GLOBAL MARKETING INDUSTRY M&A REPORT:2017 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

HUMAN CAPITAL

MANAGEMENT

Advising founders, entrepreneurs, private equity firms and global corporations

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

Deep sector knowledge, providing above market valuation outcomes

Track record of surpassing client expectations

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WE HAVE AN EXCEPTIONAL TRACK RECORD ACROSS THE MARKETING LANDSCAPE

Selligent is an international SaaS platform delivering omnichannel audience engagement

HAS BEEN SOLD TO

Jun Group is a leading mobile video and branded content advertising platform

NavigationArts is a digital strategy and experience design firm

HAS RECEIVED A SIGNIFICANT

INVESTMENT FROM

HAS BEEN SOLD TO

inVNT is an experiential marketing company specializing in live media, brand environments and creative services

3Q Digital is a leading provider of digital marketing and online customer growth services

Indicia is a leading data analytics and customer engagement agency

Investis is the leading independent global provider of digital corporate communications solutions

HAS SOLD

TO

HAS BEEN SOLD TO

HAS ACQUIRED

HAS BEEN SOLD TO

RKG is a leading tech‑enabled search and digital marketing agency

Distimo is a leading mobile app market intelligence and analytics provider

HAS BEEN SOLD TO

HAS BEEN SOLD TO

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

A SUBSIDIARY OF

HAS BEEN SOLD TO

HAS BEEN SOLD TO

HAS SOLD A 75.1% STAKE IN

TO

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

Pegasus is a leading UK integrated healthcare communications consultancy

Wiland is a leading data‑driven marketing technology and intelligence platform

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

V12 Data is a leading DaaS platform offering integrated omnichannel data products and marketing technology

Fizziology is a leading social insights and analytics company in the media and entertainment sector

MC&C is a leading independent performance media agency

The Monkeys and Maud are leading Australian agencies

Framestore is a leading global VFX and CG content production company

Brand Learning is a leading marketing and sales capability consultancy

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

Hobsons’ Admissions is a leading supplier of CRM & application management software to higher education institutions

HAS BEEN SOLD TO

HAS BEEN SOLD TO

HAS RECEIVED AN INVESTMENT

FROM

AN UNDISCLOSED INVESTOR

HAS BEEN SOLD TO

&

HAVE MERGED TO FORM

WITH INVESTMENT FROM

A PORTFOLIO COMPANY OF

HAS ACQUIRED

HAS RECEIVED INVESTMENT FROM A CONSORTIUM

OF CHINESE INVESTORS

HAS SOLD A 75% STAKE TO

LED BYA PORTFOLIO COMPANY OF

HAS ACQUIRED

TO

HAS SOLD

AN INVESTMENT OF

Note: Selected JEGI | CLARITY transactions

HAVE BEEN SOLD TO

ACCENTURE

HAS BEEN SOLD TO

HAVE BEEN SOLD TO

ACCENTURE

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We have analyzed

OVER 1,000 MARKETING SERVICES TRANSACTIONS ANNOUNCED GLOBALLY IN 2017

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2017: A YEAR IN REVIEW

1,001vs. 1,077 in 2016Transactions announced in 2017 in the Marketing Services space

772vs. 796 in 2016Different acquirers

98Transactions announced by the Top 10 serial acquirers in 2017

Source: Capital IQ and JEGI | CLARITY research. Global transactions announced between 01/01/2017 and 31/12/2017 where the target is within the Marketing Services space

Customer experience is the new battleground and this acquisition [The Monkeys] will enable Accenture Interactive t o integrate creative excellence with digital customer experience delivery (…) Together, we’re bringing our unique model to the market: part creative agency, part business consultancy, and part technology powerhouse – all focused on creating the best customer experiences on the planet.”

Brian WhippleSenior Managing Director, Accenture Interactive on The Monkeys acquisition

WHERE WERE THE TARGETS LOCATED?

52%

20172016

59%12%

11%

18%

14%

13%

21%

Marketing Services

Software, IT Services &Consultancies

Other

Financial Buyer

SPECIALIST CAPABILITIES

48% of the acquirers have a heritage outside of Marketing Services

c. 60% of transactions were targeting specific capabilities, including:

WHO WAS ACQUIRING?

