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After a deal drought in 2023, mergers and acquisitions in adtech are heating up.
Adtech-focused investment bank Luma Partners said there were almost twice as many significant, scaled adtech transactions in the first half of 2024 compared to the first half of 2023, according to senior associate Michael DeMarseilles. More specific data isn’t available until the end of the quarter.
At venture capital firm Aperiam Ventures, deal flow has increased in the first half of 2024 compared to 2023, said general partner Eric Franchi. Private equity firm GTCR said the pipeline for technology deals (a broader category than adtech) is up 50%, according to managing director Stephen Master.
Notable deals so far this year include data firm LiveRamp’s $200 million acquisition of clean room company Habu in January, Walmart’s $2.3 billion acquisition of TV maker Vizio in February and TV advertising company Cadent’s $324 million acquisition of performance marketing firm AdTheorent in April.
But in June, the market shifted into higher gear. This month, four acquisitions have already occurred, including Equativ’s acquisition of fellow supply-side platform Sharethrough. In the past two weeks, ADWEEK has reported that SSPs 33Across and Sonobi and data firm Claritas have all hired bankers to explore sales.
Driving this uptick in deal activity is the right-sizing of expectations after 2021’s very active adtech market and companies looking to create a more cohesive narrative by acquiring and shedding assets. But while adtech M&A is heating up, the market may not be fully healthy, with more stagnant companies looking to consolidate, sources said.
Correcting 2021’s inflated pricing
2021 was a landmark year for adtech. Many of the adtech companies that are public today had their initial public offerings in 2021, including DoubleVerify, Integral Ad Science, Taboola, Outbrain, AppLovin and ironSource. PubMatic debuted in December 2020.
But some of 2021’s fervor ended up overheated. DoubleVerify, IAS, Taboola and Outbrain all currently trade at lower prices than they debuted at.
“The market allowed itself to go a little bit too crazy,” said Chris Cunningham, founder of C2 Ventures. “A lot of companies were raising top-of-the-market valuations that didn’t make sense.”
Fast-forward to 2023 and M&A lay dormant, with companies worrying about a potential recession and employee cuts. By the time those fears were allayed later in the year, buyers and sellers had to get on the same page on prices.
“When the market changes so rapidly, it takes at least six months to a year for both sides to agree on what the valuations should be,” said a banker source who requested anonymity to discuss ongoing deals. The source added that they are working with several clients in the market that are seeking lower valuations than they received in 2021 when they raised capital, even though those companies have grown.
