M&A Activity Dropped in Q1 2013, Deals Down 38%

The first quarter of 2013 was marked by some notable acquisitions—Google acquired Channel Intelligence; Twitter snapped up Bluefin Labs and Facebook agreed to buy Microsoft’s Atlas DMT. Merger and acquisition activities for marketing and other sectors have generally cooled down, however, according to a new report from The Jordan, Edmiston Group, Inc. (JEGI), an investment bank for media, information, marketing services and technology.

The value of deals announced in the first quarter of 2013 declined 38% from $12.2 billion in Q1 2012, with fewer large transactions. Marketing and interactive services saw 118 transactions and more than $2.5 billion of value in this year’s first quarter, down from the same quarter last year by 13% and 14%, respectively.

Following last year’s year-end rush to close deals prior to the impending tax changes, the slowdown was not a surprise, Adam Gross, CMO at JEGI, told AdExchanger. “Given the historically strong run last year, it was clear there was going to be a dip and we may even see a dip the first half of this year,” Gross said. “Despite that, marketing and interactive services is still a healthy market with a mix of strategic acquirers from traditional agencies and software companies. We’re also seeing a growing presence from private equities.”

M&A activity for Q1 of this year was driven by “smaller transactions, as many companies looked to acquire talent (or “acqui‐hire”) and technologies to grow and evolve their businesses,” according to the report. JEGI’s Media Growth Survey shows nearly 50% more companies in the $10 to $50 million revenue range are planning an acquisition in 2013, as compared to 2012. Many of the companies are looking for new process technologies, content engines and tools for manipulating and packaging data.

At the same time, the number of deals and value for the mobile media and technology sector rose 32% and 17%, respectively, in the first quarter of 2013, as compared to Q1 2012. Some of the deals that took place include Opera Software buying video optimization and mobile browsing platform Skyfire Labs for $155 million, Yahoo acquiring Summly, a mobile news aggregation app, for $30 million and Phunware purchasing mobile ad network Tapit Media Group for $23 million.

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