The real conversation at Cannes: A new era of M&A

Opinion – Cannes Lions preview

The most interesting conversations won’t be about the latest AI tools, but about a consolidation cycle already taking shape, driven by three simultaneous forces – AI compression, changing client demands, and a generational shift in agency ownership.

Everyone will be talking about AI in Cannes this year, but I believe the public conversation will miss a much more important story.

While the industry fixates on the latest tools, the real story is unfolding in the data. Gartner’s 2026 CMO Spend Survey finds that CMOs now allocate an average of 15.3% of their budgets to AI, with 70% regarding AI leadership as a critical goal. Yet, only 30% believe their organisations are actually ready to scale those investments.

This gap between ambition and operational readiness is driving the industry’s current reorganisation. Where capabilities required to integrate AI cannot be built quickly enough, they are being bought instead. And this race is fundamentally altering M&A strategies, agency growth models, and competitive dynamics.

While the public dialogue will be noisy, the private conversations at Cannes Lions will turn to a much sharper question – which capabilities are an absolute must for an organisation to remain relevant, and which can be left to others?

I believe the most interesting conversations won’t be about the latest AI tools at all, but about a consolidation cycle already taking shape, driven by three simultaneous forces – AI compression, changing client demands, and a generational shift in agency ownership.

The reorganisation already underway

While McKinsey Global Institute estimates that generative AI could add up to $4.4trn in annual global value, largely in areas like marketing and sales, its 2025 data reveals a scaling bottleneck, noting that value is only realised when companies completely redesign their workflows rather than just bolting on AI.

For agencies, however, the immediate impact is less about opportunity and more about pressure. AI is compressing production timelines, reducing marginal costs, and shifting value away from time-based billing towards expertise, outcomes, and proprietary capability. A project that once required 40 hours can now take four, making traditional models built around labour intensity much more difficult to defend.

Across our agency portfolio, even well-resourced businesses continue to struggle with fragmented data, manual processes, and legacy systems that were never designed for an AI-enabled operating model.

Faced with growing client expectations and mounting competitive pressure, many are now concluding that acquiring capability is faster and less risky than building it themselves.

The result is a fundamental shift in M&A. Buyers originally pursued acquisitions primarily for revenue growth, geographic expansion, talent or client lists. Now, they are targeting specialist expertise, proprietary technology, AI-enabled workflows, data assets, and sector-specific capabilities that would take years to develop organically.

We see this reflected both at the top end of the market, where major holding companies are investing heavily in data and intelligence platforms, and across the independent sector, where founders are increasingly asking not whether they want to sell, but whether they can future-proof on their own or fast enough.

This is also changing valuations. Businesses dependent on labour-intensive delivery are becoming more exposed to AI-driven margin compression, while those with defensible capabilities, proprietary assets, and scalable expertise are attracting a growing premium. Increasingly, acquirers are not buying scale; they are buying acceleration.

We’re also seeing another key change in agency ownership, adding further momentum to the market. Many independent founders of established agencies are looking to retire and reaching natural succession points. However, AI, data infrastructure, technology investment, and specialist talent all require significant capital and management attention.

As a result, many successful agency owners are no longer evaluating transactions purely as exit events but as opportunities to access the capabilities, scale, and resources needed for the next stage of growth.

Four M&A conversations you are likely to hear at Cannes Lions

Firstly, M&A activity in the agency sector will continue at a rapid pace and may even accelerate, particularly in the independent mid-market. Rising capability demands, succession planning and continued market uncertainty will make partnership a strategic choice rather than a last resort.

Secondly, the most valuable offerings and capabilities agencies can offer will no longer be creative production or scale alone. Buyers will increasingly pay for proprietary data, AI-enabled operating models, technical development capability and specialist talent that can be deployed across an existing client base. Effectively, businesses that can do more with less effort.

Third, talent and agility will become major differentiators. Through our work with agencies of all sizes, we’re already seeing smaller, founder-led businesses adopt AI tools and best practices at a far greater pace than many larger networks, where governance, legacy systems and organisational complexity inevitably slow implementation. This is not new – it has been true across every major technology shift that we’ve seen. However, what is different with AI is the speed and scale at which the gap between agile and legacy organisations is now widening.

Finally, I believe we’ll see a growing divide between agencies that use AI to become more valuable and strategic rather than those that use it to be cheaper. Smaller, agile businesses stand to benefit disproportionately, challenging competitors many times their size and becoming highly attractive acquisition targets for larger groups, private equity and VC-backed platforms seeking proven capability. That’s where future valuations will be created, and where the next wave of consolidation will be focused.

The organisations that leave Cannes clear about which capabilities they can no longer afford to rent, whatever their size, will be the ones doing the reorganising, rather than being reorganised.

Max Fellows is the CEO and founder of allpoints