HW eCommerce Introduction

Harris Williams (“HW”)

  • 25+ years and more than 1,000 closed transactions
  • 350+ professionals across eight office globally
  • 170+ closed transactions in the last 24 months
  • 10 industry groups

Focused Advisory Services

  • Mergers and acquisitions (M&A)
  • Capital raises 
  • Corporate divestitures

Consistent Recognition for Quality

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HW Technology, Media & Telecom (“TMT”) Group

  • 35+ dedicated TMT professionals 
  • TMT offices include Boston, San Francisco, and London

Key TMT Themes

  • SaaS / Cloud
  • Data & Analytics
  • Digital Transformation
  • A.I. / Machine Learning

Horizontal Focus Sectors

  • Application Software
  • Cloud Managed Services and Hosting Solutions
  • Compliance Solutions
  • CRM and Marketing Automation
  • Human Capital Management
  • Infrastructure and Security Software
  • IT and Tech-Enabled Services
  • Marketing, Research, and Insights Software

Vertical Focus Sectors

  • Architecture, Engineering, and Construction Software
  • Education Technology and Services
  • Energy Technology
  • Facilities and Real Estate Software
  • Financial Technology and Payments
  • Government Technology
  • Healthcare IT
  • Industrial and Supply Chain Technology
  • Internet and eCommerce
  • Retail Technology

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HW Current Market Observations and Insights

HW Technology, Media and Telecom Mid-Year Review

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For access to HW’s Optimizing the Outcome: Dealmaking in TMT During COVID-19, visit here.

Latest HW Market Insights

For access to HW’s latest insight and perspective, email us at insights@harriswilliams.com or visit www.harriswilliams.com/news-insights

Recent Publications:

COVID - 19: Consumer Insights, New Normal Trends, & Investment Implications

M&A Learnings from Past Economic Disruptions

The Impact of 5G on Telecom

Deep Sector Expertise Across Key TMT Focus Areas

  • Architecture, Engineering, and Construction
  • Education Technology and Services
  • Financial Technology and Payments
  • Healthcare IT
  • Industrial and Supply Chain Technology
  • …and more

For access to HW’s TMT content, email us at: TMT_Insights@harriswilliams.com

Harris Williams eCommerce Focus Areas

eCommerce Brands and Retailers

Internet-based brands and retailers that interact with their customers primarily through mobile or desktop devices

  • Direct-to-Consumer (“D2C”)
  • Digitally Native Brands
  • Online Marketplaces
  • Subscription-Based Services 
  • B2B Ecommerce
  • Gig Economy Marketplaces
  • Mobile / Local Ecommerce
  • Marketplace Optimization

Select Market Participants

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Key Trends

  • Ongoing shift from brick-and-mortar retail to eCommerce is expected to accelerate due to COVID-19, perhaps resulting in permanent consumer behavior changes
  • Personalization and customer experience are key to differentiating digitally native vertical brands and D2C models and driving repeat conversion
  • Leading niche marketplaces that facilitate and accelerate transition from offline to online are well positioned relative to large incumbents

eCommerce Enablement Software

SaaS- or usage-based software solutions that support eCommerce businesses, driving conversion and sales for merchants and a best-in-class experience for shoppers

  • Website Design & Hosting
  • Marketing Automation & Engagement
  • Customer Engagement
  • Digital Experience & Personalization
  • Payment & Checkout 
  • Order Fulfillment & Delivery
  • Loyalty & Rewards 
  • Business Data & Analytics

Select Market Participants

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Key Trends

  • Increasing competition requires software and tools that allow eCommerce businesses to differentiate every step of the customer journey
  • Integration of data-driven solutions addressing customer acquisition through fulfillment allows SMBs to effectively compete with much larger competitors
  • Software that personalizes and refines the shopping experience helps to create a foundation of repeat customers, maximizing customer lifetime value and delivering a meaningful ROI to the business

Long-Term, Sustainable Market Tailwinds Driving Favorable Shift for eCommerce1,2

Tremendous Growth in eCommerce…

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  • eCommerce sales growth is significantly outpacing brick-and-mortar growth, resulting in growing share of retail sales
  • eCommerce sales growth is expected to continue as more consumers (B2C and B2B) shift their habits and mobile internet access becomes more ubiquitous

…Supported by Highly Favorable Long-Term Trends.

