Mike Rosendahl

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Industry Trends

Vista Equity to Acquire Majority Stake in Drift

Vista Equity Partners, a technology-focused private equity firm, announced that it would be acquiring a majority stake in the software startup Drift, propelling the startup to unicorn status. Although neither party would disclose the investment amount, Drift CEO David Cancel did say that the company saw a 70% growth in its annual recurring revenue this past year. Additionally, with the $1B valuation, Drift has plans to go public after the transaction completes in Q4 2021. This will help solidify further funding and market share for Drift.1 2

Deutsche Telekom Swaps Shares with SoftBank to Retake Majority Stake in T-Mobile

Deutsche Telekom and SoftBank announced a share-swap deal. SoftBank will become Deutsche’s second-largest private shareholder, and Deutsche will increase its 43% stake in T-Mobile further as it already controls the majority of voting shares. The two companies also stated that they would form a partnership that allows the companies SoftBank has invested in take advantage of Deutsche Telekom’s customer base in the U.S. and Europe. Deutsche Telekom is exercising its right to buy 45 million shares of T-Mobile from their merger with Sprint, in exchange for SoftBank to get roughly 225 million shares, or $5B, in Deutsche Telekom shares. Deutsche will also sell its stake in T-Mobile Netherlands and use the $2.4B in proceeds to purchase more T-Mobile U.S. shares, leaving the firm with a 48.4% stake in T-Mobile U.S.3

Biden Urges Private Sector to Do More About Cybersecurity

Cybersecurity has become a top priority for the Biden administration following the Colonial Pipeline cyberattack. Biden stressed to top executives from companies like Amazon and JPMorgan that they need to work with the government to bolster our national cybersecurity. Biden highlighted an estimated half a million cybersecurity jobs in the U.S. that are currently unfilled as well. As our world is more interconnected than ever, companies must begin prioritizing cyber safety initiatives moving forward.4

Global Computer Chip Shortage Continues to Ail Tech Leaders

Due to soaring manufacturing costs, access to silicon and other metals used in computer chip production has dwindled recently. This chip shortage has not only caused hardware manufacturers to idle their factories, but prices are spike up in consumer technological goods as well. Experts like Intel’s chief executive, Pat Gelsinger, see the semiconductor shortage possibly stretching into 2023. Suppliers aren’t expected to catch up with production demand until at least the end of 2021, meaning this shortage is becoming a global supply chain problem crunch.5

FCC Investigates Massive T-Mobile Data Breach

The T-Mobile hack earlier this month resulted in hackers stealing personal data such as drivers’ licenses and social security numbers from about 48 million people. While storage of such information is not illegal, it certainly raises additional questions about the future of data security. Following the Colonial Pipeline hack in May, the FCC is looking into the “bad cybersecurity practices” that allowed hackers access to the data, as the majority of those affected were not current T-Mobile customers. As 5G continues to roll out, heightened cybersecurity is paramount as 5G networks enable much larger and quick data transmissions, meaning that future breaches could be far more severe. 6 7

IBM Enlisted by Dish Network to Help Build 5G Network

As more communications companies look to expand their 5G capabilities, Dish Network looks to team up with IBM to ensure a successful rollout. By next summer, Dish plans for its new 5G network to cover at least 20% of the U.S. population and work with Amazon to use their cloud computing services to support the network. This move comes as Dish has positioned itself to emerge as a leader in the 5G space. The company has been obtaining 5G spectrum airwaves for years, and the purchase of 9 million former Sprint customers in 2019 kickstarted that process.8

Huawei Executive Returns to China

After three years, Meng Wanzhou, chief financial officer, has been able to return to China. Ms. Wanzhou was stuck in a contested extradition between the U.S. and Canada on charges she lied about dealings with Iran. The U.S. deferred prosecution, allowing Canada to allow Ms. Wanzhou to return to China and her role in Huawei. Charges against Ms. Wanzhou will be dropped after a year, provided she doesn’t violate the terms of the deferred prosecution agreement.9

U.S. Sanctions and Detainment of Huawei CFO Has Diminished Its Status In The Marketplace

In 2020, Huawei increased its market share with its 5G rollouts and surged toward the top of the global smartphone market. After continued restrictions from the U.S., Huawei has experienced three consecutive quarters of declining market share and has fallen to the ninth spot for smartphone sales. The restrictions resulted in Huawei having limited access to chips from supplies within the U.S. and outside of the U.S., which resulted in Huawei selling its budget phone unit of operations and forecasting up to $40 billion lost in smartphone revenue this year.10

