Inside The Head Of The Strategic Ad Tech Buyer
Hello readers, in this edition, we will attempt a “Being A John Malcovitch” and try to live vicariously through the eyes of a strategic ad tech acquirer. What exactly are they looking to buy - and why? These are the questions preoccupying the minds of founders and VCs alike. Liquidity is very much top of mind. So let’s dive in - but as ever let’s caveat all this as the opinion of FPC. We generally see everything from a non-US lens.
AI Ad Tech: Is Value In The Service Layer?
Anyone proffering a negative view on AI is typecast as a Luddite. Even holding a middle-of-the-road, pragmatic view on the application of the technology in ad tech is frowned upon.
The issue, though, is that nobody is buying the zeitgeist: AdCP, “agentics” and the AI industry scapes are not enticing buyers.
Maybe it’s a bit too early in the cycle. Maybe it’s the market.
Or maybe just maybe, none of these solutions have any real moats or longevity. Does the world really need another automated media buying tool? Prompt-based planning and buying is a feature - not a defensible solution.
Big tech will own the models, and the models are fast becoming commoditised. Signal remains the only differentiator in this game - a narrative FPC continues to hammer.
Will there be any splashy acquisitions in this congested AI ad tech category? It’s probable but highly unlikely in the short term, given the chunky valuation and the wait-and-see strategy adopted by strategics.
Where M&A could get interesting - in the very short term - is at the service layer. AI has been beneficial to the agency/consulting business. Panicked brands are increasingly leaning on specialist vendors and repositioned incumbents.
From workflow orchestration solutions to custom AI builders, new players are filling a big capability gap. There will definitely be some M&A activity here.
Strategic tuck-ins versus big ticket buys
There is always debate over the value of big acquisitions. Will they ever realise their expected accretive value is a bone of contention? The answers to that can be highly subjective. After all, nobody is going to issue a mea culpa for wasting $400 million on a generic ad network, are they? Of course not.
The number of buyers for anything over $150 million in ad tech is finite. The Goldilocks range remains between $25 and $150 million. Not too cheap. Not too expensive. Just about right to get board approval or avoid the board altogether.
Given the turmoil in public markets, there could be a freeze on larger deals until some form of normalcy returns (whatever that is). FPC is hearing of a few transactions about to be completed - but that’s very much the tail end of the 2025 vintage.
At the other end of the M&A scale, the sub $50 million market is relatively buoyant. We tracked a number of these deals in 2025 - and more are coming. It might not make the trades, but it is generally good for founders and investors.
Good outcomes for founders and investors is very much dependent on a) whether the acquired co was capital efficient and didn’t raise stupid amounts of money and b) whether you got in at a sensible valuation.
FPC is optimised for this type of scenario. We invest early to lock in value and have a significant portion of the portfolio positioned for this outcome. In the long run, these smaller deals (in aggregate) are likely to return more to LPs than the 150 million+ headline grabbers.
Not Cheap - Pure Strategy
The “tuck-in” is often perceived as a cheap opportunistic buying opportunity. It is not. Most big strategics have strict, and often prohibitive, revenue and EBITDA thresholds for M&A processes. The rationale needs to be compelling.
And it often is. Whether it’s global expansion or a unique technology that can accelerate revenue, the motivation for buying is less about the “bargain bucket” and more about the intrinsic strategic value.
Some of the best examples of non-US “tuck-ins” acquisitions, such as Adbrain and ADmantX, have been transformational, adding significant value for their buyers.
Right now, we have a few sub-50 processes in play, and much of the buyers’ calculus centres on expansion and the core tech asset.
Deals are happening in the space, just not the ones you expected. Here is a TL;DR summary for those special watercooler moments with colleagues and midweek pints at the local watering hole.
Ad tech AI: No real ad tech acquisitions in the short term. Mostly because the tech has no real moat. The action will all be on the service side. New workflow orchestration and custom AI consulting services are gaining traction.
>$150M: This will be a challenging segment of the market given public-market turmoil and valuation recalibration.
$25M-$150M Goldilocks range: This will remain the busiest segment of the market.
Sub-$50M: There will be lots of deals (mostly under-the-radar). The strategic “tuck-ins” are in vogue,
And that’s it for another edition. Have a great ad tech day.