Tracking the industry's private equity deals

By Olivia Morley

In recent months, there’s been a series of notable private equity investments in up-and-coming advertising agencies.

Last month, Svoboda Capital Partners invested in creative agency Highdive. In October, Keystone Capital invested in Barkley, which then merged with OKRP. In September, the London and New York-based independent agency Brainlabs nabbed funding from another private equity firm, Falfurrias Capital Partners.

Despite the high-profile deals, it was a slow year for private equity investment in the combined media and marketing sectors, according to the M&A advisory firm Ciesco. Mergers and acquisitions surged industrywide, but private equity deals hit a five-year low. Corporations led 69% of deals, while PE deals made up the remaining 31%.

Even as private equity firms tightened their purse strings amid unstable interest rates, the recent deals paint private equity as a viable option for some agencies seeking funding.

“Some private equity has gotten a little bit more comfortable with the fact that agencies don’t typically have consistent long-term revenue,” Johnathan Tann, a partner at the M&A advisory firm Spring Advisors, told ADWEEK. Tann recently partnered with creative agency Highdive to broker its deal with Svoboda Capital Partners.

Tann said that because project-based work has become so common, private equity firms are getting more comfortable with their assets’ fluctuating revenues.

“Private equity needs to get really good at determining what agencies they think are going to succeed. But the reward is much better than it was before,” he told ADWEEK.

And Michael Seidler, CEO at M&A advisory firm Madison Alley, said that successful PE backed performance agencies Wpromote and Tinuiti are making other PE firms take notice. Both agencies previously earned spots on ADWEEK’s annual Fastest Growing Agencies list.

Given how intermingled advertising and technology are becoming, technology-driven digital agencies seem likely to remain acquisition targets. Digital agencies—or those that pair service offerings with proprietary technology products—appear more attractive to private equity investors. Ciesco found that digital agencies were most likely to score deals, making up 44% of deal volume in the first quarter.

ADWEEK compiled a list (in alphabetical order) of active private equity firms investing in advertising agencies. Assets under management are based on the latest publicly available data.

Bridgepoint

Private equity assets under management: $34 billion Notable investments: Equativ; MiQ; Samy Alliance; Team ITG

Bridgepoint has recently invested in several large adtech players and digital-first agencies: Samy Alliance, a digital shop based in Madrid, and Inspired Thinking Group, which operates as a full-service creative production and marketing agency and wields a proprietary marketing SaaS product, Storyteq (previously known as CanopyCloud).

In March 2022, Bridgepoint invested in ITG.

“Team ITG is a successful marketing operations services business with a compelling software offering. It operates in a very large, growing and fragmented market that benefits from the increasing need for automation driven by the shift to digital and personalized marketing,” Emma Watford, partner and co-head of Bridgepoint’s U.K. investment activities, said in a statement.

By September, it invested in programmatic media shop MiQ. As part of that deal, the firm supported MiQ’s existing leadership team amid international growth aspirations.

ECI Partners, another private equity firm, had invested in MiQ in 2017 and increased its ROI more than six times when it exited, according to a Bridgepoint statement.

“MiQ is a major global player partnering with some of the world’s leading brands and agencies to deliver high-performing advertising campaigns and drive true business change through data analytics and insights. It offers leading analytics solutions and platforms to companies everywhere and has achieved significant growth over the last few years,” said Charles Welham, a director at Bridgepoint, in a statement.

At the time Bridgepoint invested in MiQ, the programmatic shop was eyeing contextual advertising and CTV plays, Digiday reported.

Last February, the firm followed up with an investment in ad platform Equativ. The platform is growing in the U.S. market, which represented 40% of its business at the time of the investment. Just a few weeks ago, Equativ merged with the ad exchange Sharethrough.

The Carlyle Group

Private equity assets under management: $159 billion Notable investments: Japan-based production agency AOI TYO Holdings; Dept, Incubeta

Carlyle’s December 2019 investment in the international digital agency Dept came as the Amsterdam-based shop was growing. It had hired 1,500 people across Europe and the Americas, and its revenue increased tenfold since 2015, according to a statement.

In July 2021, Carlyle purchased all shares of the Japan-based AOI TYO Holdings, a creative production agency. At the time of the investment, the partners announced a growth plan reliant on emerging technologies, like augmented reality, technologically advanced video production strategies and more acquisitions.

Then, in March 2023, it invested in Incubeta, an international digital marketing firm and certified Google Marketing Platform partner. The full-service shop offers clients access to its proprietary adtech platform.

