the race for innovation - realwire · salvage vehicle auction marketplace. iaa is a global online...
TRANSCRIPT
1 | 11 Automotive Technology M&A Overview 2H 2019
0
5
10
15
20
25
30
35
40
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
2014 2015 2016 2017 2018 2019
THE RACE FOR INNOVATION
At first glance, the stable autotech deal volumes
witnessed over the past year tell a benign story. These
unexceptional numbers, however, conceal a seismic
shift in the makeup of investors and buyers in the race
to own the vehicle of the future. Now, new faces such
as Apple and Uber abound, while Tier 1 suppliers –
previously highly active in the space – have reduced
their deal-making activity, at least temporarily. In
addition, many corporates are hedging their bets
earlier by extending their corporate venture capital
operations to automotive technology.
Fundamentally, the picture that emerges is one of
identity: every year, more OEMs expand their product
portfolios to fashion themselves as mobility providers
in addition to being car manufacturers. They acquire
companies that aid the development of complete
solutions, instigating an increasingly competitive
landscape and driving the development of critical
future technologies, such as electric vehicles, driverless
technology, and new modes of mobility.
It is not just the core technologies that are at stake
here. Supporting industries are also growing as a
result: for instance, as electric vehicle adoption grows,
so too do supporting industries such as automotive
research and development, battery testing systems,
battery rehabilitation and electrification of gas stations.
Unsurprisingly, in 1H2019 autonomous vehicle
systems were especially sought-after targets in the
M&A market. As far as the winning technology and
standards go, the future is wide open, making this race
all the more important to watch over the short- to
mid-term.
Total number of Autotech M&A deals 2014-2019
2 | 11 Automotive Technology M&A Overview 2H 2019
M&A SUMMARY
Our Autotech report covers the two-and-a-half-year period between January 2017 and June 2019. All totals and median values refer to the entire
period unless otherwise stated. Median multiples plotted in the graphs refer to the 30-month period prior to and including the half year.
2.1x2.0x
4.7x
1.7x 1.8x
13.4x13.4x
15.5x 15.5x
15.5x
0
10
20
30
40
50
60
1H 2017 2H 2017 1H 2018 2H 2018 1H2019
Tra
nsa
ctio
n v
olu
me
Stable deal volumes
In the first half of 2019, the number of deals remained
stable, with just under 50 transactions recorded in
total. So too did valuation metrics, with the median
sales and EBITDA multiples trending relatively
consistently at 1.8x and 15.5x respectively.
Most activity came from the enterprise application and
mobility and fleet management sub-sectors, with 17
deals each. The largest deal was closed by Uber, as it
acquired the Middle Eastern ride hailing app Careem
for $3.1 billion.
In line with the march toward future technologies,
around 10 per cent of recorded deals were linked to
autonomous vehicle technology, either embedded in
the car itself or in the form of supporting data
management solutions for autonomous driving.
Meanwhile, ever the pioneer in EV development, Tesla
acquired additional battery know-how by snapping up
Maxwell Technologies, thus strengthening its leading
position in this crucial growth market.
3 | 11 Automotive Technology M&A Overview 2H 2019
AcquirersAcquisitions
in 30 monthsThree most recent acquisitions
5
Clearplan automotive repossession management SaaS
CarsOnTheWeb European online B2B car auctions
STRATIM Systems fleet management SaaS
5
Torc Robotics autonomous driving sensors & software
Transvoco French ride sharing mobile app
Flinc GmbH ride-sharing mobile app
4
Quantum Signal robotic & autonomous vehicle system
Journey Holding automatic vehicle location SaaS
Skinny Labs electric scooter sharing services & app
3
ELEAD1ONE automotive CRM SaaS
Progressus Media mobile marketing SaaS
Dasboard Dealership Enterprise dealership analytics reporting SaaS
3
Thermeon Worldwide trucking hauling scale management SaaS
Profit Tools TMS trucking & transportation software & SaaS
Creative Information Systems truck hauling scale management SaaS
3
RedCap Technologies automotive customer logistics SaaS
Colimbra data management software & services
Autodata UK online automotive technical reference content
3
Wabco brake manufacturer for commercial vehicles
Simi Reality Motion Systems 3D motion detection & analysis software
2getthere autonomous electric passenger & cargo transport vehicles
2Sea Pine Technologies vehicle insurance advertising enablement software
Bright Box telematics systems & software
236
Number of acquirers who
made >1 acquisition
44
Number of active acquirers
during the past 30 months
TOP ACQUIRERS
4 | 11 Automotive Technology M&A Overview 2H 2019
and vehicle autonomy
software. 2getthere’s
applications range from
driverless electric
transport systems at
airports, industrial parks,
and theme parks to
dedicated urban
transport infrastructure.
