M&A in the UK media and marketing services sectors: Q3 2024
Renewed activity over the summer
103
deals completed
6
media and marketing services transactions advised on by Moore Kingston Smith
46%
deals backed by PE
Our view of the market
After what appears to have been a temporary pause in Q2 2024, there has been something of a resurgence in M&A activity in the UK media and marketing services sectors last quarter. We recorded 103 completed transactions in Q3, a 26% increase on the 82 deals we recorded in Q2.
The percentage of transactions involving private equity has remained steady this quarter, and is still below historical levels. We would expect to see more PE involvement in the final quarter of the year, and into 2025, once anticipated reductions in interest rates take effect. The major networks have been quite busy this quarter, albeit we have seen less activity from the challengers.
Despite this flurry in activity over the summer, and Moore Kingston Smith’s involvement in a number of completed transactions, we have heard some caution being expressed in the market. The client environment remains tough for many, and we have seen some sale processes delayed while would-be sellers wait for a hoped-for opportunity to present a better set of numbers to potential buyers. Uncertainties abound concerning what the new Labour government’s first budget will mean for business owners, investors and entrepreneurs. There is no shortage of acquirer interest within exceptional UK businesses, but the picture is more nuanced when it comes to businesses that are performing well but not necessarily outperforming.
Quarterly deal volume
Trending: social
In Q3 2024, social tied with brand and design as the favourite marketing services category with acquirers: each category accounted for 10% of all the UK marketing services deals we recorded. Businesses are increasingly turning to social agencies as they realise that social data allows them to keep up with the trends and conversations that impact their audience in real-time, enabling them to develop more informed customer-centric business strategies. We are seeing strong growth in client spend in this area.
Q3 deals in the social media space included Cheshire-based TMC Strategic Communications’ acquisition of specialist social media agency Calvin Marketing, and the merger of Fresh Digital with Peachy Digital.
Spotlight on: martech
In the marketing services sector, while most deals involved the acquisition of traditional service-led agencies, 23% of the deals we recorded in Q3 were technology-led. This is an improvement on the 19% we recorded in Q2 and Q1’s 18%, and shows an increased interest in technology-first agencies on the part of acquirers.
81% of the technology-led transactions we recorded in Q3 2024 related to martech companies – companies developing and using technology to assist with a digital marketing strategy, while 13% were adtech and 6% were mediatech.
Henry Waugh, Corporate Finance Manager, says: “After a slowdown in 2023, global martech spending is on the rise. This resurgence is driven by trends such as the rise of personalised experiences, omnichannel marketing, social media, customer journey orchestration, and AI-powered innovations. These trends underpin the rise in M&A activity in the martech arena.”
Q3 2024 deal activity in the marketing services sector
Notable UK martech deals
Referral marketing and social sharing technology business Soreto, which is backed by New Look founder Tom Singh, acquired Oculizm, a user-generated content and reviews platform.
In August, Spotler Group, a pan-European provider of marketing automation solutions, announced it had acquired RedEye, a UK-based marketing technology platform.
Major holding companies
Notable transactions
Q3 was a very active period for the large marketing services networks, with only two – Interpublic and Dentsu – announcing no new acquisitions.
In September, WPP announced its first acquisition of 2024, revealing it had acquired creative and customer experience agency New Commercial Arts. NCA was formed in 2020 by a team including industry heavyweights James Murphy and David Golding, former founders of influential agency Adam&Eve. Following the acquisition by WPP, NCA will join Ogilvy’s global creative network. Moore Kingston Smith provided advice to New Commercial Arts in relation to the transaction. Commenting on the deal in the Financial Times, Mark Read, Chief Executive of WPP, said: “Even where we are in a world of AI, we still need world-class creative ideas. We are investing in our core creative offer. We have been quite quiet on the acquisition front.”
In August, WPP announced that it planned to sell its majority stake in strategic communications and advisory firm FGS Global to US PE house KKR for $775 million. The transaction is expected to complete before the end of this year, so should feature in our Q4 report.
Publicis announced some substantial acquisitions in Q3. In July, it said that it had entered into a definitive agreement to acquire the world’s largest influencer marketing company, Influential, in a transaction reported to be worth c. $500 million. The deal is subject to regulatory approval, and did not appear to have completed by the end of Q3. Publicis followed this up with the announcement in September that it was acquiring Mars United Commerce, the world’s largest independent commerce marketing company. This deal was estimated to be worth c. $600 million.
