Together with our European Globalscope partners, we have analysed 509 Internet-based transactions with European target companies. A special focus has been set on European trends and transactions.
In 2013, the M&A activity was – with 509 completed transactions – very high in this industry. Growth drivers of the Internet industry were Germany and Russia. Germany alone contributed 204 transactions. Even countries which suffered from a poor economic situation in recent years, positively look ahead and could observe growing transaction activities in the domestic market. With 61 transactions, the North American market has been established as a relevant buyer’s market.
The M&A activity is mainly driven by consolidation in the mature market segments eCommerce, Travel, Classifieds and Payment and the interest from Private Equity that has been growing for years. Furthermore, an elaborate basis of investors in the Internet industry constantly provides a steady flow of young companies with disruptive ideas.
Due to the high fragmentation of the Internet industry, complex transaction rationales could be observed: From Private Equity financed consolidation strategies to foreign strategists “buying” access to a market or know-how.
The immense growth possible in the Internet industry remains impressive; to achieve a rating of several billions within 3 years is the exception, but since it does happen occasionally, this serves as model for young founders. Requirements for these high ratings are a leading technology or a higher sales growth.
A fact that is often forgotten: Especially the eCommerce industry does not generate any growth, the revenues are merely restacked from offline to online. How pure-offline companies face this development, is an interesting, yet unanswered question. With Collins and a significant investment in an incubator, the German Otto trade group tries to set course for the future.
The outlook for 2014 is, regardless of the economic development within the euro zone, for all segments positive. Above all, the growth and consolidation strategies that have already been pursued in 2013, will lead to a continuously high number of transactions.