NEW YORK — April 16, 2014 — Berkery Noyes, an independent mid-market investment bank, today released its Q1 2014 mergers and acquisitions trend report for the Online and Mobile Industry. The report analyzes M&A activity in the Online and Mobile Industry during Q1 2014 and compares it with the past four quarters.
According to Berkery Noyes’ research, deal volume increased five percent over the past three months. Total transaction value rose 63 percent, from $26.5 billion to $43.3 billion. This was the peak for both volume and value throughout the past five quarters.
The increase in aggregate value was attributable in large part to Facebook’s acquisition Whatsapp for $16 billion, a cross-platform mobile messaging application. Whatsapp was Facebook’s highest value Online and Mobile deal since its acquisition of Instagram for $715 million in 2012. As demonstrated by these two deals, Facebook has shown a willingness to complete major acquisitions in order to maintain and grow its mobile audience.
Although the smallest sector in terms of volume, four of the industry’s top ten highest value deals in Q1 2014 occurred in the Communications segment. In addition to Whatsapp, this included VMware’s acquisition of AirWatch, a mobile security and enterprise mobility company, for $1.2 billion; and Rakuten’s acquisition of Viber, a mobile messaging and VoIP company, for $900 million. The acquisition of AirWatch was notable in that most mobile device management (MDM) transactions over the past few years have involved the acquisitions of small and mid-sized companies that fill existing voids in the marketplace.
As for the E-Marketing & Search segment, transaction activity increased 16 percent in Q1 2014. Oracle’s acquisition of Blue Kai for $400 million and Comcast Corporation’s acquisition of Freewheel for $360 million were two notable that pertained to advertising software and data management. One trend in the segment is the shift in advertising as marketers look to move from traditional search to social and custom web experiences based on the individual. Along these lines, AOL acquired personalized content company Gravity for $83 million. With this transaction, AOL will utilize Gravity’s online semantic technology across its media properties such as The Huffington Post.
Regarding other markets covered in the report, the E-Commerce segment experienced a seven percent volume increase on a quarter-to-quarter basis. At the same time, SaaS & Cloud deal volume improved nine percent. This followed a 15 percent decline in Q4 2013. Also of note, deal volume in the E-Marketing & Search segment surpassed the SaaS & Cloud segment for the second consecutive quarter.
The number of transactions in the mobile application subsector increased from 104 to 113. Deals pertaining to consumer mobile applications improved from 56 to 61. “Mobile start-ups are often attractive acquisition candidates for several reasons,” stated Mary Jo Zandy, Managing Director at Berkery Noyes. “First, the new technology can sometimes be incorporated into the buyer’s existing product line in a relatively short period of time. Second, it’s an opportunity to add unique talent to facilitate this integration.” Zandy continued, “In some cases following the acquisition, these entrepreneurs are also tasked with developing other innovative mobile solutions once they join the new parent company.”
A copy of the ONLINE AND MOBILE M&A REPORT FOR FIRST QUARTER 2014 is available at the Berkery Noyes website.