2017

THE EVER CHANGING LANDSCAPEA Review of Marketing Services M&A Activity

A seamless combination of

KNOWLEDGE, INSIGHT AND EXPERTISE

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JEGI | CLARITY – THE LEADING MID-MARKET M&A ADVISORY PLATFORM FOR THE GLOBAL MEDIA, INFORMATION, MARKETING, SOFTWARE AND TECH-ENABLED SERVICES SECTORS

Mobile & Internet

Data & Analytics

Cont

ent &

Info

rmat

ion

Cloud & SaaS

MARKETING SERVICES& TECHNOLOGY

SOFTWARE &TECH-ENABLED

SERVICES

B2B

& B

2CM

EDIA

& E

VEN

TS

BU

SINESS IN

FOR

MATIO

N

& IN

TELLIGEN

CE

LONDONClarity, 90 Long Acre London WC2E 9RA +44 20 3402 4900

SYDNEYClarity, L35, Tower One, International Towers 100 Barangaroo Avenue Sydney, NSW 2000 +61 2 8046 6840

NEW YORK JEGI, 150 East 52nd Street18th FloorNew York, NY 10022 +1 212 754 0710

BOSTON JEGI, CIC Boston, 50 Milk Street16th FloorBoston, MA 02109+1 617 294 6555

Provides clients with a global network of prospective buyers and senior decision-makers

Serves founders and entrepreneurs; private equity and venture capital firms; and global corporations

Vast industry knowledge, perspective and intelligence

Track record of surpassing client expectations

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DEEP AND RELEVANT EXPERIENCE RIGHT ACROSS THE MARKETING LANDSCAPE

Selligent is an international SaaS platform delivering omnichannel audience engagement.

HAS BEEN SOLD TO

Instantly is a leading provider of online and mobile audiences and insights technology tools.

Jun Group is a leading mobile video and branded content advertising platform.

NavigationArts is a digital strategy and experience design firm.

A PORTFOLIO COMPANY OF

HAS BEEN SOLD TO

HAS RECEIVED A SIGNIFICANT

INVESTMENT FROM

HAS BEEN SOLD TO

inVNT is an experiential marketing company specializing in live media, brand environments and creative services.

3Q Digital is a leading provider of digital marketing and online customer growth services.

Indicia is a leading data analytics and customer engagement agency.

Investis is the leading independent global provider of digital corporate communications solutions.

HAS SOLD

TO

HAS BEEN SOLD TO

Splendid is an award-winning user experience design and technology consultancy.

HAS SOLD A 51% STAKE TO

HAS ACQUIRED

HAS BEEN SOLD TO

RKG is a leading tech-enabled search and digital marketing agency.

Distimo is a leading mobile app market intelligence and analytics provider.

HAS BEEN SOLD TO

HAS BEEN SOLD TO

BGT is a leading digital agency and creative consultancy.

Walker Media is a leading UK media agency.

adam&eve is a leading creative advertising agency.

A SUBSIDIARY OF

HAS BEEN SOLD TO

HAS BEEN SOLD TO

HAS SOLD A 75.1% STAKE IN

TO

Resource/Ammirati is a leading, US-based digital marketing and creative agency.

Pegasus is a leading UK integrated healthcare communications consultancy.

Wiland is a leading data-driven marketing technology and intelligence platform.

PrizeLogic is a leader in digital engagement programs for major brands and retailers.

Accordant is a leading data-driven, full-service programmatic advertising company and technology solution provider.

V12 Data is a leading DaaS platform offering integrated omnichannel data products and marketing technology.

Framestore is a leading global VFX and CG content production company.

HAS BEEN SOLD TO

HAS BEEN SOLD TO

HAS RECEIVED AN INVESTMENT

FROM

AN UNDISCLOSED INVESTOR

HAS RECEIVEDA SIGNIFICANT

INVESTMENT FROM

HAS BEEN SOLD TO

&

HAVE MERGED TO FORM

WITH INVESTMENT FROMA CONSORTIUM OF CHINESE INVESTORS

HAS SOLD A 75% STAKE TO

LED BY

Note: Selected JEGI | Clarity marketing services transactions.

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2016: A YEAR IN REVIEW

867Transactions announced in 2016 where the target was headquartered in either Europe, North America or Australasia

664Different acquirers

103Transactions announced by the top 10 serial acquirers

Source: Capital IQ and JEGI | Clarity research. Transactions announced between 01/01/2016 and 31/12/2016 where the target is headquartered in North America, Europe or Australasia within the marketing services space.