movements, which it will
employ to actively
monitor occupant safety.
Finally, ZF’s $7 billion
offer for Wabco further
underlines the acquirer’s
commitment to scaling its
business across all vehicle
classes.
TRENDS IN AUTOMOTIVE TECHNOLOGY
• Tech giants continue to penetrate
autonomous and electric vehicle space
• Tire manufacturers enter the M&A
race, as illustrated by both Bridgestone’s
and Michelin’s respective acquisitions of
telematics assets
• Micromobility solutions embellish
urban environments, as providers receive
billion-dollar valuations
• Cost of sensors decreases, especially for
LIDAR technology, as players are closing
large fundraises and the market becomes
ever more competitive
This transaction was followed two months later by
ZF’s acquisition of Simi, a provider of biokinetic
perception software used to track passenger
.
ACQUIRED
19 Mar
ZF Friedrichshafen acquisitive in 2019
With its strategic acquisition of 2getthere, a next-
generation provider of autonomous vehicle
technology & systems, ZF intends to strengthen its
foothold in the growth markets of Mobility as a
Service (MaaS), autonomous transportation systems,
.
ACQUIRED
13 May
5 | 11 Automotive Technology M&A Overview 2H 2019
Financial sponsor deal share normalises
In 2018, financial sponsors played an
outsized role in autotech M&A markets, as
almost one quarter of all activity was driven
by a private equity. So far this year, this
trend has declined slightly, with five autotech
transactions being consummated by PE,
though the growing maturity of the
autotech market coupled with increasingly
competitive bids from financial buyers will
drive further activity.
of European targets were acquired by European buyers in the last 30
months, compared to 29 per cent of targets snapped up by North
American investors. This accounts for the majority of deals involving
European autotech targets and reflects Europe’s historical strength in the
sector. Nevertheless, targets from North America dominated the charts,
accounting for just over half of all acquisitions, with Rest of World
(mostly Japan) rounding out the total with around one tenth of all deals.
Private equity transaction share of autotech M&A
GEOGRAPHICAL BREAKDOWN
66%
Europe
66%
North
America
29%
RoW
5%
Europe
34%
North
America
56%
RoW
10%
0%
50%
100%
2015 2016 2017 2018 1H2019
Private Equity Strategic Buyers PE Share (%)
Headquarters of Autotech
targets
Headquarters of acquirers
of European targets
6 | 11 Automotive Technology M&A Overview 2H 2019
Enterprise
Applications
31%
Internet
Commerce
& Content
13%
Embedded
Software &
Systems
27%
Mobility & Fleet
Management
29%
SUB-SECTOR BREAKDOWN
Enterprise ApplicationsCustomer retention & CRM, dealership
management systems, automotive PLM software.
Internet Commerce & ContentOnline vehicle classifieds, vehicle auction websites.
Embedded Software & SystemsADAS, connected car systems, self-driving
software.
Mobility & Fleet ManagementRide sharing & hailing, e-mobility, parking
applications, fleet management systems.
$3.1 billion
26 Mar
Uber Technologies acquires
Careem
$1.0 billion
22 Jan
Bridgestone acquires TomTom
(telematics business)
(6.5x EV/S)
$320 million
02 Apr
Lear acquires Xevo Inc [fka
UIEvolution]
$300 million
24 Apr
Getaround acquires Drivy
$218 million
04 Feb
Tesla acquires Maxwell
Technologies
$186 million
13 Mar
I.D. Systems acquires Pointer
Telocation [fka Nexus
Telecommunications Systems]
LARGEST DISCLOSED DEALS
OF 1H2019
Tech giants vs traditional auto companies
In February, Amazon led a $700 million financing
round into the Michigan-based electric vehicle start-up
Rivian, that had previously collected money from Ford
and, most recently, Cox Automotive.
