In the ever-evolving landscape of business, advertising, marketing and public relations agencies stand as the backbone of successful brand and content communication. These entities play a pivotal role in shaping perceptions, which influence consumer behavior and ultimately drive business growth.

Like many other industries, the advertising, marketing and public relations industries are undergoing a transformative shift. Technological change, changing consumer behaviors and societal shifts are shaping a landscape that demands agility and innovation from entities in these fields, which has created opportunity for growth organically or by acquisition to develop or acquire the necessary innovation, technology and workforce adept to the current market needs.

GHJ has seen tectonic shifts in the types of services offered, how they are delivered and what agency customers expect and demand in the way of service.

EXPLORING THE SPECTRUM: AGENCIES SEE HIGH DEMAND

As the landscape of agency acquisitions continues to evolve, it is important to understand the industries where GHJ is observing an uptick in activity. Agencies may offer one of several of the following services:

Advertising Agencies create compelling narratives across various channels. From traditional print and broadcast media to the expansive digital landscape, these agencies leverage creativity, design and strategic placement to convey brand messages and leave a lasting impression on the target audience.

Marketing Agencies take a holistic approach to brand building that encompasses market research, product development, pricing strategies and distribution channels. Marketing agencies aim to understand consumer needs, preferences and behaviors to create tailored strategies that position a brand favorably in the market.

Public Relations Agencies play a crucial role in managing a brand's reputation and building and maintaining a favorable public image. This is achieved through media relations, crisis management and community engagement to foster trust, credibility and goodwill and ensure that a brand's narrative aligns with its values and resonates positively with the public.

RECENT ACTIVITY UPTICK

GHJ has seen a substantial uptick in activity in agency businesses looking for exit guidance over the past nine months. Generally, the agency types GHJ is engaged by or speaking with include niche specialty public relations businesses, communications companies and branding agencies, particularly focused on the entertainment business and several others.

Many owners are interested in recapitalizing their businesses by selling minority or majority stakes to achieve partial or substantial liquidity from their companies. In addition to creating owner liquidity, this can also create a war chest to take advantage of acquisition opportunities or permanent capital to fund anticipated growth.

This uptick in agency acquisitions could be attributed to disruptions in delivery models, recently growing interest from sponsor groups and the necessity for ownership transitions.

As an example, GHJ recently helped a public relations agency through a recapitalization to create a significant liquidity event for the business owner, improve the company’s financial position and create a vehicle with which to make acquisitions to consolidate the niche it participates in. Many agency clients that have engaged GHJ in the last 12 months are in various stages of preparing for a liquidity or exit transaction.

Investment bankers have made similar observations. In the last 18 months alone, Canaccord Genuity reported 657 completed deals in the following fields:

• Communications agencies
• Strategy and creative firms
• Public affairs companies
• Brand strategy, marketing and communications businesses
• Marketing communications companies

Interestingly, deal sizes have reflected increasing multiples to both revenues and EBITDA, which reflects growing interest in the sectors. In addition, most of these deals were closed by private equity companies —these deals are both add-on and platform companies.

In the dynamic investment landscape, market preferences can rapidly change. The oldest expression on Wall Street is “When the ducks are quacking, feed them.” Agency companies are now in the spotlight, with M&A and financing available.

Clients and others in these industries would be wise to consider exploring opportunities to take advantage of the current enthusiasm coming from both private equity and strategic buyers.

To learn more about how agencies can set themselves up for long-term success, contact GHJ’s Media and Advertising Practice.

To learn more about how to strategically prepare your business for growth or an exit, contact GHJ’s Growth Planning and Strategic Advisory Practice.