Room for expansion

The gaming industry’s landscape has changed significantly over the past few years, where M&A movements are now dominant within the trading world.

Europe’s gambling sector has been transformed by a series of tie-ups, with a series of major mergers in the betting sphere definitely changing the game.

In July last year, bookmakers Ladbrokes and Coral agreed a £2bn merger, which was quickly followed in August by news Paddy Power and Betfair had joined forces to form a Goliath now worth almost £8bn.

GVC won a drawn-out bidding war with 888 to buy bwin.party for more than £1bn, with Kindred and 32Red following suit – and many more are expected in the future.

M&A activity and the affiliate space are no strangers either, as the landscape continues to evolve, and businesses are always aiming to gain a competitive edge in the expanding marketplace.

The UK’s decision to vote in favour of Brexit has played a part in the recent major moves in the market, while the smartphone revolution has provided a platform for millions of punters to bet via their mobiles – hence the flurry of M&As.

Now is seen as the ideal time to be joining the M&A community, especially for those businesses with aspirations to grow their brands even further and to remain in the competition – it’s easy to rest on your laurels in such a situation.

For us, it was only natural to partake in M&A, if we are to keep ahead of our rivals and continue to scale our operations.

The recent acquisition of SportFreunde, a leading German affiliate group, for an eight-figure sum, saw us not only expand our presence within the German-speaking market but continue to put ourselves on the betting map.

“We want the ability to learn from each other with the end goal of increasing the value for all stakeholders”

However, making the leap into the M&A space is daunting and no easy task, which requires you to have an aggressive mentality in order to succeed – you need to think big and you need to think strategically.

One of the biggest factors is scalability and being open to change which, within our industry and the affiliate space, is pivotal as operators want to work with the biggest partners.

Businesses are always vying to expand their portfolio, which in turn gives them more tools and means they have the opportunity to offer much more – so executing a successful M&A is crucial in taking the next step.

In addition, the way in which technology and products are set up, expanding becomes much more cost effective in the long-term.

Combine this with having increased interest from partners and more users utilising your growing content base, and you will see that it’s possible to establish a solid position in the industry.

Companies must have the ability to catch your eye, so that way you know that they’re doing something right and would be a beneficial merger or acquisition.

Finding a potential partner, such as an advanced technical platform or a strong brand, should be at the forefront of your mind, as it makes little sense to take over and shut down existing protocols to implement your own – which is why due diligence is such a crucial part of the process.

Mutually beneficial

When scouting out new companies to acquire, we look at whether the deal mutually benefits both parties.

We want the ability to learn from each other with the end goal of increasing the value for all stakeholders.

Looking at our SportFreunde acquisition from an industry point of view, it’s certainly one of the biggest M&A deals to have successfully gone through this year.

We’ve once again proven that an aggressive approach is paying dividends, however, we’re aware that like anything which is in demand, prices will rise rapidly with prospective buyers showing a keen interest in growing their businesses.

Looking at optimal cost structures, simple economic forces would suggest that the value of affiliates will rise as a result of increased demand.

Some shrewd affiliates will already be aware of the scope for increased valuations, so of course, they will aim to maximise the value of their assets and in turn increasing their overall chances of selling their businesses for as much as possible.

Fast moving

As we’re quickly finding out, it’s become pivotal that once a potential M&A target has been sounded out, that the businesses move quickly and aggressively to get the deal over the line, thus avoiding the danger of being trumped by a rival.

Though, it would be wrong to tell businesses to be overly hasty and rush to seal the deal. Nobody wants to be paying over the odds. Due diligence and a level-head must be kept. I’m sure we’re not the only ones to say it, but over the years, we’ve always taken a quality over quantity approach.

We’ve always taken a selective process when we consider acquiring companies to join our brand, it links with our core value of being fully transparent. This is how we differentiate ourselves from others in the industry – keeping us viewed as an attractive proposition.

The whole team firmly believe in our values and will continue to stand by them, without any danger of changing our perspective, even with the likelihood of the stronger competition entering and influencing the M&A landscape in terms of pricing.

Shared values

But while it’s important to scout out companies who fit your prioritised categories, ones that share our values have the easier transition and we’ve found that pivotal in making these key decisions during the acquisition process.

During the last decade, the M&A scene for the betting industry has changed dramatically, with start-up companies joining forces with publicly traded ones to form powerful relationships. It’s proof how the business scope has completely changed.

We’ve seen how the affiliate space has matured over the years but it’s taken the necessary time for the sector to become more transparent and honest – making us a more serious prospect.

Affiliates are sure to become more powerful in the future, as they unite to strengthen their expertise and technical knowledge, which only bodes well for the industry itself.

The affiliate space is ever changing and it’s vital to keep your finger on the buzzer if you want to stay ahead of the curve.

That’s why we had to go big with the SportFreunde deal and make it Better Collective’s biggest acquisition to date. Now it’s about building on that and continuing to grow our brand across the globe.

Jesper Søgaard founded Better Collective, a leading affiliate in the online gaming industry, in 2004 and has been the driving force of the company ever since. As CEO, he has grown the company from a start-up to one of the foremost affiliates in the betting industry, with market-leading products including German casino affiliate CasinoVerdiener.com and bettingexpert.com.