1. Executive Summary

Industry overview (macro + sector-specific)

Advertising & Marketing Services is in the middle of a structural shift from labor-intensive, campaign-based agency models to technology-enabled, data-driven, outcome-linked marketing. Key macro and sector forces shaping M&A right now:

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• Ad spend rotation rather than contraction. Budgets are increasingly flowing to performance marketing, commerce/retail media, influencer, and CRM/lifecycle channels, while slower-growth traditional brand advertising and some linear media remain under pressure. This is pushing acquirers toward assets that are measurable, digitally native, and tied to transaction outcomes. (Ciesco, Davidson Capital Advisors, Houlihan Lokey)
• AI as both a catalyst and a threat. Generative AI is raising expectations for speed, personalization, and cost efficiency in creative, media optimization, and analytics. Buyers are targeting agencies and platforms with proprietary data, AI-native workflows, or automation IP to defend margins and accelerate capability buildout. (Reuters, Houlihan Lokey)
• Convergence of services + martech/AdTech + CX. Agency holding companies and consultancies are increasingly competing for the same budgets (full-funnel revenue), driving M&A that blends creative + media + data + technology + commerce enablement. (Houlihan Lokey, Houlihan Lokey)

Net: the sector is healthy but bifurcated. Scaled, tech-enabled, performance-heavy businesses command premium interest, while slower-growth, traditional agencies face pricing and margin challenges.

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Recent M&A momentum (deal count, value)

• Strong rebound in 2024: Global media & marketing M&A reached 2,306 transactions, up 12% YoY. Total disclosed value was $129.8B (-11% YoY), but mid-market value surged: excluding mega-deals, disclosed value rose 47% to $63.8B. (Ciesco, Ciesco)
  
  
• What this means: even with fewer megadeals, buyers were very active in capability tuck-ins and roll-ups—a classic sign of a consolidating but growth-seeking services sector.
  
  

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High-level multiples & key trends

Public market valuation (directional, 2025E):

• Agencies trade at a discount vs. tech-enabled peers due to cyclicality and AI disruption risk.
  
  
• Martech-enabled and CX/digital transformation assets hold a premium for recurring revenue and scalable delivery. (Houlihan Lokey, Houlihan Lokey)
  
  

Private market (directional):

• Generalist SMB agencies: typically mid-single digit EV/EBITDA.
  
  
• Performance / commerce / data / AI-specialist assets: high-single to low-double digit EV/EBITDA, depending on growth, retention, and scarcity of capability.
  
  

Key valuation drivers investors are underwriting:

1. Revenue quality: retainer/recurring vs. project, % performance/usage-based, and martech attach.
   
   
2. Organic growth visibility: especially in commerce, retail media, and lifecycle marketing.
   
   
3. Margin durability: AI automation can expand margins, but competitive pricing can offset.
   
   
4. Data/IP ownership: first-party identity, proprietary analytics, verticalized datasets.
   
   

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Major players / consolidators

Strategic consolidators

• Holding companies: Omnicom (now integrating IPG), Publicis, WPP, Dentsu, Havas. The big groups are rebuilding portfolios around data + media + AI + commerce stacks. (Ciesco, Little Black Book, Axios, Reuters)
  
  
• Tech/consulting acquirers: Global consultancies and tech services firms continue to buy agencies for CX + digital experience + performance marketing delivery (often folding them into broader transformation offers). (Houlihan Lokey, Houlihan Lokey)
  
  

Financial sponsors

• PE remains active mainly via platform + add-on rollups in performance marketing, ecommerce enablement, influencer networks, and analytics. Although sponsor share dipped in 2024, dry powder and improving financing are still supporting add-ons. (Ciesco, SI Global)

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Summary of Key Metrics

2. Industry M&A Market Overview

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Deal activity trends (Y/Y and Q/Q)

Annual global volume (Media & Marketing M&A)

• 2024 marked a clear rebound: 2,306 transactions globally, up 12% YoY vs. 2023. (Ciesco)
  