We will see Accenture, IBM with its interactive division, Deloitte, Ernst & Young and maybe Price [WaterhouseCoopers] continue to invest and probably getting more in our world… and we will see our classic competitors – at least, WPP, Omnicom and Dentsu – transforming the way they are operating. It will be a broader set of competitors, and a more open field than it is today.

Maurice LevyCEO, Publicis (AdAge 2016)

WHERE WERE THE TARGETS LOCATED?

Marketing Services61%

Software and IT services andconsultancies12%

Other16%

Financial buyer11%

SPECIALIST CAPABILITIES

39% of the acquirers have a heritage outside of Marketing Services

Nearly two-thirds of transactions were targeting specific capabilities to include:

96 94 90

Strategic Comms

MarTech Specialist Digital

WHO WAS ACQUIRING?

8%Of the qualifying transactions were announced by the Global Networks

413

151

59

51

203 (23%) of transactions were cross-border

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Jan 2016

84

Feb 2016

76

Mar 2016

90

Apr 2016

66

May 2016

57

Jun 2016

69

Jul 2016

71

Aug 2016

61

Sep 2016

87

Oct 2016

67

Nov 2016

85

Dec 2016

54

IN 2016, THERE WERE 867 TRANSACTIONS ANNOUNCED IN THE MARKETING SERVICES SECTOR WHERE THE TARGET WAS NORTH AMERICAN, EUROPEAN OR AUSTRALASIAN

The marketing services sector remained active in 2016 despite the global political uncertainty, with a similar volume of transactions announced in H1 (51%) as in H2 (49%)

We expect M&A activity to continue in 2017, particularly in the mid-market, as the ecosystem continues to change and evolve

Source: Capital IQ and JEGI | Clarity research. Transactions announced between 01/01/2016 and 31/12/2016 where the target is headquartered in North America, Europe or Australasia within the marketing services space.

867 transactions announced across the Marketing Services sector, an average of 72 a month

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NEARLY TWO-THIRDS OF ALL TRANSACTIONS WERE TARGETING SPECIFIC CAPABILITIES

Top target locations:

210

11496 94 90

7857

38 34 29 27Agency

ServicesFull Service

DigitalStrategic

CommunicationsMarTech Specialist

DigitalPerformance

MarketingAdTech Research Technology

ServicesContent

ProductionConsultancy

Transactions by target capability

Transactions by target location

52% 44% 4%

Europe Australasia

Source: Capital IQ and JEGI | Clarity research. Transactions announced between 01/01/2016 and 31/12/2016 where the target is headquartered in North America, Europe or Australasia within the marketing services space.

Specialist63%

Generalist37%

867

37384446

North America

General Agency Services and Full Service Digital were the two largest sub-sectors, with 210 and 114 transactions respectively

In 543 of the 867 transactions (63%), acquirers were targeting specific capabilities

Strategic Communications was the most sought-after specialist capability with 96 transactions announced in the year

413

151

59

51

34

33

6

N.America-Europe (Excl. UK)26

UK-Europe (Excl. UK)16Europe (Excl. UK)-N.America

12

China-Europe/N.America7

UK-Australasia7

Europe (Excl. UK)-UK20

UK-N.America21

Other68

N.America-UK26

203

IN 95% OF ALL TRANSACTIONS, THE ACQUIRER WAS EITHER EUROPEAN OR NORTH AMERICAN, WITH 77% BEING DOMESTIC TRANSACTIONS

The Global Networks were responsible for 8% of the total transactions announced in Marketing Services

In 39% of transactions, the acquirer’s core business offering / heritage was outside of Marketing Services, from sectors such as IT Services and Software, Consulting, Publishing or Broadcasting

Financial investors were responsible for 11% of the transactions announced, including several of the largest disclosed transactions in the year

TARGET LOCATION

UK Europe (excl. UK) US

BU

YER

LO

CA

TIO

N UK 102 16 19

Europe (excl. UK) 20 188 10

US 24 24 360

RoW 5 5 24

Total 151 233 413

Other 198

France 62UK 146

NorthAmerica 461

Other Europe 116

Germany 42

Asia 5China 7

Australasia 28

Marketing Services53%

Software and IT Services7%

Consultancies5%

Global Networks8%

Other16%

Financial Investor11%

867

Split of cross border transactions1

Transactions by acquirer typeTransactions by acquirer location

Source: Capital IQ and JEGI | Clarity research. Transactions announced between 01/01/2016 and 31/12/2016 where the target is headquartered in North America, Europe or Australasia within the marketing services space.Note: 1 Buyer’s geography – Target’s geography.

