From contract to Value Creation
The M&A market in iGaming is a complex environment, governed by fluctuating regulations and rapid valuation dynamics. When an executive approaches us, the initial questions often center on the engagement terms: the commission percentage (Success Fee), the proposed sale format, or the budget.
While legitimate, these inquiries represent a premature shift in perspective. They focus on the distribution of value before establishing the maximization of value. Our role as consultants is to recenter the conversation by first identifying the root of the transaction’s potential.
Why contractual term questions are insufficient in the first contact
Immediately focusing on the Success Fee or Retainer masks the critical uncertainties of the transaction. The fundamental mistake is treating M&A as a fixed-cost service rather than a high-stakes strategic alliance.
The illusion of the Success Fee‘s simplicity
The commission percentage is only meaningful if the company’s value (Enterprise Value) is correctly defined and secured. A low commission on an underestimated valuation ultimately costs far more than a higher commission on an optimal price.
The Real Question: How will you justify and defend an EBITDA multiple higher than the sector average, given my geographical exposure and technical debt ?
As consultants, we also work with retainer fees and consulting fees, depending the project and the founder(s) ambitions. That’s why, asking at preliminary stages those questions is also irrelevant: our business model will depend on the transaction itself.
Infrastructure assessment is a risk, not a requirement
Asking for minimal « requirements » regarding licensing or technology (PAM/PSP) is a passive approach. In reality, every piece of infrastructure is either a strategic asset warranting a premium, or a regulatory/technical liability necessitating a discount.
- The Core of the Analysis: The question is not: « Is my license sufficient? », but: « What is the probability that my existing license will survive a major regulatory environment change over the next 12 months? » (The concept of Regulatory Sustainability).
The Strategic Analysis Framework: the questions that create value
A first discussion with a strategy consulting firm must focus on strategic alignment. We recommend that iGaming executives prioritize the following questions, which anchor the relationship in a logic of long-term value creation:
Question 1: Strategic Fit Diagnosis (The Deep Alignment)
Instead of asking « What sale format do you propose? », challenge the alignment:
« What are the three potential buyer profiles (by category: Tier 1 Operator, PE Fund, Media Player) for whom acquiring my company would solve the biggest strategic challenge in their 3-year plan? What specific synergy (technology or market) justifies a control premium above 20%? »
Question 2: The Valuation Deep Dive (Beyond EBITDA)
Instead of asking for an estimated budget, explore the sensitivity of the value:
« If we value my affiliation portfolio based on CLV (Customer Lifetime Value) rather than a simple EBITDA multiple, how do you integrate the quality of NDCs (New Depositing Customers) based on the acquisition channel (SEO vs. Social Paid) to adjust the Affiliation Marketing multiple? »
Question 3: Identifying Hidden Risks (Root Cause Analysis)
Instead of listing technical requirements, ask for a risk analysis:
« Given the evolution toward Generative AI and AI Agents for odds optimization and fraud detection, what is the main risk associated with my current Tech Stack that could become a major discount factor for an acquirer with an advanced proprietary platform? »
The proof of expertise is in the Analysis
The added value of an M&A consulting firm does not lie in negotiating the commission rate – a simple execution price. It lies in the ability to structure the transaction narrative, de-risk the regulatory process, and position the target company as the indispensable solution to a buyer’s strategic challenge.
A consultant who answers questions about commission and budget without first understanding and quantifying the client’s strategic value is merely a broker. We are strategic partners, and our first exchange must reflect this analytical and pragmatic approach.
FAQ
We perform a deep-dive technical audit targeting the modularity of the Player Account Management (PAM) system, the frequency of technology updates, and the scalability of the Tech Stack (the capacity to integrate AI or new products without a major overhaul). High technical debt leads to significant integration costs, which are often directly deducted from the purchase price.
Regulatory Sustainability measures a license’s and its operational practices’ ability to withstand future legislative changes (e.g., reduction in staking limits, bonus bans). A high score secures post-acquisition revenue longevity and justifies a valuation premium, as the acquirer takes on less regulatory liability risk
The most critical indicator is not CPA (Cost per Acquisition), but the Qualified NDCs CLV (Customer Lifetime Value of Qualified New Depositors) over a 12 to 24-month period. This allows us to isolate the actual profitability and retention of players generated by the affiliate, ensuring that the revenues are sustainable and not derived from low-quality or fraudulent traffic.