Inside the Briefcase

Ironclad SaaS Security for Cloud-Forward Enterprises

Ironclad SaaS Security for Cloud-Forward Enterprises

The 2015 Anthem data breach was the result of...

The Key Benefits of Using Social Media for Business

The Key Benefits of Using Social Media for Business

Worldwide, there are more than 2.6 billion social media...

Gartner IT Sourcing, Procurement, Vendor and Asset Management Summit 2018, September 5 – 7, in Orlando, FL

Gartner IT Sourcing, Procurement, Vendor and Asset Management Summit 2018, September 5 – 7, in Orlando, FL

Register with code GARTITB and save $350 off the...

Infographic: The Three Pillars of Digital Identity: Trust, Consent, Knowledge

Infographic: The Three Pillars of Digital Identity: Trust, Consent, Knowledge

8,434 adults were surveyed to gauge consumer awareness of...

FICO Scales with Oracle Cloud

FICO Scales with Oracle Cloud

Doug Clare, Vice President at FICO, describes how Oracle...

An Update on M&A in the Online and Mobile Industry

August 3, 2015 No Comments

Featured article By Vineet Asthana, Managing Director, Berkery Noyes

The ongoing shift of consumers’ time and marketing spend to digital channels has been significant in the past few years and it is expected to continue unabated at a 20%+ annual pace. In terms of M&A activity, Online and Mobile transaction volume increased 12 percent from second half 2014 to first half 2015. Aggregate value rose nine percent, from $64.55 billion to $70.27 billion. The median revenue multiple decreased from 2.6x to 2.3x, while the median EBITDA multiple declined from 13.7x to 10.3x. The peak for both volume and value over the past two-and-a-half years occurred in first half 2015.

The minor decline in valuations over the previous six months is more in line with the median throughout the last 30 months. Also, looking at the market segment breakout there was a ten percent rise in E-Commerce volume on a half year basis. E-Commerce had a lower median EBITDA multiple than the other segments in first half 2015, and E-commerce is often slightly lower since it entails a lot of transactional type business models.

SaaS & Cloud

The industry’s most active segment year-to-date was SaaS & Cloud with 406 transactions, which represented a 16 percent increase compared to second half 2014. This was the segment’s highest level of activity on a half year basis during the past two-and-a-half years. Regarding valuations, SaaS & Cloud deals in first half 2015 received a median revenue multiple of 3.5x.

E-Commerce

M&A volume in the E-Commerce segment improved ten percent relative to second half 2014. Five of the industry’s top ten largest acquisitions year-to-date were also E-Commerce related. As for specific E-Commerce subsectors, notable deals in the online food delivery market included Just Eat’s acquisition of Menulog Group for $687 million; Delivery Hero’s acquisition of Yemeksepeti for $589 million; and Yelp’s acquisition of Eat24 for $134 million.

E-Marketing & Search

Deal volume in the E-Marketing & Search segment experienced a two percent uptick in first half 2015. High profile deals in the digital marketing subsector included On Assignment’s acquisition of Creative Circle, a staffing agency that serves digital marketing companies, for $570 million; Twitter’s acquisition of TellApart, an ad-tech platform, for $533 million; NetSuite’s acquisition of Bronto Software, an email marketing automation provider for multi-channel retailers, for $200 million; Nielsen’s acquisition of eXelate, a data technology company that facilitates programmatic buying, for $200 million; The Rubicon Project’s acquisition of Chango, a programmatic advertising company, for $122 million; and AppNexus’ acquisition of Yieldex, an online advertising technology firm, for $100 million.

Video and TV Ad-Targeting

One of the largest transactions in first half 2015 was Verizon Communications’ acquisition of AOL for $4.13 billion. Verizon pursued this acquisition in part to bolster its digital and video advertising capabilities. AOL has been making deals of its own in the programmatic video buying space, such as in first half 2014 with the acquisition of PrecisionDemand, a television ad-targeting company. PrecisionDemand was merged with Adap.tv, the latter of which AOL acquired for $405 million in second half 2013.

Moreover, Comcast also completed a deal in first half 2015 with the acquisition of Visible World, a provider of targeted television advertising solutions. The cable operator was responsible for a related transaction in first half 2014 with the acquisition of FreeWheel, a video ad-serving company utilized by television networks and media companies, for $360 million.

Mobile Applications

M&A volume in the consumer application subsector increased 12 percent during the half year period, from 119 to 133 transactions. In terms of notable new mobile-based acquirers, technology and transportation company Uber acquired deCarta, a mapping and local search platform; as well as part of Microsoft’s mapping technology assets. With these transactions, Uber seems to be looking to move away from Google Maps and other external products as Google potentially seeks to launch its own driving service at some point. Another high profile deal in this space was Ola’s acquisition of taxi rental aggregator TaxiforSure for $200 million. Ola is the largest mobile taxi application in India and one of Uber’s main rivals in the region.

Conclusion

The digital trends discussed above will create a very strong foundation for future acquisitions and investments. In addition, the M&A market overall is as strong as it has been since 2007. The stock market continues to march towards new highs and the overall sentiment in the economy seems to be positive. Strategic and buyers are flush with cash and looking to make investments to jump-start revenue growth in their core markets.

Vineet BerkeryNoyes 150x150 An Update on M&A in the Online and Mobile Industry

About the Author

Vineet Asthana is a Managing Director at Berkery Noyes with 12 years of investment banking and corporate finance experience. He focuses primarily on Telecom, Media and Technology M&A transactions. He is well-versed in transaction structuring, execution and board-level communications, having completed more than 40 transactions totaling over $10 billion. Vineet holds a BBA from Franklin & Marshall College and an MBA from University of Chicago Booth School of Business.

 

 

MOBILE

Leave a Reply

(required)

(required)


ADVERTISEMENT

Gartner