5 Digital Commerce Deals Defining the Sector in 2023

The newest Digital Commerce report from Hampleton Partners has shown that deal numbers in the sector are on the up and up following a plunge seen in the wake of the pandemic’s M&A boom. And by “up and up”, we mean precisely that. As our report reveals, transactions have risen in a sustained and incremental fashion since the lowest point of the dip in Q32022, when we recorded 442 deals.

This rose to 488 deals in Q42022, 491 deals in Q12023, and 526 deals in Q22023, which is good news for the sector as a whole. That said, activity patterns have varied between the five main Digital Commerce subsectors, which are:

• Digital Commerce Software
• Media, Social & Gaming
• Internet Services & Portals
• Agencies & Services Providers
• Online Retail

Let’s take a look at some of the most significant deals recorded in each of these pivotal subsectors so far in 2023.

Companies within the Digital Commerce Software subsector have accounted for the highest proportion of M&A deals in Digital Commerce. Deal volume in 2023 so far, while lower than the pandemic-fuelled spike seen in early 2022, has been higher than what was seen pre-pandemic, reflecting a normalisation of the market.

One of the subsector’s major deals of 2023 was seen in Italy, with Pesaro-based  TeamSystem, a developer of managing software solutions, snapping up Milan-based MailUp in a $77 million transaction.

Dating right back to 2003, MailUp counts as a legacy company in the field of SaaS email marketing solutions, and has subsidiaries in Spain and Denmark. The acquisition has therefore vastly expanded TeamSystem’s European footprint, boosting the company’s value proposition for SMEs in terms of automated marketing and data economy analytics.

With much of the world unexpectedly cooped up during the pandemic period, it was perhaps inevitable that firms within the Media, Social & Gaming subsector would see an abrupt surge in interest from customers and acquirers alike. M&A deal number started shooting up in Q3 2020, with the transaction count increasing by 134% between 2020 and 2021.

While numbers have declined in the post-pandemic period, the deal volume is now roughly in line with pre-2020 levels (and indeed a little larger than what was seen then). One of the most significant players in the subsector this year has been Entain, the gaming giant headquartered in the Isle of Man.

Its deals have included the $901 million purchase of Polish bookmaker STS, and the size of this acquisition means that Entain is now well positioned to become the biggest sports betting platform in Central and Eastern Europe. 

The Internet Services & Portals subsector saw less of a pronounced spike in deal volume during the pandemic. Although transaction numbers did rise – particularly in Q12020 and Q12022 – overall momentum in the subsector has been fairly consistent since well before Covid-19 disrupted tech markets, and we’ve seen healthy numbers in 2023 so far.

One key deal in the subsector was propagated by Tradeweb, the New York-based creator of electronic marketplaces for trading fixed income products, ETFs, and derivatives. It has purchased Sydney-based Yieldbroker for £83 million, thereby acquiring a leading electronic trading platform for Australian and New Zealand debt securities and derivatives.

The deal will benefit Yieldbroker’s existing clients, who will be able to help themselves to Tradeweb’s multi-asset platform, while Tradeweb’s clients can in return tap into derivative marketplaces Down Under.

This subsector, which encompasses companies specialising in marketing campaign management, web design and associated services, has seen marked growth since 2020. Unlike other subsectors, which saw M&A numbers rise and then normalise during the pandemic and post-pandemic periods, transaction activity with Agencies & Service Providers has simply been steadily increasing, with record numbers being recorded this year.

One prominent acquirer in the subsector is advertising colossus WPP, whose key purchases include Obviously, the New York-based social influencer marketing agency.

Acquired for an undisclosed sum, the company has helped major brands embrace the possibilities of the social media age, linking them with relevant influencers and orchestrating entire campaigns for the likes of Ford and Amazon.

The Online Retail subsector has so far enjoyed the least “bounce back” after the post-pandemic market correction. Following record-high deal numbers in 2021, transaction volume has shown a steady decline, albeit with a minor boost in Q22023 which perhaps heralds a recovery of momentum.

One vertical which has particularly benefited in recent years is online pet care, which has reaped the rewards of a rise in pet ownership during the lockdowns. Retail brands catering to this so-called “pet boom” are still in the crosshairs of acquirers, with a prime example being PetCareRx.

Based in Lynbrook, New York, PetCareRx is an online pet pharmacy providing everything from animal vitamin supplements to flea and tick treatments. It was acquired by pharmaceuticals purveyors PetMeds, based in Delray Beach, Florida, for $36 million, in a deal which will allow PetMeds to move beyond offering pet prescriptions and enter the lucrative food, supplements and treats market.

All in all, to quote our Sector Principal Ralph Hubner, “the outlook for Digital Commerce, especially online sales, is good, with M&A markets corroborating this. In fact, online sales continue to climb and trump brick-and-mortar business.”

If you’re a decision maker within the sector and would like to speak with Ralph directly, please drop him an email.