Martech is on the rise, while adtech falls, as Private Equity (PE) firms continue to grow in the sectors. According to M&A and fundraising advisor Results International, there were 412 deals combined between the two sectors in 2016 – up by one from 2015. Deals in martech increased from 256 to 291 year-on-year (YoY), however deals in adtech fell from 155 to 121.
PE firms accounted for 12.6 per cent of all deals in the space in 2016 – rising from 7.3 per cent in 2015. PE firm Vista Equity Partners was the most acquisitive buyer in the adtech/martech sector, completing a total of seven deals over the year.
Julie Langley, partner at Results International, said: “There’s an increasingly diverse range of buyers looking to make acquisitions in the space. It’s still a fragmented market but consolidating at pace. As adtech and martech technologies have matured, they’ve become more attractive to both PE firms and to Asian acquirers that wish to invest in scaled businesses in the West.”
The total disclosed deal value for 2016 was $24.18bn (£19.64bn), an increase of $9.6bn YoY. Although, in this instance, adtech saw the bigger growth. The sectors deal value rose from $6.52bn in 2015 to $15.22bn in 2016, while martech only grew from $5.7bn to $8.96bn in the same period. These figures were helped by major acquisitions in excess of $1bn, including Yahoo by Verizon ($4.8bn), Demandware by Salesforce ($2.8bn), and others.
Meanwhile, 34.2 per cent of all transactions were cross-border in 2016. North America saw 44 per cent (53) of adtech deals, and 59 per cent (171), as the most significant target market. The UK attracted eight per cent of global investment in adtech and 7 per cent in martech – both growing on the 6 per cent reported for each in 2015.
“2016 was a year of mixed signals and yet again we’ve seen quite a difference between the fortunes of adtech versus martech,” Langley added.
“Looking to 2017, we expect deal activity to remain robust, driven by an ever-expanding buyer universe and the continued rapid innovation in the way we all consume media and research and make purchases. Hot areas are likely to include AI and machine learning, virtual reality, user generated content, augmented reality, discovery and data and predictive analytics.”