Insight

Digital Media M&A Newsletter Q1 2021

Read more about the M&A trends in the Digital media sector

Roderick Moon

Roderick Moon

Managing Director, KPMG Corporate Finance LLC

+1 212-954-5834

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

Q1' 21

Deal Count

549 transactions in Q1’ 21

Deal Volume

$71.9 billion in Q1’ 21

Footnotes

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


 


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