  
• Deal count has now exceeded pre-rate-shock levels, driven by steady mid-market consolidation and capability tuck-ins rather than a surge in megadeals. (Ciesco, Houlihan Lokey)
  
  

Quarterly cadence / latest run-rate

• Marketing services M&A softened modestly in 1H 2025 vs. 2H 2024, but remained healthy:
  
  
  
  • Q2 2025: 134 deals
    
    
  • 1H 2025 total: 266 deals (+8% vs. 1H 2024) (Houlihan Lokey)
    
    
• Interpretation: a normalization from a very strong late-2024, not a downturn. Buyers are still active, especially for performance, commerce, data/analytics, and AI-enabled targets. (Houlihan Lokey, Stephens, SI Global)
  
  

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Notable megadeals

Megadeals remain episodic in this sector, but when they occur they reshape competitive dynamics:

• Omnicom ↔ Interpublic (IPG) merger (announced Dec 2024; closed 2025): a landmark holding-company combination intended to create the largest global agency group, with $750M expected cost synergies and deeper pooled data/media capabilities. (Ciesco, Houlihan Lokey)
  
  
• Potential next wave of large-scale reconsolidation: Examples include S4 Capital’s merger talks with MSQ Partners (reported Aug 11, 2025), underscoring pressure on sub-scale digital networks to seek partners as AI and procurement squeeze margins. (Reuters)

Takeaway: megadeals are strategic “reset” moves to gain scale in data, media, and AI-enabled delivery, but the center of gravity remains mid-market. (Ciesco, Houlihan Lokey)

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Private equity vs. strategic acquirer share

2024 buyer mix (global)

• Strategic buyers dominated: ~67% of transactions (1,550 deals), +21% YoY.
  
  
• PE share fell to ~33% (756 deals), -4% YoY, reflecting higher cost of capital and preference for add-ons over new platforms. (Ciesco)
  
  

2025 pattern

• PE has re-focused on roll-ups in performance marketing and ecommerce agencies; >40 PE-owned platforms are actively consolidating digitally-native assets. (Stephens)
  
  
• Strategics continue to buy for AI/data, commerce, and vertical specialization — typically smaller, high-synergy targets. (Houlihan Lokey, SI Global)
  
  

Implication for process dynamics: competitive tension is highest where PE platforms and strategics overlap (performance, data, AI creative), supporting premium multiples for scarce assets. (Stephens, SI Global)

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Capital availability

• Financing conditions improved into 2025 as rates stabilized; sponsors still have substantial dry powder, translating into continued add-on velocity even as platform deals remain selective. (Houlihan Lokey, SI Global)
  
  
• Lenders underwrite most aggressively when targets show:
  
  
  
  1. Recurring/retainer revenue or durable performance fees
     
     
  2. High retention + measurable ROI
     
     
  3. Scalable delivery model (tech + nearshore + AI automation) (Houlihan Lokey, Stephens)

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M&A Volume/Value by Year

Map of Global Deal Hotspots

3. Valuation Multiples & Comps

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Median EV/Revenue, EV/EBITDA by sub-sector (public comps)

Using Houlihan Lokey’s Q2 2025 Marketing Services Market Update (S&P Capital IQ data as of June 30, 2025): (Houlihan Lokey)

Interpretation: The market consistently pays up for recurring, tech-enabled, and CX-adjacent revenue, while “classic” agencies trade cheaper because they’re more sensitive to ad-spend cycles and margin pressure.

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Historical multiple ranges (3–5 year view)

Public multiples in this space have moved in three phases:

1. 2020–21 expansion: ad-spend recovery + digital acceleration lifted agency and martech valuations.
   
   
2. 2022–23 compression: rate shock, macro uncertainty, and early AI disruption headlines pushed multiples down across agencies.
   
   
3. 2024–25 stabilization / bifurcation:
   
   
   
   • Tech/data-forward groups (e.g., Publicis) held premiums.
     
