Consolidation Continues Despite Public Market Turmoil
By Greg Passani
While technology stocks experienced significant declines from the height of November 2021 through 2022, M&A transaction volume
remained fairly stable in the commerce enablement category, declining only 6.5% from prior year. Strategic acquirors and private equity investors remained undeterred by rising interest rates and the impact of inflation on consumer discretionary spend, focused on the massive long-term secular tailwinds driving reorganization of commerce supply chains and the arms race to capitalize on this disruption with new software platforms and teams of skilled consultants and engineers.
Intrepid anticipates Commerce Enablement M&A to continue at a relatively consistent pace through the first half of 2023, as investors monitor the economic outlook and business owners gauge optimal timing for an exit. Further consolidation is bound to occur in the longer term, with ecommerce expected to grow at a 13% CAGR from $3.3 trillion today to $5.4 trillion in 2026, according to Euromonitor.
Key industry trends include:
- Increased activity from large strategics, including WPP PLC (NYSE: WPP), Accenture PLC (NYSE: ACN), Interpublic Group (NYSE: IPG), and Wipro Limited (BSE:507685)
- Private equity backed platforms continuing to seek scale through buy-and-build strategies
- Significant activity from private equity firms with emerging sector expertise, including The Carlyle Group, Charlesbank Capital Partners, Trinity Hunt Partners, Berkshire Partners, Kelso Private Equity and Trivest Partners
- Persistent back-log of skilled engineers, causing middle market firms to increase compensation and benefits as they compete for talent, while large corporations such as Shopify strategically reduce headcount
- Reinvigorated debate on offshoring strategies sparked by disruption from conflict in Ukraine
We hope that this report serves as a useful tool for your business. As you evaluate opportunities, feel free to contact us for more pointed insight.