Private equity drives marketing M&A as networks retreat

Of the seven most active buyers in 2019 so far, five are private equity firms, according to Results International’s analysis of the first half of the year.

While Publicis Groupe’s acquisition of Epsilon was the largest in terms of value, Dentsu completed the highest volume of deals out of the holding companies, with six acquisitions in H1. Aside from Dentsu, none of the agency networks made it onto the most active buyers list.

Accenture was the only management consultancy to make the top buyers list in H1 2019, also with six deals. 

There were 180 deals backed by private equity in the first half of the year, accounting for around a quarter of the 745 total deals across marketing services, marketing technology and ad tech.

Insight Venture Partners was the most acquisitive buyer in the first half of 2019, with eight deals within the marketing and e-commerce technology sector, according to the research.

Almost half of the 91 private equity deals in the second quarter were part of ‘buy and build’ strategies, where new services are added to existing companies in a portfolio. This includes Horizon Capital’s acquisition of ResearchBods, Bonamy Finch and LiFE to form Strat7.

The analysis also found that North America was the most active target region, with 175 in the first quarter and 169 in the second. Western Europe, excluding the UK, accounted for 21% of deals completed in the first half, while 12% of deals were in the UK.

Julie Langley, partner at Results International, said: "Private equity has been a key driver in marketing industry M&A for some time now. The ‘buy and build’ approach PE takes has led to the creation of many new PE-backed agencies with exciting new capabilities focused on future/next generation marketing. They, along with new entrants including the likes of LinkedIn, Apple and Walmart, are keeping the market vibrant, as many of the traditional network buyers focus their attention internally."