This demonstrates yet again two significant trends: the
notable market shift to electric driving in general, and
the market penetration by tech giants, as Apple,
Dyson, and Google all develop their own autonomous
and electric vehicles. Amazon appears to be betting on
Rivian to scale up and become a serious competitor to
Tesla.
This also follows on Amazon’s significant bet on
autonomous vehicles as it participated in the $530
million funding round into Aurora, a self-driving car
technology unicorn. Uber, on the other hand, has
been strengthening its geographic reach with the
acquisition of Careem for $3.1 billion, the largest
autotech deal recorded so far in 2019.
7 | 11 Automotive Technology M&A Overview 2H 2019
22 Apr
25 Feb
30 Apr
30 Apr
05 Jun
ENTERPRISE APPLICATIONS
NOTABLE TRANSACTIONS OF 1H2019
ACQUIRED
16
14
17
15
11
1H 2017 2H 2017 1H 2018 2H 2018 1H2019
Tra
nsa
ctio
n v
olu
me
aftermarket CRM SaaS, to expand its portfolio for
service businesses and consumers.
Financial investors’activity on the rise
The first half of 2019 recorded three transactions by
private equities, indicating a growing trust in the
viability of the market and its ability to generate
consistent positive cashflows. There is also ample
opportunity for potential “buy and build” strategies,
given the relatively fragmented state of the automotive
enterprise application competitive landscape.
A challenging market environment
Enterprise applications that support all stages of car
ownership continue to gain importance against a
backdrop of declining passenger car sales. Solutions
addressing the customer journey from marketing to
sale, through to Finance & Insurance and retention, are
being pursued by OEMs, software providers and
financial investors. For example, in April, Thoma Bravo
acquired Autodata Solutions, a SaaS and software
provider for auto marketing automation and sales
management. Thoma Bravo is looking to leverage its
expertise to help drive Autodata’s growth (not to be
confused with Solera’s Autodata).
Insurance companies are also increasingly turning to
autotech inorganic growth opportunities, as
exemplified by Zurich’s acquisition of Sea Pine
Technologies, an advertising enablement software for
vehicle insurance providers. This is not the first time
Zurich has acquired an autotech company, having last
year moved for Bright Box, a connected car software
provider, to strengthen its usage-based insurance
practice.
Given the growing need for aftermarket solutions,
Epicor acquired MechanicNet, an automotive
.
8 | 11 Automotive Technology M&A Overview 2H 2019
INTERNET COMMERCE & CONTENT
9
7
4
9
2
1H 2017 2H 2017 1H 2018 2H 2018 1H2019
Tra
nsa
ctio
n V
olu
me
backed by Softbank, enters the market of seven
European countries with this deal.
Stable trend toward vehicle resale platforms
In late July, IAA acquired Decision Dynamics, an online
salvage vehicle auction marketplace. IAA is a global
online marketplace connecting vehicle buyers and
sellers, processing over 2.5 million vehicles annually.
This deal is in line with transactions from previous
years, moving away from tools solely focusing on the
sale of new vehicles and toward a full solution that also
addresses used vehicles and the aftermarket. Declining
new vehicle sales, an uptick in alternative mobility
adoption, and other shifting consumer behaviour
necessitates more sophisticated online sales and
marketing platforms.
Transaction volume drops
The first half of 2019 witnessed a significant dip in
transaction volume in the internet commerce and
content space. This may be because some deals were
announced, but not closed. Examples of this include
the multi-billion take-over of Scout24, a company that
operates digital marketplaces specialising in the
automotive and real estate sectors. The offer was
placed by the investors Hellman & Friedman and The
Blackstone Group – the same investors that had
previously listed the company on the stock market.
However, this transaction – which, if successful, would
represent the largest take-private the German stock
market had ever seen – did not receive necessary
shareholder approval.
