PR M&A grew in 2016 as sector 'fights back'

The number of global M&A deals in the PR industry grew slightly last year, as PR firms "fought back" against sister marcoms disciplines by buying agencies to increase their own specialist capabilities.

That’s according to new research from M&A adviser Results International, which predicted that consolidation would continue in 2017.

There were 77 deals involving the PR industry last year, up slightly from 75 in 2015, with 23 per cent involving cross-border transactions.

PR was the joint-second-strongest sector in marcoms for M&A last year, behind only full-service digital and equal with integrated agencies.

There were 35 deals involving UK and European businesses in 2016, up from the 29 seen in 2015. There were also five repeat acquirers of PR agencies in 2016, with Four Communications, Santy Integrated, SEC, WPP and Publicis acquiring two PR companies each. Four's acquisitions have included healthcare comms consultancy Packer Forbes and more recently Insight Consulting Group, announced last month.

The research pointed to the trend of PR groups acquiring businesses in other areas of marcoms during 2016, such as Finn Partners acquiring brand strategy, creative services and digital marketing agency Greenfield Belser; Ruder Finn buying insight and analytics consultancy Daylight Partnership; and Japanese agency Vector acquiring integrated marketing agency PacRim Marketing Group.

Keith Hunt, managing partner at Results International, said: "PR has had to face businesses in social media, content and digital encroaching on its space over the past few years, so a number of PR groups have reinvented themselves to fight back. Some have done so by specialising in niches such as healthcare and technology, while others are moving into other areas of marcoms to build up their broader expertise through M&A.

"Several of these businesses are beginning to change the way they refer to themselves, using terms like ‘integrated’ and ‘digital’ to show that they do more than just traditional PR. Acquiring assets in other areas of marcoms is a great way to begin or reinforce that transformation."

The analysis found that private equity interest in the PR sector remained low, with three consecutive quarters without PE investment in the sector following only one deal in Q1.

However, it pointed out that private equity-backed PR groups continue to make acquisitions. For example, W2O Group made a PR acquisition in Q3 2016, following a minority investment from Mountaingate Capital earlier in the year; and BC Partners-backed Teneo Holdings followed three PR buys in 2015 with the acquisition of PSG Communications in July.

Another sector to enter the fray in 2016 was management consultancy, with Deloitte’s acquisition of UK crisis comms and reputation specialist Regester Larkin and Accenture buying London-based marcoms group Karmarama, which owns PR agency Kaper.

Hunt said: "Private equity houses may increase their interest in PR, but will likely continue to focus on the bigger players with scalable resources, fast growth and solid retainer income.

"2016 was another very solid year for M&A in the sector and we wouldn’t be surprised to see more consolidation and activity in 2017. In fact, we may see the management consultancies that have already dipped their toes into the marcoms industry looking to PR businesses as a great way to get more of the c-suite access they crave."

In the latest acquisition news for the sector, yesterday independent built environment sector PR agency ING announced the acquisition of fellow London agency Stratton & Reekie.

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