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This year, the M&A chatter is all about whether 2025 will cause an advertising and ad-tech frenzy. Here’s the twist: the deal flow never dried up in 2024.
In fact, the year kicked off with LiveRamp acquiring Haba for $200 million, and the pace of deals continued to pick up—though it never turned into a flood.
Month after month, 2024 brought notable deals, from Walmart’s acquisition of Vizio in February to Outbrain’s purchase of Teads in August.
However, skepticism persisted. Inflation, political uncertainty and fluctuating ad spending have prevented many marketers from declaring a triumphant return to mergers and acquisitions. Instead, they framed it as a cautious recovery. However, this revival is poised to gain steam.
Dealmakers – both strategic and private equity – have increasingly clear information about the unknowns, and for the latter there is dry powder waiting to be deployed. Meanwhile, investors want a return on their spending and founders face increasing pressure to bite the bullet and close deals.
Or, as Charles Ping, chief executive of the Winterberry Group, put it bluntly: “Deals have to happen.”
“Over the last two to three months, we’ve seen conversations happen much faster,” he continued.
Many of these conversations — along with future ones — are likely to deal with the incoming administration of US President-elect Donald Trump and the potential ripple effects of the administration’s policies on deal-making. Tariffs, for example, often support inflation, which pushes up interest rates—the kryptonite of mergers and acquisitions.
Still, there is cautious optimism in the ad industry, as any tariffs imposed after Trump takes office may turn out to be more symbolic than substantive. And with Trump expected to launch more deal-friendly antitrust enforcement, the M&A climate could improve further.
Ping further commented on this point: “The general line of thought is that Trump will impose totemic tariffs on territories that don’t do much, allowing him to stick to the tariff narrative that was part of the campaign rallying cry, but without the macroeconomic downside of the US economy (inflation , interest rate increases, etc.) that would bring very broad tariffs.
That means it would take a significant or unelected disruption to derail dealers in 2025. And unlike the past two years, they are expected to be more evenly split between strategic and private equity players. Recent M&A waves may have driven strategy, but private equity is poised to step up – at least in part driven by increasingly attractive valuations.
Consider ad tech companies, for example.
At the peak of the pandemic in the first quarter of 2021, media revenue multiples were a staggering 8.4 times, according to UK-based financial and accounting firm Finerva. Fast forward to Q4 2024 and that multiple has dropped to 2.7x. A market correction over the years has brought valuation multiples back to more realistic and attractive levels.
“The headline multiple probably went down a notch, but I think everyone in this space knew that 2021 to 2022 [boom] the period was not sustainable for M&A. So many mandates have gone [back then] that buyers didn’t have as much bargaining power,” explained Matthew Lacey, partner at mergers and acquisitions advisory firm Waypoint Partners.
Whatever shape this year’s M&A wave takes, the action will focus on the usual hotbeds of growth: retail media, CTV, AI and influencer marketing.
Much of the activity will be supported by companies with war chests built up during last year’s fundraising rounds. Growth has been the driving force behind these moves, with businesses eager to finance expansion into new markets or diversify into new areas.
And then there’s consolidation. Omnicom’s proposed acquisition of Interpublic Group could create a ripple effect and spur more moves between agency giants and private equity-backed independents. Meanwhile, the slow but inevitable shift by some of the biggest ad tech players from point solutions to integrated adds another layer.
Either way, the industry’s upper echelons are leaning deeper into an era of consolidation — one increasingly fueled by a slowdown among the largest companies, a growing market for independents and the speed and scale of private equity activity.
“We’re seeing more and more buyers looking at businesses that can bring them closer to either building or maintaining a moat against competitors,” said Jeremy Goldman, senior. Director of Marketing, Business & Technical Consulting at eMarketer. “They end up thinking about how to protect their price and then expand into other services.”
All things considered, the M&A outlook for the next 12 months is optimistic, but the road ahead promises to be anything but smooth. CEOs, dealers and entrepreneurs are bracing for potential curveballs, including US politics, the Chinese economy, the fate of Chrome and the future of TikTok.
Among them, the macroeconomic picture can be the most visible. It is, after all, a healthy macroeconomic environment that supports advertising spending, which in turn supports valuations and business activity. Without it, momentum could falter. For now, however, this scenario seems unlikely. Globally, advertising is likely to remain strong in both the US and Europe, according to recent forecasts from top producers such as Brian Wieser and holding companies WPP and IPG.
“It took a while for brands to realize that the uncertainty people had about the world wasn’t actually fully reflected in how they were spending their money,” Goldman said. “Once marketers understood this, they realized they were leaving money on the table and adjusted their advertising plans accordingly. That’s why the ad forecasts have held up so well.”
Taken together, it is clear that 2025 will mark an evolution, not a revolution, for M&A. The pace of activity is likely to pick up, but it will be shaped by a more settled market — one that went through the frenzy of post-pandemic consolidation, fueled by panic, low interest rates and the rush to digitize, and then grappled with the inevitable downturn as markets adjusted to rising inflation, cautious spending and regulatory supervision.