NEW YORK — January 11, 2018 — Berkery Noyes, an independent mid-market investment bank, today released its full year 2017 mergers and acquisitions trend report for the Online and Mobile Industry. The report analyzes M&A activity in the Online and Mobile Industry during 2017 and compares it with data covering 2015 and 2016.
According to Berkery Noyes’ latest research, volume declined two percent on a year-to-year basis. Strategic volume decreased five percent, whereas private equity backed volume increased 19 percent. Aggregate deal value fell 42 percent, from $178.88 billion to $104.67 billion. This followed a 13 percent rise from 2015 to 2016.
The median revenue multiple year-over-year moved downward from 2.3x to 2.0x, while the median EBITDA multiple shifted slightly from 11.4x to 11.6x. Over the past three years, deals in the $10-$20 million range received a median enterprise value multiple of 2.0x revenue, compared to 2.3x revenue for those in the $20-$80 million range and 3.3x revenue for those in the $80 million and above range.
The number of acquisitions in the consumer mobile application subsector, after remaining nearly constant in 2016, decreased 12 percent. Notable mobile-based transactions during 2017 included United Luck Consortium’s $1 billion acquisition of Outfit7, a media franchise with various mobile applications, which have received more than 5 billion downloads; Apple’s announced acquisition of Shazam, a music and image recognition application, for a reported $400 million; Take-Two Interactive Software’s acquisition of Social Point, a mobile game developer, for $250 million; ABRY Partners’ announced acquisition of MobileHelp, a provider of mobile medical alert and personal health management solutions, for $130 million; and Fingerprints’ acquisition of Delta ID, which develops biometric identity and authentication solutions for consumer mobile devices based on iris recognition technology, for $106 million.
One notable acquirer in the mobile space was Snapchat, which went public in 2017 and rebranded itself as a camera company. During the past year Snapchat acquired Zenly, a social mapping startup, with a reported purchase price of $200 million; and Placed, a consumer location analytics platform that helps measure the offline impact of mobile ads and insights into consumer behavior, with a reported purchase price of $125 million.
The E-Commerce segment saw volume decrease four percent on a yearly basis. This followed a 12 percent rise in 2016. The segment’s largest transaction during 2017 was PetSmart’s acquisition of Chewy, an online retailer for pet products, for $3.35 billion. Other notable E-Commerce deals throughout the year included Amazon’s acquisition of Souq, a Dubai-based online retailer, for a reported $580 million; Pitney Bowes’ acquisition of Newgistics, a provider of e-commerce services for retailers and brands, for $475 million; and Harland Clarke Holding’s acquisition of RetailMeNot, an online coupon site specializing in promotional codes, for $455 million.
“Among many areas of interest, marketers can use social graphing to optimize online advertising for e-commerce,” said Vineet Asthana, Managing Director at Berkery Noyes. “Given the emphasis being placed on big data and leveraging large datasets, interpreting habits and preferences based on social connections is an important tool that can be used to help predict consumer behavior.”
Transaction activity in the E-Marketing & Search segment declined three percent over the past year. Notable E-Marketing & Search deals during 2017 included Oracle’s acquisition of Moat, an ad measurement company, for a reported $850 million; Marlin Equity Partners’ announced acquisition of Bazaarvoice, which offers consumer-generated content, advertising, and personalization solutions, for $451 million; IHS Markit’s acquisition of a 78 percent stake in automotiveMastermind, a provider of predictive analytics and marketing automation technology for the automotive industry, for $392 million; and Amobee’s acquisition of Turn, an advertising technology company used by marketers and agencies, for $310 million.
As for other sectors covered in the report, volume in the Communications segment increased 18 percent on a yearly basis. This made it the segment with the largest rise in 2017. Deal activity in the E-Content segment declined 13 percent year-over-year. However, four of the industry’s top ten largest transactions in 2017 were E-Content related, making it the best represented segment in the industry’s top ten list. Transaction volume in the SaaS & Cloud segment stayed about constant for the second consecutive year and retained its position as the industry’s most active sector.
A copy of the ONLINE AND MOBILE INDUSTRY M&A REPORT FOR FULL YEAR 2017 is available at the Berkery Noyes website.