Mergers and acquisitions in the marketing and media sectors in Q1 2016
Q1 2016 has been the strongest quarter for the marketing and media sectors since Q4 2014, with 54 deals recorded by Kingston Smith’s marketing and media deal tracker. Here are our highlights of the quarter:
Strong UK buyers
The infographic below shows the origin of buyers (left segments) and sellers (right segments) for cross-border transactions involving the UK:
60% of the deals we analysed involved a cross-border transaction, with 36% of those involving an overseas buyer and 64% involving an overseas seller. This underlines the strength of UK based buyers. Prolific UK based buyers Dentsu Aegis and WPP continued to add to their portfolios with six and five acquisitions respectively.
US performance marketing giant Merkle continued to make forays into the UK market in Q1 with the acquisitions of DBG One and Comet Global Consulting following the 2015 acquisition of Periscopix.
Professional Firms continue to invade the marketing services space
As predicted, consulting firms continue to make inroads into the marketing services space. PWC acquired customer relations firm Outbox and Deloitte Digital acquired the trade and assets of digital full service agency Heat.
Digital is the top sector again
As was the case in 2015, deals with a digital focus accounted for the majority of transactions, at 54% of deals analysed this quarter. Digital marketing deals alone accounted for 31% of all transactions. As expected, data and analytics capabilities were most in demand, accounting for 29% of digital marketing deals. After being the top-performing digital sub-sector in 2015, it was a surprise that there were no performance agency transactions in Q1 2016, potentially because buyers are focusing their acquisition strategy towards data and analytics rather than broader performance marketing capabilities.
What will we see in Q2?
Q2 promises to be an extremely interesting one for the UK M&A market and economy in general with the crucial ‘Brexit’ vote being held on 23 June 2016. Q2 2015 was the worst quarter for M&A deals over the past 18 months, likely to have been a result of acquirer nervousness in the run up to the UK General Election. We will be waiting to see whether history repeats itself in Q2 2016, as acquirers may be more cautious during the politically uncertain climate.
Authors: Mandy Merron and Paul Winterflood.