- Digital, content, media and data continue to be hot sectors
- New buyers coming from the worlds of consultancy and publishing
- PE investment on the increase in Q4
- No sign of Brexit slowdown
2016 saw M&A activity in the marcoms sector continue to go from strength to strength. There were 1,023 marcoms deals globally, rising from 979 in 2015 and 972 in 2014.
In Q4 there were 238 marcoms deals worldwide, a slight decrease from the 279 in Q3 but still reflective of a vibrant market. There were also 39 deals in the UK in Q4, which was in line with the rest of 2016 at 15% of global deal volume. It seems any uncertainty over Brexit has not had a real impact on the sector.
The most acquisitive buyer in marcoms globally in 2016 was Dentsu with 43 purchases, ahead of WPP with 34. Another major buyer was IPG, which followed a slower couple of years with a buying spree: its ten deals put it in the top five of global acquirers.
There were also a number of intriguing deals in Q4, with Accenture’s purchase of Karmarama showing the continuing strong appetite from management consultancies to strengthen and broaden capabilities. High-profile publishers also continued to dip their toes in marketing and technology M&A following the New York Times’ move into the market in 2015, with The Economist’s purchase of Signal Noise, a UK-based data design agency .
Meanwhile, Scandinavian-listed The Marketing Group was the number three acquirer in 2016 with 16 deals, further highlighting the volumes of activity carried out by ‘non-traditional’ buyers.
Also in Q4, private equity investment was seen in 14% of all deals, compared with 9% for the rest of 2016. Buyers such as Providence Equity Partners (3 deals) and KKR, Court Square Capital Partners/Leonard Green & Partners and CVC Capital Partners (all with 2 deals each) showed that PE houses are continuing to increase their involvement in marcoms as the revenue models further mature. PE backed marcoms groups also continued to bolster their offerings with the likes of W2O Group (backed by Mountaingate Capital) making 2 acquisitions in Q4.
Full-service digital remained the most active subsector in Q4 and for the year as a whole, with 25 deals in Q4 (10.5% of Q4 activity), followed by media (20 deals, 8.4%) and integrated (19 deals, 8%). However, M&A involving content businesses saw growth in every quarter. There were 16 content transactions in Q4 2016, 13 in Q3, 12 in Q2 and 9 in Q1. There was also strong appetite for data and analytics offerings with 44 deals in 2016 (12 in Q4) up from 21 in 2015.
Julie Langley, partner at Results International, says: “Deal volumes for the year have looked very strong, with the marcoms sector attracting interest from a very wide range of new and traditional buyers alike. A total of 202 different buyers acquired in the sector during the year. The ever widening range and complexity of activities undertaken by Marcoms businesses is a significant driver in this.
The slight dip in Q4 is probably due to usual market fluctuations, with no sign of slowdowns in the US or UK markets despite continuing economic uncertainty.
“Although full-service digital remains the most popular target, it’s no surprise to see content nipping at its heels. It ties in with every other part of marcoms and conversations about content are now being driven at the highest boardroom levels.
Early indications are that 2017 will be another strong year that could easily surpass 2016. We are working on a record number of deals at present with strong buyer interest from all the major consultancy firms and emerging buyers from Asia and the US as well as the traditional buyers, so we are looking forward to seeing what 2017 has in store.”