LDC EXITS MSQ TO ONE EQUITY PARTNERS

During a four-year partnership with LDC, MSQ completed five acquisitions, expanded its executive leadership team; more than doubled its revenues and its headcount, and more than tripled EBITDA

The North West team of LDC, the private equity investor which is part of Lloyds Banking Group, has exited its investment in creative and technology group MSQ to One Equity Partners in a transaction that reflects growth in EBITDA from £6m to in excess of £20m over the past four years.

LDC will reinvest in MSQ as a minority partner alongside One Equity Partners to support the next phase of the company’s growth, which will include accelerating international growth and building out its creatively-led, data-driven and tech-enabled model.

MSQ is an international group of agencies that spans the full range of marketing, technology and insight capabilities. It combines the best in technology and creativity into one multi-disciplinary offer to help brands attract, convert, retain and grow valuable customers. Today, it is one of the world’s fastest growing marketing groups and supports clients such as Unilever, Vodafone, The AA, Vitality, Coca-Cola and Zalando.

LDC first invested in MSQ in May 2019 and since then has helped the management team to deliver its organic and acquisitive growth strategy, which has been a key driver in increasing revenues from around £50m to £125m.

Over the last four years, LDC has helped the management team to acquire five complementary businesses, with follow on funding, – including the transformational £20.6m public to private acquisition of the Be Heard Partnership which completed in September 2020 despite the global pandemic.

MSQ has also expanded its executive leadership team to welcome industry heavyweights such as former MEC Global CEO Charles Courtier and former Dentsu Executive Director Kate Howe to the board, and more than doubled its headcount from 550 to 1,200 people across America, Asia and Europe.

In 2020 MSQ became one of the first marketing groups to be Carbon Negative, with further approved Science-Based Targets in place for 2030.   Last month MSQ announced it has achieved B Corp certification across the entire Group, demonstrating its commitment to be a force for good and belief that people and the planet are as equally important as profit.  MSQ’s certification means that the group meets a number of social and environmental standards covering five key impact areas of governance, environment, workers, community and customers.

The transaction, which was led by Investment Director John Clarke and Managing Partner Jonathan Bell at LDC, generates a money multiple return of 3.9x for LDC.

Peter Reid, CEO of MSQ, said: “When we started the search for a private equity partner over four years ago, we saw an opportunity to invest in the business and move to a market leading position.

“We’ve had a highly successful partnership and a good cultural fit with LDC on that journey and have the potential and ambition to do more.   We are really excited about the future ahead with One Equity Partners and are equally pleased that LDC is set to continue with us on this next stage of our journey.”

John Clarke, Investment Director at LDC, added: “MSQ is a phenomenal business and it’s been great to work alongside Peter and his team as they’ve built one of the most dynamic international groups in the market. There is still so much more to come for MSQ and our ongoing investment is testament to that and the quality of the team onboard. We’re looking forward to seeing what’s next in store!”

LDC has a strong track record in supporting media businesses, having invested in 20 businesses in the sector in the last 10 years with a combined enterprise value of £1.7bn. The revenue growth for LDC exited media businesses averages 81%, generating a 2.7x average return since 2012.

MSQ and LDC were advised by Houlihan Lokey (CF) and Squire Patton Boggs (Legal), with legal advice also provided to MSQ through Browne Jacobson.