The Digital Media and marketing ecosystem has experienced ~12 months of a muted M&A environment with lower volumes and fewer scaled deals compared to the highs that followed the pandemic and lasted through Q3 2022. Even as public markets have generally bounced back YTD in 2023, and valuations have stabilized in the broader technology industry, buyers and sellers continue to seek value alignment in the wake of pandemic market highs and subsequent historic interest rate hikes, which drove a gap between perspectives of normalized performance. Rather than a widespread shift to M&A, we are starting to see pockets of activity, driven by platforms with stable core businesses.
Additionally, Q3 2023 saw the first three technology IPOs since the IPO slowdown 18+ months ago. ARM, Instacart and Klaviyo (the newest entrant to LUMA.M) all entered the public markets this quarter, testing the waters in what has been an uncertain equity market in the sector.
M&A Activity Highlights
- While the dealmaking environment continues to feel the effects of the highest fed funds rates since 2001, Q3 2023 volume was slightly down (3%) from Q2.
- Buyers and sellers are continuing to seek value alignment, as strategics who have normalized costs and driven capital efficient growth look for new capabilities (catalysts such as AI) and financial buyers in the sector see opportunities for portfolio add-ons and take-private investments.
Public Markets & LUMA Indices Highlights
- In line with the broader market, the LUMA.A and LUMA.M cohorts were challenged from a trading perspective in Q3, falling (4%) and (11%), respectively, as a surge in bond yields in September led to a market-wide slowdown.
- From an earnings perspective, Q2 2023 saw most Ad Tech and MarTech names beat revenue and EBITDA consensus estimates, although trading performance following earnings appeared to be heavily influenced by upward or downward revisions for full-year guidance.
Download the full report to get the data on Ad Tech, MarTech, and Digital Content, including the following:
- Quarterly deal activity by sector
- Public market trends and the latest earnings detail
- Public valuation and operational benchmarking across
- Highlighted private financing activity across the sectors