Marketing & Communication Agencies Industry Bulletin

Equiteq reviewed M&A and investment trends in the disrupted marketing and communication agencies industry.

Digital transformation initiatives continue to be an overarching theme, with large enterprises looking to leverage data and technology to drive consumer engagement and sales. Despite a robust market with increased spending by clients on sales and marketing, traditional marketing and communication agencies have underperformed as they have been unable to capitalize on this opportunity. The agencies have not been able to adapt to how brands are spending marketing budgets and engage consumers.

Brands are moving towards managing the overall consumer experience by interacting directly with individual consumers on a one-to-one basis, rather than pushing a standardized message to broad groups. Brands are looking to software vendors, hardware vendors and consultancies which provide tools that enable digital strategies and one-on-one customer interactions. It is expected that marketing will migrate to a model where brands interact with consumers directly or via online platforms. Capturing and analyzing the data generated by customer interactions will be a critical function for marketing agencies.

(1)      2019 as of December 31st and likely to be deflated due to delay in reporting of deals
(2)      Adjusted EBITDA multiples targeted by buyers for a consistent 20% EBITDA margin opportunity
Source: Pitchbook, S&P CapitalIQ, EY, Equiteq Proprietary Research

Equiteq believes marketing agencies will continue to pursue M&A as a means for developing the necessary digital and data analytic capabilities to revitalize growth and support their client needs. While on the face of it, increased competition for deals should facilitate sales processes and more lucrative outcomes, preparation and timing are critical.  

  • Strategic buyers and financial investors have well defined acquisition criteria and being able to demonstrate a differentiated, defensible and scalable business model will be key to driving a premium valuation in a transaction
  • As a leading advisor in the Knowledge Economy, Equiteq has significant experience serving as a strategic advisor in the space and has developed unique insights around capabilities that buyers are looking to acquire
  • Equiteq’s investment in understanding the market has created unparalleled market intelligence and insights which we bring to bear on each client engagement
  • Out team of strategic advisors and investment bankers engages with clients up to three years before a transaction to optimize the journey to delivering on shareholder goals and objectives 
  • We would welcome the opportunity to arrange a call or meeting to learn more about your goals and objectives, share additional perspectives on the market and help your team realize a superior outcome

To download the summary of the report, please click here.

If you would like to enquire about receiving a full copy of our Marketing and Communication Agencies Insights Report, or if you would like to discuss your current strategic objectives as a business owner or acquisition strategy as an acquirer, please get in touch.

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