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As the ad agency model struggles to evolve to meet client demands and navigate AI’s impact, ad agencies have been searching for partners to help themselves scale, thrive or in some cases just survive. 

At the top of the industry, nowhere is that more evident than the upcoming Omnicom-IPG merger, but throughout the industry, acquisitions are abundant, and private equity is fueling a significant portion of the spending spree. 

The presence of private equity amongst healthcare agencies has also grown steadily. Last year, MM+M reported that firms with private equity backing accounted for about a fifth of the Agency 100 list. This percentage has increased, with MM+M finding that at least a third of this year’s list have PE backing. 

Top agencies like Klick Health, Real Chemistry, Eversana Intouch, RevHealth and Spectrum Science either have some sort of private equity stake, or are backed by firms in the space. 

The private equity industry itself, however, has developed a controversial reputation in the healthcare world. Some public health entities have expressed that private firms capitalize on the healthcare industry because of its stability, but do so at the expense of outcomes. One AMA Journal of Ethics report found that “private equity investments in health care have grown to over $750 billion in the past decade and include every segment of the US health sector.”

Reports have found that these firms largely swoop in, buy hospitals, cut operations and focus on strategies that pump out cash rather than improving the quality of care patients receive. 

Despite some of these findings in the traditional healthcare world, private equity has been a welcomed and growing presence in the healthcare marketing space. 

The increasing relationship between healthcare agencies and private equity begs the questions — why is private equity becoming increasingly interested in the healthcare marketing world? And why are healthcare marketing agencies turning toward them as a source of investment?

Top executives at healthcare marketing agencies have pointed to a number of reasons, though largely underscore that working with private equity allows the brands to maintain ownership of ideas, and steer the ship in the direction they feel comfortable. 

“The PE partnership we have was very supportive to our next horizon of growth that would allow for more rapid transformation and scale,” said Amy Hutnik, the president of Spectrum Science about its partnership with private equity firm Knox Lane, which it has been collaborating with since 2023. 

She referred to Spectrum’s acquisition of CrowdPharm and Hot Iron Health — two acquisitions she said the team was likely able to achieve only after private equity backing because of Knox Lane’s expertise. 

“We were able to acquire at a scale that we weren’t able to before,” said Hutnik. 

Ben Beckley, CEO of RevHealth, echoed similar sentiments about the agency’s private equity partner WindRose, who has a majority stake in the agency since 2022. 

“It’s been a wonderful experience working with them,” added Beckley. 

He noted that since partnering with WindRose, the agency has undergone significant transformation, including a new leadership team to guide the agency through the next phase of growth. 

“Despite this, we, the leadership team, maintain final decisions of where we want to take the firm,” he said. 

As RevHealth’s PE partner does not solely work within the healthcare space, the collaboration has empowered the agency to create relationships with firms in other industries like tech. Plus, Beckley said the collaboration has allowed them to gain insight into how operations work in different fields. 

“Because the industry works with so many other types of verticals, they can see what is happening in other industries from an AI standpoint, and then bring that strategic guidance or vision into the organization,” said Beckley, underscoring the value RevHealth has gained since working with private equity. 

Matthew Schecter, the founder and CEO of Lockwood Group, underscored Beckley’s sentiment, noting that one of the driving reasons behind deciding to partner with its private equity partner Ares Management in 2021 is because of their experience and connections. 

“Ares have dealflow — they are constantly getting inbound requests and have helped create introductions to folks,” said Schecter. 

He added that while some firms can come in and change organizational structure, that is not necessarily the PE playbook. 

“What I liked about Ares is that they aren’t really operators. They didn’t have a CEO waiting to come in. It was more of a partnership and collaboration around strategic vision,” said Schecter. 

While none of the executives shared the exact investment dollars each of their respective private equity firms have poured into the agencies, they did note that it’s been enough for them to achieve the goals they have set with their partners. 

“The goal of private equity is growth,” said Schecter. 

When asked about their motivations to collaborate with private equity as opposed to a holding company or a network, the executives noted that the partnerships they have with PE allows them to be “nimble” and “agile”. 

“It’s really a collaborative process with a strong back and forth,” said Schecter. “You get to maintain your brand and vision, rather than be swallowed by something bigger.”

Plus, some mentioned that keeping things small allows them to work better with clients. 

“Some of these networks and holding companies have gotten so big, and we’ve had clients come to us and say ‘It’s become too generic,’” said Beckley. “That is what we hear every time we get on the phone with a new client. It’s like they’re tired of the big, they’re tired of the new. They want to go back to what it felt like to work with a nimble partner that’s really rolling up their sleeves, that has smart people on the table.”

Each of the leaders also added that they communicate regularly with their private equity partners, sometimes connecting with them every few days to discuss strategic opportunities or potential partnerships. 

As for private equity’s interest in healthcare marketing, this remains to be fully understood. 

“I can’t necessarily speak for private equity as a whole, though the healthcare marketing industry has a lot of opportunity and has been relatively stable compared to other industries. There is also a lot of innovation happening,” said Hutnik. “This could be a driving factor for private equity.”

MM+M reached out to a number of PE firms, including ones mentioned in this piece, but they all either declined interviews or didn’t respond to requests for comment. 

Though collaboration has been growing, the future still remains uncertain. The leaders acknowledged that the private equity industry typically works with firms for a five to seven year period before tapping out. There is no clear indication of what that could currently look like in the healthcare industry space. 

“We will wait to see what happens. Currently, we are in phase two, where we are still building out capabilities and executing,” said Beckley. “We will see what comes next.”