Mergers and acquisitions trends: Tech and media sector ready to power bounce-back in 2021

Mergers and acquisitions trends: Tech and media sector ready to power bounce-back in 2021

The media and marketing sectors will fuel growth in mergers and acquisitions over the next year, as and ‘future-proofing’ will drive the agenda for businesses following the challenges of 2020, according to new global research.

International M&A advisory firm Ciesco, analysed 1,091 M&A transactions in 2020 and has released the only report of its kind predicting the mergers and acquisition, private equity and technology sector movements to be expected this year. The report also analyses the seismic shifts in the buyer landscape brought on last year by the covid crisis.

MarTech remained one of the most active sectors. CRM is the only sector which saw an annual increase, 30% from 2019. The largest software market globally, which is expected to reach $80bn revenue by 2025, can be accessed from any device, including mobile phones as of 2020. The trend of ‘remote working’ also demanded more than ever flexible mobile and cloud solutions to deliver personalised experiences for their customers.

• Digital Media, Traditional Media and MarTech remained the most popular sectors, with 234, 180 and 143 deals respectively. That combined represents 51% of 2020 deal activity.
• CRM was the only sector which saw a year-on-year increase – up 30% from 2019.
• Just 1,091 M&A transactions were recorded in 2020, a 19 percent drop on 2019
• The total value of deals, excluding deals over $10bn, was $55.9bn, a 50 percent decline on 2019
• Digital media, traditional media demonstrated robustness, with customer relationship management businesses (CRM) seeing a 30 percent year-on-year increase in M&A activity.
• Private Equity deals fell by 29 percent in 2020 yet PE deals in tech, digital, media and marketing represented 37 percent of all buyers in 2020.
• E-commerce predicted to drive retail, and Special Acquisition Companies to drive fundraising in 2021.
• Business transformation and ‘future-proofing’ will drive the agenda for businesses following the challenges of 2020.

• Digital Media, Traditional Media and MarTech remained the most popular sectors, with 234, 180 and 143 deals respectively. That combined represents 51% of 2020 deal activity.
• CRM was the only sector which saw a year-on-year increase – up 30% from 2019.

• Ciesco unveils M&A analysis of the tech, digital, media and marketing sector
• 2020 M&A deal volumes in the USA and the UK remained robust and grew in China
• Buying dominated by Private Equity firms
• Tech-driven business transformation to drive recovery

Sector-specialist M&A advisory firm Ciesco reports global resilience in the tech, digital, media and marketing sectors 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 percent 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 percent 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 percent of all M&A activity in 2020. This was down from 42 percent in 2019, but notably higher than 13 percent in 2017. Consultancies, tech companies and holding companies contributed to a diverse buyer universe, joining Private Equity among the Top 10 acquirers.

Commenting on the report, Chris Sahota, CEO of Ciesco, said: “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 Purpose Acquisition Companies, which totalled $80bn in fundraising last year, are forecast to drive fundraising in 2021.

The Ciesco report shows deals taking 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 percent 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.

Reinvention, flexibility and future-proofing will be high on the agenda for businesses following the challenges of 2020. The 2020 Global Review and 2021 Outlook Report by Ciesco is the most comprehensive report of its kind. It’s out now and can be downloaded here