Western Europe to the fore in slowing M&A market says Results International

Increased interest in Western Europe agencies drove adland mergers and acquisitions in 2017 according to Results International, with the region accounting for 25 per cent of deals. One of the biggest acquirers, as ever, was WPP with boss Sir Martin Sorrell saying he wanted to increase WPP’s continental European footprint following the Brexit vote in the UK.

Worldwide there were 847 deals worldwide last year, down from 1023 in 2016, with many of the holding companies focussing on internal reorganisation and conserving cash.

Deals included Orient Hontai acquiring a 54 per cent stake in Spanish marketing group Imagina for more than $1bn, Accenture buying SinnerSchrader AG in Germany and Dentsu Aegis acquiring Oxyma Group in the Netherlands.

Results International partner Julie Langley says: “A lot of buyers are looking to boost their global footprint in order to provide a more joined-up global offering to their clients. Many of the US acquirers made substantial acquisitions in the UK over the past two years and are now turning their attentions to the major continental European markets.”

Private equity (PE) involvement also came to the fore in 2017 with 31 PE-backed deals in Q4, marking the most active quarter for PE in 2017 and representing 16.1 per cent of marcoms deals overall. Total PE activity for the year was up on 2016, with 107 transactions compared to 94.

One of the biggest was Bain Capital buying an 87 per cent stake in ASATSU-DK, Japan’s third largest ad agency, for $1.4bn. Another was Equistone buying Birmingham-based outsourced marketing services agency Inspired Thinking Group (ITG) from Bridgepoint.

Langley says: “The private equity houses are now moving into marcoms in a big way. Bain’s acquisition of ASATSU marks one of the largest PE investments yet seen in the sector. 2017 also saw a number of meaningful exits for PE, such as Bridgepoint’s sale of ITG, Nordian Capital’s sale of Oxyma and BGF’s exit from Zone.

“This could be a sign of things to come. PE clearly now has the appetite for big deals and seeing good exits will give them more confidence that they can make money in marcoms. And given that holding company share price performance was poor in 2017, we may even see private equity looking at some of these major players this year. The largest listed groups like WPP, Publicis and Omnicom are probably too large, but we could see PE interest in the smaller listed groups.”

In Q4 last year, Dentsu regained pole position as the most active buyer with eight marcoms deals, 29 for the year leaving it just behind WPP on 30. Accenture was third with 11 deals with rival consultancies Deloitte and EY doing two each in Q4.

Other management consultancies were also buying with Cognizant acquiring UK digital agency Zone, Concentrix buying digital products and strategy business Tigerspike and Capgemini buying Idean and Lyons.

The interest from consultancies is primarily in digital businesses and full-service digital remains far and away the most popular subsector for marcoms M&A overall, with 43 deals in Q4 2017 (up from 29 in Q3).

Back to top button