M&A activity for Massachusetts, Rhode Island and Connecticut based target companies has been rather robust of late as 123 deals in the region have closed or been announced over the past three months, according to data published by industry data tracker FactSet Research Systems. The area has historically been a hotbed of M&A activity in the technology and biotech sectors and that theme has held true as 2016 comes to a close. Of course, there have also been a significant amount of wholesale, distribution business services and manufacturing transactions completed up and down market.
The largest New England M&A transaction announced this quarter was Samsung’s $8 billion acquisition of Stamford, Connecticut based Harman International Industries. However, there have also been a number of smaller deals with less than $20 million of enterprise value. New England has also historically been a center for creativity and entrepreneurship and that sentiment has been reflected in the vast number of smaller transactions announced of late.
Some of the notable lower middle market recent transactions in the New England area of late include:
- December 2016 – 8K Miles Software Services, Inc., a subsidiary of 8K Miles Software Services Ltd agreed to acquire Wilton, Connecticut based Cornerstone Advisors Group LLC for US$10.2 million in cash and an undisclosed amount in contingent payout. Under the terms of the agreement, 8K Miles Software Services will pay US$10.2 million in cash and contingent payouts as a combination of cash and stock based on the performance of Cornerstone Advisors Group. 8KMiles Software Services provides cloud computing and data security services. Cornerstone Advisors Group provides health information technology professional services. It provides strategic and advisory services to prepare its clients for the challenges of Health Information Technology environment.
- December 2016 – BioTelemetry, Inc., formerly known as CardioNet, Inc., acquired Concord, Massachusetts based Telcare, Inc., trading as Telcare Medical Supply, Inc., a portfolio company of Norwest Venture Partners, QUALCOMM Ventures and Sequoia Capital, for US$12 million in cash and contingent payout. BioTelemetry offers cardiac monitoring services, cardiac monitoring device manufacturing, and centralized cardiac core laboratory services. Telcare develops cellular enabled glucose meters for diabetes patients worldwide.
- November 2016 – NCC Group Plc acquired Boston based Virtual Security Research LLC for US$6 million in cash and contingent payout. Under the terms of transaction, NCC Group would pay US$4 million in cash and US$2 million in contingent payout, based on the performance of Virtual Security Research LLC. NCC Group is a holding company that engages in the provision of information technology assurance, security software, and consultancy services. Virtual Security Research LLC provides information, network and application security consulting services. It offers services to the enterprise and consumer hardware and software, financial, insurance, communications, retail and the health care sectors.
- October 2016 – BroadSoft Inc. acquired Williamstown, Massachusetts based VoIP Logic LLC, a portfolio company of 21Ventures LLC, for US$13.4 million in cash. The deal has been funded through BroadSoft Inc.’s cash on hand. BroadSoft, Inc. provides software and services that allow mobile, fixed-line, and cable providers to deliver voice and multimedia services. Its products include BroadWorks, BroadCloud and BroadTouch. VoIP Logic LLC operates as a Platform-as-a-Service (PaaS) that provides Voice over-Internet Protocol (VoIP) technology. Its platform enables users to reduce cost and complexity of running a facilities-based communications services.
- October 2016 – Oxford Immunotec Global Plc acquired Boston based Immunetics, Inc. for US$12 million in cash and contingent payout. Under the terms of agreement, Oxford Immunotec Global Plc paid US$6 million in cash and will pay an additional US$6 million upon achievement of certain revenue thresholds. Oxford Immunotec Global Plc is a medical diagnostics company, which engages in the provisions of innovative tests in the field of immunology. Immunetics develops, manufactures and markets diagnostic test kits. The firm specializes in diagnostic tests, pathogen detection, blotting instruments and research.
As we move into 2017 many indicating signs are pointing to a continued robust M&A market. There is still significant resources waiting to be deployed by private equity groups and corporate balance sheets are still flush with cash reserves. Many buyers will look to acquisition as way to increase capabilities and build market share. As a result, buyers are honing in on areas like New England that are driven by innovation and hard work as these are locales where they can get the most bang for their buck.