Ascento Capital Research: Robust M&A Activity in the Data, AI & Analytics Sector

News by Ascento Capital  •  May 6, 2022

This report analyzes 41 recent M&A transactions in the data, AI & analytics sector listed in the appendix below. The transactions reveal fascinating trends that are very helpful when considering potential acquirers for an M&A process on the sell side.

Robust M&A activity in the data, analytics & AI sector is driven by the rapid advancement of the technology, particularly AI, ML, predictive analytics, and edge computing, which drives corporate usage and thus increases corporate spend.  Businesses were estimated to have spent a whopping $215 billion in 2021 on big data and business analytics solutions (IDC). Corporations will also deploy more solutions to keep up with data creation which was 79 zettabytes of enterprise data in 2021 and is projected to growth to 180 zettabytes in 2025 (Statistica). Finally, data, analytics & AI companies will acquire other companies in the sector to expand their product lines, penetrate new markets and consolidate the sector.

Data & Analytics Enhanced by AI

The data & analytics sector recently has been by AI which increases the usage of data & analytics tools. This trend causes data & analytics companies to acquire AI companies for their AI capabilities. For example, in March 2022, Intel acquired Granulate for $650 million which has an AI-powered optimization software that will be a part of Intel’s data center and AI business. In October 2021 Atos, a Leader by Gartner in its Magic Quadrant for Data & Analytic Services, acquired DataSentics, a data science firm that focuses on the development of artificial intelligence and machine learning solutions.

Private Companies More Active than the Old Guard

Interestingly, well-funded private companies are more active recently than the larger old guard companies. For example, Databricks, a data and AI company that interacts with corporate information, is still private and raised $3.5B in capital, recently acquired two companies, including 8080 Labs, the maker of a data science tool. Many old guard companies have not acquired companies in the sector recently, for example Tibco has not acquired since Information Builders in October 2020. Other public companies, such as MicroStrategy, have not acquired any companies relying entirely on organic growth.

Private Equity a Major Player

Private equity is a major player in the sector with dry powder of $1.78 trillion as of February 2022 (Preqin). Private equity firms are actively acquiring public companies as platforms. For

example, in March 2021 Thoma Bravo acquired Talend, which specializes in cloud data integration and data integrity for $2.4 billion. In June 2021 Clayton, Dubilier & Rice LLP acquired Cloudera for $5.3 billion. In September 2021, Vista Equity Partners acquired Blue Prism, which is an intelligent robotic process automation company for $1.5 billion. In January 2022 TPG Capital Asia invested $360 million in Apax Partners-backed Fractal Analytics at a unicorn valuation.

However, since the market for platforms has been picked over the last few years and private equity firms face vigorous competition from strategic acquirers and SPACs for platforms, many private equity firms are more aggressively deploying capital through the acquisition of add-ons for their platform companies. For example, in August 2021 Qlik, which is backed by Thoma Bravo, acquired NodeGraph AB in Sweden, which allows organizations to access their data story in full by leveraging data clarity, comprehension, and scalability, and, in September 2021, Qlik acquired Big Squid, with an innovative platform for Predictive Analytics & Machine Learning. In October 2021, BMC, which is backed by KKR, acquired StreamWeaver, a company with software that helps enterprises achieve their end-to-end observability and AIOps. Ascento Capital represented StreamWeaver in this transaction.

Divisions of Companies Acquiring

Divisions of companies from previous acquisitions are acquiring. For example, in 2018 Salesforce acquired MuleSoft and in August 2021 MuleSoft acquired Servicetrace, which develops innovative automation solutions. In 2019 Salesforce acquired Tableau and kept it as a division and then in November 2021, Tableau acquired Narrative Science, which creates software that writes stories from enterprise data. It is often more effective to approach the division directly, such as MuleSoft, rather than the parent company, Salesforce, since the division will be more excited regarding the strategic fit.

Big Tech Active

Big tech companies are active in the sector and should be added to the Target list. In February 2022, Cisco was rumored to be interested in acquiring Splunk, a software company that provides operational intelligence software. In January 2022, IBM acquired Envizi, which provides Data and analytics to optimize buildings and business. Big Tech companies are constantly changing their strategic priorities and given that the data, AI & analytics sector is white hot, expect more acquisitions in the future.

Consider International Targets

International targets should also be considered, for instance, SAP with its headquarters in Germany, should be on the target list even though it has not been active in the sector since its acquisition of Qualtrics, a single system of record for all experience data. NTT Data with its headquarters in Japan, has been more acquisitive recently, acquiring Chainalytics in December 2021, which provides supply chain consulting, analytics, and market intelligence.

Specific Sector Targets

If a company is in a particular sector, such as healthcare, the target list should include companies in that vertical, such as Cerner, a supplier of healthcare information technology solutions, services, devices, and hardware and Appriss, a provider of technology, data, and analytics solutions in the healthcare sector, which was acquired by private equity firm Insight Partners.

Sector Consolidation

As the data, analytics & AI sector matures, expect more consolidation with competitors acquiring each other for market share. For example, the National Investment Center for Seniors Housing & Care (NIC), which had a division that was a leader in data & analytics for senior housing, acquired VisionLTC, a leading data analytics platform for senior housing in a major sector consolidation play. Ascento Capital represented NIC in this transaction.

