In the third part of our exclusive piece of research – conducted by Zephyr in association with Knight Corporate Finance and Clarion Solicitors – we turn to the Northern acquirers buying companies from outside the region.

You can jump straight to the table, but first, Nick Jaspan casts his eye over the changing landscape of the creative North in recent years.

Knight_Primary_Logo_DarkBlue-01M&A activity and private equity investment in the North’s creative industries has, until the past few years, largely been dictated by a pattern of Northern companies being bought and precious little private equity (venture capital) investment.

Excluding a handful of large companies, the average size of a company operating in the creative sector in the North was one of five to 10 employees with no assets to speak of. These companies’ assets essentially being those who came in at 9am and left at 5 to 6pm… aka people.

However, the growth of the internet and e-commerce, combined with the huge growth in gaming, software products and tech infrastructure companies, has resulted in more realisable assets and products now being deployed by creative industries companies in the North and since the end of the recession in 2010, there has been a steady and growing interest in investing in the sector.

Clarion-only-logoNew funds specifically created to invest in the sector – most notably AXM’s £15m fund (now fully invested) – have been complemented by professional services firms establishing dedicated TMT (Technology Media Telecoms) teams within their organisations.

Advisers can smell fees which in reality is good news for Northern entrepreneurs as the sector has hitherto often had to turn to London-based advisers because of the relative scarcity in Northern media specialisation.

The BBC's investment in Salford is indicative of a growing trend for the North as a whole

The BBC’s investment in Salford is indicative of a growing trend for the North as a whole

But the North, as opposed to London (and other more developed media centres), still comprises a region which is home to more selling companies and entrepreneurs than buying companies and entrepreneurs.

The number of companies based in the North which have been bought since 2010 is roughly three times the number of Northern companies who have bought companies elsewhere.

This pattern is likely to change given the circumstances referred to above with greater financial interest being demonstrated and the huge investment made by the BBC in Salford – and Sky in Leeds – resulting in greater investment in the supply chain in the North and investments by Ericsson, SIS, Shine and many others support this increasing trend.

And of course Peel’s commercial nous and its growing interest and investments in a range of media and digital interests would in all probability not have occurred if the property company had not succeeded in its bid to outsmart Manchester council and house the BBC’s re-energised Northern base in Salford, which in turn led to Peel’s interest in Pinewood Studios and global media cities. And which in turn also sparked the future investment in the Sharp and Space Projects as a consequence of being spurned at the BBC altar.

In the meantime, the highly profitable digital and pharma sectors in the North are also attracting substantial new investment from London, Paris, Tokyo and elsewhere.

Manchester is now the UK digital centre for MediaCom

Manchester is now the UK digital centre for MediaCom

WPP plc (the world’s largest quoted marketing services company) has made Manchester its UK digital operational centres for two of its media buying brands – MEC and MediaCom – and co-incidentally has also invested in Peel’s MediaCityUK in the shape of The Farm.

Elsewhere, Havas (quoted on the Paris Bourse), fresh from its acquisition of Creative Lynx in 2012, has grown the agency from one employing 80 staff to one employing over 230 staff in Manchester and has renamed the agency Havas Lynx with offices in London, Paris and New York now reporting into the Manchester HQ.

Dentsu, the Tokyo-listed global marketing services holding company, employs over 500 staff in the North with around 400 based in Manchester spread across five operating brands.

The biggest brand, Carat, is the UK’s second largest digital media buying agency: a scenario which has probably never existed before in any regional company occupying one of the top two or three slots in a national ranking.

Given that Carat/Aegis/Dentsu ultimately ended up paying around £95m to take full control of Jeal and Lucas’ ground-breaking digital front-runner, reflects the legacy of the strength of the mail order business (and its successor digital) in the North with its keener eye on ROI than arguably London agencies with a keener eye on creativity.

And inward investment in the North’s digital sector in the shape of M&A activity can also lead to new and increased investment and management skills in the region reflected in deals such as Paperhat’s multi-million acquisition of CTI Digital in Feb 2015, which in turn led to CTI buying the 10-person digital agency Curve Digital in Leeds with plans by parent Covent Garden-based Paperhat for further digital acquisitions in the UK and overseas anchored on CTI and its increasingly global footprint.

