3 external M&A firms advise on DQ&A | incuBeta deal
South Africa-based incuBeta and Netherlands-based DQ&A Media, both digital marketing agencies, have agreed to a merger. Combined the firms will have roughly 400 full-time staff, across 13 offices worldwide. The deal was advised on by dealmakers from Capitalmind, Eversheds and Huddle.
To meet the evolving digital market demands and changing client requirements, as well as boost their scale and geographic reach, incuBeta and DQ&A Media have decided to merge*. Founded in 1995, incuBeta is a South African-based marketing performance group that provides local and international organisations with a range of digital and media services. The digital agency has operations in six countries (South Africa, UK, Australia, Singapore, China and Kenya) and serves among others Standard Chartered Bank, Europcar, Old Mutual, Woolworths, Prudential and Times Asia. DQ&A Media, a counterpart based in the Netherlands, boasts a similar service portfolio, and operates with offices in its home base, Germany, Spain, Italy, Switzerland and the US.
Combined, the merged company will have more than 400 employees in 13 offices, and generate revenues of over €100 million, say the newlywed partners. “We have created one of the world's largest, independent, international groups of digital agencies,” highlights Rick van Boekel, CEO of DQ&A Media. Van Boekel in addition adds that the two companies are highly complementary, not just from a geographical perspective, but also in terms of services and products. While DQ&A is particularly strong in programmatic digital media buying, its African merger partner specialises in search engine marketing and web analytics. “Our advertisers are increasingly asking for both services, because after someone has viewed an online video a targeted search advertisement can generate more hits and conversion,” explains Van Boekel. To date, DQ&A Media typically had to sell a ‘no’, with incuBeta facing a similar challenge at the other end of the spectrum.
Throughout the deal process the digital agencies were supported by M&A advisors from three external firms. For financial advisory services, DQ&A Media hired Capitalmind, a corporate finance firm with offices in the Netherlands, France and Denmark. The M&A consultants supported the company with among others the structuring of the deal, the commercial due diligence process and facilitated the negotiation phase on behalf of DQ&A’s shareholders. Legal support was provided by Huddle, a boutique Amsterdam-based law firm. The South Africans were legally advised by Eversheds, complemented by an in-house team of lawyers, while M&A and transaction support was provided by the firm’s internal corporate strategy unit.
Consolidation drive
The merger between the two is yet another example of the consolidation push in the broader digital marketing landscape. While for long the deal arena was dominated by the large players – WPP, Publicis, IPG and Omnicom (mostly to recover terrain in the online space) – more recently smaller agencies are increasingly joining forces to accelerate their growth, while also venture capitalists have of late boosted their investments in boutique, or mid-sized players. Building on their added financial strength, DQ&A Media and incuBeta have unveiled they are contemplating further “strategic acquisitions” in the near to medium-term to expand their services and reach.
* The deal between incuBeta and DQ&A Media was closed on 5 November 2015.
