2024 M&A Review: Big Headlines And Lots Of Smaller Deals

(MENAFN- PRovoke) Key takeaways from this article:

• The majority of deals are small (firms of less than $6 million), with independent PR firms the leading buyers-although more private equity money is entering the market;
• KKR's Acquisition of FGS Global, valuing the firm at $1.7 billion, was unprecedented, but other corporate, financial, and public affairs firms are tempting targets;
• Stagwell stood out as the most active acquirer, with eight acquisitions that were at least PR-adjacent-but there were plenty of first-time buyers active in 2024;
• Many micro-transactions were motivated by the desire to expand service offerings beyond traditional PR, most commonly into digital and social realms and creative services;
• Holding company moves, by contrast, appeared to focus on cutting costs rather than adding value.

Merger and acquisition activity in the public relations sector continued its blistering pace from 2022, with this publication tracking more than 80 deals for the second consecutive year after the number of deals more than doubled in 2023 and maintained the same high levels in 2024.

In all, our end of year research identified 99 transactions involving public relations firms (up from 96 in 2023), our own count supplemented by about a dozen additional deals tracked by New York-based law firm Davis & Gilbert (some of the surplus attributable to smaller deals that did not register on our radar, and some attributable to a the inclusion of some deals in which the PR component was relatively minor).

More than a third of these deals fit our definition of micro transactions (the acquired firm had fees of less than $3 million) with another 26% in the $3-6 million range. That means 62% of deals involved firms with less than $6 million in revenues, compared to 56% of last year's deals-so the increase in deal activity was entirely attributable to firms at the lower end of the revenue spectrum.

The proliferation of smaller deals meant that many more buyers were involved in the M&A market than in previous years - close to 80 separate buyers - with independent PR firms and private equity (and often, private equity funded independent PR firms) dominating the market - accounting for 82% of the total transactions.

“Private equity-backed consolidators have emerged as the dominant force in acquiring quality consultancies, often surpassing traditional large groups,” says David Blois, managing partner of UK-based M&A Advisory.“These buyers operate internationally with clear, growth-focused strategies.”

As for independent agency groups,“2024 was the year in which independent buyers were incredibly active in using strategic M&A to augment their organic growth as they continued to enhance client service offerings, particularly in digital and social media,” says Michael Lasky, chair of the public relations practice at Davis & Gilbert.

He adds,“There were so many first-time buyers, many of them independent firms. Their targets tended to be firms with less than $6 million in revenue, which resulted in a higher volume of smaller deals in 2024 compared to 2023.”

Among the other key takeaways from 2024:

1 Places a Big Bet

With the possible exception of the year-end sale of Interpublic to Omnicom-more on that later-the acquisition that dominated the headlines in 2024 was WPP's sale of its 50.5% stake in corporate and financial public relations specialist FGS to minority owner KKR, in a deal that values the financial consultancy at $1.7bn.

FGS ranked ninth on our PRovoke Media 250 global ranking of public relations, with fee income of around $455 million, so the deal would have been notable under any circumstances. But two elements made this acquisition unique: first, the identity of the buyer, and second the eye-watering multiple of earnings.

KKR had acquired a minority stake in FGS in 2023, and worked closely with the leadership of the firm (which was formed by a series of mergers involving firms such as Finsbury, Glover Park, Hering Schuppener, and Sard Verbinnen). There were obvious synergies between KKR's investment portfolio-companies that all require high-level strategic communications counsel-and FGS's service offerings, although both parties insisted that anticipated growth will not be driven entirely by referrals from the new owner.

As for the price, it valued FGS at $1.5 billion-many times the previous record price for any public relations firm and one many industry observers found astonishing. "Looks like it equates to a x17 multiple which sets a new industry benchmark," said one agency head, talking to PRovoke Media on background . "It is an enormous price when you consider that our sector is asset-light and has few barriers to entry."

For its part, KKR sees FGS as a unique asset.“In today's increasingly complex stakeholder ecosystems, the value of FGS's insight, advice and execution is increasingly essential for organizations to navigate uncertainty and achieve their goals," said Philipp Freise, partner and co-head of European private equity.

And, as I noted in my analysis at the time, the value KKR believes it can realize from FGS underscores the idea that“the ownership of PR agencies by large and increasingly unfocused holding companies is more likely to diminish the value of those holdings than it is to deliver the oft-promised synergies.”

