Deal tracker: December closes doubling of infotech deal values for 2021

December 2021 saw information technology deal activity cool off slightly from recent months, but deal volumes still showed growth in a historically hot M&A market.

The month saw five transactions with reported deal values cresting the $1 billion mark. While that is still a sturdy pace historically, it represents a lull compared to the rest of 2021's steady clip of 11-figure deals.

December deal volume was still 4.2% above the same month in 2020, which was 19.4% above December 2019. The month closed out a record year that saw technology deal values best the prior two years combined, surpassing the once unthinkable $1 trillion mark, according to 451 Research. All told, 2021 tech deal values landed at $1.24 trillion.

Entegris Inc. posted the largest offer, agreeing to acquire CMC Materials Inc. for a total transaction value of $6.70 billion. Private equity powerhouse Thoma Bravo LP again kept information technology valuations greased with a $2.74 billion offer on payments technology firm Bottomline Technologies Inc.

Those top deals represent the continuation of two trends that drove 2021 to record M&A values: big spending by strategic acquirers with strong equity positions and equally big spending by private equity firms, which entered the tech space with historic levels of capital.

Entergis' rationale for acquiring CMC is vertically motivated, adding new processing and finishing capabilities to its semiconductor business and expanding its end-to-end capabilities in the market. Entergis will leverage a 33.4% one-year run in market capital to make the acquisition. CMC was comparatively inexpensive, with its stock up less than 1% for the year prior to the announcement. The offer represents a 35% premium over CMC's closing price on Dec. 14, 2021.

The Goldman Sachs Group Inc. is serving as financial adviser and providing a fairness opinion to CMC, and Morgan Stanley is advising Entergis.

Thoma Bravo has been a recurring influencer in the information technology deal arena. The private equity company now holds 66 investments in information technology with a total transaction value of $54.80 billion. Its $12.37 billion acquisition of cybersecurity firm Proofpoint Inc. landed as the third-largest deal of 2021.

In December 2021, Thoma Bravo again landed in the leaderboards, but this time in the financial technology space. Bank of America Corp. will advise Thoma Bravo on the transaction. Bank of America was the 10th-ranked adviser in 2021 for financial technology deals based on number of transactions, a far slide down from the third position in 2020, according to S&P Market Intelligence data.

The last time Bank of America advised on a Thoma Bravo transaction was in June 2021 when the firm acquired enterprise software company Medallia Inc. for $7.07 billion. Bank of America advised the seller on that transaction, and while it did not disclose fees for that deal or December's Bottomline deal, Morgan Stanley collected $45.0 million advising Medallia alongside Bank of America and $5.0 million for a fairness opinion.

Deutsche Bank AG will advise Bottomline on its sale to Thoma Bravo and provide a fairness opinion.

The Bottomline transaction concludes a year in which private equity firms accumulated massive funds to execute massive deals. During the year, Thoma Bravo and other private equity houses announced five acquisitions over the $10 billion mark, as many as they had collectively since 2015, according to 451 Research.