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August extends infotech buying spree as Centerview returns to major PE client

Technology M&A is still on fire eight months through a record year, with August adding its own butane to the potentially $1 trillion blaze.

For the information technology sector specifically, deal volume reached 244 transactions, up 54.4% from the same month a year prior and well eclipsing the same month from 2019 as well. There were no megatransactions in August akin to July's $15.13 billion acquisition of Five9 Inc. by Zoom Video Communications Inc., but with several deals at the 10-figure mark, the month still contributed to an astounding run of high valuations.

"In today's red-hot M&A market, tech companies are selling for more than twice as much as they ever have before. And yet, even though it's exceptionally pricey to do business right now, the deals keep coming and the records keep falling. Unprecedented levels of market confidence have turned 2021 into a year for the ages," 451 Research analyst Brenon Daly said in a note.

At the current pace, 2021 could end at record high deal values for the tech sector and even crest the "previously unimaginable" $1 trillion mark, according to Daly. August was the eighth month of the year to eclipse $100 million in deal values. Prior to 2021, only three months in the past 20 years have achieved those heights, according to 451.

Leading the month for transactions with announced deal values, private equity firm Clearlake Capital Group LP will take Cornerstone OnDemand Inc. private in a $4.96 billion leveraged buyout, slotting the enterprise educational software company into its growing portfolio of information technology holdings.

Clearlake is moving hard through the information technology space, with about 36% of its $30 billion-plus of assets under management represented by the sector, according to S&P Global Market Intelligence. Many of its tech holdings listed directly under its Clearlake name have been added since the beginning of 2020.

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Centerview Partners LLC has been offering advisory services for some of Clearlake's biggest M&A transactions lately, typically on the target's side of the table. While the firm has only advised Clearlake on seven deals, it accounts for the highest cumulative transaction value of any other Clearlake adviser, according to S&P Capital IQ.

The firm will again advise the target as Clearlake takes on Cornerstone, and it will collect $20.0 million in fees and $4.0 million for a fairness opinion on the transaction. That seems to be a typical haul for Centerview's work with Clearlake targets. For example, in the private equity firm's $3.25 billion February acquisition of The Endurance International Group Inc., Centerview took $20.1 million in fees for its work with the seller, but in that case only collected $1.0 million for the fairness opinion.

During its sale to Clearlake, Cornerstone will also take advisers and a second fairness opinion from Qatalyst Partners LP. The buyer Clearlake will consult with a range of financial advisers, including representatives from Barclays PLC, Bank of America Corp., Jefferies LLC, JPMorgan Chase & Co., Morgan Stanley, Rothschild & Co. SCA, The Goldman Sachs Group Inc. and William Blair & Co. LLC.

Clearlake is also involved in one of the other largest transactions of the month, Equifax Inc.'s $1.83 billion acquisition of Appriss Insights LLC. Clearlake began funding Appriss Insights' parent company Appriss Inc. in 2019 in a four-round growth investment.

Equifax will add Appriss's AI-based risk detection, data and mitigation technology to its portfolio to "further position Equifax as the resource of choice for public and private sector decision intelligence," according to the merger press release.

Advisers on that deal include Evercore Inc. for the seller and JPMorgan for the buyer. Fees were not disclosed.