The Data Analytics Landscape Gets Smaller as Consolidation Continues in the Space

The month of June saw another spike in Data Analytics M&A activity. Within one week, two deals in the billions were announced, continuing a trend toward sky high valuations awarded to companies in the space. According to IT professionals, the quality of analytics is a chief driver behind an enterprise’s decision to undertake digital transformation. With vast amounts of data to be analyzed, big tech bellwethers are paying a pretty penny to extract its value. Statista estimates that big data and business analytics will generate $189.1 billion worldwide by the end of 2019.

The high demand for these insights has driven IT services companies to expand their service offerings through inorganic growth, leading to the recent surge big data consolidation. The mergers also tend to derive synergistic benefit from the fact that there is usually extensive overlap in customer coverage between both parties, allowing for cross-selling and upselling
opportunities.

In early June, Alphabet, acquired BI analytics SaaS provider, Looker, for a whopping $2.6 billion.
Presumably, the diversified tech giant plans to utilize the new capabilities gained through Looker
to enhance its Google Cloud Platform.

The most significant of these deals came in during that same week, when Salesforce made its
largest acquisition to date, purchasing data analytics and visualization company Tableau. The CRM
giant paid $15.7 billion in stock; a 12.2x multiple on revenue.

However, this was not Salesforce’s first purchase in the space during the last twelve months. In
July 2018, they acquired marketing performance intelligence and analytics company, Datorama,
for $743 million. While this dollar amount may be dwarfed by the Tableau deal, it still represents
a revenue multiple of 14.5x.

Also during June, leading embedded analytics provider, Logi Analytics, announced their deal to
purchase Zoomdata, a big data and live-streaming analytics platform, for an undisclosed amount.
This was Logi’s second analytics deal in 2019 alone indicating a move to strengthen its data
visualization offering after discontinuing its internal development efforts in the space during 2017.
As larger tech players continue to gobble up smaller analytics providers in an effort to enhance
their suite of services, we can only expect the price tags to increase correspondingly.