China sees weakest marketing M&A in past decade

Buffeted by rising global trade tensions and regulatory scrutiny, China experienced its weakest M&A activity in a decade, with deal activity in marketing services plummeting 54% in 2019, according to a new study by R3 Worldwide. Due to this decline, overall APAC deal value tumbled 55% and number of deals fell by 9%. 

“Investment in APAC has slowed, though it remains of interest to buyers wanting to address marketplace complexity in the region,” said Greg Paull, principal at R3. "Buyers have been looking at investments that will strengthen their position in an uncertain geopolitical climate.”

According to R3's findings, amongst traditional holding companies, only Publicis ranked in the top 10 acquirers, the first time so few have appeared in this list worldwide. The report revealed that the number of deals fell 50%, even though year-on-year spend remained constant. Publicis Groupe was the top buyer after dramatic M&A activity in 2019, with Dentsu leading holding groups in total number of transactions. 

R3 assessed 489 M&A deals in the marketing services industry between January to December 2019, with $27.7 billion invested, a 15% decrease in spend year-on-year. Even as holding companies faded in 2019, private equity groups contributed 44% more in deal value globally ($6.6 billion), with Bain Capital and Blackstone making two of the top five deals in 2019. 

In 2019 buyers favoured martech and adtech companies, but diversity was visible in the type of acquisitions made. Production houses and shopper/CRM/promotion companies saw double-digit growth in both number of transactions and value. “Restructuring has shifted attention away from volume and forced holding companies to attend to integration,” added Paull. “It’s been about what’s going to help win new business.”

(This article first appeared on CampaignAsia.com)