Agency acquisitions are heating up—who’s buying and which ones might be sold next

In the span of three short months, Omnicom acquired Flywheel Digital, consultancy Globant took a majority stake in Gut, Interpublic Group of Cos. sold two legacy agencies—Deutsch New York and Hill Holiday—to Attivo Group and Accenture Song announced plans to acquire Work & Co. That might seem like a lot, but—pardon the grammar—you ain’t seen nothing yet. Michael Seidler, founder and CEO of M&A advisor Madison Alley, said that despite appearances there has actually been “very low activity” in the ad sector, due in part to what he called a “perfect storm” of economic issues, general business caution, and the underperformance of agencies that made them less desirable for buyers. Ad Age Best Places to Work 2024 50 companies doing a standout job See the full list here “We're eagerly looking at fourth-quarter results and how the first quarter is turning out because, more than anything—even more than the interest rates—the biggest hurdle was that the supply of [strong-performing] independent companies was very limited,” he said. Seidler is among 21 executives who told Ad Age they expect the M&A market to heat up significantly this year. In particular, these industry insiders are expecting big moves from consultancies such as Accenture, Tata Consultancy Services and Globant, as well as holding companies, private equity firms and even independent agencies and networks such as Meet the People, Plus Company and MSQ. Among the shops vulnerable to acquirers: Specialists in ad tech, influencer marketing, design, performance marketing and AI, distressed agencies now owned by holding companies, small creative agencies and any shop that can fill holes in an acquirer’s agency portfolio to deliver what Andrew Essex calls “soup to nuts” service for clients. “We are definitely moving into a bundling phase,” said Essex, a former Droga5 executive who is now senior managing partner of Tata Consultancy Services’ digital services business, TCS Interactive. “The client wants more than ever one throat to choke.” “The new throat they want to choke is an end-to-end offering, which is basically from the development to the delivery, from soup to nuts, from the creative concept to the CRM,” he said. “That requires ingesting capabilities that you might not have and offloading redundancies that you do have.” Essex predicts that the industry won’t look the same in two years. “It’s not a trend,” he said of the shift prompting the buying frenzy. “It’s a fundamental secular reorganization of the business.” 2023 mergers and acquisitions January WPP merges MediaCom and Essence March WPP acquires influencer agency Goat WPP acquires influencer agency Obviously April CPB merges with MMI, Vitro and Observatory May DDB New York merges with Adam&EveNY June Serviceplan Group acquires minority stake in L&C WPP acquires 30% stake in Majority July Havas acquires majority stake in Uncommon October Stagwell acquires Left Field Labs PE firm Keystone Capital invests in Barkley WPP announces plan to merge VMLY&R and Wunderman Thompson FVLCRUM Partners and Channing Johnson acquire Burrell Communications Accenture acquires ConcentricLife from Stagwell Omnicom acquires Flywheel November Stagwell acquires Movers + Shakers Globant acquires majority stake in Gut 2024 mergers and acquisitions January Attivo Group acquires IPG’s Hill Holliday and Deutsch New York Stagwell acquires Team Epiphany Accenture Song announces plan to acquire Work & Co Deloitte Digital acquires Giant Machines Up for grabs? Agencies currently drawing attention from buyers, according to executives interviewed by Ad Age, include Supernatural, OKRP and M&C Saatchi. The last shop has been mulling a sale for a few years now, and ended up declining a roughly $394 million offer from digital marketing group Next Fifteen in 2022, according to several people who work in M&A in the industry. M&C Saatchi declined to comment. Those same people said PE firm Carlyle Group is also looking to divest the majority stake in digital agency Dept it took in 2019. “There is no active process for Carlyle to sell its ownership stake in Dept,” a spokesperson for Dept commented via email. Independent agencies such as Mojo Supermarket report increased unsolicited interest from potential buyers. “I have not talked to anybody about acquisition, ever,” said Founder and Creative Director Mo Said. “We’ve never talked to a banker. We’ve never even taken a loan. We’ve never had short-term debt. We don’t even have a credit line. [Yet] people have reached out. We’re not interested. I understand that Mojo Supermarket is cool, but goddam, give us a minute. We’re just getting started!” Dooley Tombras, the president of Knoxville, Tennessee-based agency Tombras, said he received a “historic amount of interest” last year from potential suitors, including PE firms, consultancies and holding companies. “What a lot of [them liked] was the fact that we are full service and the fact that there’s a lot of interest on the client side right now on integration and getting creative and media together because of the rise of performance media, the proliferation of bottom-funnel and creating all the assets,” he said. Tombras said he will not sell the agency, which has been family-owned since 1946 and now has nearly 500 employees. Agencies of highest interest right now are those specializing in “high-level data and tech skills especially related to AI and specifically, generative AI, as well as influencer marketing,” said Marla Kaplowitz, president and CEO of 4A’s, the ad agency trade association. The big allure for Supernatural, founded by creative vet Paul Caiozzo in 2021 with former Heat and Deloitte executives John Elder and Mike Barrett, is its AI capabilities. “For 2024 we think AI will continue to be of interest in M&A, particularly the practical applications of AI. This is where Supernatural has been focused for the past two