Next 15 Communications Set to Acquire Engine U.K. Tony Walford quoted in Adweek.

21st February 2022

The deal, set to be completed in the coming days, will see the break up of the creative agency network

The U.K. sector of Engine Group is set to be sold to communications group Next15. The sale has been ongoing for several months since Sky News first reported that its owners, Lake Capital, had appointed bank Lazards to find a buyer for the U.K. business—with an asking price of around £100 million.

While it was preferable that the whole business would be bought as one, Next15 will buy the British part with talks ongoing about the U.S side. The future of the APAC section is unclear if both are sold separately.

Adweek has spoken to four sources—each with knowledge of the deal—and it is understood that the sale will be confirmed before the end of February.

Engine works with some of the U.K.’s biggest consumer brands, including baking brand Warburtons. Others on its blue-chip client list include the Royal Navy, Red Bull, Money Supermarket, AstraZeneca and telecoms provider Sky. It has a structure across three pillars: creative, communications and transformation.

An uncertain future
Next 15 is an AIM-listed tech and data-driven network with operations across Europe, North America and Asia Pacific operating agencies such as Elvis, Odd, Velocity and Mighty Social.

“This structure is important because while the three units work together, they also have their own distinctive propositions and skill sets,” Tony Walford, partner for merger and acquisition consultancy Green Square, wrote for Adweek in July 2021. “This means the group could easily be split into the separate disciplines if needed, making it more attractive to buyers not looking to buy a group but a set of skills or competencies.”

He added, “It is the only U.K. indie of scale still left, which in itself makes it a tasty proposition for any buyer, especially in a landscape in which the old model of legacy holding groups is coming increasingly under question.”

When approached for comment, Next 15 said it had a rule not to discuss acquisitions. A spokesperson for Engine Group also declined to comment.

At the end of January, while announcing organic growth of 24% year on year for its third quarter, Tim Dyson, Next 15’s chief executive, said: “Our performance in Q4 was again strong, showing that there has been no change in demand for our wide range of growth-enhancing services as market challenges and disruption across industries continue. It is further validation of our model that growth was strong across all segments and geographies. We look forward to updating investors in greater detail when we announce our final results in April, including how we are accelerating investment in talent and product development to continue to innovate for clients and drive longer term growth.”

Meanwhile, that same month, the chief executive of Engine Creative, Ete Davies, left the agency after five years.

Updated: In response to this story, Next 15 released the following statement to shareholders admitting that talks with Engine U.K. were underway:

“Next Fifteen Communications Group plc … the tech and data-driven growth consultancy, notes the recent press speculation in relation to the potential acquisition of Engine UK.

“In line with its strategy, the company regularly assesses a number of potential acquisition opportunities at any given time. The company confirms that it is in discussions with Engine UK and its owners.

“Shareholders are advised that there can be no certainty that any transaction will proceed to completion or as to how any transaction would be structured.

“A further announcement will be made in due course, if appropriate.”

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Tony’s article July 2021