Hampleton: E-commerce Market M&A Report for the First Quarter of 2023

Although things appeared to have calmed down after the market frenzy in late 2021 and early 2022, e-commerce M&A ended 2022 with a rebound, up about 5% from the third quarter.

The fourth quarter of 2022 recorded 473 transactions, a recovery after declining levels of transaction activity in the previous two quarters.

2,167 e-commerce M&A deals were completed in 2022, down 9% from the record number of 2,370 in 2021, but still well above the 1,386 recorded in 2019.

Analysts noted that 7% of active acquirers made more than one acquisition last year, and there have been 5,474 active acquirers in the industry over the past 30 months.

The "e-commerce" market covered in the report includes 5 sub-sectors, and the transaction volume in the second half of the year is evenly distributed. The leading sub-sector is the media, social and gaming sub-sector, accounting for 24% of the transaction volume. It is followed by Internet services and portals (21% share) and e-commerce software (20%), followed by online retail (18%) and agency and service providers (17%).

While the Institutional and Service Providers sub-sector has the fewest deals, it has seen a steady increase in deal count over the past few years, while the other sub-sectors appear to have peaked in late 2021 and early 2022.

In terms of valuations, valuations for agency and service providers have been relatively stable, while valuations for e-commerce software have fluctuated significantly over the past few quarters. Valuations for media, social, and gaming rose slightly in Q4, while valuations for online retail fell for the second consecutive quarter. Finally, the median EBITDA multiple for the Internet Services and Portals sub-sector jumped significantly over the past 30 months, from 11.9x in Q3 to 15.2x in Q4 2022.