Is it better to build agency capability or buy it in?

To buy, build or borrow?

Joe Maglio, president, Cheil North America, CEO, McKinney & Barbarian: “I evaluate our agency offerings relative to future client needs on a regular basis and always consider three paths – buy, build or borrow. The decision is ultimately based on the complexity of the offering, the existing knowledge base that we have internally and the speed-to-market that is required. While an acquisition is often viewed as the quickest path, the reality is that any acquisition with scale takes time, and following the closing of the deal, there is often the need for more time and resources to integrate the new company. That said, if a capability requires specialized skills and/or technology, an acquisition can help you move faster. Case in point for McKinney, when we decided to add a comprehensive influencer capability, we analyzed the three paths and decided that this was an offering that we needed to buy, resulting in our acquisition of August United a couple of years ago.”

Ed Davis, managing partner, Agency X, director, BBN: “At BBN, we believe that building capability from the ground up is often a more effective strategy than acquiring another agency. By growing internally, you develop a team that is already aligned with your culture, values and operational style, which is often a significant challenge in mergers. Additionally, building capability internally allows for better cost control, as acquisitions often come with hidden or unexpected expenses. Furthermore, if a business is available for sale, it’s worth questioning whether its capabilities are truly competitive. Ultimately, a homegrown team allows for organic growth and ensures alignment with your long-term strategic vision.”

Eric Campbell, global chief client officer, VML: “We focus capability building and any related acquisitions around accelerating our value to clients, and specifically, strengthening our ability to create connected brands through our brand experience, customer experience and commerce practices. So, we are less focused on speed of acquisition and more around ensuring we deliver that value proposition across all geographies and any acquisition matches our strong culture.”

Rana Barua, Group CEO, Havas India, SEA and North Asia: “A strategic tie-up or acquisition is indeed one of the fastest ways to scale and add new capabilities, as it brings leadership, equity, and valuable expertise. Depending on the vision and strategic intent, it can facilitate a quick buildup versus starting from ground zero, given that it leverages well-established, proven machinery that is already performing well with its clients. However, for me, the key determinants in any acquisition are two things: Identifying the Strategic Need: This involves pinpointing expertise or capability that will enhance our offering to clients. The rationale behind positioning an acquisition agency must be crystal clear. It should not be driven merely by scale and size but should address a specific need gap or add a skill that benefits clients. Culture Fit: Acquiring an established agency or team can offer immediate benefits, but if the leaders and culture do not align, it risks undermining the value of the deal. Successful integration requires shared values and a collaborative mindset to maintain operational coherence. While the experience and skill sets of a potential acquisition are crucial, ensuring a cultural fit is what truly makes the partnership work."

Jason Cobbold, CEO, BMB: “It depends on what you’re looking to do. If it’s a fast fix upgrade that’s needed, acquisition can be a great option, especially when the requirement is upskilling. There are some spectacular examples of this working well in our industry (eg, networks buying big digital consultancy and data businesses). But with acquisition comes risk. You must choose well, and that means fitting together two cultures and two sets of personalities. That’s not always as easy as it first seems, as many acquisitions get unpicked surprisingly quickly because there is insufficient effort to integrate. The ‘Can you share a train journey with each other?’ test on day one may look very different a year later. Alternatively, while building it yourself can be painful and slow, with many false turns and harsh lessons – the resulting proposition can be more stable and predictable. The question really is, ‘How impatient are you?’

Anton Jerges, CEO/founder, We Are Collider: “As we’ve evolved over the last 21 years, we’ve had to develop new offerings. This has sometimes meant buying new capabilities, which is why we acquired three agencies pre-Covid. But since emerging from the pandemic with a more refined offering and, after three strong years, we looked again at how we might further differentiate ourselves and remain future-proof. This time, instead of acquiring, we enhanced our offering by investing in Seven Communications and Arq. Although acquisition is a faster route to new skills and services, it’s not without complications. Investment is better because clients see only benefits and not perceived negatives like talent and culture change. Also, the agency’s profile can still be leveraged and existing stakeholders remain engaged and incentivized. When structured correctly, investment means everyone benefits and stays motivated to move forward together while creating opportunity and growth.”

Marcus Orme, chief executive officer, Medialab: “Acquisition is certainly one of the ways you can grow your company quickly, and there are several excellent examples in our space where this has worked well. My preference has historically leaned towards building organically because you can embed your culture from the start. It takes longer, but it works well when you’re playing the long game. When we’re looking at businesses, we ideally want them to be supported by a tech stack or solution that ensures consistency of output. It’s then all about due diligence, as the people aspect is so important – it always has been and always will be.”