In July, Havas announced the acquisition of Australian media agency and creative production company, Hotglue, and followed that in September with the acquisition of UK-based global digital agency DMPG. DMPG will join Havas’s data, tech and analytics consultancy, CSA.
In September, Omnicom announced that its precision marketing division had acquired LeapPoint, a digital advisory firm focused on helping organisations improve the orchestration and performance of their entire marketing lifecycle.
Challenger networks
Q3 saw a couple of the challenger networks continuing to buy and build.
Stagwell has already had a very busy 2024, and in July it announced two further marketing services acquisitions – predictive brand technology platform BERA and LEADERS, a digital agency specialising in influencer marketing and social commerce. Also in July, Stagwell’s publishing subsidiary, Ink, announced the acquisition of all the Business Traveller brands – media that serves the business community worldwide. The acquisition includes seven editions of the magazine, and the events Cellars in the Sky and the Business Traveller Awards.
In September, Moore Kingston Smith advised Cadence Innova, a multi-award winning agency specialising in transforming SMEs in the public sector, on its sale to Transform, a technology and data consultancy business, part of Next15.
Marketing services industry stock performance
In Q3 2024, global stock markets showed some small gains. The S&P 500 was up by 5% in Q3, while the FTSE 100 was up by just 1%. However, the Moore Kingston Smith Marketing Services Index lagged the market, ending Q3 flat. Of the 13 companies in the Moore Kingston Smith Marketing Services Index, nine ended the quarter in positive territory.
Q3’s star performer was Omnicom, which saw its share price increase by 18% across the period. Omnicom’s share price hit an all time high, breaking the $100 barrier in the middle of September, as investors reacted to the news that the group has been producing better results than many of its peers, with expectations of a particularly strong full year performance in the US and the UK.
Our worst performer in Q3 was Next15. At the beginning of September it saw its share price plummet by 50% in just one day, after the group announced that it had lost one of its biggest and most lucrative clients. Next15 said that its venture building division, Mach49, is expected to see a revenue shortfall of £80 million in the financial year 2026 due to the client’s decision not to renew their three-year agreement. Next15’s share price recovered slightly during the last few weeks of the quarter, leaving it 42% down across the whole period.
Moore Kingston Smith Marketing Services Index Q3 2024
Private equity
PE-backed investments accounted for 46% of all deals completing in Q3 2024, which is exactly the same as the level recorded in the previous quarter. We remain confident that the market for leveraged PE-backed transactions will improve towards the end of the year and into 2025 as interest rates come down.
Moore Kingston Smith advised on a number of private equity-backed transactions in Q3. In August, Moore Kingston Smith advised the management team of tech-enabled provider of architectural visualisation and marketing services, The Boundary, on the company’s sale by Mobeus to Kester Capital. Mobeus exited its investment in The Boundary three years after it initially backed the company. Secondary transactions, where one PE house sells its interest to another after a three to five year holding period, are an increasingly common feature of the UK market.
In September, the Moore Kingston Smith corporate finance team advised Incubeta, the global digital marketing company backed by PE titan Carlyle, on the acquisition of Shout Bravo, a Manchester-based digital PR agency. The acquisition of Shout Bravo, will reinforce Incubeta’s services, expertise and capabilities to deliver even more powerful, integrated PPC and SEO strategies for clients, and is Incubeta’s second acquisition of 2024, following its purchase of Persuasion Technologies in June.
Notable UK PE-backed deals
Carlyle portfolio company Incubeta, advised by Moore Kingston Smith, acquired Shout Bravo, a Manchester-based digital PR agency.
London-headquartered, global programmatic media specialist MiQ acquired digital media execution specialist Pathlabs, with backing from its PE sponsor Bridgepoint in July.
Towerbrook Capital-backed luxury, lifestyle and fashion PR group, The Independents, revealed it had acquired Dubai-based creative agency BUREAU BÉATRICE in August.
Percentage of PE-backed deals
“Private equity firms understand the increasing value of digital marketing, especially now that SEO has seen its biggest shift in a decade. It’s transforming the way people search, where they search and the search experience as a whole.”
Mike Orton, Corporate Finance Partner at Moore Kingston Smith
TV, film and entertainment
Within the TV, film and entertainment sector, gaming transactions proved to be the most popular with acquirers in Q3, just as they were in Q2, accounting for 38% of the deals we recorded.
