The Private Equity Pitch identifies private equity-owned portfolio companies that are ripe for an exit in a particular subsector in Europe. You can receive the PE Pitch by creating a new alert with the “Private Equity Pitch” topic. To find older pieces, search under the “Private Equity Pitch” topic on the homepage.  

Despite market volatility and tumultuous times impacting M&A across sectors − even the generally resilient TMT space – there is still notable activity the data and information services space. As investors try to navigate the current environment, tools that enable informed decision-making have become indispensable rather than just desirable.

B2B media services in particular are instrumental in providing niche support across industries ranging from banking and asset management to commodities and life sciences. As the value of data and analytics becomes more evident, subscription-based information services have been enjoying strong cash flows, demonstrating what matters the most these days: resilience.

Benefiting from recurring revenue streams, deals in the space tend to generate strong returns and valuations, and there has already been a steady flow of deals over the year.

Right at the beginning of the year, Horizon Capital sold its portfolio company AgriBriefing, the London-based agricultural commodity pricing provider, to Mintec, a UK-based provider of global commodity price data backed by Five Arrows. The vendor saw 3x returns on its invested capital from the sale, as reported in the press.

Also at the start of 2023, Equistone’s sale of UK-based outsourcing research business Acuity Knowledge Partners to Permira underscored the interest in the space. The deal value was not disclosed, but, according to reports, a sale was expected to value Acuity at USD 1.3bn-USD 1.5bn.

Over the summer, With Intelligence’s new owner Motive Partners called on Partners Group [SWX:PGHN] to supply a financing package in support of its GBP 400m takeover. The financial data and intelligence provider was sold for around 20x EBITDA, as reported.

Also in July, Macrobond, a Swedish SaaS firm that offers economic intelligence for financial professionals, was sold to Francisco Partners for a reported EUR 700m valuation, equating to 23x EBITDA. Macrobond’s previous shareholder Nordic Capital reaped around 6x returns, as reported in the press.

Meanwhile, New York City-based bankruptcy and distressed-debt intelligence supplier Reorg was acquired by Permira in August 2022 in an SBO from Warburg Pincus.

As evidenced, private equity firms in particular are drawn to the segment by the recurring revenue streams from subscription renewals and upfront payments, as well as the high operating margins −often as much as 40%-45% of revenues− and strong cash conversion −typically 90%-110% of EBITDA− according to a KPMG report.

The market is also highly fragmented, with many small players valued at less than USD 50m, said the report, offering an abundance of consolidation opportunities.

Kynetec, the UK-based agricultural and animal health market research, data and insight firm −backed by Paine Schwartz Partners− has been among the key consolidators in the space. It most recently acquired MQ Solutions, a Brazil-based monthly price and retail monitoring service company.

Times Higher Education (THE), a UK-based publisher and data/insights provider owned by Inflexion Private Equity, has a robust pipeline of potential acquisitions, as reported and a Likely To Exit (LTE)* score of 60, based on Mergermarket‘s predictive algorithm.

Inflexion, which is very keen on information services, was reportedly weighing a sale of the global provider of legal rankings Chambers & Partners late last year. The business, which has an LTE score of 30, has been growing well, according to the sponsor, with bookings and EBITDA up over 20% per annum as of December 2022.

Looking ahead, Bridgepoint [LON:BPT] is lining up the launch of a formal sale process for PEI Group, as reported. Motive’s acquisition of With Intelligence for roughly 16x the company’s projected FY23 EBITDA of GBP 20m is expected to provide PEI’s suitors with a relevant valuation benchmark as they contemplate proposals.

The market is also anticipating the sale of security and defence intelligence specialist Janes. Private equity firms are expected to show interest in the Montagu-backed asset, which is expected to be marketed off EBITDA in the region of GBP 50m or more, as reported. It has an LTE score of 65, based on Mergermarket’s predictive algorithm.

Among the B2B information service providers tipped to hit the European auction pipeline include EQT’s [STO:EQT] enterprise data management portfolio company Rimes Technologies, which is expected to come to market early next year and could be valued at up to EUR 1bn.

Another company to watch is Future plc [LON:FUTR], a digital media publisher, which has been flagged as a possible takeover target, despite enjoying gains on the stock market, as reported.