Author: Kelsey Kovachik
LOGICFORCE Has Been Sold to Frontline Managed Services
JEGI LEONIS Advised The Hill in Their Sale to Nexstar Media
Q2 Public Market Update
Q2 Public Market Update
Key Takeaways
Total equity market value up by 7% since April 2021
The Media, Marketing, Information & Technology public equity markets continue to prosper, with the total equity market value up by 7% since April 2021.
2021 revenue growth of 17% across all sectors
Led by +28% growth across the eCommerce and digital media sectors, 2021 forecasted revenue growth remains strong across all sectors at 17% vs 2020. Notably, the Marketing Technology sector is also forecasting strong year on year revenue growth of +20%.
2021 EBITDA growth of 17% across all sectors
Favorable outlook for 2021 EBITDA, with nearly all sectors expecting double digit growth vs. 2020. Very positive outlook for Digital Media vs. 2020 with several sub-sectors including search and social media expecting +30% year on year EBITDA growth.
Valuation environment remains robust with the Media, Marketing, Information & Technology markets having increased by 7% ($975bn) since Q1 2021. This is underpinned by strong forecasted 2021 revenue growth across all sectors, with an average of 17% across the market, representing total incremental revenue across the market of nearly $455bn.
The total market value of the Media, Marketing, Information and Technology Sectors has increased by 7% since April 2021
AdTech and MarTech emerge as leaders of TMV growth in Q2 2022
- The main drag on TMV growth through Q2 2021 has been eCommerce. While the growth outlook for these sectors remain positive, the sector was able to withstand the decline in Price Comparison and Consumer Verticals and saw TMV growth of 4% in Q2
- Investor demand for businesses exposed digital transformation solutions and best-in-class CX is similarly reflected in TMV growth in both Tech & Consulting Services (up 7%) and Insights, Data, Analytics (up 12%)
- The Digital Media sector, led by companies such as Facebook, Snap and Google, also continues to perform, up 7% ($4,015bn of TMV) over the period. The sector benefits from powerful tailwinds, including strong and growing demand for performance marketing
Forecast 2021 revenue growth of +10% for many sectors
- Strong 2021 revenue growth is projected by current market forecasts for nearly all sectors. The growth is driven by powerful tailwinds across many sub-sectors and a “bounce-back” in revenues in those sectors most impacted in 2020
- Total revenue growth is forecast at c.17% from 2020 to 2021, signifying an aggregate increase in revenues across all sectors of close to $455bn, with double-digit percentage growth expected across many sub-sectors
Driving double-digit EBITDA growth for 2021
- eCommerce is expected to have the strongest revenue growth, increasing by 28% to $997B, showing a limited correlation with the change in TMV
- With Publishers & Lead Generation being the key sub-sector of growth and benefitting from demand from the eCommerce vertical, the Digital Media sector is forecast as a high performer with growth of 28%
Current market forecasts show that FY21 revenue growth across the Media, Marketing, Information and Technology sectors is expected to be 17% with 17% average EBITDA growth across the sectors in the same period
Market Research Sector Update
Market Research Sector Update
Key Takeaways
Sizable global market at $40B
Increasing to $80B with addition of analytics meaning ample addressable market to chase and capture.
M&A activity in the sector is increasing
Consolidation from existing players and increasing appetite from Private Equity is driving activity in the space.
Spend on research is recovering quickly
Companies need a better understanding of post-2020 markets and how consumers now think and feel.
Marketplace winners will optimize core market research while positioning for success in digital and data
Companies that can provide business leaders with agile, data-backed market analysis across media platforms are expected to be the most successful.
There is a sizable opportunity at the convergence of traditional research advisory, user experience, customer experience, experience management, and digital transformation.
M&A playing an active role
Large scale consolidation is reshaping the landscape as digital agencies, consultancies and SaaS vendors encroach on market research budgets.
Recent sector transactions
As vendors vie for scale, growth, and wallet share – advertising agencies have increasingly acquired market research companies to pursue value added services and new capabilities.
The existing sector landscape is evolving as market players focus on new opportunities
Global agencies and measurement companies are exposed
- Businesses with flat and declining revenues are looking at cutting costs and resources leading to vulnerable accounts and talent drain.
- M&A activity is increasing as a result with businesses looking to divest, restructure or hold for sale.
CX technology vendors are taking mind and wallet share
- SaaS vendors are seeking access to enterprise client relationships and channel partners.
- These vendors are also able to turn up the M&A where others cannot compete on price.
Large scale consolidation reshaping the landscape
- Firms looking to return to growth through scale as well as bridging the current gap between research, insights, and marketing.
- Service set expansion pursued as a way to increase mind and wallet share.
Large cap Private Equity active in the sector
- Private Equity are being attracted by the sizable, fragmented, and disrupted market.
- They understand the value of research and are recapitalizing to help re-define the market for a digital era.
