Digital Marketing Company for Sale

Goodstuff founders sell agency to US ‘challenger’ group Stagwell

Goodstuff founders sell agency to US ‘challenger’ group Stagwell
Written by publishing team

The founders of Goodstuff Communications sold their independent media agency to Stagwell, the US-listed “rival” holding company.

Tell Andrew Stephens and Ben Hayes, who founded Goodstuff in London in 2004 Campaign The deal will enable them to add digital, data and technology capabilities and grow the agency’s business in the UK, as part of their strategic ambition to take their company from “good to great”.

Goodstuff – The UK’s second largest independent media agency and 14th overall, with annual billing estimated at £208m in 2020, according to the campaign School Reports – will retain its branding.

Stevens and Hayes have also been committed to the company for five years as part of their earnings.

The deal was agreed just days before Christmas. Financial terms were not disclosed but Goodstuff may have sold more than £30m on the basis that it reported a profit before the Extraordinary Items, known as Ebitda, of £3.4m in the year prior to the pandemic, the agency usually sells for about 10 times the annual profit.

Companies House filings show that Stevens and Hayes controlled all shares of Goodstuff Holdings, but their combined stake is believed to have approached 75%, because eight other senior executives have stock options that mature after the sale.

The eight partners are Simeon Adams, Bobby Dean, Sam Drake, Paul Jeffrey, Laura Moorcraft, Megan Stewart, Genevieve Tompkins and Simon Wilden.

Goodstuff employs about 130 people and has created a deal bonus amount to reward other employees with sale proceeds.

The agency will become part of the Stagwell Media Network, the media arm, which has 3,000 employees and claims to manage nearly $5 billion (£3.7 billion) in annual spending globally.

Stevens and Hayes will also sit on the Stagwell Media Network’s global board.

Mark Penn, a former CEO of Microsoft and WPP, founded Stagwell in 2015. It has since acquired dozens of agencies, including MDC Partners, creative store owner 72andSunny and Anomaly, and media agency Assembly. Stagwell has approximately 10,000 employees worldwide.

Stevens and Hayes said: “Goodstuff’s enduring mission is to be the most innovative media agency in the world, and to help accelerate our next phase, we wanted to join a network that could deliver world-class capabilities in data, technology and digital.

“At Stagwell, we have not only found these services, but we have also found a partner that perfectly aligns with our culture of entrepreneurship, invention and advancement. We have been hugely impressed by Stagwell’s defiant stature and ambitions, their senior leadership team, and the breadth of modern, world-class marketing brands in the group. “

Ben, Chairman and CEO of Stagwell, said: “We welcome Goodstuff as an important part of our strategy to create a truly global and competitive media operation.

When we created the Stagwell Media Network [in September 2021]We set out to build a collaborative and cohesive network of global media agencies that are at the forefront of media, data and technology. Adding Goodstuff, with its proven track record of innovation, continues to advance our vision for transforming marketing.”

It is understood that Goodstuff and Assembly worked together to promote at least one – unnamed – client last year, encouraging both sides to consider a merger and acquisition deal.

James Townsend, Global CEO of Stagwell Media Network said: “What drew us to the agency is their world-class leadership and unwavering focus on people, culture and work.

“Following a series of successful collaborations with Assembly in the UK, we see the potential of our network to build something truly special, progressive and exciting in the marketplace.”

The sale reflects Goodstuff’s need for digital, data and technology capabilities

Stevens, 50, and Hayes, 54, met in their twenties at Saatchi & Saatchi, before moving to Manning Gottlieb OMD, where we incubated Goodstuff — initially as a planning agency, before expanding to buyout in 2011.

Omnicom, the parent company of Manning Gottlieb OMD, held a minority stake until 2017, when Stevens and Hayes took 100% control.

The agency has built a reputation for its creative and collaborative approach, attracting clients such as Cazoo, Ovo, On the Beach and Yorkshire Tea, and winning Grands Prix at both Media Week Awards and Campaign Media Awards in 2019 and 2020, and the annual Goodstuff Media Showcase, where media owners are invited to pitch ideas to creative agencies.

The co-founders prided themselves on independent ownership of Goodstuff, but there was speculation that they were considering a sale in the fall of 2019 and rumors resurfaced around the same period in 2021.

Their decision to sell now appears to matter as clients increasingly look for a single agency partner who can offer comprehensive funnel planning and buying across both digital and traditional media.

Goodstuff is best known for its expertise in communications planning and broadcast television, while Stagwell’s media capabilities are primarily in digital marketing and performance marketing. Stagwell acquired specialists like Forward3D and PMX and later merged them with Assembly, a traditional media agency.

Stevens and Hayes explained the rationale for the sale in the company’s blog post, describing it as “a recognition that while we are one of the UK’s leading media agencies now, the digital industry, data and technology around us is changing at a rapid pace, if we are to achieve our stated mission.” [to move from ‘Good to Great’]We must likewise change our offerings and develop them.”

Goodstuff initially spoke with several “digital professionals” about the idea of ​​an “informal” partnership, before moving on to discussions about the sale, according to the blog.

Stevens added that they were certain they did not want to sell to an established agency giant or a private equity investor because that would not help Goodstuff achieve its ambitions.

High growth in the UK

Goodstuff Communications is Stagwell’s first acquisition since the MDC Partners merger completed in August 2021 through a reverse buyout. The company is listed on the New York Stock Exchange.

Ben talked about building Stagwell into the “first digital alternative to traditional holding agency companies.” It is one of several “competition” groups – including S4 Capital, You & Mr Jones and Dept – that have emerged in recent years.

He told investors in Stagwell’s third-quarter results that “we’re making sure we’re doing it[line] and offline media on a global basis” and “winning global contracts” was among his priorities.

Townsend said acquiring Goodstuff allows Stagwell to collect offline and online media in Europe in the same way it has already been done in the United States. Campaign, stressing the growing need to combine brand building and performance marketing into a single offering he called ‘Brand Performance’.

Stagwell Media Network will have approximately 500 employees in Europe. The association employs about 350 people, plus 130 joins from Goodstuff.

While Goodstuff is expected to support the Stagwell Media Network in action across Europe, Stephens and Hayes said their primary focus remains the UK.

They said there was room for growth as they looked to compete with bigger competitors, citing Publicis Groupe’s Zenith, WPP’s Essence and Manning Gottlieb OMD as examples of some of the UK’s top 10 media agencies they ranked.

Goodstuff was advised by corporate advisory firm JEGI Clarity, law firm Osborne Clarke and accountants Moore Kingston Smith.

JEGI Clarity previously sold Adam & Eve to Omnicom’s DDB and M&C Saatchi sold Walker Media to Publicis Groupe. Walker Media had a similar profile to Goodstuff and was sold at a multiple of 9.2 times its annual earnings.

Stevens and Hayes emphasized in their blog post that “all the good parts of Goodstuff stay the same” after the sale.

The post said, “Andrew, Ben and Partners are committed for the long term…Our brand, values, culture and relentless focus on innovative work will not change an inch but as of today, we also have access to world-class talent, services, digital technology and data to bring multi-channel brilliance to our customers. brands for the most advanced customers.”

As part of the sale, Goodstuff exited from minority interests in Love Sugar Science and Sixteen By Nine, two agencies it supported in a startup initiative, called Startstuff, in 2019.

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