and half years,” Elder wrote in an email to Ad Age. That said, he added: “We’re not in any acquisition talks.” PE firms are particularly concerned with how AI can disrupt creative advertising, said Peter Lang, principal co-founder of PE firm Ava Acquisitions, which acquires mid-sized advertising companies. “We are very mindful of AI and its threat to the creative service category,” he said. Chicago-based creative shop OKRP, meanwhile, touts a growing client roster. Founded in 2013 by advertising veterans Nick Paul, Matt Reinhard and Tom O’Keefe, the agency is relatively small, with just around 110 employees, but has scored some outsized wins over the last few years, including Burger King, Metro by T-Mobile and Ferrara Candy. The agency declined to comment on whether it has been approached or would consider a sale. Possible partnerships Given the current economic uncertainty, there are a lot of independent agencies looking to make deals right now that could include being acquired or merging with other indie shops, several people told Ad Age. “There is a question mark around the independents,” said Jay Pattisall, VP and principal analyst for Forrester. “When you do start scaling AI, it does pose a bit of a threat to independents that either aren’t working across the marketing mix or don’t have funds or resources to invest or build proprietary [AI tech].” Recent news: Publicis Groupe invests $326 million in AI Rather than selling, Pattisall said he envisions partnerships similar to the one formed by indie media shop Crossmedia with Joan Creative, which last year opened up a combined offering called JoanxMedia. Nick Allen, a senior partner at Tata Consultancy Services, said there are really only two types of creative agencies that seem valuable in the current market: “There’s always space for really, really small” shops, he said, and big holding company agencies that are servicing the biggest client accounts as part of integrated teams. One agency cited as a hot prospect for buyers is Collins, a 58-person agency with a roster including Nike, Target, Electronic Arts and Disney that specializes in design, another discipline in much demand by clients. Collins declined to comment. There’s also an appetite for select major indies with long-term accounts. One advertising executive at a consultancy cited Wieden+Kennedy as a bucket-list buy, noting: “What they can offer is a 30-year relationship with Nike globally. There is something there to buy.” Wieden, however, will never be for sale: The shop’s late founder Dan Wieden put it into a trust ensuring that it will remain independent as long as it exists. Wieden aside, the most interest is in creative shops with under 100 employees “where you’re getting the best creative ideas,” Allen said. One small agency CEO told Ad Age he received several serious inquiries every month last year compared to one inquiry every few months the year prior. Majority, an Atlanta hotshop, sold a 30% stake to WPP in June, the same month &C sold a minority stake to Serviceplan Group. In July, creative hothouse Uncommon sold a majority stake to Havas. It’s the midsized agencies of between 200 and 500 employees that are “really suffering,” Allen said. The advertising executive at a consultancy who spoke on condition of anonymity said midsized agencies are a hard sell because they come “with a price premium. With AI, the scale you used to get with agencies, it’s already being automated. I just don’t see long-term liability for mid-sized agencies. [They are] not relevant. That’s the hard truth.” Who’s doing the buying While big creative agencies have lost some of their luster, there is still a lot of value in the U.S. advertising sector and offers are coming from several different types of buyers, including traditional holding companies that continue to do deals, PE firms, consultancies and global players looking to expand their footprints. Consultancies are expected to invest in more design, creative and front-end capabilities, while holding companies are anticipated to invest in more back-end and tech capabilities, according to Seidler, who pointed to S4 Capital’s merger with tech company TheoremOne in 2022, a deal inked with Madison Alley’s assistance. Stagwell Chairman and CEO Mark Penn said he will be looking to be “more aggressive” in the marketplace in the new year, seeking international and larger-scale deals. Stagwell has also been a seller. It sold its healthcare marketing agency ConcentricLife to Accenture for $245 million in October. “We decided that the prescription drug industry was something that we wouldn't achieve scale at and that somebody else would probably do better and that we could go ahead and buy out, take the funds, and turn it into three or four purchases,” said Penn. In the same month, Stagwell acquired Left Field, an agency that specializes in providing digital solutions via AI, as well as other technological approaches such as VR and experiential design. Later in 2023, Stagwell snagged TikTok agency Movers + Shakers along with culture and experiential agency Team Epiphany. Reshaping the holding company Other holding companies are also shedding some assets. In 2023, along with IPG divesting Deutsch New York and Hill Holliday, Publicis sold its stake in Burrell Communications to a PE firm and Omnicom sold two of its agencies, C Space and Hall & Partners. There will be more holding company pruning to come, predicted Allen. He said IPG has “too many [agency] brands,” which is not attractive to clients seeking simplification. He said that he wouldn’t be surprised if more of IPG’s underperforming agencies were sold off or merged. Clients “don’t need to be working with a holding group with multiple P&Ls all fighting for the same slice of the pie,” Allen said. IPG did not comment by deadline. All eyes will also be on Havas Group. Its parent, French media company Vivendi, has been exploring options to split up its company, which also includes