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The search marketing firm Bigmouthmedia has been acquired by Germany’s Global Media, in a move aimed at creating a real search superpower, capable of managing SEO and PPC campaigns on a global basis.
I caught up with Steve Leach, Bigmouth founder, to find out more…
First, let’s look at the juicy details...
The move was engineered by the Carlyle Group, one of the biggest VCs in the world. Carlyle acted as matchmaker and financier, setting up Bigmouth and Global Media for some initial discussions after realising that the two companies would be a great fit.
Carlyle invested in the deal, allowing Global to buy Bigmouth, in return for some equity in the enlarged group. The VC has a long pedigree of technology investment.
The deal went through for almost EU 60m, but Leach claims that the enlarged company may be worth around EU 200m, significantly higher than the £101m predicted by the FT today. Each company has generated profits of around EU 5m in the past year.
Leach confirmed that Bigmouth’s shareholders have reinvested a large chunk of this fee back into Global Media (which is owned almost equally by the Global Media shareholders, Carlyle Group, and Bigmouth’s shareholders).
As Leach says, now is not a good time to walk away from the nascent online / search advertising scene: “The industry is just getting started and these are very exciting times”.
This determined the fate of Bigmouth, which last year faced three strategic choices:
1. Remain independent.
2. Accept an offer from a big agency
3. Merge and grow
Leach said the firm had “a lot of unsolicited offers from VCs and trade buyers”, and that last year the shareholders walked away from a firm offer: “We were very nearly acquired by a big ad company last year, but it was a deal we decided to walk away from at the last minute,” he said.
“We didn’t like the prospect of a three-year earn out, then being invited to walk away to sit on beach for a while. We had a big problem with the ‘walk away’ bit because we really enjoy working in this industry.”
There’s no beach lined up following this deal. Leach remains an entrepreneur at heart, something that steered him away signing Bigmouth up to the culture often found in Big Agencies: “Some big organisations are worse than others, but you can spend so long in meetings that you end up losing the entrepreneurial drive. There can be too much red tape and bureaucracy.”
“In order to compete you have to be light on your toes. Things change quickly, especially in search,” he added. “At Bigmouth if we make a decision it happens that afternoon.”
So what makes Global Media a good fit for Bigmouth?
“We have complimentary skills. That’s the first thing. Secondly, Bigmouth has a great foothold in the UK and US, plus a few other territories around the world. Global Media is very well respected in Europe, so by coming together we truly have a global presence. There is no US competitor with the geographic presence that we’ve got.”
Clients are increasingly demanding a joined-up search strategy, especially the multinational firms.
As an example of this one of Bigmouth’s large clients had about 15 search agencies working around the world, with 15 different points of contact, 15 different sets of billings, 15 different reporting systems, and so on.
This deal was therefore driven by demand, as much as opportunity. The new Global Media Group will have 15 offices around the world, with the Bigmouth brand remaining in the UK and US. In Europe the brand will be Global Media.
Leach takes a seat on the board and becomes Chief Strategy Officer, charged with integrating Global Media’s London and Manchester teams into the Bigmouth fold over the next three months, before looking at group strategic planning.
Bigmouth will effectively double in size overnight, from almost 60 UK staff to 100 with the addition of Global’s personnel.
Our congratulations to Steve and the Bigmouth team.