1

In association with

31st January 2017

22016 Global M&A

Review

Deal volume

• Record year for M&A activity, reflecting a dynamic and robust sector• 1,175 recorded deals, with buyers from 43 different countries acquiring companies

across 50 different countries

32016 Global M&A

Review

Deal value

*

* AT&T’s acquisition of Time Warner, Microsoft’s acquisition of LinkedIn, and 21st Century Fox’s acquisition of Sky Plc has been excluded from the aggregate disclosed value for 2016 to limit comparative distortion.

• Large acquisitions surged: with three mega-deals at +$10bn, and another 22 deals valued $1bn to $10bn, totalled 25 deals in the sector

• 36% overall value increase• Three mega deals announced in 2016, with a combined value of $127bn (not included

in charts above)

42016 Global M&A

Review

Monthly M&A Activity

• Q1’s high-deal count meant the first half of 2016 was stronger: 635 vs 540.• Consistent trend in the majority of deals being completed in Q1 and Q2 • Q3 recorded the highest transaction value at $26bn, with lowest in Q4 at $13.4bn

52016 Global M&A

Review

Notable deals over $1bn

Bidder Target Target descriptionDeal value (as reported)

EV/Revenue EV/ EBITDA

Media and entertainment conglomerate $85,400m 3.7x 13.9x

Social networking website for professionals and businesses $26,200m 8.5x 95x

Cable broadcasting and satellite company based in the UK $14,571m 2.1x 12.9x

Cloud-based ERP (Enterprise Resource Planning) provider $9,191m 11.7x n.a.

Digital media company with advertising, content, search and mobile capabilities $4,841m 0.97x n.a.

Enterprise cloud commerce solutions $2,800m 11.5x n.a.

Marketing automation software provider $1,790m 7.1x n.a.

Travel comparison website $1,743m 11.9x 81.3x

Performance marketing agency specialising in data and CRM $1,500m* 3.4x n.a.

Mobile marketing platform $1,400m n.a. n.a.

62016 Global M&A

Review

Notable deals under $1bn

Bidder Target Target descriptionDeal value (as reported)

EV/Revenue EV/ EBITDA

Adtech platform $900m n.a. n.a.

DMP (Data Management Platform) $700m n.a. n.a.

Video advertising enablement SaaS provider $540m 2.5x n.a.

Performance marketing providers for consumer brands $242m 6.6x n.a.

Video focused adtech platform $96m n.a. n.a.

Mobile marketing agency $78m 2.4x 7.3x

Online news portal with apps and webpages $56m n.a. n.a.

Digital marketing and creative agency n.a. n.a. n.a.

One of the UK’s largest independent creative agencies n.a. n.a. n.a.

Creative advertising agency in the Netherlands n.a. n.a. n.a.

72016 Global M&A

Review

Top 10 Active BuyersCompany 2016 2015 2014

36 26 1833 40 5214 - -10 19 2310 7 19 3 -8 4 98 3 87 7 27 1 1

• Top 10 accounted for 12% of overall deal volume (142 deals) • M&A focus on enhancing service offering and strengthening market share• Representative of the evolving buyer landscape

Telecommunications

Networks

Private Equity

Social MediaTechnology

IT Services

Emerging Buyers

Ad Tech & Mar Tech

Consultancies

Mid-market Groups

Asian Buyers

Media & Publishers

Buyer Landscape

92016 Global M&A

Review

Holding networks’ activity

18

52

23

9 105

26

40

19

49 9

3633

10 84 4

2014 2015 2016

• Dentsu acceleration over the last three years has now see them overtake WPP as the most active acquirer in the sector

• Publicis, Omnicom & Havas number of deals were down year-on-year• Holding networks’ share of total M&A activity falls to 8% (vs. 9% in 2015 and 10% in

2014)

102016 Global M&A

Review

Technology Buyers

• Focused on strengthening in digital marketing, machine-learning & data analytics • Salesforce in particular were aggressive, with 9 deals

BUYER ACQUISITION/TARGET

112016 Global M&A

Review

Consultancy Buyers

=

• Capability gap narrowing – allowing consultancies to compete with large networks and other technology firms to provide a full service Customer Experience

