Carlsquare M&A-Study: A sustained growth path of the German Internet Industry pushed the M&A activity in 2011 up to a five years high

350 transactions with internet background in 2011 – increase in transaction activity of 37%

A positive general mood in the German economic environment, despite the Euro crisis, has positively influenced the M&A activities in the internet market in 2011 and led to a record high of transactions. This is the result of a study of the Corporate Finance Consultancy Carlsquare (www.carlsquare.com).

In the last year the German internet M&A market, with an increase of 37%, has once again continued its growth trend to a record high and demonstrated its crisis resistance. In 2011 a total of 350 acquisitions of and investments in German internet companies were published.  Although the number of strategic investors grew, still 60% of the total transaction volume was made by financial investors. A significant share of the transaction volume flow into the European „Silicon Valley“ Berlin, which is becoming more and more attractive for international investors and continues to mature.

Not only had the number of transactions increased impressively also the average deal volumes went up. The number of disclosed transactions with a known volume of over 12m EUR jumped from 5 transactions in 2010 up to 15 transactions in 2011. This development is due to various double-digit financing rounds, acquisitions through Private Equity Companies as well as strategic “buy & build” activities of companies being in a growth phase. Furthermore Carlsquare perceived a growing interest of large US companies, like Google or Ebay, in German internet companies. Thus those internet giants pose an interesting exit option for German internet firms.

Acquisitions of and investments in German internet companies are still more focused by German companies and investors. Nevertheless the international interest is growing.

Concerning German internet companies the most active international investors and acquirers come from Switzerland and the USA, representing 36% respectively 28% of the international investors and acquirers. Further significant activities came from France (15%) and Sweden (6%) as well as from countries like India, Japan or China, which are carefully considering their market entry but are still hesitant with closings.

Key drivers of the M&A activity in the internet sector still were transactions within the Commerce sector (35%), followed by the technology driven Enabling/Analytics/ Ad Serving segment (24%). Especially growth segments such as ´Cloud-Computing´ or ´HTML 5´ driven programming solutions were focused by Private Equity- and Venture Capital- Investors as well as strategic acquirers. Further propelling segments were Online-Gaming (Consumer) and Social Networking/Indexing/Photo/Sharing (Consumer).