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using your laptop mic.

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No, I'm on a Mac with an external

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Okay, is the mic plugged in?

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It's just telling me it's saying internal microphone at the moment

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And now it says no microphone.

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Try

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No, you've gone now.

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no.

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Yeah, now I can hear you.

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That's fine.

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That's fine.

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That works fine.

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Cool.

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OK.

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Yes.

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Well, welcome to the podcast.

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And if you could just start by introducing yourself and telling me a little bit about your
background.

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Hi, I'm Nick Morgan, current Group CEO of We Group, which is made up of three agencies.

19
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And this is my latest iteration, 10 years old.

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Since I sold another agency, I've been involved with sort of three different businesses,
or actually four of which I've exited all of those for, and this is my fifth business

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currently.

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Okay, that's so four exits over the years.

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Yeah, with various success, which we will come onto.

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Yeah, lots of lessons learned.

25
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Nice.

26
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Well, shall we just sort of take them one by one and go through?

27
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What was your first...

28
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And what kind of agencies?

29
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What was your first

30
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So my first business was in parallel.

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So effectively we had some bars and effectively I exited those through the cap table.

32
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you know, other partners are involved in that business.

33
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We sold to them over a sort of period.

34
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It wasn't an earn out as such, but it was over a prolonged period of which the business
bought us out.

35
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And then we had a group of pubs, again, very similar to the cap table.

36
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So

37
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I was a silent partner, that person within the business who was more active, they wanted
to acquire us.

38
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We went through various iterations of valuation as you do, and then exited them.

39
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And then I would say more of a distressed business, effectively, which was an agency, a
group agency, of which we had various services under that group.

40
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So design, know, 360 as a horrendous term these days, but was used with great

41
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Great fruition.

42
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Back in the day, so with that we had one particular client which was within our events
division that effectively went under owing us over 900 ,000 pounds.

43
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So, you know, at the time I made the choice to reverse out of that business.

44
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So we split the business.

45
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It was quite complex, you know, complex time obviously.

46
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So looking at, you know, the debt relief, managing the debt in a new entity.

47
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you know, was, was very challenging.

48
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my ex business partner effectively, set up a new entity and took some of the clients, you
know, so we went through that probably took about a year.

49
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but you know, it has led to it.

50
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It wasn't actually.

51
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Yeah.

52
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So we didn't go admin.

53
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So I, I kept the sort of legacy of the business and then managed almost like manage an
admin pack on it, but didn't go out there.

54
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So, you know, I managed the whole credit.

55
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You know, it took a long, long time not giving any preferential treatment, obviously, to
any of the creditors.

56
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you know, and yeah, I've always, I've never done admin and always been just for
reputational.

57
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I've always advocated whatever you can do to keep that business going.

58
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think, yeah, there's too many people, especially in the UK where it's a lot easier than it
is in, you know, some countries where you have to have massive bonds placed or

59
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underwriting.

60
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yeah.

61
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So I have always advocated to maintain that business.

62
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So did that and that still lives to today, albeit in a much smaller iteration.

63
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And then from that group, I set up a new agency called the Fair, which has now become We
Group because we have three different agencies within that group.

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Okay.

65
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So yeah.

66
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So tell me a bit about FAIR then what, what, what does that agency do?

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Yes, so the fair is a large scale event, sort of production, delivery.

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We're producers of various festivals.

69
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And then through that, we've built upon other divisions.

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So we are placemaking, which as the name suggests, we work for lots of the UK, develop
largest developers doing sort of public realm curation, placemaker strategy.

71
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And then more recently in the last three years, we've set up ops, again, our division.

72
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And that looks after operations within public realm.

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look at things like CT, counter -terrorism, risk, you know, which is ever more present in
everyday society.

74
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So yeah, and it's all under this banner of We Group because, you know, we're also, I've
always exited businesses that I've owned and we're on that trajectory now.

75
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You know, that's the plan.

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We're very transparent, you know, within the business.

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You know, we're on a three to five year plan to effectively exit.

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So

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We have an EMI scheme as well for those people that have been with us for over three
years.

80
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So how did the three distinct companies in the group come together?

81
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Did you acquire any of them or did you just kind of set up other divisions or was it
separate limited companies?

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How have you kind of structured

83
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Yeah, so Big Cat Group, which was the old agency, you know, that was slightly changed.

84
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I changed the name on that to We Group and that has holding on We Are the Fair.

85
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So everything's centrally built through the fair and the other two, Ops and placemaking,
are divisions effectively.

86
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So trading divisions within, yeah, within the sort of total entity.

87
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Okay, I'm not familiar with place making.

88
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what is that exactly?

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I mean, if you speak to most developers, they'll all have a different interpretation.

90
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But for me, you know, it's ever important now, you know, it's really challenging getting
people, Hey, that's the high street back into schemes.

91
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So retail schemes or food and retail schemes.

92
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So it is curating programs, which are of interest to get general public to go back to
those schemes.

