Speed Panel: Investment Restart – What Will The M&A Landscape Look Like In 2025?

[Music] next we have investment restart what will the m&a landscape look like in 2025 this is a panel with shim Singh from agito or agio Capital Nick button Brown um from various Todd rossof from the rain group kagar eager from xmx and cadri hmer from smtm so I guess we're the last panel for for the session so uh we'll try to be as engaged as possible I think we're going to leave about five minutes for a Q&A so we're going to have to be quick guys I don't know know if we'll be able to get

through all the themes so we'll be quick and I might cut you off and just dive into the next question because we do want to get maybe some audience participation so really quick um I'm sham Singh uh founder and MD of agnesa capital um I've been coming to this event since its Inception uh love it um local uh so I'm not going to say too much about myself if you want to please come and have a chat with me we're an investment Bank have advised on a lot of deals love Founders love the game have invested a lot in the industry um I'm going to ask all of the panelists to introduce themselves but before I do I want to dive right into the first question and get some insights so last year um was a was a tough year let's be honest it it was an interesting year it was a restructuring year um but there's some interesting transactions that were happening towards the end of last year in particular uh the Acquisitions of plarium and easybrain uh which again were large transactions but it just

I think hopefully created some more renewed interest into the sector um I think the big question on everybody's mind is will that translate into further activity in the small to mediumsized segment which I would imagine most of the audience members are probably a part of um so I'll turn over to my panelists and Todd since you're in the closest to me I'll I'll put you on the spot and please introduce yourself yeah uh hey everyone uh Todd rosof I'm a partner at rain we're we're set up a little interestingly we're a merchant bank which is kind of a fancy word for we both advise and invest uh gaming is a like a Power Alley for us has been for probably 20 20 years of of doing games deals um it's look it's we we talk about this one a lot I mean I I expect overall m&a activity in 2025 to be more active across really all deal sizes small to

large um you certainly I don't know if you guys caught Josh's comments before like believe me like the show me the money theme like investors certainly Bankers want to see the money every bit uh as much as you guys do um and buyers are sitting on just an absolute like horde of cash right so like if I think about how we exited 2024 you mentioned easy brain um you know plarium I'd add super play on that like those deals kind of hit three each each kind of its own uh kind powerful motivation that U that buyers have like super play in the case of growth you think about plka you existing portfolios organic growth has just not been there you got to find it m&a is a is a vector to kind of do that if you think about easy brain portfolio diversification both IAA as well as IAP so it doesn't have to mean genre it can mean kind of monetization model too um and then plarium kind of dot scale right

particularly important for for the buyer in that case so if I think about the small and midsize Studios you guys probably play more into the first two that kind of growth imperative and also the kind of portfolio diversification and you guys bring the creativity really really the innovation in the industry so I think that's critically important um and midsize kind of m&a happens to be probably the widest potential set of buyers so it kind of sets up well to uh to have kind of the most transaction volume does anybody else want to kind of pick up on that point uh because I'm just conscious of the time and I do want to get to some of these other themes so yeah yeah please um yeah first of all I'm chard quick intro um I don't know this is the 10th 15th panel I'm together with SH so you just like me and um yeah um I used to work for good gamees still front for quite some time then part of xmo we sold xmo I

think almost three years ago to aonic group and with aonic group um we are very active in m&a and just uh quickly on that topic I also think this year we will definitely see uh more and more transactions and last year and the year before I think um one of the main reasons why we didn't see that much transactions was that the expectation of the founders were crazy high from the days um of covid so now everyone is getting more more realistic so that's why um the investors are really happy to invest and um so I think this year we'll see definitely a lot more activity there yeah I'm looking at codre and Nick um do you guys want to expand on that or do you want to maybe dovetail into and I know Todd you mentioned play Tika right and you know obviously there's different sets of buyers were going to be

