global marketing industry m&a 2018 in review€¦ · global marketing industry m&a 2018 in...

GLOBAL MARKETING INDUSTRY M&A2018 in review

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A seamless combination of

KNOWLEDGE, INSIGHT AND EXPERTISE

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JEGI | CLARITY – THE LEADING M&A ADVISORY PLATFORM FOR THE GLOBAL MEDIA, INFORMATION, MARKETING, SOFTWARE AND TECH-ENABLED SERVICES SECTORS

Mobile & Internet

Data & Analytics

Cont

ent &

Info

rmat

ion

Cloud & SaaS

B2B

& B

2C M

EDIA

AN

D E

VEN

TS

& TECH-ENABLED

SERVICES

SOFTWARE

MARKETING SERVICES& TECHNOLOGY

INFORM

ATION

BUSIN

ESS

& INTELLIGEN

CE

MANAGEMENT

HUMAN CAPIT

AL

Advising founders, entrepreneurs, private equity firms and global corporations

More than 50 people across London, New York, Sydney and Boston

Deep sector knowledge, providing out-of-market opportunities and outcomes

Track record of surpassing client expectations

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WE REMAIN INCREDIBLY ACTIVE ADVISING RIGHT ACROSS THE MARKETING LANDSCAPE

HAS BEEN SOLD TO

HAVE BEEN SOLD IN A PRE-ARRANGED

MERGER TOHAS BEEN SOLD TO

Pegasus is a leading UK integrated healthcare communications consultancy

Selligent is an international SaaS platform delivering omnichannel audience engagement

NavigationArts is a digital strategy and experience design firm

Resource/Ammirati is a leading, US-based digital marketing and creative agency

HAS BEEN SOLD TO

Indicia is a leading data analytics and customer engagement agency

BGT is a leading digital agency and creative consultancy

Walker Media is a leading UK media agency

adam&eve is a leading creative advertising agency

HAS SOLD

TO

HAS BEEN SOLD TO

Accordant is a leading data-driven, full-service programmatic advertising company and technology solution provider

Framestore is a leading global VFX and CG content production company

Avention is a leading business intelligence and software platform for sales acceleration

Webcollage is a leading product content management SaaS platform for global brands and retailers

FuseFX is a leading independent visual effects studio providing services for episodic television, feature films, commercials, and VR productions

IMSI and Morpace are leading market research firms

FMAV is a leading audiovisual and live event production company

True Clarity is a leading ecommerce and experience platform services provider

Challenger is a leading performance improvement platform, focused on sales, marketing and customer service in-person and online training

Hargrove is a leading experiential events and exhibitions production company

MediaMonks is a leading global creative production platform

The Monkeys is a leading Australian creative agency

OPEN Health is a leading multi-disciplinary health communications and market access group

Turnkey Intelligence is a leading sports research and advisory firm

Brand Learning is a leading marketing and sales capability consultancy

MERGE is a leading integrated healthcare marketing and technology development agency

HAS MERGED WITH

S4 CAPITAL

HAS BEEN SOLD TO

A SUBSIDIARY OF

A PORTFOLIO COMPANY OF

HAS ACQUIRED


SPORTS INTELLIGENCE

HAS SOLDCHALLENGER SALES TRAINING BUSINESS

TO

HAS BEEN SOLD TO

HAS BEEN SOLD TO




TO

HAS SOLD

HAS BEEN SOLD TO


Note: Selected JEGI | CLARITY transactions

HAS BEEN SOLD TO

A SUBSIDIARY OF

HAS BEEN SOLD TO

A CONSORTIUM OF CHINESE INVESTORS

HAS SOLD A 75% STAKE TO

LED BY

HAS SOLD A 75.1% STAKE IN

TO

HAVE BEEN SOLD TO


HAS ACQUIRED

HAS BEEN SOLD TO

HAS BEEN SOLD TO

HAS BEEN SOLD TO

HAS BEEN SOLD TO

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We have analyzed

OVER 1,800 MARKETING SERVICES TRANSACTIONS ANNOUNCED GLOBALLY IN 2018

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2018 MARKS THE FIRST YEAR WHERE THE MAJORITY OF TRANSACTIONS WERE MADE BY COMPANIES WITH A NON-MARKETING SERVICES HERITAGE