93
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So, you know, we do everything from winter activations over a four month period, obviously
generally sends around Christmas.

94
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But know, summer from the very basics of, know, Wimbledon screenings, but you know, we're
delivering one of the Olympic fan zones in London, right in the middle of Grosvenor

95
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Square.

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Grosvenor we've worked with for nine, 10 years now.

97
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So, you know, that sort of stuff, which will attract people, you know, has an extended
dwell time.

98
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So where people are sort of in that area for more than 45, 50 minutes, we generally see a
spend within retail, you know, or FMB, Food and Beverage, within

99
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the facility.

100
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that's what developers want.

101
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They want to support their retailers, they want to support their food and beverage
partners.

102
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So by doing more and more placemaking, it's getting people out.

103
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We're challenging people to stay in their locality.

104
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So loads and loads of work has gone into that over last five, six years.

105
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Right, OK.

106
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And in terms of the We Group, the ownership, are you doing it with partners or are you
doing it on your

107
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So yeah, we have, like I mentioned, an EMI scheme.

108
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yeah, I will, after that EMI has been vested, owns 73 % of the business, and then rest of
the ownership or cap table is split between various employees have been long serving.

109
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And that's always been my intention.

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We want that transparency.

111
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I find it when people are trying to exit, they're obviously trying to pump revenue through
that business.

112
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employees aren't always aware, whereas I'm more aligned to being transparent about it.

113
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We're all on a journey and not being too emotionally attached.

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believe agencies have six to 12 year cycles where they go through a really buoyant period.

115
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People want to work with them, but with every agency there's churn.

116
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So for me, I've always sold within that timeline.

117
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Okay.

118
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And can you, what, how many employees have you got?

119
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And can you give us an idea of what sort of revenue you're

120
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Yeah, I mean, we've got 32 headcount.

121
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Revenue is not something really I'll discuss in the public realm, but yeah, it's
successful business and has been obviously hit hard during the pandemic given the fact we

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did events and government shut them down.

123
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But yeah, we've come back very strong and yet have, you know, we obsessed around new
business and pipeline.

124
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So quite aggressive in that sort of sphere.

125
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You know, always looking at new business.

126
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And I think, you know, the biggest development for us in the last 12 months is opening up
in the U S so, uh, going through the painstaking process of getting, getting a visa, you

127
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know, Oh, a, uh, is quite hard and challenging, you know, successfully did that.

128
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And we recently launched six months ago, uh, with an office in Miami.

129
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So now servicing the East coast.

130
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Um, yeah, and I'm back in New York next week, looking at, you know, more sort of there.

131
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There's so much business in the U S, uh, if you.

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take the right approach.

133
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It is my belief.

134
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Yeah, no, absolutely.

135
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I had a video production company and I, set up an office in New York and went and lived
out there for six years.

136
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and, and grew the business on that side of the pond.

137
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So, yeah, it's, such a cliche, but it is just a much bigger market and there are bigger
budgets and people just seem a little bit more willing to, to spend money and, and take

138
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risks.

139
00:10:07,948 --> 00:10:11,109
so yeah, definitely, definitely see the opportunity out there.

140
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So what, what's,

141
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What's your kind of role then?

142
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What do you kind of spend your time doing?

143
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I would say the aspiration is to spend at least 60 % of my time doing new business.

144
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The reality is probably far less.

145
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So I spend a lot of time working with leadership teams.

146
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So I've seen a sort of leadership team.

147
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So they manage each of those divisions.

148
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And yeah, trying to remove myself from general admin, albeit I am sometimes drawn back
into that.

149
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But yeah, looking at more strategic planning.

150
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So M &A.

151
00:10:47,170 --> 00:10:48,780
We nearly just closed on a deal.

152
00:10:48,780 --> 00:10:53,552
You know, it fell through, whether that was deal fatigue, there was various reasons around
that.

153
00:10:53,552 --> 00:10:59,223
So I look at working on that a lot and looking at new territories.

154
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You know, the US, we didn't, you know, take lightly.

155
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didn't just, you know, through, I always believe you go into a territory with a client.

156
00:11:05,635 --> 00:11:15,198
So we successfully did that two years ago into Nashville, you know, that particular event,
you know, really, really grown and recently delivered something for a client over in

157
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Miami.

158
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So I think that's really, really important.

159
00:11:18,161 --> 00:11:27,178
I've seen loads of peers of mine who have gone to the US without that, and it's maybe
through narcissism and it's failed because they haven't had that network.

160
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So that's been really pertinent to us.

161
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And just for the introductions, the UK still is held in high regard, I believe, in the US,
albeit they're not big fans of Brexit.

162
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But they do like the quality of our work.

163
00:11:41,187 --> 00:11:44,940
We're well regarded in my sector anyway within event delivery.

164
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you know, mass scale, you know, globally.

165
00:11:48,072 --> 00:11:53,135
So for me, that export is, I would say, fairly easy to do.