attracted to different sizes of companies right do you guys maybe want to talk and I know Nick you're you're certainly involved in in in in a couple of interesting projects that I know you can uh talk about and and and codre please any views you might have on Asia uh well I mean hi I'm Kadri uh cisu Venture so maybe not on on the end of the of the spectrum where these guys are but more looking at early stage but obviously all the companies that we invest in want to be acquired at one point so uh so looking at it at a little bit more uh of a different angle but I just wanted to also bring optimism with the fact that all the obvious large targets are already acquired more or less so more money for the small and medium siiz right so I think that is also a very a big point to uh to look at and uh and understand that Acquisitions are still going to be made and and there's less targets so means you can do more smaller targets Matt

uh hi I'm Nick Bon Brown I've been in games for 30 years I have a games Angels group but I'm also involved in a few other companies which is why my company name was various on this I was like yeah I work for various um uh I'm particularly looking at the moment kind of private Equity I'm seeing a lot of non-gaming private Equity expressing interest in gaming now they're still struggling to get over the line a little so there's some that once they've made the first one a little I'm not sure that's appropriate once they made the first one then they're off the they kind of got it and there there's quite a few others that are looking for that first one and as soon as they make it then I think then they'll buy five um but yeah there there's I I I feel that there's a lot of movement in private Equity uh small so in answer to your first question that's in the small to midsize range as well so that drives the the earlier purchases not just the bigger

purchases what about and again just on this kind of buyer Universe topic um you know and and again thank you for those comments uh but do you see perhaps non-gaming or maybe tech companies you know entering into the market they're seeing valuations are pretty attractive now do you see some of of these newer entrance possibly coming in uh acquiring maybe a studio and then perhaps using that as a vehicle to acquire others um that that's a tremendous policy I look at my LinkedIn post um yeah it's plenty and and that's why they need the first one to kind of get in build confidence and actually then you're taking the management team from the first one to manage the second the third the fourth one um and and you're trying to kind of roll them up yeah that's that's absolutely the the kind of the best way forward and and and Todd you mentioned there's really you know hordes of cash if I'm not mistaken right that

was I still have my hearing so hordes of cash where are these hordes of cash to yeah I mean look I I call seriously it's definitely not in my pockets believe me um no I mean it's kind of like the Challenger group right like I look at a New York Times more than half their engagement is driven Now by games I I look at businesses like du lingo which trade really well have cash right that you know it's not a bridge too far to see like extensions of their core brand of their core audience I mean certainly everybody talks about kind of the traditional media guys um you know some more capable than others but like they've got IP um you know games has been a blind spot for them for a while so I put put them into the mix and then there's kind of the the guys we've all focused on for a while Amazon Netflix Etc so no shortage of cash with with any of those I mean there there's a lot of companies in process at the moment and I just want to go back to the point you made earlier the difference now is

valuation right so it's gone from last year people were expecting 20 25 times their profitability now what's coming out is 8 to n you know and sometimes people go oo maybe we can push it up to 10 to 11 but that's a very different proposition and then the investment companies there is upside there there is a chance for them to build a return whereas when it was 25 to 30 there wasn't a chance and I'm just going to pick up on that point because I I that's a nice segue Nick into valuation and perhaps size of of transaction uh I'm looking at joller because you haven't spoken in a bit so I'm going to put you on the spot what do you I mean maybe you can tell a little bit about ionic and what you guys are looking for because that could be directly relevant for some people in the audience I mean ionic um right now our Focus since um xmo is in the rewarded space and maybe you guys saw that there are a lot of rewarded uh UA providers out there their Booth so

for us um we see that this is a big opportunity and we recently raised over 150 million to not only invest in this space we have two verticals one is games and ionic and the other vertical is at or at Tech so to say and U we also recently closed the deal in turkey or invested with a call option to a company called Mega Fortuna so they're also in a rewarded space and we think that there is um great opportunity and we are focusing mainly on on this um area at the moment and and and again you know and thank you for that um what what about size or what makes let's say a small to medium siiz Studio attractive to a potential buyer um you know Todd you had some pretty interesting thoughts on that yeah I mean look you you it's hard to get mind share right so like um and we all do the screens you know Josh in the last presentation kind of alluded to the ones he does too I mean you know I I

