Insight

Digital Media Quarterly update Q4 2020

Read more about 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

Riding high on the momentum gained in Q3’ 20, Global Tech M&A activity in Q4’ 20 witnessed a jump of over 30% in aggregate deal value ($272B) on a Q-o-Q basis, with 1,119 transaction announcements in the quarter


Mega deals are driving the M&A market

Despite the global COVID-19 situation and economic recession in 2020, TMT M&A was at record high levels.  The market reflected somewhat of a ‘barbell’, with high quality companies commanding premiums and others facing distressed exits.

  • While mega deals saw a whooping rise of EV/Rev. median multiple to 5.9x, from 4.5x in 2019, deals under $1bn fell to 2.1x, from 2.6x in 2019.
  • Financial sponsors continued to drive a lot of the M&A activity.

Digital Media M&A in H2’ 20

Q4’ 20 recorded a total of 499 deals, a 9.9% decline from Q3’ 20 with a total of 554 deals. On the other hand, the overall deal volume for Q4’ 20 was ~$104bn, 7.1% increase on a Q-o-Q basis. The deal volume and deal count in mega deals (>$1bn) were consistent in both the quarters. The digital media M&A market in Q4’ 20 was mostly driven by deal announcements in digital media technologies, eCommerce and services segments. U.S. dominates the global M&A market both in terms of deal count (40%) and deal volume (30%). UK is ranked 2nd in the digital media M&A landscape. China is ranked 3rd in eCommerce M&A.

Digital Media M&A Market Snapshot

  • Sponsor Backed M&A Activity
    Of the 499 digital media deals announced in Q4’ 20, 37 involved one or more financial sponsors, of which 14 are U.S. based targets. Financial sponsors contributed $4.9bn in disclosed deal spending in Q4’ 20.
  • Domestic M&A and Cross-Border Deals
    US and UK dominated the digital media M&A landscape, constituting more than 50% of total deal volume as acquirer and target nation. The number of cross border transactions reduced by 14.6% from 322 in Q3’ 20 to 275 in Q4’ 20.
  • Deal Multiples
    Digital media deal valuations also decreased in Q4’ 20 with an average EV/Rev. multiple of 3.1x, compared to 3.7x in Q3’ 20. Average EV/Rev. for H2’ 20 is 3.4x.

Q4' 20

Deal Count

499 transactions in Q4’ 20

Deal Volume

$102.1 billion in Q4’ 20

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 and other publicly available information, IAB report, eMarketer


 


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