Part 4: M&A round-up
Popular M&A targets (apart from special situations and
distressed assets) are rarely situated in markets that
face uncertainty.
Ben Robinson, RB Capital
chequebook back in the drawer.
As he suggests, Catena Media now has
situations and distressed assets) are rarely
situated in markets that face uncertainty,” says
“limited funds” to spend on acquisitions given Robinson from RB Capital. “Multiples are directly
its committed earnout payments. As of the end related to the return on a buyer’s investment
of the second quarter, €53.5m of asset purchase (ROI) and how fast they can recoup the purchase
commitments are outstanding, of which circa price and start generating profit. When a market
€25m is to be paid in cash. faces uncertainty, the sustainability of a business
Another reason for the general slowdown
in M&A in the affiliate space comes as a by-
is unclear.”
Then there is the issue of the compound annual
product of the previous frenzy – the inflated growth rate of the business and what that means
expectations on the part of vendors. Catena and for multiples. “Unless an affiliate is bucking the
the others have been keen to stress they will trend that is facing the majority of UK affiliates,
only pay multiples of EBITDA within set limits this will be reduced considering the challenges
but that doesn’t stop those being approaching (currently facing the affiliate sector),” he says.
overestimating what they think their business is
worth. A big enough valuation gap could easily
put paid to many a deal.
Then there is the regulatory shadow spoken
Sector consolidation and client
concentration risk
One aspect of the drive towards bigger affiliate
about earlier in this report. Sims at Rightlander businesses is the risk it poses in terms of client
suggests that ensuring that the content on your concentration. The most visible relationship in this
site is compliant will be a big factor in all future regard is between Better Collective and its main
deals. “We recently scanned some acquisitions for client Bet365. According to an analyst initiation
a big affiliate to help them check whether historical note from the team at Redeye in May this year,
content was actually compliant in the territory the Bet365 accounts for circa 25% of total revenues,
site was targeting so it is certainly on the mind of while the Better Collective IPO document in
an acquiring party, that is for sure,” he adds. 2018 said that the top 10 clients were worth
“Popular M&A targets (apart from special
circa 52% of total revenues. However, this latter
Better Collective’s top 10 clients were worth circa 52%
of revenues according to the IPO document, while
Gambling.com Group’s were worth 59% according to
its bond prospectus. Neither percentage is thought to
have significantly changed since listing.
iGaming Business • Affiliate Monitor • October 2019
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