The Marketing Services sector continued to be very active in 2018, with 1,084 transactions, representing an increase of 8% against 2017 reflecting the ongoing consolidation around specialized capabilities and select market themes, such as the increased demand for content and the simultaneous expansion and consolidation within Marketing Tech

Specialist capabilities accounted for 64% of the total deals, with Specialist Digital and Marketing Technology being the largest subsectors, with 206 and 172 deals, respectively

The Global Networks still dominated the Top Serial acquirers ranking in 2018, albeit completing fewer deals and representing only 6% of the total deals compared to 9% in 2016

Amid restructures, reorganizations and new strategic plans announced by the Global Networks, the Consulting and IT firms kept on expanding their digital marketing capabilities with a new focus on back-end data analytics and programmatic, the latter illustrated by Accenture’s acquisition of Adaptly towards the end of the year

2018 also marked the year when Sir Martin Sorrell, the former WPP Chief Executive, launched his “new era” advertising network, for which MediaMonks, the Dutch-based content production agency, was its platform acquisition – a deal on which JEGI | CLARITY advised

Looking ahead to 2019 we expect the Marketing Services M&A market to continue to be active across North America, Europe and Australasia with increased demand from the non-traditional Marketing Services acquirers and further demand for specialized digital skills

We were delighted to have advised on 11 deals within Marketing Services during 2018 across Healthcare, Content Production, e-Commerce Tech Services and Research

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2018: A YEAR IN REVIEW

1,084vs. 1,001 in 2017Transactions announced in 2018 in the Marketing Services space

825vs. 772 in 2017Different acquirers

85Transactions announced by the Top 10 serial acquirers in 2018

Source: Capital IQ and JEGI | CLARITY research. Global transactions announced between 01/01/2018 and 31/12/2018 where the target is within the Marketing Services space

The $1 trillion advertising and marketing services industry is changing rapidly. Clients have had to deal with modest GDP growth, little inflation and hence limited pricing power and pressure to reduce costs (…) At the same time, digital transformation has disrupted innovation, manufacturing, distribution and marketing. The communications services industry itself has faced potential disruption from new-media companies (…) from the consulting companies, from in-housing and from startup millennial driven brands. Whilst this is a very challenging environment (…), the industry’s scale and continued growth, particularly in the digital, media and data areas, offer tremendous opportunity to well-funded, agile and entrepreneurial disrupters. Welcome back to the future.Sir Martin Sorrell

WHERE WERE THE TARGETS LOCATED?

47%

20182017

52%

13%

14%

21%

13%

22%

18%

Marketing Services

Software, IT Services &Consultancies

Other

Financial Buyer

SPECIALIST CAPABILITIES

53% of the acquirers have a heritage outside of Marketing Services

64% of transactions were targeting specific capabilities, including:

WHO WAS ACQUIRING?

62vs. 68 in 2017Transactions announced by the Global Networks, representing a decline of 9% compared to 2017

103 vs. 76

Strategic Comms

172 vs. 143

MarTech

206vs. 163

Specialist Digital

455 vs. 391

132 vs. 132

69 vs. 77

47 vs. 60

41 vs. 34

275 (25%) of the transactions were cross-border vs. 263 (26%) in 2017

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IN 2018, THERE WERE 1,084 TRANSACTIONS ANNOUNCED IN THE MARKETING SERVICES SECTOR, REPRESENTING AN INCREASE OF C. 8% COMPARED TO 2017

The deal activity in the Marketing Services sector in 2018 picked up pace in the second half of the year leading to total deals being up from 2017 by 8%