Chris Karl Joins as Chief Business Development Officer
Chris Karl Joins as Chief Business Development Officer
New York, NY, July 12, 2021 – JEGI CLARITY, a pre-eminent M&A advisory firm for the global media, marketing, information and technology industries, headquartered in New York, NY and London, UK, is pleased to announce that Chris Karl has joined the firm as Chief Business Development Officer. Chris brings more than 20 years of senior level operating and market development experience with Yahoo! and MediaMath coupled with recent M&A and capital markets experiences with Progress Partners advising clients in deal origination and process execution.
Chris has advised a number of companies on Corporate Development and Strategy within the media and technology sectors over the years. Chris comes highly recommended by former employers where he has driven go-to-market sales strategies, partnerships, and dramatically expanded each Company’s revenue base. Former Yahoo! EVP Global Sales and JEGI CLARITY Advisory Board Member Greg Coleman commented, “Chris was one of the stars on the Yahoo! sales team and was responsible for delivering strong and complex partnerships with several of the top markets in the US.”
Chris has also authored several articles on AdTech and MarTech trends, the emergence of private data clouds, and “The Big Data Food Chain.”
At JEGI CLARITY Chris will support the firm’s Leadership by identifying and cultivating business prospects and enhancing JEGI CLARITY’s client base.
Wilma Jordan, Founder & CEO, North America of JEGI CLARITY noted, “Chris’ unique combination of business development, market strategies and M&A advisory skills, make him a valuable addition to JEGI CLARITY’s partnership ranks. We are thrilled to have Chris on board.”
Commenting on his new role at JEGI CLARITY, Chris said, “We are in the midst of a prolonged period of reinvention in consumer marketing and customer relationship management as a result of shifting consumer behavior and media consumption trends. Software technology is now disrupting every major business sector and JEGI CLARITY’s years of global deal making in the AdTech and MarTech space put us in a fantastic position to help CEOs and their investors identify the right buyers as the market consolidates. I couldn’t be more thrilled to join the firm at this particular time in the evolution of media and marketing.”
Corporate Divestiture Update
Corporate Divestiture Update
Key Highlights
Cash and investments held by US corporations rose 30% to $2.5T in the first half of 2020
34% of divestitures had a Private Equity buyer in 2020
9.7% annual shareholder return for companies with focused divestitures and M&A programs
Companies with active M&A programs continue to outperform inactive companies
Corporate Divestitures Remain a Robust Part of the M&A Market; Trending Back up Post the Pandemic
Organizations tend to review their portfolios and go through corporate divestitures more aggressively post economic crises, as evidenced by strong divestiture activity post the financial crisis during 2008-2009. Given a heightened sense of risk and a desire to focus on growing core parts of their organizations, corporations are already evaluating noncore assets in order to free up cash to pay down debt, leading to uptick in the corporate divestiture activity in Q4 2020 and Q1 2021.
A heightened sense of risk has caused corporations to evaluate noncore assets in order to free up cash to pay down debt
Companies With Active M&A Programs Outperform Inactives
Based on total shareholder returns generated over comparable periods, companies with focused divestitures and M&A programs tend to outperform organizations that have stayed relatively inactive.
Growing role of Private Equity Players as Buyers
Private Equity firms will continue to play a substantial role in divestitures as they accounted for a record 34% of buyers in 2020. The number of private equity firms focused on carve outs and “complex” deals continues to rise.
Perils Of Holding On To Non-Core Assets For Too Long
In Summary
With Private Equity continuing to be a driving force we anticipate the market for corporate divestment activity to remain buoyant. Equally as we are still in the process of emerging from the pandemic companies will continue to need to assess how they service debt requirements. M&A should be an important part of the discussion around board tables.
Power of 5: The Digital Transformation Series
“Power of 5”
The Digital Transformation Series
5 Leaders, 5 Questions, 5 Minutes
The Digital Transformation Series
Introducing our Power of 5 series. We ask 5 industry leaders 5 questions in 5 minutes to gain insight on how they are succeeding in today’s market.
In this series we focus on Digital Transformation. The rate of technological change is high and constant and global brands are increasingly looking to third party experts to help them keep up. From technology consulting to strategic marketing services, the market continues to grow and continues to focus on all things digital.
Over 5 weeks we interviewed 5 select leaders from global agencies who all serve international brands. Topics of discussion included, current challenges facing clients, learnings from 2020, and M&A criteria going forward.
Key Takeaways
- 2020 has accelerated digital transformation across all areas of marketing spend and working practices
- Measurability: performance marketing is increasingly important given the race to digital in all facets of the marketing mix
- First party data is becoming central to marketing strategies particularly in light of the death of the 3rd party cookie
- Ecommerce has gone from important to critically important for clients
- Technology and brand need to be aligned more so now than ever before
- Cultural fit and strategic alignment remains a key factor for M&A decision making across the board
Speakers
Dan Gilbert, Global CEO, Brainlabs
Rob Pierre, Co-Founder & CEO, Jellyfish
Zach Morrison, CEO, Tinuiti
Wendy Clark, Global CEO, Dentsu International
David Jones, Founder & CEO, You & Mr Jones
Full Interviews Below
Dan Gilbert speaks with Jonathan Davis
Wendy Clark speaks with Marcus Anselm
Zach Morrison speaks with Jonathan Davis
Rob Pierre speaks with Marcus Anselm
David Jones speaks with Marcus Anselm
In today’s era of volatility, there is no other way but to re-invent. The only sustainable advantage you can have over others is agility, that’s it. Because nothing else is sustainable, everything else you create, somebody else will replicate.
