Ad Tech M&A Report H1, 2021 - OAREX Capital Markets
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Ad Tech M&A Report
H1, 2021
1TABLE OF CONTENTS Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Mergers, Acquisitions & Buyouts: First Half of The Year. . . . . . . . . . . . . . . . . . . . 4 2021 Deal Activity by Month . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Deal Activity by Month – 2021 vs. 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Deal Activity by H1 Volume – 2021 vs. 2020. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Deal Activity by Quarter – 2021 vs. 2020. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Acquirers Funding Status. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Notable Transactions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11 Home Country of Suitor. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Top 10 Acquirer Industries. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 About OAREX. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 Disclaimer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
INTRODUCTION
The M&A market is hot. Early in the year, we saw numerous head-turning
transactions in digital media and ad tech. According to Luma’s Q2 report, deal
activity for advertising and marketing technology firms was up 174%.
Bryan Park’s Q2 M&A Report confirmed the surge in volume, as global M&A
activity value grew $1.5T, a 385.6% increase over Q2, 2020.
This prompted us to mine Crunchbase data for similar transaction data, which
is summarized in this report.
3YoY Mergers, Acquisitions & Buyouts
By Half Year
MERGERS, ACQUISITIONS & BUYOUTS: FIRST HALF OF THE YEAR
2021 393 23 19
ACQUISITION
2020 224 12 10 LEVERAGED BUYOUT
MERGER
0 50 100 150 200 250 300 350 400 450
H1 '21 Mergers, Acquisitions & Buyouts
In the first half of 2021, ad tech mergers, acquisitions and By Month
buyouts grew 77% versus the same period last year.
In fact, H1 ‘21 saw nearly the same amount of activity as all of
100
2020. With 435 transactions, H1 closed at 91% of 2020’s total
transactions,
90 falling short by only 43. MERGER
2
6 LEVERAGED BUYOUT
80 3 5 ACQUISITION
4
5
70 2
6
5H1 '21 Mergers, Acquisitions & Buyouts
By Month
2021 DEAL ACTIVITY BY MONTH
100
90 MERGER
2
6 LEVERAGED BUYOUT
80 3 5 ACQUISITION
5
70 2
6
1 5
60
50 4
3
40 79 80
66 62
30 59
47
20
10
0
Jan Feb Mar Apr May Jun
Transactions peaked in February with 88 in total. Activity
bottomed in May with 54 transactions, and finished strong in
June with 69.
Leveraged buyouts saw the largest growth, nearly doubling
versus 2020 (92%). Closely followed by mergers (90%) and then
acquisitions (75%).
5By Month
DEAL ACTIVITY BY MONTH –Acquisitions
HoH Mergers, 2021 VS. 2020
& Buyouts
100
88 87
90
77
80
69
70 2021
60 61 60
57
60 54
50
40
30
30
22
20 16
2020
10
0
Jan Feb Mar Apr May Jun
As expected, when the world shut down due to the Covid pandemic, transactions came
to a crashing hault in April 2020, plummeting by 40%. That trend would continue through
H1 '21 Mergers, Acquisitions & Buyouts
the remainder of H1 ‘20, with transactions continuingBy toMonth
slide in May and June. Down
28% and 43%, respectively, from the prior months.
As a result of the sudden crash, we are unable to establish a baseline for seasonality of
mergers,
100 acquisitions and buyouts. That being said, both periods appeared to start off
strong so we believe that it may be common for Q1 to have elevated
MERGER transactions in a
90 2
given year. This would make6sense, as media companies often make 20-30%
LEVERAGED of their
BUYOUT
annual
80 5
revenue in Q4. Flush 3with cash, a logical step would be vertical or horizontal
ACQUISITION
6
growth via some
5 type of merger transaction.
70 2$279
0%
Jan Feb Mar Apr May Jun
DEAL ACTIVITY YoY
BY Mergers,
H1 VOLUME – 2021
Acquisitions VS. 2020
& Buyouts By Half Year In Millions
$80,000
$70,000 MERGER
LEVERAGED BUYOUT
ACQUISITION
$60,000
$43,092
MILLIONS
$50,000
$40,000
$30,000 $7,950
$20,000
$235
$27,383
$10,000
$3,976
$-
2020 2021
Known price data for all transactions increased 17.6 times in 2021.
Unfortunately, most transactions are private so price data remains largely
unknown. Of all activity since January 2020, we found known price data for
only 133 (14%) transactions.
