Western Europe drives marcoms M&A market in 2017
25% of marcoms merger and acquisition deals took place in Western Europe in 2017, up from 19% in 2016, according to analysis from Results International. Meanwhile, UK deals fell from 15% to 12% over the same period.
The study found that Western Europe was also the only region globally to see an increase in overall deal volumes, from 197 to 210.
There were 847 deals worldwide last year, down from the 1,023 seen in 2016, with many of the holding companies increasing attention on internal development and reorganisation with lower levels of M&A.
Results International said that deals such as Orient Hontai acquiring a 54% 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, highlight the growing importance and appeal of Western European acquisitions.
“A lot of buyers are looking to boost their global footprint in order to provide a more joined-up global offering to their clients," said Julie Langley, a partner at Results International.
"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% of marcoms deals overall. Total PE activity for the year was up from 94 in 2016 to 107 transactions in 2017.
One of the more notable private equity deals in Q4 was Bain Capital acquiring an 87% stake in ASATSU-DK, Japan’s third largest ad agency, for $1.4bn.
“The private equity houses are now moving into marcoms in a big way...This could be a sign of things to come." Langley said.
"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 holdco share price performance was poor in 2017, we may even see private equity looking at some of these 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, making it and WPP the most active buyers of 2017 with 29 and 30 deals in total, respectively. Accenture was third with 11 deals.
A number of other management consultancies are also now dipping their toes into marcoms; 2017 saw meaningful purchases in the sector by Cognizant (acquiring UK digital agency Zone), Concentrix (buying digital products and strategy business Tigerspike) and Capgemini (acquiring Idean and Lyons).
The interest from consultancies is primarily in digital businesses and full-service digital remains far and away the most popular sub-sector for marcoms M&A overall, with 43 deals in Q4 2017 (up from 29 in Q3).
“The consultancies may not be at the top in terms of deal volume, but they’re undoubtedly behind many of the most interesting and high-profile investments in the sector - such as Accenture buying Wire Stone and Deloitte Digital acquiring Acne," Langley added.
"Some are looking to expand their digital offering, but others are looking to move into the creative side of marcoms as well."
Langley said next year we can expect to see continued buyer interest in areas including: the convergence of physical and digital environments; proprietary data and data skills; digital transformation; transparent media buying; and content.