London, 2 February 2023 – Digital Commerce M&A experienced a record-breaking start to 2022 with 699 deals, according to Hampleton Partners’ Digital Commerce M&A Market Report. The Covid-inspired digitalization of both work and home, along with investor interest in the sector, continued to impact the industry.
Although deal volumes dropped in the following three quarters – 544 in Q2, 451 in Q3, and 473 in Q4 – the full-year count of 2,167 deals in 2022 represents a higher “new normal” compared to pre-Covid levels.
Ralph Hübner, director at Hampleton Partners, stated that the decline in digital commerce deal volume in the second quarter reflects the overall decline of the M&A market. Political and economic uncertainties, as well as the market’s tendency to normalize after a period of high activity and volatility, contributed to this downswing. However, Hübner sees these numbers as a “new normal” that is significantly higher than the pre-pandemic era. Acquirers are still seeking new digital technologies but have become more selective and risk-averse. The market for mature and healthy companies in digital commerce continues to be strong, but the market for unhealthy companies is limited.
The report from Hampleton Partners covers various segments within digital commerce, including internet services and portals, digital commerce software, agencies and service providers, media, social and gaming, and online retail. It identified Embracer Group, Tencent, and Animoca Brands as the top acquirers in the sector, with Embracer Group making 19 acquisitions, Tencent making 15 acquisitions, and Animoca Brands making 11 acquisitions in the past 30 months. The report also noted significant growth in the Media, Social and Gaming and Agencies and Service Providers segments.
The Media, Social & Gaming sector experienced a transformation with the onset of COVID in Q4 2020, resulting in a 134% increase in transaction volumes from 2020 to 2021. In 2022, the transaction count declined by 27% to 438, but it still remained at a higher “new normal” compared to pre-pandemic levels. GamingTech deals have been particularly prolific, with a record number of around 97 deals in the online gaming segment.
Transactions in the Agencies & Service Providers segment increased by 8% year over year, reaching an unprecedented level of 312 deals. The report also mentioned that the trailing 30-month EBITDA multiples saw a slight decline from 7.7x to 7.5x, while revenue multiples remained stable.
Looking ahead, Ralph Hübner believes that the global Digital Commerce M&A market is likely to become more segmented with stronger regional differences in terms of deal value and multiples in the next two to three years.
The full Hampleton Partners’ Digital Commerce M&A Market Report can be downloaded from their website.
Note to Editors:
Hampleton Partners’ M&A Market Reports are compiled using data and information from the 451 Research database, Capital IQ, and CB Insights.
About Hampleton Partners
Hampleton Partners is an international mergers and acquisitions and corporate finance advisory firm for technology companies. They offer hands-on expertise and advice to tech entrepreneurs and companies looking to accelerate growth and maximize value in sectors such as Artificial Intelligence, Autotech, Cybersecurity, Digital Commerce, Enterprise Software, Fintech, Healthtech, HR Tech, Insurtech, and IT & Business Services. Hampleton has offices in London, Frankfurt, Stockholm, and San Francisco.
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