As the flagship annual health and medical communications industry award event, we’re excited to be sponsoring the new “Excellence in Pro Bono Working” category. This award recognises sector-leading work in this field by celebrating those agencies and in-house departments who are investing their time and expertise to make a positive impact on issues that need it most. The awards ceremony will take place on 4th July 2024 and further details as to how agencies can work with Passion Partnership to give some of their time to Pro Bono causes for the greater good can be found here: Passion Partnership Communiqué Awards 2024 We’re looking forward to a great events ceremony and to meeting some of you on the night.
Sectors: Creative, Media & Technology
Green Square, alongside Passion Partnership, is proud to sponsor the 2024 Communiqué Awards.
Why Stagwell’s acquisition of Latin America agency Pros makes sense. Tony Walford writes in The Drum
Stagwell’s latest agency acquisition is Pros in Brazil, its first in the potentially lucrative Latin America market. With the deals coming thick and fast, Green Square founder, Tony Walford, puts Mark Penn’s latest deal into context. This morning’s news of Allison’s acquisition of São Paulo’s PROS Agency is the fourth acquisition by Stagwell this year and comes hot on the heels of last November’s Movers+Shakers, Anomaly Alliance’s acquisition of French digital shop What’s Next Partners (WNP), Allison buying the UK Sidekick and Constellation’s purchase of US-based Team Epiphany.
According to Stagwell, PROS will become part of Allison, which has its heritage deep in PR and now offers integrated marketing and communications across 50 markets. While Stagwell commenced operations in LatAm two years ago, this is its first acquisition in the region. So, let’s have a look at what’s been going on. Six months ago, Stagwell sold its integrated healthcare offering, Concentric Life, to Accenture in a $245m cash deal, having previously merged its rare disease agency, Scout, into Concentric to create a 270-person Healthcare specialist. The rationale for the sale, according to chairman and CEO Mark Penn, was to “focus on core digital services, including AI-based digital transformation; strengthening our balance sheet; and investing in our future”. We have to admire a decision to divest. When companies offload assets, there’s always a suspicion it’s because things aren’t going well and they need the cash. True, Stagwell wanted to improve its balance sheet and, like most of its peers, it had taken a bit of a knock due to the tech downturn, but the key driver in this case was healthcare being non-core and Stagwell has not invested in other healthcare agencies since. Given the rationale for the Concentric disposal, looking at the acquisition of Movers+Shakers and the four acquisitions so far this year, what do they tell us in terms of strategy? Founded in 2016, Movers+Shakers is one of the fastest-growing social media agencies, adding 21 new clients in 2023 and was one of the first agencies to embrace TikTok, guiding hundreds of brands onto the platform. Its 20m user-generated campaigns have had over 250bn views and it counts Netflix, Hasbro, E.L.F and Amazon among its clients. Definitely tick(toks) the core digital services box. The next acquisition, in January 2024, Team Epiphany (“TE”) is a content, experiential and influencer agency that is rightfully obsessive about culture. BIPOC founded and run, its outputs are very cool, featuring cultural icons such as A$AP Rocky. Albeit TE uses digital channels, it’s not pure play in this regard. But it’s certainly an investment in the future – culture and neutrality of talent (across all metrics) are core tenets of every company today and TE, which has joined Stagwell’s Constellation network, exemplifies this. In February, UK-based Sidekick (represented by us at Green Square), brought experiential, live events, digital storytelling and branded content to Allison, with clients including Amazon, Deliveroo, Sipsmith and EE. What’s interesting about this deal is Allison had been collaborating with Sidekick for over 12 months before discussing a more permanent alliance. Allison has always been keen to acquire capabilities that it doesn’t already have, regardless of market. Very digitally and culturally focused, Sidekick ticked all the Concentric sale rationale boxes. Next up, WNP (acquired in February) again definitely ticks the “focusing on digital services” box, with expertise in AI-enabled CRM and data, digital creative and content. Adding a French footprint to Anomaly and complementing its other European offices in London and Berlin, it brings a mix of French and other European clients to the fold, including some big names such as Danone and BASF. And now PROS. Another Allison play, this is Stagwell’s first LatAm acquisition, and adds a local entity. Female-founded and run, PROS 130 staff brings further cultural balance to the group, with a 10-year heritage and significant clients including Mondelez, Boticário and Amazon (already a Stagwell client across multiple divisions). PROS 2023 growth was stellar at 50% and 20% is tabled for the current year. São Paulo has the largest economy by GDP in Latin America and is the 12th largest city by population in the world. Strategically this deal looks to make a lot of sense – an agency of significant size and stature, increasing Stagwell’s footprint in the region with a proper investment, and the opportunity to cross-sell other group services. In sum, all the acquisitions post-Concentric make sense and look to be smart strategic buys. So, what’s next? Having made a rumored $700m bid for Martin Sorrell’s S4, which, if successful would have taken Stagwell to 22,000 people and mirrored the size of Havas, Mark Penn is certainly not resting on his laurels. His acquisition of MDC in 2021, and the highly regarded brands within it, really put Stagwell on the map and, given its activity over the last year, and with 4 acquisitions in as many months this year, it will be one of the most interesting groups to watch as 2024 pans out.
