2018 Agency M&A Up 126% with Non-Traditional US Buyers Leading the Way

  • 100 Agency Related deals worth $4.6b in total sales value through to the end of March (compared to 94 deals at $2.0b in 2017)
  • US based deals showing biggest increase (+366%) with 58 deals at $3.1b
  • Continued rise of new buyers – just 14% of all deals done by Agency holding companies

With just three months past, it’s been an incredibly active year for M&A in the agency sector – but not lead by the traditional agency holding groups. “The consultants – and other non-traditional buyers are taking the lion’s share of the assets, said Greg Paull, Principal of independent marketing consultancy R3, that tracks this data monthly. “The holding groups have their own internal challenges – along with those from their shareholders – and it means that more than enough other investors are stepping in,” he added.

Consultants and PE Lead the Way

2017’s leading players in terms of deals, Dentsu and WPP, both were relatively quiet in the first quarter of 2018, with just eight of the hundred deals between them. This year, it’s the Consultants led by CapGemini and Accenture that lead the way with major investments including Meredith Xcelerated Marketing and LiquidHub in the US.  “Consultants have the client base, the C-Suite relationships and the cash to expand aggressively in the marketing sector. We expect them to be equally active through the rest of the year,” added Mr Paull.

This was also an active period for PE firms with Ocelot Partners, Milpond and KKR amongst the top buyers.  All three went beyond traditional agencies to explore value in the Outdoor, Sports Marketing and Digital arenas. “Private Equity firms are looking for stronger margin growth for their investments, and it’s a challenge finding purely within the ad agency sector,” added Mr Paull

The R3 report also covers some more unusual acquisitions this quarter. Office Co-Working company WeWork invested in Search Agency Conductor, with an eye to setting up a marketing cloud. Dentsu Ventures invested in Cheddar, an OTT broadcaster in the US targeting millennials and competing with CNBC and Bloomberg. Nordstrom bought two retail digital agencies. And L’Oreal continued to drive its digital best practice forward with an investment in AR / AI firm Modiface.

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