Jef Loeb, founder, Brainchild Creative: “Let me be among the first to argue for the golden third path in the buy versus build hall of mirrors: you rent. It’s a case I can make based on both the economics of unstable thin margin categories and the winning real-world experience of having delighted clients, delightful results and delightfully better sleep over the past two decades by avoiding the integration headaches, financial gut gnaw and, best of all, the inevitable HR calamities that go with adding humans and overhead to the Sisyphean burden. We all know that agencies of any size or shape are almost always dysfunctional families. We’re in the business of communications, so it only stands to reason that we’re inept at communicating with each other. Adding more bodies to the mix, not to mention the always expiration-date-stamped tech that comes with a lot of the new crop, only compounds the misery. Renting, by contrast, requires less onboarding (experts know what they need to know), far less management (experienced pros are either self-starters or they starve) and much, much simpler parting of the ways if and when the inevitable happens.

Alignment and culture are key factors

Jon Dupuis, president, PMG: “When adding a new capability, start by aligning the decision with your company’s vision and values. Both your employees and customers rely on your actions to reinforce the foundational beliefs of your organization. While speed is an important factor, it shouldn’t overshadow the long-term impact on what matters most: your people and the trust you build with customers. Building in-house demonstrates your belief in the talent within your company, and nothing strengthens your culture more than investing in your own team. If acquisition is the right path, cultural alignment should be the top priority. The market offers many options for specific capabilities, but true integration requires shared beliefs to ensure a smooth transition and long-term success.”

Kate Ross, co-founder, Eight&Four: “Acquisitions are highly attractive. Building client bases is so painful that buying an income feels like a really great shortcut, as well as buying in some fantastic talent. That’s really exciting. So, on paper, you’d think acquisition every time. But I think you always destroy value in mergers – one plus one always equals 1.2. If you have founders who are coming over with the merger that’ll be an issue because founders don’t want a boss, so you’ve got immediate tension within your business. And because founder-led businesses are built on the founder and their values, approach, vision, and so on, if they leave you’ve literally just taken the root out of the tree. So maybe on some sort of enterprise-level scale, it makes sense, but certainly not if you’re talking about a medium-sized agency like mine.”

Tom Denari, president/CEO, Young & Laramore: “While acquiring an agency with a specific capability can provide a ‘quick’ solution, we are mindful of the potential challenges that come with acquisitions, such as integrating different cultures and aligning on values. If a capability is closely related to our core offering and there’s an opportunity to build that expertise from within, we usually lean towards that approach. Building in-house allows us to develop more seamless integration with our existing teams and maintain our culture of strategic thinking and creative excellence. It also encourages innovation from within, leveraging the multi-talented group we already have, and it allows us to ensure that every aspect of what we deliver is infused with the same values and standards our clients have come to expect from us.”

Jon Goulding, CEO, Atomic London: There’s no doubt acquiring companies is the fastest way to add capabilities and scale your P&L. However, if your aim is to bring capabilities together and give your clients more joined-up creative thinking, then “acqui-hiring” or growing from the ground up is a better way to go. The reason so many agency mergers and acquisitions fail is that the cultures are incompatible or because the specialist agencies are driven by what they want to make on their own as opposed to the brilliant new thing they could create together. Active collaboration has been at the very heart of our company culture from day one. Like-minded specialists sitting around one table, with no hierarchies. Just a tight team of entrepreneurial, creative minds looking at new ways to create growth for clients. This approach doesn’t mean compromising on how quickly you can scale. Whether you’re combining advertising and creators, social and performance, creativity and health, or brand strategy and long-form entertainment, it’s the collisions that spark the most interesting and exciting growth nowadays. That’s why building out your capabilities from the inside will always have an advantage over acquisitions and bolt-ons.”

Caroline Parkes, chief experience officer, Wonderhood Studios: “Do you want quick? Or is building a quality connection with the right cultural fit a more important consideration? As someone who’s just recently joined a business to build a CX capability, I know that I’ve been hand-picked as someone who has the right ethos and not just the right skills. What you deliver and what you believe are fundamentally different. An acquisition might well be the speedy answer and could be necessary if there’s an immediate client requirement, but a more strategic approach can pay longer-term dividends. If you are looking at an acquisition, look beyond the skills and go deeper into the why. Exploring strategic partnerships may well be a better approach, rather than acquiring ‘all in.’ Connecting culturally is key to success.”

Acquisition is never easy

Tim Ringel, global CEO, Meet The People: “If an agency wants to add a capability quickly, an acquisition can make a ton of sense. The main reason is that you do acquire not only the skill (people) but also the revenue and clients (creds) to launch/cross-sell the new capability across existing clients of the acquirer. Nevertheless, acquiring a capability/agency brings the risk of an unsuccessful integration afterwards, different company cultures clashing as well as attrition of people and clients. So any decision on buy versus build needs to be considered in context of who is selling, who is buying and what happens after, besides the simple 1+1 = 3 math that financial engineering would lead to.”

