Wave of purchases and fusions makes noise in small advertising shops

During the Ad Age Small Agency Conference, which took place on June 30th in Boston, the main topic of discussion was the high levels of mergers and acquisitions in the agency world at this moment. According to panelists, this unusual rate doesn’t imply that all small agencies can join the sales wave.Potential purchasers are not the problem. “New buyers coupled with new capabilities and demand is driving a lot of new activity in the market and I really don’t see it stopping any time soon” said Maurice Watkins, partner at Results International, an investment bank focused on agencies and marketing tech companies. “The big agency holding companies are only doing about 15% of the global deals right now, with IT companies, international buyers, media companies and private equity driving many of the other deals.”Other important questions are which are the most coveted agencies? Are they ready to sell and prepared to go through the process?. “Size does matter, even within the small agency crowd”, explained Watkins. “It is very difficult to find in any market the ideal buyer for an agency that has 10 people. Fifty people however, attracts a certain kind of buyer, and with 100 that’s a different kind. Once an agency reaches a certain size it becomes attractive for the market”. Watkins highlighted the keys for a small agency to make a good deal: get advisors who understand the financial world, tax law and other things agencies know little or nothing about; have more than one possible buyer; and move slowly in the first year regarding significant changes .