     
   • Legacy-heavy or sub-scale players saw persistent multiple pressure, highlighted by WPP’s sharp market-cap decline and underperformance through 2025. (The Guardian, The Times)

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Comparison to S&P 500 / related industries

• Agency multiples (~7–8x EV/EBITDA) sit below broad-market services and far below software, reflecting lower growth visibility, higher labor intensity, and AI-driven pricing risk. (Houlihan Lokey)
  
  
• CX digital and tech-enabled marketing services narrow that gap thanks to recurring programs, platform integration work, and more defensible differentiation. (Houlihan Lokey)

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Historical Valuation Multiples

Comps Table - Peer Multiples & Financials

4. Top Strategic Acquirers & Investors

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Active acquirers (last 12–24 months)

The buyer landscape splits into (A) global holding companies, (B) next-gen agency networks, (C) consultancies/tech services, and (D) martech/data platforms. Across all groups, the most consistent themes are AI enablement, first-party data/identity, influencer/creator scale, commerce/retail media, and CX integration.

A. Global holding companies (scale + data/AI stacks)

1. Omnicom (incl. IPG integration)
   
   
   
   • Flagship deal: Omnicom’s ~$13B acquisition of Interpublic (IPG), completed in 2025, creating the largest agency group globally and targeting ~$750M in cost synergies. (Financial Times, McCracken Advisory Partners)
   • Thesis: gain scale in media buying, unify data assets, fund AI platforms, and defend margins through consolidation.
     
     
2. Publicis Groupe
   
   
   
   • High-tempo bolt-on program:
     
     
     
     • Influential (creator/influencer platform, July 2024). (Publicis Groupe, Campaign Live)
     • Mars United Commerce (commerce/retail media, Sept 2024). (Marketing Dive, Campaign Live)
     • Lotame (data/ID graph, Mar 2025). (Reuters, Campaign Live)
     • Additional 2025 regional/digital tuck-ins (e.g., BR Media Group, Dysrupt, Adopt). (Campaign Live)
       
       
   • Thesis: expand first-party identity + creator scale + commerce enablement, all wired into Epsilon and an AI-centric operating model. (Reuters, The Times)
     
     
3. Havas
   
   
   
   • Recent deal: acquired Australian indie media agency Kaimera (Dec 2025), keeping it as a specialist brand inside Havas Media Network. (The Australian)
   • Thesis: strengthen regional media scale and accelerate its Converged.AI roadmap. (The Australian)
     
     
4. WPP
   
   
   
   • Fewer disclosed acquisitions recently, but still an active capability buyer in AI/data partnerships and targeted fills while undergoing restructuring. (The Times, The Times)
   • Thesis: stabilize core network and re-platform toward AI-enabled delivery; M&A is selective due to internal turnaround needs.
     
     
5. Dentsu
   
   
   
   • Consistent acquirer historically and remains active in data, CX, and performance agencies, particularly in APAC/EMEA. (Agency Mania, MediaNews4U)
   • Thesis: reinforce digital transformation and performance services around its strong Japan base.
     
     

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B. Next-gen agency consolidators (mid-market rollups)

6. Stagwell
   
   
   
   • 2024–25 acceleration: ~11 acquisitions in 2024 and multiple in 2025, including:
     
     
     
     • ADK Global (intent announced Jan 2025) and
       
       
     • Gold Rabbit Sports (sports partnerships/activation) and
       
       
     • JetFuel (experiential/creative, May 2025). (weareteam.com, Stagwell, Yahoo Finance)
   • Thesis: build a “challenger network” focused on digital performance, experiential, and advocacy/communications, keeping assets mid-sized and high-growth. (Axios, Yahoo Finance)
7. S4 Capital / MSQ Partners (potential consolidators)
   
   
   
   • Reported 2025 merger talks show sub-scale digital networks seeking scale to compete in AI and procurement-driven markets.
     
     
   • Thesis: consolidate digital creative + content + performance to restore margin leverage.
     