think where you start to get kind of broader um you know on people's radar is when you're kind of in that 10 million of trailing you know Revenue with like a current run rate that kind of points to like a a strong growth year head so at least your forecast is also kind of quite credible based on the last few months like that's generally where you start to hit like everybody's filters that they're doing among amongst the Fire group I don't know if you guys see the same but no I mean I I I I think that's generally a pretty good threshold you know and certainly gets people excited and interested um let's let's uh kind of maybe just transition over to growth um I mean we haven't really talked uh about that but obviously all buyers in a saturated mature Market are going to be interested and kind of probably fixate on growth you know what's in your pipeline what new games do you have how's the existing back catalog performing and what are you doing in

terms of operations to improve that back catalog but where's the upside on on uh new Pipeline and New Growth so I'm just curious on you know and and and Nick you brought up the valuation topic of kind of you know eight you know of course they've come down dramatically but I think you know certainly what we're seeing is that is really probably one of the one of the most important U drivers evaluation so it it is um but at the the same time it's not as important as people think um a lot of companies they're buying you for what you are now and because growth is such a risk you know great we're going to double in size in four years I mean that's just a madeup number well well I mean the trajectory right let's say so it's it's great to show previous growth but there's no guarantee of future growth so I think part of the change this year is more based on where companies are now rather than where they'll be in two years when you're arguing about price it's a price multiple based on this

year's number not a price multiple based on a number in two years and I think a few years ago it was based on that number in two years so people are maybe more realistic about growth that it's not guaranteed um yeah and and and maybe what growth segments do you see out there as a particular platforms or or sorry Todd you wanted to no I mean look maybe one point that for Nick is like I think people have to get more comfortable with structure right like one way to bridge that like you know the unknown will growth kind of repeat itself is is to kind of put your money where your mouth is and like look we're as buyers you're happy to pay a premium multiple if you actually achieve that forward view that you presented that showed the 50% growth case right like plka Etc like you ask all those guys are happy to pay earn outs right like that's a high class kind of problem to have so I I think the outsized outcome is there if you're willing to you know kind of

risk on around the deal yeah um and then maybe just back uh do you guys see any particular segments or Niche Subs sectors within the industry that are growing I mean joller obviously you already pointed to how many rewarded incentivized uh uh providers are out there so clearly uh a growth area within the industry but um are there maybe particular platforms particular business bus models um or areas that you see within the industry that that you know some of the audience members might be interested in uh I think that maybe what is a little bit also happening with the uh with the transactions last year is that people are also more looking at like let's say the work for hire or the tech side as well like before if it's all about let's say you can say that games are like hit or miss or I I think people haven't said that in 10 years anymore but they used to uh so I think maybe also more stability is being found in in businesses that are run differently than

than games which are the tech businesses or work for higher businesses so I think this this is also something that is good for VCS because I mean we at at the early stage are also looking at a lot of tech and some of that Tech is going into obviously building games but also a few of our portfolio companies for instance are also looking at other Industries to use that same Tech so that would give them also more potential acquirers when when they do do mature and are at that stage and um maybe what's also not that popular at the moment um like no one is talking about it that much is this real uh money gaming so right now it's not available on Android no sorry yeah it's not available on Android only on iOS and once um this might be more relaxed I think there's also a huge opportunity for further growth for these kind of companies and I know we know papaya and and um some other guys out there so they are doing

pretty well and only available on IR so I think there's also a huge opportunity yeah um let's get into predictions because I think that's what everybody here is probably thinking about I certainly am um how do you guys feel 2025 will will shake out do you guys think it will be similar to 2024 do you think that you know with maybe Todd you brought up you know three large transactions you know so maybe kind of a slew of you know maybe a handful of some large transactions um and then you know kind of more of the same or do you expect an uplift um you know this year compared to last and and and everybody can I think everybody should answer that question I'm I'm curious to hear everybody okay I'm I'm consistent on this I may be wrong but I'm consistent so for a year and a bit I've been saying the middle of this year the middle of

