PR M&A Stays Healthy in Q1, with Continuing Interest in Specialist Agencies

27/04/2018
Insights
James Kesner

Our latest research into the global M&A for PR agencies shows that the market remains vibrant. There were 14 deals involving PR agencies in Q1 2018, out of 193 for the entire marcoms sector, making it the third most-active subsector behind only full-service digital and website UX. It continues the strong showing of PR M&A deals seen throughout 2017.

The first quarter of 2018 also saw continuing buyer interest in specialist and niche PR agencies around the world: US firm Finn Partners acquired travel and tourism agency The Brighter Group; The BMF Media Group acquired LFB Media, a lifestyle and hospitality public relations company; and Vested, a US public relations company specialising in financial communications, bought UK-based financial communications agency Templars Communications.

James Kesner, director at Results International, comments:

“Deal volumes for PR agencies remain very healthy, with Q1 seeing the second highest quarterly deal volume for the past 12 months. Both trade buyers and those outside marcoms value the C-suite access and breadth of creative skills that PR provides.

“It’s also unsurprising that we’re seeing a lot of interest in specialist agencies, as they offer a level of expertise in their chosen area that’s practically impossible for more generalist agencies to match. That makes them prime targets for acquisition. Also, it’s not just marcoms groups and consultancies acquiring PR expertise any more, PR players continue to fight back and buy into the full-service digital space.”

The past few months saw a number of PR businesses looking to expand their skill sets by buying in non-PR marcoms expertise. AIM-listed Next Fifteen Communications acquired digital marketing communications agency Brandwidth for $14.1 million in Q1 2018. This followed on from New York stock exchange listed Cision Ltd., a PR software company, buying German corporate research company Prime Research International, and Weber Shandwick, a subsidiary of IPG, acquiring US full-service digital firm Resolute Digital, both of which deals were completed in December 2017.

The research also found that there were two private equity-backed deals in the PR sector in the first three months of 2018, after none at all throughout 2017. There were also three deals involving UK targets in Q1, after only five for the whole of last year. All three of these involved US-based buyers, who continue to be attracted by both capabilities and the strategic advantages the UK offers in terms of geographies.

James Kesner concludes:

“The merger of Burston-Marseller and Cohn & Wolfe was also big news in Q1, but that was more reflective of WPP’s continuing inward focus and rationalisation – a process that’s only likely to intensify following the departure of Sir Martin Sorrell.

“When it comes to acquisition, we’re seeing growing interest from private equity buyers who value the retainer-based revenue model and strong human capital held in these businesses. With almost a third of deals being cross-border, the market is still thriving and is well-set for the rest of 2018.”

View the Marcoms Q1 M&A infographic here