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.
499 transactions in Q4’ 20
$102.1 billion in Q4’ 20
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