The north will rise again: Retrofuzz-Eskimo deal catches the eye as Manchester reasserts itself
Over the past few weeks talk has been of big holding groups making inroads into China and other developing territories. But let’s not forget that there is a thriving M&A scene within the UK, and over the past few weeks a couple of deals have caught my eye; so, without further ado, let’s visit Manchester.
Manchester, so much to answer for
Outside of London and Edinburgh, the 'Rainy City' is probably the biggest agglomeration of marcomms talent in the UK. Manchester has always had a thriving cultural scene – witness the libraries, theatres, museums and public spaces built by the early industrial barons of the north – and, of course, the media powerhouse that was Sidney Bernstein’s Granada, the biggest and most successful of all ITV franchises, and which, it could be argued, helped the north west of England forge its identity and self-confidence.
With much of the BBC, as well as ITV, now relocating to Salford and its surrounds, it’s good to see Manchester once again starting to assert itself. Good to see also that the city’s marketing communications agencies are keeping themselves busy and demonstrating their ambitions.
RetroFuzz, a Manchester-based digital design agency, last week acquired – for how much hasn’t been revealed – another Mancunian hotshop, the communication and branding agency Eskimo Creative.
RetroFuzz is one of those great regional outfits (magneticNorth and MCR are two other examples) which, away from the pressures and hyper-scrutiny of the capital, produce some great work, often for achingly cool clients. It is perhaps best-known for its links with the music business – clients include (or have included) the likes of Levi’s, Lee and every major record label (appropriate really, when you consider that Manchester has a very good claim to being the music capital of the UK) and a number of noted bands, including Foals, Fleet Foxes, Lady Gaga and The Stone Roses.
Just recently it's found a niche creating apps for music artists – the agency’s One Direction app got the downloads, but the stunning app it designed for that epitome of jazz cool, the Blue Note label, won it the plaudits.
It’s impressive enough that it is almost certainly the agency of choice for the music industry; but for an agency that’s fewer than 15 souls, it produces a lot of high-quality, high-end work, and there’s something that warms my heart when I see that this tiny agency, which was only started up in 2007, already has enough self-confidence to embark on the acquisition trail.
The outfit it has acquired is just as interesting – and just as hip. Eskimo Creative is an award-winning 'visual communications' (a phrase encompassing design and related disciplines across print, digital and experiential/engagement) studio with a reputation for strong strategic thinking and offering good ROI for clients.
The deal is an excellent one (especially for RetroFuzz) because the two companies, while operating in a similar space, have complementary client books, and, to a degree, skill sets. Thanks to their new acquisition, RetroFuzz will be able to work with a wider – and arguably more profitable – group of clients; Eskimo has done work for the likes of Adidas, Visit Britain, King’s Cross station and the Arts Council.
Clients of both agencies can now be offered a more complete range of services, allowing RetroFuzz to build on its core client base in music and fashion, as well as pursuing its stated aim of “strategic expansion”.
Importantly, observers also tell me that the two agencies are very similar in terms of culture and values.
With immediate effect, the Eskimo team has been integrated with that of RetroFuzz, and existing Eskimo clients will continue to be supported by the newly-expanded RetroFuzz.
Eskimo founder and creative managing director Mark Janson has taken up the post of managing director at RetroFuzz, supporting Retrofuzz co-founder/directors Jonathan McNamara and Matthew Kendall.
“The Eskimo philosophy has always been one of strategic collaboration,” Janson said last week. “Seeking out productive partnerships that allow us to create well-crafted, considered and effective design solutions, is what we love doing. From our very early discussions it was clear we share the same principal values, so we are… now in a position to pursue this opportunity.”
We at Green Square are no strangers to music deals having handled the FRUKT transaction into Interpublic and having worked with some of the festivals, venues and music events providers. As a hardcore music fan, I will be watching RetroFuzz’s progress very closely from now on…
Staying in the UK (and outside London), the other interesting deal of the past week has been the merger of TV production companies Twofour and Cardiff-based Boom Pictures; it’s not just in the ad industry that consolidation is a key driver of M&A activity – it’s also been going on in the media for years.
Twofour, which is headquartered in Plymouth, has a good track record: among its hits have been The Hotel Inspector, Splash! and most recently, Educating Yorkshire. It also has offices in Abu Dhabi and the US, and has a post-production operation, and works with the likes of Ogilvy & Mather Entertainment and DuPont to create “branded content”.
Boom, which was set up last year by former BBC bigwig Lorraine Heggessy, creates Welsh-language programmes and also has a strong reputation in branded content and post-production, as well as having a decent roster of writing talent – Father Ted co-creator Graham Linehan among them – on its books.
Essentially, the merger – which was backed by the private equity firm LDC, which has solid credentials in successful investments in media and marcomms and funded Boom last year – allows the two companies to move from the fringes and into the big time (or at least, into the upper echelons of the indie hierarchy). Twofour has an annual turnover of some £47m, while Boom’s is £29m – and with a probable injection of cash from LDC, we could be looking at a £100m company.
Where their skillsets overlap, in post-production and branded content, they gain scale; also, culturally, the two are a good fit, with their roots in, and commitment to, the regions.
But as in any good merger, the two entities complement each other nicely. And it’s a good deal for both sides (although I suspect Boom will be the senior partner here, especially as Twofour founder Charles Wace is stepping back from the business). Twofour gets serious funding; and Boom gets Twofour’s expertise in rights management and international distribution.
In broadcasting, and for the future of quality, original programming, diversity can only be a good thing, and I look forward to a new super-indie competing with the giants for their slice of the broadcasters’ commissioning budgets.
Tony Walford is a partner at Green Square, corporate finance advisors to the media and marketing sector.