"This is about the next decade, not the next few years" - Behind the scenes of BlueFocus' $30 million acquisition of We Are Social
Today, We Are Social (WAS), the London-headquartered social media agency that has been on a path of continuous growth over the last couple of years, announced its acquisition by Chinese network BlueFocus in a $30m deal.
Last year, BlueFocus, best known for its PR heritage business, is understood to have grown its revenues by over 70 per cent. However, the group’s revenues and 2,800 headcount are outside PR and represent an array of disciplines across a number of separately managed businesses in the East.
The surprise agreement has actually been in the works since the beginning of the year, reveals Results International partner, Jim Houghton who led the deal from the beginning.
“We first started working with WAS in March of 2012 when the business had just opened up in New York, Singapore and Brazil, so it had five mature and maturing offices and three brand new ones and it was an example of an agency that was growing so fast that it could barely keep pace with itself. There was a founding team rushing around trying to maximise the market opportunity, which they [We Are Social] have successfully achieved. It’s remarkable the speed at which they have grown,” states Houghton.
He continued to explain that conversations with the agency to prepare it to speak to potential partners originally began on 2012, and that following a skiing accident during its Christmas party last year, managing director Robin Grant was forced to take initial meetings wearing a plaster cast on his arm.
“BlueFocus were in those conversations from the very start. Lenovo is a key client for them, and a founding client. When we initially spoke to BlueFocus about the opportunity, what I was talking to them about was a business with a global footprint, great growth, social and digital skills and a client that was crucial to BlueFocus in China and a not insignificant client of WAS as well.
“We got the BlueFocus guys into London, had a series of meetings over the course of a week, I then went out to China to see them to stress test the strategy and see what it might look like when it came to the negotiation time in the Spring and we moved into a period of exclusivity in the Summer.,” Houghton explains of the timescale, which was expanded due to the continual movements and demand for time that the management for WAS had across its offices, as well as the cautiousness both parties took to ensure it was the right move.
“It’s two big groups who are really busy with clients and didn’t want to rush it. The Chinese, just like Robin and Nathan, are absolutely driven by getting the right cultural and personality fit and they met each other a lot of times to make sure it was absolutely right. We had guys flying in-and-out of China or meeting up in London or the states and they spent a lot of time working together.”
He admits that the deal is “an unusual one” in that, despite its involvement with the Hunstworth Group over the last eight years, BlueFocus has no real footprint in the West.
“Their strategy is really simple. Go global, go digital. For them, this was about, what’s the right business that matches what we are trying to be internationally. They had the opportunity to talk to lots of companies, but these were the first people who offered them proper reach in one hit.”
Houghton confirms that other parties – including some of the more recognised major marketing networks, were also interested in forming a deal with WAS, although he will not confirm any names.
“Who’s not going to be interested in buying a business that is doubling its revenues every year and is the biggest independent social media player in the world? Everyone is going to want to talk to a business like that, but all of those organisations are very constrained as to how they can buy and operate with the companies they are bringing in because they have an infrastructure that is fixed and very inflexible,” he states.
Asked how long the directors were tied to the company for, a spokesperson for We Are Social, commented: "We can't disclose exact information but Nathan and Robin are certainly in it for the long haul. This is about the next decade, not the next few years."
As to what this will mean for the future, with the deal expected to be passed by the regulator early next year, Houghton states that this will only be the start for BlueFocus in terms of further acquisitions being made in the West – with this opening a door to them for further discussions. Meanwhile he also doesn’t foresee a tranche of social media agency acquisitions in response to it, simply because there as so few independents at scale, that could compare.
“There are lots of social media companies out there with chunky revenues but none have found successful methods of making big profits out of it,” is his view.
The acquisition of WAS is a major one to end a year that has already witnessed deals that will alter the shape of the marketing network landscape internationally, forever.