Inside indebted Unilad and the quickfire bidding process for the company
At least 33 prospective parties have considered acquiring social publisher Unilad since it was pushed into administration last week, according to an email leaked from inside the company. But a rushed bidding process has been branded “ridiculous” by one suitor that spoke to The Drum.
Unilad has debts in excess of £6.5m: £1.5m is owed to HMRC, and £5m is remarkably now owed to LadBible, its biggest competitor, which is also known to have tabled a bid. LadBible bought the debt from Unilad's long-exiled founder, Alex Patridge, upon the company's administration last Thursday. Now the primary creditor, LadBible has a commanding position over its rival as third parties hurry to gather millions of pounds for bids.
Administrator Leonard Curtis set noon today (Monday 8 October) as the deadline for bids for the stricken company, leaving barely three working days for potential buyers to prepare an offer. Meanwhile, some 200 staff await their fate, locked out from vital CMS and social systems while trying to keep the company ticking over. Keeping the wheels turning is of the utmost importance because Unilad risks having its hallowed Facebook ranking eroded by inactivity. Some staff have even offered to work for free.
One bidder talked The Drum through the difficulties of making an offer. Harry Hugo, co-founder of social media agency Goat, could not go into business specifics because of a non-disclosure agreement but said the administrator had failed to supply numerous vital Unilad documents to interested parties less than 24 hours before the bidding deadline.
Hugo revealed: “The administrators are trying to close it quickly but we're seriously interested in the company, we’re from another space and we’re not direct competitors.” He added, “It’s going to take a lot of work and sacrifice, but we can do it.”
Asked whether the Unilad brand itself is desirable (it has the drawn-out founder court case and its legacy of lad “banter” on Facebook looming over it), Hugo admitted there are pros and cons to the title. “It is a brand that has the opportunity to successfully move from away its heritage, but it still has a way to go. It can be done and a change in ownership will really cement it.”
On what an incomer will have to do with Unilad, he said: “We want to continue it how it is, we will need to make decisions on certain aspects, it is in trouble and needs to change but fundamentally we want to keep it as it as.”
He noted how unusual it is for such a valuable asset to enter administration, and that it is difficult to understand the exact value of a company whose proposition is tied up in debt and is at the mercy of Facebook’s algorithm (which may not affect the business as much as previously thought).
On Friday, John Quinlan, managing director of Unilad, claimed to The Drum that revenue had reached new heights recently and that it was only legacy debts that had precipitated the administration. His goal was to communicate that the company can drive profit for any potential bidders.
How profitable is Unilad? A source within the company claimed that its programmatic revenue has been increasing every month since April. They pointed to at least one video last month generating £40,000 in revenue via Facebook Watch (a tidy fee for some 4.8m ad impressions). They added that this new part of the business is growing fast.
In the first weeks of October, more than 32 Unilad videos breached 1m views on Facebook. This week ‘The Ultimate What The Fluff Challenge Fail’ hit 27m. These videos are licensed, and are syndicated by the company. The reach shows the scale of the operation.
The source added: “It has been a record month for many of our channels in terms of total minutes viewed.”
Steve El-Sharawy, an analyst at EZYinsights, provided a look at the scale of Unilad.
There is almost no chance that Unilad is not making money hand over fist. Nothing about the story as reported makes sense. pic.twitter.com/JSUtn3CDPE
— Steve El-Sharawy (@Stiff) October 5, 2018
Another bidder told The Drum they worked through the weekend to pull together an offer for the deadline. The challenge was in threading together a strategy for Unilad, the capital to secure it and a team to run it – in just a few days. They stressed that the process time was “ridiculous”.
A source inside Unilad was similarly unhappy with the quick-fire bidding process. They posited: “There would be even more bidders if there wasn't such a tight deadline, without a doubt. So you have to wonder why as an administrator you wouldn't want to get the maximum value for the business.”
The herd of 33 interested parties has thinned out over the weekend, The Drum understands. The Drum has contacted the administrators Leonard Curtis for more information.
On employees offering to work for free to keep the site afloat, a Unilad staffer said. “This was so the administrators can take the time to find the best deal for employees and creditors. Everyone knows the value is in the brand, and pages that have taken years to build and grow. They can be maintained very cheaply for a few weeks.”
One unsurprising bid is expected to come from Linton Capital. Its managing partner was Unilad’s interim chief executive David Sefton, and it has drummed up a £10m offer with Rocket Sports Media, a digital publisher of sport and entertainment websites.
UPDATE: After the noon deadline, administrators told Unilad employees "a number of" bids have been processed. It also confirmed that staff will be paid this month.
Unilad's Manchester office remains in operation, the London team is reportedly operating with a skeleton crew. The acquisition decision will be made by Friday 8 October.
Six companies are believed to have lodged bids.
The deadline was extended from Monday noon to midday Tuesday to allow for further bids.
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