September and October were record months in terms of the number of deals announced in a given month over the last 3 years


1,077 transactions in 2016

303 transactions

255 transactions

266 transactions

253 transactions

241 transactions

258 transactions

247 transactions

247 transactions

286 transactions

289 transactions

227 transactions

290 transactions

1,001 transactions in 2017 1,084 transactions in 2018

Jan

107 86 110 92 67 96 85 77 104 83 97 73 726986 9486 8971 7595 8681 7693 8595 9998 7078 12083 12766 91Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan JanFeb FebMar MarApr AprMay MayJun JunJul JulAug AugSep SepOct OctNov NovDec Dec

201620172018

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NEARLY 2/3 OF ALL TRANSACTIONS WERE TARGETING SPECIFIC CAPABILITIES

258

281

301

141126

223

163

108

143

8276

109

80

44 44 4435 36 29 32

24

86

206

172

103

53 54

29

51

29

Generalist

AgencyServices

Full ServiceDigital

AdTechSpecialistDigital

MarketingTech

StrategicCommunications

ResearchTechServices

ContentProduction

ConsultancyServices

Transactions by target capability

Source: Capital IQ and JEGI | CLARITY research. Global transactions announced between 01/01/2018 and 31/12/2018 where the target is within the Marketing Services spaceNote: Refer to Glossary for definitions of each category on page 15

20182017

Specialist

64%59%

41%36%

Generalist

General ‘Agency Services’ was once again the largest sub-sector in 2018, with 301 transactions

In 2018 the demand for specialist capabilities increased and represented nearly two-thirds of the total acquisitions

Full Service Digital means less and less in a world of more specialisms…

‘Specialist Digital’ remains the most sought-after specialist capability with 206 transactions announced in the year

‘Marketing Tech’ continued to be in strong demand in 2018 representing 16% of all deals, compared to 10% in 2016, as a result of further industry expansion and consolidation

‘Content Production’ was also a desired capability, with 51 transactions in 2018, as a consequence of strong demand for large amounts of content and decoupling trends

201620172018

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Top target locations:

Transactions by target location

46%vs. 42%

4%vs. 3%

38%vs. 40%

2%vs. 1%

10%vs. 11%

1%vs. 2%

Europe

Latin America

Asia

Africa and Middle East


496vs. 425 in 2017

38vs. 31 in 2017

408vs. 396 in 2017

17vs. 15 in 2017

112vs. 114 in 2017

13vs. 20 in 2017

North America

Australasia

455vs. 391in 2017

132vs. 132 in 2017

69vs. 77 in 2017

47vs. 60 in 2017

41vs. 34 in 2017

33vs. 27 in 2017

31vs. 27 in 2017

29vs. 13 in 2017

22vs. 29 in 2017

21vs. 16 in 2017

MOST REGIONS EXPERIENCED AN INCREASE IN DEAL ACTIVITY, WITH NORTH AMERICA ACCOUNTING FOR THE LARGEST INCREASE IN ABSOLUTE TERMS

North America continued to be the largest region by deal volume in 2018 with an increase in the number of transactions of 17%

The total number of deals within Continental Europe stayed relatively flat in 2018 with strong declines in France and Germany, of 10% and 22% respectively, while the Nordics, driven by Sweden and Norway, recorded a strong increase of 79% with a total of 50 deals across the region in 2018

In other regions the deal activity stayed relatively flat

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Transactions by acquirer type

MORE THAN HALF OF THE ACQUIRERS IN 2018 WERE FROM A NON-TRADITIONAL MARKETING SERVICES BACKGROUND

45%

7%

13%

14%

21%

2016

Total

2017

1,077 1,001

41%

6%

22%

13%

18%

2018

1,084

Financial Buyers

IT Services, Software and Consultancies

Global Networks

Marketing Services

Other

50%

9%

12%

11%

18%


The proportion of non-traditional Marketing Services acquirers continued to grow in 2018, representing 53% of the total transactions compared to 41% in 2016

