ZMI ALPHA:Private-equity firm Innovatus Capital buys ad agencies

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ZMI ALPHA:Private-equity firm Innovatus Capital buys ad agencies

  • Private-equity firm Innovatus Capital acquired three midsize ad agencies in the past three months.
  • It joins other PE firms that have poured billions into marketing services over the past few years.
  • Innovatus said it plans to acquire more agencies that have been weakened in the downturn.
  • See more stories on Insider’s business page.

Private-equity firm Innovatus Capital has snapped up three midsize ad agencies in the past three months in what it said is a plan to take on big ad holding companies, such as Publicis, and upstart agencies.

Innovatus acquired Boulder’s Public Label and Toronto’s Match Retail — whose clients include Danone, L’Oréal, Adidas, and Mars Wrigley — after acquiring design agency VSA Partners, which is in Chicago, in January.

Innovatus founding partner David Schiff said he saw an opportunity to acquire ad agencies that were weakened by the pandemic.

Innovatus — which had $1.6 billion in assets in mid-2020 and previously invested in the real-estate, construction, and life-sciences industries — is expected to continue buying marketing companies “with conviction,” Schiff said.

PE firms have poured billions into marketing services over the past few years, and their influence is expected to continue as digital ad spending increases and newer agencies and software platforms pay off for investors.

Industry analysts believe M&A activity will heat up this year as PE firms compete for agencies with traditional ad networks such as WPP and challengers such as You & Mr. Jones and Martin Sorrell’s S4 Capital.

Commerce and events-focused Public Label and Match Retail, which helps clients handle in-store marketing, formed when Match Marketing split in two in December.

Brian Cohen, the CEO of both Public Label and Match Retail, is expected to retain his title, overseeing around 200 employees at the companies. Terms of the sale from PE firm Southfield Capital were not disclosed.

Cohen told Insider that Match Marketing split to set its services apart and sold to Innovatus because it offered “more fuel” than Southfield. He said Innovatus’ backing will help these agencies invest in machine-learning and artificial-intelligence tools rather than going the route of other advertising companies in acquiring data platforms.

“The private-equity relationship allows us to constantly be out there, scouring the market for larger-scale and smaller-scale investments so we don’t let our own size and infrastructure be a hindrance,” Cohen said.

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