Production services deals were the most prominent in Q3, accounting for 77% of the transactions we recorded in this space. Technology-led transactions accounted for a further 19%, while pure content plays accounted for just 4% of the deals recorded in Q3.
Moore Kingston Smith advised on two transactions in the TV, film and entertainment space in Q3. In July Moore Kingston Smith provided advice in connection with the sale of the world’s longest running theatrical production, The Mousetrap, to a new producing consortium led by TodayTix CEO Brian Fenty.
In September, the Moore Kingston Smith corporate finance team advised Liverpool-based video game development company, Wushu Studios, on its sale to Keywords Studios, a technical and creative services provider to the global video games and entertainment industries.
Notable UK TV, film and entertainment deals
In July, Amazon Prime Video acquired Bray Film Studios in Berkshire. This purchase is in addition to Amazon’s significant presence at the UK’s Shepperton Studios, and demonstrates Amazon’s commitment to the UK creative community.
In a move to strengthen its capabilities in the content creation space, global sports agency 54 announced the acquisition of Manchester-based production house Mob.
Q3 2024 deal activity in the TV, film and entertainment sector
Publishing
Consumer publishing and business to business publishing each accounted for 50% of the publishing deals we recorded in Q3.
The main publishing news story in Q3 was the £100 million sale in September of flagship news-stand title The Spectator to Sir Paul Marshall, a hedge fund tycoon and major investor in GB News. He reportedly beat around 20 other bidders to buy the right-leaning magazine, which was once edited by former Prime Minister Boris Johnson. The Spectator was re-offered for sale in April after an Abu Dhabi-backed bid to buy it along with the Daily Telegraph and the Sunday Telegraph collapsed following UK government intervention, banning the ownership of UK newspapers by foreign states.
Notable UK publishing deals
In July, multi-platform publisher North East Times acquired Bdaily. The deal for the national digital news organisation bolsters North East Times’ presence as the region’s leading business-to-business media company.
In August, one of the UK’s oldest independently owned publishing houses, Duckworth Books, acquired mind-body-spirit publisher September Publishing.
Q3 2024 deal activity in the publishing sector
Outlook
After the reduction in activity in Q2 it is heartening to see the market rebound in Q3. Whether activity will continue to grow in Q4 is dependent on a number of factors, including how quickly the environment for agencies’ underlying businesses improves, how soon interest rate cuts emerge, and precisely what details lie within the new Chancellor’s budget. At the moment 2024 is on track to record a very respectable number of UK transactions in the media and marketing services sectors, but we believe that some sale processes are likely to fall outside of this year into 2025, when the M&A environment should improve still further.
“2024 has been a tough for many in the sector, with client spend taking longer to recover than anticipated. This has made the M&A landscape more challenging and yet deal volumes are still healthy albeit not reflective of the whole market. A combination of a continued economic recovery, reduction in interest rates and hopefully a budget that is favourable to entrepreneurs would put the M&A market in a much stronger footing going into 2025.”
Paul Winterflood, Corporate Finance Partner at Moore Kingston Smith
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Methodology
In compiling our deal tracker we use Pitchbook, an international financial data provider that gives access to comprehensive data on the private and public markets. We analyse every deal with either a UK buyer or UK seller (or both) and where the target company is classified as marketing services, publishing or TV, film & entertainment, the transaction is entered into the deal tracker. We classify marketing services into sixteen sub-categories; TV, film & entertainment into seven sub-categories; and publishing into four sub-categories. As well as the data extracted from Pitchbook we have used information from the following sources: koresoftware.com, marketingdive.com, adexchanger.com, take1.tv, nftplazas.com, havasgroup.com, wpp.com, thedrum.com, deadline.com, businesswire.com, ft.com, fortune.com, themarketinpractice.com, antin-ip.com, wildstone.co.uk, media4growth.com, pehub.com. Any assumptions, opinions and estimates expressed in the information contained in this content constitute the judgment of Moore Kingston Smith LLP and/or its associated businesses as of the date of publication and are subject to change without notice. This information does not constitute advice and professional advice should be taken before acting on any information herein. No liability for any direct, consequential or other loss arising from reliance on the information is accepted by Moore Kingston Smith LLP or any of its associated businesses.
