A key stakeholder in industry affiliate Better Collective’s international expansion, Michal Kopec (Head of M&A) details his firm’s significant acquisition activity undertaken this summer.
In a changing affiliate landscape, how should leadership stakeholders gauge and value potential affiliate assets. Furthermore, is affiliate M&A fully understood as a marketing expansion vertical.
SBC: Hi Michal, it’s been a busy period for you and Better Collective. Can you briefly summarise your company’s recent acquisitions and how they fit with Better Collective’s European expansion projects?
Michal Kopec: It was definitely a busy period for us. We didn’t have any big events like the World Cup or Olympic Games this year, so we expected some nice holiday and we ended up having probably our busiest summer ever.
All of our acquisitions so far are focused on our key markets. We have especially expanded heavily in the German-speaking market, with WettFreunde and Wettportal probably being known to everyone involved in the gambling business within that market. We haven’t ignored the UK either, acquiring CasinoLounge.co.uk. Plus, we boosted our presence in regulated markets like France, Italy, and Spain with the most recent deal with Pull Media.
All in all, we are expanding our European network in regulated, or expected to be regulated, markets—which is our strategic goal.
SBC: Leading Better Collective M&A strategy, how do you personally value potential M&A targets? What key dynamics and competencies are you looking for in potential targets?
MK: There’s no one simple answer to that question. We are looking at a wide range of targets. You can see that from our recent deals. We’ve bought companies with +30 employees and smaller sites with only owner with some freelancers working on it. Clearly we look at some obvious metrics like revenues, profits, depositors or traffic stats, but on top of that we need to see how the targets would fit into our existing operations. We really look at how we can utilize existing synergies and what chances and options we have for driving business forward together. Lastly, and equally important, we need to make sure the seller shares the same values as Better Collective and if the business is run in a clean and transparent way.
SBC: In 2017 Better Collective has undertaken 6 major affiliate acquisitions, how does your team plan to integrate these new assets effectively…how hard and vital is this function of Post M&A activity?
MK: Integration is a key to the success of any M&A deal. We have a different approach case by case. With companies like WettFreunde or Pull Media, we have acquired already successful businesses that are already being run by talented people. While we are still keen to improve and share the learnings and synergies, we also want to make sure we don’t lose out on their unique attributes.
With some other deals, like CasinoLounge.co.uk, we are ready to quickly integrate the assets to our existing organization in our Copenhagen office, supported by the resources from our office in Niš and our freelancers.
SBC: How has M&A changed the industry affiliate marketing landscape? Is M&A fully understood by industry marketing stakeholders, could M&A prove to be disruptive for all-around industry marketing practices?
MK: I believe that M&A activity will continue to happen and will make the industry more professional. Let’s not forget it’s still a young industry with most of current affiliates being startups created by some friends 5 to 15 years ago. Some of those startups, just like Better Collective, will chose to follow up on initial success and expand further. Some will chose to sell at the right moment and do something else. It’s just a natural way for this still relatively young industry to develop further.
The heavy competition in the general sphere makes it harder for small affiliates to compete, but it is also a litmus test. If they manage to establish themselves, they have proven to add value to the marketing chain. Plus, there is still plenty of space for new entrants. Adding to that, I am sure that the consolidation amongst established affiliates will continue for several years. This consolidation can only be good for the end users; as established affiliates cannot afford to be non compliant in their marketing. Whilst I am sure that no other operators will follow SkyBet, I can only expect the operator to focus more on their affiliates compliance, which is a good thing for the industry.
SBC: Bringing in new affiliate assets through M&A, how do you see Better Collective changing as a corporate entity?
MK: Managing the acquisitions makes us more professional as a whole company. Suddenly we have more people, more offices and more assets to deal with. That requires a more structured organization, starting from business and daily operations and ending with things like finance or HR. However, Better Collective has a wonderful culture that truly inspires progress, and our aim is to ensure the “Better Collective spirit” remains and permeates throughout our current and new offices.
SBC: Will affiliate M&A still be an industry dominant issue in 2018, or do you expect the market to calm down?
MK: We plan to remain active with our acquisitions and we are pretty sure our main competitors will do the same. Furthermore, it could be relevant for some other (not directly affiliate related) parties to participate. Let’s not forget that the gambling industry is still growing, and more and more countries are leaning towards regulation and, in some cases, towards more liberal regulation. With all of these developments, affiliates will continue to grow and M&A will be a natural part of this maturing and consolidating industry.
Michal Kopec – Head of M&A – Better Collective