infographic q1
TRANSCRIPT
Marketing Communications and
Technology
Q1 Infographic
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Julie Langley Jim Houghton
Partner Partner
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[email protected] [email protected]
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Industry Deals - Infographic
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Marketing Communications Sector Insights
What has happened over the first quarter of 2014?
The M&A continues to be very buoyant, for both tech and marcoms, and
for both it is the USA that continues to be the largest market for deal
activity, closely followed by Europe and, specifically the UK. What we find
fascinating every quarter, however, is the number of deals in either sector,
that are done by companies that have only made one acquisition in the
quarter (over 80% of all marcoms and tech deals we tracked in Q1).
Which means the buyer market for any deal is large - and it’s not
necessarily the largest deal machines that are going to be the best or
most likely acquirers for your business.
Where are the buyers coming from?
It’s not a surprise that the majority of the buyers for targets in both the
technology and marcoms sectors hail from North America, a trend that
we can fully support from the number of conversations we have with
potential buyers each week. And more so than ever we are seeing US
players looking to Europe and Asia for expansion. Particularly when
considering the technology sector, and specifically adtech where many
of the fastest rising marketing suites are looking at European and in some
cases Asian companies to add a layer of geographic differentiation to
their own equity growth story pre-IPO.
In marketing services, the large networks remain busy, but as we continue
to see the marcoms and tech sectors converge, not all are embracing the
value of owning the technology stacks that are disrupting the ad
landscape. However, WPP is an anomaly, continuing its agency
consolidation of local agencies worldwide whilst being one of the most
active buyers and investors in adtech, with a focus on data-driven and
analytical platforms including FusePump through Wunderman and
investing in eCommera, both of which are UK companies.
(1) Some clients were advised by Results International Partners at prior firms3
What is the driving deal size?
What’s driving M&A in marcoms and tech however is intrinsically different. Significantly more marcoms deals are cross-border as the networks look to
consolidate globally in terms of local capability and clients, and indeed serving those clients with as many capabilities as possible in each global market.
Deals are smaller and more specialised.
It’s no secret that the tech sector is in a state of high growth and with the large publishers, media owners and social networks competing for users/audience
and channel ownership, deal values are extremely high (e.g. Facebook/Whatsapp and Rakuten/Viber). This difference in deal value is also largely due to the
different valuation structures applied to the deals (tech businesses are largely valued as a multiple of revenue rather than a multiple of profit).
Consolidation in adtech is focused on adding new channels, particularly social and mobile to existing suites as vendors seek to buy/sell, optimise and analyse
inventory in the race to become the leading ‘cross-channel’ player. And whilst some might look at the SaaS number and think this low, the sector remains
young (with many vendors still trying to figure out how to move to a SaaS model) and we certainly anticipate significantly increased deal flow in the sector as
the now smaller, specialised vendors reach critical mass and become natural M&A targets.
We have the privilege of sitting centrally to all of these sectors and are excited about the pace of the sectors and the outturn for the coming months of 2014.
If you would like to discuss this article please contact Mark Williams, [email protected]
Updated copies of the infographics need to be added here – references to these infographics are still correct however and have been checked.