Media Content Protection Software M&A Transactions and Valuations

In the media content protection sector between Q1 2020 and Q2 2024, $4 billion was deployed by acquirers; 210 deals were conducted with an average transaction size of $22 million. The sector includes intellectual property protection software serving the media and advertising industries with large applications in marketing and entertainment.

Most transactions conducted and capital invested in media content protection software were by US- and European-based acquirers. US-based acquirers accounted for 88% of all capital invested in the sector across 89 transactions. European acquirers contributed $800 million across 85 transactions, highlighting their appetite for smaller transactions.

Buyout and leveraged buyout transactions accounted for the majority of capital deployed in media content protection software acquisitions. Strategic mergers and acquisitions contributed to the majority of transactions in the sector with an average deal size of under $4 million. This highlights the appetite for smaller strategic acquisitions and add-ons.

Media content protection software founders and shareholders should be aware of exit opportunities presented by strategic acquirers from the US and Europe.

• The valuation multiples are based on a sample set of publicly listed podcasting and podcast advertising companies and M&A transactions in the sector. The data was collected on August 27, 2024.
• The sample set trades at an enterprise value to EBITDA multiple range of between 9x and 25x with an increase in average multiples as the enterprise value increases.
• Average enterprise value to revenue multiples ranged from 1x to 6x.      

• The median transaction size has ranged significantly with peaks of over $100 million seen in Q4 2023. This was driven by large transactions conducted by private equity firms. 
• Transactions in the sector appear to have a seasonal trend with the largest annual quarter median transactions occurring in Q4 2020, Q4 2021, and Q4 2023. This is likely driven by annual budgets in the entertainment industry and the demand to close larger acquisitions before the end of the financial year.   
• Median transaction size has remained low in 2024, indicating an appetite for smaller transactions. 

• Between Q1 2020 and Q2 2024, $4 billion was deployed across 210 media content protection software acquisitions. The average transaction value was $22 million, highlighting the volume of transactions in lower middle and middle markets.  
• The most significant deployment of capital, $653 million, occurred in Q2 of 2021. This is likely due to the low interest rates and high investments in technology as the global economy reopened following the pandemic.   
• While the deal count shows variability, it remains above 7 per quarter. This consistency indicates a stable interest in deal-making, even as the investment amounts fluctuate. The largest deal count was in Q3 of 2021, 21 transactions.

• Buyout and leveraged buyout transactions dominated M&A capital invested transactions in the sector. They contributed 88% of all capital in the industry with $3.5 billion, while conducting 33% of all transactions. The average transaction size of $51 million highlights the appetite for larger acquisitions. 
• Strategic mergers and acquisitions accounted for the majority of deals, 128 acquisitions, and $480 million of capital invested in the media content protection software sector. The average transaction size of under $4 million indicates the appetite for strategic acquisitions in the lower market. 

• US-based acquirers dominated the capital invested in the media content protection software sectors, with over $3 billion across 88 transactions. This could be due to many factors, including the historical dominance of the Hollywood film industry, the complex nature of intellectual property law in the US, or the abundance of small companies in the sector.  
• European acquirers conducted the largest number of transactions in the sector, 85, but contributed less than half of the capital deployed than US-based acquirers, with $800 million. The significant deal count indicates an appetite for smaller media content protection software acquisitions and the abundance of smaller and independent companies in the industry.
• The rest of the world exhibits a noticeable spike in the deal count, but an exceedingly small share of the capital deployed. This implies a wide distribution of smaller deals across various countries not individually listed. These smaller markets collectively engage in a considerable number of media content protection software transactions, but each deal tends to be small, reflecting diverse capital market activities.

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Media content protection software has broad applications in the marketing and entertainment industries. Technology has become more important for these sectors as they look to monetize their intellectual property while protecting their content. Strategic acquisitions of small and medium-sized firms are common, particularly among US- and European-based acquirers. 

Media content protection software companies should be mindful of exit opportunities. EBITDA multiple in the sector ranged between 9x and 25x in the period, with technology and intellectual property contributing significant increases in multiples. 

Sources: Pitchbook Data, Jahani and Associates (1), (2).