2. Other High Value Targets

While 30% of the acquisitions we saw in 2024 involved full-service or generalist firms, another 20% of the acquired firms specialized in either corporate and financial comms or public affairs-widely regarded as the two most high-value segments of the market, delivering high margins for offering high stakes advice to clients in the C-suite.

Even more notable, a high proportion of the most significant deals last year featured firms in the corporate and financial arena:

• In Italy, the private equity funded Excellera Advisory Group, which broke into our top 100 last year, drew on private equity funding to acquire Barabino & Partners , a perennial leader in the M&A rankings. The deal was expected to double the group's size to around €60 million-making it one of the three largest acquisitions of the year.
• Elsewhere in Europe, other private equity funded firms made targeted acquisitions: Paritee, parent of Geelmuyden Kiese and Brands to Life, bought German firm LHLK ; another Nordic business, Rud Pederson, acquired public affairs specialists Issuemakers in the Netherlands and EuroNavigator in Croatia ; and US public affairs specialist Bully Pulpit continued its European expansion by buying highly-regarded UK corporate firm Seven Hills and research group Message House.
• Publicly traded US company PPHC made public affairs acquisitions in the US (Lucas Public Affairs) and the UK (Pagefield ).

Alex Halbur, of US advisory firm Prosper Group, worked on the Lucas sale, as well as the sale of Sacramento lobbying firm Axiom Advisors to Svoboda Capital Partners and the sale of Civitas Public Affairs to PR firm Orchestra, which also owns Berlin Rosen. He says he sees several reasons why public affairs firms are in demand,

“Most agencies in the public affairs and lobbying space are single office agencies and so are ripe for geographic expansion into state capitals,” he says, pointing to M&A activity in Sacramento over the past year.“Most PA and lobbying firms have the pricing leverage to drive high margins.
It's not unusual for firms to have consistent operating margins at or above 35%.

“And most PA and lobby shops can be expanded by adding capabilities as they are generally exclusively strategy shops.” Among the supplementary services in demand, he says, are public relations, polling and primary research, digital/social/micro-targeting and creative resources,

3. The Stagwell Spending Spree

Stagwell-parent company of public relations firms Allison+Partners, Exponent, Hunter, KWT, SKDK, Sloane & Company, and Veritas-was by far the most active acquirer in 2024, concluding eight deals on our list (and 11 acquisitions across all disciplines)-the most we have ever recorded by one firm in one year.

While not all of those deals were pure play public relations firms (in fact, most of them included broader capabilities spanning the digital arena and even marketing technology) they all appeared to strengthen the company's global public relations expertise.

Among the highlights:

• In April, Stagwell acquired Brazilian digital public relations specialist PROS Agency, which became part of Allison;
• In May, it bought Canadian PR and influencer marketing firm Luxine Relations Publiques, which became part of Veritas;
• In July, it added Leaders , a Tel Aviv-based influencer marketing specialist;
• In August, it bought Consulum , a government advisory firm with 160 professionals across offices in
  Riyadh, Manama, Dubai, London, Cape Town, and Kuala Lumpur;
• In November, it acquired German media monitoring platform UNICEPTA ;
• And in December, with the last acquisition of 2024, it purchased Middle Eastern digital communications specialist Create Group

4. First-Time Buyers Joined the Fray

If Stagwell was the most active of the frequent acquirers on our list, there were also a number of first-time buyers.

“In 2024, 43 buyers - a remarkably high number - completed their first M&A acquisition in the PR sector,” says Brad Schwartzberg, co-chair of D&G's transactions practice, who says his firm identified 28 independent first-time buyers and 15 private equity or private equity backed first-time buyers.

“These new entrants fueled almost half of this year's deal activity. Understanding these new players, what they were seeking to achieve, and what made them attractive to their sellers provides a vital roadmap for 2025. It also bodes well for a strong PR M&A market in the year ahead.”

The biggest of these first-time acquisitions was Ohio advertising agency The Shipyard, which used private equity funding secured in 2023 to buy Fahlgren Mortine , which with fees of just under $40 million was ranked number 81 on our PRovoke Media 250 and was the third largest acquisition of the year.

