Marketing and media mergers and acquisition activity in 2016 remained strong, with nearly two-thirds of respondents being approached by a buyer, and 22 percent actually entering a a transaction, according to a survey by M&A firm AdMedia Partners
Respondents expect this high level of activity to continue in 2017, both with strategic buyers and increasingly with financial (e.g., private equity) buyers.
Digital services, such as programmatic, data/analytics and social, continue to generate strong interest and are viewed as disruptive.
This year, however, experiential marketing also appears to be more in demand, which is perhaps reflective of the increasingly blurred lines between digital and traditional, with all marketing services truly complementing and leveraging each other.
Seth Alpert, managing director at AdMedia Partners, said, “Interestingly, expected valuations remain robust with little or no change from last year’s results. However, there was significantly more interest in analytics, consulting, design/user experience, experiential and mobile.”
Continued M&A Growth in 2016
Among respondents, there was a material increase in companies that ended up receiving an offer.
There was an increase in actual deals completed, with 14 percent of respondents being acquired by a strategic buyer and 8 percent being acquired by a financial buyer
M&A Expectations for 2017
While there was a decline in respondents who expect to explore a sale of their company next year, almost half of respondents still expect to do so.
In addition, there has been a very significant increase in respondents who expect to seek investment/growth funding, doubling from a year ago. Similarly, more than half of respondents expect that M&A activity by financial buyers will be up in 2017—an increase from 44 percent last year.
These responses reflect the continued activity by private equity firms in the marketing services space, with a sizable group of PE firms showing the interest and wherewithal to capitalize on the continuing shifts in the marketing landscape.
Artificial Intelligence was cited by numerous respondents as being disruptive to the industry; in addition, a number of prominent trends continued from last year, such as programmatic, social, data and analytics.
Likewise, the areas that most respondents were most interested in expanding or acquiring into are analytics (65 percent), design/user experience (50 percent) and social marketing (50 percent).
In addition, giant tech players like Google, Facebook and Amazon are viewed as competition for both client spend and talent.
For more information on the viewpoints of buyers and sellers regarding valuations, growth expectations, M&A activity, and disruptive industry trends download and read the complete survey at www.admediapartners.com/research/