A new Chapter
The Mission Marketing Group PLC (L:TMMG) has added the Chapter Agency to its network, consistent with its growth strategy of broadening and deepening its network through both acquisitions and start-ups. Chapter broadens the advertising base, with an award-winning creative team, and adds strong new clients to the roster. New business wins continue to flow in H2 and the group is starting to leverage its international opportunities. The valuation remains at a deep discount to peers – well beyond that attributable to its smaller size.
Comfortable headroom to implement strategy
Chapter is a creative advertising agency, with a recently-acquired digital marketing team and a strong client base across a wide range of consumer brands, including Nissan, Topps Tiles and Virgin Trains. Initial consideration of £1.3m – payable in (internally-generated) cash – is equivalent to 0.7x turnover (FY to March 2014), 3.3x profits. Further payments are dependent on financial performance through to 2018 and are capped at £3.7m, with the first £0.2m to be paid in shares. The current banking facilities of £15m (in term loan and revolving facility) give plenty of headroom, with a year-end market net debt estimate of c £9.7m.
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