166
00:11:53,276 --> 00:11:57,228
And then, yeah, looking at sort of &A targets, and then I have other things.

167
00:11:57,228 --> 00:12:04,583
I sit on various trade boards for industry advocating or trying to advocate our business
to government.

168
00:12:04,684 --> 00:12:09,286
And with the change of government, you know, they're much more receptive to culture as a
sector.

169
00:12:09,547 --> 00:12:14,710
And then I sit as an advisor on, I actually sit in an &A practice called Capital A.

170
00:12:14,942 --> 00:12:19,344
where I'm also a share and equity partner on that, but also a senior advisor.

171
00:12:19,344 --> 00:12:23,545
looking at, and again, their focus is mainly in the U .S.

172
00:12:23,665 --> 00:12:29,157
We're seeing better rebates, more money as you've already alluded to, and giving U .S.

173
00:12:29,157 --> 00:12:32,428
companies a massive opportunity also in the UK.

174
00:12:32,428 --> 00:12:36,640
So UK sellers getting U .S.

175
00:12:36,640 --> 00:12:37,556
acquirers.

176
00:12:37,556 --> 00:12:39,157
Okay, that's interesting.

177
00:12:39,157 --> 00:12:50,744
got quite a lot to dig into it just in terms of the We Group then what what kind of
lessons have you taken from your previous exits that you're applying to what you're doing

178
00:12:50,744 --> 00:12:53,675
now and and I guess sort of related to that.

179
00:12:53,836 --> 00:13:04,202
What what what are you kind of doing differently with an exit in mind rather than just
kind of you know, building a business because you know, organic growth is is fun.

180
00:13:05,122 --> 00:13:12,042
Yeah, I think we're more, yeah, we are much more selective on the M &A.

181
00:13:12,382 --> 00:13:23,862
where I have perhaps gone down the path of multiple M &A conversations, I think, you know,
we do a level of DD in our way, we cut those conversations off really quickly, you know,

182
00:13:23,862 --> 00:13:33,248
unless they are genuinely mobilized, willing to sign pretty quickly, like a heads of
terms, you know, where you're into an exclusivity for say, 16 weeks.

183
00:13:33,248 --> 00:13:35,570
then we wouldn't entertain that conversation.

184
00:13:35,570 --> 00:13:44,737
I think I've been guilty in the past of probably getting excited about the deal size and
then having lots of conversations and they're having lots of conversations with other

185
00:13:44,737 --> 00:13:45,528
parties.

186
00:13:45,528 --> 00:13:52,243
That is a fairly, I think, fairly fruitless and very demotivating route to take.

187
00:13:52,243 --> 00:13:57,067
Loads and loads of people just, people find it quite humbling.

188
00:13:57,067 --> 00:13:59,499
Obviously, if you make an approach saying we want to buy your business.

189
00:13:59,499 --> 00:14:03,170
So there's no one, I don't think, that wouldn't entertain that conversation.

190
00:14:03,170 --> 00:14:10,210
So hence why I think you need to be much more ruthless in getting to that decision really
quickly.

191
00:14:10,210 --> 00:14:16,942
Within 48 hours after that first initial conversation, I want to be saying whether we
think this is something we would take forward or not.

192
00:14:16,942 --> 00:14:17,703
totally agree with that.

193
00:14:17,703 --> 00:14:18,033
Actually.

194
00:14:18,033 --> 00:14:24,227
I've been looking to buy a small corporate video production company in the UK for the last
year or so.

195
00:14:24,227 --> 00:14:30,230
And I've had three separate deals that have kind of fallen over and taken up a huge amount
of time.

196
00:14:30,230 --> 00:14:33,822
And you spend a lot of time with the owner and get to know them really well.

197
00:14:33,822 --> 00:14:40,216
And there's all these, you know, positive conversations, but then for one reason or
another, it doesn't actually kind of come to fruition.

198
00:14:40,216 --> 00:14:43,717
it's, it can be, can be a frustrating process.

199
00:14:44,547 --> 00:14:51,225
You alluded to a deal that you might have just fallen through or what's the current state
of

200
00:14:51,822 --> 00:14:59,162
yeah, I mean, we think it's fallen through and I think that may be an element of D or T on
both sides.

201
00:14:59,162 --> 00:15:03,842
I think effectively are, you know, we went through DD on both legal side.

202
00:15:03,882 --> 00:15:12,422
Also, you know, we have a tax DD, our tax DD red flagged some things around IR 35.

203
00:15:12,862 --> 00:15:19,162
So, you know, once you sort of flag these things, either people take it in, you

204
00:15:19,542 --> 00:15:22,663
The advice that we're giving, which is effective, is free at that point.

205
00:15:22,663 --> 00:15:26,324
They need to sort of re -look at their business and de -risk it.

206
00:15:27,184 --> 00:15:33,636
In this case, it wasn't something that they particularly wanted to take on board, I
believe, and they have currently pulled out the deal.

