Blue Rubicon brings in M&A specialist to sell majority stake

PRWeek has learned that the multi-award-winning corporate reputation specialist has brought in marcoms dealmaker Results International to find third party investment.

PRWeek understands that in recent months Results International and Blue Rubicon have created an exhaustive prospectus with a view to selling a majority stake. It is thought a number of industry players, both holding companies and independents, have received the document.

However, one well placed source suggested the agency hopes to secure an investment partner rather than a wholesale sale, to enable the brand to grow beyond its UK roots.

The source suggested Blue Rubicon may look for a non-trade investor to fund an international expansion of the brand, similar to the model of College Group, which sold a majority stake to private equity investor Vitruvian Partners in October.

The agency does not enter its figures in the annual PRWeek Top 150, but PRWeek understands the agency had a fee income of around £12.5m in 2011, putting it among the UK’s top five independent agencies.

Sources suggested the agency’s profit margins were about 20 per cent, translating to an annual profit of roughly £2.5m last year. Industry observers noted the business could expect to generate a nominal sale price of six to eight times profit, which would value the firm at £15m-£20m.

The valuation mirrors that of public affairs group Portland, which was sold last month to Omnicom in a deal reported to be worth up to £20m.

Only a handful of trade buyers would have the resources to fund a similarly sized acquisition, but none contacted by PRWeek acknowledged firm interest in the agency.

Another observer suggested an increasing proportion of independent agencies were seeking exits and that the industry could be entering a period of consolidation.

Blue Rubicon facts

• Blue Rubicon was founded in 1999 by Fraser Hardie, former head of comms at Powergen, and Chris Jones, former home news editor at Channel 4.

• Key clients include Coca-Cola, eBay, Facebook, McDonald’s, O2 and Shell.

• Hardie is understood to own 60 per cent of the agency.

• It has more than 130 staff at its London Bridge HQ.

This article was first published on prweek.com