Integration and Growth: Combining the Strengths of Two Agencies With Richard Simpson from Tayburn

Show Notes

Richard Simpson talks about his role in sales and how it helped him access opportunities. He discusses the history and specialisations of Tayburn, the design agency he joined in 2008. Richard also explains how he acquired equity in the business and how his role evolved over time. He then delves into the process of the acquisition by Lewis, including the valuation, deal structure, and integration of the two agencies.

• Sales experience can provide access to valuable opportunities in the creative industry.
• Equity ownership in a business can be obtained through options and converted into equity over time.
• Preparing for a sale or acquisition by getting the company's house in order is crucial.
• Maintaining business as usual and minimizing disruption to clients and employees during the integration process is important.
• Combining the strengths and expertise of two agencies can create new opportunities and services for clients.

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Creators & Guests

Host

Barnaby Cook

What is The Exit Plan: Mergers and Acquisitions for Creative Entrepreneurs?

The Exit Plan is for business owners that are interested in learning more about how to sell their business. Each episode Barnaby Cook interviews someone who has bought or sold a business - either a creative agency, or a production company. The conversation gets under the skin of why they wanted to sell, or were looking to acquire, how the deal was structured, how they agreed upon a valuation and what lessons they learnt along the way.

It's pretty straightforward.

So yeah, if you can start by telling me who you are and a bit about your business.

Yeah, sure.

So Richard Simpson from Tabern.

So I started Offlife.

I'm very lucky, I guess, when I was 16, I knew I always wanted to run my own creative
agency.

the route to that was a little circuitous via selling media space in London for a big
publisher and then eventually getting my break with a global brand consultancy.

So I joined Tabern in 2008.

I'm very much in a sales role because I found that background experience of sales helped
me kind of get access to conversations and opportunities that I wouldn't otherwise have

had.

know, Taber is very much a design business founded in 1979.

So graphic design primarily, but then, you know,

the marketing communications landscape has evolved.

It's taken on new flavors of design.

We've looked at digital and I guess really our specialism these days has been known for
branding and building brands, all shapes and sizes from startups through to charities and

some big corporates in many cases as

So yeah, it's got a long history.

It's got some staying power.

Yeah, and a nice sort of Scottish legacy as well.

So from a sort of ownership perspective, like you joined in a new biz role, at what point
did you kind of take equity in the business?

Yeah, well, prior to that, well, I suppose before I say that, I mean, I think because it's
always been independent.

There's a belief that, I mean, our founder was a guy called Eric Davidson, who built the
agency up into, you know, I'm very grateful to him for all that he's done in terms of

awareness.

And so he had a belief that the people, directors that worked in the business should own
the business.

having that sort of pathway.

and succession opportunity was something that he was always very supportive of.

think the other thing that was true was that a former colleague who was managing director
when I joined was aware that I'd had opportunities in a previous role.

And so he was very supportive about giving me the opportunity through options initially,
which were then converted into equity.

And then I guess as the business had sort of various changes.

I had the opportunity to increase that shareholding over a period from about 2010 to about
2014, 2015.

Okay, and how did your role develop from when you joined to now?

Yeah, it's a funny one actually because it sort of develops the regress because I'm really
good at drinking coffee and eating lunch.

you know, I've sort of made a career out of attending the opening of a bag of crisps as
well.

you know, that's pretty much what I started.

I

we have cut out.

to do.

Thank you.

No.

hello, get back.

I'm so sorry about that.

My wifi looked like it was okay.

I'm just going to tether for my phone and feel better.

I'm so sorry.

No, that's fine.

No, no, no, no problem.

Can you hear me okay and is it?

Yeah, I can hear you fine.

So the way Riverside works is it records locally and then uploads it.

So any sort of interference we get when we're recording won't come through on the final
thing.

but it does use quite a lot of bandwidth because of that.

I'm just, I'm tethering off my phone.

I've got, I've got a better signal with that.

Yeah.

So that's okay.

Yeah.

Yeah, okay.

Cool, I was just asking you about the evolution of your role.

And I guess, yeah, I guess, yeah.

and then I think with that, you know, it just comes a bit more responsibility,
particularly as you increase your ownership, you get more involved in other facets of the

business.

Typically four areas, clients, people, money, and then of course new business as well.

So over

sort of migrated to that.

And I suppose this has been one of the exciting things about this new future is there's a
chance for me now to focus on the areas that I really enjoy doing, that I love doing, that

actually the business needs, which is going back to having more coffee and lunch with
people.

Great.

