Insight

Digital Media M&A update Q1 2022

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

Roderick Moon

Roderick Moon

Managing Director, KPMG Corporate Finance LLC

+1 917-270-2828

Global Tech M&A Overview

After soaring in 2021, M&A in the TMT sector lost some altitude in Q1 ’22. While expectations for an active Q2 ’22 are still largely present, dealmakers are cautiously optimistic.


Tech Pockets to Look Out for in 2022


2021 offered a favorable capital-raising environment for businesses, driving growth of new technology companies globally.

  • Technologies such as AI, IoT, and cloud-based computing have caused significant disruption across sectors
  • Crypto, health tech, energy storage, and metaverse are some of the hot pockets to keep an eye out for in 2022

Avenues for Performance Marketing in the Metaverse1


While there is still a long way to go for many marketers to start spending on metaverse and other virtual worlds, these platforms have already begun building the avenues for brands and marketers can leverage, including:

  • Hosting customized live events with customers and marketing partners
  • Creating virtual communities where members can interact with brands and other users
  • Building o-marketing strategies for different brands in virtual worlds and sponsored events


Digital Media M&A in Q1’ 22 vs. Q1’ 21

  • Q1’ 22 recorded a total of 447 deals, ~19% lower than 549 recorded deals in Q1’ 21
  • Overall deal value for Q1’ 22 was $156.5B, over 120% increase on a Y-o-Y basis
  • Deal value in mega deals (>$1B) also increased by ~180% from $52.7B in Q1’ 21 to $146.8B in Q1’ 22 (predominantly driven by Microsoft’s acquisition of Activision), with 96% of the overall mega-deals value from U.S. targets
  • Deal count in mega deals decreased by 29% from 17 deals in Q1’ 21 to 12 deals in Q1’ 22
  • Digital media M&A market in Q1’ 22 was mostly driven by activity in the media services, e-commerce and digital media technologies segments
  • U.S. dominated the global digital media M&A market in Q1’ 22, both in terms of deal count (48%) and deal value (93%)

Digital Media Q1’ 22 M&A Market Snapshot

  • Sponsor Backed M&A Activity
    Of the 447 digital media deals announced in Q1’ 22, 48 involved one or more financial sponsors, of which 28 are U.S. based targets. Financial sponsors contributed $46.3B in disclosed deal spending in Q1’ 22.
  • Domestic M&A and Cross-Border Deals
    US dominated the digital media M&A landscape, both in terms of total deal count and deal value. The number of cross border transactions were lower by ~17% at 174 in Q1’ 22 vs. 210 in Q1’ 21.
  • Deal Multiples
    Digital media deal valuations had average EV/Rev. of 4.9x in Q1’ 22, lower than Q1’ 21 average EV/Rev. multiple of 5.4x. Average EV/Rev. for last 6 months is 4.5x.

Deal Count

549 transactions in Q1’ 21

$156.5B
in Q1’ 22 


447
transactions in Q1’ 22 



We hope you find this information valuable, and as always, feel free to reach out if you would like to discuss in further detail. To read the full report, download the PDF below.


 

Footnotes

  1. Sources: eMarketer, Creative Clicks; Capital IQ, 451 Research, Mergermarket and other publicly available information


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