Sam Davies of Knight Corporate Finance

Sam Davies of Knight Corporate Finance

This heightened interest in the North is also being played out Fat Media of Lancaster which again was the subject of an earlier acquisition as it has made two acquisitions in Bristol (Strategy Digital) and London (Reach Local) in the past 18 months while headcount back at HQ in Lancaster has continued to grow, almost doubling in size since the company’s previous MD Michael Gibson opted to sell the agency.

But growth and renewed confidence in the North overall has also led to companies outside the sector also now dipping their (financial) toes into the creative world given the increasing awareness of the sector’s attractions. Financial management company AJ Bell, one of the UK’s largest fund administration companies, bought a niche financial publisher, MSM, based in London for an undisclosed sum believed to be over £3m.

Sam Davies, of Knight CF, says that looking at the longer term trend, “Northern Media M&A deals have been averaging over 30 deals a year since 2010 with acquirers’ main objectives being to gain strategic capability and geographic footprint expansion and establish leading positions within specific services and locations.”

The most actively traded companies in the North remain marketing and communication companies followed by printing, digital services, publishing and the broadcasting and music production sub sectors.

The most active buying company in the North is Fishawack, a medical communications agency headquartered in Knutsford, which is itself controlled by the PE company Growth Capital Partners. Fishawack has been on the acquisitions trail since 2010 and has acquired five companies across the UK, US and Switzerland, reflecting the owner’s buy and build strategy as it pursues an international growth plan.