Largest Transactions Closed

  • Target
  • Buyer
  • Value($mm)
  • Slack Technologies, Inc.
  • salesforce.com inc.
  • $29,345.67
  • Maxim Integrated Products, Inc.
  • Analog Devices, Inc.
  • $22,844.03
  • Proofpoint, Inc.
  • Thoma Bravo, L.P.
  • $12,371.99
  • Globallogic Worldwide Holdings, Inc.
  • Hitachi Global Digital Holdings Corporation
  • $9,500.00
  • Alight Holding Company, LLC
  • Alight, Inc.
  • $8,529.28
  • Astound Broadband, LLC
  • Stonepeak Associates IV LLC
  • $8,100.00
  • Ingram Micro Inc.
  • Platinum Equity, LLC
  • $7,375.75
  • Tiger Parent (AP) Corporation
  • TD Synnex
  • $7,200.00
  • Blue Yonder Group, Inc.
  • Connected Solutions Company
  • $7,100.00
  • McGraw-Hill Education, Inc.
  • Platinum Equity, LLC
  • $6,742.08

Other Financial Buyer Transactions Closed

  • Target
  • Buyer
  • Value($mm)
  • Calypso Technology, Inc.
  • Thoma Bravo, L.P.
  • $3,750.00
  • Cincinnati Bell Inc.
  • Macquarie Infrastructure and Real Assets
  • $2,933.62
  • Sphera Solutions, Inc.
  • Blackstone Inc.
  • $1,400.00

Other Strategic Buyer Transactions Closed

  • Target
  • Buyer
  • Value($mm)
  • Verizon Media LLC
  • Apollo Global Management, Inc.; LionTree Advisors, LLC
  • $5,000.00
  • Infrastructure & Automotive (I&A) Business of Silicon Labs
  • Skyworks Solutions, Inc.
  • $2,750.00
  • Sykes Enterprises, Incorporated
  • Sitel Worldwide Corporation
  • $2,439.72
  • Plex Systems, Inc.
  • Rockwell Automation, Inc.
  • $2,220.11
  • MSG Networks Inc.
  • Madison Square Garden Entertainment Corp.
  • $2,006.11
  • Risk Management Solutions, Inc.
  • Moody's Corporation
  • $1,985.37
  • Wireless Telecommunications Assets of Shenandoah Personal Communications Company
  • Sprint Spectrum L.P.
  • $1,940.00
  • Stack Exchange Inc.
  • Prosus N.V.
  • $1,800.00

 

Source S&P Capital IQ as of 10/8/2021 and PCE Proprietary Data

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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. “Vista Equity to Acquire Majority Stake in SaaS Startup Drift, Taking it to Unicorn Status,” Mary Ann Azevedo, TechCrunch, September 1, 2021.
  2. “Drift Announces Strategic Investment from Vista Equity Partners; Partnership Will Help Customers Accelerate Revenue via B2B Conversational Commerce”, P.R. Newswire, September 1, 2021.
  3. “Deutsche Telekom’s Deal With SoftBank Tightens Its Grip on T-Mobile U.S.,” Phred Dvorak & Drew FitzGerald, The Wall Street Journal, September 7, 2021.
  4. “Biden Says Cybersecurity Is The ‘Core National Security Challenge’ at CEO Summit,” Dustin Volz & David Uberti, The Wall Street Journal, August 25, 2021.
  5. “Chip Shortage Keeps CIOs and Other Tech Leaders Scrambling,” Angus Loten, The Wall Street Journal, August 9, 2021.
  6. “T-Mobile Faces Regulatory Scrutiny After Hack,” David Uberti, The Wall Street Journal, August 19, 2021.
  7. “T-Mobile Says Hackers Stole Data on More Than 40 Million People,” Drew Fitzgerald and Robert McMillan, The Wall Street Journal, August 18, 2021.
  8. “Dish Network Enlists IBM to Help Build 5G Network,” Jared Council, The Wall Street Journal, September 15, 2021.
  9. “U.S. Set Out to Hobble China’s Huawei, and So It Has,” Dan Strumpf, The Wall Street Journal, October 7, 2021.
  10. “U.S. Set Out to Hobble China’s Huawei, and So It Has,” Dan Strumpf, The Wall Street Journal, October 7, 2021.
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