Digital Commerce M&A Deal Volume Down Last Year But Deal Pipeline Noticeably Filling

The latest Digital Commerce M&A report from Hampleton Partners, the international M&A and corporate finance advisory firm for software and technology companies, reveals the sector experienced a decline in deal numbers throughout 2023, with 1,063 transactions in 2H2023 compared to the 1,220 recorded in the first half of the year. Relative valuation multiples also showed a downward trajectory.

However, M&A volumes have continued to track higher than in the years preceding the pandemic, and there has been increased deal activity in 1Q2024. Another indicator of ripening market conditions is the cracking open of the Digital Commerce IPO window, with major players like Instacart (Maplebear Inc) and Klaviyo Inc making their stock market debuts, and more such public offerings in the offing.

The Digital Commerce report identifies a number of megatrends encouraging a bounceback in the sector. These include the marked rise in rollup companies which buy up multiple SaaS platforms in order to offer integrated software suites to their users.

A case in point is UK-based Shop Circle, which aggregates Shopify apps and has raised $120 million in Series A funding. Both strategic and financial buyers have been aggressively pursuing this “buy and build” approach, helping re-energise M&A activity in the sector.

E-commerce is also back on the rise after the post-pandemic lull. While macroeconomic pressures mean that some territories are less buoyant – with the German e-commerce market notably experiencing a contraction in 2023 – global sales are soaring. Factors such as the worldwide proliferation of smartphones and  the deployment of generative AI to assist in customer journeys are helping drive momentum.

Hampleton Partners Sector Principal Ralph Hübner notes that “a group of growth investors have launched new plays, heralding a new era in the e-commerce market.  Players like Hg Capital, Bregal Unternehmerkapital and LEA Partners have clearly demonstrated with their latest investments that e-commerce is once again an attractive growth area.”

Over the past 30 months, the top three most prolific buyers within the Digital Commerce space have been:

• Accenture – 20 acquisitions, including Redkite Data Intelligence (data consulting services), Rabbit’s Tale (creative and digital experience agency), and Ammagamma SRL (AI and generative AI consulting services)
• Playmaker – 10 acquisitions, including Futmarketing (soccer digital marketing), The Nation Network (online sports news, blogging and statistics), and Two-Up Agency (digital design and development services)
• Animoca Brands – 9 acquisitions, including Be Media Group (digital marketing and advertising services), BDVL OU (digital assets payment SaaS), and Quidd (digital collectibles marketplace).

Download the full Hampleton Partners Digital Commerce M&A Market Report 1H2024, which discusses trends shaping the sector and takes a close look at pivotal deals within five key segments: Internet Services & Portals, Digital Commerce Software, Agencies & Services Providers, Media, Social & Gaming, and Online Retail at https://www.hampletonpartners.com/reports/digital-commerce-report/

Hampleton Partners’ M&A Market Reports are compiled using data and information from the 451 Research database (www.451research.com); Capital IQ, CB Insights, Gartner, IDC and more.

Hampleton Partners advises technology company owners on M&A and growth financing transactions with strategic buyers or financial investors. Hampleton’s experienced deal makers have advised hundreds of tech industry shareholders and provide hands-on expertise and unrivalled advice to entrepreneurs looking to sell their companies, partially exit, or to accelerate growth.

With offices in London, Frankfurt, Stockholm and San Francisco, Hampleton offers a global perspective with sector expertise in: Enterprise Software, Digital Commerce, IT & Business Services, Artificial Intelligence, Autotech, Cybersecurity, Fintech, Healthtech, HR Tech, and Insurtech.

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