Although North America remains the most active region for merger and acquisition deals in the adtech/martech sector, with 51% of the total global deal volume in Q2 2015, other regions are eating away at its dominance, research has shown.
Asia/Pacific deals accounted for 16% of deal activity in April-June, up from 13% in January-March, while South America was home to 7% of deals, up from only 1% in the first quarter of the year. At the same time, Western Europe’s share of deal volumes rose from 13% to 18%.
Advertising platforms continue to be the most active sector within adtech. They comprised over a third (35%) of all global M&A deals done in the sector in the second quarter of 2015 – up from 33% in Q1 2015.
Volumes of social and ecommerce deals were also on the rise. M&A transactions involving social media software businesses were 20% of the total global deal volume in Q2, up from 14% in Q1, while over the same period ecommerce deals jumped from 9% to 13%.
In addition, marketing automation businesses saw activity double from the first half of 2014 to the first half of this year, from 8% to 15% of all global adtech deals.
The disclosed value of deals in the sector in Q2 2015 was $7.7bn as opposed to $1.4bn in Q1, but that is mainly due to Verizon’s $4.8bn acquisition of AOL.
Some of the other key deals in the sector were Infosys’ cross-border acquisition of Skava for $120m, Vista Equity Partners buying Media Ocean for $720m and Twitter picking up TellApart for $533m.
There were nine deals worth $100m+ during Q2, as against only five in the first three months of 2015.
The data comes from specialist marcoms and tech M&A consultancy Results International. It also found that 79% of deals in the first half of the year were by companies that made just the one acquisition, although WPP remains the most prolific buyer with eight transactions in H1 2015.
Furthermore, private equity M&A activity in the sector remains very low, with many companies still focused on top-line growth and prioritising scale over profitability, a strategy best suited to venture capital. Only 3% of the adtech deals in Q2 2015 were backed by traditional PE, although commensurate with this thesis venture capital fundraising levels remain high.
Mark Williams, director at Results International, said: “Deal activity continues to be strong with levels similar to H1 2014.
“Advertising platforms continue to dominate M&A activity as diverse groups of buyers are looking to enter the programmatic world, but martech sub-sectors like social and ecommerce are definitely growing too.
“It will also be intriguing to see if the trend of deal activity moving away from North America continues over the coming months, or if this quarter was just a flash in the pan.
“The region is still far and away the major force in adtech M&A, but there are emerging centres of adtech and martech in APAC and Western Europe that we believe will see many more deals over the coming years – particularly as the large dominant US players seek international growth and look overseas for innovation and differentiation.”