     

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C. Consultancies & tech services (CX + build-operate-market)

8. Accenture Song (and broader Accenture)
   
   
   
   • Accenture remains the largest consultancy buyer of agencies globally; consultancies represent ~24% of marcom M&A since 2016. (MediaNews4U)
     
     
   • Thesis: own the end-to-end enterprise growth stack: strategy → experience design → build → market → measure.
     
     
9. Deloitte Digital / PwC / Capgemini / Infosys / Cognizant
   
   
   
   • Continue acquiring digital marketing and data agencies to deepen CX transformation capabilities, often emphasizing AI, cloud martech, and commerce enablement. (MediaNews4U, Capstone Partners)
     
     

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D. Martech / data platforms (identity, measurement, automation)

10. Zeta Global & identity-centric platforms
    
    

• Zeta + LiveIntent (Oct 2024, $250M + earnout) is emblematic: buying first-party identity + publisher monetization. (Legacy Advisors, Capstone Partners)
• Thesis: capture signal and measurement advantage as cookies phase out.
  
  

11. Adobe/Salesforce ecosystem partners & retail-media enablers
    
    

• More tuck-ins into CDP, clean rooms, and retail-media tooling to bolster platform breadth. (Legacy Advisors, Capstone Partners)
  
  

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Investment theses — what buyers are paying for

Across strategic categories, the common acquisition logic is:

1. First-party data & identity durability
   
   
   
   • Buying ID graphs, clean-room capability, or sector-specific datasets to preserve targeting/measurement. (Reuters, Capstone Partners)
     
     
2. Creator/influencer and social performance at scale
   
   
   
   • Move budgets into high-growth channels with measurable ROI (Publicis-Influential). (Publicis Groupe, Campaign Live)
3. Commerce + retail media enablement
   
   
   
   • Tuck-ins that connect media to transaction outcomes (Publicis-Mars United). (Marketing Dive, Campaign Live)
     
     
4. AI-native creative/optimization and workflow IP
   
   
   
   • Acquiring automation, content production, and optimization layers to defend margins and speed delivery. (Capstone Partners, The Australian, The Times)
     
     
5. CX integration
   
   
   
   • Consultancies/holding cos buying agencies to stitch marketing into enterprise transformation programs. (MediaNews4U, Capstone Partners)
     
     

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PE platforms & roll-up strategies

PE is highly active but tilted toward platform add-ons in fragmented niches:

• Performance & digital demand-gen platforms: buying SEO/PPC, paid social, CRO, and ABM boutiques.
  
  
• Ecommerce/retail-media agencies: Amazon/Walmart/Instacart specialists are frequent add-ons.
  
  
• Influencer/creator networks: scalable creator supply + tooling.
  
  
• Data/analytics services: attribution, MMM, and customer intelligence specialist shops.
  
  

Recent PE commentary suggests a return of platform formation into 2025 as financing loosens, with tech-enabled providers still clearing premium multiples. (Capstone Partners, SI Global, Business Insider)

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Logo Grid: Active Acquirers

Deals by Acquirer, Value, Rationale

5. Transaction Case Studies (Representative Deals)

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Below are four recent, high-signal transactions illustrating the main vectors of consolidation in Advertising & Marketing Services: holding-company scale, creator economy capability, first-party identity/data, and martech platform expansion. These are not recommendations—just sector context.

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Case Study A — Omnicom ↔ Interpublic Group (IPG): Holding-Company Scale Reset

One-page snapshot

6. Valuation Framework & Modeling

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This section explains how deals are valued and underwritten in Advertising & Marketing Services today, what premiums look like, and the typical modeling levers that drive purchase price. It’s presented as a framework and example assumptions only (non-advisory).

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How deals are priced in practice

Buyers and bankers almost always triangulate three lenses:

1) Trading comparables (public comps)

• Anchor the market clearing range for EV/Revenue and EV/EBITDA by sub-sector:
  
  
  
  • Classic agencies screen lower due to cyclicality, labor intensity, and perceived AI disruption.
    
