Independent advertising agency Mekanism has been acquired by Plus Company, a private equity-backed marketing holding company based in Quebec.
Plus Company, which has additional offices in Europe, the Middle East and the Asia-Pacific region, also named former Accenture Interactive Chief Executive Brian Whipple as chairman of the board.
Chief Executive Brett Marchand said the dual announcement is an opening salvo in Plus Company’s plan to establish a presence in the U.S. market and compete for marketers’ business against established ad giants and consulting firms, as well as newer, privately funded digital marketing agencies.
Plus Company and Mekanism didn’t disclose the total value of the deal, which was a combination of cash and equity. Each of Mekanism’s four co-founders has agreed to stay with Plus Company for at least five years as they, along with an unspecified number of additional agency partners, become shareholders, said Mekanism CEO Jason Harris, who will report to Mr. Marchand.
Mr. Harris said Mekanism, which is based in New York and San Francisco, reached $50 million in annual net revenue for fiscal year 2021 and maintained year-over-year organic revenue growth of about 10%.
Mekanism recently hired mergers-and-acquisitions firm GP Bullhound to assess various buyout offers, and the partners found Plus Company’s proposal appealing because it would allow Mekanism to retain its name and leadership structure while serving as the face of the company’s U.S. creative marketing operations, Mr. Harris said.
“We knew we had to keep our culture and brand identity, and then be ready to grow [with] a company that could acquire and put companies beneath us,” Mr. Harris said of the deal. “It will allow us to participate in global pitches and service clients internationally, which we’ve never had the opportunity to do before.”
Mekanism was incorporated in 2003 and went on to create advertising campaigns for brands such as Jose Cuervo and Charles Schwab, and Joe Biden’s 2020 presidential campaign. But it might be best known for a viral 2019 Peloton ad in which a man presents his wife with a bike as a Christmas present.
The ad inspired various memes and a satirical campaign from Ryan Reynolds’s marketing firm Maximum Effort, which promoted the actor’s own Aviation Gin brand.
Mr. Marchand said he focused on Mekanism because of its name recognition, its client roster and a pandemic-era decision to pivot toward performance-based marketing as clients placed more emphasis on using data to prove that their ad campaigns are generating new business.
“It matters what the brand stands for and what its purpose is. But it’s also important to be able to show how you are driving outcomes and sales,” Mr. Marchand said.
Mr. Marchand said he and Mr. Whipple plan to pursue more U.S. acquisitions, focusing on creative services and marketing technology platforms to expand Mekanism’s offering and win more comprehensive contracts with large brands, as well as expanding Plus Company’s separate social media, public relations, design and influencer marketing practices.
Plus Company will generate about $125 million in annual U.S. revenue after acquiring Mekanism, and the company wants that number to reach $300 million or $400 million within the next four years, Mr. Marchand said. Plus Company employs more than 3,000 people around the world and reported $330 million in net global revenue for fiscal year 2021, according to a spokesman, who said the company looks to triple that total in the same four-year span.
Mr. Whipple served as CEO of Accenture’s marketing division Accenture Song, previously known as Accenture Interactive, from 2011 until his resignation in summer 2021. During his tenure, the firm acquired more than 30 marketing businesses around the world.
Mr. Whipple said he would advise Mr. Marchand on hiring decisions, acquisitions and the integration of new businesses as the CEO attempts to build a company that can help marketers create, activate and measure their campaigns.
“Brett’s perspective is very much similar to mine in that the days of creativity and technology being separate are dead,” said Mr. Whipple, who is also a shareholder and investor in Plus Company.
Plus Company formed in September 2021, when Chinese marketing services company BlueFocus Communications agreed to sell a majority stake in its international division, Blue Impact, to private equity giant CVC Capital Partners and Canadian pension fund CDPQ. Plus Company’s properties include London-based social media marketing firm We Are Social and Canadian creative ad agency Cossette, where Mr. Marchand previously served as CEO.
BlueFocus’s North American spinoff, BlueFocus Intelligent Communications Group, still owns a significant stake in Plus Company, Mr. Marchand said. It also holds two of the company’s seven board seats. The CEO said he and other top Plus Company executives own 19.9% of the company on a fully diluted basis.
Write to Patrick Coffee at patrick.coffee@wsj.com
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Originally published at https://www.wsj.com on June 16, 2022.
