Private equity deal is £20m windfall for College PR group, Engine loses £1.5m as borrowings soar

College Group, the UK mini marcoms group based on College Hill financial PR has sold just over half the company to US venture capital firm Vitruvian in a deal that values the whole company at £45m, leading to a £20m plus windfall for founder Alex Sandberg (pictured) and other managers.

Meanwhile ever-ambitious Engine Group, the rather bigger marcoms company based on ad agency WCRS, has turned a £5.4m profit in 2009 into a £1.6m loss in 2010 despite revenue rising from £59.1, to £73.9m. Its borrowings have increased dramatically to £55m.

Last October US private equity outfit HIG Capital invested £32.5m in Engine for a 40 per cent stake.

College Hill was founded in 1990 and has since grown to include other PR, branding and research businesses although, in its core area of City PR, it is smaller than giants Brunswick, Financial Dynamics (now FTI Consulting) and Roland Rudd’s Finsbury, now part of WPP.

Engine Group, under WCRS founder Peter Scott, has had a typically frenetic year, creating a US business led by ad agency veterans Martin Puris and John Bernbach which bought digital agencies Deep Focus and Noise, merging WCRS with digital agency Altogether and buying social media agency Jam and financial PR firm Penrose Financial in the UK.

Scott, seemingly as confident as ever, says: “We continued to align and grow our UK companies to take advantage of current market trends and make sure they are best placed to work together and deliver the stronger collaboration and integration that differentiates Engine from the traditional networks.

“We entered 2011 in strong shape, with a new financial partner and a business delivering both creative flair and strong commercial results.”

The danger with the Scott approach, as other marcoms pretenders have found, is that it only takes one or two small acquisitions to turn bad and the whole company suffers, however much backing it has.

WPP’s Sir Martin Sorrell, who started by building a similar operation based on design companies, sidestepped this issue with the purchase of mega-agency J. Walter Thompson (as was) which propelled the company straight into the big league.

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About Stephen Foster

Stephen is a former editor of Marketing Week and London Evening Standard advertising columnist. He wrote City Republic for Brand Republic and is a partner in communications consultancy The Editorial Partnership.