The core focus for companies’ acquisition strategies is on relatively traditional business areas, including digital media services, content creation and video distribution.
However, frontier technologies are attracting significant attention as well. More than a third of respondents are targeting companies in the Internet of Things, wearable tech, artificial intelligence, AR/VR and drone technology segments.
Scandinavian countries represent the top cross-border priority for almost one in two respondents to the survey, making the region the leading target for buyers—perhaps reflecting the reputation of countries such as Sweden and Denmark for innovation. Despite Brexit, the U.K. was the second-most popular target region.
Acquirers from the U.S., Europe and China mostly share the same priorities in dealmaking. Nonetheless, certain distinctions do exist. For instance, Chinese respondents expressed relatively more interest in digital publishing and gaming, while U.S. and European respondents are more keen on advertising and marketing tech.
M&A in technology and media can be high-risk, given the uncertainties of translating market potential into tangible results, particularly given the limited track record of many companies. Almost one in two respondents see wrongly evaluating a technology’s importance or potential as the biggest risk in an M&A deal in these sectors. More than a third fear misjudging a target’s growth potential, a similar concern.
Companies rely heavily on advisors and other third parties to conduct due diligence, reflecting the difficulties of accurately assessing digital media and technology companies. The majority of respondents emphasize the importance of thorough diligence, even if this extends the deal timeline, over the need to conclude a deal quickly.
While more than a third of respondents said potential problems such as cultural clashes concerned them when conducting M&A, very few cited integration as a priority in due diligence. This mismatch indicates that acquirers may underestimate the importance of planning for post-merger integration when doing a deal.
Executive Summary