621-2141 |

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Eric Zaleski

Chicago Office

847-239-2466 |

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Jon Gogolak

Orlando Office

407-621-2136 |

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Data Assumptions

This report represents transaction activity as mergers & acquisitions, consolidations, restructurings and spin-offs. Targets are defined as U.S. Based companies with either foreign or U.S. based buyers. Transaction information provided is based on closed dates only.

Glossary

EBIT - Earnings Before Interest and Taxes
EBITDA - Earnings Before Interest, Taxes, Depreciation, Amortization
LTM - Last Twelve Months
TEV - Total Enterprise Value

Sources:

  1. 1. Fitch, A. "Arm IPO Excites Wall Street, but Challenges Loom.” The Wall Street Journal, 16 September, 2023.
  2. 2. Elias, P. “AI Dealmaking, IPOs, Fuel Hopes for Tech M&A Rebound.” Mergers & Acquisitions, 15 September, 2023.
  3. 3. Kruppa, M. “Google’s Antitrust Trial to Set ‘Future of the Internet,’ DOJ Says.” The Wall Street Journal, 12 September, 2023.
  4. 4. Coster, H. “Comcast moves up date for Hulu deal with Disney to Sept 30.” Reuters, 6 September, 2023.
  5. 5. Seetharaman, D. “OpenAI Seeks New Valuation of Up to $90 Billion in Sale of Existing Shares.” The Wall Street Journal, 26 September, 2023.
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