That being said, transaction detail has become more commonplace:
price data increased in 2021 to 17% (75 deals) vs 12% in 2020.
7YoY Mergers, Acquisitions & Buyouts
By Quarter
YOY MERGERS, ACQUISITIONS AND BUYOUTS, BY QUARTER
2021 168 9 6
QUARTER 2
MERGER
LEVERAGED BUYOUT
2020 62 3 3 ACQUISITION
2021 225 14 13
QUARTER 1
2020 162 9 7
0 50 100 150 200 250
QoQ ANALYSIS: Q1 in both 2020 and 2021 saw significant transaction activity,
with nearly 67% of all H1 transactions occuring in 2020, and 58% in 2021. Q2 2021
accounted for 42%, much higher than 28% in Q2 of 2020. This low figure in Q2 2020
comes as no surprise, as the entire market was reeling from the Covid-19 fallout.
YoY ANALYSIS: Q1 2021 activity rose by 42% YoY. For the most part ,Q1 was pretty
normal in 2021, up until mid-March when economies shutdown worldwide. Q2
increased 169%, which again comes as no surprise.
8OUR THOUGHTS
“ Is this simply staggering growth, a
return to normalcy, or both? We believe
that a large portion of the data is just a
reflection of the economy rebounding
due to the reopening. However, it seems
unlikely that is the only factor. One major
factor is that cash is at an all time high,
and businesses are looking to deploy
funds into the economy by acquiring or
merging with other companies.”
9Acquirer Funding Status
By Half Year
ACQUIRERS FUNDING STATUS
Seed
Early Stage Venture
5% 9%
Private Equity
15%
5% 11%
12%
IPO
32%
36%
31%
31% 5%
M&A
9%
Late Stage Venture
A rising tide lifts all boats. This comes to mind when looking at transaction data for
companies with a known funding source. The average growth across all categories
was 117%. Late Stage Venture companies showed the most growth when compared
to the year prior (217%), although this acquirer status accounted for only 9% of total
transactions. Either way, it was the most significant growth versus the prior year.
32% of acquisitions were done with a suitor that raised money in an IPO, in order to
acquire the existing target. It’s crystal clear from this reported data that IPOs are a
huge driver of the M&A market.
10Top 5 Transactions
In B illions
NOTABLE TRANSACTIONS
2021
Local Media Group
acquired by Gray TV $3
Televisa
acquired by Univision Communications $3
Verizon Media
acquired by Apollo $5
MGM Studios
acquired by Amazon $8
WarnerMedia
acquired by Discovery $43
2020
ION Media Networks
acquired by The E.W. Scripps Company $3
Nielsen - Global Connect business
acquired by Advent International $3
Endurance International Group
acquired by Clearlake Capital Group $3
ZeniMax
acquired by Microsoft $8
eBay Classifieds Group
acquired by Adevinta $9
$- $5 $10 $15 $20 $25 $30 $35 $40 $45
As usual, a handful of transactions accounted for most of
the transaction volume. Ironically enough, the Discovery
acquisition of Warner Media was $43B alone, equivalent to
the total reported merger value of 2021!
11HOME COUNTRY OF SUITOR
Acquirees by Country
Countries with +10
2021
United States 222
United Kingdom 60
Canada 22
Germany 15
France 11
The Netherlands 10
2020
United States 148
United Kingdom 21
Canada 10
0 50 100 150 200 250 300
The number of countries with companies that had more than 10 transactions
doubled in 2021 (from 3 to 6). Germany, France and the Netherlands all joined
the list, alongside the leaders of the pack: the United States, the UK and Canada.
The USA dwarfs all other countries, making up more than 70% of the total
transactions in each year(71% in ‘20 & 78% in ‘21).
The UK is still second in command but lost market share (down 30% YoY).
12Top 10 Acquirer Industries Top 10 Acquiree Industries
TOP 10 ACQUIRER
H1 2021INDUSTRIES TOP 10 ACQUIREE H1INDUSTRIES
2021
Digital Advertising
Marketing SaaS Platforms
Mobile Analytics
1.8% Advertising Social Media 1.7% 2%
2.1% 1.7%
Internet 7.1% 1.8%
Internet Advertising
2.2% 2%
Financial Digital 16.3%
Services Marketing 2.5%
2.2%
Publishing Marketing Software 3.5%
2.3%
5.7%
3.8%
Media and 3% Digital Media
Entertainment
3.9%
3.1% 4.2% 9.8%
Publishing
5% Marketing
Information 3.2% Software
Technology
Digital Media Media and
Entertainment
Financial Services and Digital Media were the only acquiring industries to rise in 2021’s Top 10 (both jumping 2 spots
each). The number of acquiring companies from those industries grew by 143% and 150% respectively. While their
market share shot up by 28% and 31%.
