Pure-play digital advertising company S4 Capital is cashing up with an eye to going after bigger businesses.
The Martin Sorrell company, with 13 acquisitions, or mergers as it calls them, has announced a capital raising of GBP100 million (AUD 180 million) to give it “additional firepower”.
The cash will enable the company to “explore larger deals”, as well as respond quickly to opportunities as they arise.
Chief growth officer Scott Spirit says the deals recently have all been quite small and funded out of cash flow.
“The raise gives us more firepower and flexibility and allows us to move quickly if we find the right things,” he told AdNews.
Last month S4 acquired Lens10, a leading Australian digital strategy and analytics consultancy. The business is being merged with MightyHive, Sorrell's vehicle of choice for data analytics.
The content practice was established in 2019 with the Melbourne-based BizTech (now MediaMonks) acquisition.
S4 is looking for companies with a strong record of organic growth, good earnings margins and little or no risk of technoloogy destroying the business.
The company wants the entrepreneurial spirit, which built the businesses in the first place, to survive acquisition.
The deals S4 Capital offers are usually made up of half cash and the rest of the purchase price in S4 Capital shares. There are no earn out payments. The incentive is in the S4 shares.
S4, in its capital raising announcement, says it “believes that despite the economic headwinds caused by covid-19, S4 Capital, given its continued growth, is in a unique position to accelerate its acquisition strategy of merging with high-quality, complementary businesses, increasing its scale and capabilities and further stimulating growth”.
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