According to Digi Capital M&A in e-gaming hit a record $4b in 2012. Whilst this shows that M&A is heating up transactional volume actually dropped by 27%, in effect there were fewer but larger deals. Already in 2013 we have seen the Sportingbet deal, William Hill’s probable buyout of their JV partner and the question of who will Playtech buy next with that money. With the looming UK regulation and its potential impact on small and medium operators, not to mention regulated US Poker this indicates to me that 2013 could be the year when the industry finally starts to truly consolidate.
But be warned it’s also too easy for the M&A to be done for the wrong reasons such as increasing the share price multiple or buying revenue rather than longer term sustainable strategic reasons such as obtaining economies of scale, increasing bottom line revenue, entering new markets or buying expertise. Too often I hear the question “Now we have bought the business what do we do with it, how do we operate and what should the integration plan be?” Operators spend months negotiating the finer legal points around an M&A yet spend very little time before the deal is done even contemplating an integration plan.
Having directed two large and complex integration projects I have devised five golden rules that need to be answered before any lawyer even starts to look at a prospective M&A deal.
By following these five rules I believe that the longevity and profitability of our industry can be assured no matter what regulation and taxation is thrown at us.
Peter Marcus was the former Chief Operations Officer for William Hill Online as well as UK Managing Director for Betfair. He now is the Associate Consultant for DrPete Technology Experts, a consulting company specialising in IT strategy, specialised project management and integration within the online gaming industry.
By Associate Consultant Betting And Gaming