While all of the Top 5 acquiring industries saw declines, publishing was the only one to fall out (getting bumped down to
7th from 4th). Furthermore, the publishing sector saw the slowest growth when compared to other industries. Of all the
industries that saw high transaction volume, Digital Marketing made the most strides, jumping 4 spots to 6th overall in
2021.
The absolute number of acquired companies for each industry grew within the Top 10, but the majority gave up
significant market share. Publishing suffered the biggest loss at nearly 37%.
While there is movement across the board, the Top 5 industries being acquired remained steady.
13CONCLUSION
There you have it. A record breaking year for deal activity; not just in ad tech, but
in the economy as a whole. We anticipate the activity to continue at a steady
pace given the amount of cash still on the sidelines (despite all the M&A activity
already). Eventually, we’ll see a slow down as sideline cash gets deployed into the
economy, but with more potential government funding programs on the horizon,
we don’t anticipate a slow down to happen any time soon. Also, historically, the
M&A market tends to follow the stock market. Earnings are high, corporations
are flush with cash, so consistent with anticipating higher equities, we expect
increased M&A activity. Stay tuned!
14ABOUT OAREX
For digital media buyers and sellers.
OAREX, the Online Ad Revenue Exchange, is a platform for digital media and advertising
businesses to obtain fast funding. As a capital-as-a-service (CaaS) platform, we directly fund
and provide liquidity to digital ad buyers and sellers, no matter where they sit on the supply
chain.
Digital ads are served in milliseconds, but it takes months to get paid. We are eliminating this
endemic pain point in the industry, enabling our clients to scale without the red tape, headache,
or dilution associated with traditional capital.
We are proudly backed by East West Bank and Arena Investors with a $100M financing facility.
15DISCLAIMER
This study is for informational purposes only, is confidential and may not be reproduced or transferred, in whole or in part, to any other party without
the express written consent of OAREX Capital Markets, Inc. The information contained herein does not constitute any sort of guarantee to any person or
company. The information contained herein is based on public data found within Crunchbase.com and is for illustrative purposes only. OAREX Capital
Markets, Inc. is not affiliated with Crunchbase, Inc. or any of their subsidiary companies. Our commentary is based upon certain hypothetical assumptions
and events over which we have only partial or no control. The selection of assumptions requires the exercise of judgment and is subject to uncertainty due to
the effects that economic or other changes may have on future events. Nothing contained herein should be relied on. Any recipient of this information must
conduct and rely on its own evaluation of the projections provided, trends identified, including with respect to the uncertainty involved. No representation
or warranty of any kind is or can be made with respect to the accuracy or completeness of, and no representation or warranty should be inferred from the
information herein or the assumptions underlying it. No representation or warranty is or can be made as to any company’s future operations or the amount
of any future income that may be realized or loss due to the information herein. The actual results achieved will vary from herein, and variations may be
material. Recipients of this information are cautioned not to place reliance on the study.
METHODOLOGY: The study is based on data found within Crunchbase.com for the time period in question. The completeness of the data obtained
varied from transaction to transaction, and we do not attempt to normalize for this, so if the data analyzed is not representative of the market as a whole,
then our results shown here won’t be either. Due to limited data, results shown are largely based on the number of transactions that occurred, rather than on
a cost basis. So transactions are equally weighted, regardless of size, which may bias our results. We do our best to accurately represent relevant transactional
data. Therefore, we filtered to reflect all Acquisition, Merger and Leveraged Buyout data for acquired companies within a relevant industry, as identified by
Crunchbase.com. These industries include, but are not limited to, Advertising, Digital Media, Mobile Advertising, Ad Network, Ad Exchange, Advertising
Platforms, Media and Entertainment, Outdoor Advertising, Video Advertising, Social Media Advertising and Publishing. As a result, the information
herein is limited to acquiree companies within the aforementioned industries and does not control for acquirer companies. The information contained
herein is based on secondary data, while we try to make sure it is represented accurately, please take all of it with a grain of salt and do not rely upon it.
Nothing in this report is a guarantee or an offer. You hereby hold OAREX harmless for any losses incurred in reliance on this study.
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