Martech M&A deals rose while adtech deals fell in 2016

While the total number of deals in 2016 was only one deal more than 2015, the number of martech deals rose sharply while adtech deals went into decline.

Martech M&A deals rose while adtech deals fell in 2016

Globally, the number of adtech deals fell from 155 in 2015 to 121 in 2016, whereas martech deal volume rose from 256 in 2015 to 291 in 2016, finds specialist technology M&A advisor Results International. 

The combined total stands at 412, up by one deal on the previous year. The combined disclosed value of deals was $24.18bn (£19.65bn), up $9.6bn year on year. 

Despite the decline in the number of adtech deals, its deal value growth was more substantial than martech, up $6.52bn to $15.22bn in 2016 for adtech versus $5.7bn to $8.96bn for martech. 

Driving the high value of the deals was the number of 'mega' acqusitions that took place last year in excess of $1bn. Namely, Yahoo! by Verizon ($4.8bn); Demandware by Salesforce ($2.8bn); Marketo ($1.6bn) and Cvent ($1.7bn) by Vista Equity Partners; Applovin by Orient Hontai Capital Partners ($1.4bn); and Sitecore by EQT ($1.1bn).

In the UK, the M&A market remained firm, attracting 8% of global investment for adtech and 7% for martech, both showing growth on the 6% reported for each in 2015. 

Just over a third (34.2%) of all adtech/martech transactions in 2016 were cross-border. North America was once again the most significant target market for M&A in both the adtech and martech sectors, with 53 (44%) and 171 (59%) deals completed respectively – a marginal year-on-year increase for both.

Private equity firm overtook WPP 

Many of the biggest deals in the past a year were private equity backed and, in fact, private firm Vista Equity partners overtook WPP to become the most acquisitive buyer in the adtech/martech sector, completing a total of sevel deals. 

WPP, which made four acquisitions in 2016 also fell behind Dentsu, which completed five deals. 

A quarter of companies involved in deals also made two or more acqusitions last year, of which the most active included internet firms such as Alphabet, eBay, and Rakuten; publishing firms such as Time Inc; and enterprise software businesses such as Salesforce and IBM.

"There’s an increasingly diverse range of buyers looking to make acquisitions in the space," said Julie Langley, partner at Results International. "It’s still a fragmented market but consolidating at pace. As adtech and martech technologies have matured, they’ve become more attractive to both private equity firms and to Asian acquirers that wish to invest in scaled businesses in the West."

Future of adtech versus martech

Just based on the number deals struck, it would seem that the fortunes of adtech versus martech have diverged, continued Langley. "However, the rnage of buyers interested in the sector [adtech] continues to expand and drive solid levels of deal activity. We also saw renewed life in the public markets with the first adtech IPO since the second quarter of 2015 in the form of The Trade Desk."

In the year head, Langley expects deal activity to remain robust . "Hot areas are likely to include AI and machine learning, virtual reality, user generated content, augmented reality, discovery and data and predictive analytics," she concluded.