The State of Ecommerce Ecommerce M&A activity in the lower middle market has demonstrated strong resilience and growth, especially after the recent US election due to the president-elect's promises of deregulation. Further, the sector has thrived given a combination of robust consumer demand for digital shopping and the expected favorable economic conditions under the new US administration. The Ecommerce sector has experienced a remarkable 41% YoY increase in deal volume, far surpassing the broader consumer industry's modest growth of 0.6%. This surge follows a period of subdued activity in 2022 and 2023, signaling the release of pent-up demand among buyers. Strategic buyers have been especially active, making up 58.2% of total transactions in the Ecommerce M&A market, while private equity firms accounted for 41.8%. Notably, private equity firms have shown a significant rise in add-on acquisitions, highlighting their focus on strengthening existing portfolio companies within the Ecommerce space. The prevalence of bolt-on strategies among private equity firms, where smaller companies are added to existing portfolio companies, has surged. In 2022, the ratio of bolt-on deals to platform deals reached a record high of 7.6:1, indicating a strong trend toward consolidating smaller firms within larger platforms. The financing environment is becoming more favorable as interest rates stabilize or decline, making capital more accessible for M&A deals. The availability of private equity capital should allow firms to pursue acquisitions more aggressively.
8
Made with FlippingBook flipbook maker