Commercial & Consumer Technology M&A Continues Amidst Sustained Consumer Demand and Challenged Supply Chains

M&A activity has remained strong in 2021, building on the momentum of the second half of 2020. The “Pandemic Effect” continues to be a double-edged sword for many companies as consumer demand remains remarkably robust. However, almost every company we cover in consumer electronics, music technology, gaming, A/V, and residential technology faces meaningful supply chain challenges resulting in higher costs, significant backorders, and potentially lost revenue. Driving M&A in 2021 are factors such as aggressive private equity and strategic buyers proactively initiating M&A discussions, companies showing record sales and earnings, continued low interest rates, and an expectation of capital gains tax increases in 2022 or sooner. This has led to an industry-wide expectation that the remainder of 2021 may prove to be one of the busiest periods of M&A activity in recent memory.

The first half of 2021 saw several players complete noteworthy M&A deals in the Commercial & Consumer Technology (CCT) space. In music technology, Francisco Partners acquired Native Instruments, a leading provider of hardware and software solutions for music creators, and followed this deal quickly with the acquisition of iZotope to form a new industry heavyweight, The Music Creation Group. In gaming peripherals, ACCO Brands (NYSE: ACCO), a company best known for school and office supplies, acquired PowerA, a provider of third-party gaming accessories, for $340 million. Lastly, in the personal audio category, Noritsu Koki (TSE: 7744) followed its 2020 acquisition of DJ products company AlphaTheta (formerly Pioneer DJ) with the March 2021 acquisition of Intrepid’s client JLab Audio, a leading provider of personal true-wireless audio products, for $370 million.

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Looking ahead, growing interest in the sector among these and other well-capitalized acquirers will drive industry consolidation, providing unique liquidity opportunities for entrepreneurs in the sector. As the market continues to adapt to the many opportunities and challenges associated with the pandemic, we remain incredibly bullish on the future of M&A across the CCT spectrum.
If you are interested in learning more about what is going on in the markets or potential M&A or capital raising options for your business, please do not hesitate to reach out.

Gary Rabishaw
Managing Director
Head of Commercial & Consumer Technology
grabishaw@intrepidib.com