November 12, 2013 ONLINE AND MOBILE M&A ACTIVITY REMAINS ROBUST IN THIRD QUARTER 2013

According to Berkery Noyes’ Online and Mobile report for third quarter 2013, total volume experienced an uptick, from 541 to 549 transactions. At the same time, deal value declined four percent, from $17.0 billion to $16.3 billion. The median revenue multiple moved slightly from 2.3x to 2.2x, while the median EBITDA multiple rose from 10.0x to 12.0x.

The SaaS & Cloud segment underwent a five percent decrease in volume on a quarter-to-quarter basis. However, the number of SaaS & Cloud deals throughout the first three quarters of 2013 increased 11 percent compared to the same timeframe in 2012. 

Regarding the E-Marketing & Search segment, deal volume remained about constant on a quarterly basis. An ongoing trend in the segment pertains to possible monetization opportunities from social media monitoring, especially as it relates to television. Along these lines, Twitter acquired Trendrr in third quarter 2013 as well as BlueFin Labs earlier in the year. There were also several high value deals that involved video advertising platforms in third quarter 2013, such as Extreme Reach’s acquisition of Digital Generation’s television business for $485 million and AOL acquired Adap.tv for $405 million. 

Moreover, there were two high profile mobile advertising transactions during the quarter, each of which highlights the growing interest in real-time bidding solutions. Within this subset, Twitter acquired mobile ad serving platform MoPub for an estimated $350 million while Millennial Media acquired mobile ad network Jumptap for $239 million. Another similarity between the two deals is that they were both all stock acquisitions.

“The advertising marketplace is undergoing a transformation,” said Mary Jo Zandy, Managing Director at Berkery Noyes. “Digital video is impacting traditional media buying practices, social media networks are looking to effectively monetize digital ads, and mobile marketers are trying to engage their audience with more targeted offerings. These are just some of the factors that are fostering a positive environment for M&A in the sector going forward.”