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The Rundown: The way the ad tech market is relocating the lack of public market exits

Two acquisitions announced the other day are indicative of the M&A activity for ad tech still coming, sources told Digiday.

In the beginning, the identity of MiQs successful suitors was made public Bridgepoint Capital is overtaking for earlier private equity backers ECI Partners in a deal that valued the ad tech company at near $1 billion.

Meanwhile, PubMatic, made its first consolidation because it debuted on the Nasdaq in 2021 by purchasing Martin with the supply-side platform trumpeting how it can help shore up its measurement capabilities.

Financial information on both transactions weren’t disclosed but whats telling is how all of them signifies simultaneous M&A trends which have emerged as ad tech companies press pause on thoughts of raising funds on the general public markets.

Why now?

Companies which could convince Wall Street of these tech wares in 2021 found themselves with lofty valuations, we are in need of only look at the way the Trade Desk (a demand-side platform) was valued at a lot more than Ford at one point this past year. Hence many founders and investors in the sector took the chance to capitalize with some buoyed by the popularity of special purpose acquisition company mergers.

In accordance with investment bank LUMA Partners, the amount of ad tech and mar tech companies trading on the general public market is approximately (although definition of such outfits can be debated) 24 lots that represents a far more than two-fold increase since prior to the Covid-19 crisis.

However, what rises must drop, so when even family members names in the sector, such as for example Facebook owner Meta and Snap, are stuttering within their capability to impress the markets, the trickledown effect is inevitable.

In accordance with Lemonade Projects programmatic economist Tom Triscari, it looks as though ad tech valuations are bottoming out with the stock price of just five of the publicly listed companies his outfit tracks up in comparison to if they initially floated. And which means you can find bargains to be enjoyed as corporate development executives eye synergies and market share at a fraction of the purchase price it could have cost them previously.

Financial engineering

Just look at how Tremor International, an organization that listed publicly a long time before the 2021 goldrush, recently found the assets of Amobee for $239 million from Singtel, the South East Asian telco that spent ten years and almost $1 billion on assembling the ad tech asset.

One source with direct understanding of PubMatics purchase of Martin told Digiday how financial engineering often is important in governing such decisions. Theres numerous items that can drive an investment thesis, said the foundation, who declined to be named because of the employers PR policies.

One is whether youre getting technology that plugs a substantial gap in your platform thats great theres also the financial component where in the event that you purchase a company trading at a 1-X multiple, and yours is trading at a 5-X multiple, youre basically getting that company free of charge, added the foundation.

Meanwhile, another source acquainted with MiQs plans to expand after Bridgepoint Capitals check clears told Digiday how it really is already considering M&A opportunities to expand its market share.

Theres space to consolidate with plenty of point solutions which could also help them expand [both geographically and also into new sectors of the market], said the foundation, who similarly declined to be named.

Talking to Digiday earlier in the entire year, Sovrn CEO Walter Knapp explained how his company,fresh off the trunk of a $35 million funding injection, was likewise considering investment opportunities since it also aims to graduate from the industrys mid-tier to its upper echelons.

From our vantage point, the important section of innovation may be the software to optimize workflows and manage reporting, said Knapp, adding that purchasing undifferentiated competitors, only to gain market share, had not been of interest.

He further explained that adding point solutions that may more firmly entrench Sovrns platform with existing (and potentially future) clients is really a more appealing option.

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