I mean, yeah, keep it up.

Sounds good.

So from, again, from a sort of ownership perspective, you increased your equity.

What other directors were there in the business at the point you came to do the deal?

So we, had an external shareholder who were looking to divest.

And so we had a term loan to buy them out.

I had another four colleagues as well.

One of them was set to retire, RFD, of many, many years.

He goes back to RXT.

There was another director who was responsible for an area of business that again, we were
moving away from just changes in the marketplace and dictated that.

he wanted

continue that on his own.

And so there were three of us left, really, managing director, creative director, and a
mere sales director.

And the intention was for us to go forward.

So this is around about 2014, 2015.

Unfortunately, the managing director the time became unwell.

And so he had to, he had to leave the business, which was, was, you know, very, very
difficult for everyone, actually, you

obviously for him, but then for us as well in terms of how we sort of manage that
succession.

And at a time where we had been buying out quite a lot of directors and servicing a term
loan and trying to transition the business at that point away into more of digital future,

which is where the market was very much headed.

It was quite a tricky spell.

mean, that was 10 years ago.

I lost you at the end there.

Did you?

Yeah, that's all right.

I can edit that out.

As in, it will still be on there.

What was it like making these decisions and managing the business day to day with that
many stakeholders?

Yeah, I

It was, it was, it was okay.

mean, it was, it's an, it's an interesting one because in some ways there was really good
bench strength because there was some very senior people with real expertise in particular

areas.

but then naturally there would be conflicting views in terms of direction.

And so, you know, there was maybe a bias towards more brand strategy.

one area there was maybe a bias towards more creativity and another.

So you know sometimes there was an element

trying to find the most effective way to ensure everyone had a voice, actually without not
having a clear direction.

So I think we were able to, that's one thing we've always been able to do.

We've been very collegiate actually in terms of our decision -making and supportive of
these different views.

And then in recent times when it has just been Malcolm and I,

I know that we've sometimes looked back going, wasn't it good when we had that grey
-haired experience around the table?

And I guess that's one of the benefits we've got now with this new future is there's good
bench strength and there's some people who have worked in the industry and in the business

for a long time that we can draw

Okay, so the decision to...

Well, was it a merger or was it a sale?

What was the actual sort of structure of the deal?

Yeah, it's a great question.

So technically it's an acquisition.

mean, this is the first time I've done this and I know more about these things than I do.

But I believe that a true merger is not as common or not as prevalent as disposals and
acquisitions and so forth.

So the intention had been to join forces and it was a throwaway comment over a burger with
David.

which is literally, why don't we work together?

And I was like, gosh, why don't we?

That's blindingly obvious.

But then you get into the nuts and bolts of how does this actually work?

And as it transpired, they were a little bit bigger with us, no, sorry, a little bit
bigger than us.

They had more reserves than we did.

We're still well capitalized, to be clear, but they've...

David had built up a very strong balance sheet over a number of years.

so actually it made sense for Lewis to acquire Tayburn.

But what happened was that a limited company was set up and that company wholly owns
Lewis, Tayburn, and then we have another agency, Always Real as

Okay.

So, and I guess just taking a step back from that, where did the decision come from or how
did you make the decision to go for a sale or explore a merger?

Yeah.

I think it's a combination of things.

mean, think, you know, we were very much on an upward growth trajectory around 2019, 2020.

And then the world changed and it changed for a lot of people.

And we did really well to weather the storm and then actually we bounced back pretty
quickly.

But it felt

in some ways, right?

You know, how are we going to kick on from here?

And, you know, it felt like we needed some kind of change.

We had a very good chairman in our business a number of years ago, was a sapient guy
called Mike Reed.

And he talked about waves.

And that was one of the successes that Sapient had prior to their sale to

They rode away from them, but they coined the term digital transformation long before.

mean, I know it's very common these days, but they coined that long before anyone else
did.

So they had that, that wave.

And I think we felt that we needed to try and find a way.

So it was, you do we get some investment in?

we, you know, what, what, what, are the, what are the options?

And then, David Lewis and I, had been working with our, our business coach, independently
off each

But we were connected through him.

We knew David for years because obviously it's a fairly small industry and we'd actually
worked together on a number of clients back in the day as well.

not so much with Lost Touch, we just hadn't seen each other for ages.

So we started meeting regularly for coffee.

you know, was quite philosophical actually, just talking a little bit about, you know, the
trials and tribulations of what we do and

That was kind of how it started because I shared with him our desire to have some kind of
change.

