By Patrick Coffee
Carlyle-backed Dept acquired 3Q Digital as it continues its US ad agency buying spree.
The deal will help Amsterdam-based Dept compete with agencies like Tinuiti and ad holding giants.
It’s the latest example of private equity dollars owing into the red-hot performance marketing space.
Dept, a buzzy digital marketing rm owned by PE rm Carlyle Group, continued its US buying spree, snapping up 500-person 3Q Digital.
Amsterdam-based Dept, with 2,000-plus employees, had more than $500 million in 2021 revenue from clients including Adidas and Ikea. It’s part of a new breed of upstart agencies including Jellysh and S4 Capital that are buying up rms to capitalize on advertising’s shift online.
CEO Dimi Albers said the new acquisition, which is Dept’s largest to date by headcount and revenue, would help the agency establish a foothold in the lucrative US ad-buying market for the rst time. Previous US acquisitions focused on engineering, UX, and creative services.
3Q, with more than $110 million in revenue last year and clients like Skechers and Square, is one of the top independent performance marketing agencies in the US. Dept will oversee $3 billion in annual ad spending when the deal is completed and be better positioned to compete with performance marketing agencies like Tinuiti and Wpromote as well as the ad holding companies, the two agencies said.
Performance marketing, which focuses on driving sales, has become a red-hot area for private equity. Michael Seidler, CEO of M&A rm Madison Alley, which has advised 3Q in the past, estimated its value at $550 million to $700 million, or about 20 times EBIDTA.
Dept has bought more than 20 mostly mid-sized companies since rst taking private equity funding in 2015. The US has been its fastest-growing market after recent
acquisitions such as data science rm Raybeam and software consultancy Devetry; it’s expected to contribute more than half its 2022 revenue.
Dept is eyeing further expansion in the US as well as the Asia Pacic region, and has begun unifying its agencies under the Dept brand, Albers said.
The 3Q sale is an all-equity deal, with 3Q investors’ shares rolling over into Dept. Penny Pritzker, founder of private equity rm PSP Partners, a 3Q investor, will take a seat on the board. 3Q CEO Rob Murray will join Dept’s US C-suite and 3Q Chief Strategy Ocer Sam Huston will become global VP of growth. Sanjay Chadda of Canaccord Genuity advised on the deal.
Seidler, who was not involved in the Dept deal, said Dept has been discussing an IPO and that the all-equity nature of the 3Q deal supports that idea. The
companies declined to comment on IPO plans.