Shop Therapy: heads sharp increase in ecommerce M&A

Data InsightDealspeak 26 July

Shop Therapy: heads sharp increase in ecommerce M&A

Thoma Bravo’s USD 6.6bn acquisition of mailing and shipping software company, announced 9 July, illustrates just how hot ecommerce now is.

Deal making for North American ecommerce software companies reached USD 23.3bn in 1H21, nearly double the same period last year. 

Private equity is also becoming a bigger player in ecommerce transactions, accounting for about half by value and a fifth by count in 2021 year-to-date.

The pandemic massively accelerated ecommerce adoption in the US – the US Department of Commerce says it rose to 14% of total sales from 11% in 2019. That big jump forced companies to rethink their supply chains and put ecommerce enablement software in vogue. 

Because so much growth is still seen ahead, acquirors worry less about overpaying, says a banker. Thoma Bravo paid a 67% premium for – at least double what it offered for other recent buyouts.

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Ecommerce spans a large universe, including software for supply chains, logistics and inventory management; software for online stores, discovery search and review websites; as well as meal delivery and shipping software. 

But most ecommerce companies still only solve individual pain points – focuses on shipping labels. The opportunity for PE firms like Thoma Bravo is to acquire all the “picks and shovels” needed to create an end-to-end ecommerce enablement offering, says Emily Todd Anderson, a managing director at Union Square Advisors. Financial sponsors want to do just that, searching for other category leaders to bet on. Even Shopify [NASDAQ:SHOP], a large cap Ottawa-based company that helps businesses set up online stores, can’t be considered truly end-to-end because it lacks certain advertising and marketing solutions, she says. 


Three areas exist that hold promise. Companies that help build customer loyalty with perks such as free shipping will be attractive. Marlin Equity-backed Clarus Commerce, which helps businesses launch premium loyalty programs like Amazon Prime, is one example.

‘Headless commerce’ – a way of storing and managing content about products that can be delivered via APIs to mobile apps, smartwatches, fridge screens or smart speakers – is another area. Players there include Elastic Path, Contentstack, Webflow and Fabric.

A third area is B2B software. GTCR and Insight Partners-backed CommerceHub, whose drop-shipping software connects large retailers with inventory owners, could fill out its offering with acquisitions in order management or payment processing. 

As for, expect a series of acquisitions – to facilitate an international entry and to expand around shipping – before a mega exit in as little as three years. 

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