Even Without S4 Capital, Stagwell Has Ambitious Growth Plans. Barry Dudley quoted in Adweek
Stagwell has significant growth ambitions, as recent reports of founder Mark Penn approaching a potential merger with S4 Capital show. With a technological focus, it currently employs around 13,000 people across more than 34 countries within agencies such as Anomaly, 72&Sunny, Forsman & Bodenfors, Doner and Gale. Speaking to ADWEEK, Penn would not comment on any progress of a potential $700m merger offer, repeating that it’s “pencils down.” But, M&A is on the cards, with a “steady stream of strategic acquisitions” planned, as well as growth in Europe and, like many agencies, figuring out AI. International expansion is a priority, said Penn, following end-of-year results that saw international revenue grow by 13% last year, largely driven by EMEA, where growth was 17% for the year. Overall, he forecasts 5% to 7% organic revenue growth, expecting clients to increase their spending after a challenging year for marketing services, where tech companies, in particular, have reduced spending. “We’re diversifying our geographic footprint. [At the moment] we’re at about 20/80 U.S. to global/U.S but we want to get that to about 60/40… as soon as possible,” he said. That’s buoyed by recent M&A activity like buying creative agency Movers+Shakers for a reported $50 million, as well as culturalist agency Team Epiphany, European-based specialist agency group Sidekick and French digital agency What Next Partners. According to Green Square partner Barry Dudley, any move to merge with S4 Capital would be focused on growing scale and take the resulting company to around 22,000 people, placing it on a similar size to that of Havas, another rumored suitor for Martin Sorrel’s empire. Sorrell has dismissed the offers saying there had been “no credible takeover approaches”. “All of the big groups will have been circling one way or another,” said Dudley. “S4C would undoubtedly bring new capabilities and expertise, but I don’t think this would be the main driver.”
A focus on European growth
In September, Stagwell announced the promotion of its media agency Assembly’s CEO James Townsend to CEO of EMEA. He will be based out of the newly opened London hub, supporting the 20 agencies operating in the region. “We expect our growth to come from share gains within Europe,” Penn said. “Already we see the kinds of pitches and opportunities that we’re getting once people realize the diversified talent we have there.” Currently, its roster of clients in Europe includes BMW, Unilever, Netflix, P&G, Lenovo, Diageo, Google, Estee Lauder and Volvo. “There’s a huge opportunity and momentum building in our EMEA business where we intend to be an alternative to the established competition,” Townsend claimed. Within Townsend’s new remit is M&A as well as a focus on unlocking greater vertical integration across agencies to help clients do more with less and navigate an increasingly fragmented media landscape. Procurement specialist Tina Fegent, who has handled agency pitches involving Stagwell believes that while there is a desire for digital expertise, not all clients want their agency partner to be digital-first. “Brands want a mix,” she said. “The individual agencies are strong, especially in the States,” said Fegent, “but they need to be more connected and talking more about clients that are already using them across multiple agencies.” A return of the business’ Sport Beach activation at Cannes Lions for a second year is another example of Stagwell’s growing ambitions, with Penn describing plans for this summer as “Sports Beach Plus” as it aims to go bigger.
AI to recreate the customer experience
Stagwell has recently worked with Google and Oracle to develop AI applications to add to its tech stack. “We don’t forsake or minimize the role of human creativity,” said Penn. “We believe you’ve got to have high levels of talent and technology and combine those into a modern offering.” Rather than generating creative assets or efficient market research, he views AI as useful for recreating the customer experience and brand connection. “There are many companies now that do no external advertising, their entire brand image is created through the experience that people have interacting with them online, that experience is going to fundamentally change,” he said. Read more
Green Square advises Given on its acquisition by Anthesis
Green Square Associates is delighted to have advised the brilliant team at Given on their acquisition by Anthesis the largest group of dedicated sustainability professionals globally. Given was founded in 2009 by co-founder and CEO Becky Willan. Its London-based team of 50+ experts work with C-Suite decision makers to define, embed and activate purpose to achieve sustainable, long-term growth. Recent industry accolades include the Corporate Content Awards’ Best Purpose-Driven Content Gold Medal, for its work with IKEA, and the Corporate Comms Award for ‘Best Embodiment of Corporate Purpose’ in acknowledgement of its collaboration with Lloyds Banking Group. The acquisition reinforces Anthesis’ belief that purpose driven strategy combined with robust sustainability capability will help organisations and brands build distinctive, impactful, high-performing businesses. Stuart McLachlan, CEO of Anthesis, said: “Given is recognised as one of the pioneers of purpose as a business strategy, helping to unite organisational stakeholders harness greater meaning through mission, and find superior performance as a consequence. With our growth in purpose-led strategy and transformation, backed by our science-based expertise, we can help more clients move purpose from a ‘nice to have’ to an essential creator of business value. Given has demonstrated the power of purpose for many years with some of the world’s biggest brands. We are very excited to bring this experience and expertise into Anthesis and our broader client relationships.”
