Mid-market entertainment sector hungry for cross-border M&A
Cross-border acquisitions are becoming an increasingly important consideration for mid-market entertainment companies, either looking to buy for growth or to increase their value on exit by looking beyond domestic acquirers.
In 2018, there were more than 9,500 mid-market M&A transactions globally (involving companies with an enterprise value of less than U.S.$300 million) that generated a total enterprise value in excess of U.S.$350 billion. Of these, 21% were cross-border transactions.
The entertainment industry – including industry groups such as broadcasting, cable and satellite, interactive home entertainment, interactive media and services, movies and entertainment, and publishing – comprised 3% of total mid-market M&A activity by both volume and value.
This involved 257 transactions with a total enterprise value of U.S.$6.5bn and, of these, a quarter were cross-border deals.
Companies in the entertainment industry generally have a high level of intellectual property in their businesses and demand beyond their local market. As such, the value of entertainment companies has strong potential for growth beyond local borders.
One of the key drivers of these cross-border transactions is the ability of companies to gain access to new technology to service their existing market.
For example, last year U.S. gaming giant Electronic Arts acquired the cloud gaming technology assets and personnel of a subsidiary of Israeli business Gamefly, to deepen its expertise and capabilities in cloud gaming.
Cross-border acquisition can also provide a number of other benefits. Canada’s Entertainment One purchased British company Whizz Kid Entertainment to improve its television production capabilities in the UK and ability to deliver programmes in both markets.
In turn, Britain’s Keywood Studios bought Snowed In Studios in Canada, an engineering and co-development services studio for the video games industry. The acquisition gives Keywood Studios access to significant global clients, new markets and engineering talent to support growth in both regions.
Cross-border acquisitions can also give acquirers access to assets located in a specific region such as U.S.-based Live Nation’s acquisition of the Rock in Rio festival in Brazil.
With a strong outlook for M&A activity generally and greater global connectivity, cross-border transactions in the entertainment industry are likely to continue, primarily driven by demand for entertainment products beyond domestic markets and for intellectual property that is not available locally.
For more information, contact:
T: +61 2 9251 4600