Global Tech M&A Overview
The last three quarters have witnessed a significant increase in mega deals leading to deal volumes crossing an all-time high threshold of $300bn in Q1’ 21, with 871 transaction announcements in the quarter.
SPACs emerge as key disruptors in M&A
SPACs have boosted global tech M&A by heavily infusing billions in tech vendors, upstarts and unicorns.
- SPACs can facilitate tech companies in going public at valuations that are typically 3x market average.
- Over 50 tech vendors acquired so far by SPACs in 2021, with an average equity value of about $2.5bn.
- By mid-March 2021, 243 blank-check companies had raised $79bn in aggregate the U.S., a 100%+ increase from Q4’ 20, with 117 blank-check companies netting $34bn.
Digital Media M&A in Q1’ 21
Q1’ 21 recorded a total of 549 deals, an ~11% increase over Q4’ 20 with a total of 496 deals. The overall deal volume for Q1’ 21 was ~$71.9bn, a ~30% decline on a Q-o-Q basis. The deal volume in mega deals (>$1bn) also decreased by 40% from $91.5bn in Q4’ 20 to $55.0bn in Q1’ 21 while the deal count in mega deals increased by 55% from 11 deals in Q4’ 20 to 17 deals in Q1’ 21. The digital media M&A market in Q1’ 21 was mostly driven by activity in the digital media technologies and eCommerce segments. The U.S. dominated the global digital media M&A market both in terms of deal count (49%) and deal volume (45%), followed by UK at 11% deal count and 16% deal volume.
Digital Media M&A Market Snapshot
- Sponsor Backed M&A Activity
Of the 549 digital media deals announced in Q1’ 21, 82 involved one or more financial sponsors, of which 37 are U.S. based targets. Financial sponsors contributed $16.5bn in disclosed deal spending in Q1’ 21.
- Domestic M&A and Cross-Border Deals
US and UK dominated the digital media M&A landscape, constituting more than 60% of total deal volume. The number of cross border transactions increased by 44.2% from 147 in Q4’ 20 to 212 in Q1’ 21
- Deal Multiples
Digital media deal valuations increased in Q1’ 21 with an average EV/Rev. multiple of 5.4x, compared to 4.3x in Q4’ 20. Average EV/Rev. for last 6 months is 4.9x
549 transactions in Q1’ 21
$71.9 billion in Q1’ 21
Note: All data is represented on the basis of disclosed deal values for transactions as available in the sources.
Sources: Capital IQ, 451 Research, Mergermarket and other publicly available information, Consumer Technology Association