And it just felt like the stars aligned.

Okay.

And then so how did you, from those kind of informal conversations and, and kind of
thinking it would be a good idea, how did you kind of progress the idea and what was that

process like of kind of agreeing evaluation and sort of talking about how you would
structure it?

How many different iterations did you go through?

It's funny isn't it?

It can be very exciting.

You go on some dates and you enjoy all the romance of these early chemistry and then you
get into the functional stuff and it sort of kills the buzz a little bit.

I mean, it's inevitable, I suppose, because you have to look at legal advisors and
accountancy and non -disclosure agreements and the sharing of private and confidential

commercial information.

So that was really how it started.

We did an NDA, we shared documents, we met up again, we chatted.

shared our respective views of what we felt were fair and reasonable valuations.

And then we realized actually in order for us to kind of form some sort of basis, we
needed a professional to do that.

So we worked with a forensic accountant who went off and followed a very detailed
methodology to arrive at a valuation for Lewis and a valuation for Taborn.

And we used that.

And of course, you know, it's that thing where it's bit of an art rather than a science.

So you can look at the black and white of the numbers, but then there are other attributes
that are a bit more emotional perhaps and more based on feeling, such as talent and

reputation and credentials, as well as the hard facts of recurring income and
profitability and cash and all that kind of stuff as well.

that was the sort

It was a bit of a messy middle, to be honest with you.

And it happened over the summer.

So try and avoid doing these things during the summer because everyone disappears off on
holidays.

So it just protracts the process.

think it was kind of this time last year, I was thinking, great, we'll get this done by
September.

Not a chance.

Thanks.

so yeah, that's interesting, isn't it?

The how it, yeah, how it changes, doesn't it?

From, from it's all, it's all exciting to begin with, and then it gets down to the, to the
hard facts.

So was it the, was it looking at both valuations that kind of drove that decision for it
then to be a straight, straight up acquisition?

Yes, basically.

Because I think within the process of looking at the valuations, could see the differences
became apparent in terms of reserves, cash at bank and just being a little bit bigger than

Okay.

And then how did that from there, how was the deal structured?

Sort of what was, were there sort of elements of equity?

What kind of percentage was it cash?

Like how did, how was it sort of put together just in broad terms?

In broad terms, yeah.

So it's a cash and equity deal.

what we looked at was we took a combination of EBITDA and multiple and working capital.

We had some other factors to consider such as a C -bills loan debt, which added a little
bit of complication, which I'm happy to share about.

It's just one thing for people to watch out for.

And then we had some other assets as well that were added back into.

So that helped us arrive at a price.

How did we deal with Whatsy?

Seaville's

With the C bills, loan.

Yeah.

Yeah, yeah.

what we did was we were under the impression from our bank, who were amazing, by the way,
to be clear, they were very, very supportive, very good, that we could roll this over.

But then apparently, in order for the transaction to go through,

I think it's the British business bank that actually provided the loan.

They insisted on it being paid back in full.

And obviously while we had enough cash to do that, clearly, it had implications because it
did mean that it was going to, we're to have to transfer all that over basically and tie

that up.

I think the other thing that's worth saying as well, Barnaby, is that because of Taborn's
age as a business,

And because of the structure of its ownership, we had quite a lot of complexity.

had a holding company and a limited company and we had multiple bank accounts.

And we also had an employee share ownership trust as well, which is a legacy.

It was never actually utilized in the end.

So for the first time, I actually understood what it meant to be exit ready or investor
ready.

And I think, you know, a key lesson here is just, you know, take your medicine

and get it all in order.

I think we were so lucky that this was a real marriage between two friends.

Because I think if it hadn't been, it could have been quite tricky, actually.

Yeah.

What was it like working with the Great British, sorry, the Great, what's it called?

Great British Business Bank that provided the funding.

we were removed from them.

So we'd taken the CBOs loan out during COVID and it was because we were going to be moving
offices.

And we thought, well, we might have a delapse bill, which actually turned out to not be
anywhere near what we thought it was.

So we just retained it.

And because the terms were so favorable, we were just paying it down.

Over a period of time, it made sense to do that.

And that was through our bank who were fantastic.

So we had nothing to do with them.

It was just, you know, it was a bit disappointing that they hadn't been a bit clearer on
the terms prior to this going through, because it just held things up a little bit.

And it's just back to that point about just having everything in order prior to, you know,
getting into sort of heads of terms and the due diligence.

what did you do with the holding company in the, sorry, that was a slight overlap there.

