M&A and investment in the game sector Realising investments and acquiring game businesses Up to 50% of the management’s deal terms and valuations since their post-tax proceeds from the sale will motivations for the deal are strategic usually be rolled over into new equity rather than purely financial and, and this will likely be subject to leaver especially if the buyer is from Big provisions. Sales to private equity are Tech, they’ll often be funding the therefore most likely to be the right fit deal purely from existing cash for a founder team which isn’t looking reserves and not with external debt. to exit the business immediately but Unlike PE buyers, strategic buyers wants a new partner to help it grow. don’t tend to ask management to Strategic corporate buyers ‘rollover’ or reinvest a portion of their sale proceeds into the company. A strategic corporate buyer will likely Instead, they often offer more money operate in the same or an adjacent up front, use earn-out consideration space as the target company structures and might, less commonly, and often makes the acquisition offer shares in the ultimate controlling for strategic rather than purely company of the buyer group. These financial reasons. Goals can vary mechanisms usually serve two broad but typically include a desire to aims: bridging gaps in the valuation integrate assets and operations with discussion between buyer and a view to realising synergies, gaining sellers and binding the founders new customers, talent, or IP, and/or and management team into the accelerating growth in new markets. future success of the business Being part of a larger group can after the deal. therefore bring the target company and its founder new and enhanced Strategic buyers want to acquire opportunities to scale the business, 100% control when they undertake which will be especially important if an acquisition and then integrate there is an earn-out or the founders the business into their wider group. are taking equity in the buyer group. Ongoing management may therefore end up with less autonomy than in Strategic buyers may also be a PE deal and may find themselves prepared to offer more attractive 19