• Moving from “behind the scenes” to “customer-facing” digital expertise• Accenture Interactive now the largest digital agency worldwide (AdAge 2016)

BUYER ACQUISITION/TARGET

122016 Global M&A

Review

Emerging Buyers

• Newly formed groups and/or new funds - seeking to build a new generation of business models aimed at disrupting the sector and gaining market share

• Emerging market entrants from other sectors / emerging markets• Interest in high growth areas (Marketing Tech, Data & Analytics, Mobile)

BUYER ACQUISITION/TARGET

132016 Global M&A

Review

Private Equity

9%91%

10%90%

Private Equity Strategic

2015

2016

Deal volume by private equity vs strategicDeal volumes and values by PEs

• Financial investors increasingly bullish on the sector, with increases in both deal volume (+20%) and deal value (+42%)

• 118 recorded deals, with buyers from 18 different countries acquiring companies across 24 different geographies

• High level of take-private M&A

142016 Global M&A

Review

Geographic Overview

• USA continues to dominate, and deal number in line with 2015. Canada likewise• Western Europe deals up 13% from 2015 to 178 deals• APAC strong once again (driven by a 15% increase in China) with 197 deals being

completed in 2016, over 172 in 2015

UK

2016: 1882015: 149

Africa

2016: 102015: 11

APAC

2016: 197 2015: 172

Eastern Europe

2016: 212015: 26

Western Europe

2016: 1782015: 157

Middle East

2016: 192015: 12

LatAm

2016: 152015: 27

USA

2016: 514 2015: 516

Canada

2016: 332015: 35

15 2016 Global M&A Review

Geographic overview

• 44% of acquisitions were of US-based companies

• APAC at 17% of total – China dominates• Share of Western European acquisitions

was up slightly to 15% in 2016• UK up with 188 total deals, from 149

previously

2016

USA 44%

APAC 17%

UK 16%

Western Europe 15%

Canada 3%Middle East 2%

Eastern Europe 2% LatAm 1%

Africa; 1%

162016 Global M&A

Review

Rise of China

2015 2016

64 64

420

Domestic

6823% YoY

84

• Total deals by Chinese buyers up 23% to 84 deals• Outbound activity 24% of all activity - mainly in US (9) and UK (3) • Chinese market maturing – opening more opportunity for tech-enabled and

media/marketing companies• China buyers now adept at cross-border transactions and raising capital in foreign

markets

Outbound Chinese Acquisitions

172016 Global M&A

Review

Sectors

0

20

40

60

80

100

120

2015 2016

Deal

Vol

ume

• Marketing Technology – most active sector (~ approx. 9% of overall deal volume), 12% down y-o-y

• Mobile – deal volumes also down, 2nd most popular• Across the remaining sectors, deal volumes are distributed more evenly

182016 Global M&A

Review

Marketing Technology

• Retained no. 1 position • Attractive to a range of buyers (PE firms, telecom and media companies, Asian

acquirers, enterprise software companies, etc.)• Focus on technology platforms that can help identify new levels of consumer

behaviour insights and user engagement & experience

102deals

$8bndisclosed value

192016 Global M&A

Review

Mobile

• Bouyant sector – hardware, software & availability of rich media helping drive this.• 60% of Google’s global revenue in 2017 will come from Mobile. +46% vs 2015• Apps dominating with Apple’s App Store generating record $28.5bn in 2016. China App store sales have grown 90% from 2015

$2.8bndisclosed value

90deals

@

202016 Global M&A

Review

Data and Analytics

• Fourth most active sector with 16% growth from 2015• Increasing need for Brands to capture data and insights into consumer behaviour.

Adspend budgets increasingly rising in this category• Access to real time audience data is increasing among marketers budgets• Companies with cutting edge products in data management, data analytics for content

marketing – and artificial intelligence capabilities are creating high value activity

72deals

$4.1bndisclosed value

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For a copy of the full 46 page report, including detailed analysis on:

Deal statistics, volumes, values Notable deals Buyer landscape

– Holding companies– Mid-market groups– Technology– Consultancies– Emerging buyers

Private equity activity Geographic overview Cross-border activity Sectors Ciesco’s outlook

Please contact james.whyms@ciescogroup.com