MPL, the brand development specialist CLK plus its sister company The Brandnaming Company, have left the Princedale Group in a 3.6m management buyout.
C&FD, the annual report specialist, remains within Princedale, as does sales promotion agency BDP. A question mark now hangs over their futures within the group. Indeed, it is believed BDP is actively seeking a buyout.
Led by Chris Wood, managing director of Princedale’s marketing services division, and MPL chairman Peter Sampson, the MPL/ CLK buyout is backed by venture capital group 3i and the Bank of Scotland.
Wood, Sampson and the other board directors of the three consultancies will form the board of a new holding group – yet to be named. Wood will be the holding group’s chief executive.
Sampson says: “It’s terrific, amazingly positive and exciting. We have been working on this for the best part of a year.”
The three companies’ combined staff, numbering around 100, were told of the deal last week. Ten per cent of the new company’s shares will be distributed to the staff, says Sampson. No redundancies are planned.
The three consultancies will continue to trade under their own names – for the time being at least. Sampson explains: “The three companies want to work much more closely together. However we structure ourselves, that is the name of the game.
How far we go we don’t yet know – we may decide to merge into one. We genuinely have an open mind on that.”
A Princedale Group press statement, which announces the “disposal” of CLK and MPL, says the sale “represents a further significant step in Princedale’s strategy of increasing the focus on its manufacturing-led activities”.
The price of the sale “represents a substantial premium over the associated net assets” of the bought-out businesses. One City analyst says that, with a combined turnover of 7.21m, the price paid for the businesses is “not over the odds and sounds reasonably sensible”.
Sampson says the possibility of including C&FD in the deal was “never an issue”. C&FD director Adrianne LeMan says the company “has no intention” of pursuing its own buyout “at the moment”.
MPL is to relocate, joining CLK and The Brandnaming Company in their offices in London’s Hammersmith within a month.
3i has launched a new co-investment fund aimed at smaller UK management buyouts and buy-ins with a transaction size of up to 10m. It is believed the Princedale deal was not fuelled by this fund, but a 3i spokesman says marketing services, including design, is one area where the new fund may well be used.