Analysis: Private equity firms hungry for digital, media and marketing M&A deals in 2021 (2023)


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Private equity firms are predicted to have "a very strong appetite" formerger and acquisitions (M&A) deals in thetechnology, digital, media, and marketing sectors, according tosector-specialist M&A advisory firm Ciesco’s latest report on M&A outlook in 2021.This comes as no surprise since the private equity sector reportedly has over US$1.7 trillion of cash, the report added.Overall in 2020, private equity represented 37% of all deal activity in the technology, digital, media, and marketing sectors. Some notable M&A deals include Platinum Equity's buyout of earned media software provider Cision, and Clayton, Dubilier & rice buying specialty services firm Huntsworth.

This figure in 2020 is higher than 13% in 2017 and 22% in 2018, which the report said showcases the attractiveness to financial backers of technology-driven business models in the digital world. Although it formed slightly more than a third of all deal activity, the number of private equity deals in the sectors still dipped by 29% compared to 2019,with the total value estimated to be US$17 billion compared with US$57 billion in 2019.

Analysis: Private equity firms hungry for digital, media and marketing M&A deals in 2021 (2)

Due to the lower deal count last year, the report predicts that most firms are keen to deploy their investment funds in 2021, which will result in competitive bids and higher valuations.

Investors will also compete for the limited quality acquisition opportunities and in recent times, the private equity route has become an attractive exit or partial exit opportunity for business owners.

The most popular sub-sectors for private equity investment last year were digital media, martech, data analytics, and digital agencies, together representing 55% of inward investment across over 200 deals. The business models in these sub-sectors comprise activities such as systems for data collection, data management, analysis including predictive analysis, adtech platforms, and online media market places.

Traditional holding networks to have strong appetite for M&A in 2021

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Meanwhile, global holding networks are expected to have “a strong appetite” for M&A this year to strengthen their capabilities in specific services, disciplines, and regions. This comes after global holding networks such as Publicis Groupe, dentsu, and Omnicom Group spent majority of last year restructuring their operations and divest legacy under-performing assets.

Areas such as data, tech, eCommerce, and CRM-enabled capabilities are predicted to receive strong interest from the global networks, with focus on China, US, UK, and Germany.

According to the report, Amsterdam is also among their priorities as a regional hub, especially considering Brexit.

M&A activity among global network companies was expected to pick up in 2020 after a sluggish 2019, but this changed when agencies shifted emphasis on restructuring, consolidation, and senior management changes as a result of the COVID-19 pandemic. Only a total of 15 acquisitions were completed in 2020, a 42% dip versus 2019.

Dentsu had six transactions conducted via Merkle, Voyage Group, and Cmer TV across the US and Japan. Meanwhile, WPP made four acquisitions across New Zealand, the US and UK, and even merged AKQA with Grey and last year. At the same time, Havas made two acquisitions, respectively in the UK and Australia , while Publicis, IPG, and Omnicom each recorded a single acquisition. According to the report, this is also a drastic dip from 2016 when 95 deals were completed by the six major holding networks – dentsu, WPP, Publicis, IPG, and Omnicom – representing 8% of all activity that year.

Analysis: Private equity firms hungry for digital, media and marketing M&A deals in 2021 (3)

The acquisition strategy and direction of the six networks has changed over the past four years, noted the report, which added that digital, data, and technology play a major part of their focus and needs as they continue to futureproof the business.

Consultancies are certainly giving the major holding networks a run for their money as they are no longer the first or natural choice for the would-be seller in the market within the overall buyer landscape, the report added.

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In 2021, the six global network companies are expected to emphasise the value of creativity and leverage their media capabilities. Agencies that merge digital, tech, and design capabilities to deliver connected experiences will also benefit from digital transformation, which is predicted in the report to “accelerate at super speed” this year. At the same time, consultancies will also benefit from digital transformation, and they are expected to continue building on their data, digital, and delivery capabilities, and make further advances in building a name for themselves in managing global campaigns.

The acceleration of digital transformation is a result of 2020 bringing to light rigid business models and their inability to adapt to the changing environment. Companies that demonstrated resilience throughout the past year were those that were digital and tech-savvy. Hence, the report advises business leaders to drive business transformation across all sectors of their organisation – marketing, customer service, sales, and supply chain procurement.

