Cavendish Corporate Finance has advised on the sale of B2B creative marketing agency Twogether Creative Limited (Twogether) to Next 15 Plc, the AIM-listed digital communications group.
As part of the deal R Capital, the turnaround specialist investors in Twogether, will exit the company. The entire issued share capital of Twogether will be bought for an initial consideration of GBP6.6 million, with an additional earn out based on earnings from 2018 to 2021.
Founded in 2001, Twogether is a leading UK-based B2B creative marketing agency serving a global network of technology companies with an expanding business in the US. Its clients include major technology companies such as Brocade, Intuit, Symantec, Veritas, Lenovo and Zebra Technologies.
Twogether offers clients a full range of brand, marketing and communications services. This encompasses digital and interactive services such as web design and app development, brand and marketing communications including brand identity and messaging, and channel expertise to support sales. It also has a proprietary SaaS offering in partnermarketing.com, which is used for channel marketing. For the year ended 30 June 2015, Twogether reported net revenues of GBP4.6 million, adjusted profit before tax of GBP0.9million and net liabilities of GBP0.2m.
The initial consideration for the acquisition is approximately GBP6.6 million, of which c. GBP4 million is to be paid in cash with the balance to be satisfied by the issue to the vendors of new ordinary shares in Next 15. Further consideration may become payable through an earn-out based on the average profits of Twogether for the years ending 31 January 2018, 2019, 2020 and 2021.
Uniting the two businesses will open up synergies in a number of areas. With 16 other businesses in the group, Next 15 has a track record of efficiently integrating promising agencies into a broader portfolio, leveraging its client network to generate business opportunities and investing in the development of its component companies. Next 15’s support will satisfy a key business objective by bolstering Twogether’s presence in the US, where the agency already makes circa 35 per cent of sales, in addition to consolidating the merged group’s offering in the technology sector.
Cavendish Corporate Finance advised the shareholders of Twogether on the deal, which marks the fourth completion in six months for Cavendish’s media team, following the sale of Dare Digital to Oliver Marketing in October 2015, the November acquisition of PCI Group by Verisk Analytics and the sale of Opia to Village Roadshow in December 2015. The series of deals highlights the breadth of coverage of Cavendish’s media team across a broad range of media sectors including data services, marketing communications and digital agencies.
The flurry of transactions, three of which involved large multi-national quoted companies, also illustrates significant interest from international trade buyers in mid-market media assets and a willingness to pay high multiples to integrate these with their broader portfolio. In this context, Cavendish expects further similar transactions in the course of 2016.
Linda Sullivan, Partner and head of media & digital at Cavendish, which advised Twogether on the transaction, says: ‘We are delighted to have acted for the shareholders of Twogether in finding the right partner for the business. This deal will see Next 15 and Twogether unlock significant gains from their complementary offerings, with Next 15’s experience of buy & build and international capability opening new routes to expand Twogether’s business.
‘Twogether has built a significant reputation in the global B2B creative and digital marketing market, based on a tailored proposition to technology companies which includes a SaaS service.
‘As with other recent deals in the media sector we witnessed significant levels of interest in the asset, which helped us get the best deal. Competition for innovative mid-market media and marcomms companies is on the rise and Cavendish has demonstrated its global reach with a string of recent successful transactions.’
Kirsty Gilchrist, CEO of Twogether, says: ‘Next 15’s commitment to the technology sector and passion for creativity and innovation was an obvious fit with our guiding principles at Twogether. Our specialism and expertise in B2B marketing for technology has been a key differentiator for our success over the last 3 years.
‘Working closely with Cavendish was essential to identifying the right buyer and reaching a long-term deal. It was vital for us to find a Group who understood and were aligned with our focus and dedication, but who could also provide the global support and infrastructure we require to accelerate our US growth. We are incredibly excited by the possibilities that will come from being part of the Next 15 group.’
Tim Dyson, CEO of Next 15 Plc, says: ‘Twogether is a great addition to the Group. Its digital offerings, software platform and client base make it very complimentary to our other agencies. It is also a business that is looking to expand its US customer base, something we are well placed to help with. Of equal importance, however, is the strong cultural fit between Twogether and our other businesses. Cultural fit is crucial as it will enable to Group to get full value out of these investments and get businesses to collaborate organically without many of the artificial means often seen in larger groups where fit and trust are sorely lacking.’