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  • Dramatic increase in data-enabled device usage enables brands to better engage with customers at the most likely time to transact
  • Adoption of eCommerce is accelerating among the most attractive consumer demographics
  • Average order values (AOVs) and gross merchandise values (GMVs) are increasing as trust in eCommerce platforms grows and loyalty/cashback discounts increase value to/buying power of the consumer

Keys to Capturing Share

  • Data-driven, efficient customer acquisition
  • Best-in-class, seamless user experience across mobile and desktop platforms
  • Personalization capabilities that drive engagement and conversion
  • Frictionless experience at every step of customer journey (shopping, payments, fulfillment, reverse logistics, etc.)
  • Content, community, and rewards, all of which drive loyalty and LTV
  • Scalable, integrated software solutions that support and drive growth

Note: Projections for annual U.S. Retail eCommerce Sales were completed before the COVID-19 crisis

Notable 2Q 2020 eCommerce Transactions4,5

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Hearst Autos’ Acquisition of Bring a Trailer

  • Bring a Trailer provides a digital auction platform and auto enthusiast community
  • Bring a Trailer curates classic, collector, and enthusiast vehicles submitted by its audience for auction, and has an active community of more than 415,000 users and 175,000 registered bidders
  • Hearst Autos will expand and support Bring a Trailer’s offerings, community, and transactions through investments in robust technology and new products and features
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Canva Raises $60M at a $6B Valuation

  • Canva provides a graphic designing platform enabling users to design blog graphics, presentations, flyers, posters, and invitations
  • The company is growing 100% year over year in both revenue and users, with 30 million monthly active users across 190 countries
  • Canva’s tools are meant to simplify the design process for folks who don’t work in the design department, whether it’s the sales team putting together sales materials, marketers working on content, or other departments working on internal materials to send to the broader organization
  • The company plans on using the funding to grow the company, make a push into collaboration, and continue making acquisitions
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Just Eat Takeaway’s Acquisition of Grubhub

  • Grubhub operates as an online and mobile food-ordering company, connecting diners with local takeout restaurants in the U.S. and London
  • Expected to close in the first quarter of 2021, the deal will combine two of the top food delivery services in the world
  • The combined operation, which processed 593 million orders in 2019, will have over 70 million combined active customers globally
  • Matt Maloney, CEO and founder of Grubhub, will join the Just Eat Takeaway.com management board and will lead the combined group’s businesses across North America
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Insight Partner’s Investment in Imperfect Foods

  • Imperfect Foods provides grocery delivery services to homes and offices, with a mission to eliminate food waste and build a better food system for everyone
  • The company serves over 300,000 customers in over 38 states
  • The funding will fuel continued expansion of the grocery delivery service across the country, increase capacity in new and existing fulfillment centers, expand assortment, and enhance technology to better connect producers, farmers, and customers
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Providence Strategic Growth’s Investment in Assembly

  • Assembly invests, builds, and partners with e-commerce software & services that help sellers more effectively run their businesses
  • Assembly intends to use the capital to build and acquire e-commerce software and services, including its most recent acquisition of Helium 10, a world-class software solution that empowers Amazon merchants to expand and optimize their businesses
  • As the e-commerce sector continues to grow and consumer spending increasingly shifts online, Assembly is well positioned to continue equipping merchants with the technology they need to succeed

eCommerce Landscape

Select Participants in the eCommerce Continuum

To receive the latest eCommerce market map, please contact HW at tmt_reader@harriswilliams.com

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eCommerce Public Market Observations4

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As of June 30, 2020

Public Comparables Analysis

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Source: CapIQ.

