Dealmakers hope that Samba TV’s confirmation last week of its acquisition of Semasio is indicative of the recent wave of ad tech mergers and acquisitions that will eventually flow into a more stable pipeline.
Such objectives are gaining traction because the macro and micro political and economic environments should theoretically further support such activities.
The latest acquisition by Samba TV completed a busy October that saw Connatix confirm its previously reported merger with JW Player and Zeta announce its acquisition of LiveIntent.
In the meantime, there is still conjecture that Integral Ad Science is considering its alternatives. According to sources, the most likely option for acquiring private control of the publicly traded ad tech company would be private equity. Naturally, any such agreement would probably turn out to be a billion-dollar or more deal, similar to Outbrain’s August acquisition of Teads.
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According to investment bank LUMA Partners, ad tech M&A activity increased significantly in Q3 2024, with overall volume up 13% from the previous quarter and notable increases in scaled transactions over $100 million. Publicis’ acquisition of Mars United Commerce was also noted as a noteworthy deal during this time.
Strategic acquisitions were the main driver of a 26% increase in ad tech M&A deals exceeding $100 million from quarter to quarter. This momentum is indicative of a larger pattern of so-called “rationalization” agreements meant to grow into new markets or consolidate existing ones.
According to Terence Kawaja, CEO of LUMA Partners, developments in the digital ecosystem, such as modifications to cookie policy and ongoing antitrust cases, are also expected to have an impact on dealmaking in this area.
Therefore, he continued, “we’re not in a gangbuster bull market for deals, but it is a revival relative to 2023.” The majority of these announced acquisitions fall into the latter category of rationalization and consolidation; they’re decent but not outstanding. Not much to write home about.
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Michael Seidler, CEO of Madison Alley, an M&A consultancy firm, pointed out that a rise in the financial performance of several ad tech and media industries has boosted interest from possible buyers.
He told Digiday, “A lot of companies didn’t perform well last year and took a little while to get back on track this year.” “Now that businesses have nearly a year of strong performance under their belts, things are beginning to happen.”
In recent months, deal flow has been made possible by recent interest rate reductions and the general increase in the stock prices of ad tech companies, especially those that listed in 2021, according to Richard McDermott, managing director at Rosenblatt Securities, the firm that organized and hosted the Investors Summit during Advertising Week in New York. and that similar activity would probably be sparked by such changes in the coming year.
He went on to say, “There are just so many interesting developments,” citing the rise of retail media, data clean rooms, and CTV. “It’s likely going to take one transaction to get things started, even though you could see a number of them.”
Although there might be “pent-up supply,” McDermott said that, in contrast to the somewhat flat market state of 2022–2023, the industry has had a relatively solid deal flow this calendar year.
He remarked, “The ship has departed from the shore; the question is, how far will it go?” “I believe there are many businesses out there that some [possible acquirers] will consider, and there are some genuine opportunities for consolidation.”
Sources have anecdotally told Digiday that some parties in the industry are starting to make noise about joining the current wave of publicly traded ad tech companies, even teasing the possibility of earnings from an IPO during the hiring process. This is another echo of the industry in 2021.
“We’re not likely to see the same number of stock flotations we saw in 2021, but there is a small number [likely two or three] that could feasibly do it,” according to one source, who asked to remain anonymous due to their employer’s PR policies.
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