Poran Malani, group CEO, Creativeland Asia:"I believe the question is far more complex than it has been stated. If, as mentioned, the goal is to achieve growth 'quickly,' then on the surface, merging with or acquiring an existing brand with a strong skill base and solid client portfolio seems logical. However, I think the real challenge lies in the word 'quick.' Over the decades, we’ve seen too many deals rushed to achieve inorganic growth. While everything may look good on paper, the differences in integration, culture, and leadership often take a toll. Not all businesses are compatible with each other, and typical buyout structures come with their own set of problems. That said, there are several scenarios to consider:

First, if you're looking for geographic expansion and there's a strategic fit with a similar culture that you believe you can build on, an acquisition makes sense. In these cases, it’s easier to grow from an established base rather than starting from scratch. The key here is to quickly integrate and align roles, operations, vision, and planning. Second, if you’re looking to add new services, you’ll need to decide whether you intend to integrate the new services or operate them separately. If you choose the latter, acquisition is sensible; if the former, absorption might be a better alternative."

Chris Woodward, CEO, CTI Digital: “If speed is the goal, depending on the complexity and barriers to entry of growing the new capability, 99% of the time, I would advocate for ‘buy.’ However, buying a business is not for the fainthearted. Even a speedy purchase, depending on the size of the acquisition, is still a process of several months. The financial and legal practicalities are relatively specialized and many agencies won’t ordinarily have them in-house unless they’re part of a large holding company or they’re private equity backed. For us, as a private equity-backed business, growth through acquisition is a core part of our value creation strategy – that’s where we differ from other agencies. Acquisition is in our DNA, in the same way that the creative department is a core element of most traditional agencies.”

Christopher Vollmer, MD, MediaLink: “With organic growth rates in low single digits for many agency businesses, a robust and active approach to acquisitions has become more critical than ever. Agencies will often test new growth offerings through a mix of opportunistic cross-selling and delivery via partners or freelancers. However, once an expansion opportunity is market-validated and client-tested, acquisition typically becomes the preferred path to scaling quickly. Historically, a mix of marquee executive talent and strong client relationships have been the key factors for identifying the most attractive acquisition targets. In today’s market, agencies in acquisition mode are increasingly looking for targets with tech-enabled workflows and unique approaches to data. These are capabilities that can deliver immediate “signaling value” to current and prospective clients around an expanded offering and help the acquiring agency to accelerate revenue growth.”

Toby Evea, business development director, Wonderhatch: “Deciding whether to acquire new capabilities or build them internally often comes down to an agency’s size and the specific capabilities needed. But when an agency is agile enough to build internally, they can gain a significant advantage. Self-built specialisms, from video production to brand strategy, allow agencies to tailor solutions directly to their client’s needs while keeping the agency’s image, values and workflow intact. Talent and ethos are the foundation of an agency’s identity, so how we grow – and who we grow with – is critically important. Acquisitions can introduce cultural silos and slow down the process of bringing new capabilities to the market. But an agency that fails to grow risks missing the boat on clients’ evolving requirements. My advice is to seek partners and talent who share your values and can bring exactly what your clients need to the table. Grow fast, but stay true to you.”

Scott Tieman, global head of AdTech & MarTech, Star: “If speed is what matters most, acquiring a company is the fastest means to owning a capability. However, acquiring is complicated and there are many considerations. The business case must make sense to justify the cost. Managing the integration of brands, leadership, talent, capability and technology takes time, patience and determination. Acquired revenue might lack stickiness. Focus on ensuring the following: 1. The acquired leadership team wants to see it through and is committed to making both companies successful over the long term. 2. The acquired capabilities fill a gap in the existing portfolio. 3. Both companies share complementary work locations. 4. The acquired company agrees to be integrated within a short period. 5. There is a synergy case for acquiring the company beyond the existing revenue streams. Partnerships can be a strategic alternative to acquisitions, providing access to talent and capabilities without the same level of risk, cost, or time commitments.

James Connelly, CEO and founder, Charlie Oscar: “If ‘speed’ is the objective when adding a new capability to any agency, then I would build the capability rather than buying it every day of the week. Most M&A deals take 12 months to complete from the moment you first engage with the target, let alone the sourcing of the right company and kissing a few frogs along the way. A more realistic time frame could be up to 24 months, from identifying the capability gap to completing an acquisition. The fastest way to go to market with a new capability, other than to find a company to partner with, is to hire a new team or refocus existing staff on the new capability. M&A is far better for more strategic growth of a company rather than ‘quick new capabilities.’”

Jared Belsky, CEO, Acadia: “Build where you can, buy when you have to. Acquisition is harder than people assume. In addition to time and capital, it takes integration know-how, which is rare. We added a GA4/Tagging capability by studying the market to find a ‘way in’ and hiring a leader with significant experience and know-how. One person can home-grow a single area of expertise with a low cost of entry. Retail media and Marketplaces was a different story. We couldn’t just hire one person who knew Amazon PPC; we needed to incorporate multiple, costly areas of expertise to be credible. For that, we acquired a pioneering provider that had built an enterprise service – combining 24-hour inventory, product and media management – with a sizable base of clients and achievements. That foundation made us a player overnight.”

Additional APAC reporting by Amit Bapna, Editor-at-Large, The Drum