68vs. 101 in 2016Transactions announced by the Global Networks, representing a decline of 33% compared to 2016

76 vs. 109

Strategic Comms

143 vs. 108

MarTech

80 vs. 82

Ad Tech

163vs. 223

Specialist Digital

391 vs. 422

132 vs. 158

77 vs. 59

60 vs. 51

34 vs. 33

263 (26%) of the transactions were cross‑border vs. 281 (26%) in 2016

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IN 2017, THERE WERE 1,001 TRANSACTIONS ANNOUNCED IN THE MARKETING SERVICES SECTOR, REPRESENTING A DECLINE OF C. 7% COMPARED TO 2016

Compared to 2016, the deal pace in the Marketing Services sector in 2017 was slower at the start of the year, picking up in Q3 before reducing slightly again towards the end of the year

Notwithstanding this, we see the outlook for 2018 being favorable, especially in the mid‑market, as the global political and economic uncertainties faced in 2017 start to become clearer

Source: Capital IQ and JEGI | CLARITY research. Global transactions announced between 01/01/2017 and 31/12/2017 where the target is within the Marketing Services space

1,077 transactions in 2016

303 transactions 255 transactions 266 transactions 253 transactions 241 transactions 247 transactions 286 transactions 227 transactions

1,001 transactions in 2017

Jan

107 86 110 92 67 96 85 77 104 83 97 73 86 69 86 71 95 81 93 95 98 78 83 66Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

20162017

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NEARLY 60% OF ALL TRANSACTIONS WERE TARGETING SPECIFIC CAPABILITIES

258

281

141126

223

163

108

143

82 80

109

76

44 44 4435 36

29 3224

Generalist

AgencyServices

Full ServiceDigital

StrategicCommunications

SpecialistDigital

MarketingTech

AdTech ResearchTechServices

ContentProduction

ConsultancyServices

Transactions by target capability

Source: Capital IQ and JEGI | CLARITY research. Global transactions announced between 01/01/2017 and 31/12/2017 where the target is within the Marketing Services spaceNote: Refer to Glossary for definitions of each category on page 13

20172016

Specialist

59%63%

37%41%

Generalist

General ‘Agency Services’ was the largest sub‑sector in 2017, with 281 transactions

In 2017, 594 of the 1,001 transactions (59%) were targeting specific capabilities

‘Specialist Digital’ remains the most sought‑after specialist capability with 163 transactions announced in the year

‘Marketing Tech’ saw an increase from 2016 of 32% with 143 transactions

20162017

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Top target locations:

Transactions by target location

42%vs. 42%

3%vs. 4%

40%vs. 37%

2%vs. 2%

11%vs. 13%

2%vs. 2%

Europe

Latin America

Asia

Africa and Middle East

Source: Capital IQ and JEGI | CLARITY research. Global transactions announced between 01/01/2017 and 31/12/2017 where the target is within the Marketing Services space

425vs. 455 in 2016

31vs. 38 in 2016

396vs. 399 in 2016

15vs. 23 in 2016

114vs. 137 in 2016

20vs. 25 in 2016

North America

Australasia

391vs. 422in 2016

132 vs. 158

77 vs. 59

60 vs. 51

34 vs. 33

29 vs. 35

27 vs. 34

27 vs. 25

16 vs. 26

15 vs. 11

CONTINENTAL EUROPE SAW AN INCREASE IN DEAL ACTIVITY OF C. 10% IN 2017, WHILST MOST OTHER REGIONS SAW A DECLINE COMPARED TO 2016

Continental Europe saw an increase in the number of transactions in 2017 (264) vs. 2016 (241) – representing 26% vs. 22% of total deals in each year

In particular France, Germany and Italy were potential beneficiaries from the fallout of Brexit, with a total of 152 transactions in 2017 vs. 121 in 2016, up by 26%

Meanwhile the UK and the US saw a decline of 16% and 7%, respectively, likely reflecting the uncertainties around the political environment

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Transactions by acquirer type

NEARLY HALF OF THE ACQUIRERS IN 2017 ARE FROM A NON-TRADITIONAL MARKETING SERVICES BACKGROUND

449

45%

68 7%

13614%

13313%

215

21%

2016

Total

2017

1,077 1,001

IT Services, Software and Consultancies

Financial Buyer

Global Networks

Marketing Services

Other

50%

9%

538

101

121

127

190

11%

12%

18%

Source: Capital IQ and JEGI | CLARITY research. Global transactions announced between 01/01/2017 and 31/12/2017 where the target is within the Marketing Services space

The acquirers of Marketing Services business continue to expand in 2017 in comparison to 2016, with non‑traditional Marketing Services acquirers representing 48% of the total transactions, compared to 41% in 2016

The Global Networks were responsible for 7% of the total transactions announced compared to 9% in 2016 – this represents a decline of 33% in absolute terms

2017 saw an increased proportion of buyers coming from an IT Services, Software and Consultancy background, illustrated by Cognizant’s 3 acquisitions, including that of UK‑based digital agency, Zone

It is therefore unsurprising that we continue to hear rumors of a potential acquisition of a Global Network by one of the large Consultancy/IT Services groups, as we wrote about in our 2015 annual review

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EuropeIn: 48

Out: 61

Africa and ME

In: 14Out: 5

AsiaIn: 23

Out: 17

AustralasiaIn: 9

Out: 5

Latin America

In: 9Out: 3

IN 85% OF ALL TRANSACTIONS, THE ACQUIRER WAS EITHER EUROPEAN OR NORTH AMERICAN, WITH 74% BEING DOMESTIC TRANSACTIONS

Source: Capital IQ and JEGI | CLARITY research. Global transactions announced between 01/01/2017 and 31/12/2017 where the target is within the Marketing Services space

