JEGI: Marketing And Tech M&A Volume Down YoY

q1M&A activity in marketing services and tech declined in Q1 2015, compared to the same period last year, in volume and value.

Investment bank Jordan, Edmiston Group Inc. (JEGI), which released its Q1 2015 M&A Overview on Thursday, noted 128 deals in Q1 2015, compared to 154 in Q1 2014 (a 17% decline). Value of the total deals plummeted from $7.7 billion during Q1 2014 to $3.5 billion in Q1 2015 (a 54% decline). Read the report.

The decline is due mainly to several large transactions in 2014’s first quarter, among those Berkshire Partners taking a majority stake in Catalina Marketing (a $2 billion deal).

Within marketing services and technology, the ad tech subcategory was the third largest in terms of value (following marketing research/consulting and out-of-home marketing). It saw seven Q1 deals, totaling $528 million, and accounted for 15.1% of the marketing services and tech category’s total value.

“In 2014, the markets were open in every way possible,” Davis Noell, managing director at Providence Equity Partners, noted in JEGI’s report. “The debt markets were open for recaps, the IPO market was open, there were huge corporate mergers and we saw big private market valuations. That will likely continue in 2015.”

Although Q1 2015 didn’t have as much M&A activity as the same period last year, JEGI predicted there will be a strong number of transactions for the full year and was optimistic about market conditions. The economy continues to improve, with unemployment in the US down to 5.5% in February, according to the Bureau of Labor Statistics.

JEGI co-President Tolman Geffs told AdExchanger that ad tech, a subsector within the marketing services and tech category, is of particular interest. “Programmatic has gone over the divide of being viewed as something risky and remnant-oriented to being viewed as the smart way to do business,” he said.

Notable transactions include Nielsen buying eXelate for a reported $200 million, AppNexus buying Yieldex for a reported $100 million and Vector Capital acquiring Triton Digital.

Aside from programmatic, Geffs said that data visualization and marketing automation are also of interest to buyers and sellers.

“Data visualization is a theme across all sectors,” he said. “Marketing automation continues to be a huge push. That’s going to continue to be very active in M&A. … The next big wave of innovation, commercialization and of M&A is going to be around inventing various types of ‘eyes’ so you can see what matters to you in the ocean of data.”

Within the marketing services and tech category, ad agencies saw the most deals, with 20 acquisitions totaling $361 million. Ad networks saw the second-highest volume, with six exits totaling $162 million.

Looking at the entire tech vertical – which includes media, information, marketing, software and tech-enabled services – JEGI counted 545 transactions totaling $26.6 billion. At this time last year, JEGI noted about the same number of transactions totaling $27.4 billion.

Investment bank Petsky Prunier also reported a virtually unchanged number of transactions between Q1 2014 and Q1 2015, though Petsky Prunier counted a total of 768 transactions this quarter. Petsky Prunier’s findings put the total value of transactions a little under JEGI’s, at $23.6 billion.

 

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