    
  • Tech-enabled marketing services / data / CX peers clear premiums for recurring revenue and defensible IP.
    
    
• In processes, public comps set:
  
  
  
  • Downside floor for a buyer’s “walk-away” price.
    
    
  • A narrative benchmark for why a target deserves to trade above/below median.
    
    

2) Precedent transactions

• Most critical for agencies because deal value is capability-specific:
  
  
  
  • Performance + commerce agencies
    
    
  • Creator/influencer platforms
    
    
  • Data/identity assets
    
    
  • CX/digital transformation shops
    
    
• Precedents are typically adjusted for:
  
  
  
  • Scale discount/premium
    
    
  • Growth differential
    
    
  • Margin structure
    
    
  • Revenue quality (retainer vs project vs performance fees)
    
    
• In a sale process, precedents define a “scarcity premium” band for in-demand capabilities.
  
  

3) DCF / cash-flow underwriting

Used more heavily for:

• Large, diversified agencies / networks
  
  
• Retainer-heavy digital/CX businesses
  
  
• Martech-enabled services where cash flow durability is clearer
  
  

Key steps:

1. Forecast net revenue (gross revenue minus pass-through media and production costs).
   
   
2. Build margin evolution with explicit productivity/AI assumptions.
   
   
3. Add working capital and capex (usually light for services, higher for tech-enabled models).
   
   
4. Discount at a sector-appropriate WACC and apply a conservative terminal value.
   
   

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Typical control premiums

Public targets

• Control premiums for public marketing businesses are usually driven by:
  
  
  
  • Synergy density (cost saves + media scale + tech leverage)
    
    
  • Strategic urgency (data/AI/commerce gaps)
    
    
  • Competitive tension (PE + strategic overlap)
    
    
• Result: premiums often land in a mid-double-digit % band in competitive situations, with wider dispersion in megamergers.
  
  

Private targets

• Premium is more visible via EBITDA multiple “uplift” vs. trading screens.
  
  
• Add-on deals are typically priced:
  
  
  
  • At or slightly above platform multiple when highly synergistic or scarce.
    
    
  • Below platform multiple if scale is small or integration risk is high.
    
    

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Key model drivers in this sector

Advertising & Marketing Services valuation is especially sensitive to net revenue growth and margin durability.

Revenue drivers

1. Organic growth rate
   
   
   
   • Strongest in: performance marketing, commerce/retail media, CRM/lifecycle, creator ecosystems, and vertical B2B specialists.
     
     
2. Revenue mix quality
   
   
   
   • Retainers and recurring managed services = higher visibility → higher multiple.
     
     
   • Project/creative-only revenue = lower visibility → discounted multiple.
     
     
3. Client concentration & churn
   
   
   
   • Small agency risk: a few clients can drive most profit.
     
     
4. Pricing power
   
   
   
   • AI can reduce delivery cost but also pressures pricing if clients expect savings.
     
     

Margin drivers

1. EBITDA margin level and trajectory
   
   
   
   • Scale agencies tend to normalize in the low-to-high teens.
     
     
2. Utilization and headcount productivity
   
   
   
   • The most important cost lever for agencies.
     
     
3. AI efficiency impact
   
   
   
   • Buyers increasingly model explicit automation savings.
     
     
4. Off/near-shoring mix
   
   
   
   • Often modeled as gradual margin uplift via blended labor cost.
     
     

Cash-flow / balance-sheet drivers

1. Working capital
   
   
   
   • Agencies can be cash generative if billing cycles are favorable; pass-through media can distort “revenue” vs cash.
     
     
2. Capex
   
   
   
   • Usually low, but higher if the target runs proprietary martech/AI.
     
     

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Example modeling assumptions (illustrative, non-advisory)

Base operating case (mid-market digital-first agency)

Notes on assumption logic

• Growth band reflects current demand for measurable performance + commerce outcomes.
  
  
• Margin ramp reflects AI automation + operational scale net of pricing pressure.

