Robert Sawatzky
Apr 12, 2018

APAC agency M&A growth lags global feeding frenzy

While global acquisitions soar 126% in Q1, Asia has seen fewer deals, according to R3’s latest tables.

APAC agency M&A growth lags global feeding frenzy

The first quarter of 2018 has seen a spike in agency mergers and acquisitions globally, led by hungry consultancies. In the US alone, deals are up a remarkable 366% over the first quarter of 2017, led by major purchases like Meredith Xcelerated Marketing and LiquidHub by consultancies Accenture and CapGemini respectively.

But the latest R3 M&A League for March suggests activity in Asia has been more subdued.  While deal value has gained 11% in Q1 over last year, the number of deals has dropped from 18 to 16.

Holding companies still lead APAC M&A with half of the total deals and about 40% of the total $400 million of the region’s deal value. But each of the big firms has only made one main purchase over the past three months, led by Hakuhodo’s deal for Square Communications and Dentsu’s investment in Data Artist.

“The big holding companies have faced several new challenges in Asia in the past two years,” said R3 Principal Greg Paull. “The rise of unconventional buyers in the marketing M&A space, combined with marketers increasingly working with local shops and bypassing agencies to work directly with media and tech vendors (particularly in China) has definitely caused a slow-down for the global giants.”

But Asia isn’t seeing the same growth from consultancies and other unconventional buyers like elsewhere either. These accounted for only three deals in Q1, making up about 22% of APAC total sales value in APAC, including Blackdot's deal for the creative and digital operations of pharma agency Healthy Thinking Group.

Other notable deals in Asia this quarter saw KKR-backed Emerald Media acquire Global Sports Commerce, Omnicom Health buy pharmaceutical communications firm Elsevier, and Publicis acquire content agency Frontside in New Zealand.

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