In the first half of 2018, there were 397 mergers and acquisitions within the global marcoms market. According to Results International, there were 28 deals involving Website UX, Design and Build; 27 deals involving PR agencies and 63 deals involving full-service digital agencies – the most active subsector.
Big names to hit the headlines were Disney and Fox; AT&T acquiring DirecTV; JCDecaux acquiring APN Outdoor group; and Vested, the US financial communications specialist, buying UK-based Templars Communications. With Comcast’s purchase of Sky also on the horizon, the media M&A boom is only set to increase.
PR companies buying specialist firms
Looking more closely at the buoyant PR industry, there were 103 publicly announced and completed transactions worldwide in 2017. This is an increase of 14 per cent on 2016.
Davis & Gilbert’s research shows that a third of the transactions involved PR firms with less than $3 million in revenues, suggesting that agencies are looking for smaller firms they can “tuck in” to an existing business rather than pioneering their own expertise. This strategy is helping companies navigate our fast paced, digital world. Evidence of this is seen in the fact that 27 per cent of the firms acquired last year were technology or digital firms.
While a merger brings many benefits and opportunities, it also creates some challenges for those at the heart of the process. Working out how to consolidate the back office of two entirely different organisations rarely gets the attention it deserves – the focus is usually on the new branding and integrating the people and work cultures.
Integrating the back office
For companies considering a merger or acquisition or currently experiencing one, thinking about how the day-to-day operations of the two companies can be brought together and streamlined is of first importance. There are huge opportunities around a consolidation and many economies of scale to be enjoyed.
For example, each company usually has an extensive network of suppliers with individually negotiated rates and terms and conditions. Getting an overview of this and working out where duplicates exist is critical.
Seeing the big picture
One way in which media and marketing companies can navigate this administrative nightmare is to ensure their payments processes and invoicing are digital.
This means companies can have immediate visibility of all their suppliers and invoices. It provides a unified view of company spending – something that is crucial in the early days of a merger or acquisition. The spend analytics tools enable newly merged firms to easily crunch the data and identify price variances and duplications, and potentially negotiate better prices.
Adopting e-invoicing also improves internal controls, reducing the potential for fraud and mistakes, and enhances invoice audit capabilities. It is efficient and streamlined, suitable for a modern company in a digital world.
Most mergers or acquisitions will involve a period of reviewing and consolidating suppliers that results in the creation of a list of preferred suppliers. Having said this, it might not be a particularly short list!
A complex world
The marketing industry as a whole is becoming increasingly fragmented and every agency, by nature, tends to have a huge raft of suppliers and freelancers to meet their different needs. Agencies often have to outsource elements of work to different specialists in order to win new business, stay competitive and offer the best service to their customers. They do not usually have all the skills inhouse that are required for integrated, digital campaigns and many are working with external suppliers, week in, week out.
For this reason, encouraging suppliers to sign up to an electronic network is vital if marketing agencies want to avoid getting bogged down in a mountain of paperwork. Automating the payment process enables marketing professionals to scale business operations more easily and improve the productivity and efficiency of their accounts departments. It reduces the cost of handling invoices by more than 50 per cent – a vital saving when margins are tight, and every new business win is such a hard-won battle. With electronic invoicing, you can be certain that the back office is pulling its weight and working as cost effectively as possible.
In the aftermath of a merger or acquisition, every newly combined team is looking to hit the ground running and show the world how dynamic a force they have become. Though not as exciting as the new branding and product or service offerings, consolidating your back office can bring cost savings, more buying power and opportunities to negotiate better deals. There is no easier way to get the actionable insight you need than moving all your suppliers and invoices on to an electronic network. At Tungsten Network we are keen to support marketing companies as they navigate the merger process, helping them on-board their suppliers and streamline their back offices.