Scott Denne is a Senior Analyst with 451 Research, where he helps direct the firm's coverage of technology mergers and acquisitions. He also contributes to 451 Research's Customer Experience & Commerce Channel with coverage of the advertising technology industry.
Prior to joining 451 Research, Scott spent six years at Dow Jones, where he covered startups and venture capital for VentureWire, Private Equity Analyst and The Wall Street Journal.
COVID-19 disrupted many businesses, although it created ideal conditions for mobile gaming. Fewer restaurants, stores, movies and jobs has translated into more time spent playing games. Against that backdrop, Zynga has printed its largest-ever acquisition.
With big buyouts on hold, PE firms have trickled into PIPE deals. The widespread drop in equity prices that began in February opened the opportunity for sponsors to pick up minority stakes in public tech companies at steep discounts. And while those deals should continue to flow, the recovery among tech stocks will tighten the spigot.
The COVID-19 outbreak exposed Twitter's overreliance on brand advertising and weakness in direct response campaigns. Now it has acquired CrossInstall to help build sales in that corner of the advertising market. It's a more considered acquisition than its previous attempt to push into direct response ads.
As consumer spending shrinks and shifts amid the pandemic, valuations are rising for many e-commerce vendors. But that's not likely to boost acquisition multiples. The shift that's benefiting many of the largest online players is decimating offline retailers " a major source of exits for e-commerce startups.
The recession sets the stage for IBM to maintain a dubious title in the tech M&A market " it has unwound more acquisitions than any other tech vendor. Prior to the recession, Big Blue had narrowed its product strategy and now it's bolstering its cash to get through the downturn " both moves point toward further divestitures.
Ad-tech companies face an inordinate blow from the coronavirus pandemic. Among software categories, it's going to be first to feel cuts in marketing spending. Not only does that endanger the last source of cash for many of these vendors, it makes the already improbable task of finding a buyer seem impossible.
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