Rise in mergers and acquisitions predicted

Designers are predicting a rise in mergers and acquisitions of consultancies, despite findings in a new report which show there is little interest from buyers outside the industry.

The WKS Results survey, which covers all marketing services, showed more businesses are willing to sell and there are more buyers around. Nearly all the design consultancies in the survey expect an increase in M&A activity in the design sector.

However, Ian Cochrane, chief executive of management consultancy The Tice Group, claims there are “outside buyers, mainly from the advertising sector in the UK and overseas”, for good design businesses.

Mergers between design groups are tipped as a growth area. Design groups are “looking to grow and asking whether they can join with another design group without having to write a fat cheque”, states Bob Willott, partner at Willott Kingston Smith which compiled the survey with Result Business Consultancy.

International expansion is seen as the main motive behind M&A activity for design consultancies, whereas for other marketing services critical mass is top priority.

All the design respondents believe now is a good time to sell, but were split 50/50 over whether it’s the best time to buy. Cochrane sees smaller businesses being squeezed by larger players and predicts more mergers. “It’s a good time for strong businesses to sell,” he adds.

In the past few months deals have been clinched between RSCG Conran Design and Worthington & Co and between Curious and Parker Stratton, among others. Wickens Tutt Southgate has completed its link with Rodney Fitch and Virgin while rumours are rife that Wolff Olins is up for sale, although these have been denied by the group.