M&A deals slow down but value grows

M&A activity in the global marketing services industry has slowed down significantly, but the value of deals going through is increasing, according to R3’s latest report.

The consulting firm analysed 235 transactions in the marketing services industry in the first half of 2019. It found that US$13.6 billion was invested overall, a 43% jump on last year, though at the same time the number of deals declined.

“North America and martech are holding up the M&A market as buyers look for as much certainty as they can get,” said Greg Paull, R3 co-founder and principal. “It’s a scramble for first-party data, and the increased valuation and spend on martech companies reflect that value.”

Martech deals accounted for US$7.2 billion of overall investment, a 97% increase in value on a minimal 7% increase in volume of martech deals.

Deals in North America accounted for the majority of acquisition in 1H 2019, increasing 54% in value year-on-year. More concerning, however, is the significant drop in China M&A activity, thanks to trade tensions with the US and tougher refinancing conditions. Deal value in China sank to 84% less than compared to last year, and the number of deals plummeted by 74%.