At the same time, the report also touched onmid-market buyers,a "new breed of marketing services firms" that go beyond traditional media strategies to offer expertise on technology best practices, in-house team design and technical implementation, advanced measurement, and privacy. Hakuhodo and S4 Capital were named in this list, with the former beingthe most active acquirer. Last year, Hakuhodo had five majority and one minority acquisition including martech firm Adglobal360 and Taiwanese agency Growww Media Co. Meanwhile, S4 Capital completed five acquisitions in 2020, including digital marketing firm Circus Marketing, data and analytics consultant Digodat. It also raised an additional US$100 million to explore larger deals.

Significant decline in deal volume for marketing and digital sectors

On a whole, 2020 witnessed “a significant decline” in deal volume for M&A in the technology, digital, media, and marketing sectors. Compared with 2019, M&A transactions dipped 19% to 1,091, well below the average 1,241 deals per annum recorded over the last five-year period, according to the report. This was largely a result of the pandemic’s impact on buyer confidence and general lack of visibility in trading. This was also compounded by the need to adjust to the new normal and significant changes in consumer behaviour.

That said, digital media, traditional media, and martech remained the most active sectors for M&A last year, with 234, 180, and 143 deals respectively. This combined to form 51% of 2020 deal activity.According to the report, digital media showed no change in activity from 2019 whereas traditional media and martech experienced activity declines of 13% and 8% respectively from 2019.

Analysis: Private equity firms hungry for digital, media and marketing M&A deals in 2021 (4)

Likewise, agency services and digital agency sectors followed with 112 and 114 deals announced. CRM was the only sector that had a year-on-year increase, up 30% from 2019. On the other hand,strategy suffered the steepest decline with only 32 deals announced, 57% less than in 2019. The report added that consultancies have also taken a hit globally due to delays or cancellations in client projects.

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Asia Pacific, Latin America and the Middle East had growth in deal activity, while activity remained flat in the Eastern European region. On the other hand, Western European countries experienced a small year-on-year dip of 8% in activity. The US and UK, however, remained the most active M&A markets last year, with 503 and 143 deals respectively. Combined with France, Germany, Canada, and Netherlands, these six countries represent 76% of the global deal flow.

Meanwhile, consultancies also witnessed a 30% dip in M&A activity last year, due to the uncertainty caused by the global economic slowdown. Despite this, the report ranked Accenture as the most active consultancy and buyer in the space with 12 acquisitions. Its strength lies in its long-term relationship building and the innovative nature of service offering. Among the list of companies it acquired last year were CX consultancy Mainiro, tech consultancy Icon Integration, and digital marketing services firm iTrigger.

Analysis: Private equity firms hungry for digital, media and marketing M&A deals in 2021 (5)

Capgemini was ranked second with three acquisitions – social impact agency Purpose, data science firm Advectas, and cloud-based independent consultancy firm WhiteSkyLabs. EY, on the other hand, only had one acquisition – digital customer experience agency Doberman.

Other trends for 2021

1. ECommerce: ECommerce is expected to thrive and drive future retail this year, putting further pressure on brick-and-mortar brands. The report predicts further increase in purchasing online via different devices as more brands also shift their focus towards D2C. Companies involved throughout the eCommerce chain will prosper and specialist eCommerce creative, content, and media agencies with capabilities particularly in delivering Amazon and Amazon Marketplace programmes, will see further revenue increase for existing clients and new businses opportunities.

2. Programmatic: More brands are expected to embrace programmatic opportunities with technology enhancements in 2021, with many more developing in-house capabilities. The efficiencies of programmatic buying and the increased capability to apply data in targeting specific audience segments will grow further this year, along with the benefits it brings for brands. According to the report, programmatic buying and measurement will become more effective this year. The collaboration of the sell and buy sides will be able to thoroughly evaluate supply and demand to create greater optimisation requirements.

3. Reinvention for companies: Business leaders will seek to better futureproof their business this year, with technology and data expected to be at the forefront of the evolution. The smart use of data will also help in making informed decisions across the company, from sales and marketing to product innovation and supply chain management. Brands will want to get closer to their customers and creative use of technology will be another key enabler.

