Paul Holmes 03 Jan 2023 // 4:12AM GMT
Acquisition activity in the public relations sector declined slightly in 2022, with this publication tracking 39 deals involving PR agencies, fewer than the 51 transactions we reported on in 2021, and exactly the same number we saw in 2020.
The downturn in M&A activity notwithstanding, we were able to identify several interesting storylines for those interested in exploring the market over the next 12 months.
1. Independents are still busy
The share of deals in which independent public relations firms bought other independent public relations firms continued to rise in 2022. Last year, 24 of 39 deals (61.5%) saw independent PR firms doing the acquiring, up from 55% last year—marking the third consecutive year in which independents were the most active buyers.
Finn Partners, which has been very active in the M&A arena in recent years, added three new acquisitions to the five it made in 2021—the most significant of which was SPAG Asia, the healthcare public relations specialist that strengthened Finn’s global healthcare operations and its Asia-Pacific footprint, expanding or adding offices in Bangalore, Delhi, Indonesia, Malaysia, Mumbai, the Philippines and Singapore.
UK-based Clarity and PLMR—both of which appeared on the list in 2021—were back on the list in 2022, the former expanding its digital and public affairs capabilities, the latter adding healthcare expertise. American agencies Real Chemistry and Ruder Finn, meanwhile, were back on the list after an absence last year—the latter snapping up Peppercomm, a prominent New York agency with $9 million in fees, just outside the world’s top 200, one of three purchases last year.
Other acquirers were newcomers, ranging from US healthcare specialist Spectrum to French digital agency Jin to Redhill in Asia.
2. Europe is where the action is
For the first time since we started tracking annual M&A activity, there were more deals in Western Europe than there were in the US, with 10 deals in the UK, 7 in continental Europe, and just 13 in the US. (In fact, most of the decline in activity this year can be attributed to the US, where there were 21 deals in 2021.)
The UK saw one of the biggest deals of the year, with Next Fifteen (the parent group of tech agency Archetype, consumer specialist M Booth, and a host of digital agencies) splashing out to acquire Engine Group, parent to what was then Engine MHP+Mischief and which rebranded later in the year to become MHP Group. With fee income of slightly more than $42 million, MHP/Mischief had ranked at number 70 in our PRovoke Media Global 250 listing of the world’s largest public relations agencies.
Other UK deals included two acquisitions by Clarity; an expansion of corporate capabilities by tech specialist WE Communications; the sale of Lexington to New York-based Kyu Collective, which runs 18 creative agencies around the world—its first PR acquisition; and Huntsworth making the most substantial PR acquisition since its glory days, buying UK consumer and business-to-business firm Cirkle, which ranked number 249 in the world with fees of more than $6 million.
Across the channel, meanwhile, there were a number of smaller deals: Nordic agency Rud Pedersen Group continued its recent expansion with acquisitions in France and Latvia; Italian corporate and financial specialist Barabino bought a Franco-Germany agency to expand its European footprint; and Huntsworth picked up a German public affairs firm as part of its Grayling operation.
The biggest deal, however, saw giant holding company Havas—relatively quiet in recent years—buying 200-person Spanish agency Tinkle, integrating the firm into its AMO financial PR operation.
3. SEC Newgate expands into the Americas
Italian public relations leader SEC made quite an impact in 2019 when it merged with Porta, a move that led to the integration of SEC’s expanding European holdings with Porta’s Newgate operation—a public affairs and corporate communications firm with real strength in Asia. At the beginning of 2022, the company announced that it would delist from the AIM exchange, returning to private ownership, but anyone who thought that might mean a retreat from M&A activity was very wrong.
Instead, SEC Newgate established itself as a genuinely global force in the public relations business, acquiring “a significant stake” in New York-based public affairs firm Global Strategy Group—a $53 million firm ranked number 49 in our global ranking—in the biggest acquisition of the year.
It wasn’t done after that, however. Before the end of the year, SEC Newgate had also acquired a majority stake in Mexican creative agency Another, which has a LatAm footprint including Mexico, Argentina, Brazil, Chile, Colombia, Costa Rica, Panama, Peru and Uruguay and ranked 166th in our Global Ranking.
4. Hill+Knowlton makes a statement
The big three holding companies—Interpublic, Omnicom and WPP—have been relatively quiet in recent years. There have been a few micro-acquisitions where there were geographic gaps, and there were some mergers of existing brands, but there haven’t been many marquee acquisitions—until September when Hill+Knowlton acquired Latin American specialist Jeffrey Group.
The sale of Jeffrey was no surprise. With owned offices in Mexico, Brazil (Brasilia, Rio de Janeiro and Sao Paulo) and Argentina, and active in every market throughout Latin America, the firm was one of the industry’s most eligible. And with slightly more than 300 people across the region and revenues last year of $13.8 million (number 153 in our Global Ranking), it could provide an instant Latin America leadership role for any acquirer.
But H+K, which already had a significant footprint in the region, was a dark horse buyer.
5. Everything, everywhere, all at once
Usually there is a clear, or at least credible, answer to the question, 'What’s hot?' We have lived through years in which technology agencies were clearly on everyone’s wish-list. Or when healthcare was hot. Or, more recently, when everyone was looking to acquire digital capabilities they had not been able to grow for themselves.
So what was hot in 2022? Everything, or nothing, dependent on your perspective.
There were seven deals involving digital acquisitions, and seven involving healthcare (and one, for Real Chemistry, involving a digital healthcare firm). There were six deals for firms that could reasonably be described as generalists, and five for public affairs firms (plus a couple for firms that specialize in the ESG space—a sub-set of corporate and public affairs). There were four deals for consumer specialists, and four more for tech agencies. There were two deals for firms specializing in multicultural markets.
If you had to generalize, you’d say that activity was not focused on the flavor of the week (or year) but on firms that fit a specific need for their acquirers. That seems like a healthy development.
6. A quiet year for private equity
We have heard a lot in recent years about private equity interest in the PR industry, and there have been several examples of significant investment, fueling acquisition sprees for firms like LLYC and Real Chemistry. But there was relatively little activity in 2022.
There was some further activity from Selbey Anderson, the UK-based investment group that has been building a network of boutique agencies. It acquired award-winning creative boutique Unity—its fifth acquisition overall but its first in three years—and later in the year announced that it has secured an additional £10 million in funding from investment firm Triple Point.
In the US, meanwhile, Charter Growth Capital Fund made a strategic investment in Lambert Global, the holding company for PR, investor relations and integrated marketing firm Lambert, which has made a number of small acquisitions in recent years.
7. And one deal that didn’t happen
There was also one big story that wasn’t.
After buying Engine for £77.5 million in February, Next Fifteen made it clear that it was willing to spend more big money to further diversify its operations with a deal that valued M&C Saatchi Group at £310 million. In May, the target companies' independent directors made it clear they would be recommending the sale to shareholders, and it looked like a done deal.
It still looked that way in September, when Next Fifteen reported record profits and chairman Tim Dyson said he was “confident” the deal would get done. But in late October, Saatchi shareholders rejected the bid, electing to remain independent.