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Next Fifteen boss Tim Dyson explains why it has acquired Engine

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By Sam Bradley, Senior Reporter

March 10, 2022 | 7 min read

Next Fifteen Communications announced last week that it’s set to acquire the UK operations of creative and media agency Engine. We caught up with chief executive officer Tim Dyson to find out why.

royal navy ad still

A still from Engine Creative’s ad for the Royal Navy Engineers / Engine Creative

“We tend to look at businesses in a pretty straightforward way. Is the product the business produces really good? If so, it’s worth having a conversation.“

Tim Dyson, chief executive officer of Next Fifteen Communications, the British parent company to agencies such as Elvis and Archetype, is reflecting on its acquisition of Engine, which was confirmed last week. Though his explanation of the move is simple enough, Next Fifteen’s motivations were a little more complex. And once the acquisition has been finalized, it has major plans for Engine, including a switch in its client focus, international expansion, more investment and, potentially, further acquisitions.

US expansion

Though Engine’s private equity owners Lake Capital had wanted to offload the company wholesale, the deal encompasses Engine’s UK operations only. Dyson says this was because Engine’s American and Asia Pacific units, such as EMX, didn’t gel with the sectors Next Fifteen is engaged in.

“They’re not going to be the things that expand the businesses we already have. If they’d had a creative or comms piece, or a transformation business in the US, we would have definitely gone after those.“

That still leaves scope to expand its British creative, comms and transformation units internationally, in his opinion.

“The creative business should be a more international business than it is. We have a global footprint of our own – it wouldn’t be hard for us to hire small teams in certain key geographies. Then [Engine] doesn’t have to worry about infrastructure, about tax filings, about god knows what else. We can get them on the road.“

Investment plans

Though the deal itself came together over three months, Dyson says Next Fifteen’s long-lasting links to Engine (several of its senior staff previously worked for the business) meant it had long considered an acquisition. The same back channels also meant it was already aware of the strengths and weaknesses of the agency before the extensive auditing process by PricewaterhouseCoopers got under way.

“We don’t worry too much about the financials, because they’re often misleading. You can find a business that looks super profitable, but dig into it and it might be that it’s had no investment and is bleeding itself and all its people are about to quit; conversely, you can find a super unprofitable business and it’s because they’ve been loaded with a whole bunch of costs that isn’t doing anything for the business.“

So, although Engine’s recent financial performance wasn’t, in Dyson’s words, enough to “set your hair on fire,“ he says a deeper investigation revealed “how good a business it was ... it just needed a bit of structural change to try and get it to where it needed to go.“

A prime example is Engine Creative. The agency “created brilliant work“ and famously brought in Robert De Niro to flog Warburton’s bagels – but Dyson says the agency needs a clearer direction. “It’s a case of a business that does brilliant work, but doesn’t seem to know what it wants to be when it grows up.

“It wasn’t clear what journey it was trying to take its customers on over the next three to five years. If you want to be a high-quality business in that space, you need to be able to do that. It didn’t seem to have a long-term plan ... but if it could get a mission then it could be a really exciting business.“

Dyson says Engine had been “somewhat starved of investment“ in recent years. “Unfortunately, under private equity, especially under private equity for sale, you’re going to be starved of investment. That’s just the way it works.“

That investment will likely come in a hybrid form, through further agency acquisitions at home and abroad or new hires. “It’ll be delivered by commercial logic,“ he says.

Transformation agenda

Engine’s UK operations are split across three units, broadly encompassing communications, creative and transformation. It’s the latter that particularly attracted Next Fifteen, Dyson says.

“It was clear that was something we’d be interested in. We’re building quite a big business transformation [unit] and that fits nicely with what we’re trying to do there. We’ve gone from having nothing in that area to it probably bringing in over $100m of revenue this year for us. It has been a huge area of growth.“

Engine’s roster is currently dominated by public sector clients such as the UK Marine Management Organization and the Royal Navy – something Dyson wants to change. “If we could help them skew that work, not away from public sector, but increase the amount of private sector revenue, they could become a more profitable business by default.

“Government contracts are much lower margin, though they are nice and long-term. So if we could just balance that revenue stream out a little bit for them, that would take care of all the challenges we know they face.“

Odd couple

There’s a similar rationale behind the merger of Odd into Engine; Odd chief exec Phil Fearnley is set to lead the combined firm. The former agency, Dyson says, was too heavily skewed towards the fashion sector and hoped to break out; Engine’s client base offered it the chance to apply its niche expertise to a wider range of brands.

“Scale isn’t everything, but it helps. There are certain advantages to being a certain scale. It’s like with buildings – if you get one large enough it creates its own weather. And that’s the case with good creative businesses. If they get above a certain scale it starts to attract a certain level of talent and a certain type of customer.“

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