Becky Willan, CEO & Founder and Ben Hayman, Executive Director of Given commented:
“Purpose is the foundation of sustainable performance. Purpose-driven companies attract and retain the best talent, are more innovative and build more trusted and distinctive brands. But unlocking the benefits of purpose requires business-wide transformation. That’s why we’re so delighted to be joining Anthesis, to offer unparalleled expertise and scale to support clients at every stage of the journey – from defining a true North Star to guide their business, to delivering real change and impact with the urgency the world needs. We had been approached by several potential acquirers and were uncertain how to establish suitability and whether we would benefit from a wider market process. Green Square quickly understood our business, people and culture, and worked with us to determine the best fit for Given and its team on a strategic and personal level. Working closely with our team, they negotiated an outcome that was great for all parties involved. Andrew and the Green Square team were a pleasure to work with and we always felt they were on our side, working openly with other advisors, and the buyer, to find solutions to the inevitable challenges that arise during this type of process.” Ben Hayman, Executive director, Given added “Green Square’s clarity and direction made a real difference to how all of us experienced the process and, critically, their expertise enabled us to get a better deal.”
Andrew Moss, Partner at Green Square, commented:
“It was an absolute pleasure to work with Becky, Ben, Jason and the team at Given. It’s rare to come across such a well-developed business that has not only maintained its lead in its chosen field of expertise, but also retained its strong entrepreneurial culture. It was this and the unrivalled understanding of Purpose by the Team that made Given so attractive to Anthesis, itself now taking the global lead on the Purpose and Sustainability agenda. A meeting of minds, strategy and chemistry will greatly benefit Given’s clients’, provide growth opportunities for the Given team, and drive international expansion. We look forward to seeing the continued success of both parties during the next stage of their journey.” Anthesis Given Read more
Disappointing S4 figures suggest the only way left for Sorrell to go is up. Tony Walford writes in The Drum
S4 Capital has reported a 25% drop in core earnings after what the group described as a “difficult” 2023. Will things get any easier in 2024? Green Square’s Tony Walford examines its prospects and explores whether a mooted mega-merger could offer salvation. Sir Martin Sorrell is an incredibly resilient character, indeed potentially the most resilient of our industry over the last 50 years. His career includes being ‘the third Saatchi’ in the ’70s, where he completed multiple acquisitions, through to creating WPP in the ’80s (and building it to be the largest marketing group in the world), to creating his current digital group, S4. His career has seen him deal with many issues, from personal slants following hostile takeovers, criticism from institutional shareholders over his employment contract, shareholder revolts over his remuneration, and the famous Shepherd’s Market personal misconduct accusation. The latter led to him being ousted from WPP and creating S4, the vehicle he used to buy the highly regarded creative production outfit Media.Monks and subsequently making MightyHive S4’s first digital media buy. S4 has since completed over 30 acquisitions on a funding model that includes a mix of cash and S4 shares and no earnouts – the idea is the earnout is effectively replaced by the future increase in value of the shares received by those selling in. However, S4’s share price has declined from 878p in September 2021 to today’s 40p, following myriad issues that started with delayed audit reports on fears of poor financial controls and accounting practices, through to repeated profit warnings and worries over Sorrell’s own health. Today’s results announcement was really nothing new – more tales of woe, clients spending less due to recessionary fears, challenging macroeconomic issues, revenues for 2024 anticipated to be down again, but operational profits expected to hold constant. There was no joy in there aside from its debt at £180m being at the bottom end of expectations – a little ray of light in a high-interest rate environment – and a possible first dividend if the second half of 2024 looks good. So, where does this leave S4? There have been rumors of a bid by Stagwell at a premium to S4’s current £240m market value. Sorrell has dismissed this by saying he has not received a credible approach, but surely others must be circling. Despite the current share price languishing around the 40p mark, S4 has some great talent from smart acquisitions. It has a solid blue-chip client base, 10 of which are each delivering over $20m in revenue (albeit a very significant chunk of S4’s revenue comes from the tech sector, which is facing its own challenges) and it has taken action on cost reduction. Thus, it remains an attractive proposition for many competitors that could do with this expertise and client base, which is why I expect to see more approaches over the coming months. It’s hard to see where S4 can go from here on its own. As mentioned earlier, its model has been built on acquisition, buying agencies with a fairly big chunk (up to 50%) in S4 shares. When your share price is 800p+, you don’t have to issue that many to get to a decent value. When it’s 40p, you have to issue 20 times that number to get to the same price. So, S4’s hands are tied unless it’s prepared to significantly dilute – not a very attractive thought. And what will those who took shares at 800p be thinking? Not only has the share consideration element they received dropped by 95%, but they must question if it is ever going to recover. And given S4’s repeated profit warnings, who would want to become part of that group at this moment in time? But you could argue for the share price, the only way is up. I’ve said it before – underestimate Sorrell at your peril. He is the King of Resilience and I hope that the next piece Green Square writes on S4 is a more positive one… not least because I am also a shareholder. Read more