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WE HAVE LOOKED AT WHERE THE TOP 10 SERIAL ACQUIRERS HAVE BEEN INVESTING

Source: Capital IQ and JEGI | Clarity research. Transactions announced between 01/01/2016 and 31/12/2016 where the target is headquartered in North America, Europe or Australasia within the marketing services space.Note: Havas, Omnicom and Next Fifteen also announced 4 transactions each. Key geographies and capabilities listed above have been ranked by deal volume.One of the 8 transactions announced by The Marketing Group in 2016 involved the acquisition of 4 agencies. These have been grouped as a single transaction.

Top 10 acquirers were responsible for 103 transactions (12% of total)

Number of transactions in 2016#

Key Geographies:– United States (7)– Australia (3)– United Kingdom (2)22

Key Capabilities:– Agency Services (10)– Performance Marketing (4)– Full Service Digital (3)

Key Geographies:– United Kingdom (4)– United States (2)– Australia (2)8

Key Capabilities:– Agency Services (4)– Full Service Digital (3)– Specialist Digital (1)

Key Geographies:– United Kingdom (3)– United States (3)– Australia (2) 9

Key Capabilities:– Specialist Digital (2)– Strategic Comms (2)– Consultancy (2)

Key Geographies:– United States (9)– United Kingdom (2)– Netherlands (2) 23

Key Capabilities:– Specialist Digital (6)– Agency Services (5)– Full Service Digital (3)

Key Geographies:– Netherlands (3)– Germany (1)– United Kingdom (1)5

Key Capabilities:– Full Service Digital (2)– Agency Services (1)– Specialist Digital (1)

Key Geographies:– United Kingdom (1)– United States (1)– Australia (1)5

Key Capabilities:– Specialist Digital (2) – Agency Services (1)– Technology Services (1)

Key Geographies:– France (3)– Germany (1)4

Key Capabilities:– Strategic Comms (2)– Agency Services (1)– Research (1)

Key Geographies:– United States (3)– Germany (2) 5

Key Capabilities:– Full Service Digital (3)– Technology Services (1)– Specialist Digital (1)

Key Geographies:– United Kingdom (2)– Germany (1)– Netherlands (1) 6

Key Capabilities:– Agency Services (2)– Specialist Digital (2)– Technology Services (1)

Key Geographies:– Spain (1)– Germany (1)– Poland (1) 4

Key Capabilities:– Agency Services (2)– Full Service Digital (2)

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NOTABLE TRANSACTIONS OF 2016

Some of the largest transactions were led by financial investors

DATE TARGET ACQUIRER SECTOR VALUE1 ($M)

Dec-16 NeuStar Golden Gate Capital MarTech 2,900

Nov-16 V12 Group and DataMentors

ABRY and Brook Venture Partners MarTech Not

disclosed

Nov-16 Ansira Advent Full Service Digital

Not disclosed

May-16 Marketo Vista Equity Partners MarTech 1,790

Apr-16 Sitecore EQT MarTech 1,139

Dentsu and WPP were the most active of the global networks

DATE TARGET ACQUIRER SECTOR VALUE1 ($M)

Oct-16 Triad Digital Media WPP AdTech Not disclosed

Sep-16 Accordant Media Dentsu AdTech Not disclosed

Aug-16 Merkle Dentsu Performance Marketing 1,500

Jul-16 Gyro Dentsu Agency Services Not disclosed

Mar-16 Communications Media WPP Agency Services Not

disclosed

Chinese interest in marketing services assets

DATE TARGET ACQUIRER SECTOR VALUE1 ($M)

Nov-16 Framestore Consortium of Chinese buyers led by CIH

Content Production

Not disclosed

Sep-16 AppLovin Orient Hontai Capital MarTech 1,400

Sep-16 Media.net Miteno AdTech 900

Jun-16 Smaato Spearhead AdTech 148

May-16 Propaganda GEM Dalian Wanda Agency Services Not disclosed

Other notable transactions

DATE TARGET ACQUIRER SECTOR VALUE1 ($M)

Nov-16 Mirabeau Cognizant Technology Services

Not disclosed

Nov-16 TubeMogul Adobe AdTech 626

Oct-16 Krux Digital Salesforce MarTech 768

Feb-16 Tapad Telenor MarTech 360

Jan-16 Resource/Ammirati IBM Full Service

DigitalNot

disclosed

Source: Capital IQ and JEGI | Clarity research. Transactions announced between 01/01/2016 and 31/12/2016 where the target is headquartered in North America, Europe or Australasia within the marketing services space.Note: 1 Where the transaction value was not disclosed an estimate has been provided where available.

