Engine UK’s chief executive Debbie Klein has stressed that the agency group will retain its independence following its £100m buyout by private equity firm Lake Capital.
The move will see Engine work closely alongside Lake Capital’s two other marketing services companies – entertainment and content marketing agency Trailer Parks and global market research and business intelligence firm ORC, which will result in a “new breed” of agency that will in total command $400m (£237m) in revenue – 60 per cent of which will be generated from digital.
Speaking to The Drum about the acquisition, the details of which were confirmed earlier today, Klein said the group had been on the hunt for an investor that would “love and buy into” its model, since last year, and that the acquisition will enable it to strengthen its international foothold.
“We have been looking for some time for the right partner to help us take this next chapter in our growth, a strategic partner who will buy into and love our model…we’re very excited about them as a partner, which is well-known for investing in marketing services companies,” she said.
The identities of Engine’s existing brands, which include ad agency WCRS, social media agency Jam and PR firm MHP Communications, will remain as they are while all managing directors will remain in place. Klein will also maintain her position as UK chief executive of Engine and on the global board of directors.
She added that the intention was always to court the investment of a private equity investor, rather than a major agency group such as the likes of WPP or Omnicom.
“The main reason for this is that being owned by a private equity firm allows us to remain independent. I don’t think we have ever thought of selling Engine to one of the big companies that aren’t right for us or our staff and clients, but this [acquisition] allows us to retain our independence as the largest independent agency in the UK. That’s what they [Lake Capital] have bought into – that ethos and culture,” she said.
The deal will see Terry Graunke, Lake’s chairman and co-founder, become Engine’s executive chairman, while Engine’s co-founder Peter Scott will become vice chairman and head of global strategy.
Aside from that there will be no further staff changes, according to Klein.
Meanwhile all managers who were already shareholders will roll their equity into the new group.
She also said there are no plans to make any further acquisitions or investments in the UK, but that there are certain areas it will look to "round out" the disciplines it has already established in the UK, particularly in digital, internationally, focusing on the US and Asia.
Lake chairman Graunke said: “We are very excited about bringing Engine into our marketing services group – it has great agencies, people and clients and a unique business model which attracted us to it. We have a proven history of working with talented and entrepreneurial people and growing businesses in the sector both organically and through acquisition. We are planning that Engine, ORC and Trailer Park form the basis of a major, independent global force in marketing services and communications.”
The acquisition will see present private equity owner HIG, which first invested in Engine Group in 2010 when the two companies agreed a £62.5m deal over two years to aid Engine’s expansion into new markets, bought out.
Engine was advised by Ingenious Corporate Finance.