How Australian agency group GrowthOps came back from the brink

After its formation from eight Australian creative and strategic agencies in 2018, the company expanded significantly through acquisitions in Australia and South East Asia – a strategy that proved incorrect and led to it being de-listed from the Australian stock market.

After a hard reset, it is back in private ownership, looking outward once more and back at the merger table. According to Clint Cooper, its managing director and chief executive since 2019: ”The thesis was that we could go in and basically sell a range of services to clients... from developing a product, strategizing a product and all the product segmentation, to pushing that into advertising, digital marketing, building the product. And then, at the back end, we could actually coach leaders to implement transformational changes as their businesses grow.

”It was a really interesting theory. And it sounds good, in theory. But the reality of the situation was that it didn’t quite work. It didn’t quite hit the mark.”

Further expansion came through the acquisitions of digital businesses across Asia Pacific, including Asia Pacific Digital and Digital Moshi. Revenues rose over 250%, but costs also banked sharply.

In September 2019, auditors Deloitte warned shareholders that the company had lost A$65m (US$45m) and burned up over A$13m (US$9m) of its cash reserves, noting that ”material uncertainty exists that may cast significant doubt on the group’s ability to continue as a going concern”. The announcement crunched GrowthOps’ share price from A$1.35 to 24¢ and two weeks later the majority of its directors resigned.

In late 2019, GrowthOps’ owner put in place a new board and kicked off ”a pretty rigorous restructure, uncovering what was going on in the business and transforming it with the support of banking partners,” explains Cooper.

Cooper himself was hired away from running a T20 cricket franchise in Melbourne and recalls arriving to find a situation much worse than he had imagined. ”Certainly the job description was very different to the reality.”

The initial ”hard yards” of the business restructure turned out to be just the beginning of the company’s difficulties. Two months after that process finished, Covid emerged and GrowthOps lost its two large clients, which represented A$10m in revenue. With turnover down, the firm pushed its debt facilities close to their limits and got rid of two Sydney offices.

Restructuring journey

One of the principal mistakes made, Cooper says, was an attempt to roll each of GrowthOps’ constituent agency brands together into a single entity. ”One of the big things we did was to move GrowthOps back into a holding company situation and push the brands that had equity in the market, like AJF and Khemistry, back into the market under a house of brands strategy.”

Now the company trades as GrowthOps in its Asian market and under the individual brand names in Australia, meaning it can ”keep the agency founders in play, give people back some autonomy and responsibility and accountability to their regions and their businesses”.

Delisting from the stock market in December 2020 was another tough decision made by the new board. ”That was a pretty monumental decision,” says Cooper. Staff morale ”was at an all time low” between 2019 and 2020 and while the restructuring process managed to avoid outright redundancies, staff that left during covid were not replaced.

It proved a necessary, however: the company’s poor performance on the market (it de-listed at just over ¢6 a share, down from A$1.30 when it listed in 2018) ”didn’t help from a brand point of view and certainly wasn’t helping from an employee and cultural point of view”.

Next chapter

Now on the other side of its recovery process, GrowthOps has 400 staff across nine national markets and is hiring again. ”We’ve got a net deficit of about 20 to 30 roles,” says Cooper, noting that competition for talent has slowed down its return to staff growth. It has hired a chief people experience officer, however, in Louise Hope – a role specifically designed to make the company a better employer. Cooper says of Hope: ”She really puts people at the center of all our decisions – making sure we’re flexible-first.”

During the last two years, the company has begun to take a less traditional approach to corporate life – this summer, for example, a score of his colleagues will be based out of Bali, from a WeWork site funded by the company. ”It does challenge the older folk in our organization, being so liberal with our work policies these days. But that’s the way of the world and we have to find a way to capture that and then work on the best solutions we possibly can for our people.”

Beyond Australia, the major centers for the business are Malaysia and Hong Kong. Its core client base of FSI advertisers has held strong and GrowthOps is working to diversify its client roster further with new auto and airline clients, as well as FMCG and retail such as GHD in its home market.

Late last year, the group acquired digital strategy consultancy Penso in a deal financed with cash reserves built up from organic growth and equity in the group. It’s a sign of ”how significant” the group’s turnaround has been. ”Since 2021, we’re now in a position where the business has been fully restructured. We’ve got a stable platform, we’re now on the acquisition trail, we’re growing right throughout the region.

”For us, it’s about growing scale, and scale and duration with our client base throughout the network.”

Now on the hunt for businesses that can help it fix ”blind spots” in geographic markets or gaps in the service portfolio, North East Asia (China and Japan) is a particular focus says Cooper. ”Currently, our revenues are probably skewed two-thirds to Australia and one-third to Asia. I strongly believe that, over the next three or four years, we will see that flip around.”