M&A activity on the rise in 2011

The high level of merger and acquisition activity taking place in the first few weeks of this year points to a positive 2011 for the sector, according to industry experts.

The beginning of this year has seen a number of mergers taking place within the PR industry, including the banding together of comms companies Four Communications and travel agency BGB, Brando with Band & Brown and Tavistock's acquisition of Conduit.

The sheer level of deals, coupled with a host of M&A transactions in the last few months of 2010, suggest that the UK PR industry is heading for consolidation following months of fragmentation.

Industry experts explain the rise in M&A volumes as 'defensive' in nature, especially in terms of SMEs, who often look to pool resources and cut costs in a tough economic climate.

Chairman of Huntsworth Communications , Lord Chadlington, said, "Some have found the past three or four years quite difficult and I think a lot of the deals that are currently coming through are defensive."

Founder of Lansons Communications, Tony Langham, "Many agencies … are looking very carefully at their costs, which is pushing them into mergers."

The number of deals happening within SMEs is also likely to lead to larger deals, added Lord Chadlington. "Larger companies are no longer looking for bolt-ons, they want companies with more than 100 people that are not dependent on one individual."

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