Arma Partners delivers new record year as Digital Economy powers ahead despite pandemic
This year saw continued dramatic growth in the Digital Economy as businesses, societies and governments adapted to the new, digitally enabled “normal” resulting from the pandemic. Our team’s work reflected this as we advised on some of the year’s most transformational M&A and growth financing deals. In 2021, Arma advised on 35 transactions, an increase of more than a third on our previous record annual total.
2021 saw an uptick in activity from strategic buyers backed by Private Equity owners, demonstrating keen interest in Software-as-a-Service (SaaS) businesses in particular, which remained in demand due to their robust financial profiles and recurring forward earnings. These PE-backed strategic buyers stepped up the deal-making tempo and the valuation multiples paid and are now routinely competing not just with stand-alone PE firms with fresh leverage but also with publicly listed strategic players. This trend was in evidence in our sell-side advisory roles for Unifaun’s merger with Francisco Partners’ portfolio company Consignor; TalentSoft’s acquisition by Silver Lake portfolio company Cegid; the disposal of Soluno to Destiny, a portfolio company of Apax Partners; Allocate’s sale to RLDatix, backed by Five Arrows and TA Associates; Servelec’s acquisition by Access, owned by TA and Hg; and Content+Cloud’s sale to Advania, a portfolio company of Goldman Sachs Asset Management. Our role within the private equity ecosystem was recognised with Arma named as European Corporate Finance House of the Year for a second year running at the Private Equity Awards 2021.
Meanwhile, in cloud infrastructure, the growing adoption of public cloud and emergence of enterprise-grade public cloud service providers drove global systems integrators to pivot towards digital transformation via acquisition, with Arma leading sale processes for five of the world’s most significant public cloud service providers in the past 12 months. In Digital Media & Internet, investor appetite was strongest for online consumer marketplace models, and particularly for defensible specialist platforms serving large market niches. Arma advised on fundraisings by food delivery services Wolt and HungryPanda, video kit reseller MPB and online grocery business Rohlik, as well as the acquisition of NotOnTheHighStreet, as the booming European growth capital market set new highs for start-up valuations and funding round sizes. In FinTech, we saw continued consolidation of the payments landscape and the extension of traditional financial services companies’ product footprint through acquisitions, such as JPMorgan Chase’s landmark acquisition of Nutmeg, on which Arma advised.
Across the board, sale processes this year were repeatedly characterised by a combination of top-tier companies attracting higher valuations against a tighter timeline with fewer but higher-quality bidders. Driving some of this has been PE funds managing deployment to time to the next fundraise and, in some cases, greater deal selectivity after losing out on several auctions.
Finally, the systemic change fostered by the pandemic across all sectors of the Digital Economy lingers and investors are adjusting for, and predicting, post-Covid trends. Major cases in point included Xero having the foresight to look beyond short-term disruptions and thinking strategically with its technology-driven acquisition of Planday, despite a rise in cases in Denmark at the time; as well as the successful growth capital raise by online travel technology company Holidu in a bet on long-term trends in vacation rentals.
Notwithstanding the latest uncertainty surrounding the pandemic, the Digital Economy remains robust and is powering the economic recovery, with the widespread adoption of technology and significant investment likely to persist.
Find out more about the deals on which we have advised across the world in 2021, as well as our previous transactions, here.
We wish you a safe and restful holiday period.