Havas siblings such as Canal+Group.” Pattisall said he expects Havas’ media and creative assets to be split and sold to different buyers. “I could see one of the consultancies being interested in Havas Media Network,” Patisall said. “There is a bigger question mark for Havas Creative; there is not as big an appetite for those acquisitions.” One executive of an ad network that is acquisitive said he could see Vivendi exploring a sale of Havas with French holding company Publicis Groupe. The executive said he’s not sure how it would look to spin off some of the Havas assets. “The idea to spin it off goes against the strategy they have been pushing about all the benefits of integration with Vivendi, etcetera,” this person said, “and its numbers have been pretty poor, so it’s not going to look good as a public company standalone.” Havas declined to comment. Several executives speculated that WPP could be looking to sell some of its assets. CEO Mark Read denied those claims. “Given the profound effect AI is going to have on our industry I think we’re quite focused on organic investment versus acquisition in 2024,” Read said. He pointed to growing companies like Satalia, an AI company WPP acquired in 2021. PE firms on the prowl Private equity firms historically gravitated toward performance and tech-specialized agencies. Now, they are broadening their focus, according to Mark Williamson, a partner at law firm Lathrop GPM, and they are finding willing buyers who need help to expand. Last year, Williamson provided counsel on Keystone Capital’s investment in Kansas City, Missouri-based Barkley. While Williamson declined to discuss details of the deal, he did say it was indicative of what independent agencies typically have to do when they get to a large size. “These advertising agencies get to a certain level where it becomes harder and harder for them to self-finance acquisitions,” Williamson said. “There’s a realization that they could probably be more of a full-service shop for their clients if they could acquire either new geographic areas or add agencies in new geographic areas or with some sort of additional scope.” Another example is Mekanism, which was bought in 2022 by Plus Company, a PE-backed marketing holding company based in Quebec. “We grew to a certain size as an independent but wanted to double our growth and needed investment and strategic support to fuel our growth,” Mekanism Co-Founder and CEO Jason Harris said. “We wanted to be part of the exit upon growth and we wanted a partner that was in the early stages that we could be a big part of the growth from early days.” Harris added that Plus Company is planning “on making some strategic acquisitions in 2024.” While there will be PE interest this year, Brad Schwartzberg, partner and co-chair of the Corporate + Transactions Practice Group at law firm Davis+Gilbert , said he expects it to be more “reserved” compared to last year. “[PE firms] bought quite a bit over the last three years. The private equity model is to buy and to build through acquisitions and then ultimately to market it, to sell it,” Schwartzberg said. “Most PE firms would like to be able to monetize an investment somewhere within three to five years after they bought something.” Stephen Master, a managing director at investment firm GTCR, said he will be looking to “double down” on his investments in the ad tech space because he expects ore stability compared to the big growth spurt of 2010 to 2021 and a major pullback from clients the past two years. Ava Acquisitions’ Lang said PE firms are also looking for companies that will not be as disrupted by AI. For example, there is “huge interest” right now in agencies with government contracts, he said. PE firms “want to be seen as making good bets in times of uncertainty and AI is not going to disrupt some of these more boring service industries, these less sexy ones; or at least disrupt as quickly,” he said. Gamut Capital Management looks for “undervalued” agencies, or companies in the advertising space that it can potentially reposition. One company it acquired in 2022 is called XR. Michael Kreger, a partner at Gamut, said others viewed the company (previously named Extreme Reach) as an ad delivery platform, missing its potential. “To us, the value isn’t the ad delivery, it’s the infrastructure and asset management capabilities that exist in the process of delivery,” Kreger said. “The rest of the world looked at XR as a linear ad delivery platform. That's not what we look at it as.” Expanding footprints Much of the M&A activity for U.S. shops is expected to come from outside the country. International players including New Zealand’s Attivo Group, which bought Hill Holliday and Deutsch New York, are ones to watch in 2024, several people said. “M&A is the single best way to enter a local market with a secure position,” said Lang. Check out the latest Ad Age events and award programs “The U.K. is one category suffering because of the many political and geopolitical decisions made by the country,” Lang said. “You’ll see a lot of players continue their U.S. expansion because of it. They’re trying to increase the contribution of non-U.K. market revenue.” Others said to keep a close eye on Germany’s Serviceplan Group, which acquired a minority stake in L&C last June and Pereira O’Dell in 2020, as well as London’s Gravity Global, which expanded in the U.S. with its acquisition of Houston-based, minority-owned agency 9thWonder last July. Wherever the suitors come from this year, they will come. Bullish Managing Partner Mike Duda, citing Accenture Song’s deal to buy Work & Co, said that while “agency people like to bemoan” the state of the industry right now, “the agency business is in vogue.” ~ ~ ~CORRECTION: A previous version of this story incorrectly described what options Vivendi is considering for Havas.

Agency acquisitions are heating up—who’s buying and which ones might be sold next

Featured Stories