Just shy of three months after leaving WPP, Sir Martin Sorrell has made his first big move in building his new empire, and it really is a biggie.
The rumoured $350m acquisition of MediaMonks, the Netherlands-based creative production agency, carries all the hallmarks of the famed WPP execution strategy: find a listed vehicle, secure supportive financiers, buy big platform, acquire (serially).
So far, so predictable.... Or, is it?
Sir Martin might just be dropping a few hints that this time, things are different.
Firstly, at nearly 3x revenue (implied), this price looks rich. MediaMonks is a ‘best-in-class’ asset, embodying the advertising new world order - digital media, data, content and technology. However, creative is still a people business, and 3x revenue for a people business gives us some idea about where we are in the cycle. $350m was too rich for the under-bidders, Accenture, Inflexion and yes, you guessed it, WPP.
On top of this, the man who perfected the infamous ‘earn-out’ (where sellers must deliver against future business targets to receive deferred consideration) has opted to leave the sellers with equity in his business, S4 Capital, highlighting their importance to the future strategy of the group.
Advertisers know it, agencies know it, and clearly Sir Martin knows it: the times they are a changin'.
A Twitter post from MediaMonks lets on that Sir Martin shall henceforth be known as ‘Senior Monk’. After the recent Financial Times expose, the irony of this title won't be wasted on his investors, nor on his competitors.
Kicked out of his monastery, he is already building a new one, and in MediaMonks he has found his cornerstone.
Arise, Sir Martin - Bulletproof Monk.
"We want to work with the S4 team to build a next-generation company with a consolidated offering across creative, data, media and technology" - Media Monks co-founder and chief operating officer, Wesley ter Haar. The fact that Sorrell did not structure the deal around a traditional “earn out,” in which the company being acquired must reach certain goals to get future payments, also played a role.