Next 15 Communications Group, the consultancy behind Elvis and Planning Inc, has swooped on Engine UK to complement its data-driven communications offering, in a deal worth £77.5m.
Engine UK has comprised three divisions, digital transformation, communications and creative, since 2019 when then UK chief executive Jim Moffatt scrapped high-profile agency brands, including WCRS, Partners Andrews Aldridge, Slice and Synergy.
The group has been owned by US private equity owner Lake Capital since 2014 and now has 600 staff and 300 UK and international clients.
Next 15 said the acquisition will be funded from the company’s debt facilities and the proceeds of a proposed placing of new ordinary shares in the company, being handled by Numis and Berenberg with the aim of raising up to £50m.
In the year ended December 31 2021, Engine UK increased its net revenue by 18% to £88.6m and generated adjusted EBITDA of £11.8million, representing an acquisition multiple of approximately 6.7 x 2021 adjusted EBITDA
Its clients include both private and public sector organisations, including global brands such as AstraZeneca, E-On, Sky and the Home Office and the Ministry of Justice.
Engine UK’s communications division, MHP Mischief, provides a broad range of services including corporate strategy, positioning and communications for the financial, healthcare and consumer market. It is claimed to be one of the UK’s leading full-service strategic communications consultancies, and , delivering above industry growth rates and margins.
Engine Creative division provides digital brand experiences, integrated online and offline advertising and influencer marketing. Next 15 plans to merge the division with its ODD creative agency to deliver a digitally native, data-driven creative agency.
Meanwhile, the transformation division offers technology and digital transformation consulting that combines strategy, data and technology to deliver change to public and private sector organisations. Its client base is predominantly public sector, with significant growth opportunity in the private sector with scope for margin expansion, Next 15 insists.
The group already comprises 15 businesses, including Activate, SMG, Mighty Social and Velocity, and claims the deal will accelerate Next 15’s business transformation ambitions, adding significant scale and bringing new capabilities in the public sector, as well as an experienced management team.
There is also the potential for cross-functional data and digital B2C growth, with the opportunity to collaborate on a new set of data products.
Management are also confident of delivering cost synergies of at least £3m from the year to January 31 2024.
Next 15 chief executive Tim Dyson said: “We are delighted to welcome the people and clients of Engine UK to Next 15. Acquiring this broad-based digital transformation, communications and creative business fits well with our track record and strategy of adding growth businesses which then contribute to our target of doubling the size of our business in the next three to five years.
“Its three businesses are home to great talent and strong client relationships and provide multiple opportunities to expand and further apply our growth consultancy services.
“We look forward to working with the management teams, staff and clients of the three businesses at Engine UK and the other industry leaders within Next 15 to execute our growth plan built on our model of independence, incentives and investment.”
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