207
00:15:33,636 --> 00:15:43,939
But, you know, we tie people into abortion fees and things like that, you know, we need to
cover some element of our exposure effectively financially.

208
00:15:43,939 --> 00:15:48,640
It doesn't only cover the opportunity cost and the wasted accommodations.

209
00:15:48,640 --> 00:15:50,192
But yeah, that's important as well.

210
00:15:50,192 --> 00:15:59,230
Lesson I think I learned when we were nearly getting acquired is putting in clauses like,
you know, having fairly hefty abortion fees.

211
00:15:59,230 --> 00:16:05,396
You know, if the other party pulls out, they owe us a proportion of our legal costs.

212
00:16:05,398 --> 00:16:20,483
Yeah, that's a good idea because I did spend some money on not loads, on some legal costs
and some accountancy DD costs on a deal and then it fell through and then I was just money

213
00:16:20,483 --> 00:16:21,604
down the drain.

214
00:16:23,685 --> 00:16:26,665
Where did your interest in &A come from?

215
00:16:31,043 --> 00:16:39,346
I think ironically when it was Andy at Castle A approached me, they were looking, so he
had an acquirer looking to purchase us.

216
00:16:40,046 --> 00:16:49,120
And I suppose just, you know, I'm not saying by any means exemplar, but just, you know, I
am really interested in finance.

217
00:16:49,120 --> 00:16:57,354
You know, I've got a good hand on things like balance sheets, lots of CEOs, you know,
we'll have, we do have a CFO, but won't be as engaged necessarily on the sort of finance

218
00:16:57,354 --> 00:16:58,018
side.

219
00:16:58,018 --> 00:16:59,288
So I've always found that interesting.

220
00:16:59,288 --> 00:17:02,309
I'm quite numerically driven and that doesn't mean monetary.

221
00:17:02,309 --> 00:17:04,620
I just mean understanding the numbers.

222
00:17:05,000 --> 00:17:16,693
Being a realist in terms of like EBIT multiples, know, spoken during COVID to lots and
lots of agencies, you know, there was a distressed market and I got really frustrated

223
00:17:16,693 --> 00:17:24,166
with, you know, there's two things I think that people find is either people are there,
you know, they've done long service within their own agency.

224
00:17:24,166 --> 00:17:25,218
So feel

225
00:17:25,218 --> 00:17:32,258
because they've done 30 years, their own 30 years of EBIT is obviously ridiculous and
unrealistic.

226
00:17:32,618 --> 00:17:46,118
So that or people in a distress market feel such resentment of the current conditions that
they almost want an overrider on their EBIT, you know, again, unrealistic.

227
00:17:46,198 --> 00:17:53,678
So, but through that, you know, meeting and working with Andy consistently through that,
you know, I've always had an interest to a point.

228
00:17:54,274 --> 00:18:03,870
and just, you know, not being over emotionally attached, like every deal I had, albeit,
you know, some of them very small, I've always exited, you know, well, in my opinion, I

229
00:18:03,870 --> 00:18:08,303
was above the sort of, you know, standard of three times, you know, I haven't had a SaaS
business.

230
00:18:08,303 --> 00:18:17,178
I've just invested in a SaaS business where those multiples, if they hit, you know, over
this one million EBIT, you know, they do suddenly exponentially grow.

231
00:18:17,478 --> 00:18:20,370
whereas agencies is quite traditionally set.

232
00:18:20,990 --> 00:18:22,791
Yeah, I've always had an interest.

233
00:18:22,791 --> 00:18:24,632
know, I'm always interested in meeting people.

234
00:18:24,632 --> 00:18:26,593
You know, it's part of new business, I find.

235
00:18:26,593 --> 00:18:30,115
I've had new business out of just having an &A conversations.

236
00:18:30,115 --> 00:18:35,138
No intention to sell our services, but it's come to that because of the conversations
we've had.

237
00:18:35,138 --> 00:18:38,820
So I think it's always good as well to be knowledgeable on competitors.

238
00:18:38,820 --> 00:18:42,472
So, you know, it gives you really good insight into the market.

239
00:18:44,944 --> 00:18:47,715
When do you think you'll sell the We Group?

240
00:18:47,715 --> 00:18:55,209
Have you got kind of predefined sort of triggers or targets that you want to hit and then
at that point you'll take it to market?

241
00:18:55,209 --> 00:18:57,480
Or how are you thinking about the exit?

242
00:18:58,466 --> 00:19:07,526
Yeah, think we've so myself, the sort of leadership team, Rob, who's a business partner on
it, you know, he's got 10 % of the business.

243
00:19:07,526 --> 00:19:16,746
We've done a lot of work on looking at, mean, I'm not too prescriptive, but setting some
sort of benchmarks over the next two or three years in terms of growth.

244
00:19:16,746 --> 00:19:17,906
You know, we're realistic.