What did you do with the holding company and the trading company and just from a sort of
company secretarial point of view, how did it all go together?

basically a high -vot process.

the Hollings company owned the limited company, the limited company did all the trading.

So it's basically just a question of, it's a bit of a paper exercise.

We had lawyers that we appointed as well to manage the employee ownership trust.

It wasn't being utilized, but there

trustees and we had to follow the due process in order to resolve that and then hive the
company up into the holdings company.

And then, there was a bit of admin around the bank accounts as well.

So just closing ones down that we didn't need anymore and all that kind of stuff.

So, you know,

It's just one of these things.

I can't stress the importance of it enough to anyone that's about to go through this
process that, you know, getting your house in order beforehand is critical.

And what effect, because it sounds like there was some sort of little bumps in the road in
terms of the practical side of working on the deal.

How did that affect your and the other and Malcolm's sort of focus on the business?

Because I know often these deals can be quite distracting.

Yeah, well, and that's a great question.

that was it.

mean, as far as the deals concerned, had little bearing really.

We would have had to incur these costs anyway.

We just had deferred them until we were needing to do them as opposed to being in a
position of not urgently needing to do them.

But we still had those costs.

What it did mean was at a time when you

in discussions about something that's got strategic significance to the business and its
overall direction, and you're having to maintain business as usual, you've got some, you

know, let's put too fine a point on it.

I mean, it's not the most exciting stuff in the world, reading through complex company
secretarial documentation and,

dealing with lawyers, that kind of stuff as well, no disrespect to lawyers, clearly.

So it was very time consuming and it was another layer that we just didn't

At what point did you bring the staff into it?

What point did you kind of tell them what was going on?

Again, another great question.

think we wanted to make senior colleagues aware first, ask with anything because of the
length of time that goes through and the fact that it might not happen as well.

That was the other thing we had to bear in mind.

I mean, we were confident that it would do, but we had to bear in mind that it might not.

So it was

yeah, it was, it wasn't long before, we actually, announced the whole company, but we, we
some, people who have responsibility for the teams know just in advance to give them a

heads up.

And then we did, we did, we did a company announcement, the day that we, completed, which
was, it was tough actually.

be honest with you because, you know, we've got colleagues, I've worked in the business
for 15 odd years, Malcolm for twice that.

We've got colleagues who've been in the business for, you know, as long as that as well.

And so there is an element where you think, gosh, am I being dishonest here?

But, you know, it felt that it was only appropriate, that was the most appropriate way of
doing it

It might, you know, it might not have gone through.

might not have happened.

actually again, because we've got such a good long term settled team, they were
incredible.

I mean, they were taken by surprise, you know, but they were, they were really, really
good about it.

And actually, because going back to why we've done this, it makes sense for our colleagues
because there's

as a strength in numbers, there's a much greater opportunity for them to develop their
careers and to have more investment going into their own development.

And, you know, there are greater benefits as well from the combined

What are the sort of respective sizes in terms of number of employees of the two agencies?

So it was about.

Roughly, think it's about 18 and 14, I think, in terms of full -time or equivalent.

So combined we've got about 30, just over 30 people.

you?

Okay.

And in terms of location, are you both in Edinburgh and what did you do with the office
space?

Yes, this is something that's quite interesting.

The bulk of the team are spread across the central belt.

People in Edinburgh, people in Glasgow, we have an admin function in Falkirk.

Our most northerly colleague Kevin, he's in Dundee, and our most southerly colleague Jamie
and Lucy.

Lucy's in Newcastle and Jamie's in Liverpool.

So we've got, we've got a bit of a spread, but you know, we're, generally again, just as
far as the alignments can say, we very much operate a hybrid model.

So there's a lot of home working, but we've got a Glasgow office.

We've got two Edinburgh offices and then we've got this sort of Falkirk admin office.

the intention, so we've just resigned our lease with Glasgow.

But we have plans to reconfigure what we're going to do with the two Edinburgh and

basis as well and probably consolidate into one present.

And so how has the integration gone?

How did you approach doing that after you announced the sale?

So, I mean, it's very much a question of just business as usual.

And because we've got two long established brands, 51 years Lewis and 45 years Tabern, we
don't want our clients to be disrupted.

We don't want our colleagues to be disrupted.

We want our clients to be able to access the colleagues that they always have been doing.

The benefit is now that they're able to access much

broader array of services.

So maintaining that is, been really critical, but there are some opportunities to create
some efficiency.

So obviously I've touched on the offices, but there are platforms and systems that we want
to integrate.