The Global Networks continued to represent a smaller proportion of total deals in 2018 (6% compared to 9% in 2016)

In 2018 we saw IT Services, Software and Consultancy acquirers further enhancing their digital capabilities in the design and advertising arena, representing 22% of the total deals announced in the year

Oliver Wyman and Bain & Company were new entrants in this space in 2018 with the acquisitions of London-based Draw, a digital transformation agency and Minneapolis-based FRWD, a digital agency

In 2018, Accenture, well familiar in the space, formally made a move into the ad-buying world with the acquisition of Adaptly in an effort to rollout their programmatic practice which will also include planning, buying and management of programmatic ad campaigns

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EuropeIn: 58

Out: 58

Africa and ME

In: 6Out: 8

AsiaIn: 20

Out: 13

AustralasiaIn: 13Out: 7

Latin America

In: 9Out: 3

IN 85% OF ALL TRANSACTIONS, THE ACQUIRER WAS EITHER EUROPEAN OR NORTH AMERICAN, WITH 75% BEING DOMESTIC TRANSACTIONS


In/Out deals from region Transactions with target and acquirer in the same country within region

Transactions with target and acquirer from different countries within region

Split of cross-border transactions

TARGET LOCATION

BU

YER

LO

CA

TIO

N

UKEurope (excl. UK)

US RoW Total

UK 88 14 18 13 133

Europe (excl. UK)

9 237 13 11 270

US 26 15 402 34 477

RoW 9 10 22 163 204

Total 132 276 455 221

North American companies acquiring in Europe represented the largest proportion of cross-border transactions, 46, followed by European companies acquiring into North America, 33 (of which 20 had UK-based acquirers)

XX

424

26

8

0

X

X

273

77

7

0

24

1

73

19

North America

In: 46Out: 63

46

6

4

2

11

5

4

5

3

11

5

21

3

44

5

33

5

2

13

WE HAVE LOOKED AT WHERE THE TOP 10 SERIAL ACQUIRERS HAVE BEEN INVESTING

37

22 22

34

21

7 77

12

98

56

45 5 5

4

12

4

9 9

2 2 2 2 2

6

12

6

Source: Capital IQ and JEGI | CLARITY research. Global transactions announced between 01/01/2018 and 31/12/2018 where the target is within the Marketing Services spaceNote: Futurestream Networks, Deloitte, M&C Saatchi and Nielsen have also acquired 4 companies in 2018

The Top Serial acquirers in 2018 was still dominated by the Global Networks, although their deal activity has reduced significantly since 2016

Hakuhodo, Omnicom, Dept and Capgemni were new entrants in the Top serial acquirers in 2018

Capgemini stepped up its M&A activity in the space in 2018. In addition, in a move that marks a departure from its competitors, Capgemini integrated its management consulting, digital and creative units into a new business line, Capgemini Invent

Top 10 acquirers were responsible for 8% of total transactions in 2018 vs. 9% in 2017

Key Geographies

Europe (10)Asia (5)

Europe (6)North

America (3)

Europe (5) North

America (2)

Asia (7) North

America (1)

Europe (2)North

America (2)

Europe (3)North

America (1)

Europe (3)North

America (1)

Europe (3)North

America (1)Europe (5)

Europe (3)North

America (1)

Key Capabilities

Agency Services (7)Full Service Digital (4)

Agency Services (5)Full Service Digital (2)

Content Production (2)

Tech Services (2)

Strategic Communications (3)

Full Service Digital (2)


Tech Services (2)

Specialist Digital (3)

Agency Services (1)

Agency Services (2)



Agency Services (2)

Specialist Digital (3)

Full Service Digital (1)

Tech Services (1)Specialist Digital (1)

86transactions in 2017

vs. 85transactions in 2018

A total of A total of201620172018

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NOTABLE TRANSACTIONS ANNOUNCED IN 2018

