Rundown: How the Advertising Technology Market Moves in the Absence of Public Market Exits

Sources told Digiday that two acquisitions announced last week indicate that ad technology M&A activity is still looming.

In the first place, the identity of MiQ’s successful suitors – Bridgepoint Capital takes charge of former ECI Partners – was announced in a deal that valued the ad technology company at nearly $1 billion.

Meanwhile, PubMatic made its first merger since debuting on the Nasdaq in 2021 by purchasing Martin with a supply-side platform that boasts of how it has helped boost its measurement capabilities.

Financial details of both operations were not disclosed, but what they tell us is how they each point to simultaneous merger and acquisition trends that emerged as ad tech companies lobby for fundraising ideas in the public markets.

why now?

The companies that managed to convince Wall Street of their tech tools in 2021 found themselves to have high ratings, we just need to look at how The Trade Desk (a demand-side platform) valued more than Ford sometime last year. Hence, many founders and investors in the sector have seized the opportunity to capitalize on each other buoyed by the popularity of merger of special purpose buyouts.

According to investment bank LUMA Partners, roughly the number of ad technology companies and technology companies traded in the public market (although these groups are defined as Can 24 – A number that has more than doubled since before the Covid-19 crisis.

However, what goes up must fall, and when even household names in the sector, such as the owner of Facebook Meta and Snap, falter in their ability to convince markets, a choppy effect is inevitable.

According to program economist Tom Trescari of the Lemonade Project, looks as if Ad tech valuations are currently at an all-time low with the share price of only five of the listed companies his device tracks compared to when the shares were initially offered. This means that there are ‘deals’ to be made because corporate development managers are looking to synergize and market share at a fraction of the price that would have previously cost them.

“financial engineering”

Just take a look at how Tremor International, the publicly listed company long before Goldrush 2021, recently Amobee assets picked up for $239 million From Singtel, the Southeast Asian telecom company that has spent a decade and nearly $1 billion accumulating ad technology assets.

A source familiar with PubMatic’s purchase of Martin told Digiday how “financial engineering” often plays a role in managing such decisions. “There are a number of things that could drive the investment thesis,” said the source, who asked not to be named due to the employer’s PR policies.

“One of them is whether or not you get technology that plugs a big gap in your platform, that’s great… There’s also the financial component where if you buy a company that trades at the 1-X multiplier, and your company trades at the 5-X multiplier, you get that company Essentially free,” the source added.

Meanwhile, a separate source familiar with MiQ’s expansion plans after scanning Bridgepoint Capital’s checks told Digiday how it is going. Already looking at merger and acquisition opportunities to expand market share.

“There is room to integrate with a lot of point solutions that can also help them expand [both geographically as well as into new sectors of the market]said the source, who similarly requested anonymity.

Speaking with Digiday earlier this year, Sovrn CEO Walter Knapp explained how his company, which received $35 million in funding, was also looking at investment opportunities as it also aimed to graduate from the “middle class” in the industry to senior positions.

“In our view, an important area of ​​innovation is software for workflow improvement and reporting management,” Knapp said, adding that buying undifferentiated competitors, just to gain market share, was not significant.

He further explained that Add point solutions that will firmly anchor the Sovrn . platform With existing (and potential future) customers it is a more attractive option.

The Rundown: How the ad tech market is moving in the absence of public market exits

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