Related Posts
Visual Storyteller
Additional Posts in Advertising
Anyone from MediaCom on here?
Ted Royer helping JL win VW. Rumor or true?
New to Fishbowl?
Download the Fishbowl app to
unlock all discussions on Fishbowl.
unlock all discussions on Fishbowl.
My old agency, formerly independent, was sold to PE bc the owner wanted to retire. It was a slow, awful death. From my perspective, PE and an agency view “value” differently. Both need to make a profit, sure, but for example … we had a big chunk of a city’s football team. It didn’t produce the most revenue, but we used this relationship for marquee value in recruiting talent and various case studies were highlighted in new biz pitches. But our new PE ownership had a a more financially myopic vision. We were told we needed to resign this account bc of the low margin, and spend our time on a higher margin client. There are other examples, but that’s maybe the most concise. I have no idea why PE would want to buy an agency.
Many of the so called indie agencies are actually funded 50% or more by private equity money. But seems private equity leaves them alone more than holding companies. Barkley OKRP, Burrell, Highdive and others.
Small-cap POV: I started and run a boutique 10-person shop, and my cofounder and I get approached by multiple funds every month.
Most of them are backing mid-sized agencies and attempting to grow them through acquisition. Since most agencies only “scale” by adding headcount, buying pre-built skills or functions (ie, other agencies) is way easier and lower risk for both funds and their portfolio agencies.
It’s also a potentially exit strategy for founders\owners, for sure—until you look at the terms. Most agencies can only expect ~1.5X multiple (see “scale” above), which disappears into taxes and legal fees. Which really blows when it’s also paid through a 3-year earn-out.
Or roll several up and eliminate redundant roles, but that’s already what the holdcos are doing lol.
Dunno…ask ChatGPT maybe? Off rip big shop advertising is a pretty terrible business model, especially for PE. Only upside I could see it if a firm wanted to come in and hugely reduce operating costs with AI by reducing headcount.
Rising Star
If you have an MBA a lot!
squeezing the remaining value out of it.
ie. more layoffs, with less people doing more work