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Adtech deals go off the boil in first half of 2016

New figures from specialist technology M&A advisor Results International show that the global market for adtech and martech remained stable in the first half of this year. The overall volume of combined deals completed is up by 9.5 per cent on the same period in 2015, rising from 199 deals in H1 2015 to 218 in the first half of this year. The disclosed value of those deals, based on total consideration, is also up, rising to $11.5bn in H1 2016 from $9.2bn in H1 2015.

The number of adtech deals completed is down slightly year-on-year, a 10.4 per cent decrease from 67 transactions in H1 2015 to 60 in H1 this year. The total value of those deals fell from $7.6bn in H1 last year to $3.7bn in H1 2016.

By comparison, the number of martech deals rose from 132 in H1 2015 to 158 in H1 this year – an increase of almost 20 per cent. Martech deal value rose from $1.5bn in H1 last year to $7.8bn in H1 2016. However, this year’s figures are skewed by a number of acquisitions in excess of $1bn: Demandware by Salesforce ($2.8bn), Marketo ($1.6bn) and Cvent ($1.7bn) by Vista Equity Partners and Sitecore by EQT ($1.1bn).

Julie-Langley-thumbnailResults International partner Julie Langley (left) says: “Adtech deal value may be down by nearly $4bn on H1 last year but we should bear in mind the H1 2015 figures were skewed by Verizon’s acquisition of AOL in June 2015. At $4.4bn this was one of the biggest adtech deals ever completed. In terms of the drop-off in the number of transactions, the slowdown in adtech M&A is actually pretty minimal.

“This goes to show that while funding has become harder for adtech companies, there is clearly still a valuable M&A market for differentiated businesses that are able to scale. This is particularly apparent in areas such as mobile, video, data and cross-device tracking.”

Yesterday Verizon bought Yahoo’s online business for $4.8bn.

In geographic terms North America remains the most active market for adtech and martech M&A. Over half (53.7 per cent) of all martech/adtech deals were completed in the US and Canada in the first half of this year. The UK accounted for around 6.7 per cent of adtech and 7.6 per cent of martech deals completed globally. i

APAC also remains a strong region for adtech/martech M&A. Adtech deals there accounted for 18.3 per cent of the global market in the first half of this year, while martech deals in the region fell by 4.9 per cent but still amount to nine per cent of global deal volume.

The trend for Asian acquirers to buy into overseas territories continues: deals of note in adtech include Miteno’s acquisition of Media.net for over $900m; publicly traded Chinese integrated marketing group Spearhead buying the US and EU markets via Smaato; and Canadian DSP AdGear being acquired by South Korean giant Samsung.

Private equity investment in both sectors continues to grow quarter-on-quarter. Notably, Vista Equity Partners invested over $3.5bn in Marketo, Cvent and Colspace Corporation (through its portfolio company Mediaocean), whilst EQT invested $1bn in Sitecore in H1 2016.

The number of deals involving PE backing in the first half of 2016 was 15 per cent in adtech and 10.8 per cent in martech, up from 4.5 per cent and 5.3 per cent respectively in the same period last year.

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