2021 UK Comparison & Performance M&A review

The end of 2020 saw a flurry of M&A with Red Ventures acquiring Confused, Future acquiring GoCompare and NerdWallet acquiring Know Your Money (Sequence Advised). With the impact of Covid still being felt, 2021 saw a greater focus on organic growth and market recovery over significant M&A. MoneySuperMarket’s £101 million acquisition of Quidco (Sequence Advised) was a notable exception.

2022 looks set to deliver an increase in M&A. There are a growing number of well-funded potential acquirer groups looking for opportunities that fit strategically and are robust in the face of dynamic market conditions. We look at the areas that are most likely to be of interest.

2021 M&A and Investment highlights

Big 4

2021 saw a strengthening of M&A capabilities across the ‘Big 4’ Comparison groups (CompareTheMarket, MoneySuperMarket, Red Ventures and GoCompare) with the completion of the deals announced in 2020. However, in a market where the performance across the key Comparison verticals varied significantly with the impact of Covid and other external factors, there was a slowing in M&A overall. MoneySuperMarket’s £101 million acquisition of leading cashback provider Quidco (Sequence Advised) was the largest and most innovative acquisition in 2021. The major acquisitions across 2020 and 2021 were all valued on EV/LTM EBITDA multiples in ‘the teens’.

Data & Tech

Data opportunities continued to drive some M&A and investment but a number of the key Comparison verticals served by B2B technology platform providers were impacted by Covid. Transunion made an investment in credit platform Monevo. Investment in credit-led financial Comparison services continued with ClearScore raising $200m and TotallyMoney receiving a follow-on investment.

One-stop personal finance ‘super apps’ continued to raise investment but the ability to cost-effectively attract and monetise users is yet to be proven. Players such as Yolt are now focused on B2B technology platform providers. With the Open Banking market yet to mature, acquisitions of B2B technology platform providers in this space were limited with Equifax acquiring long term partner AccountScore in a rare acquisition.

In general, technology is yet to be a key driver of significant M&A in Comparison with some verticals digitising at a slower pace than anticipated given structural issues in the industry. Indeed, the mortgage Comparison market saw some technology players exiting at an early stage of development with Red Ventures acquiring Mojo and acquiring Trussle.

Market conditions in 2021 and beyond

Covid continued to impact the performance and pace of the recovery of some of the key Comparison verticals. There were also external shocks:

  • Consumer financial products are showing strong recovery from the declines in Covid, particularly around lending. Going forward, there may be an impact on the growth of consumer short term lending Comparison in credit cards and unsecured credit as Buy-Now-Pay-Later (‘BNPL’) competes with these products. With interest rates still near record lows, savings Comparison is not expected to be significant in the near term. Growth continues in self-service pensions and wealth platforms but Comparison models are yet to capture this audience.
  • Insurance experienced a softer decline than consumer financial products. Key verticals such as home insurance are less cyclical and motors performed well with lockdowns reducing claims and innovation in low-use motor insurance products like ByMiles and Cuvva. From January 2022, the impact of FCA regulation on “price walking” is likely to affect insurers’ profitability and marketing strategies as could an increase in motors claims in 2022. However, these trends may accelerate the shift of marketing spend to digital.
  • The energy crisis hit consumer energy switching hard with no switching in Q4 2021. This was bad timing for autoswitching, impacting GoCo’s plans following its previous acquisition of LookAfterMyBills (Sequence Advised). Recovery hopes are pinned on the reset of the price cap in April 2022.
  • In the SME Comparison market, SME energy fared better in the absence of price caps and generally longer term contracts. SME finance is growing with the ending of government financial support and increasing specialist SME finance providers. SME insurance remains dominated by Simply Business.
  • In shopping, it remains to be seen how much of the significant growth seen in 2021 in online retail was structural vs. Covid driven. The extent and timing of the recovery in international travel will also drive performance in rewards.

Buyer appetite in 2022

What is clear is that in 2022 there will be more and better funded buyers than ever before for Comparison & Performance targets. This will increase M&A interest and EV/LTM EBITDA multiples will continue to be in the ‘teens’ for attractive businesses with scale:

  • 3 of the “Big 4” now have an established M&A track record. CompareTheMarket (CTM), as the market leader, may have had less reason to focus on M&A historically, but with CTM’s owner BGL Group now considering the sale of its insurance arm, CTM may become more acquisitive. The Big 4 will need to be aware of potential CMA issues when considering M&A targets in different verticals.
  • There is a plethora of well-funded international groups, particularly from the US, as a result of the growth of domestic Comparison & Performance markets. Several US players already have a firm foothold in the UK market. NerdWallet acquired KnowYourMoney (Sequence Advised) in 2020, entered the market in 2021, Red Ventures is now a major player and Credit Karma has a presence.
  • Other trade interest may come from new models in consumer finance such as BNPL or NeoBanks. Indeed, Klarna acquired shopping Comparison site PriceRunner in 2021. The fit with data players continues to be strong, as illustrated by Experian’s focus on its consumer credit proposition Experian Boost.
  • There are a number of private equity backed businesses in the market. Some of these will use M&A to develop their platform (as Bionic continued to do in 2021) and some will consider exit options in 2022. Successful private equity exits in Comparison will increase private equity interest in the market.

M&A opportunities

Buyers’ M&A strategy will focus on how to best attract and monetise users, increase the share of the value chain and leverage investment in technology in the context of changing market conditions. We see M&A opportunities in the following key areas:

  • Marketing continues to get more expensive as competition for eyeballs increases. Acquisitions of targets with strong brands in a vertical can provide immediate market share. Sites with users acquired from multiple sources particularly attractive.
  • Offering a higher quality user experience, building repeat usage and cross-selling of products reduces dependence on marketing spend to attract new users. Acquisitions of targets with proven membership models and sites which have a differentiated offering can cut through a commoditised market. But targets will need a proven model or points of differentiation.
  • As many groups focus on generating B2B technology platform revenues, acquiring targets with vertical technology strength is attractive to buyers to both increase the share of the value chain on their own site and develop B2B revenues. Technology integration issues and a target’s mix of revenues from ‘competitors’ will be key in any M&A assessment.
  • Not all Comparison verticals are fully digitised. Some key Comparison verticals need people in sales or advice to deliver, regulate and best monetise the product offering, as in mortgages, SME services and life insurance. The overlap between broker and Comparison models is clear and will increase with digitalisation. Private equity funds continue to invest in broker businesses whilst large corporates continue to consolidate. Comparison groups have now started to acquire businesses in these broker-led industries (Red Ventures acquiring Mojo).
  • There are related product verticals where Comparison groups have yet to make significant investment. Pensions and wealth management seems an obvious area, particularly with growth of the online self-service market. Comparison sites are also well placed to develop personal finance super apps.
  • Longer term we expect a number of Comparison groups will have an increasing interest in capturing more of the value chain by offering their own products alongside or instead of third party products.

Sequence Advisers is a Digital & Tech corporate finance adviser. The Sequence team has advised on more deals in the UK Comparison and Performance market than any other firm. Deals include sales of Quidco, MoneySavingExpert,, KnowYourMoney, Look After My Bills and Runpath.