M&A Week Day 3: The Northern acquirers buying companies based elsewhere

Date Target name Location Subsector Deal value
mil GBP
Deal type Acquiror name
01/02/2010 Nexus Communications Inc. Philadelphia Marketing & Communications n.a. Acquisition 100% Fishawack Ltd
02/05/2010 Inspirit Brands London Marketing & Communications n.a. Acquisition 100% Global Brands Ltd
15/10/2010 Wright Printing Services Ltd’s trade and assets Rotherham Printing n.a. Acquisition 100% Paragon Group UK Ltd
08/11/2010 Media Facility Group BV ROTTERDAM Printing 1.74 Acquisition 100% Printing.com plc
18/11/2010 Sailing Today magazine Southampton Publishing n.a. Acquisition 100% CSL Publishing Ltd
30/11/2010 Reeds Printers Penrith Printing n.a. Acquisition 100% H&H Group plc
01/02/2011 Multinational Business Review Bingley Publishing n.a. Acquisition 100% Emerald Group Publishing Ltd
24/02/2011 Impact Media Galway Marketing & Communications n.a. Acquisition 100% H+A Marketing Group Ltd
08/04/2011 Printing.com plc’s Carlisle branch Carlisle Printing n.a. Acquisition 100% AstSigns Ltd
14/06/2011 Orchestra Bristol Ltd’s trade and assets Wotton-Under-Edge Marketing & Communications 2.25 Acquisition 100% Communisis plc
20/07/2011 Phocus Services GmbH BASEL Marketing & Communications n.a. Acquisition 100% Fishawack Ltd
29/07/2011 Kapler Communications Ltd HUNTINGDON Marketing & Communications n.a. Acquisition 100% Scott Partnership Ltd, The
02/08/2011 Digicom Out of Home Digital Media Ltd LONDON Marketing & Communications n.a. Acquisition 100% Amscreen Group Ltd
30/09/2011 Phoenix Marcom Ltd HUNTINGDON Marketing & Communications n.a. Acquisition 100% Scott Partnership Ltd, The
30/01/2012 Whitesprint Group Ltd LONDON Printing 0.20 Minority stake unknown % Seneca Investments Ltd
19/03/2012 Diamond Resorts Spanish/ Balearic/ Tenerife Sales SL MIJAS Marketing & Communications n.a. Acquisition Diamond Resorts (Europe) Ltd
31/05/2012 DMS Agency Cheltenham Marketing & Communications 2.10 Acquisition 100% Mosaic Print Management Ltd
20/08/2012 Vacation Share SL BENALMADENA Marketing & Communications n.a. Acquisition Diamond Resorts (Europe) Ltd
31/10/2012 Kingsway Print Kings Lynn Printing n.a. Acquisition 100% Kaye-Dee Marketing Solutions Ltd
05/02/2013 eAZe Media Ltd HASLEMERE Marketing & Communications n.a. Acquisition 100% Bite Digital Ltd
06/06/2013 Archimed Medical Communication AGTarget Switzerland Marketing & Communications 6 Acquisition 100% Fishawack Ltd
14/08/2013 Selby Times, Goole Courier Selby Publishing n.a. Acquisition Chronicle Publications Ltd
05/09/2013 Editions Publishing Ltd EDINBURGH Digital services 5.90* Acquisition 100% Communisis plc
08/11/2013 Mix Media Ltd Saffron Walden Marketing & Communications n.a. Acquisition 100% Luigibella Ltd
11/11/2013 Brandhouse Ltd LONDON Marketing & Communications n.a. Acquisition 100% Hangar Seven Ltd
27/03/2014 JK Associates Inc. CONSHOHOCKEN Marketing & Communications n.a. Acquisition 100% Fishawack Ltd
30/04/2014 Old Pond Publishing Ltd’s business and assets Ipswich Publishing n.a. Acquisition 100% Benchmark Holdings plc
01/05/2014 Holmbergs i Malmö AB MALMÖ Printing n.a. Acquisition 100% Paragon Group UK Ltd
01/05/2014 Service Point UK Ltd’s trade and assets LONDON Printing n.a. Acquisition 100% Paragon Group UK Ltd
02/06/2014 Shooting Star PR Ltd LEDBURY Marketing & Communications n.a. Acquisition 100% Mason Williams (Manchester) Ltd
02/06/2014 Allkopi Service Point AS Norway Printing 29.9592 Acquisition 100% Paragon Group UK Ltd
10/06/2014 The Communications Agency Limited London LONDON Marketing & Communications 7 Acquisition 100% Communisis Plc
01/07/2014 Facilitate Brighton Marketing & Communications n.a. Acquisition 100% Fishawack Ltd
08/07/2014 Marblehead Brand Development Ltd CLYDEBANK Marketing & Communications n.a. Acquisition 100% Quintessential Brands Ltd
11/12/2014 Underwired Ltd LONDON Marketing & Communications n.a. Acquisition 100% Gratterpalm Ltd
15/01/2015 Mailing & Mechanisation (UK) Ltd DAVENTRY Printing n.a. Acquisition 100% Totalpost Services plc
03/02/2015 Clicksco Financial Services Ltd BILLINGHAM Marketing & Communications n.a. Merger 100% My Pension Expert Ltd
18/03/2015 Arcus Animation Studios Gateshead TV Production 0.08* Minority stake unknown % Northstar Ventures Ltd
15/04/2015 eSubstance Ltd LONDON Publishing n.a. Institutional buy-out unknown majority stake % Endless LLP
20/05/2015 DLRS (NI) Ltd LISBURN Printing n.a. Acquisition 100% TALL Group of Companies Ltd, The
02/07/2015 Strategy Digital Bristol Marketing & Communications n.a. Acquisition 100% Fat Media Ltd
15/07/2015 MediaCo (UK) Ltd DUNDEE Marketing & Communications n.a. Acquisition 100% WSI Yorkshire
27/07/2015 Golf International Magazine LLP Padstow Publishing n.a. Acquisition 100% Sports Publications Ltd
03/08/2015 Magnadata International Ltd Boston Printing n.a. Acquisition 100% Paragon Group UK Ltd
28/08/2015 Rapid Media Services Pty Ltd DEVONPORT Digital services n.a. Minority stake unknown % MediaCom North Ltd
07/10/2015 Monterosa AB STOCKHOLM Marketing & Communications 1.20 Minority stake unknown % Angel CoFund, Mr Robin Shenfield, 24Haymarket Ltd
01/01/2016 GatewayCDI SAINT LOUIS Marketing & Communications n.a. Acquisition 100% Brand Addition Ltd
26/01/2016 International Journal of Sports Marketing and Sponsorship Buckfastleigh Publishing n.a. Acquisition 100% Emerald Global Publishing Group Ltd
08/02/2016 ReachLocal UK Ltd’s assets London Marketing & Communications n.a. Acquisition 100% Fat Media Ltd

See our full M&A series:

M&A Week Day 1: Northern creative companies acquired between 2010 and 2016
M&A Week Day 2: Northern creative companies acquired between 2010 and 2016 (part 2)
M&A Week Day 3: The Northern acquirers buying companies based elsewhere
M&A Week Day 4: Northern targets for Private Equity and VC deals
M&A Week Day 5: Mergers and acquisitions in the creative industries: a concluding perspective

zephyr

Data compiled by Zephyr