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Mobile Money M&A

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Mobile money is happening and it’s happening big. This opportunity reflects the explosion of connected mobile devices, which is estimated to reach 2 billion devices by 2015, according to IDC. The size of the mobile money market is expected to reach $323B in 2013 and to grow to $617B-$1T in 2017, depending on the source.

The size and 40%+ growth rates have attracted a myriad of new players (Paypal, Square, ISIS, Google Wallet), among others that have forced incumbents (banks/credit cards) to take more active (defensive) roles in the marketplace. In order for banks to parlay their trusted customer relationships into mobile-commerce revenue, they require mobility and retail technology (shopping, loyalty, offers/coupons, rewards) and expertise.

One of the beneficiaries of this dynamic is the UK-based Monetise, which is currently trading at a 10X EV/Revenue multiple. While Monitise fulfills the mobile money component for banks, maintaining their 10x EV/Rev trading multiple will require them to provide evidence of success with mobile commerce services, and more broadly multi-channel marketing. As seen below, they have already turned to M&A to accelerate their own product roadmap, paying handsomely to acquire mPOS company ClairMail, Inc. for 10x revenue.

mobile post graph

 

 

 

 

 

 

 

We believe this type of M&A activity and froth will continue over the next twelve months as the land grab to capture market share intensifies.

Some other transactions of note:

  • MasterCard (NYSE:MA) acquired Truaxis for an undisclosed amount: “The offer and rewards industry is rapidly evolving as consumers have demonstrated their desire for customized offers and savings that truly matter to their individual lifestyles.” – Tim Murphy, Chief Product Officer at MasterCard.
  • VeriFone (NYSE:PAY) acquired European electronic payment firm Point International at 5.5x revenue despite the recession in Europe, with VeriFone’s CEO stating that “the trends to a cashless society are bigger than any short-term or medium-term issues.”
  • Augme Technologies (OTCBB:AUGT) acquired mobile marketer HipCricket for 6.7x revenue as part of a strategy to develop the “most powerful, best-of-breed mobile marketing solutions” for the rapidly growing market.
  • Local Corporation (NasdaqCM:LOCM) purchased discount deal company Screamin’ Media at approximately 8.5x revenue for a “new way to engage consumers.”