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Sample DCF Input Summary

Sensitivity Analysis Table

7. Trends & Strategic Themes

Sector-specific shifts shaping dealmaking

1) AI becomes core to both why deals happen and how targets are integrated

• 2025 is a pivot year where buyers are no longer “experimenting” with AI—they’re restructuring organizations around it. Omnicom’s post-IPG integration is explicitly centered on unifying data/AI platforms and rationalizing overlapping agency brands to fund automation. (The Current, Mobile Marketing Reads, Research Live)
• Strategic logic: AI lowers cost-to-serve, but also forces scale + data depth. That’s pushing (a) holding-co consolidation and (b) tuck-ins for AI-native capabilities. (The Current, Ciesco, KPMG)

2) Retail media + commerce outcomes are now the highest-tempo M&A adjacency

• Retail media is forecast to overtake TV ad revenue in 2025, underscoring a structural reallocation toward transaction-linked channels. (The Wall Street Journal)
• Buyers are building full-funnel commerce stacks (retail media, onsite search, marketplace ops, measurement), driving acquisitions of commerce agencies, retail-media specialists, and enabling tech. (The Wall Street Journal, Business Insider, Capstone Partners)
  
  

3) Creator / influencer platforms are consolidating

• Influencer/creator marketing is repeatedly cited as a top 2025 deal theme alongside AI and retail media. (Business Insider, Ciesco)
  
  
• Rationale: brands want scaled creator supply + deterministic measurement, which favors platforms and large agencies that can industrialize workflows.
  
  

4) Bid-for-growth + bid-for-efficiency simultaneously

• Ad spend growth expectations for 2025 were revised upward, largely due to AI-driven productivity and resilient demand, which improves revenue underwriting for targets. (The Wall Street Journal)
  
  
• At the same time, buyers are still squeezing cost via integration synergies and AI automation. This “growth + efficiency” combo supports continued M&A even without major multiple expansion. (The Current, Mobile Marketing Reads)
  
  

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Emerging business models attracting premiums

AI-enabled service delivery

• Targets that have AI embedded into production, media optimization, or attribution are being valued as scalable tech-enabled services, not labor-heavy agencies. (Stephens, Capstone Partners, KPMG)

B2B SaaS-style marketing services

• Fast-growing pockets look more like SaaS: recurring retainers, usage-linked performance fees, and embedded tooling. Buyers pay up for visibility and lower churn. (Stephens, Capstone Partners)
  
  

Nearshoring / global delivery hubs

• As AI compresses low-level production work, agencies are pairing automation with nearshore talent to protect margins. This increases interest in regionally strong, delivery-advantaged platforms (APAC, MENA, Eastern Europe). (Ciesco, KPMG)

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Antitrust / regulatory changes

• The headline regulatory focus in the sector has been on large holding-company combinations, particularly Omnicom-IPG, which underwent multi-jurisdiction review before closing in late 2025. (Research Live, The Current)
  
  
• Practically, most mid-market tuck-ins and PE add-ons face low antitrust friction, so consolidation continues below the mega-deal tier. (Ciesco, Capstone Partners)
  
  

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Expert POV: forward-looking commentary (non-advisory)

• The sector is bifurcating faster:
  
  
  
  • Premium lane: data/identity, commerce outcomes, AI-native production, creator platforms, CX transformation.
    
    
  • Discount lane: generalist creative-only agencies with project-heavy mixes and weak tech/data moats. (Stephens, The Wall Street Journal, KPMG)
    
    
• Scale will matter again, but only “scale-with-tech.” Omnicom-IPG is a signal that holding companies need enough size to fund AI and compete with platform ecosystems. (The Current, Mobile Marketing Reads)
  
  
• PE roll-ups remain a structural feature. With 40+ PE-owned platforms actively buying in performance marketing, scarcity for high-quality targets stays high. (Stephens, Capstone Partners)

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Timeline of Trend Emergence

8. 2025–26 Market Outlook

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Expected M&A drivers (2025 into 2026)

