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Unveiling the Dynamics of Digital Commerce M&A: A Record-Breaking Journey

The Digital Commerce M&A landscape experienced a remarkable start to 2022, setting a new record with 699 recorded deals, as disclosed in the Hampleton Partners’ Digital Commerce M&A Market Report for London on February 2, 2023. This surge in activity was attributed to the rapid digitalization prompted by the Covid pandemic, influencing both work and home environments, along with growing investor interest in the sector.

Despite subsequent declines in deal volumes throughout the following three quarters – 544 in Q2, 451 in Q3, and 473 in Q4 – the cumulative count for 2022 reached 2,167 deals, representing a nine per cent decrease compared to the previous year’s 2,370 deals. Nonetheless, this count signifies a higher ‘new normal’ than the pre-Covid era.

The Insight from Ralph Hübner, Director of Hampleton Partners

According to Ralph Hübner, the director of Hampleton Partners, the dip in digital commerce deal volume during the second quarter mirrors the overall decline in the M&A market. He attributes this downswing to political and economic uncertainties, as well as the market’s natural tendency to stabilize after a period of heightened activity and volatility.

However, the data reveals a positive outlook, indicating a ‘new normal’ that remains significantly higher than the pre-pandemic period. Acquirers are still actively seeking new digital technologies but have become more selective and risk-averse in their choices. The market continues to offer strong multiples for mature and healthy companies in digital commerce, while the prospects for unhealthy companies are limited.

Top Digital Commerce Acquirers

Among the key players in the Digital Commerce M&A space, three companies stood out for making over ten acquisitions in the past 30 months:

  1. Embracer Group: With 19 acquisitions, including Crystal Dynamics, Square Enix, and Aspyr Media.
  2. Tencent: Holding 15 acquisitions, including game design and development studios Shift Up, Inflexion Studios, and 1C Entertainment.
  3. Animoca Brands: Making 11 acquisitions, including TinyTap, WePlay Media, and BDVL OU.

The report by Hampleton Partners identified a total of 5,474 active acquirers in the past 30 months.

Significant Growth Segments in Digital Commerce

Media, Social & Gaming

The Media, Social & Gaming sector witnessed a transformative shift with the onset of COVID in Q4 2020, leading to a remarkable 134 per cent increase in transaction volumes from 2020 to 2021. While the transaction count declined by -27 per cent in post-pandemic 2022, reaching 438 deals, it still demonstrated a higher ‘new normal’ compared to pre-pandemic times.

Notably, the GamingTech sector saw a particularly prolific number of deals, reaching approximately 97 deals in the online gaming segment.

Agencies and Service Providers

The transactions in Agencies & Service Providers segment surged by 8 per cent year over year, setting an unprecedented level of 312 deals.

The Future of Digital Commerce M&A

Ralph Hübner forecasts that in the next two to three years, the global Digital Commerce M&A market is likely to become more segmented, exhibiting stronger regional differences in deal value and multiples. Some individual economies are expected to outperform others, paving the way for diverse trends in the sector.

For the complete insights into the Digital Commerce M&A market, you can download the full Hampleton Partners’ report here.

As Hampleton Partners continues to be at the forefront of international mergers and acquisitions and corporate finance advisory for technology companies, the digital commerce space holds great promise for those seeking to accelerate growth and maximize value.

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