A report from R3 has found that the value of the deals in marketing services for the first half of 2019 has slumped across Asia-Pacific and China. The value of deals in China has gone down by a staggering 84%; decreasing to US$57 million from US$365 million at the end of first half of 2018. The decline in deal value in Asia-Pacific is 28.5% down to US$649 million.
The slump in China is said to be the result of trade tensions with the US and tougher refinancing conditions, according to R3. This is against the backdrop of a 43% increase in total deal value worldwide, according to the report.
R3 analysed 235 M&A deals in the marketing services industry, conducted through the first half of 2019. $13.6 billion was invested, representing a 43% increase in total deal value.
The bulk of the deal-making happened in North America. with the value of deals going up by 54%. Europe, Middle East and Africa were also on a growth trajectory with an increase of 42%.
R3 principal and co-founder Greg Paull said: “North America and martech are holding up the M&A market as buyers look for as much certainty as they can get. It’s a scramble for first-party data, and the increased valuation and spend on martech companies reflect that value.”
Of the holding companies, Publicis Groupe was the most aggressive with its $4.4 billion acquisition of Epsilon. WPP and Omnicom made no deals in the first half of 2019.
Dentsu and Stagwell Group which positions itself as ‘the alternative to the holding companies’ are in the top five, along with Accenture and private equity firm CVC Capital Partners.
Paull added: “The high rollers of marketing M&A continue to be consultancies, private-equity groups and technology companies.
“Holding companies have their focus elsewhere as they urgently need to work out new business operating models as consultancies edge into the industry and in-housing grows in popularity with clients.”The bulk of spend is on the martech space. Dubbing it ‘The Golden Age of Martech’, R3 points to buyers spending $7.2 billion on these acquisitions.
Paull said: “40% of the top 30 acquisitions over the past six months were for martech companies, and buyers were other martech companies looking to expand their stack, or consultancies building their network of services.”
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