It used to be easy. Leave uni, do a few years at a large agency to learn the ropes, start up a new agency with a couple of mates, do some cool work for a big brand willing to take a chance on a start-up, gain a reputation, show year on year profit growth, get to 50 employees, sell to one of the five holding companies (probably WPP). Well not any more.
If the last 12 months has taught us anything it is that the profile of agency buyers is changing, and rapidly. The holding companies are (generalising slightly) struggling with clients moving their work around and share prices tumbling; focus has become more internal than external. At the same time, there are many more buyers in the market. Much has been written about the entrance of the consultancies, and in particular Accenture (third most acquisitive buyer in 2017). According to the excellent JEGI/Clarity report, nearly half of acquirers in 2017 came from outside the traditional holding companies: IT firms, brands, PE, Asian companies and interesting collectives (check out kyu).
And these buyers are just looking for a track record of profitable growth, right? Actually maybe not. It seems that there are now a multitude of reasons for acquisitions including filling a talent gap, acquiring a new product or service, and access to new clients.
To hear Karish discuss M&A and what you need to be aware of when acquiring an agency register to attend our next seminar here.
Dentsu was the top acquirer, making 22 deals last year but that was more than a third lower than 37 in 2016, and WPP bought 21 agencies, down from 34 the year before. Accenture leapt into the third place by making 12 acquisitions compared to only seven in 2016. The total number of M&A deals in marketing services globally fell about 7% to 1,001 from 1,077 a year earlier.
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