Waypoint’s Jim Houghton: why a break-up isn’t the best way to keep Engine running

Engine has kept itself in adland’s headlines for most of its life, from 2004 when it was formed from a buyout of WCRS (below) from Havas, to 2008 when it acquired the iconic Partners Andrew Aldridge. It was also a pioneer and an enthusiastic publicist of bringing its agency brands together, labelled as “best in class under one roof”, at its site in Great Portland Street.

So, when the recent announcement was made that current owners Lake Capital were putting Engine up for sale, it was no surprise that the future of one of adland’s most interesting independent agency groups triggered debate.

Unlike some of the voices, I do not believe that Engine should be broken up. Here’s why.

Engine is a relatively rare beast. There are not that many businesses of a similar size and breadth of offering out there that are not publicly quoted on the stock market. A successful business of scale that is doing valuable work for clients, which Engine is, is pretty unusual and a valuable proposition for shareholders.

Given this, if I were a shareholder, would my first instinct be to break the business up? Actually, I would probably do everything I could to avoid it.

Admittedly the three Engine divisions do have very strong legacy agency brands quite close to the surface, despite the airbrushing out in recent years. You only have to go onto the UK website to find ‘contact us’ email addresses that still contain the historic agency names.

Surely, however, we’re not saying that because of the way we feel about the business as practitioners, with long-standing fond associations with brands like WCRS and MHP, that we can force clients to turn back their own clocks? That’s pretty unlikely. It’s a while now since client budgets were consolidated and that market forces drove agencies to streamline their operations and agency brands.

The other thing that we can miss from our UK vantage point is that Engine is a Transatlantic brand with an international business. Its US operation is quite separate and talks about itself and its services differently to the UK. It’s also built from different legacy brands. Crucially, within the US operation is a business called EMX, which stands apart from the agency brands. So, it’s quite possible to see a two or even three-way demerger of Engine now or in stages but I would see that as a geographical split rather than a UK break-up, despite the interest that still remains in the individual parts.

Jim Houghton is a partner at Waypoint Partners.

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