Owners and employees of independent Hispanic/multicultural agencies who want to be acquired by other agencies will find that the recent acquisition of DirecToHispanic by C.A. Fortune interesting news. Portada talked to Nery Vazquez, CEO of Los Angeles-based retail marketing agency DirecToHispanic (DTH), to understand the rationale behind the transaction.
Vazquez tells Portada that Chicago-headquartered C.A. is a privately held, national sales and marketing agency, providing end-to-end solutions for consumer brands of all sizes. More specifically, C.A.’s sales verticals range from outsourced sales management teams for emerging brands, headquarter management services for grocery, natural, club, drug, mass, c-store, etc. trade channels, dedicated e-comm/omni solutions, national in-store merchandising/activation services, holistic back office/admin offerings (order processing, deduction mgt, trade mgt).
Last year, C.A. acquired SRW which further strengthened our marketing vertical by allowing us to offer additional services in-house, including brand strategy, creative, social, digital, public relations, media buying and shopper marketing. Adding DTH into the C.A. family complements our service offering with another vital layer – providing our customers access to a national, Hispanic focus on retail marketing, experiential brand strategy and digital disciplines.
C.A. Fortune – DirecTO Hispanic: The rationale for the Transaction
Vazquez notes that the driving force of this transaction is to “strengthen our joint capabilities and ensure that we are delivering the end-to-end solutions both organizations’ clients want.” DirecToHispanic clients include Mazola, Ensueno, Cloralen, Pinalen, Lemi Shine, and Juanita’s. These accounts can be offered C.A. Fortune services, while C.A. Fortune clients can receive Hispanic and multicultural marketing services through DTH.
DTH has a presence in nine states and services a broad spectrum of CPG brands focused on engaging with Hispanic consumers where they live and shop. “DTH becoming part of C.A. allows us to jointly reach more Hispanic consumers in a culturally relevant and authentic way. C.A. has a national presence and expansive client roster, so we are excited to get to know and work with these clients to reach Hispanic consumers.”
“Both C.A. and DTH are privately held companies, and the details of this transaction will not be made public,” says Vazquez
For a general indication of transaction amounts for M&A in the marketing and agency space, Hugh Boston, MD at JEGI, a NYC-based investment bank, says that for companies with revenues above US $40 million, the transaction multiple lies between 7 and 10 times EBITDA, depending on the quality of revenue (recurring vs. less predictable revenue). Boston says that companies with Data & Analytics are valued at a premium. “Anything that gives insights on consumer engagement and call to action, ” he says, is valued higher. As hot categories within the marketing space, he mentions CPG and financial (e.g., loans, insurance) and healthcare. Another category with relatively high valuations is e-commerce enablement. Branding strategy and campaign management are not as coveted as some major brands have been in-housing these services.
“Agencies servicing categories including CPG, financial, health care and who do e-commerce enablement are generally valued at a premium.”
Retail Marketing Space
DirecTOHispanic specialty lies in retail marketing. Says Vazquez: “The Hispanic population has steadily grown over the last decade, and it is not slowing down.” She adds that the “retail landscape continues to change dramatically, and strategies that cater to Hispanics have been adopted with the evolution of consumer buying behaviors, technology, e-commerce, and retail mergers and acquisitions. There is a tremendous need for CPG brands to stay at the forefront of consumer shopping behaviors and collaborate with 3rd parties that evolve with the trends. Through strategic growth and acquisition, C.A. is now poised to provide complete services across the U.S. specifically tailored to our customer’s needs, whether General Market or Hispanic-focused.”
“There is a tremendous need for CPG brands to stay at the forefront of consumer shopping behaviors and collaborate with 3rd parties that evolve with the trends.“
