Part 2: M&A update
important element of the deals Catena has done casinoFever.ca in Canada, Shogun Media a year
have been shares-based, particularly when it comes ago and casinoFeber.se in May last year).
to earnouts. Hence the share price slide has come
“We will continue to look for companies that
at an inopportune moment and its attractiveness to complement our current business,” says Scott
potential targets has been diminished. Collins, head of communications and corporate
Of course, the other reading of the M&A lull is
responsibility at Raketech. “We are experienced
that the low-hanging fruit has been snapped up. in the process, know what we want and do not
According to this analysis, the larger listed affiliate want to rush into anything without finding the
entities no longer see the same benefits from right fit; the right people behind the company
adding acquired assets as was the case a few and on fair terms.”
years ago. This would seem to be the case with
Catena, which has suggested recently that it has For Collins there are three factors which play
been closing sites acquired in recent years. into the M&A slowdown:
But the Redeye analysts are not convinced.
“We believe it has made too many acquisitions to
be able to handle them in a constructive fashion,”
they wrote. “Its low organic growth is evidence
• There are few remaining high-quality
companies out there willing to sell;
• Prices are too high. The higher competition
increases the price expected by sellers.
of this, and only 50% of its revenues comes from Also, past acquisitions might have been too
revenue-share agreements.” expensive, and as the current expectations are
based on past overestimated multiples, we are
A smaller pool seeing greatly inflated prices. As such, fewer
Catena Media is merely the most obvious buyers are willing to pay high prices;
example of a company that has gorged itself on
acquisitions in recent years but others have joined
• The bigger affiliates are now listed companies
and have an added responsibility to make sure
the fray with equal enthusiasm, if not quite the an acquisition will be able to deliver long-term
same appetite. results. Buyers are therefore more cautious
One obvious consequence of the M&A splurge
when evaluating potential M&A targets.
in recent years – and a partial explanation for the
relative slowdown in activity in recent months – is Another company which has also recently been
that the more obvious targets have all now been making acquisitions in the space is Net Gaming
snapped up. Europe and its chief executive Marcus Teilman
“Many of the choice opportunities have
says there are “some qualitative prospects
been picked off already,” says Charles Gillespie, out there still and we will continue to see new,
chief executive at Gambling.com Group. “The innovative ones popping up”.
bigger deals that do happen make sense as the
The entrepreneurial nature of the affiliate space
corporate affiliates now need to do bigger M&A means it is never static. New sites are cropping
than ever to continue to move the needle and up all the time, enticing new players with newer,
hit growth targets. What used to be big is now potentially more mobile-based offerings. And
considered small.” with an obvious pathway through to a potential
One company which has been active in the
sale, it seems unlikely this will be a river that will
past year is Raketech, which has made three necessarily dry up any time soon, regardless of
deals in the past 18 months (the most recent deal, the regulatory backdrop for gambling.
iGaming Business • Affiliate Monitor • August 2019
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