And again, I mean, there's, there's some stuff that Lewis have got that really good and
there's some stuff that we've got that's really good too.

And so it's just a question of working out.

how best to pick and choose from that so that we're not doubling up on these costs.

And then I think that the biggest opportunity is then gradually introducing our existing
clients under each brand to their counterparts and the other.

So for example, we've got a large distiller

and we've been doing quite technical digital consultancy with them, but we've now got a
really exciting creative arm that we can introduce to

So what are the difference in services that Louis offer versus what Tabern does?

Yeah, so Lewis is, I guess, a very well established and well known digital agency with
expertise in data and digital strategy, customer journeys.

And then from our design and development perspective, very robust capabilities

design and develop websites and applications.

So we're a gold partner in a Braco and we've got very, very robust ESG credentials.

So we're the only agency in Scotland to be gold accredited for Ecovardis and one of 11 in
the UK.

So there's, you know, that's a requirement of one of our biggest clients Santander.

So there's a very robust capability there.

On the table side, obviously, we've got our reputation for brand strategy and creative
design in terms of branding, but also campaigns.

And then we've got our packaging business as well.

So again, that shares a real parallel with Lewis's technical team, their digital
technical, our guys are very much in the technical artwork and reprographic space.

So it's amazing, they're very different areas, but actually they're very, very similar.

Yeah.

And what this is always when I talk to people about the potential of them selling their
business, often the first question is about the brand.

So what's going to happen to the, how are the two brands going to be integrated?

It's a $64 ,000 question, Barbies.

Have you got any ideas?

Cobbler's Burns or something.

yeah, I mean, again, we've got two really long established brands that have got a lot of
equity.

you know, it makes sense to retain them because they're well known, well regarded.

But there's a really interesting opportunity around Limitless and actually our PR advisors
put a really positive challenge forwards on that front, which is there's a really

interesting story there about how it's come about, which is a desire to be closer to the
heart of our clients' businesses.

And we want

do things differently from a position of love and positive intent, which I know can sound
a bit woo -woo and a bit folksy, but actually, we've been doing this quite a long time and

I think we've seen the good parts of the business, but we've also seen the parts that
don't work so well and don't deliver that much value.

so there's an opportunity to change that a little bit.

So under Limitless, we're very interested

making more of being authentic, know, with integrity and actually being vulnerable about
it as well.

So I think there's going to be quite an interesting evolution over time, but certainly for
now, you know, Taborn has got very strong brand equity in brand and Lewis has very strong

brand equity in digital.

Okay.

And how has it changed things for you since the deal has gone through?

Yeah.

So that, you know, to my joke earlier about regressing in my career.

I mean, you know, I'm predominantly focused on the sales side of things again, which is my
passion.

That's what I love doing.

I'm very lucky.

I get to go out and meet really interesting people and chat to them about their business.

And that's what I love doing.

It gives me great energy.

And so I've got more of an opportunity to do

enjoy speaking and doing these sort of things as well.

So the chance to do more of that and less, you know, chasing age debts and managing HR
challenges and, you know, the stuff that there are other people who are much better at

than me, leave them to do

Lost you slightly there.

can you hear

I've lost the same, Barnaby.

I

Am I back now?

Yeah, I've you now.

I think I accidentally clicked mute.

I've got a little marker.

So if there's a blip, I can just put a mark in and it helps me edit it.

But I accidentally hit mute.

Okay, no worries.

So I'll have to mark this bit.

What was I going to ask?

Yes, just looking back and anything that you would do differently if you were to go
through a similar process again.

Yeah, I think one thing is just have a bit more faith and belief that it's going to go
through.

There's a tendency, I think, to oscillate between it's not happened or it might not
happen.

And actually, if you spend more time residing in the belief that it will happen and, you
know, without taking your eye off the ball of what you need to do to get it to happen and

also the business as usual.

you might enjoy the process a little bit more.

And certainly my wife would have been a bit happier to be around me.

And then I think, yeah, I mean, I've made the point already, it's just about having your
house in order as well in advance of these things.

So making sure that you've got, it's just really clean and simple.

You don't have unnecessary...

companies and unnecessary bank accounts and things like that.

It's all just nice and clean so that when they acquire or however it's going to be
structured happens, it's very easy for them to just go, right, perfect.

There we go.

Exit ready.

Yeah.

Yeah.

Great.

Well, that seems like a good place to wrap it up.

So thanks very much for sharing your story.

No, it's a pleasure.

No, it's a pleasure.

I hope it's okay.

I'm