Late last year, the company announced its intention to pull back on consumer, retail and media investments to focus instead on industries like technology and financial services.

CVC Capital Partners

Private equity assets under management: $119 billion Notable investments: Adtech player Aleph Holdings; BlueFocus International; Mediaocean; Plus Company

CVC Capital Partners is one of the most prolific and acquisitive private equity investors in the agency space. It sometimes partners with other private equity firms, like CDPQ and TA Associates, to execute deals. In August 2021, the firms acquired Plus Company, a group of 25 agencies spanning advertising, design, media, PR and marketing technology specialties.

Now, with private equity backing, Plus Company is making its own acquisitions. In June 2022, the agency group bought the well-known independent creative agency Mekanism.

“[Plus Company’s] belief was not having 100 companies that do the same thing just by market share, but to have a creative agency, a PR agency, a social media agency, experiential and so on. That model appealed to us,” Mekanism co-founder and CEO Jason Harris told ADWEEK.

In May 2021, CVC partnered again with CDPQ to acquire a major stake in BlueFocus International, the parent brand overseeing agencies like We Are Social, fuseproject and Vision7 International.

Then in July 2021, the firm continued its acquisition spree by acquiring a $470 million stake in Aleph Holding, an adtech player that helps marketers invest ad dollars across several social platforms.

By August, the firm co-invested with TA Associates in the global adtech firm Mediaocean. At the time, Mediaocean CEO Bill Wise said in a statement that Mediaocean would double down on its global omnichannel advertising platform. “Now, more than ever, agencies and their clients need an independent, open and neutral operating system to manage media investment and grow their businesses.”

Falfurrias Capital Partners

Private equity assets under management: $2.25 billion in raised capital Notable investments: Brainlabs; Said Differently

In September 2022, Falfurrias Capital invested in the global marketing agency Said Differently. The agency gathers specialist teams designed to meet its clients’ unique goals. At the time of the investment, Falfurrias specified that Said Differently would be a platform asset—implying an expectation for growth via M&A. “The Covid pandemic opened a lot of people’s eyes to how technology can turn the traditional employment model upside down,” said Alexander Jutkowitz, a Falfurrias executive who became chairman of Said Differently, in a statement.

“Said Differently has completely revolutionized the traditional agency model by amassing a collection of global talent that would rival any agency, and I know Falfurrias is excited for them to be the launching pad for additional investments in similarly innovative companies,” Jutkowitz continued.

The investment is part of Falfurrias’ Future of Work investment strategy that targets businesses reinventing working models.

The firm continued in September 2023 with its investment in full-service media agency Brainlabs. Another private equity firm, Livingbridge, in 2019 invested in Brainlabs. Between 2019 and the time of Falfurrias investment, Brainlabs experienced 800% top-line growth and made eight acquisitions.

Fvlcrum

Private equity assets under management: $5 billion in transaction value Notable investments: Burrell Communications Group

Fvlcrum is a mission-driven private equity firm that since 2013 has worked to close the racial wealth gap. It invests in middle-market companies based in the U.S.

“As an investor in diverse businesses, our goal is to generate top quartile returns for investors by targeting control equity investments in diverse companies of scale that demonstrate significant potential for growth and sustainable competitive advantages,” the firm’s website states. One of the firm’s three stated goals is to “create the next generation of market-leading minority businesses.”

In November, Fvlcrum partnered with View Park Capital (VPC) to acquire one of the country’s largest multicultural agencies, Burrell Communications Group, from former co-CEOs Fay Ferguson and McGhee Osse.

After the acquisition, Channing Johnson, founder and managing partner at VPC, became chairman of Burrell, and Tara DeVeaux, former CEO of Wild Card Creative Group, became Burrell’s new CEO.

Keystone Capital

Private equity assets under management: $1.4 billion, according to Business Insider Notable investments: Adlucent; BarkleyOKRP

Last October, Keystone Capital invested in full-service independent agency Barkley. In March, Keystone backed Barkley’s merger with another creative independent, OKRP. The agencies combined under the name BarkleyOKRP. The merger made BarkleyOKRP one of the largest independent media agencies, with 800 employees across offices in Kansas City, Chicago, Denver, Pittsburgh and Austin.

Just last month, Keystone backed BarkleyOKRP’s acquisition of Austin, Texas-based digital marketing agency Adlucent. Adlucent specializes in performance marketing and has expertise in search, social, display and retail media. Its clients include Zappos, The Vitamin Shoppe and 1-800-Contacts. Adlucent strengthens BarkleyOKRP’s digital marketing capabilities, according to a statement from Keystone.