But several entrepreneurial PR firms ventured into the M&A arena for the first time, including two prominent Washington, DC-based healthcare firms: JPA Health, which bought US biomedical specialist BioCentric and UK medical communications boutique akt health ; and Spectrum Science, which bought clinical trial recruitment specialist Continuum Clinical.

5. Expanding the PR Offer

A significant number of the smaller deals we saw were highly targeted and motivated by the desire to add new capabilities to existing firms.

“Consultancies are increasingly broadening their offerings by adding new skill sets, technologies, or geographical capabilities,” says David Blois.“This trend is evident in PR consultancies acquiring digital agencies, public affairs firms, and marketing agencies to deliver more comprehensive services to get closer to their clients.”

He points to the acquisition of creative agency Studio La Plage (MHP's first since it became part of Next Fifteen), adding substantial content creation capabilities.

The majority of these deals saw PR firms-independent or private-equity backed-making smaller acquisitions with“non-traditional” capabilities. Our analysis, coupled with that of Davis & Gilbert, showed that about 40% of the firms acquired last year had significant digital and social media expertise, while about a third had content development capabilities and a quarter offered influencer marketing.

Other deals included data and analytics (almost 20%), SEO (about 10%), web design and development, media planning and buying, and video and studio production facilities (all under 10%).

6. Meanwhile, The Holding Companies....

The vast majority of the deals we looked at in 2024 were about the merging of complementary specialized capabilities (most of the acquisitions undertaken by independent agencies fall into this category) or about accelerating growth (the majority of private equity deals).

But two major mergers-one at the start of the year, one at the end-didn't fit neatly into either rationale.

The first was the internal reorganization of WPP agencies that saw BCW and Hill+Knowlton come together to form Burson. If H+K brought any supplementary capabilities that BCW didn't already possess, they are not readily apparent, and larger, publicly held agencies tend to grow more slowly. The benefits in other words, are all about reducing headcount and therefore costs.

The second of these deals was the Omnicom-Interpublic deal at the end of the year, which Richard Edelman described in PR Week as the PR industry's“fourth big bang.” I hesitate to disagree with him on matters related to the agency business, but I have to admit that from a PR perspective this deal seems more like a whimper than a bang.

While there are lot of big PR brands involved (Weber Shandwick, Golin, R&CPMK now belong to the same family as FleishmanHillard, Ketchum, MMC and Porter Novelli) I don't believe that a moment's thought went into the implications for the PR part of the merged business. The increased scale of Omnicom-IPG benefits the media buying business and, perhaps, the ability to invest billions in artificial intelligence. While some of the benefits might trickle down to the PR agencies, previous mergers suggest that the biggest impact is likely to be-one again-reduced overhead.

Stephen Waddington, the UK PR guru who previously worked at Ketchum, sums it up:“We shouldn't kid ourselves that this is some innovative industry power play or masterstroke for clients. It's financial optimisation to create scale, generate shareholder value and build a more attractive proposition for investors.

“The acquisition may be driven by financial strategy, but the managers of the creative business will be left to manage the relationship issues with clients and talent.”

Adds David Gallagher, another Omnicom veteran:“Mergers like this really aren't based on PR assets... Overall, it probably doesn't matter much if there are eight big agencies or four giant ones.”

Other items of note included:

• The second largest PR acquisition of the year saw Acceleration Group acquiring New York's DKC , which ranks just outside the top 60 of our PRovoke Media global ranking with fees of around $55 million;
• The healthcare sector remained highly active, accounting for 16 deals in 2024, the largest of which saw Real Chemistry-long active in the M&A arena-add medical communications specialist Avant Healthcare, a 200-person operation;
• Publicis, alone among the giant holding companies, continues to make PR acquisitions, most notably AKA Asia , a 50-person Singapore firm and perennial Agency of the Year finalist in the region, although influencer marketing specialist Influential might also qualify as a PR buy;
• Accenture was the lone consulting giant to take an interest in the communications sector last year, buying
  Unlimited group -which includes tech PR agency Nelson Bostock and healthcare specialist Health Unlimited-to add to its Accenture Song creative group;
• Orchestra, previously known as Berlin Rosen Holdings, acquired Small Girls PR , with a team of about 75, expanding its consumer capabilities.

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