Digital Commerce M&A Finishes 2019 Strong but Faces New Challenges in the Age of Coronavirus
• Despite current lull digital commerce firms could be in pole-position after the storm
London, UK – 31 March 2020. The Digital Commerce M&A market report from Hampleton Partners, the international technology mergers and acquisitions advisor, reveals the sector experienced a strong finish to 2019, with 778 disclosed transactions in the second half of the year. This was up from 664 transactions in the first half of 2019.
The sector also saw an uptick in disclosed transaction value which reached a record $94.5 billion.
Over the second half of 2019, the digital commerce sector saw over a dozen multi-billion dollar deals, including Charles Schwab’s acquisition of Ameritrade ($26.3bn); Flutter’s merger with The Stars Group ($11.3bn); and Takeaway’s merger with Just Eat ($8.6bn).*
The median transaction value over the past 30 months was $26 million.
Ralph Hübner, Sector Principal, Hampleton Partners, said:
“In the second half of 2019, the digital commerce space continued to see peak levels of M&A in terms of transaction volume, disclosed deal value and company valuations. Key drivers behind this surge include the hegemony of Amazon, B2B e-commerce and the advent of the platform age.”
A new model
Ralph Hübner commented:
“E-commerce and digital marketing are more than ever turning into one mature, consolidating sector. ‘Digital commerce’ is the new normal if we consider the overlap between digital marketing and e-commerce in fields such as social commerce, retail marketing, or indeed if we consider marketing giants expanding into e-commerce software, as illustrated by Adobe’s acquisition of Magento in 2018.
“In addition retailers who want to ensure a solid purchase and post-purchase journey for the customer, and later reap rewards such as customer loyalty, repeat purchases and increased revenue, must now also focus their efforts on digital marketing solutions such as improved CRM software and AI to analyse and tailor their marketing to customer behaviour.”
Most active Digital Commerce sectors
The Internet Services & Platform Solutions segment accounted for 36 per cent of the total volume of digital commerce transactions in the second half of 2019.
Firms in the Online Retail segment accounted for the second largest portion, representing 29 per cent of M&A deal volume in digital commerce.
Digital Commerce M&A in 2020 and beyond
Ralph Hübner concluded:
“Unfortunately, the growing effect of COVID-19 means that M&A in the digital commerce field is extremely uncertain for 2020 – at least for now. Retail is grappling with a sudden drop in spending and consumption as fewer shoppers commit their finances to non-essential goods and services. The funding market is also set to suffer for a while.
“In the long term, however, we believe that more mature companies will grow into sought-after targets and traditional brands and retailers will show big demand for digital channels overall. Also, aside from conferencing software and other remote IT & business solutions (which are currently in high demand for obvious reasons), we believe that e-commerce will be in pole-position once demand picks up again after the storm.
“Ultimately, given these conditions, we’re confident that when the public health situation has improved and technology M&A picks up again, the digital commerce space will see a stronger-than-average comeback.”
Hampleton’s Digital Commerce M&A report analyses transactions, trends and activity across the following segments: Internet Services & Platform Solutions; Online Retail; Media, Social & Gaming, Agencies & Service Providers; and Digital Commerce Software.
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Note to editors
* The merger of Takeaway with JustEat is yet to be approved by the UK Competition & Markets Authority.
Hampleton Partners’ Digital Commerce Technology M&A Market Report 1H 2020 is compiled using data and information from the 451 Research database (www.451research.com); CapitalIQ, a product of S&P Global Intelligence; and Crunchbase.
Download the full Hampleton Partners Digital Commerce M&A Market Report: https://www.hampletonpartners.com/reports/digital-commerce-report/.
About Hampleton Partners
Hampleton Partners is at the forefront of international mergers and acquisitions and corporate finance advisory for companies with technology at their core. Hampleton’s experienced deal makers have built, bought and sold over 100 fast-growing tech businesses and provide hands-on expertise and unrivalled advice to tech entrepreneurs and companies which are looking to accelerate growth and maximise value.
With offices in London, Frankfurt, Stockholm and San Francisco, Hampleton offers a global perspective with sector expertise in: Artificial Intelligence, Autotech, Cybersecurity, Digital Commerce, Enterprise Software, Fintech, Healthtech, HR Tech, Insurtech and IT & Business Services.
For more information visit https://www.hampletonpartners.com.
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