this year is when a lot of Market forces kind of come around m&a is picked up cuz it's already picking up um which then trickles down to kind of earlier stage investment so I'm hopeful and there is you know I I am hopeful it's not guaranteed but I think the business Market changes middle of the year when Publishers realize they've killed all their games and all of a sudden they need games because otherwise they have to fire themselves and nobody does that and the VC who are sitting on the money realized we've got to spend it otherwise we've got to fire ourselves and nobody does that and the private yeah okay you can get the theme at some point people have to be active again um and I I'm middle of this year okay that's that's interesting now look I I agree I mean I like buyers for the last two years they've kind of done everything right they've they've cut costs clearly shed head count they've done share BuyBacks they've done everything they could like inward looking and now it's you know it's time to find growth and I think that's that's

going to drive the m&a market I think the financing environment's stable uh capital is available whether it's the private lenders whether it's the banks I think the capital is there um so I I agree I I think it's going to be higher deal volume and higher overall deal value in 2025 and as I just mentioned in the beginning since the um valuations are getting more and more realistic U because of only because not only because of that but that that will be definitely a reason why more transactions will happen this year well I mean I guess I need to disagree then just to be interesting but uh I mean overall I agree with you guys but I also see that there's a lot of things um that are causing almost like instability a lot of things launching a lot of new things happening so like we don't really know until the end of the year really how these new things are going to affect the overall market so I also think that people are going to be cautious and kind of like let's see how that hits and then see if if and what we

want to do so maybe I'll say fourth quarter just to be interesting well if we all say it often enough then we all believe and if you say Q4 then you're kill you know Fair a fairy died cuz you said Q4 I Q2 I I I I will add one point and not to be controversial but I I don't know and and maybe some people in the audience have read Matthew Ball's uh 200 Page you know I can see a lot of people nodding here right so that was pretty insightful I I I agreed with some of his points and I strongly disagree with some of his other points I I felt it was a little bit the tone was too negative um but um all these former Gamers or let's say fleeting Gamers whatever you want to call them Co Gamers um are now spending their time getting fit meditating uh getting you know virtual pets or

lifestyle apps or what have you I mean their dwell time which was largely in games has now transitioned over to other apps um how is that going to impact um you know the gaming industry do do and again I think I think some of his points in that deck were very interesting and some of them I disagree with I fundamentally think again you know on on record that I agree with you guys but I'm just curious Playing devil's advocate uh because according to his deck and his thought process we're actually in for a pretty rough ride we we debate this a lot internally like there was this question like during covid did that represent just max consumer wallet and Max like consumer time allocation to games relative to whatever else you you love doing working out or whatever it is right so like is that the high water mark and I think you

see a lot of forecasts that you know after the couple year decline it's a pretty slow almost slightly above like inflationary growth rate expected in games right it's still the largest category in entertainment so I I just kind of feel like the opportunity especially for you guys back to the Innovation it's it's there like the dollars are there but but even if you've got steady growth within that there's some sectors which are massively taking on off and there's some which are kind of steadily declining so I I think the disruption comes and and we've had it I mean I've been in games for 30 years we've had so many different periods of disruption and you didn't always see them coming you didn't know which one was going to come out you didn't know whether well okay a lot of people in this room you didn't know whether web 3 was actually going to be able to deliver a great set of games that opened it up to a wider audience You could argue they haven't managed to do that um but is it Discord gaming Josh said it's not all right but actually we

then had a little discussion in the in the back going actually maybe there's elements of Discord gaming and so there's there are opportunities but it's not doing the business as it's been done for the last 20 years it's focusing on community maybe it's mixed reality you know I I was literally in a meeting talking about mixed reality and I was like have we tried the ray band glasses they're kind of cool and he went click I'm like owned that was nice so I I think there are so many OPP but we've got to look at those opportunities it's not just a blanket let's carry on doing what we've done before does if I think if nobody else has any comments I think we can open up to the audience so any questions hi everyone thank you for the talk small question what type of synergies do you expect to to uh see on the market between an acquire and a

