Mergers and acquisitions activity in the marcoms sector grew in 2016 according to new research from M&A advisor Results International. 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 showing a vigorous market. There were also 39 deals in the UK in Q4, which was in line with the rest of 2016 at 15 per cent of global deal volume. Brexit has not had a real impact on the sector so far.
The most acquisitive buyer in marcoms globally in 2016 was Dentsu with 43 purchases (nine in Q4), ahead of WPP with 34 (seven in Q4). 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.
Among the noteworthy deals in Q4 was Accenture’s purchase of Karmarama. High-profile publishers also continued to dip their toes in marketing and technology with The Economist’s purchase of Signal Noise, a UK-based data design agency. 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.
In Q4 private equity investment figured in 14 per cent of all deals, compared with nie per cent for the rest of 2016. Buyers including Providence Equity Partners (three deals) KKR, Court Square Capital Partners/Leonard Green & Partners and CVC Capital Partners (all with two deals each) showed that PE houses are continuing to increase their involvement in marcoms as revenue models mature. PE backed marcoms groups also continued to bolster their offerings with W2O Group (backed by Mountaingate Capital) making two acquisitions in Q4.
Full-service digital remained the most active sub-sector in Q4 and for the year as a whole, with 25 deals in Q4 (10.5 per cent of Q4 activity), followed by media (20 deals, 8.4 per cent) and integrated (19 deals, eight per cent). 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 nine 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.
Results International partner Julie Langley 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 made one or more acquisitions 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.”