1) Macro tailwinds: improving deal environment + rising ad spend

• Broader M&A expectations across Wall Street are optimistic into 2026, supported by lower financing costs and CEO confidence. (Reuters, Reuters)
• Advertising spend growth has been revised upward for 2025 and remains positive into 2026, improving revenue visibility for agency and martech targets. WPP Media now forecasts ~8.8% global ad-spend growth in 2025 and expects continued growth in 2026. (Axios, The Wall Street Journal, WPP Media)

Implication: Stronger top-line outlook increases buyers’ willingness to underwrite growth and pay for scarce capabilities.

2) “Scale-to-fund-AI” consolidation

• The Omnicom–IPG merger reset the strategic logic for holding companies: scale is a prerequisite to fund AI platforms, data integration, and margin defense. (Reuters, Capstone Partners)

Implication: Expect more large-network portfolio reviews, selective mergers, and divestitures of non-core/low-growth agency assets.

3) Scarcity premiums for data/identity and measurable performance

• Buyers continue to prioritize first-party identity graphs, measurement, attribution, and martech-enabled services, because privacy changes and AI tools raise the value of deterministic signal. (Capstone Partners, IAB)
  Implication: Deal flow should remain strongest in performance marketing, CRM/lifecycle, clean-room/ID, and analytics/insights.
  
  

4) Commerce & retail media adjacency stays hottest

• Retail media is projected to surpass TV ad revenue in 2025, growing double digits. (The Wall Street Journal, EMARKETER)
  Implication: Continued M&A for commerce agencies, retail-media specialists, marketplace ops, and enabling tech; incumbents fill gaps fast.
  
  

5) PE re-acceleration and platform formation

• Sector reports indicate PE add-ons remained resilient through 2024–25 and are poised to re-accelerate as capital costs ease, especially in performance/commerce niches. (Ciesco, Stephens, Capstone Partners)
  Implication: Expect ongoing roll-ups plus renewed platform acquisitions in 2026.
  
  

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Headwinds / constraints

1) Multiple expansion is not guaranteed

• Even with better macro, public-market comps in classic agencies remain in a lower band; buyers still demand clear growth/AI leverage to pay up. (Stephens, Capstone Partners)
  Net effect: pricing stays bifurcated—premium for scarce assets, discipline elsewhere.
  
  

2) AI-driven pricing pressure

• AI lowers delivery cost, but buyers increasingly model a share-back to clients through lower fees—so margin uplift isn’t automatic. (Ciesco, Capstone Partners)
  
  

3) Integration & talent risk

• With faster M&A cadence, the limiting factor becomes integration capacity and talent retention—especially for founder-led agencies and creator platforms. (Legacy Advisors, Capstone Partners)

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Buy-side vs. sell-side positioning (2025→26)

Buy-side priorities

1. Data/identity + measurement (cookieless durability)
   
   
2. Retail media & commerce outcomes
   
   
3. Creator/influencer at scale
   
   
4. AI-native production + optimization tooling
   
   
5. CX integration / digital transformation adjacencies
   Supported by ad-spend growth and an improving deal tape. (Axios, The Wall Street Journal, Capstone Partners)
   
   

Sell-side opportunities

• Best-positioned sellers are those with:
  
  
  
  • Recurring retainers or managed-services revenue
    
    
  • Proprietary data or workflow IP
    
    
  • Clear AI productivity story
    
    
  • Vertical specialization (healthcare, fintech, SaaS, retail media)
    These attributes are what clears premium bids in current sponsor and strategic screens. (Stephens, Capstone Partners)

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Funnel of Deal Types by Strategic Priority

Outlook Grid: Short / Mid / Long Term

9. Appendices & Citations

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This section provides (A) a compact deal appendix you can drop into slides, (B) data/methodology notes for how the earlier sections were built, and (C) a hyperlinked reference list. All information is for market context only (no investment advice).

