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M&A activity heats up
Source: Various
July 24th-31st, 2024
 Summary: If there was any doubt that the environment for industry M&A was improving, look no further than the SIX DEALS announced in the past week. From events companies to agencies and ad tech, players in several corners of the digital advertising ecosystem were making moves. Here's a rundown of the deals:
MiQ acquires Pathlabs, a firm that offers programmatic capabilities - Headquartered in Missoula, Montana, Pathlabs serves as an extension for independent agencies, specializing in digital media execution. MiQ, an independent, programmatic services company, already has relationships with agency holding companies and hopes that this deal will help it gain a foothold with midsize agencies, which oversee $25B in annual digital ad spend. Pathlabs will continue operating under its own brand identity as an independent business unit of MiQ.
Deal Flavor: Horizontal acquisition to sell similar services (digital media execution) to new customers (mid-size agencies).
Video ad tech firms Connatix and JW Player are holding merger talks 🔒 - JW Player makes money from a SaaS-based video player and ad sales, with broadcasters and media owners as customers. Connatix has a supply-side platform (SSP) with direct buy-side integrations. A deal would likely be characterized as a merger, with private equity firm Court Square Capital Partners—which has a controlling stake in Connatix—providing funding. Consolidation synergies are the name of the game here. Deal terms weren’t announced.
Deal Flavor: Vertical merger to sell content-powering tech (video player) and ad monetization tech (SSP) to existing customers (publishers).
Publicis Groupe acquires influencer-marketing giant Influential - Influential is the world's largest influencer marketing company and platform, with a network of 3.5M creators, including 90% of global influencers with more than 1M followers. The deal, reportedly worth about $500M🔒, would enable agency holding company Publicis to combine Influential's platform with its data tech unit Epsilon to match clients to influencers using data. Influencer marketing has surged in recent years, driving nearly half of consumers to make daily, weekly, or monthly purchases.
Deal Flavor: Vertical acquisition to sell new tech (influencer marketing platform) to existing customers (large advertisers).
Stagwell to Acquire Influencer Agency Leaders, Expanding in the Middle East - Leaders is a Tel Aviv-based agency known for influencer marketing, InfluencerMarketing.AI (a global influencer marketing SaaS platform), and social commerce. IMAI links AI to more than 300M global creators and helps brands quickly launch / manage campaigns, predict sales, and track performance. This will be agency holding company Stagwell’s first agency in Israel and seventh acquisition this year.
Deal Flavor: Vertical acquisition to sell new tech (influencer marketing AI) to existing customers (large advertisers).
Cannes Lions Operator Ascential Weighing $1.5B Bid - The bidder is Informa, a British data platform and events company that owns the Money20/20 fintech events. Ascential operates the Cannes Lions Festival of Creativity. Ascential is also selling agency tech startup Hudson MX and just slashed its price tag; it also sold digital commerce shop Flywheel Digital to Omnicom for $835M last year.
Deal Flavor: Horizontal acquisition to sell similar services (events tickets and sponsorships) to existing customers.
Hyve Group buys the Possible conference, and will add a meeting element to it in the future 🔒- It's only been two years since Beyond Ordinary Events launched Possible, a three-day conference focused on tech, marketing, media, and culture. The deal is reportedly worth about $40M. Hyve Group owns the ShopTalk and FinTech Meetup events.
Deal Flavor: Horizontal acquisition to sell similar services (events tickets and sponsorships) to existing customers.
Opinion: Don’t forget, the big Outbrain and Teads deal is still hanging out there, too. We have several key takeaways from this M&A flurry:
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Financial markets and valuations have stabilized: We’re back to steady growth and no one is expecting valuations to dramatically change in the near future. Which means sellers aren’t waiting around to get much higher price tags and buyers aren’t waiting around for bargain deals. Everyone is ready to transact.
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Scale is the name of the game: Always has been, especially in media and advertising. Economies of scope and scale can be achieved through vertical and / or horizontal integration. These mergers and acquisitions don’t involve speculative investment in new, up-and-coming areas. They’re mostly all tried-and-true scale plays.
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What’s hot and what’s not in M&A?
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What’s hot: Influencer marketing, AI, CTV, events, and agencies buying tech.
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What’s not: Traditional ad servers, SSPs, and DSPs are either undesirable or cheap, and walled gardens are not acquisitive.
Big picture, the M&A activity we are seeing is positive, as it will lead to more valuable solutions in market (at scale), more investment into the industry, and ultimately more industry growth.
Barring unforeseen circumstances, expect a lot more M&A in the back half of the year!
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