Digital Commerce M&A Levels “Normalize,” Remain Elevated vs. Pre-Pandemic

February 23, 2023

The digital commerce M&A market ended 2022 with a rebound quarter that was up by about 5% from Q3, though things appear to have settled after a market frenzy in late 2021 and early 2022. So details Hampleton Partners in its latest foray [download page] into the deal-marketing environment for digital commerce.

With 473 deals recorded in Q4, 2022 ended with an uptick after falling levels of activity in the previous 2 quarters. That had been somewhat expected, in line with the broader M&A market that has dealt with “political and economic uncertainties, as well as the market’s inherent inclination to normalize after a period of high activity and volatility.” That high activity peaked with an astounding 699 deals registered in Q1 2022.

Overall, there were 2,167 digital commerce M&A deals reported in 2022, representing a 9% drop from the record-setting figures of 2021 (2,370) but still well above the 1386 recorded in 2019.

The analysts note that 7% of active acquirers made more than one acquisition last year, and that there have now been 5,474 active acquirers in this sector in the past 30 months. The most active acquirers during that time period have been Embracer Group (19), Tencent (15), Animoca Brands (11) and Accenture (10).

The “digital commerce” market covered in the report contains 5 sub-sectors, and they had a fairly even distribution of deal flow during the second half of the year. Leading the way was the Media, Social & Gaming sub-sector, at 24% share of deal count. It was followed by Internet Services & Portals (21% share) and Digital Commerce Software (20%), with Online Retail (18%) and Agencies & Services Providers (17%) trailing.

Although the Agencies & Services Providers sub-sector is the smallest by deal count, it has seen a steadily increasing number of deals over the past couple of years, while the others appear to have reached their peaks in late 2021 and early 2022.

With regards to valuations, they’ve been relatively steady for Agencies & Services Providers while being a little more volatile in the past few quarters for Digital Commerce Software. Valuations inched up in Q4 for Media, Social & Gaming, while dropping for the second consecutive quarter for Online Retail. Finally, there was a substantial jump in trailing 30-month median EBITDA multiples in the Internet Services & Portals sub-sector, rising from 11.9x in Q3 to 15.2x in Q4 2022.

For more, download the report here.


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