Participating in the Wave of European Games M&A | Paul Gardner
Delivered at Casual Connect Europe 2016 A historic M&A cycle will be cresting from early 2016 into 2017. With two multi-billion dollar pieces taken off the board (and the opening moves for a third such acquisition already in play), acquirers across all global territories are preparing to change the landscape of the games industry in Europe by scooping up a selection from small studios through the next cohort of leading publishers. This session will explore the drivers behind this coming change; how to position for advantage; and what the resulting landscape might look like. The London-based speaker has 20 years experience in the games industry and his firm has been involved in a wide range of investment, M&A and commercial transactions in the industry.
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Participating in the Wave of European Games M&A | Paul Gardner
- 1. Participating in the Wave of European Games M&A in the Next 3-18 months Paul Gardner Partner Osborne Clarke LLP
- 2. The Proposition A historic M&A cycle will be cresting from early 2016 into 2017
- 3. A look back to 2015 • A record year for M&A • US $ 4.78 trillion • 69 deals > $10 billion • 10 transactions > $50 billion • But what about the games industry…?* • Total deal value (investment, IPOs and M&A) < $5 billion • Down 81% on 2014 • M&A down 75% on 2014 *(source Digi-Capital and excludes Activision / King)
- 4. Overview • What are the key drivers? • What are buyers looking for? • How to position for best advantage? • And why this might not happen…
- 5. The Proposition • A historic M&A cycle will be cresting from early 2016 into 2017 What are the key drivers?
- 6. The key drivers • Driver #1: Companies have lots of cash • Driver #2: Asian companies coming to Europe • Driver #3: Console companies entering the market • Driver #4: Other companies entering the market • Driver #5: A good crop of great businesses ($10m - $250m+) • Driver #6: New technologies and markets (e.g. VR, eSports and gaming)
- 7. The key drivers • Driver #7: Challenges for smaller players • Increasing cost of development • Increasing cost of UA • Proliferation of content • Platforms more difficult • Driver #8: Challenges for big players • Need to achieve growth in revenue / margin • Need to keep up with competitors
- 8. What are buyers looking for?
- 9. What are buyers looking for? • Revenues • Content on which to leverage their systems • People • Skills • Locations • Technology (some specific bits) • What a competitor is looking for…
- 10. How to position for best advantage?
- 11. How to position for best advantage? • Think strategically • Get advice and input • Ask corp. devs. what is of interest to them • Speak to intermediaries • Keep focussed on your business • Keep the end game in mind • Investors • Licence terms and • Contractual provisions (e.g. change of control, ROFR etc.) • Prepare to be able to execute a deal • Be realistic – it is a buyer's market
- 12. Why this might not happen • Macro issues • China • Sub-scale businesses • Lifestyle businesses • Valuation gaps • Unrealistic expectations • Achieving a return for investors
- 13. Why this might not happen • Macro issues • China • Valuation gaps Value can be slow to build and quick to lose
- 14. Thank you Paul Gardner Osborne Clarke LLP paul.gardner@osborneclarke.com +44 20 7105 7066 @the1gardner