Opt in when you earn out

Mook was a creative hotshop in Hoxton when ‘digital’ was actually called Web design, and grown men had cat-operation haircuts and rode micro scooters to work. We had a warehouse studio, youth brand clients and only went home when it was necessary. We grew up through the dotcom era and learnt the hard way how to run a business on cash with only reputation and hard work to get us through. But that changed when our evangelism for digital design began to win us clients, and we saw that Internet marketing was going mainstream.

So we started to think beyond creativity to act strategically for our clients and our business. Both led us to more integrated communications thinking, and to seeing digital as a part of the broader mix. We appointed Phil Jones – one of the UK’s digital pioneers – as our chairman. He showed us the commercial benefit of selling to a larger business and has expertly guided us through thick and thin since then.

Then we met Chris Clarke, founder and chairman of Nitro Group, and merged Mook into the newly formed Nitro London six years after we opened. Chris had a compelling vision for a new kind of creative group, one that brought advertising, digital and innovation under one roof across five continents, to drive growth for global businesses.

That’s when the fun started. The first thing we learnt was that mergers bring enormous operational challenges. Everything you take for granted about how you do things gets turned on its head for six months while you work with new people, settle into new hierarchies and create something that is greater than the sum of its merged parts. This was as much about education as getting to know people, and we spent several weeks just establishing what everyone else was talking about. Workshops, process creation, training sessions and frantic pitching abounded until we began to act as one firm.

But the other challenge was that we decided to keep the Mook brand alive – not only because we had a strong reputation and our clients wanted us to keep our identity, but also because it was important to keep a vestige of specialism in a marketplace still uncertain about integrated groups claiming to ‘do digital’ (which meant having a developer called Dave and a hollow-eyed project manager running 30 microsites on a combination of Benzedrine, fear and loathing). So we had to keep Mook going while simultaneously growing the Nitro London brand.

To add to the complication, some of us started to work more globally, helping to spread digital thinking to New York, Shanghai and Australia. So it’s no surprise that it took the better part of two years to engineer a single profit and loss account, a great set of clients who understand and value our model and some work that proves the model. We doubled in size year-on-year, and maintained our profitability and client base.

There are things we would have done differently. We would have sold a year earlier, because the dynamic change and growth we’d been craving was out of reach before the sale. But we would also have moved to a single profit and loss more rapidly – perhaps even from the first day – because the transformation into a single entity was a powerful driver of integration and change.

Then there’s the issue of the earn-out, which demands growth of the original company to maximise shareholder value. For Mook, this task is now complete, because it was a barrier to progress. Our sale was managed in two halves, and we should have sold 100 per cent at the start to focus entirely on making the new enterprise a success.

So the story has been a success for Mook, but it has also been a success for us personally. The best evidence is that two-thirds of the original management team, which sold Mook, are now in leadership roles within Nitro Group. Our ambitions had been for Mook and its growth, and, candidly, to realise the modest value of what we’d built. But those ambitions have changed in three years and evolved into plans for the new company. Digital is central to Nitro Group thinking and, if anything, it has been one of the key drivers of our growth since we merged.

We are helping to influence everything from brand and product strategy to integrated communications and customer relationships – all enabled by digital thinking and creativity. As the chief executive of Nitro London, Kevin Dundas, said when he started, ‘Digital isn’t just one of the things we do well, it’s in everything we do.’

And the best thing? There isn’t a micro scooter in sight.

Top tips:

• Don’t lose sight of the work. In the thick of your earn-out, it’s easy to forget what we’re here to do

• Think about the earn-out, plus two years. It will change your outlook

• Don’t sell just to get money out of your business. Find a partner that will help your company develop long-term, so wants to stay after the deal

• Never assume people understand what you do. Be ready to explain and train internally to build allies that will help your growth

Tom Adams is co-founder of Mook and global head of digital strategy at Nitro Group.