MSQ completes Be Heard acquisition amid global M&A slowdown

The move, which puts an enterprise value on Be Heard of £20.6m, is likely to mark one of the biggest M&A activities in the sector this year.

The purchase was backed by follow-on financing from the Manchester arm of private equity firm LDC. Be Heard’s senior managers have invested in the enlarged group as is currently the case in MSQ.

The Drum explores the significance of the deal.

The ins and outs

• MSQ is one of the fastest-growing ad networks in the industry, counting Unilever and Vodafone among its clients.

• Bringing Be Heard into the fold adds significant weight to MSQ in digital tech and data analytics.

• Now its combined group of 785 staff in the UK, Asia and the US brings together the complementary skills of Be Heard’s agencies MMT Digital with MSQ’s Holmes & Marchant (branding and design), Smarts (PR and content), Stack (customer acquisition and engagement), Stein IAS (B2B marketing), The Gate/ Walk-In Media (creative and media) and twentysix (digital).

• Pete Reid, MSQ’s chief exec, said the merger would make the group "more relevant to a greater number of clients in a world where these talents are increasingly sought".

• He added: “It’s an exciting time in MSQ’s development, not least transacting a deal and integrating two groups in the virtual, and often challenging environment, that we are currently operating in. A number of interesting discussions are already taking place between the agencies and new business opportunities are arising as a result both in the UK and across our international offices.”

A rare M&A moment amid Covid-19

• The MSQ deal is also noteworthy because it comes at a time when big advertising giants are holding back on M&A decisions.

• Entering 2020 the M&A market was already facing a slowdown. Global activity dropped to its lowest point in over a decade in the second quarter of this year, according to data provider Refinitiv.

• This is because companies (including those in the ad sector) have retreated from their growth and expansion plans to concentrate on protecting their operations and employees in the midst of the coronavirus pandemic.

• Traditional holding groups have been coy about when they expect to see a boost in M&A activity now, dialing back on investment until they get their own balance sheets in check.

• Though WPP has made several acquisitions in recent months (including that of Perth-based agency Meerkats), Mark Read told investors during WPP's earnings call last week that he would revisit the issue with them in November.

• Elsewhere, smaller rivals like You & Mr Jones and S4 Capital are on the acquisition trail.

• S4 Capital acquired Amazon specialists Orca Pacific at the end of July. In August, You & Mr Jones bought influencer company Collectively. JellyFish is also set to enter the M&A market before 2020 is out.