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 97 19 14 18 148

Europe (excl. UK)

10 222 16 13 261

US 20 18 337 33 408

RoW 5 5 24 150 184

Total 132 264 391 214

North American companies acquiring in Europe represented the largest proportion of cross‑border transactions, followed by European acquirers buying into North America and into Asia

Compared to 2016, 2017 saw a higher proportion of cross‑border transactions with an acquirer from outside of North America or Europe, being 17% vs. 11%

XX

356

19

6

0

X

X

272

76

6

0

20

2

78

13

North America

In: 50Out: 62

41

7

6

5

13

5

8

3

1

1

2

52

1

1

33

10

32

3

1

11

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

37

22

34

21

7

12

4

9 9

6

2

6

12

6

1

6

1 45

45

Source: Capital IQ and JEGI | CLARITY research. Global transactions announced between 01/01/2017 and 31/12/2017 where the target is within the Marketing Services spaceNote: Altavia has also acquired 5 companies in 2017

Still dominated by the Global Networks, the Top 10 serial acquirers in 2017 included Dentsu, WPP, Havas, IPG and Publicis, which accounted for 64 transactions vs. 96 in 2016

Accenture continues to increase their investment in the sector with 12 acquisitions in 2017, which included two JEGI | CLARITY transactions: The Monkeys and Maud in Australia and Brand Learning in the UK

LINK Mobility, Ströer, Deloitte and Webedia were new entrants in the Top 10 serial acquirers in 2017

Top 10 acquirers were responsible for 10% of total transactions in 2017 vs. 11% in 2016

Key Geographies

Europe (9)Asia (7)

Europe (10)North

America (6)

North America (6)Europe (5)

Africa and ME (3)Europe (2)

North America (3)Europe (2)

Europe (6)Europe (3)

North America (2)

Europe (6)North

America (4)Europe (1)

Europe (5)

Key Capabilities

Agency Services (8)Specialist Digital (7)

Full Service Digital (8)

Agency Services (6)

Agency Services (4)Full Service Digital (3)

Agency Services (5)Full Service Digital (2)

Full Service Digital (2)Strategic

Communications (2)

Marketing Tech (3)

Specialist Digital (2)

Agency Services (3)

Strategic Communications (2)

Agency Services (3)Ad Tech (2)

Specialist Digital (3)Content

Production (1)

Specialist Digital (3)Content

Production (1)

114transactions in 2016

vs. 98transactions in 2017

A total of A total of20162017

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NOTABLE TRANSACTIONS ANNOUNCED IN 2017

Some of the largest transactions in 2017 were…

ANN. DATE TARGET ACQUIRER SECTOR VALUE1 ($M)

Oct‑17 Asatsu-DK Bain Capital Agency Services 1,184

May‑17 Havas Vivendi Agency Services 4,309

Apr‑17 Moat Oracle Ad Tech 850

Mar‑17 Teads Altice Ad Tech 308

Feb‑17 Turn Amobee Ad Tech 310

48% of deals involved non-traditional Marketing Services acquirers

ANN. DATE TARGET ACQUIRER SECTOR VALUE1 ($M)

Oct‑17 Zone Cognizant Full Service Digital Not disclosed

Aug‑17 Brand Learning Accenture Consultancy Services Not disclosed

May‑17 The Monkeys and Maud Accenture Agency Services Not disclosed

Mar‑17 Headway Entravision Communications Ad Tech 47

Feb‑17 CitizenNet Condé Nast Ad Tech Not disclosed

14% of the deals were led by financial investors

ANN. DATE TARGET ACQUIRER SECTOR VALUE1 ($M)

Nov‑17 Bazaarvoice Marlin Equity Partners Marketing Tech 456

Oct‑17 Inspired Thinking Group

Equistone Partners Agency Services Not disclosed

Aug‑17 Williams Lea Tag Advent International Agency Services Not disclosed

Apr‑17 Cheetah Digital2 Vector Capital Marketing Tech 400

Jan‑17 Daymon Worldwide Bain Capital Agency

Services 413

Other notable transactions

ANN. DATE TARGET ACQUIRER SECTOR VALUE1 ($M)

Aug‑17 Acne Deloitte Content Production Not disclosed

Jul‑17 Rocket Fuel Sizmek Ad Tech 147

Jul‑17 thjnk ag WPP Agency Services Not disclosed

Jun‑17 Beijing adSage Longguang (Jiaxing) Ad Tech 262

Jan‑17 FMCG Deluxe Agency Services 200

Source: Capital IQ and JEGI | CLARITY research. Global transactions announced between 01/01/2017 and 31/12/2017 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

2 Previously known as Experian plc, Email/ Cross‑Channel Marketing Business

JEGI | Clarity transactions in 2017

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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 2017 and 31 December 2017

• 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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