“2020 is going to be a complete reset on M&A. The holding groups are going to face too many internal liquidity issues to rely on external funding or investment,” Greg Paull, principal at consulting firm R3 Worldwide, told Marketing Dive. “All of the main holding groups’ first quarter calls were mostly doom and gloom. They are clearly going to be preoccupied with their own challenges over the coming months.”
… Leading into 2020, deal activity showed signs of weakening. The value of M&A transactions among advertising and marketing companies last year fell 15% to $27.7 billion amid a pullback in buyouts of ad-tech firms, according to an R3 study. Major ad holding companies slashed the number of M&A deals by more than half while their dollar value rose 8% to $6.53 billion.
… Smaller agencies that hang on through the crisis will likely see a strong rebound in their values once the pandemic subsides. “For independent agencies, it’s going to be an important baptism of fire for them to weather the storm,” Paull said. “If they can, it should only exponentially increase their value when M&A returns to 2019 levels.”