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Investor view: Hamsters on a wheel – changing the agency acquisition merry-go-round

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12.10.2021

Last month, the US Securities and Exchange Commission fined WPP $19m (£14m) for various violations of the Foreign Corrupt Practices Act after it found WPP had failed to ensure local advertising agencies in "high-risk markets" met its accounting standards.

A fuller detail of the claims is outlined in the article here and it should be noted both that WPP has denied any wrongdoing and that WPP's former chief excutive, Sir Martin Sorrell, has denied responsibility for what happened.

Putting aside the specifics involved, there are some interesting questions raised here about the acquisition model for the agency holding groups and how things may change moving forwards.

One thing to point out is that many of the acquisitions made by the agency holding groups fall under the radars of analysts, as they are usually too small to be of consequence in the wider scheme of things.

Yes, once in a while, a game-changing deal such as Publicis' purchases of Sapient and Epsilon, or IPG buying Acxiom, comes along, which attracts greater scrutiny and a more detailed explanation. But, more often than not, there is usually a brief description of the asset purchased with (usually) no details of either the price paid or the financials, followed by a........

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