Appendix: Recent M&A Transactions in the Data, Analytics & AI Sector

Announce Date Acquirer Target Target Description Enterprise Value (EV)
4/7/2022 Talend GammaSoft An innovative change data capture vendor that enables organisations to ingest data.
3/31/2022 Intel Corporation (NASDAQGS: INTL) Granulate An AI-powered optimization software creating a streamlined environment. $650M
3/1/2022 Snowflake Inc (NYSE: SNOW) Streamlit An open-source app framework for creating and deploying data science. $800M
2/28/2022 Software AG (XETR: SOW) StreamSets A DataOps platform for modern data integration.
1/27/2022 Atlassian Corporation (NASDAQ: TEAM) Percept.AI An AI-powered virtual agent technology provider.
1/11/2022 Fractal Analytics Neal Analytics A management consulting company offering data analytical services.
1/11/2022 IBM (NYSE: IBM) Envizi Data and analytics to optimize buildings and business.
1/6/2022 Alteryx Inc (NYSE: AYX) Trifacta Trifacta delivers an intelligent, collaborative data engineering cloud platform. $400M
12/23/2021 Automation Anywhere FortressIQ FortressIQ defines security and insights in enterprise automation and AI.
12/21/2021 NTT Data (OTCMKTS: NTDTY) Chainalytics Provides supply chain consulting, analytics, and market intelligence.
12/21/2021 Airtable Walrus.ai A new software company provides end-to-end tests in 1 line of code.
12/16/2021 Hugging Face Gradio An AI and machine learning company.
11/15/2021 Salesforce (NYSE: CRM) / Tableau Narrative Science Creates software that writes stories from enterprise data.
11/10/2021 Workato RailsData A Ruby on Rails and big data development company.
11/3/2021 Scale AI SiaSearch Intelligent data solutions for automated driving at scale.
10/22/2021 Alteryx Inc (NYSE: AYX) Lore IO Eliminates ETL and automates the process of unifying data. $10M
10/20/2021 Atos SE (EPA: ATO) Datasentics A data science firm that focuses on the development of AI and ML solutions.
10/14/2021 Elastic NV (NYSE: ESTC) Optimyze Allows visibility into ‘which line of code is consuming how much CPU’. $20M
10/7/2021 Alteryx Inc (NYSE: AYX) Hyper Anna AI-powered data insights meets interactive storytelling in real time. $25M
10/6/2021 Databricks 8080 Labs Maker of bamboolib, a popular UI-based data science tool.
10/4/2021 Celonis Lenses.io DataOps – A real-time applications and data operation portal.
10/1/2021 BMC StreamWeaver Enterprise grade, end-to-end observability, AI operations (AIOps), and cloud migration.
9/30/2021 Qlik Big Squid Innovative platform brings Predictive Analytics & Machine Learning to business.
9/28/2021 Vista Equity Partners Blue Prism An intelligent robotic process automation company that develops a digital workforce. £1.1B
9/20/2021 Fivetran HVR Develops a data replication technology designed to integrate high data volumes. $700M
8/12/2021 Qlik NodeGraph AB Allows organizations to access their data story in full by leveraging data clarity.
8/11/2021 Airtable Bayes Developed a no-code cloud service that analyzes the data to visualize.
8/2/2021 Salesforce (NYSE: CRM) / MuleSoft Servicetrace Develops innovation in robotic solutions.
7/26/2021 DataRobot Algorithmia A machine learning model deployment and management solution for MLOps.
7/22/2021 Veritone Inc (NASDAQ: VERI) PandoLogic Provides programmatic solutions powered by predictive analytics, ML and AI. $150M
7/13/2021 Contentsquare Upstride A new computational paradigm to improve accuracy of neural networks.
6/30/2021 LogicMonitor Dexda Imagine a world where machine learning solves real business problems.
6/24/2021 Fivetran Teleport Data A platform designed to improve reliability and performance in database replication.
6/21/2021 Hewlett Packard Enterprise Determined AI A machine learning tech company that revolutionizes the way deep models are trained and deployed.
6/1/2021 Clayton, Dubilier & Rice LLP Cloudera Delivers an Enterprise Data Cloud for any data, anywhere, from the Edge to AI. $5.3B
6/1/2021 Cloudera (NYSE: CLDR) Datacoral Provides a data integration platform for analytics.
5/25/2021 IBM Catalogic ECX A copy Data Management company for Nimble Storage.
5/18/2021 Splunk Inc (NASDAQ: SPLK) TruSTAR A cloud native Intelligence Management platform that automates data. $82M
5/11/2021 DataRobot Zepl An enterprise, cloud data science and analytics platform that allows insights.
5/4/2021 ThoughtSpot Diyotta Software to orchestrate and automate the movement and integration of Big Data.
3/31/2021 ThoughtSpot SeekWell An analytics platform built to help teams work faster.
3/11/2021 The National Investment Center VisionLTC Supplies the senior housing industry with data and analytics tools.
3/9/2021 Thoma Bravo Talend Specializes in cloud data integration and data integrity. $2.4B

 

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