Broadridge’s Acquisition of Itiviti. Nothing Is Cheap.
Earlier this week Broadridge(BR) agreed to acquire trading platform Itiviti for $2.5 Billion in an all cash deal from PE firm Nordic Capital. This demonstrates that growth is valued at a premium as it values Itiviti at approximately 34x 2020 Non-GAAP Operating Income and 10x 2020 Revenue. Itiviti is growing organic revenues faster than Broadridge (8-10% vs. 5-7%) with superior adjusted operating margins (30%+ vs. 18%). Itiviti helps Broadridge diversify its core business outside of the back and middle office, extending BR’s footprint into the front office. Nonetheless it is difficult for me to swallow these rich valuations. Were I a board member who was concerned with inflation and a devaluing dollar I believe I would double down on investing in my company’s technology and people rather than overpay for XYZ acquisition. If you are interested in learning more about Broadridge’s Itiviti deal, you may read the investor presentation HERE.