Engine CEO Peter Scott has earned a deserved reputation for shrewd business dealing over the past thirty years but his announcement today that Engine Group, the mini-marcoms company based on ad agency WCRS (he was one of the original names on the door) will not be pursuing an IPO looks a little strange.
He told the Financial Times that market conditions weren’t right, reasonably enough as a number of IPOs have been scrapped including UK clothes retailer Matalan. But Matalan is always postponing IPOs, usually because its owners’ valuation doesn’t match anyone else’s.
Ocado did float only to find investors bailing out of the shares but Ocado is a funny business, dependent on one client, Waitrose, resolutely unprofitable and with Michael Grade, formerly of ITV as chairman. None of these things enthuse the City.
But Engine is only looking to raise £50m or so and marcoms companies across the board are turning in good figures. The nearest in character and scale to Engine are Don Elgie’s Creston Group and Lord Bell’s Chime.
Elgie has had to sell Creston’s ad agency Delaney Lund Knox Warren to Lowe so Creston is hardly an example to Scott and Engine. But Bell’s Chime recently posted record profits and boasted that it was winning several pitches a day.
Chime is well-placed as it has WPP as a safety net minority shareholder, has two biggish cash generative businesses in agency VCCP and PR outfit Bell Pottinger and, of course, the presence of his lordship with his unmatched contacts book.
So would investors buy into Engine? Well they might want to see another big business in the group, which is basically WCRS plus lots of incubator companies which Scott needs to sell to his bigger clients. But everyone can see that the ad market is starting to move again and there is the proverbial tidal wave of company and pension money out there waiting to snap up good deals.
Scott used to be the boldest of dealmakers, back in the late 1980s he bought French media broker Carat for WCRS, renaming the whole company Aegis. Aegis, of course, is still around as the world’s biggest independent media buyer although its connection with WCRS only lasted a few years.
So has Scott’s boldness deserted him? Or is he just trying to flush out a bidder?
How does he get on with WPP’s Sir Martin Sorrell?