Campaign AI M&A watch: Global deals up 22% in H1 as private equity confidence grows

We continue to see very good levels of activity in the marketing services sector, with H1 2021 deal volume up by 22% on H1 2020 at 369 and 303 deals respectively, according to analysis from Results International.

Private equity continued to drive M&A in H1, both directly and through portfolio companies, as confidence in the space holds strong – so much so that six of the top 10 buyers in the period were private equity.

Meanwhile, S4 Capital remains the most active trade buyer over the first half of 2021.

The uptick in the public market is an ongoing positive sign as global economies continue their recovery.

Deal volume

The 369 transactions in the first half of 2021 continued the positive trend evidenced at the back end of 2020. Volumes fell by 50% in Q2 2020 when the impact of Covid-19 was first felt.

Our research shows that there were 190 and 179 deals in Q1 and Q2 2021 respectively, representing the highest quarterly volumes since Q1 2020, and we continue to see good levels of activity in the market and remain optimistic around an exciting second half of the year.

Key trends

An ongoing theme in H1 has been continued activity from private equity looking at platform investments and significant deal volume from private equity-backed groups.

Significant private equity deals noted across the period include:

• Waterland’s significant investment in The Sideshow Group – a large independent digital group that had made five acquisitions itself before the deal (March) with a full M&A pipeline ahead supported by Waterland.

• Investcorp’s acquisition of Investis, a large provider of digital corporate communications and marketing services, providing an exit for ECI Partners and minority investors (March).

• Bridgepoint’s investment in IDHL – a digital marketing and transformation group (March).

• Inflexion’s minority investment in Goat, a social media and influencer marketing business (March).

• Horizon Capital’s significant investment in business-to-business specialist The Marketing Practice (April).

• CVC Capital Partners and CDPQ’s majority investment in BlueFocus, which comprises agencies including We Are Social (May).

Notable private equity-backed transactions include:

• Carlyle-backed Dept’s acquisition of Byte (February).

• New Mountain Capital-backed Tinuiti’s acquisition of Ortega (March).

• Blackstone-backed HH Global’s acquisition of Adare (June).

Trade buyers

There were 291 strategic deals in H1 (79% of deals) versus 255 in H1 2020 and 255 in H2 2020, as M&A activity continued at pace.

S4 remained the most active buyer with six deals as it continued its targeted M&A activity across digital content, media and data. Havas also completed two deals in the period.

Private equity investment

There were 78 private equity deals in H1 (21% of deals) versus 48 in both H1 and H2 2020 – a marked uptick in activity, continuing the momentum from 2020.

Waterland was the second most active party in the six-month period with four transactions, including its significant investment in Sideshow and three deals through its European digital group Intracto. Six of the top 10 buyers in H1 were private equity, once again reflecting ongoing appetite in the space.

Geographies

North America was again the most active with 163 targets acquired and 162 acquirers in the region, versus 231 targets acquired and 234 acquirers in the whole of 2020.

Asia-Pacific and Western Europe showed continued strong levels of activity and 58 targets were acquired in the UK in H1 2021 versus 71 in the whole of 2020.

Public markets

The public markets have shown a continued positive trajectory in H1, with an 18% increase in share price across the larger networks, a 14% increase across select consultancies and up a third across mid-sized networks, with a notable positive performance from Next Fifteen. That's a positive sign for the continued global economic recovery from the pandemic.

James Kesner is director at Results International
Campaign works with Results International on M&A analysis for Campaign's Advertising Intelligence, which tracks the latest new-business activity in the industry. Find out more here