Dominic Rovano
Dominic Rovano

Following the bustling holiday season, a notable trend is emerging within the mergers and acquisitions landscape of public relations and marketing agencies. This month we’ll dive into the latest developments and opportunities for industry players weighing their M&A options in 2024.

Shifting tides: an uptick in activity

After a period of decline in transaction volume since 2021, there’s a renewed sense of optimism regarding M&A activity in the PR and marketing agency sector for 2024. Initial concerns among industry advisors suggested 2025 as the year for significant transactions have been replaced by a different outlook. According to Procopio’s "Mergers & Acquisitions: Advertising, Marketing & Public Relations Industry M&A Report 2023," “the total number of AM&PR M&A transactions announced in 2023 fell by 15 percent to 216 compared to 254 in 2022. This decline was primarily driven by a decrease in the number of smaller transactions (< US$50 million), which fell by 23 percent.”

However, industry experts like Lori Murphree from Evalla Advisors confirm a shift in sentiment: “I believe 2024 M&A activity is picking up, quite a bit, from 2023. Interestingly, we are seeing more demand than we have in the last couple of years for pure creative agencies that can be overlaid across the various disciplines in more digitally focused agencies. There is still demand for digital with an increased focus on media, analytics and AI-enabled agencies.” This positive sentiment is echoed throughout the industry, with attorneys, advisors, agency partners and accountants reporting a surge in initial meetings and valuations, a trend supported by a 20 percent increase in M&A inquiries reported by M&A advisory firm IMAP in Q4 2023.

International expansion: a growing presence

While traditionally, U.S.-based buyers dominated the market, a significant rise in interest from European companies has been observed over the past six months. The announcement in November of 2023 of Publicis Groupe’s intended acquisition of MSL Group underlines this trend. According to a report by PitchBook, European private equity firms invested a record-breaking $39.2 billion in North American companies in 2023, with a significant portion targeting technology and marketing sectors. This influx of European buyers seeking to expand their U.S. presence through acquisitions of marketing and PR agencies presents a distinct opportunity. Additionally, Evalla Advisors highlights the growing interest amongst buyers in “specific Asian markets including Japan & Singapore,” offering significant potential for agencies operating in those regions, supported by the anticipated growth of the Asia Pacific advertising market reaching $362.3 billion by 2026, according to Statista.

Challenges remain

2024 does hold significant promise for M&A within the PR and marketing agency space. However, it’s important to acknowledge the potential challenges that could cloud this optimism:

  • Economic uncertainty. Global economic headwinds, the U.S. presidential election, inflation and the continued talk of potential recessions could dampen investor appetite for M&A deals.
  • Rising interest rates. Higher borrowing costs could make financing acquisitions more expensive, impacting valuations and deal structures.
  • Competition for talent. The tight talent market could make it difficult for agencies to attract and retain top talent, a crucial factor for post-merger success.
  • Regulatory landscape. Evolving regulations around data privacy, antitrust and taxation could add complexity and potential roadblocks to M&A transactions.

Despite these challenges, well-prepared agencies with a clear vision, diversified client base and strong financial performance can still navigate the M&A landscape effectively. Proactive discussions with experienced advisors and a thorough understanding of the market dynamics will be crucial for success.

Preparing for M&A: strategic optimization

For agencies considering M&A, a key focus should be ensuring a well-structured and organized company with robust account teams. This necessitates a clear vision for growth, meticulous financial statements and a seamless client delivery experience. It’s time to address those often-avoided administrative tasks:

  • Develop a data-driven budget and forecast. Utilizing industry benchmarks and market research to inform financial projections.
  • Ensure all tax and state filings are current. Demonstrating responsible financial management to potential buyers.
  • Review payroll and contractor data for proper classification. Avoiding potential legal and tax liabilities post-acquisition.
  • Establish clear policies for new business pitches. Streamlining processes and showcasing professionalism.
  • Refine financial statement presentations. Providing transparent and easily understandable financial information.
  • Seek professional tax advice for both business and personal aspects. Minimizing tax implications for sellers.
  • Diversify your client base. Reducing dependence on any single client and mitigating risk.
  • Sharpen your vision and client narratives. Compellingly articulating your agency’s value proposition and differentiation.
  • Identify your key differentiators within the market. Highlighting unique strengths and capabilities.
  • Define your desired post-acquisition life. (Beyond lounging on a beach with a drink!) Having a clear exit strategy and post-transaction goals.
  • Don’t hesitate to seek expert guidance. Partnering with experienced M&A advisors to navigate the process effectively.

Conclusion: a year of opportunity, but not without challenges

2024 presents both opportunities and challenges for M&A in the PR and marketing agency space. The M&A landscape is very dynamic and any volatility in the market could upset these positive trends. However, by being aware of the potential hurdles and taking a strategic approach, agencies can maximize their chances of success in this evolving market.


Dominic Rovano, CPA, is a Partner at Armanino LLP.