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Berkery Noyes Releases Online and Mobile Industry M&A Report For Third Quarter 2017

Thursday, October 05, 2017

NEW YORK — October 5, 2017 — Berkery Noyes, an independent mid-market investment bank, today released its third quarter 2017 mergers and acquisitions trend report for the Online and Mobile Industry. The report analyzes M&A activity during the three-month period and compares it with data for the six previous quarters.

Total volume declined nine percent on a quarterly basis. When compared to the first three quarters of 2016, volume year-to-date stayed decreased four percent. Aggregate value over the past three months remained nearly constant at $27.9 billion.

Five of the industry’s top ten largest deals thus far in 2017 occurred during the third quarter, three of which occurred in the E-Content segment: KKR’s Internet Brands’ announced acquisition of WebMD Corporation, an online health information provider, for $2.8 billion; The Walt Disney Company’s announced acquisition of a majority stake in BAMTech, a technology and video streaming company previously owned by the media and Internet business of Major League Baseball, for $1.6 billion; and Red Venture’s announced acquisition of Bankrate, an online publisher, aggregator, and distributor of personal finance content, for $1.4 billion.

Rounding out the top five highest value transactions in third quarter 2017 were Global Payments’ announced acquisition of the Communities and Sports Divisions from The Active Network, which delivers cloud-based software, including payment technology solutions to event organizers, for $1.2 billion; and DigiCert’s announced acquisition of Symantec’s website security and related public key infrastructure (PKI) solutions for $950 million.

Transaction volume in the SaaS & Cloud segment was nearly constant from second to third quarter 2017. SaaS & Cloud acquisitions received a median revenue multiple of 2.8x thus far in 2017, as opposed to 1.9x revenue for the entire industry.

M&A activity in the E-Commerce segment declined 29 percent over the past quarter. Relative to the same time period in 2016, segment volume year-to-date decreased five percent. Notable E-Commerce deals in third quarter 2017 included Alibaba’s announced acquisition of a majority stake in Cainiao Network, which operates a logistics data platform that fulfills transactions between merchants and consumers, for $804 million (note that Alibaba increased its stake in Cainiao from 47 percent to 51 percent with this transaction); Pitney Bowes’ announced acquisition of Newgistics, a provider of e-commerce services for retailers and brands, for $475 million; Signet Jewelers’ acquisition of R2Net, the owner of JamesAllen.com, an online jewelry retailer, for $328 million; GrubHub’s announced acquisition of Eat24, a web-based food delivery service, for $288 million from Yelp (note that Yelp acquired Eat24 in 2015 for $134 million); Webjet’s announced acquisition of JacTravel, a technology-enabled B2B marketplace for hotel rooms, for $225 million; and Blackhawk Network’s acquisition of Cash Star, which offers gift card commerce solutions, for $175 million.

As for the E-Marketing & Search segment, volume was flat over the past three months. Notable segment transactions during the third quarter included IHS Markit’s announced acquisition of a 78 percent stake in automotiveMastermind, a provider of predictive analytics and marketing automation technology for the automotive industry, for $392 million; RhythmOne’s announced acquisition of YuMe, a provider of digital video brand advertising solutions, for $111 million; Valassis Communications’ announced acquisition of MaxPoint Interactive, a marketing technology company that optimizes brand and retail performance with hyperlocal intelligence, for $105 million; and Apax Partners’ announced acquisition of Go Global Travel, a supplier of search engine technologies and related services for hotel booking for travel agents and tour operators, for $64 million.

“Companies committed to customer relationship management (CRM) appear keen on integrating social media with their existing marketing platforms by acquiring startups,” said Vineet Asthana, Managing Director at Berkery Noyes. “The traditional CRM model is being replaced by a more interactive process in which businesses aim to listen to what their consumers are saying in real time.” Asthana continued, “The advertising marketplace is undergoing a transformation. 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.”

Regarding other areas covered in the report, volume in the Communications segment decreased seven percent on a quarterly basis. However, segment M&A activity rose 35 percent in the first three quarters of 2017 compared to the corresponding timeframe in 2016.

The number of mobile application deals stayed about the same over the prior quarter. Mobile related transactions by high profile acquirers during third quarter 2017 included Google’s acquisitions of Senosis Health, a mobile health monitoring startup; and AIMatter, which specializes in AI technology for photo editing purposes; and Facebook’s acquisition of Ozlo, an AI startup that will be folded into Facebook’s Messenger app.

A copy of the ONLINE AND MOBILE INDUSTRY M&A REPORT FOR THIRD QUARTER 2017 is available at the Berkery Noyes website.