Managing supplier relationships post-M&A
Mergers and acquisitions are prolific within the global media and marketing industry. According to Results International, there were 397 mergers and acquisitions in the first half of 2018. In particular, there were 28 deals involving Website UX, Design and Build; 27 deals involving PR agencies and 63 deals involving full-service digital agencies - the most active subsector.
Big names to hit the headlines were Disney and Fox; AT&T acquiring DirecTV; JCDecaux acquiring APN Outdoor group; and Vested, the US financial communications specialist, buying UK-based Templars Communications. With Comcast’s purchase of Sky also on the horizon, the media M&A boom is only set to increase.
The PR industry was especially buoyant with 103 publicly announced and completed transactions worldwide in 2017. This is an increase of 14 per cent on 2016. Davis & Gilbert’s research shows that a third of the transactions involved PR firms with less than $3 million in revenues, suggesting that agencies are looking for smaller firms they can "tuck in" to an existing business rather than pioneering their own expertise. This strategy is helping companies navigate our fast paced, digital world. Evidence of this is seen in the fact that 27 per cent of the firms acquired last year were technology or digital firms.
While a merger brings many benefits and opportunities, it also creates some challenges for those at the heart of the process. Working out how to consolidate the back office of two entirely different organisations and amalgamating two extensive networks of suppliers is of utmost importance.
Integrating new suppliers
Very often within the creative sector, agencies have a huge raft of suppliers and freelancers to meet their different needs, each with individually negotiated rates and terms and conditions. Getting an overview of this and working out where duplicates exist is critical.
One way in which media and marketing companies are navigating this administrative nightmare is to encourage suppliers to sign up to an electronic network. This gives companies immediate visibility of all their suppliers and invoices and provides a unified view of company spending – something that is crucial in the early days of a merger or acquisition. The spend analytics tools powered through e-invoicing help newly-merged firms crunch the data and identify price variances and duplications and negotiate better prices.
Doing due diligence
In a tough and competitive industry, it is also vital that you trust your suppliers, particularly ones that are new to your business, post-merger. After all, a business is only as strong as the weakest link in its supply chain and the rate of supplier failure is alarming.
This is where new services like Mastercard Track can help. It is a unique global trade platform that gives new and existing Tungsten Network customers deeper insight into their supply chain. Beginning in early 2019, businesses will be able to maintain, retrieve and exchange key information relating to themselves and their trading partners through the Track Trade Directory, a secure, permissioned repository of over 150 million company registrations worldwide. This central directory will integrate feeds from more than 500 sanction, watch and law enforcement lists into one place, while also keeping a close watch on any negative media, monitoring more than 21,000 global sources for reports of financial crime. This process makes the screening and onboarding of suppliers post M&A more efficient, as time spent up front is less likely to be wasted further down the line.
A M&A can be an extremely exciting time for a business but also involve a huge amount of administration and strategic planning. At Tungsten Network we are keen to support marketing companies as they navigate the merger process, helping them on-board their suppliers and streamline their back offices.