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4. Becoming an all-round ethical business: This year, more brands are predicted to further change or enhance their approach to be a better all-round ethical business. According to the report, they will also embrace purpose, social, and environmental sustainability. Agencies that successfully demonstrate they operate off a purposeful platform will benefit, and acquisition activity within this communication sector is also expected, the report said. This comes as 2020 was the year brands began reacting and realigning with consumers on issues such as social, environmental, and ethical responsibility.

Photo courtesy: 123RF


How many mergers and acquisitions were there in 2021? ›

The market saw 190 mergers and acquisitions close in 2021, far more than any prior year.

Which industry has the most mergers and acquisitions? ›

Mergers and acquisitions (M&As) are most common in the healthcare, technology, financial services, and retail sectors.

What typically happens when a private equity firm acquires a company? ›

When a private-equity firm (PE) acquires a company, they work together with management to significantly increase EBITDA during its investment horizon. A good portfolio company can typically increase its EBITDA both organically and by acquisitions.

Where can I find M&A deals? ›

Resource: When important M&A transactions occur, it can have a major impact on markets and stock prices. M&A also creates key opportunities for investors.
  • ...
  • ...
  • ...
  • CNBC. ...
  • ...
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Why was M&A activity so high in 2021? ›

Brian Levy added: “M&A activity in 2021 was fueled in large measure by intense demand for digital and data-driven assets, and we believe technology adaptation will remain a consistent pressure across all industries in 2022.

Why was M&A so high in 2021? ›

With easy access to capital, low interest rates, and a recovering global economy, deal makers around the world announced $5.1 trillion worth of M&A transactions in 2021, up from $3.8 trillion in 2020 and the highest level since 20151.

Why are there so many mergers and acquisitions 2021? ›

Rapid M&A activity in 2021 was fueled by strong demand for technology as well as digital and data-driven assets. Also, pent-up demand for deals from 2020 was unloaded in 2021. Many transactions that were scheduled for 2020 were delayed by the pandemic and completed in 2021.

What is the largest M&A deal ever? ›

As of August 2022, the largest ever acquisition was the 1999 takeover of Mannesmann by Vodafone Airtouch plc at $183 billion ($297.7 billion adjusted for inflation).

What makes M&A successful? ›

Every acquisition or merger will have its own unique challenges and curveballs. Quick integration of core business data, having real-time visibility into the combined organizations, and embracing and aligning on culture are all cornerstones to successful M&A.

Why is M&A activity so high? ›

The M&A market is exceptionally buoyant, with activity driven by the combination of high levels of private equity cash, strong stock markets, significant numbers of SPACs looking for deals and a healthy debt market.

What happens when a PE firm buys a public company? ›

A PE firm may buy a private or a public company. But when it buys a public company, the firm will often take that company private. PE firms often target companies for buyouts that need an influx of cash or a management change.

Why would a company sell to a private equity firm? ›

What Are the Reasons for Selling Your Business to a Private Equity Firm? One of the business owners is nearing retirement and wants to exit their stake in the company. One owner may want to diversify their investment portfolio to avoid tying up their net worth in the business.

Why is private equity popular? ›

First, it offers investors higher returns than those available in public stocks and bonds markets. Yet, to enjoy those returns, it helps to already be rich. Private equity funds are open solely to “qualified” (read: high-net-worth) individual investors and to institutions such as endowments.

What current mergers of media companies are being considered? ›

Four major mergers are currently pending—AT&T-Time Warner, Sinclair-Tribune, DiscoveryScripps, plus the already mentioned Entercom-CBS Radio merger—with speculation about many others.

What is the most successful merger? ›

3 successful mergers and acquisitions examples
  1. Successful acquisition: Disney, Pixar and Marvel. ...
  2. Successful acquisition: Google and Android. ...
  3. Successful merger: Exxon and Mobil.

What companies are merging in 2021? ›

Top 5 Biggest M&A deals of 2021
  • US17. ...
  • US20 billion acquisition of Nuance Corporation by Microsoft. ...
  • US$22 billion acquisition of Deutsche Wohnen by Vonovia. ...
  • US26 billion acquisition of Shaw Communication by Rogers Communication. ...
  • US$30 billion acquisition of KCS by Canadian National Railway.

What are M&A deals? ›

The term 'mergers and acquisitions' (M&A) refers to the process by which one company joins another, either by combining together (company merger process) or by one purchasing the other to incorporate into the larger business (acquisition process). M&A transactions can indicate any deal of this type.

