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A run of independent agency acquisitions by bigger, global players is creating an opportunity for the next generation of high-performers to fill a gap in the market.
However, these acquisitions also consolidate power at the top end of the market and intensify competition, meaning indie agencies have a short window to seize this opportunity before the market stabilises.
Holding companies and private equity (PE) firms are accelerating their acquisition strategies, targeting high-performing independent agencies to strengthen capabilities in areas such as performance media, first-party data, e-commerce, influencer marketing, and AI-driven marketing, to name a few.
While this trend presents challenges to the landscape, the hidden benefit is a phoenixing effect where small to medium-sized agencies can propel themselves into the gaps created by the acquisition of top-tier indies.
Earlier this month, adland witnessed one of the most significant media agency deals in recent years, both in scale and strategic impact, as powerhouse French holding group Publicis acquired Australia’s largest indie Atomic 212.
"The deal not only strengthens Publicis Groupe’s market dominance but also signals a significant shift in the competitive landscape," SI Global director of Australia Julia Vargiu told AdNews.
"This will reduce the number of strong independent alternatives for clients while significantly intensifying competition at the high end of the market, particularly against GroupM and Omnicom."
SI Global anticipates that the trend of indie acquisitions will continue, leading to a decline in the number of strong independent agencies. This could raise concerns for client brands seeking alternatives outside of holding group agencies.
Like many indie agencies, one of Atomic’s biggest selling points was its independence, with some clients choosing them specifically because they were not aligned with a holding company.
"I wouldn’t expect current clients to reconsider their position, as the agency remains independent-minded. Although, some future client opportunities may be affected by the shift away from independent ownership," Vargiu said.
"However, I'm always an optimist, so in the short term, I believe the next tier of media indies will grow and step into the independent space Atomic has left behind.
"There is significant opportunity in the mid-tier right now for agencies to move up. We have to remember that the indies of yesterday are often at the core of the holding companies of today. As the most sought-after agencies get acquired, a new wave of indies emerges to fill the gap."
For example, Match Media was an innovative media indie ahead of its time. It was acquired by Publicis, became Blue 449, and later merged with Spark Foundry, which has since grown into a formidable industry player.
"But on the flip side, this newly merged entity has become a tough competitor to beat," Vargiu said.
"So, if clients are comfortable with independent-minded agencies rather than full independent ownership, then local indies may have only a short window of opportunity before the market stabilises."
Other emerging M&A trends: Consolidation within a sluggish economy
SI Global anticipates continued acquisitions and consolidations, particularly in high-growth sectors.
"The appetite for M&A among some holding companies remains strong, as they continuously seek to fill capability gaps and maintain their competitive edge in an evolving market," Vargiu said.
Australia, mirroring global trends, is experiencing a diversification of acquirers, with new entrants actively pursuing opportunities in the market. This shift creates expanded opportunities for businesses, particularly as private equity firms increase their presence in agency acquisitions.
Recent notable deals such as Sparro’s acquisition by PE-backed UK-based Brainlabs and Simon Ryan's RyanCap being acquired by PE-backed French firm Labelium, underscore this growing demand.
SI Global also anticipates greater consolidation among smaller players as economic pressures continue to mount.
"We’ll likely see smaller agencies—many of which have benefited from a historically strong Australian economy and have not experienced prolonged economic downturns—merge with similarly sized businesses to remain viable and, in some cases, achieve the scale that has eluded them," Vargiu said.
Unlike other markets, Australia largely avoided the full impact of the Global Financial Crisis (GFC). As a result, many of today’s indie agencies have not had to build the operational resilience or commercial rigour required to navigate prolonged economic instability.
"The challenge with mergers of smaller agencies is that, aside from being harder to execute, they seldom succeed because owner-entrepreneurs of boutique businesses don’t always align well. However, they can be effective when two agencies with distinct specialisations—who have successfully collaborated in the past—merge to enhance their specialist capabilities," Vargiu said.
"This could lead to further consolidation among mid-tier indie agencies, particularly those struggling to sustain growth in tougher economic conditions."
Another option for struggling small indie agencies is the acqui-hire model, where a business acquires a company primarily for its client base and the expertise of its staff, rather than for its service offerings. This type of acquisition is typically structured as an asset sale with a payout—similar to a recruitment fee for sourcing multiple hires.