Jeff Bezos, Executive Chairman, Amazon
Year to Date Market Update
Year to Date Market Update
Key Takeaways
Total equity market value up by 3% since January 2021
The Media, Marketing, Information and Technology public equity markets continue to perform well, with total market value up by 3% since January 2021, albeit against a broader market backdrop which has seen other benchmark indices up by 7 – 12% over the same period.
2021 revenue growth of 17% across all sectors
2021 forecast revenue growth remains robust across all sectors at 17% vs. 2020, led by +27% growth across e-commerce and digital media, and in particular verticalized e-commerce and social media.
2021 EBITDA growth of 18% across all sectors
Strong outlook for 2021 EBITDA, with virtually every sector expecting double digit growth vs. 2020, other than for specific sub-sectors which continue to experience fall-out from Covid-19.
Valuation environment remains robust with the Media, Marketing, Information and Technology markets having increased by 3% ($420bn) since the start of 2021. This is underpinned by strong forecast 2021 revenue growth across all sectors, with an average of 17% across the market, representing total incremental revenue across the market of nearly $450bn
The total market value of the Media, Information and Technology Sectors has increased by 3% since January 2021
Following strong growth in 2020, E-commerce and Software have both seen a slight contraction in total market value (TMV)
- The main drags on TMV growth through 2021 YTD have been e-commerce and Software. Whilst the growth outlook for these sectors remains positive, both sectors previously saw an exceptionally strong H2 2020, with TMV growth of 30% and 19% respectively
- Investor demand for businesses exposed digital transformation solutions and best-in-class CX is similarly reflected in TMV growth in both Tech & Consulting Services (up 6%) and Insights (up 10%)
- The Digital Media sector also continues to benefit from powerful tailwinds, including strong and growing demand for digital engagement. It has continued to outperform, up 13% ($3,544bn of TMV) over the period
Forecast 2021 revenue growth of +10% for many sectors
- Current market forecasts show robust 2021 revenue growth across virtually all sectors, driven by powerful tailwinds across many sub-sectors and a “bounce-back” in revenues in those sectors most severely affected in 2020
- Total revenue growth from 2020 to 2021 is forecast at c.17%, representing an aggregate increase in revenues across all sectors of close to $450bn, with double-digit percentage growth expected across many sub-sectors
Driving double-digit EBITDA growth for 2021
- The strongest growth of 36% is expected for e-commerce, showing a limited correlation with the change in TMV
- Digital Media is forecast to be the second highest performer with growth of 32%, with Search and Social Media being the key drivers as both audiences and advertising dollars drive growth in the sector
Current market forecasts show that FY21 revenue growth across the Media, Information and Technology sectors is expected to be 17% fueling an 18% average EBITDA growth across the sectors in the same period
Hugh Boston Joins JEGI LEONIS as Managing Director
Hugh Boston Joins JEGI LEONIS as Managing Director
New York, NY, April 19, 2021 – JEGI LEONIS, a pre-eminent M&A advisory firm for the global media, marketing, information and technology industries, headquartered in New York, NY and London, UK, is pleased to announce that Hugh Boston has joined the firm as Managing Director. Hugh brings more than 20 years of M&A, capital markets and operating experience working with global organizations in the technology, media, advertising and marketing services industries.
Prior to joining JEGI LEONIS, Hugh led corporate development and capital markets activities for The Interpublic Group of Companies (NYSE: IPG), a global leader in marketing services. While at Interpublic, Hugh developed a deep domain expertise in media broadly and marketing communications more specifically. At IPG, Hugh oversaw the completion of more than 70 acquisitions across the marketing services landscape. Hugh also helped lead capital allocation and capital markets transactions for the firm. Prior to IPG, Hugh worked in investment banking at UBS and JPMorgan where he advised media, communications and technology firms in mergers, acquisitions and capital markets transactions. Prior to his banking career, Hugh practiced corporate law.
Commenting on his new role at JEGI LEONIS, Hugh said, “I am excited to join JEGI LEONIS, where I can leverage my significant industry and investment banking experience and relationships in combination with their strong brand and thought leadership. I look forward to working closely with the JEGI LEONIS team to offer the highest value strategic insights for our clients.”
Wilma Jordan, Founder & CEO, North America of JEGI LEONIS, noted, “Hugh’s impressive depth and breadth of experiences in the marketing services sectors will strongly benefit JEGI LEONIS clients. He is known nationally as well as internationally for his transaction expertise. Hugh will elevate the value we bring the businesses that we serve in these sectors….we are very pleased to have him join our firm!”
Hugh received an MBA from The Wharton School of the University of Pennsylvania, a JD from Columbia University and a BA from the University of Alabama.