Globally, Mergers and Acquisitions (M & As) is considered a strategic business tool for leveraging brand equity and also to have the competitive edge. The concept is deliberate coming together of two or more companies to form one entity which could take the form of merging all structures and employees. Experts say M&A which could be permanent or temporal has become a big part of the corporate financing all over the world.
While this business concept of local firms merging has either forcefully or unilaterally been embraced by some players, it is yet to be witnessed in the advertising industry in Nigeria. What is obtainable are largely sketchy cases of foreign affiliations.
In view of the increasing challenging environment occasioned by business dynamics, various stakeholders and different forums have advocated for mergers of firms in the advertising community to compete favourable in the global market but importantly to withstand storms. But the advices are not really penetrating.
Biodun Shobanjo, the chairman of Troyka Holdings, who has spoken at different advertising related forums, believes that it is only when operators in the industry re-think, redefine the industry and consent to mega firms through mergers and acquisitions that the industry will further be pushed up.
Addressing the outdoor segment of the advertising community some time ago, the successful business man believed that it is due to the plethora of one-man business in the Outdoor industry that sometimes advertisers feel they are doing the agencies favour, when it should be the other way round.
Also, speakers at the recent meeting of Association of Advertising Agencies of Nigeria, AAAN toed Shobanjo’s line when they emphasised collaboration among the industry operators, support of one another, discovery of more markets and finding solutions to clients challenges as solutions for survival.
The speakers who included Jimi Awosika, Vice Chairman of Troyka Holding; Bola Thomas, AAAN Trustee; Steve Babaeko, CEO of X3M Ideas and Lanre Adisa, CEO of Noah’s Ark agreed that collaboration is a way forward.
But the industry appears solidly stuck in the past; satisfied with me-too agencies as the operators seem not to be interested in M&As. This is either the operators are not ready to go through the haul of the process of M&As or the operators in the entire Nigerian advertising space are treading with caution on the belief that most of the companies do not have fundamentals to enable M&A transactions.
However, Innocent Nwani, Director at Hill+Knowlton Strategies Nigeria Ltd., a global communications consultancy firm said one of the factors militating against M&As in the IMC sector in Nigeria is the inability to see the bigger picture, powered by myopic and selfish tendencies. “Most of the practitioners are fixated in their mentality of ownership and- the fear of losing control. The industry is populated with people who want to call the shot, unfortunately most of them do not have enough clients to keep them afloat. This explains why most of them cannot pay their employees”, he told BusinessDay.
Nevertheless, he said beyond the reasons being brandished for the lack of adoption of M&A in Nigeria’s IMC industry, particularly Adverting, the silent issue which nobody talks about is the Asset value and goodwill of these companies. “In M&A transactions, these two are important among several vital factors that executives, investment bankers, and other stakeholders have to consider”.
Asked why agencies are not embracing M&As as part of strength, Jenkins Alumona , CEO of Strategic Outcomes Limited, an integrated marketing communication firm that has deep understanding of the Nigerian market during an interview recently linked this to ego.
“There is something about the ego of some Nigerians that baffles me. I don’t understand when the economy is contracting we are having more agencies come on stream, mostly with the same approach except for a few. Agencies and media companies are not merging. It is frightening to see how we are prepared to allow our egos ruin our businesses”.
Akonte Ekine, CEO of Absolute PR, based in Lagos identified lack of trust as major issue working against the concept of M&A in advertising and other industries. He agreed that there is more to M&A than name and logo but stated that business should transcend beyond an individual who started the business. He said there is fear of who loses more when the M&A does not work.
For business advantage, individual companies can come together to muster the strength to bid for a business and subsequently execute the business jointly. This is part of AAAN forum recently that called for collaboration for survival in a turbulent economy.