245
00:19:17,906 --> 00:19:21,246
I think that growth is going to come more from the US than it is the UK.

246
00:19:21,246 --> 00:19:27,006
think UK is quite a stagnant market, in my opinion, or it is in our sector.

247
00:19:27,651 --> 00:19:34,515
So yeah, a lot of my focus will be on the US and growing that given every state is bigger
than the UK by landmass.

248
00:19:34,775 --> 00:19:36,316
So huge opportunity.

249
00:19:36,316 --> 00:19:51,116
So I think looking at that and when those trigger, yeah, we would probably go market and I
would probably go to market through a broker, unsurprisingly probably capital A.

250
00:19:51,116 --> 00:19:56,990
I think that's often people on smaller micro businesses think that they can handle

251
00:19:58,466 --> 00:20:03,672
My advice would always be aspirationally try and grow the business and brokers are really
useful.

252
00:20:03,672 --> 00:20:07,315
People do get very frustrated with them, but they're the intermediary.

253
00:20:07,315 --> 00:20:09,778
They have those unpleasant conversations.

254
00:20:09,778 --> 00:20:13,102
I think it can really break down if you're trying to go direct.

255
00:20:13,102 --> 00:20:14,002
Absolutely.

256
00:20:14,062 --> 00:20:26,667
I agree with that as well, especially with these smaller businesses where, you know, I've
had some where they don't do management accounts and they don't really have a particularly

257
00:20:26,667 --> 00:20:31,490
kind of overarching kind of business view of their own business.

258
00:20:31,490 --> 00:20:39,083
And there've been times where I just wish they had an &A advisor or a broker or someone in
between to just kind of help explain these concepts.

259
00:20:39,083 --> 00:20:42,900
Because sometimes you sort of say stuff and they take it really personally.

260
00:20:42,900 --> 00:20:46,444
And you're like, there's nothing personal about this.

261
00:20:46,444 --> 00:20:49,716
This is just a sort of an observation about the business.

262
00:20:49,977 --> 00:20:50,978
So yeah, no, I agree.

263
00:20:50,978 --> 00:20:51,898
I agree.

264
00:20:52,560 --> 00:20:58,105
just getting the right advice is absolutely the right thing to do.

265
00:20:58,105 --> 00:21:01,548
So tell me a bit about Capital A then.

266
00:21:01,548 --> 00:21:02,599
is their business model?

267
00:21:02,599 --> 00:21:03,670
What do they do?

268
00:21:04,650 --> 00:21:08,131
Yeah, mean, is a, well, it's two things actually.

269
00:21:08,131 --> 00:21:13,973
So they, we've set our agencies codes for where people can list for free effectively.

270
00:21:13,973 --> 00:21:18,114
Obviously there is a percentage point on an exit.

271
00:21:18,314 --> 00:21:22,796
So, you know, they're getting bigger exposures and mass databases sits behind that.

272
00:21:22,796 --> 00:21:27,197
Or there's the more bespoke service where effectively, you know, it's very proactive in
market.

273
00:21:27,197 --> 00:21:31,510
So taking on the business and then going out to the huge network.

274
00:21:31,510 --> 00:21:34,743
very finite, so it's within the marketing space.

275
00:21:34,743 --> 00:21:39,396
So Markcom's again, I speak to loads of different agencies.

276
00:21:39,396 --> 00:21:44,731
I'm not going to name them or shame them, but you know where they are effectively just
brokerage houses.

277
00:21:44,731 --> 00:21:45,051
You know mean?

278
00:21:45,051 --> 00:21:50,225
They'll take anyone from a tire manufacturer through to Markcom's agency have no
specialism.

279
00:21:50,225 --> 00:21:51,506
And for me,

280
00:21:51,734 --> 00:21:55,587
you you don't get the service, you you need an expert personally.

281
00:21:55,587 --> 00:22:02,702
I'm not just overselling Castelay, but you need an expert within that group because
there's different technologies that you need to understand from that.

282
00:22:03,083 --> 00:22:09,168
So yeah, they specialize in the MarCom sector on both the sell and buy side.

283
00:22:09,168 --> 00:22:16,904
And also, you know, they're working with some really big sort of agencies now who are
looking to acquire and build out their group.

284
00:22:17,050 --> 00:22:22,516
And I would say the waiting is towards the US, so based out of New York and LA.

285
00:22:22,697 --> 00:22:32,268
But also here, you know, I represent lots of UK companies looking to be acquired by, you
know, a US company who's very mobilized to get presence in the UK.

286
00:22:32,268 --> 00:22:33,658
So, yeah.

287
00:22:33,658 --> 00:22:38,752
do you spend on the capital A side versus your main business?

288
00:22:40,018 --> 00:22:41,459
I mean limited.

289
00:22:41,459 --> 00:22:43,150
mean it's well run by Andy.