Note: "NM“, or “not meaningful”, represents negative multiples, EV/Revenue multiples greater than 20x, and EV/EBITDA multiples greater than 50x.

Case Study: Kalkomey

HW’s TMT Group advised Kalkomey, a portfolio company of Inverness Graham, on its sale to Cove Hill Partners.

screen_shot_2020-07-24_at_11.06.58_am.pngTransaction Overview

Kalkomey is a leading provider of online recreational safety education reaching all 50 U.S. states, as well as Australia, Canada, Guam, Mexico, New Zealand, Puerto Rico, and the United Kingdom. The Company works hand in hand with governmental agencies to provide tailored online safety education courses and certifications for boating, scuba diving, hunting, snowmobiling, and off-roading.

Kalkomey's regulatory-approved safety education courses provide official safety certifications to nearly a million students annually. The Company's cloud-based government agency software offerings drive operational efficiencies of key workflows from licensing and registration, to certification and event management, to compliance and reporting.

Cove Hill is a long-term-oriented private equity firm focused on partnering with management teams to build market-leading technology and consumer companies. The firm manages a long-duration fund with over $1 billion of commitments from its investors and founders. Based in Boston, Cove Hill has an innovative structure that provides the flexibility to enable a patient, concentrated, and value-add approach in a small portfolio of long-term investments.

Relevant Subsectors

  • D2C Online Training & Certifications
  • Digital Content & Media
  • Omni-Channel Licensing & Registration

1. Retail Dive

2. eMarketer

3. Adobe

4. CapIQ

5. MergerMarket

 

The information and views contained in this report were prepared by Harris Williams LLC (“Harris Williams”). It is not a research report, as such term is defined by applicable law and regulations, and is provided for informational purposes only. It is not to be construed as an offer to buy or sell or a solicitation of an offer to buy or sell any securities or financial instruments or to participate in any particular trading strategy. The information contained herein is believed by Harris Williams to be reliable but Harris Williams makes no representation as to the accuracy or completeness of such information. Harris Williams and/or its affiliates may be market makers or specialists in, act as advisers or lenders to, have positions in and effect transactions in securities of companies mentioned herein and also may provide, may have provided, or may seek to provide investment banking services for those companies. In addition, Harris Williams and/or its affiliates or their respective officers, directors and employees may hold long or short positions in the securities, options thereon or other related financial products of companies discussed herein. Opinions, estimates and projections in this report constitute Harris Williams’ judgment and are subject to change without notice. The securities and financial instruments discussed in this report may not be suitable for all investors and investors must make their own investment decisions using their own independent advisors as they believe necessary and based upon their specific financial situations and investment objectives. Also, past performance is not necessarily indicative of future results. No part of this material may be copied or duplicated in any form or by any means, or redistributed, without Harris Williams’ prior written consent. 

Harris Williams LLC is a registered broker-dealer and member of FINRA and SIPC. Harris Williams & Co. Ltd is a private limited company incorporated under English law with its registered office at 8th Floor, 20 Farringdon Street, London EC4A 4AB, UK, registered with the Registrar of Companies for England and Wales (registration number 07078852). Harris Williams & Co. Ltd is authorized and regulated by the Financial Conduct Authority. Harris Williams & Co. Corporate Finance Advisors GmbH is registered in the commercial register of the local court of Frankfurt am Main, Germany, under HRB 107540. The registered address is Bockenheimer Landstrasse 33-35, 60325 Frankfurt am Main, Germany (email address: hwgermany@harriswilliams.com). Geschäftsführer/Directors: Jeffery H. Perkins, Paul Poggi. (VAT No. DE321666994). Harris Williams is a trade name under which Harris Williams LLC, Harris Williams & Co. Ltd and Harris Williams & Co. Corporate Finance Advisors GmbH conduct business.