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Mergers and Acquisitions Engine Group Adtech

Lake Capital and Engine Group boss Terry Graunke eyes ad-tech acquisitions

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By Jessica Davies, News Editor

September 28, 2014 | 4 min read

Lake Capital – the new owner of Engine Group – is on the lookout for acquisitions in the ad-tech, data and analytics market, according to its co-founder and chief Terry Graunke.

Speaking to The Drum Graunke described the last few months that led to the Engine Group buyout as a “bit of an adventure” – referring to a slight stall in the deal’s completion due to some disgruntled shareholders.

“It was nothing that was ever nearly as dramatic as some people thought. So all of that is behind us, and everyone is delighted with the outcome.”

Focus will now turn to completing its 100-day business plan for 2015, in which is currently “waist deep”, according to Graunke.

Part of that will include “filling the gaps” in its group proposition, which - alongside Engine - also includes entertainment and content marketing agency Trailer Parks and global market research and business intelligence firm ORC.

Together the group will command a $400m (£237m) in revenue, 60 per cent of which will be generated from digital.

“Now we are in a position where we have this middle-market marketing services group, which we will spend a lot of time on until the end of the year, refining into a gaps map – looking at what we don’t have product-wise and geographically, that we want to have. And from that we will spend time in 2015 looking at hiring groups of people to fill those gaps.

“We will also look at making acquisitions where we can’t organically build ourselves.”

He said he is “pretty confident” the group will need to add data and analytics to better connect the business intelligence and creative groups, which will likely lead to acquisitions in the ad-tech market.

“We have some capability there within ORC and Engine, but we need more. That’s pretty hard to build organically. They can be small acquisitions – they don’t have to be big ones.”

However, he stressed that the group is not “hell bent” on acquisitions and won’t be embarking on a “mad buying spree", instead taking a considered approach where it will weigh up the benefits of a buyout versus building in-house.

“It’s not about being big for big’s sake it’s about taking advantage of what the marketing opportunities are. But I do think there will be gaps and data and analytics will be one.

“We also want to extend some of the creative capabilities we have in the UK - like WCRS - to other regions – so if we can buy there we will, and if we can build we will,” he said.

Graunke referred to the Engine buyout as a critical phase in its ongoing strategy to meet the demands of the current disruptive market, which he attributed to the digitisation of marketing services.

“You can think of that in relation to social or mobile but at the end of the day it’s about consumers pulling data to learn about, get informed and ultimately making purchasing decisions, instead of it being pushed on them by TV and radio commercials.

“And the economics of that are quite compelling. $600bn a year will be spent on marketing across the world by 2020 – that’s a big shift from zero ten years ago, and some believe it will be as much as 50 per cent of that will shifted by time we get five to six years down the road.

“So we believe there is a big opportunity to take advantage of that by bringing a group of services and deliverables to market in a way that has financial and global scale, and has the ability to take advantage of that digital shift,” he said.

The latest £100m acquisition of Engine has led some media outlets to call Lake Capital - now known as Engine Group - an agency holding group.

However, Graunke told The Drum that although being branded an agency holding group didn’t “offend” him, it is more accurate to describe Engine Group as a “middle-market marketing services group”.

Graunke is executive chairman of Engine.

More to follow.

Mergers and Acquisitions Engine Group Adtech

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