290
00:22:43,150 --> 00:22:53,728
I mean we have sort of bi -weekly calls and you know I'll always mention it in
conversations to peer groups to agencies you know I'm in lots of different forums if I

291
00:22:53,728 --> 00:23:02,204
feel appropriate and I'm not there to oversell it I'm not part of their new business
function but for me you know it is sometimes of interest you know people come to me all

292
00:23:02,204 --> 00:23:08,482
the time due to the fact I guess I have sold some businesses you know for advice you know
of which I'll just say you

293
00:23:08,482 --> 00:23:10,824
personally get on board, have to be them.

294
00:23:11,165 --> 00:23:13,027
But if I can help, I will.

295
00:23:13,348 --> 00:23:16,541
And, you know, introducing an introductory conversation.

296
00:23:16,541 --> 00:23:22,638
So yeah, it's, it's limited to that really, apart from being, in my

297
00:23:23,564 --> 00:23:24,761
Yeah, OK.

298
00:23:28,178 --> 00:23:30,199
And I had a question and now it's gone.

299
00:23:31,471 --> 00:23:32,341
yeah, that's right.

300
00:23:32,341 --> 00:23:41,227
So what would, in terms of building the We Group, do you kind of know what type of buyer
you think would be interested?

301
00:23:41,227 --> 00:23:49,232
Are you kind of building something that you know buyers want or are you building something
that you want to build or the market is telling you to build?

302
00:23:49,232 --> 00:23:51,873
Like what's the mix of those priorities?

303
00:23:53,344 --> 00:24:02,492
Yeah, well, think when I first, I'd call it a restart, but started the business as the
fair, it was, I wouldn't say it was a passion project, but yeah, it was more about

304
00:24:02,492 --> 00:24:06,915
something I wanted to build, you know, I wanted to work for the biggest independent
festivals in the UK.

305
00:24:06,915 --> 00:24:08,427
wanted my team to do that.

306
00:24:08,427 --> 00:24:13,171
And I think, yeah, we've started to finesse it and looking at the market.

307
00:24:13,171 --> 00:24:19,195
So effectively an acquirer, I mean, it would probably be two areas of expertise.

308
00:24:19,195 --> 00:24:22,380
It'd either be a promoter, so promoters,

309
00:24:22,380 --> 00:24:29,553
who we work into who take huge risk, know, underwriting their show, you know, they have to
sell tickets or sell it out.

310
00:24:29,553 --> 00:24:32,514
But you know, what we do is de -risk, we don't take risks.

311
00:24:32,514 --> 00:24:37,296
So effectively we're on a fee, you know, a fee to deliver shows on behalf of promoters.

312
00:24:37,296 --> 00:24:47,360
So we've had those sort of conversations previously, or, you know, lot of the large, you
know, I'm talking about the big agencies of the world, know, people like the Jack Mortons,

313
00:24:47,360 --> 00:24:51,628
you know, they during COVID, understandably, if they were networked agencies,

314
00:24:51,628 --> 00:24:53,599
you know, how to down scale.

315
00:24:53,599 --> 00:25:04,647
And a lot of that, some of their production departments, some of their outsource say in
risk management, so ops, health and safety, again, is no longer in house.

316
00:25:04,647 --> 00:25:08,770
So for them, you know, that would be a prime opportunity I would suggest.

317
00:25:08,770 --> 00:25:14,354
And also reversing some of their clients, you know, we don't work direct to brand.

318
00:25:14,354 --> 00:25:20,588
So there's a huge opportunity for those brands to then enter into the festival market or,
you know, we do.

319
00:25:20,588 --> 00:25:29,372
big corporate events in fields, you know, that again, so it could give them a sort of
secondary opportunity and easy route to market to then go and sell to their brands, you

320
00:25:29,372 --> 00:25:30,783
know, why aren't you at this event?

321
00:25:30,783 --> 00:25:38,742
Because we work with probably, you know, the largest independent shows in the UK, for
example, again, place making, you the largest developers.

322
00:25:38,742 --> 00:25:39,382
Okay.

323
00:25:39,382 --> 00:25:52,606
And tell me a bit about the EMI scheme that you've set up and kind of what, I guess, which
sort of key employees, which roles have you you tied in and what are the kind of terms of

324
00:25:52,606 --> 00:26:01,268
the of the EMI and, and what, you know, if your plan is to exit, is it exit and presumably
kind of leave the business?

325
00:26:01,649 --> 00:26:03,189
Are they what are their plans?

326
00:26:03,189 --> 00:26:06,420
Are they kind of planning on staying on once the business is acquired?

327
00:26:10,444 --> 00:26:11,063
Can you hear me?

328
00:26:11,063 --> 00:26:12,969
sorry, yeah, just cut out a bit there.

329
00:26:16,441 --> 00:26:17,343
yep.

330
00:26:18,966 --> 00:26:20,316
Yeah.

331
00:26:20,316 --> 00:26:20,536
Yeah.

