It’s only July, but mergers and acquisitions in the media, information, marketing, software and tech-enabled services sectors are on track to surpass 2016 and 2017 full-year levels.
That’s according to JEGI, which counted 950 transactions during the first half of 2018.
Excluding the Time Warner and Twenty-First Century Fox mega-deals, those transactions are worth roughly $140 billion, the New York City-based investment bank estimates.
Relative to recent years, transaction volume during the first half of 2018 declined modestly, relative to recent years, while transaction value increased dramatically.
Indeed, transaction value during the first half of the year increased a whopping 43%, compared to the same period in 2017.
Among other factors, a notable increase in the number of large-cap transactions (worth more than $1 billion) was responsible for the uptick in value, year-over-year.
Yet by JEGI's reckoning, the first half of 2017 was an “easy comp” to beat in terms of transaction value, given the quiet M&A market following the shocking 2016 presidential election results.
Among other notable transactions that took place earlier this year, Thomson Reuter divested a majority stake in its largest, but low-growth Financial and Risk business unit to a consortium of investors led by Blackstone.
With an implied enterprise value of $20 billion, JEGI saw the deal as underscoring two key market trends: the degree to which mature companies are driven to reorganize for future growth; and the extent to which private-equity firms enable large-scale divestiture and reorganizations.
Signaling big shifts in the digital-media food chain, 2018 also saw the recently approved AT&T/Time Warner transaction, along with Comcast and Disney’s ongoing battle for Twenty-First Century Fox.
AT&T, of course, also dropped $2 billion on AppNexus, a top programmatic advertising platform.
No matter how bold they might appear, JEGI sees the recent moves by AT&T and Comcast as highly defensive, reflective of smartphone saturation, pricing pressure for carrier and cable services, and intensifying competition from Netflix, Amazon and others content streamers.
Put another way, JEGI believes ]AT&T and Comcast are being forced to cross industry lines in search of growth from digital advertising.
Also of note, transactions in the database and information services sector were down dramatically, partly due to heightened concerns over consumer data privacy.