Charity direct marketing agency DMS and former Involve Marketing Partnership stablemate {united} have been bought following the collapse of Whitewater and instability at the company which owned it.
Mosaic Print Management has purchased DMS and the "belief-driven creative agency" {united} for £2.1m, a prize for which there were reportedly multiple interested buyers. The acquisition is in the wake of instability caused at the debt-laden Involve Marketing Partnership after charity specialist agency, Whitewater, went into administration in April.
There will be no staff changes as a result of the buyout.
Following the Whitewater collapse, the Partnership, which had included ten agencies, moved to assure the market that the remainder of the agencies in the group were financially solvent.
However, Elly Woolston, founder of {united} and chair of DMS, told civilsociety.co.uk that while other companies in the group were profitable, banks lost confidence in the Involve Marketing Partnership after Whitewater went into administration.
Millennium has also found a buyer for its business, and these sales follow the purchase of Our Lasting Tribute by Valldata earlier this month.
Banks lost confidence
“[The Involve Marketing Partnership] was strong and there are elements of it that were still strong, but unfortunately it got itself into quite a mess,” said Woolston. “Because there were cross-guarantees, due to the fact it was a group, the bank was concerned about the losses at Whitewater, and decided that they weren’t prepared to support the group anymore despite the fact that DMS and {united} are successful and profitable, as is and was Millennium, which was another agency in the group.”
The Involve Marketing Partnership reported a loss of just over £2m for the year ending June 2011 compared to a profit of £451,875 in the previous financial year, according to its latest financial records. In November 2010, the group had obtained bank finance to the tune of £6.9m. Net debt at the end of June 2011 was £5.4m.
In December last year the company sold off DM Print Ltd and one of its properties. The latest financial report highlights concern that “current economic conditions” create uncertainty over the demand for the group's services, but that the directors should have a reasonable expectation to continue on for the foreseeable future.
Woolston said that given that Mosaic PM founders Steve Smith and Tony Gill paid for the two agencies without bank financing, DMS and {united} are now in a much more secure position.
“It means we can be more nimble, whereas before everything we wanted to do as a group had to go through the banks to see whether they would sanction,” she said. After settling in to the new environment over the next six months, Woolston said she expected the companies to invest more in the business.
Gill, founder and chief executive of Mosaic PM, said that he was struck with the quality of the businesses and their clients. “It was just a no-brainer,” he told civilsociety.co.uk.
Gill said his company took a low-debt approach to business. “We’re a safe pair of hands,” he said.
