2022: Back to (new) normal?
Waking-up from a pandemic-induced high
As seen in the M&A activity during the pandemic yearsThe Global Online Retail (GLORE50) index below clearly
of 2020 and 2021, the Digital Commercesector wasillustrates this development. Since the pandemic high in
flying high. From one day to the other, COVID caused a2021, the global index share price has dropped by
massive acceleration of digitalisation in the industrywhopping -51%. The deal activity in the private sector,
and society. However, in 2022, we saw a decline inon the other hand, by -9%. That said, for M&A in Digital
numberof transactions.Political and economic Commerce business public markets are currently not the
uncertainties have affected investor moods – theright proxy and therefore not directly comparable or
private and VC sectors have seen a massive decline inrelevant for the market’s transaction volume. We see the
deals over the past year, as have publicly listedDigital Commerce M&A market as a stable, mature, and
companies. resistant market within the global economy.
Evolution of the Global Online Retail “GLORE50” index share price, 2016-present
600%
500%
-51%
400%
300%
200%
100%
0%
Dec ;15 Dec ;16 Dec ;17 Dec ;18 Dec ;19 Dec ;20 Dec ;21 Dec ;22
Source: 451 Database, S&P CapitalIQ, Hampleton Research.
Is it a new normal?
Despite seeing a decline in deal activity in the sector,However, overall, we are seeing a stabilizing and slowly
many people are still bullish about the developments of increasing deal count in some of our subsectors, as well
the Digital Commerce M&A market. They see the decline as positive new developments and long-term trends
in deal volume from 2021 to 2022 as a normalisation of athat are holding up the market segment.
high phase during the pandemic –or in other words, as
the ‘new normal’. They believe that the lack of euphoria
within the market is merely caused by the comparison
of 2022 results with the pandemic highs of 2021.
1 | 10 Digital Commerce M&A Overview 1H 2023 M&A summary
Digital Commerce M&A normalising after a after a period of high activity and volatility, have caused
record-breaking start to 2022 this downswing.
From the end of 2020, M&A volumes in Digital
A+5% uptick in deal activity was seen in the last quarter
Commerceexperienced a steep increase, with breaking
of 2022. Deal volumes are normalising at a higher level
records in every quarter. COVID as an accelerator of
(north of 450 deals) than in 2016-2019, where we saw a
digitalisation in 2020 and 2021 increased the investors
deal average of 385. Active acquirers have decreased
interest in the thriving Digital Commercesector. The
from 14% to 7% in 2H 2022. This reservation of the
category underwent an unprecedented growth spurt of
formerly notorious buyer group makes a significant
+38% in those years. In 2022 the category saw a total of
difference to deal volumes in the market. As we know
2,167 deals, which is a -9% decrease to the record-
that the acquirer’s funds are filled, we assume that the
breaking figures of 2021.
backward trend is a result of acquirers becoming more
The investors bullishness in the Digital Commerce M&A selective and diligent with their acquisitions.
market was exhibited in the record-high deal volume in
We know that events at the beginning of 2022 had
the first quarter of 2022. The downturn in the second
impacted investors moods. We see a stabilisation of deal
quarter by -22% is in line with the overall decline of the
activity at a ‘new normal’ in the Digital Commerce
M&A market. Political and economic uncertainties, as
sector for 2023.
well as the market’s inherent inclination to normalize
.
Total number of Digital Commerce M&A transactions by quarter, 2016-2022
699
-22%
644
606
560571 +5%
549 544
461 473
448 445 453 451
424
420 408
407 392
373 368377
356358 351
326 324 319 324
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2016 2016 2016 2016 2017 2017 2017 2017 2018 2018 2018 2018 2019 2019 2019 2019 2020 2020 2020 2020 2021 2021 2021 2021 2022 2022 2022 2022
Source: 451 Database, S&P CapitalIQ, Hampleton Research.
5,4747%
Number of active acquirers in Share of active acquirers that
the past 30 months made >1 acquisition in 2022
2 | 10 Digital Commerce M&A Overview 1H 2023 Top acquirers of Digital Commerce targets, 2020-2022
Acquisitions
Acquirers Three notable Digital Commerce acquisitions
in 30 months
Crystal Dynamics Inc. –Video game developer
19 Square Enix Holdings Co. Ltd. – PC, console & mobile games developer
AspyrMedia Inc. –Video game developer & publisher
Shift Up Corporation –Game design and development studio
15 Inflexion Studios Inc - Game design and development studio
1C Entertainment S.A. - Game design and development studio
11 TinyTapLimited –Educational games SaaS
WePlayMedia Holdings LLC –Game design and development studio
BDVL OU – Digital assets payment SaaS
10 MacGregor Partners, LLC - SCM SaaS & consulting services
OpenmindSrl–E-Commerce consulting services
LEXTA GmbH –Technology consulting services
flexEngage Inc. – POS & marketing automation SaaS
8 Inspirock Inc. –Online travel planning services
PriceRunner International AB –Online platform for price comparison services
WordWatchInc. – Product data feed optimization SaaS
8 SellerActive Inc. – E-commerce SaaS & services
180Commerce LLC –E-commerce marketing SaaS & services
TakeLessonsInc. – Online instructor directory
7 SuplariInc. –Procurement data analytics SaaS
Tantalus Media Pty Limited –Video game developer
Valkyrie Entertainment, LLC –Video game developer
7 NixxesSoftware B.V. – Video game design, development, and porting
Tiger Media International GmbH – Electronic publishing of children;s books.
Source: 451 Database, S&P CapitalIQ, Hampleton Research.
3 | 10 Digital Commerce M&A Overview 1H 2023 Subsector breakdown
Share of deal count by subsector in 2H 2022
Internet Services & Portals
Digital commerce services, analysis & reference providers, online
advertising, directories, search, exchanges, education.
20%21%
Digital Commerce Software
Digital marketing and e-commerce software, CRM, advertising
enablement, marketing automation.
Agencies & Services Providers
Mobile & web marketing, e-mail marketing and measurement,
17%campaign management services, web design & development.
18%
Media, Social & Gaming
Social networking, online games, e-sports, entertainment, online
communities, video, blogs, music, news content.
24%
Online Retail
E-commerce retailers, online marketplaces, classifieds, auctions.
Total number of M&A transactions by subsector & by quarter, 2016-2022
250
200
150
100
50
-
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
;16 ;16 ;16 ;16 ;17 ;17 ;17 ;17 ;18 ;18 ;18 ;18 ;19 ;19 ;19 ;19 ;20 ;20 ;20 ;20 ;21 ;21 ;21 ;21 ;22 ;22 ;22 ;22
Internet Services & Portals Online Retail Media, Social & Gaming
Agencies & Services ProvidersDigital Commerce Software
Source: 451 Database, S&P CapitalIQ, Hampleton Research.
The breakdownof the subsectors showstheThe steepest decrease, on the other hand, can be seen in
development of M&A transaction in each subsector overdeals targeting Internet Services & Portals with a
time. While transactions in the sector of Agencies &decrease of -37% in Q4 2022 compared to last year’s Q4.
Service Providers have seen a steady increase, the rest ofThis is followed by the Digital Commercesector, which
the sectors have seen a downturn since the beginning ofexperienced a -31% decline in the same tim