Leading advisers and investment heads have argued operators looking to flex their M&A muscles should avoid blending white and grey market operations when kicking the tyres on potential acquisitions.
Speaking at the SBC Americas Summit this week, a panel dedicated to M&A featuring the likes of Australian businessman Tom Waterhouse and Blackstone advisor Adam Rosenberg warned operators against inorganic growth in markets without solid regulatory footing.
With the appetite for M&A in the sector seemingly coming back into favour, it was suggested that grey markets could be the riskiest type of purchase.
This hasn’t been a trend among listed companies in recent years, instead the likes of Flutter snapped up 56% of Betnacional parent company NSX Group as Brazil transitioned into its regulated market.
Similarly, crypto-centric Stake has sanctioned a flurry of M&A to push into regulated markets, including Colombia, Italy and Denmark.
Waterhouse, who runs his eponymous VC fund, said that while it was difficult to ascertain the best-looking M&A deal in the market currently, he warned against expanding outside of the regulated arena.
He advised: “I think it’s a difficult question. I know what deals I wouldn’t do. I wouldn’t mix up white and grey. I’d stick to your lane and focus. You’re now seeing the largest grey market operators going to white.”
Ficom Leisure senior partner Christian Tirabassi suggested the M&A that currently made the most sense would be getting ahead of regulated markets, as Flutter did in Brazil.
He said: “The deal is to get as early as possible in a market that regulates, because after that you will have [an] advertising battle. Taking the early position in the markets, in my view, is a very safe place.”
Elsewhere, Rosenberg suggested the flurry of take-private deals in the supplier side of the industry could prove valuable once those assets are potentially put to market again.
Several take-private deals, including Apollo taking over Everi and some of IGT’s assets last year, and Ainsworth set to be snapped up by majority shareholder Novomatic, have peppered the M&A landscape over the last year.
Rosenberg added: “There’s now a lack of slot machine manufacturers in the public markets. There’s going to be a wave of them coming back. It’s very hard for public investors to get access after the take-private deals.
“The reason for that is the multiples and the public markets just did not support that valuation the private markets recognise.”
The post Use M&A to get ahead of regulation, say industry advisers first appeared on EGR Intel.
Several top M&A experts give their thoughts on the vitality of the market, with appetite for inorganic growth seemingly back on the rise
The post Use M&A to get ahead of regulation, say industry advisers first appeared on EGR Intel.