Target next year it it's really bio specific like I think if you talk about plka again as as an example right like incredible you know UA mon monetization expertise I think they're kind of pretty open like hey your product relative to certain is is not as much a strength historically right so like you Moon active like you could go by buyer and each one kind of brings their own unique skill set through um but you know I think there's certainly you talk about like centralized operations marketing like it's less of that you got to find out like what's your when you position your business like especially that like unmodeled upside when you talk to a given buyer you got to spend time thinking about what their core competences are and kind of play to the you know play to the audience a little bit um for me it's it's definitely that the

some of the parts has to be greater than the parts and I can't quite believe I have to say that I mean I I'd spent nine years at EA so I really learned how not to acquire teams um but no I mean from a point of view you're you're putting some companies together they have to have enough benefits to make all the companies better um they have to add to the existing things and be better because of the knowledge that they're bringing in or the reach or the market or the community or something like that and you have to have that clearly identified up front but again I can't believe I have to say that that well well I mean sorry can I sorry I mean I think we went through a frenzy right yeah and so people kind of lost track of hey let's create a strategic rationale why are we doing this you know let's understand from a seller perspective first hey why are we selling do we have a professional you know do we have a certain goal and achievement and we feel

we can accelerate much faster because we're lacking as Todd mentioned all of these internal functional areas of expertise and guess what these five buyers can satisfy that and so I think if you're if you're not doing that homework you're not getting your strategic rationale or why you'd want to sell a business right from the get-go then you're probably not going to have a great process or you know desired outcome I mean when you're looking at people who are selling companies like yourselves it's very much you're now trying to find the right fit for the company it's not just it's out there and everybody's bidding against it's like actually they make sense for this company because it fits with the other five things that they're doing but I think also in terms of like strategy is good and necessary and all of that but like I would also say that I am hoping that everything also gets integrated properly because like if you go ahead and you have like a really good acquisition strategy and everything and then you acquire and then you just like kind of sit there with your hands in

your pocket and everything just blows up that's also not good for the market not good for the deals not good for anything really so I think it's also the the tactics behind it of like what is actually going to be done with that company and how is is something that maybe has sometimes been overlooked hi so you were talking a lot about valuations coming down and that bringing in investors uh I'd be curious about do you have a take on the flip side of that right like the part of the reason valuation coming down is that multiples in gaming are getting like quite low concerning or potentially concerningly low right like the the MTG acquisition of plarium the the revenue multiple there is is pretty depressing or you could argue that uh and you know some of you are you know Angel Investors other ones V's does that does that concern

you just I'll hit the multiple one I mean I I do think iida matters so like you know the the days of paying very full kind of Revenue multip it's not a growth at all cost kind of Market m&a Market environment so there's a little bit of like a a ship now that said mo mobile you're right I mean mobile trades uh as as depressed as probably it it's been I don't think that represents kind of like a steady state justifiable you know multiple I just think the kind of the growth idfa Etc it's just been a challenging couple years and until we find kind of some more you know consistent quarters of of growth across the key players I think that'll rebound to kind of more normal levels I mean I think always like what is normal like what are you comparing to are you comparing to when it was the absolute top or like are you comp like what are you comparing to I think at the

end of the day also the market conditions themselves have changed a lot especially on mobile so in in that sense I think you know people are also just being cautious and trying to understand like how does it stabilize and what are the new models now like how are you going to do the things that you knew how to do before so so in that sense then you're being more cautious with the valuations and and once that gets figured out it will it will you know pop back a bit but uh I'm I'm from a VC standpoint I'm hoping it's not going to pop back up to where it was because that was a little bit crazy for us as well but I think also quickly I know we have to stop but um Plum is Plum's case is not really representative because that was um there's almost as far as I know not that much growth expected so that that was one of the reasons so growth is still very important in in uh giving multiples so and in that case it wasn't really there just to put it in a relative I I'll add just one very you know you

mentioned uh plarium so easy brain was done at Double the multiple of uh plarium literally a week later and what is fundamentally different about those two business to jwar point growth right so people will pay a healthy premium healthy multiple for businesses that can demonstrate uh consistent growth very thank you [Applause]