According to research from M&A and fundraising advisor Results International, there were 237 M&A deals completed in the marketing/communications sector in the third quarter, making it the most active quarter since Q4 2016.
Dentsu and WPP were the two most active buyers, both completing five deals in Q3.
The advisor notes that WPP is still pursuing an acquisition strategy despite its recent shift in focus to internal restructuring, as seen in the merger of VML and Y&R and the divestment of minority holdings such as AppNexus.
Following a fairly active buying spree by the management consultancies in the first quarter acquisition in this space all but ceased in Q3, with Accenture making just one acquisition (although Deloitte also acquired Magnetic Media, an AI marketing solutions business). According to Results, the quiet Q3 for consultant M&A is “most likely a brief period of consolidation and integration rather than a trend, as many of the key players are still looking to M&A as a way to broaden their strategic offering.”
Julie Langley, partner at Results International, said, “Although S4’s acquisition of MediaMonks got a lot of the headlines this quarter, it was far from the only deal of note. IPG’s acquisition of Axciom Marketing Solutions (AMS) for $2.3bn, IPG’s largest deal in years, confirms IPG’s willingness to move forward as a standalone company. Salesforce’s acquisition of Datorama for an estimated $800m highlights where the marketing cloud-based platforms are heading, which is providing brands with the ability to analyze their data more quickly across all channels and take near real-time decisions on how best to engage consumers.”
Full service digital was the most active subsector in Q3 with 31 deals. The number of healthcare agencies acquired this quarter moved from 19th place last quarter to 9th place in Q3 with 12 transactions. Among those 12, Huntsworth plc acquired two healthcare agencies, Navience Healthcare Solutions for $24 million with a two-year deferred consideration of $40m, and Giant Creative Strategy, a large independent healthcare agency, for $72.2 million.
Per the research, there were also five acquisitions within sports marketing, matching the total number in the first half of 2018.
Langley added that the growing interest in specialist agencies in areas like healthcare and gaming “allows traditional acquirers and consultancies to fill the gaps in their portfolios, but also provides incentive for new buyers to get involved, such as gaming companies. There’s a new breed of hybrid specialist agency that combines deep vertical market insight with technology expertise, and they’re very attractive prospects.”
There were also 21 Q3 deals in UX and design and build and 20 deals in media. The latter subsector included major deals such as US-based Boston Omaha buying two out-of-home marketing agencies based in the USA, Watt Outdoor for $82 million and Key Outdoor for $38 million, plus British radio agency Global Radio UK acquiring Outdoor Plus from Inflexion and Primesight from GMT Communications.
There were also 49 private equity-backed deals in Q3, bringing the total number of private equity transactions to 138 this year, the most since.
From a geography standpoint, North America was again the most active region with 105 deals, a 21% increase from Q2.