Some of the largest transactions in 2018 were…

ANN. DATE TARGET ACQUIRER SECTOR VALUE1 ($M)

Feb-18 LiquidHub Capgemini Tech Services 500

Jun-18 APN Outdoor JCDecaux Agency Services 915

Jul-18 Acxiom Marketing Solutions IPG Specialist Digital 2,300

Jul-18 Datorama salesforce Marketing Tech 800

Sep-18 Marketo Adobe Marketing Tech 4,750

54% of deals involved non-traditional Marketing Services acquirers


May-18 FRWD Bain & Co Full Service Agency Not disclosed

Jul-18 MediaMonks S4 Capital Content Production 350

Dec-18 We Are Friday PA Consulting Tech Services Not disclosed

Dec-18 Adaptly Accenture Specialist Digital Not disclosed

Dec-18 Syfte Wipro Agency Services Not disclosed

13% of the deals were led by financial investors


Mar-18 CommerceHub GTCR/ Sycamore Marketing Tech 1,045

Jun-18 Integral Ad Science

Vista Equity Partners AdTech Not disclosed

Aug-18 SugarCRM Accel-KKR Marketing Tech Not disclosed

Oct-18 FuseFX EagleTree Capital Content Production Not disclosed

Dec-18 Vision Integrated Graphics H.I.G. Capital Agency Services Not disclosed

Other notable transactions


Jan-18 Mackevision Accenture Content Production Not disclosed

Jan-18 Draw Create Oliver Wyman Full Service Digital Not disclosed

Jun-18 AppNexus AT&T AdTech Not disclosed

Dec-18 Mustache Cognizant Content Production Not disclosed

Dec-18 Open Health Peloton/ Amulet Strategic communications Not disclosed

Source: Capital IQ and JEGI | CLARITY research. Global transactions announced between 01/01/2018 and 31/12/2018 where the target is within the Marketing Services spaceNote: 1 Value denotes the Implied Enterprise Value of the target; Where the transaction value was not disclosed an estimate has been provided where available; Converted into USD at announced date

JEGI | CLARITY transactions in 2018

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APPENDIX

Methodology

Categorization method

• Identifying relevant deals in the marketing space from the pool of over 9,000 transactions announced on Capital IQ (inclusion criteria below) demands careful analysis and deep sector knowledge

• JEGI | CLARITY developed a working definition of Marketing Services targets and a lexicon of key words to screen companies and transactions for inclusion

• The category of each transaction was reviewed and approved by at least two JEGI | CLARI TY sector analysts

Inclusion criteria

• Relevant transactions within the following sectors:• Advertising; • Diversified Support Services; • IT Software and Services; • IT Consulting and Other Services;• Application Software;• Research and Consulting Services; and • Movies and Entertainment

• Announced date falls between 1 January 2018 and 31 December 2018

• Percentage sought at least 20% (where information on percentage sought is available)

• Step-up and cancelled acquisitions, as well as asset sales are excluded

Sources

• Capital IQ (Primary source) • MergerMarket• Press Releases• Public Information

Glossary – Target Categories

Ad Tech Programmatic, ad networks, DMP and DSP businesses

Agency Services Creative, branding, media planning and buying, traditional marketing (e.g. direct marketing, OOH)

Content Production Digital content or commercials production as a service

Consultancy Services Marketing related consultancies

Full Service Digital

Companies that provide full suite of screen-based marketing products and services

Marketing TechSoftware license models e.g. CRM platforms, marketing automation solutions, retargeting, content management systems, automated email tools

Research Market research services

Specialist Digital

Companies with a specific focus on a narrow set of screen-based marketing products and services e.g. mobile marketing, UX/UI and performance marketing

Strategic Communications Public Relation and communications services

Tech Services Marketing related technology implementation services

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BOSTON One Liberty Square Boston, MA 02109 +1 617 294 6555

global marketing industry m&a 2018 in review€¦ · global marketing industry m&a 2018 in...

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