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Deal Appendix (selected recent transactions)

A1) Representative, disclosed / widely reported deals (2024–2025)
CSV-ready format:

A2) Broader marketing services M&A pace (context numbers)
Houlihan Lokey’s Q2’25 sector update reports:

• 266 marketing services transactions in 1H 2025, including 134 in Q2 2025,
  
  
• Volume down vs. strong 2H 2024, but still ~8% above 1H 2024, indicating resilient buyer appetite. (Houlihan Lokey, Houlihan Lokey)

A3) Additional listed “highlights” from sector tape
HL’s deal-highlights page shows a mix of sponsor and strategic add-ons across digital CX, strategic comms, market research, influencer marketing, and B2B managed marketing services. (Houlihan Lokey)

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Data sources used in this report

Core M&A / market activity

• Houlihan Lokey Marketing Services Market Update Q2 2025 (deal counts, subsector activity commentary, public comps). (Houlihan Lokey)
• Company press releases / earnings materials for deal confirmations (Publicis, Lotame, Stagwell). (Lotame Solutions Site, Stagwell, Publicis Groupe)
• Reputable business press (Reuters, Business Insider, Axios) for large-cap merger details and post-deal integration updates. (Reuters, Business Insider, Axios)

Valuation and multiples

• HL public comparables tables (EV/Revenue, EV/EBITDA medians by marketing agencies vs. tech-enabled/CX peers). (Houlihan Lokey)
  
  
• S&P Capital IQ (as cited by HL) as the underlying market-data provider. (Houlihan Lokey)
  
  

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Methodology (how the numbers/insights were built)

Deal activity

1. Scope: Advertising & Marketing Services including: holding companies, digital/performance agencies, CX/digital transformation, influencer/creator platforms, commerce/retail-media services, and marketing data/identity.
   
   
2. Counting convention: HL deal counts include announced marketing services transactions globally; mostly mid-market add-ons, with fewer megadeals. (Houlihan Lokey)
   
   
3. Value disclosure: Many agency deals are private/undisclosed; deal-value analysis therefore emphasizes trend direction and strategic mix rather than a complete value census. (Houlihan Lokey)
   
   

Multiples

1. Public comps: Pulled from HL tables as of 6/30/2025, grouped into:
   
   
   
   • Marketing Agencies / Holding companies
     
     
   • Marketing Services (non-agency, tech-enabled)
     
     
   • CX/Digital Transformation peers
     HL reports medians and means for EV/Revenue and EV/EBITDA to characterize the market range. (Houlihan Lokey)
     
     
2. Interpretation: We focus on median multiples to reduce outlier distortion (common in small-cap martech).
   
   
3. Comparability guardrails: Multiples are interpreted alongside growth and margin profile because sector pricing is quality-bifurcated (data/AI/commerce premium vs. generalist discount). (Houlihan Lokey)
   
   

Modeling framework

• Example DCF and sensitivity tables are illustrative templates, not tied to any specific company.
  
  
• Primary value levers emphasized:
  
  
  
  1. Net revenue growth,
     
     
  2. EBITDA margin durability / AI productivity,
     
     
  3. Client concentration and retention,
     
     
  4. Synergy density for strategics and PE platforms. (Houlihan Lokey)
     
     

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Hyperlinked reference list (key load-bearing sources)

1. Houlihan Lokey – Marketing Services Market Update Q2 2025 (PDF): deal counts, themes, and public comps. (Houlihan Lokey, Houlihan Lokey)
2. Publicis press release – acquisition of Lotame (identity/data rationale). (Lotame Solutions Site, Publicis Groupe)
   
   
3. Public reporting on Publicis M&A program (Influential, Mars United, BR Media) and 2025 budget. (Hello Partner)
4. Stagwell Acquisition Archives / JetFuel press release. (Stagwell, Yahoo Finance)
5. Omnicom–IPG merger coverage and synergy targets / integration actions. (Business-News-Today.com, Reuters, Business Insider)
6. Stagwell strategic consolidation context (Axios). (Axios)

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