332
00:26:20,536 --> 00:26:23,437
So we set up the EMI about two or three years ago.

333
00:26:23,437 --> 00:26:25,948
So it's not position led.

334
00:26:25,948 --> 00:26:27,658
It's about long serving.

335
00:26:27,658 --> 00:26:35,430
So effectively, after three years, we've had a meeting with one of our producers.

336
00:26:35,430 --> 00:26:38,611
They are given shares and it's not share options.

337
00:26:38,611 --> 00:26:40,811
They're vested from day one.

338
00:26:41,071 --> 00:26:48,553
And what we want to do is on day one, you get proportional shares and then the rest are
vested over the next two years.

339
00:26:48,898 --> 00:26:50,958
on every sort of quarter milestone.

340
00:26:50,958 --> 00:26:55,158
So, you know, as you obviously stay within the business that, you know, they increase.

341
00:26:55,158 --> 00:26:57,438
So you're on a dividend call from day one.

342
00:26:57,438 --> 00:27:00,598
If a dividend is called, you will benefit from that immediately.

343
00:27:00,738 --> 00:27:02,098
And then we're realistic.

344
00:27:02,098 --> 00:27:13,098
I mean, for me, the expectation is we would start the sort of, as I term it, courting
process in the next 24 months, potentially, you know, and there'll be an earn out.

345
00:27:13,098 --> 00:27:17,986
So for me, I think the whole cycle would be five years, you know, the earn outs
ordinarily.

346
00:27:17,986 --> 00:27:27,966
Yeah, best would be 24 months, you know, unless you do, you know, some people cut term at
a flash sale where you do walk on day one, you know, all money off table.

347
00:27:27,966 --> 00:27:33,026
But obviously the acquirer is going to pay far less than that EBIT multiple.

348
00:27:33,026 --> 00:27:35,346
You know, they want you to be part of the business.

349
00:27:35,986 --> 00:27:36,446
Yeah.

350
00:27:36,446 --> 00:27:46,006
So, but for me, getting over that sort of the EBIT one million, you know, it has, it has
been very important and that's where, you know, there is real value in the business.

351
00:27:46,006 --> 00:27:51,690
the employees because you know, the inherent belief is which is absolutely true in our
business.

352
00:27:51,690 --> 00:27:56,273
You know, I'm not involved in, I'm not involved in many of those client conversations.

353
00:27:56,273 --> 00:28:04,319
Whereas below that sort of EBIT, you're very reliant on the founder, you know, who's
probably managing a proportion of those.

354
00:28:04,319 --> 00:28:12,065
So, you know, I want to not make myself redundant, but effectively, you know, I'm not as
involved.

355
00:28:12,065 --> 00:28:14,356
You know, the team are doing

356
00:28:14,738 --> 00:28:16,879
consistently speaking to clients etc.

357
00:28:16,879 --> 00:28:28,133
So I probably maintain probably two, maybe two, three clients, know, in terms of our
regular conversations with, and they're some of our larger clients, whereas the team, you

358
00:28:28,133 --> 00:28:36,558
know, do an excellent job in managing all of the rest of the business, and I'm more
looking at territory and &A and new business pipeline.

359
00:28:36,558 --> 00:28:42,000
There's a lot of talk about the sort of magic one million EBITDA figure.

360
00:28:42,000 --> 00:28:54,104
you, I guess, know, kind of an acquirer will be looking at historical performance and, and
do you kind of thinking you're like, get to a million, then sell or like get to a million

361
00:28:54,104 --> 00:28:55,505
and do a couple of years of that.

362
00:28:55,505 --> 00:28:59,486
And, and how do think that would affect the eventual multiple?

363
00:29:01,262 --> 00:29:04,605
I mean, like I say, there's lots of talk around it.

364
00:29:05,346 --> 00:29:11,731
Yeah, I mean, we've been over that million EBIT at one point pre -COVID.

365
00:29:11,731 --> 00:29:19,978
I'll be honest, the churn staff retention went down and that is probably because, you
know, all of us combined were working.

366
00:29:19,978 --> 00:29:23,000
You know, we were doing too much as individuals.

367
00:29:23,000 --> 00:29:30,006
So what we've done over COVID, we did a lot of work around, you know, strategizing the
business and now we've built

368
00:29:30,048 --> 00:29:36,090
a much larger head office function like things like HR, all these things we didn't have
pre -COVID.

369
00:29:36,090 --> 00:29:39,181
So we were trying to manage between the directors.

370
00:29:39,181 --> 00:29:41,961
It was too much for us, I believe.

371
00:29:41,961 --> 00:29:46,783
So now we've got HR, we've got CFO, which we didn't have pre -COVID.

372
00:29:46,783 --> 00:29:49,554
We've got office, head of office.

373
00:29:49,554 --> 00:29:53,225
So things like that have helped resource the team.

374
00:29:53,325 --> 00:29:58,050
The team maybe do less shows, but we've seen that in the delivery.

