Online business M&A: The key trends in 2023
Online business M&A was one of the areas affected by the overall downward trend in dealmaking activity during 2022. Coming after huge levels of pent-up M&A in 2021 – following the disruption of COVID-19 – 2022 saw a return to more normal levels.
The economic turbulence that many global economies have experienced during 2022 and into 2023 has also had an impact, with M&A affected by rising interest rates, inflation, supply chain problems and geopolitical turmoil – most prominently Russia’s war in Ukraine.
This has forced many dealmakers to pursue alternative deal structures in order to bridge valuation gaps, with earnouts a popular tool, particularly for transactions involving larger online businesses and content sites.
Another key trend has been dealmaking in the SaaS space, which actually saw an increase in M&A last year despite the numerous headwinds. Software Equity Group (SEG) reporting a 21 per cent increase in deal volume from 2021 to 2022, a trend that was particularly driven by private equity activity. With the continuing (and accelerating) emergence of AI, SaaS is also being widely predicted to be a major driver of dealmaking over the next few years.
Arguably the major trend to emerge in online business M&A, however, is advertising, with industry M&A marketplace Empire Flippers reporting that display advertising sites had the highest deal volume for any business model, with 89 display advertising firms sold via the platform last year. Advertising is especially prominent in content M&A, being highly profitable and easily monetised when incorporated into content sites.
While activity may have slowed somewhat since 2021, the emergent trends in online business M&A point to a thriving dealmaking environment persisting over the coming years. To read more about the trends shaping the sector, check out our exclusive, in-depth analysis of online business M&A in 2023.
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