Report: M&A activity up 9% in Q3

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Mergers and acquisition (M&A) value in the marketing, media, technology and services industries increased 9% to $43.4 billion in the third quarter of 2011 compared with Q2, according to a transactions report from investment bank Petsky Prunier. Seven hundred and seventy-one transactions occurred during the quarter, an increase of 9% compared with the second quarter.

The software and information segment was the highest-value segment, with $22.9 billion in deal value during the quarter. The largest acquisition in the segment was New Enterprise Associates' $136 million investment in event, survey and marketing solutions provider Cvent.

The digital media and commerce segment produced 306 transactions during Q3, the most active segment tracked in the report.

The digital advertising segment's transaction volume increased 8% during the quarter, with transaction value increasing 39% to $1.4 billion. Thirty-five transactions occurred in the marketing services segment, totaling $1.6 billion, a 119% volume increase and a 170% value increase.

“It's been a big year,” said John Prunier, partner at Petsky Prunier. “There was a very applied pursuit of good opportunities despite economic uncertainty. Acquisitions to diversify or expand digital capabilities has been a theme around for just shy of a year. Anything that's digital will have greater demand and higher valuation than things that are not.”

Marketing technology was the second most active segment in Q3 2011 with 167 deals, representing the third highest value segment at $7.4 billion. Transaction value in the agency and consulting segment increased by 32% with 75 deals announced for approximately $2 billion in Q3 2011.

The largest investment during the third quarter was Silver Lake Partners' and Digital Sky Technology's $1.6 billion investment in Alibaba Group.

“There has been an overriding preference for acquiring best in class assets, whether they're technology or service providers,” said Prunier. “Debt is more expensive than it was last year and consequently it's more expensive to buy a business.”

Prunier predicts perspective bidders in the fourth quarter will pay particular attention to companies experiencing growth as opposed to those with good long-term records that have recently softened.

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