Dealmaking in media and advertising has shown signs of movement in recent months, with several notable acquisitions taking place. However, it is premature to declare a full-blown resurgence in the industry. While there have been some significant deals, they have been in the works for some time and may not be indicative of a widespread trend.
The recent uptick in term sheets and acquisitions, such as Outbrain acquiring Teads and Publicis acquiring Influential, point to a potential shift in the market. These deals, along with others like Informa’s acquisition of Cannes owner Ascential and Hyve Group’s move for the Possible conference, suggest that companies are positioning themselves for growth and expansion.
Despite the flurry of activity in the past few months, many deals have been in the works for some time. This gradual buildup of deals may be a precursor to a larger wave of mergers and acquisitions in the media and advertising space. Investment banks have been preparing companies for sale, and while deals have been slow to materialize, there is a sense that the tide is turning.
The U.S. is expected to lead the charge in dealmaking, with the U.K. lagging behind. U.K. businesses are cautious about coming to market, but there are signs that they may soon join the fray. Investment firm First Party Capital and U.K. agency group Common Interest are among those eyeing potential deals in the near future.
Valuations in the industry have been less inflated in recent years, with a significant dip in deal value between 2021 and 2022. This trend has started to reverse, with an increase in deal values in the first half of the year. Companies are focusing on profitability rather than just growth, leading to more realistic valuations and deal structures.
The recent acquisition of Teads by Outbrain for $1 billion is seen as a strategic move that reflects a more measured approach to dealmaking. By combining Teads‘ profitability with Outbrain’s operational challenges, the merged entity has the potential to achieve a strong return on invested capital.
Overall, dealmaking in media and advertising is like a traffic signal stuck on yellow, with decisions on hold until conditions change. The industry is poised for a potential resurgence in the final quarter of the year or early 2025, with companies positioning themselves for growth and expansion.