Buy signal: Cashed-up Enero plots “aggressive” acquisition trail to bolster three-pronged attack on big holdco rivals
Former veteran global Nike exec and new Enero CEO Brent Scrimshaw is targeting acquisitions after a bumper 2020 - and thinks the mid-sized holding group can outdo its larger rivals when it comes to consolidating structures within months rather than years. He's eyeing media planning and strategy as well as bringing more niche start-ups into the fold.
What you need to know:
- The once teetering and troubled Australian listed marketing services group Enero is looking to buy up complementary businesses in a bid to become a more agile alternative to traditional ad holding companies.
- After solid growth, it's sitting on $55m cash to fund acquisitions and build out its three core pillars, while planning to integrate and consolidate agency brands faster than its larger peers.
- It's eyeing both non-traditional start-ups and some traditional strategic media planning capability, according to newish CEO, Brent Scrimshaw, a former global Nike marketer
What you can expect to see from us is a much more aggressive implementation around shaping our portfolio … and to see us be more aggressive in terms of acquisitions over the next six to 12 months.
Enero looks set to return to the acquisition trail. Unlike its last sortie, when it was called Photon and crumbled spectacularly after a debt-fuelled buying spree, this time it has the money up front - and insists its new strategy is anything but a repeat performance.
After better than expected financial results, as core clients in tech, supermarkets and healthcare booked Covid upside, the ASX-listed group’s share price has climbed 50% this year.
Now Enero is sitting on $55m cash to fund what CEO Brent Scrimshaw describes as “aggressive” growth plans, fully backed by a board chaired by former Westpac exec Ann Sherry.
Scrimshaw, who spent the best part of two decades with Nike, aims to streamline the group’s brands into three core pillars around creative shop BMF, digital agency Orchard and tech-focused PR unit Hotwire – and may end up bringing in start-ups to bolster their capabilities. Some of Australia’s burgeoning new breed of independent agencies could yet find themselves back in a a group structure.
“All brands in the Australian market grew top and bottom line. BMF had four consecutive months in the first half that were record months over the last four months of the last calendar year. Orchard delivered a similar result, both in terms of top and bottom line,” Scrimshaw told Mi3
“What you can expect to see from us is a much more aggressive implementation in the marketplace around shaping our portfolio … and to see us be more aggressive in terms of acquisitions over the next six to 12 months,” he added, pointing to the divestment of Frank PR earlier this month as evidence that its buys, and books, will be balanced.
“We have considerable cash reserves on the balance sheet, so we're well positioned to do that. We have no debt, which I think was probably an issue in the past.”
Once those deals are done, the acquired firms will be wrapped into the three core brands, said Scrimshaw.
“We won’t be buying brands [to be] standalone businesses.”
A big brief to the team at BMF is what does BMF look like in two, three, five years time? … And that runs the full gamut from how we think about media and communications and comms planning as one element of an overall mix.
Most ad holding companies are scrambling to streamline structures in Australia, notably WPP AUNZ. Scrimshaw believes Enero can do it much faster – and thinks cross-selling services to existing clients will deliver “a great source of organic growth.”
Like the big groups, Enero also aims to beef-up digital, data and tech capabilities. But it’s not the be all and end all, said Scrimshaw.
“I've come from a world at Nike, which was certainly not as data heavy as one might think. So my perspective is that there's always a balance between utilising insights from data that drives input, together with a strong intuitive feel to deliver great results.”
Moreover, Scrimshaw added 18 years spent working with the likes of Wieden + Kennedy and AKQA in its formative years means, “I know what great looks like.”
He said the firm will invest in being an enabler of technology-led solutions, rather than buying up tech firms and solutions.
Media planning for BMF?
While Enero’s ad network business, OB Media, “is doing very, very well,” Enero has no immediate plans to acquire further adtech/martech businesses, nor plans to become an executional media business, i.e. to add media buying to its remit, according to Scrimshaw.
But acquiring greater media planning and strategic capability looks likely.
“That’s definitely a strong consideration for us, more so in Australia than I would say outside of Australia at this point in time,” said Scrimshaw.
“A big brief to the team at BMF is what does BMF look like in two, three, five years time? … And that runs the full gamut from how we think about media and communications and comms planning as one element of an overall mix,” he added.
“It's fair to say that if you're not continually thinking about how you reinvent yourself, you're going to be left behind.”
Scrimshaw knows what it takes to launch and attempt to scale a start-up. After leaving Nike, he co-founded sports social video platform Unscripted, ultimately acquired by The Players Tribune – and it’s likely that some of Enero’s $55m cash pile will be invested in start-ups, locally and internationally.
While Australia’s agency start-up scene appears more active than at any point in the last 15 years, Scrimshaw said trailblazers may find taking the next step is more difficult than starting out.
“The question is, once you get to a certain point, can you truly scale that business, and what does it take to scale that business, both in terms of people capability and financial resources? “
He thinks that presents an opportunity for Enero.
“One of the things we talked about at our last AGM was how we start to think about incubating independent businesses ourselves,” said Scrimshaw.
“That doesn't necessarily mean that we're going to take stakes in independent businesses, but how do we foster incubation of smaller businesses in different parts of the world?
“We have a footprint in Silicon Valley, San Francisco, New York, in London as well [as Australia], to make sure that we are at the leading edge of understanding how those [new] businesses are being created,” he said.
“That provides opportunity for us in terms of both partnerships and acquisition.”
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