Conversely, two successful transactions in this space
were both led by American buyers. In February,
RumbleOn acquired AutoSport-USA, a pre-owned
vehicle distributor. RumbleOn operates a growing
online marketplace for the acquisition and
redistribution of used car inventory to consumers and
dealers, with AutoSport providing customers access to
stock, staff, and the Florida vehicle market.
Secondly, Getaround acquired the Norwegian car
rental startup Nabobil.no for $12 million. Getaround,
.
ACQUIRED
04 Feb
ACQUIRED
04 Apr
9 | 11 Automotive Technology M&A Overview 2H 2019
EMBEDDED SOFTWARE & SYSTEMS
29 Mar
02 Apr
26 Jun
NOTABLE TRANSACTIONS OF 1H2019
ACQUIRED
$320 million
13
15
7
13
17
1H 2017 2H 2017 1H 2018 2H 2018 1H2019
Tra
nsa
ctio
n v
olu
me
19 Mar
13 May
02 Apr
supports ZF’s strategy to offer integrated safety
systems from a single source.
Tesla further investing in battery expertise
Earlier this year, Tesla acquired the supplier of
ultracapacitor-based energy storage products,
Maxwell Technologies, for $218 million. Tesla’s
reported rationale was to secure the valuable IP held
by Maxwell, as it continues to target its frontrunner
status in battery technologies.
Surge of deals in autonomous driving
After the 2018 spike in demand for connectivity
features, 1H2019 registered numerous acquisitions of
autonomous car systems, demonstrating the critical link
between both technologies.
Recently, Apple acquired drive.ai, a provider of
autonomous driving sensors and software, in a
distressed sale. Shortly before staff were expected to
be let go, the troubled startup’s autonomous vehicle
assets were snapped up by the tech giant. Drive.ai was
once valued at $200 million and belonged to the more
promising startups in the space but struggled to survive
the recent wave of consolidation.
Another notable transaction was Uber’s acquisition of
data management SaaS for autonomous vehicles,
Mighty AI, fuelling its continuous push into the
autonomous vehicle space. Uber’s Advanced
Technology Group – the division responsible for
developing its AV efforts – secured further funding
from Toyota and Denso earlier this year, valuing the
unit in excess of $7 billion.
Another acquisitive buyer, ZF, invested in the
embedded software space by acquiring Simi, a
computer vision company that tracks passenger
movements inside the vehicle. This asset
.
10 | 11 Automotive Technology M&A Overview 2H 2019
NOTABLE TRANSACTIONS OF 1H2019
MOBILITY & FLEET MANAGEMENT
31 Jan
04 Jan
26 Mar
24 Apr
16 May
$300 million
$3.1 billion
$1 billion
12
1516
10
17
1H 2017 2H 2017 1H 2018 2H 2018 1H2019
Tra
nsa
ctio
n v
olu
me
New player I.D. Systems
I.D.Systems, an American company providing vehicle,
container and cargo tracking systems, recently
recorded two transactions in this space. In the first, it
acquired the US-based assets of CarrierWeb Services
in January. In the second, it acquired Pointer Telocation
in March. I.D. Systems aims to gain market share in the
growing mobile IoT, connected car, and telematics
markets.
ACQUIRED
13 Mar
Big deals happening
Mobility and fleet management transactions have
boomeranged compared to their slight decline late last
year, reaching a record of 17 transactions. Alongside
the recent developments in micromobility, transactions
in the fleet management space continue to proliferate,
with corresponding deal sizes seeing a notable boost.
Tire manufacturers participated in the M&A race for
fleet management and monitoring solutions. Michelin,
an active player in this market, acquired Masternaut,
while Bridgestone kickstarted its inorganic expansion
into fleet management by acquiring the telematics arm
of TomTom for $1 billion. The remaining TomTom
company will now focus on its mapping and
autonomous driving efforts.
