2020 In Review – Arma completes record year as digital transformation accelerates
This year has posed extraordinary challenges to societies, governments, businesses and individuals around the world. Against the backdrop of the pandemic, we are proud of how we performed as a team, continuing to work on transformational deals with established category-leaders, high-potential start-ups and financial investors, even as lockdowns required us to collaborate remotely and introduced new and unfamiliar dynamics to deal processes. In 2020, Arma Partners advised on 26 transactions, including 20 M&A deals with a combined value of $22 billion, an increase of over 80% in volume and 200% in value from 2019 – a record annual total in the history of our firm.
As Arma Partners entered 2020, we had made the strategic decision to expand our scope of expertise to address the entire Digital Economy. This decision proved timely, as Covid-19 spurred an acceleration in technology investment across an unprecedented range of industries. In response to macroeconomic uncertainty and a low-yield environment, equity investors and debt finance providers, in both public and private markets, have engaged in a “flight to quality”, drawn to the Digital Economy by its companies’ unique combination of rapid organic growth, strong long-term fundamentals and significant operating leverage. The resulting expansion in the share of M&A and growth financing activity accounted for by Digital Economy businesses was highlighted by Arma’s recognition, despite our specialist independent advisory focus, as the European Corporate Finance House of the Year at the recent Private Equity Awards 2020.
Software-as-a-Service (“SaaS”) businesses, already highly popular on account of their robust financial profiles and highly visible forward earnings, experienced perhaps the strongest surge in investor demand, as both the public and private sectors sought out SaaS solutions to automate workflows, deliver applications via the cloud and enable distributed and remote working. Arma advised on landmark SaaS transactions involving Visma, IFS, Aareon and thinkproject – valued in aggregate at $18 billion – as well as Corilus, Consignor, CoreHR and EcoOnline. Cloud services and communications received a similar boost to their already attractive long-term fundamentals through increased demand for high-bandwidth connectivity to data and applications, cloud-based conferencing, telephony and messaging, as well as higher-intensity consumption of streaming media services. In this context, Arma successfully advised on the sales of pan-European leader in public cloud services Nordcloud to IBM, M2M/IoT connectivity solutions provider CSL, public cloud transformation specialist NewSignature and cloud-based telematics service provider Mobiliz.
The pandemic also fostered systemic changes in consumer behaviour around media, e-commerce, education, healthcare and financial services. The enlarged addressable markets for digital-native entrants to these sectors has fuelled a strong pipeline of growth capital financings, with Arma advising on six such deals that raised $500m investment involving e-marketplaces such as Catawiki, Wolt and HungryPanda, the smartphone re-commerce platform Swappie, Sella Group and Fabrick’s digital consumer banking joint venture Hype with illimity Bank and the mobile financial services platform Lydia. Other B2B industries have also experienced significant increases in digital penetration – notably construction, with tech enablement of the built environment a key driver of the Aareon and thinkproject deals.
As we emerge from the crisis, the Digital Economy will play a critical role in powering the economic recovery, as increased technology adoption eclipses traditional industries and alternative investment firms deploy significant firepower, including into emerging “deep” technologies such as quantum computing, food technology and eco-friendly mobility. You can find more information on the 26 deals on which we have advised across the world in 2020, as well as all our previous transactions, here.