24 January, 2022

iGaming M&A gains momentum

As more businesses look towards benefiting from the explosive growth of iGaming M&A, the role of the M&A consultant has never been more important to navigate the complexities of the industry. Chris Vella, Co-Founder & MD of Exacta Solutions, tells us more

A flurry of momentous M&A announcements has dominated the headlines in the last few months. In a deal worth £2.2bn, 888 Holdings agreed to buy William Hill’s European business from its US owner. Spanish firm Nasdaq welcomed Codere Online via a merger with Mexico-based DD3, which sees the company listed in North America for the first time. News also broke that Games Global concluded deals to acquire Microgaming’s Quickfire distribution business in addition to their showing significant interest in several iGaming studio businesses.

IGaming M&A activity is at such an all-time high that earlier this year InvestGame reported that Q1 of 2021 saw games acquisitions and public offerings on track to generate a record $39bn of value across 280 announced transactions. To put that in perspective, 2020’s total of 664 gaming deals only generated $33bn.

And the M&A trend doesn’t appear to be slowing down. Some industry insiders are even predicting that the landscape is evolving at such a pace that there will only be six large operators in the end. Whether that’s the case remains to be seen. But what’s certainly true is that industry giants are gaining more of a foothold in more markets.

Of course, 2021 hasn’t been one unbroken string of M&A success stories, either. Some promising and hugely consequential acquisitions turned south as interests cooled and agreements could not be reached. Just in October, it was announced that a £16.2bn takeover of Entain, the owner of Ladbrokes, by the US fantasy sports and gambling company DraftKings would not go ahead, after all.

Mergers and acquisitions involve a precarious process and there are a wide range of complex factors that can make or break a deal. That’s why more and more businesses are turning to experienced M&A consultants to act on their behalf. Whether a company is looking to buy or sell, a professional consultant can advise clients on time-tested principles that will facilitate a smooth process and sidestep 11th-hour snags.

It’s understandable that business owners want to be heavily involved in the process. It’s their business at the end of the day and they feel protective towards it. However, many business owners fail to appreciate just how time consuming and fraught with uncertainty the process can be. As such, it can force business owners to lose focus of their most valuable asset: their actual business. Ultimately, this is not only damaging to the business and brand itself but to any potential M&A agreements. A slump in operations or a sudden PR snafu is a definite red flag to investors.

Whatever stage in the M&A process, businesses can seek consultants to cover all bases. A professional M&A strategy can help clients with everything from forming clear documentation on the history, present status, and future prospects of companies to guiding clients on due diligence processes to enter negotiations with transparency.

Professional M&A advisors follow the gaming market closely and have access to industry insights that might not be widely publicised. This means that they can offer investors detailed analysis, like-for-like catalogue scans, and snapshot reports to help them make decisions with confidence. A professional consultant will already have carried out all the groundwork, from understanding the specialist lingo to having a thorough understanding of the market’s intricacies, and more. This enables consultants to hit the ground running on behalf of their clients to develop efficient and effective M&A strategies that are tailored to the specificities of that company, including various back-up and contingency plans. These types of asset catalogues and investor maps will enable buyers and sellers to pursue deals with reasonable expectations based on concrete metrics drawn from like-with-like scenarios.

There’s also the issue of acquiring quality leads. A reputable advisor will be able to open doors to conversations through their network of contacts built up over many years of operating within the industry. All in all, this forms the foundations for a structured and targeted M&A approach that avoids time-wasting and is more likely to result in an optimal deal for all parties involved.

When approached with the right strategy and frame of mind, M&As open up a world of opportunities for buyers and sellers. Through the process, companies may reach the conclusion that a merger or acquisition isn’t the right step for their company at the time. However, there is still value to be gained through the possibility of starting unique collaborations with industry partners. By starting conversations, businesses may realise they have more to gain through different kinds of synergies and partnerships.

IGaming businesses seeking the services of M&A consultants can look out for a few tell-tale signs that will indicate whether that consultant is a good match for them. Firstly, M&A consultants should be willing to share both their success stories as well as failed initiatives to give clients insight into the various pitfalls and obstacles that may stop a deal in its tracks. A reputable M&A advisor will also likely be in possession of a growing portfolio of anonymised assets and buy-side mandates. This will indicate whether the agency is primed for successful M&A negotiations at all levels within the industry.

As with most business relationships, selecting an M&A agency to represent your business boils down to trust. By starting conversations today and putting feelers out, a business will be better prepared to succeed with a merger or acquisition down the line.