Sector-specialist M&A advisory firm Ciesco has reported global resilience in the tech, digital, media and marketing sectors even in the face of the Covid crisis.
Ciesco tracked global M&A activity in these sectors, reporting 1,091 M&A transactions in 2020, with announced deal values of $55.9bn. This value excluded the one mega-deal of the year (defined as a deal greater than $10bn): the $27.7 billion acquisition of communication platform Slack by Salesforce. This took place despite a mostly pandemic-induced 19% drop in M&A activity last year.
Digital media, traditional media and MarTech were the most popular sectors for deal-making, collectively representing over half of all deal volume in 2020. Customer relationship management businesses (CRM) saw a 30% year-on-year rise in M&A activity.
The private equity market showed the greatest buoyancy. PE deals in tech, digital, media and marketing represented 37% of all M&A activity in 2020. This was down from 42% in 2019, but notably higher than 13% in 2017. Consultancies, tech companies and holding companies contributed to a diverse buyer universe, joining private equity among the Top 10 acquirers.
Ciesco CEO Chris Sahota says: “Our report demonstrates the attractiveness of data and technology-driven business models to financial investors, and through last year’s turbulence, businesses are learning to adapt and future-proof their operations.
“2021 will be a period of re-invention for many companies. Technology and data will be at the forefront of this evolution, with smart use of data informing decisions across all parts of an organisation.
“Global holding networks spent much of 2020 restructuring their operations in the face of declining revenues and took the opportunity to divest under-performing legacy assets. We see a strong appetite for M&A to strengthen technology services, disciplines and geographies.”
The report expects the outlook for 2021 to bring opportunities to investors looking to back companies with dynamic business models. E-commerce is predicted to drive retail this year and Special Acquisition Companies, which totalled $80bn in fundraising last year, are forecast to drive fundraising in 2021.
Deals took place in 84 countries last year, mostly driven by technology, media and marketing. The USA and UK remained the most active M&A markets, followed by France, Germany, Canada and the Netherlands. Combined, they made up 76% of the global M&A deal flow.
Deal volume increased in China, which announced 18 transactions in 2020 after a year of relative inactivity. Notable deals included Tencent Holdings’ $11bn acquisition of the digital marketing agency Bitauto and Baidu’s $3.6bn acquisition of the live streaming platform JOYY.
The full report, compiled with with law firm Bird&Bird and financial data company Pitchbook can be downloaded here.