M&A: The job starts when the deal is closed

The gambling industry has remained highly dependent on M&A to reach growth now for some time, yet things are changing. Better Collective, in particular, recently announced it was slowing down its acquisition plans.

It is commonly accepted that igaming M&A opportunities represent a colossal amount of work. Between the announcement of the intention of the purchase, the announcement of the acquisition, the actual acquisition (the signing of the SPA) and the exploration of synergies, there are multitudes of skills working together.

Buying is the easy part

Let’s be honest, concluding an igaming M&A deal is not easy. The due diligence phase is always a headache as the aspects to be explored are quite vast (legal, products, tech, HR, finances, etc.), and the complexity increases the larger the deal. 

But buying is, above all, about a successful negotiation. Where things get complicated is once you have invested time and money in an opportunity for which you expect solid financial synergies and complementary expertise. Meaning that the real challenge kicks in with the post-merger integration phase.

Making the most of the cost

The post-merger phase is critical since it is at the end of this project that you will know if what was deemed a good opportunity was well managed in terms of integration. It is not uncommon to see acquisition projects fall through. In other sectors, I have an example that often comes up with Carrefour, the retailer, which has long bought start-ups only to have them close sometime later.

In igaming and on the affiliate side, it is not uncommon to see companies integrating the sites they have just purchased and, because of not keeping the initial secret, to see the site sink to the bottom of Google rankings.

So, to succeed in your M&A, you must succeed in your PMI. And this is often where things go wrong, due to a lack of organisation and support, since consulting firms often stop at the SPA.

Organise the transition

If due diligence gives a more or less clear image of what we are buying, it must also give a fairly faithful image of what you must capitalise on.

Here are two cases that help make the types of acquisitions clear: 

• A horizontal acquisition: a company which has the same core business as yours, and which enriches your portfolio via its power or its geographical presence, for example.
• Vertical acquisition: acquiring an asset whose core business is different, but linked to the value chain of your business.

For the purposes of this article, we are going to explore horizontal acquisition, since this is often the type of transaction that we encounter on the affiliate side.

Aiming for the moon

What determines the success of the project is often the setting of objectives, as in many other areas. There’s a chance that you might grow tired of the acquisition process due to factors like it taking much longer than first expected. This is usually due to numerous back-and-forths between different stakeholders, which creates the risk of wanting to accelerate things and going too quickly.

Let's keep in mind that the assets generated income before purchase; to rush the process only risks sacrificing the fruit.

You can’t get to the moon without a plan

Before starting any integration process, capitalising on the knowledge on both sides makes it possible to build a multidisciplinary team capable of investigating the different scenarios.

It is essential to allocate time to these experts or to have a dedicated team (rare, unless the M&A channel is very active) using service providers. Without time, we botch things. And with the acquisition itself likely costing a hefty fee, you don’t want to get things wrong, which will cost you even more in the long term.

Address synergies and duplications

To get the most out of an M&A acquisition, you must ensure that you avoid duplication, both from an HR point of view (which will have to be re-allocated or, failing that, propose an acceptable exit plan) but also from a tooling, technological and partnership point of view.

Also, it’s important to have humility in the process to preserve the best of each person involved and to make sure you, as the acquiring company, devote the energy to manage the transition over however long it might take.

To prioritise

Not all tasks are equally important. And doing everything at once only guarantees failure. 

The first thing to do is ensure that the asset continues to generate income. Then it's key to make sure it does not cost more to run, at least proportionally. That the teams are well integrated, that everyone knows the importance of this merger and their role in this changing organisation.

Finally, the question of tools and projects will arise. The complexity of PMI is accepting an upheaval of organisations while maintaining business as usual without adding ambitious and cross-functional projects in parallel. That’s the challenge for executive managers and directors, and from experience, this is often the most difficult to get right.

M&A at any level

The M&A field is not limited to large-scale enterprises. Especially within the igaming sphere, the growth observed in recent years has enabled smaller structures to accumulate significant revenues, presenting them as interesting targets for the entire industry.

It is beneficial to assess opportunities and seek guidance for your ambitions, even without an established M&A division, notably in 2025 with the market contraction that is predicted in the sector.

My main takeaway is that M&A is a strategy that can cost a lot of time and money, so making sure you surround yourself with people who have run such projects and processes before helps to mitigate the risk.