New Report On Daily Deal Industry: Acquisitions Increasing; Valuations Dropping “Quickly & Signicantly”

Research firm CB Insights, published a report on “the Daily Deal” industry calling it the “most detailed and comprehensive report on M&A transactions, M&A valuation multiples, transaction deal terms and investment funding trends.”

According to the report:

The four key takeaways which emerged after an analysis of the data and numerous acquirers, investors and acquisition targets in the daily deal industry.

1. Daily deal M&A activity is climbing significantly
2. Valuation multiples are dropping – quickly and significantly
3. Groupon and LivingSocial’s implied valuations based on private company M&A multiples are significantly below rumored IPO valuations and secondary market transactions
4. Despite negative sentiment, there remain a significant number of rumored entrants into the space

The report goes on to say that the  “M&A activity in the Daily Deal space has accelerated with Q2 2011 and Q3 2011 (through just its first 2 months) on pace to exceed all the cumulative M&A activity seen in the industry since 2009.”

“Since 2009, 72 acquisitions have occurred in the daily deal space with 44 in just Q2 and Q3 2011.”

However although the report notes that M&A activity in the space has been booming, valuations has been dropping like a rock.

“Since their peak hit just two quarters ago in Q1 2011, the Price per Subscriber and Price per Voucher Sold multiples paid in private company M&A transactions have declined 36% and 40% respectively in Q3 2011.”

“The decline in valuations is driven by:

• An oversupply of daily deal companies
• Increasingly negative sentiment about the daily deal space which increased significantly after Groupon’s S-1 provided some visibility into daily deal economics
• Investor reticence about the daily deal space

If you want you can purchase the full report for $4,800 by clicking here