Despite an overall sluggish close to 2022, marketing industry mergers and acquisitions have largely continued unabated. Sellers were motivated by higher multiples and strong optimism in the market as strategic and financial buyers continue to seek organic and inorganic growth through the acquisition of digital marketing firms.
To expand its digital capabilities in cloud services, content production and data analytics, advertising giant Dentsu announced in 2022 that would spend $2.6 billion on M&A over the next three years. And while most companies don’t have a multi-billion-dollar war chest to play with, this provides a good example of what smaller marketing agencies around the globe will be doing in 2023.
Below are a few other thoughts and trends we are seeing in the marketing sector M&A market.
Rise in digital paydays
Many of the larger, more traditional marketing agencies are finding it difficult to adapt to new technology fast enough. This fact has helped ignite a rise in acquisitions of small, ultra tech-savvy digital agencies. Business owners who started digital marketing agencies just a few years ago are walking away with major paydays.
Investors favor flexibility
Investors love that digital agencies can be managed from anywhere in the world. The lack of geographical restraints increases the buyer pool to include a vast array of strategic buyers. Larger agencies looking to expand their vertical can now scour the entire planet looking to acquire smaller, more nimble firms. And private equity firms looking to add to their profit-centric portfolio are also no longer bound by geographic location.
Consolidation trend continues
With more agencies looking (or needing) to broaden their service offerings, consolidation remains a hot industry trend. And while it’s hard for some marketing agencies to view this as a good thing, consolidation has turned out to be a major positive for clients. More one-stop-shops and less niche agencies staying in their silo leads to better brand consistency, streamline workflows, more reliable results, improved agency cost controls, and more. Undoubtably, the trend will continue. If you’ve been wondering if consolidation is right for your organization, give us a call to discuss your options.
Marketing agency value
If you’re considering a merger, acquisition or sale, there are a number of factors buyers will look at when considering your firm. Are you constantly making profit? Are you growing and do you have momentum? Do you have the infrastructure in place with the right team to grow? If the answers to all these questions are yes, you’re probably sitting in a lucrative position.
Let us tell you more
If you own a marketing business and you’re considering selling or raising capital for your organization, the M&A advisors at Hyde Park Capital are eager to help. With our certified business valuation service, you can find out how much your company is worth. When you’re ready to sell, our talented and tenacious team can ensure that you get maximum value.
To learn more about the marketing M&A market, or to discuss a possible sale, merger or acquisition, give our team a call at 813-383-0202, or contact us today via our website.