"This can be a strategic alternative to merging for founders of boutique agencies with small margins (AUD 1 million EBITDA or less) looking to exit, as they often struggle to attract market-leading acquirers due to their lack of scale," Vargiu said.
"However, the closer two merging agencies are in size and service offerings, the more challenging the integration process can be—particularly if there isn’t strong alignment in company culture, timing, and demonstrable growth, along with a clear understanding of the original constraints that inhibited business growth.”
But what makes an agency attractive to buyers?
Beyond the skills, talent, and culture of their people, agencies that achieve a minimum of 20% year-on-year revenue growth, offer specialist services, maintain a strong client base, and have a scalable business model are highly attractive acquisition targets.
Profitability is now just as important as revenue growth as a key valuation metric, with today’s deal values more commonly based on EBITDA (earnings before interest, taxes, depreciation, and amortization) rather than pure top-line growth.
As the Australian dollar continues to decline, the equivalent EBITDA benchmarks for global buyers often sit at around USD 2 million, EUR 2 million, or GBP 1.5 million,, so Australian agencies typically need an EBITDA of AUD 3 million to attract international acquirers offering the most competitive valuations and fairest deal structures.
"Scale is critical for Australian businesses—first, because it is particularly difficult to achieve in this relatively small market, and second, because many acquirers operate cross-border," Vargiu said.
"Even though holding companies have local operations and deals may be initiated domestically, they are ultimately evaluated and executed at the global level, where head office M&A teams assess them as part of the company’s broader business strategy.
"A small fraction—around 10% to 15%—of local small to mid-sized agencies are thriving, outperforming their peers by achieving margins of 25-30%. However, if they are not achieving scale and their staff numbers remain below 20 full-time employees (FTEs), they may still struggle to attract a world-leading, best-in-class acquirer. That said, a first-time local buyer or fledgling international group may have more flexibility to find them appealing.”
Holding companies and PE-backed platforms are particularly interested in firms with deep expertise and specialised services, typically avoiding generalist agencies, as they can be difficult to integrate.
"We often recommend specialisation—being a specialist is valuable, being a specialist at scale is even better, and being a specialist at scale with the ability to internationalise is highly attractive," Vargiu said.
"In Australia, where achieving scale is a challenge, many agencies expand their capabilities by adding new skills and services. However, this approach carries the risk of becoming too broad and losing their niche positioning in pursuit of growth.
"Being a scaled specialist is particularly difficult, and agencies often need to expand internationally to demonstrate that their offering is not just viable in Australia but also applicable to other markets. The majority of acquirers, after all, are cross-border buyers based in either London, the EU, or the US."
Agencies with a strong client base, whether through high-profile clients, global brands operating locally, or long-term contracts, can offer immediate value to acquirers, who prioritise sector and client risk mitigation. However, securing long-term contracts has become increasingly difficult, as much of the industry now operates on a project-based model.
On the other hand, client concentration risk can be a concern, as acquirers typically prefer that no single client accounts for more than 20% of an agency’s gross profit or revenue. Diversification is key to reducing risk and increasing acquisition appeal.
While financial performance is a critical factor in valuation, acquirers prioritise cultural and operational fit to determine deal desirability and ensure seamless integration with their existing structures. A well-aligned agency reduces disruption and enhances long-term value.
"Atomic and Publicis will likely experience a smoother integration than most, given the complementary nature of their culture and skill sets," Vargiu said.
Another often-overlooked factor is that acquirers place high value on indie agencies with a strong, loyal, and committed management team that extends beyond the founders. A well-established, incentivised leadership team enhances stability, increases the likelihood of meeting the growth needed to achieve earn-out targets in performance-based deals, and ensures a smoother post-acquisition transition.
"If you're attractive to a buyer—whether you choose to sell or not—it’s a testament to the strength of your business. A well-structured agency provides owner-entrepreneurs the freedom, choice, and flexibility to shape their own future," Vargiu said.
"Ultimately, valuation and deal structure fairness reflect how well a business has positioned itself—not just as an acquisition target, but as a resilient, high-performing entity capable of long-term success.”
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