Why do you want to work in M&A? ›

M&A can be an attractive career path, not only because it's lucrative but also because you play a role in significant financial decisions. M&A professionals are often intermediaries in decisions involving big industry players, which means you might have a hand in deals that go into the billions.

How much do mergers and acquisitions make? ›

How much does a Top Mergers and Acquisitions Executive make in the United States? The average Top Mergers and Acquisitions Executive salary in the United States is $293,827 as of September 26, 2022, but the range typically falls between $251,484 and $364,042.

What is the largest acquisition ever? ›

1. Vodafone and Mannesmann (1999) - $202.8B. As of June 2022, the largest acquisitions ever made was the takeover of Mannesmann by Vodafone occurred in 2000, and was worth ~$203 billion. Vodafone, a mobile operator based in the United Kingdom, acquired Mannesmann, a German-owned industrial conglomerate company.

Why did Vodafone and Mannesmann Merge? ›

The offer would expand Vodafone's presence in Germany and create an integrated communications operator by combining Vodafone's brand and extensive distribution with Kabel's high-speed broadband cable network and existing client base.

Did Google and Android merge? ›

Google bought Android from a standalone company called Android Inc. It was founded a couple of years before Google bought it, in the first half of 2003. The Palo Alto company's most well-known co-founder was Andy Rubin, who had previously worked for companies like MSN and Apple.

What is a M&A transaction? ›

The term 'mergers and acquisitions' (M&A) refers to the process by which one company joins another, either by combining together (company merger process) or by one purchasing the other to incorporate into the larger business (acquisition process). M&A transactions can indicate any deal of this type.

What makes M&A successful? ›

Every acquisition or merger will have its own unique challenges and curveballs. Quick integration of core business data, having real-time visibility into the combined organizations, and embracing and aligning on culture are all cornerstones to successful M&A.

What is the most successful merger? ›

3 successful mergers and acquisitions examples
  1. Successful acquisition: Disney, Pixar and Marvel. ...
  2. Successful acquisition: Google and Android. ...
  3. Successful merger: Exxon and Mobil.

What are the 3 types of mergers? ›

The three main types of merger are horizontal mergers which increase market share, vertical mergers which exploit existing synergies and concentric mergers which expand the product offering.

What happened to Mannesmann? ›

The name Mannesmann ceased to exist in the engineering, automotive and telecommunications sectors soon after Vodafone purchased the company.
HeadquartersDüsseldorf , Germany
Area servedGermany
9 more rows

What type of merger is Vodafone and Mannesmann? ›

It was one of the biggest horizontal mergers in telecommunication history. As a result of the merger, Vodafone and Mannesmann had controlling stakes in ten European markets. The acquisition gave the merged entity the most extensive wireless coverage in the European market.

Which strategy involves a significant change in the financial structure of the business firm? ›

Restructuring is when a company makes significant changes to its financial or operational structure, typically while under financial duress. Companies may also restructure when preparing for a sale, buyout, merger, change in overall goals, or transfer of ownership.

What is acquisition in business example? ›

An acquisition is a transaction whereby companies, organizations, and/or their assets are acquired for some consideration by another company. Some examples of acquisitions include: Google's $50 million acquisition of Android in 2005. Pfizer's $90 billion acquisition of Warner-Lambert in 2000.

Who owns the Android platform? ›

Android began in 2003 as a project of the American technology company Android Inc., to develop an operating system for digital cameras. In 2004 the project changed to become an operating system for smartphones. Android Inc., was bought by the American search engine company Google Inc., in 2005.

What are the 4 types of M&A? ›

What are the most common types of mergers and acquisitions?
  • Horizontal merger.
  • Vertical merger.
  • Congeneric mergers.
  • Market-extension or product-extension merger.
  • Conglomeration​

What does an M&A analyst do? ›

What is an M&A Analyst? The primary role of a mergers & acquisitions analyst is to help companies and organizations in the process of combining, selling, or buying a business. M&A analysts dwell in the preliminary stages of potential deals, especially assessing financial reports and studying company processes.

How would you describe an M&A deal? ›

An M&A deal is a general term used to describe a transaction through which two or more companies consolidate. There are several ways that this consolidation can occur, including: Mergers. Acquisitions.


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