New Mountain Capital

Assets under management: $50 billion across private equity, credit and net lease capital Notable investments: Tinuiti; Bounteous

New Mountain Capital (NMC) has deployed private equity capital to more than 80 businesses since 2000 and usually invests between $100 million and $500 million per transaction, according to its website.

In December 2020, it invested in performance marketing firm Tinuiti. Leading up to NMC’s investment, Tinuiti made several acquisitions of its own, including OrionCKB, Email Aptitude and CPC Strategy. It had grown from 150 employees in 2017 to 700 at the time of the NMC deal.

“The rising importance and increasing complexity of digital marketing and ecommerce ecosystems is generating a massive need for firms that can partner with brands to navigate this landscape and deliver data-driven outcomes,” NMC managing director Brian Murphy said in a statement.

In August 2021, NMC invested in the digital experience consultancy Bounteous. The investment followed a high-growth period for Bounteous, which grew six-fold over five years.

“The rising importance and increasing complexity of digital experiences and commerce ecosystems put Bounteous in a unique position to take advantage of increasing demand and new opportunities. Bounteous is a compelling addition to the growing portfolio of New Mountain’s digital transformation investments,” said NMC’s Prasad Chintamaneni in a statement.

One Equity Partners

Private equity assets under management: $10 billion Notable investments: U.K.-based agency holding group MSQ; local TV advertising company Locality

Last June, OneEquity became majority shareholder of U.K.-based agency holding group MSQ. The group’s previous private equity investor, LDC, also reinvested with a minority stake. MSQ, which oversees 11 agency brands, had 1,200 employees across 13 offices around the globe, at the time of the investment. With OneEquity, the group is likely to expand further.

“We believe that through operational expertise and M&A, MSQ can continue to grow as a business and increase cross-selling opportunities among clients to become a differentiated platform in the space,” Tim Borneck, vice president of One Equity Partners, said in a statement.

In late 2022, OneEquity bought media sales firms CoxReps and Gamut from Cox Media Group. By June 2023, CoxReps and Gamut merged to form Locality, a firm focused on local TV advertising.

Shamrock Capital

Private equity assets under management: $4.5 billion Notable investments since 2020: ADWEEK; digital marketing and enrollment strategy company Carnegie; strategic communications firm Highwire; data, media measurement and analytics software company EDO; intelligent creative platform Vidmob

Shamrock Capital, which owns ADWEEK, is a Los Angeles-based firm with investments across the media and marketing sector. In 2018, it invested in the digital performance agency Wpromote; it acquired ADWEEK in June 2020.

In April 2022, the firm invested $80 million in EDO, the TV measurement firm also backed by actor Edward Norton. That August, Shamrock led Vidmob’s $110 million Series D investment round. In September of that year, it also invested in strategic communications firm Highwire. Shamrock continued to invest in the space this year, in February announcing its partnership with Carnegie, a shop specializing in marketing and enrollment strategies for nonprofit higher education institutions.

“We look for agencies that are playing on broader growth trends in the market and have a differentiated service offering, as validated by strong retention and upsell with their clients. Often, these businesses are also leveraging data and technology to augment their services offering and drive-enhanced performance,” Laura Held, Shamrock partner and executive committee member, told ADWEEK.

“We look for management teams that are excited about bringing on a capital partner, as the best investments we’ve made are when there is a shared vision and we work closely together to accelerate growth and create enterprise value post-investment,” she added.

Svoboda Capital Partners

Private equity assets under management: $400 million Notable investments: Creative agency Highdive

Svoboda Capital Partners invests in companies between $25 million and $100 million and focuses on professional services companies that span the media and marketing industries, and as well as others like accounting and IT services.

“We are open to unique transaction structures and have significant experience structuring appropriate incentives for leadership teams of companies in the professional services sector,” the firm’s website states.

Last month, Svoboda invested in the up-and-coming creative agency Highdive. It’s opted to give Highdive CEO Megan Lally and her co-founders control over the business and does not regard Highdive as a platform company.

John Svoboda, managing director at the firm, told ADWEEK in May that independent agencies like Highdive are good investment targets because their founders are often highly engaged and available to form direct relationships with clients hungry for more interaction with agency leaders.

https://www.adweek.com/agencies/10-private-equity-firms-ad-agencies-should-watch/