JEGI | Clarity transactions in 2016

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DRILLING FURTHER INTO THE GLOBAL NETWORKS

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ACROSS ALL GEOGRAPHIES, M&A ACTIVITY BY THE GLOBAL NETWORKS HAS SLOWED TO ITS LOWEST LEVEL IN 5 YEARS

Source: Capital IQ and JEGI | Clarity research. Transactions announced by the Global Networks between 01/01/2016 and 31/12/2016 regardless of location of target.Note: 1 Please note that this is distinct from the analysis upfront where the focus was on transactions with targets headquartered in North America, Europe and Australasia exclusively in the marketing services space (where 67 transactions were announced).

2008

90 transactions

2009

27 transactions

2010

54 transactions

2011

98 transactions

2012

127 transactions

2013

115 transactions

2014

132 transactions

2015

116 transactions

2016

103 transactions

The Global Networks announced 103 transactions in 2016. This includes all geographies and all sectors1

Of these, 67 transactions were in Marketing Services where the target was based in Europe, North America and Australasia

Volume in H1 2016 was higher than H2 with 56 vs. 47 transactions announced respectively. This compares to 56 transactions in H1 2015 and 60 in H2 2015

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AFTER OVERTAKING PUBLICIS IN 2015, DENTSU SURPASSES WPP TO BECOME THE MOST ACQUISITIVE GLOBAL NETWORK IN 2016

16

26

40

27

17

17

143

22

22

11

27

25

23

130

59

10

13

10

13

60

410

79

129

51

811

4

64

5

38

33

269

44

64

51

32

45

20152014201320122011 2016

Source: Capital IQ and JEGI | Clarity research. Transactions announced by the Global Networks between 01/01/2016 and 31/12/2016 regardless of location of target.

Transactions by Global Networks in 2016

Dentsu39%

103

Omnicom5%

Havas4%

Publicis10%

IPG10%

WPP32%

In 2016, the most acquisitive Global Network across all geographies was Dentsu with 40 transactions, overtaking WPP, who had been the top acquirer in each of the previous 8 years

This increase in M&A activity by Dentsu is in line with its strategy to become a 100% digital business by 2020, using acquisitions as a key accelerator

Amongst the largest transactions by the Global Networks was Dentsu’s acquisition of Merkle, the US-based data-driven, technology-enabled performance marketing agency

Notably, the level of deal activity from both WPP and Publicis was sharply down on previous years

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NORTH AMERICA AND EUROPE ACCOUNTED FOR OVER 50% OF THE TRANSACTIONS ANNOUNCED BY THE GLOBAL NETWORKS

Germany4%

UK10%

North America31%

Latin America8%

Africa5%

Other Asia10%

India3%

Other Europe11%

Australasia7%

China7%

France4%

103

Full Service Digital15%

Specialist Digital16%

Agency Services28%

MarTech1%

Technology Services1%

Other4%

Content Production2%

Research2%

Performance Marketing9%

AdTech6%

Consultancy4%

Strategic Communications14%

103

Transactions by target location Transactions by target capability

Source: Capital IQ and JEGI | Clarity research. Transactions announced by the Global Networks between 01/01/2016 and 31/12/2016 regardless of location of target.

In 2016, the Global Networks interest switched to North America

In 31% of transactions the target was located in North America (18% in 2015), 29% in Europe (38% in 2015), 20% Asia (19% in 2015), 7% Australasia (10% in 2015) and 13% RoW (16% in 2015)

57% of transactions announced by the Global Networks were targeting specific capabilities with the remainder of transactions targeting general Agency Services or Full Service Digital

Of the specific capabilities, Specialist Digital (16%) and Strategic Communications (14%) were the most targeted

LONDONClarity, 90 Long Acre London WC2E 9RA +44 20 3402 4900 | www.claritycp.com

SYDNEYClarity, L35, Tower One, International Towers 100 Barangaroo Avenue Sydney, NSW 2000 +61 2 8046 6840 | www.claritycp.com

NEW YORK JEGI, 150 East 52nd Street18th FloorNew York, NY 10022 +1 212 754 0710 | www.jegi.com

BOSTON JEGI, CIC Boston, 50 Milk Street16th FloorBoston, MA 02109+1 617 294 6555 | www.jegi.com