The biggest disclosed deal of 1H2019 – the acquisition
of Careem by Uber – clocked in at $3.1 billion. Before
its hotly-anticipated IPO, the company caused a stir by
taking over all of Careem’s businesses across the
greater Middle East region. Uber is aiming to expand
and capitalise on the substantial opportunity in the
digital mobility markets of the Middle East. The deal is
subject to regulatory approval and is expected to close
in early 2020.
11 | 11 Automotive Technology M&A Overview 2H 2019
CONCLUSION & CONTACTS
About the Author
David runs Hampleton Partners’ automotive practice and has over 30 years’ experience in the
sector, having previously transacted in various roles including working for a global OEM,
serving as CEO of a leading content management supplier to OEMs and dealers around the
globe, and working with leading T1 suppliers on advanced connectivity solutions.
David has been completing auto-focused deals for more than 25 years – the last several years
with Hampleton Partners – focusing on sell-side M&A, buy-side consultancy including
divestment and M&A, as well as raising growth capital in the autotech and AI sectors. David
advises and sits on the Board of several autotech and AI firms.
If you are interested in speaking to David about our autotech sector, please reach out using
the email address on this page.
About Hampleton Partners
Hampleton Partners is at the forefront of international Mergers and Acquisitions advisory for companies with technology at their
core.
Hampleton’s experienced deal makers have built, bought and sold over 100 fast-growing tech businesses and provide hands-on
expertise and unrivalled international advice to tech entrepreneurs and the companies who are looking to accelerate growth and
maximise value.
With offices in London, Frankfurt and San Francisco, Hampleton offers a global perspective with sector expertise in: Automotive
Tech, IoT, AI, Fintech, Insurtech, Cybersecurity, VR/AR, Healthtech, Digital Marketing, Enterprise Software, IT Services, SaaS & Cloud
and E-commerce.
David Riemenschneider
Director
Head of Automotive Practice
Autotech funding and M&A remain healthy for quality
assets. We have seen a slow-down in speculative deals, as
acquirers and investors are becoming better educated
and have more clearly defined investment objectives.
While this may look like things have plateaued, they have
not. There is still a very robust market for good
technology assets, who will always find a good home at
an exceptional valuation. In many ways, we feel the slow-
down in deals with very early-stage technology is helpful
for all in the sector. It helps firms with great technology
fully realise the value of what they have created while
focusing early-stage autotech firms to continue the
development of their tech. The early-stage teams will get
their chance at a proper valuation once they have
developed and proven their technology.
Furthermore, we are seeing EV tech, in all forms (vehicle
and infrastructure) thrive. Proven AV tech with skilled
teams are also continuing to attract investment from
inside and outside of the main-stream auto sector (e.g.
Amazon’s investment into Aurora).
Despite the clouds in the sky (declining vehicle sales in
several key markets), we do not anticipate any slowdown
in autotech M&A for the remainder of this year or into
early 2020. In fact, we see a bright future for those
working in the customer retention and CRM space, as
OEM marketing budgets will be searching for great
solutions to retain current customers and attract new
leads.
Hampleton provides independent M&A and corporate finance advice to owners of Autotech, Internet, IT Services, Software and High-Tech Industrial companies. Our
research reports aim to provide our clients with current analysis of the transactions, trends and valuations within our focus areas.
Data Sources: We have based our findings on data provided by industry recognised sources. Data and information for this publication was collated from the 451
Research database (www.451research.com), a division of The 451 Group. For more information on this or anything else related to our research, please email the
address provided below.
Disclaimer: This publication contains general information only and Hampleton Ltd., is not, by means of this publication, rendering professional advice or services. Before
making any decision or taking any action that may affect your finances or your business, you should consult a qualified professional advisor. Hampleton Ltd. shall not be
responsible for any loss whatsoever sustained by any person who relies on this publication.
©2019. For more information please contact Hampleton Ltd.
Hampleton produces regular reports on M&A activity in the following sectors
Healthtech
Insurtech
Internet of Things
IT Services
AR/VR
Artificial Intelligence
Automotive Technology
Cybersecurity
Digital Marketing
E-Commerce
Enterprise Software
Fintech
You can subscribe to these reports at http://www.hampletonpartners.com/reports/.
London | Frankfurt | San Francisco
Follow Hampleton