NEW YORK — The trend for smaller acquisition deals in the PR industry continues, according to a report from law firm Davis & Gilbert, which found independent firms were responsible for most of the PR industry’s recent M&A activity. The report also showed in uptick in independents' penchant for buying digital and tech specialists.

The report, which tracked activity for seven months from October 2017, found independents made up 74% of agency buyers vs. holding companies, which were responsible for the remaining 26% acquisitions. That’s an 8% increase in deals driven by independents; it’s also a 3% decrease in those fuelled by holding companies.

Of the 34 acquisitions during that time, 31 involved new buyers. Over half of those deals, 55%, were in North America, while 34% were European transactions.

D&G managing partner Brad Schwartzberg (pictured) said independent buyers have been on the rise for roughly two years. The deals largely involve agencies with annual revenue in the range of $10 million to $15 million acquiring firms whose yearly take is under $5 million.

“It’s really helping them fuel their growth, not just through acquisition of revenue but organic revenue as well,” Schwartzberg said. He added that before independents started more aggressively pursuing M&As there weren’t a lot of “exit opportunities” for small firms, as holding companies more typically looked for larger acquisitions: “On both sides it could be quite beneficial."

Technology and digital firms were the top sellers, together making up 35% of the agencies purchased during those months. Second and third favorites were financial services and investor relations agencies, which accounted for 11% of the acquisitions, and general practice, making up 10% of the sales. Next up were healthcare agencies, which made up 8% of sales. No other specialism hit more than 5%.

“With the evolution of social media and other capabilities, you have some fantastic agencies out there have really good consumer practices that are looking to looking to expand digital relations, financial services and healthcare, which is lucrative,” said Schwartzberg.

With M&A activity typically heavier in the latter half of the year, Schwartzberg said he expects to see even more of the same sorts of deals through 2018.