375
00:29:58,050 --> 00:30:02,273
So, know, the retention in terms of clients is the highest it's ever been.

376
00:30:02,613 --> 00:30:06,246
So for me, yeah, it's building back that building out the revenues.

377
00:30:06,246 --> 00:30:07,937
The revenue has gone up year on year.

378
00:30:07,937 --> 00:30:18,845
And I think getting back to that sort of, know, above the million, I don't think we would
want to, you know, I'm not obsessed around getting to two, three million EBIT.

379
00:30:18,845 --> 00:30:25,529
I think, yeah, the realism in the next two, three years is getting, yeah, the general
profile.

380
00:30:25,529 --> 00:30:26,510
If you can get

381
00:30:26,668 --> 00:30:29,196
Five to ten million revenue and you can get

382
00:30:30,914 --> 00:30:40,714
or five million and you're getting to that above the you know one million I think you know
you're in a good profile for many businesses there is almost a danger I know of a recent

383
00:30:40,714 --> 00:30:51,694
business just sold you know they were doing 30 million revenue I think just over to in
ebit but obviously you are reducing the profile of acquirers you know because they're

384
00:30:51,694 --> 00:30:57,134
gonna have to be quite significant whereas of that profile 10 to 1 or 10 to

385
00:30:57,756 --> 00:31:04,886
you know it's much more affordable i would say for a multitude of these sort of network
businesses especially in the US.

386
00:31:04,886 --> 00:31:06,088
Yeah, yeah.

387
00:31:06,088 --> 00:31:17,196
So what just in general terms, and I guess from your work with capital A, what kind of
multiple ranges are you seeing for different sizes of agency?

388
00:31:18,274 --> 00:31:28,194
Yeah, I mean, the realist, you know, the realism in market is if you're under that,
generally, you know, if you're under the 1 million EBIT, you know, you are looking at it

389
00:31:28,194 --> 00:31:30,974
can be anything between two and three.

390
00:31:31,194 --> 00:31:37,954
I don't think if you are over that, and it depends, know, SaaS businesses are getting
really good multiples, obviously.

391
00:31:37,994 --> 00:31:47,014
But yeah, in the service industry, in sort of agencies, you know, I think you'd be then
looking at maximum eight, some people are getting 10.

392
00:31:47,714 --> 00:31:50,836
depending on often it comes down to what people will pay as well.

393
00:31:50,836 --> 00:31:57,478
If it's a real service sector they want to enter, don't currently have a skill set within
it, they probably will pay the upper end.

394
00:31:58,639 --> 00:32:00,650
Yeah, there's sort of multiple.

395
00:32:00,650 --> 00:32:08,674
Obviously there's this big void and that's another learning is people's aspiration of exit
to what people are prepared to pay.

396
00:32:08,674 --> 00:32:12,745
I think you just need to accept and often that will be a middle ground.

397
00:32:12,745 --> 00:32:14,146
But people

398
00:32:14,432 --> 00:32:20,484
I know so many people who obsess around getting their multiple up to get an exit of five
million.

399
00:32:20,484 --> 00:32:22,964
You know, that seems to be up to this.

400
00:32:22,964 --> 00:32:24,565
It's talked to me all the time.

401
00:32:24,565 --> 00:32:28,346
And the realism of getting that sometimes is not, it's just not possible.

402
00:32:28,346 --> 00:32:29,796
You know, people aren't going to pay.

403
00:32:29,796 --> 00:32:38,909
So I think, yeah, being realistic with that and accepting of that, because that deals will
fall over and they fall over all the time because people are pushing on that.

404
00:32:38,909 --> 00:32:41,910
could be a hundred grand, you know, people are pushing on that.

405
00:32:41,910 --> 00:32:44,110
Whereas you could spend that, you

406
00:32:45,261 --> 00:32:50,052
just in opportunity cost in a year of more negotiation.

407
00:32:50,052 --> 00:32:50,893
So

408
00:32:51,052 --> 00:32:53,123
Yeah, yeah, okay.

409
00:32:53,604 --> 00:32:54,544
Great.

410
00:32:54,565 --> 00:32:57,167
Well, that's yeah, been very, very helpful.

411
00:32:57,768 --> 00:33:00,049
Very useful to hear your experience.

412
00:33:00,049 --> 00:33:04,453
And is there anything else you wanted to cover?

413
00:33:04,733 --> 00:33:05,518
I think.

414
00:33:05,518 --> 00:33:07,701
don't think, mean, for me I think that's, yeah.

415
00:33:07,701 --> 00:33:10,884
I think that's the majority.

416
00:33:18,033 --> 00:33:18,403
Cool.

417
00:33:18,403 --> 00:33:19,354
OK.

418
00:33:19,355 --> 00:33:20,537
Well, that's great.

419
00:33:20,537 --> 00:33:21,282
I will.

420
00:33:21,282 --> 00:33:22,004
Thank