15th April 2024
Stagwell’s latest agency acquisition is Pros in Brazil, its first in the potentially lucrative Latin America market. With the deals coming thick and fast, Green Square founder, Tony Walford, puts Mark Penn’s latest deal into context.
This morning’s news of Allison’s acquisition of São Paulo’s PROS Agency is the fourth acquisition by Stagwell this year and comes hot on the heels of last November’s Movers+Shakers, Anomaly Alliance’s acquisition of French digital shop What’s Next Partners (WNP), Allison buying the UK Sidekick and Constellation’s purchase of US-based Team Epiphany.
According to Stagwell, PROS will become part of Allison, which has its heritage deep in PR and now offers integrated marketing and communications across 50 markets. While Stagwell commenced operations in LatAm two years ago, this is its first acquisition in the region.
So, let’s have a look at what’s been going on.
Six months ago, Stagwell sold its integrated healthcare offering, Concentric Life, to Accenture in a $245m cash deal, having previously merged its rare disease agency, Scout, into Concentric to create a 270-person Healthcare specialist. The rationale for the sale, according to chairman and CEO Mark Penn, was to “focus on core digital services, including AI-based digital transformation; strengthening our balance sheet; and investing in our future”.
We have to admire a decision to divest. When companies offload assets, there’s always a suspicion it’s because things aren’t going well and they need the cash. True, Stagwell wanted to improve its balance sheet and, like most of its peers, it had taken a bit of a knock due to the tech downturn, but the key driver in this case was healthcare being non-core and Stagwell has not invested in other healthcare agencies since.
Given the rationale for the Concentric disposal, looking at the acquisition of Movers+Shakers and the four acquisitions so far this year, what do they tell us in terms of strategy?
Founded in 2016, Movers+Shakers is one of the fastest-growing social media agencies, adding 21 new clients in 2023 and was one of the first agencies to embrace TikTok, guiding hundreds of brands onto the platform. Its 20m user-generated campaigns have had over 250bn views and it counts Netflix, Hasbro, E.L.F and Amazon among its clients. Definitely tick(toks) the core digital services box.
The next acquisition, in January 2024, Team Epiphany (“TE”) is a content, experiential and influencer agency that is rightfully obsessive about culture. BIPOC founded and run, its outputs are very cool, featuring cultural icons such as A$AP Rocky. Albeit TE uses digital channels, it’s not pure play in this regard. But it’s certainly an investment in the future – culture and neutrality of talent (across all metrics) are core tenets of every company today and TE, which has joined Stagwell’s Constellation network, exemplifies this.
In February, UK-based Sidekick (represented by us at Green Square), brought experiential, live events, digital storytelling and branded content to Allison, with clients including Amazon, Deliveroo, Sipsmith and EE. What’s interesting about this deal is Allison had been collaborating with Sidekick for over 12 months before discussing a more permanent alliance. Allison has always been keen to acquire capabilities that it doesn’t already have, regardless of market. Very digitally and culturally focused, Sidekick ticked all the Concentric sale rationale boxes.
Next up, WNP (acquired in February) again definitely ticks the “focusing on digital services” box, with expertise in AI-enabled CRM and data, digital creative and content. Adding a French footprint to Anomaly and complementing its other European offices in London and Berlin, it brings a mix of French and other European clients to the fold, including some big names such as Danone and BASF.
And now PROS. Another Allison play, this is Stagwell’s first LatAm acquisition, and adds a local entity. Female-founded and run, PROS 130 staff brings further cultural balance to the group, with a 10-year heritage and significant clients including Mondelez, Boticário and Amazon (already a Stagwell client across multiple divisions). PROS 2023 growth was stellar at 50% and 20% is tabled for the current year. São Paulo has the largest economy by GDP in Latin America and is the 12th largest city by population in the world. Strategically this deal looks to make a lot of sense – an agency of significant size and stature, increasing Stagwell’s footprint in the region with a proper investment, and the opportunity to cross-sell other group services.
In sum, all the acquisitions post-Concentric make sense and look to be smart strategic buys. So, what’s next? Having made a rumored $700m bid for Martin Sorrell’s S4, which, if successful would have taken Stagwell to 22,000 people and mirrored the size of Havas, Mark Penn is certainly not resting on his laurels. His acquisition of MDC in 2021, and the highly regarded brands within it, really put Stagwell on the map and, given its activity over the last year, and with 4 acquisitions in as many months this year, it will be one of the most interesting groups to watch as 2024 pans out.