Why the well-connected media consultancy MediaLink just sold to the Cannes Lions advertising festival organizer
Ascential will purchase MediaLink for an initial cash consideration of $69 million, but the total consideration, including earnouts, could reach up to $207 million if the company meets its performance targets.
The Cannes Lions
MediaLink formalized a partnership with the Cannes Lions festival about six years ago. The company takes up a space at the famous Ritz Carlton hotel for its clients to meet, network, and thrash out business deals.
Last year, the company threw an invite-only party with iHeartRadio at the exclusive Hotel du Cap Eden Roc which featured music from Coldplay's Chris Martin and an impromptu duet with Will Smith, where they performed the "Men in Black" theme to an audience of celebrities and top executives including Twitter CEO Jack Dorsey and WPP CEO Sir Martin Sorrell. The MediaLink and Conde Nast party at the Consumer Electronics Show in Las Vegas in 2016 saw Lady Gaga perform.
Why Ascential bought MediaLink and what happens now
But MediaLink isn't just about big names and fancy parties - although tentpole events on the advertising calendar give the company a chance to charge its clients to get themselves in front of the most important people in attendance. MediaLink will join Ascential's information services unit, alongside the likes of fashion trend forecasting service WGSN and environmental risk data business Groundsure.
Kassan describes MediaLink as sitting at the "intersection of
MediaLink sat in on "somewhere like 60% of the most important advertising reviews in the world," last year, according to Kassan.He says the company sets itself apart from its competitors in the marketing and media consultancy space by acting out a "three-legged stool" approach.
"We advise the client, we help create a strategy, then we figure out the implementation. The third leg is the execution which I think is a step that - and I have respect for traditional management consultancy firms - but it's a step many of them don't get involved in," Kassan said.
But one of MediaLink's disadvantages versus its rivals is that it is very US-focused. The 13-year-old company has four offices, all based in the US. The US is the world's biggest ad market, so this isn't necessarily a bad thing, but Ascential offers MediaLink bridge into Europe and beyond into Asia.
Whether MediaLink's US-style approach will work in the European market remains to be seen. Sources told Business Insider that over the past few months, MediaLink had been speaking with a number of Europe-based consultancy and marketing information firms about potential acquisitions in order to help the company grow its footprint beyond the US. Some of those sources suggested MediaLink had been looking to sell itself for a while - and any international offices opened as a result of those acquisitions would likely help boost its valuation.
Kassan says it wasn't quite like that, although he said that as a "people person," he's always talking to people about potential opportunities.
He added: "I've always advised clients, and I would tell you in my own perspective, that we have never been for sale. There have been people who have knocked on our door and wanted to advance conversations, and we are always open to a conversation, but it's a Goldielocks approach: one may have been too hot, one too cold, and this one was just right."
MediaLink's $69 million sale price was a multiple of earnings, based on current earnings. The final valuation will become known in 2021, based on MediaLink's adjusted EBITDA (earnings before interest, tax, depreciation, and amortization). The total aggregate consideration, including earn-out payments, is capped at $207 million "in the event that stretching profit targets are reached," according to the press release announcing the deal. But Ascential said it expects to pay earn-outs between $42 million and $62 million.
MediaLink reported a 29% increase in unaudited revenue to $54 million in 2016, while profit before tax rose 24% to $14 million. The company had core assets of $11 million in December 2016, the release states.
Kassan: 'I am never going to carry another business card that says anything other than "MediaLink" on it'Kassan has signed a four-year contract to stay on as MediaLink CEO. The 66-year-old suggests he will either stay on longer than that - or retire once the earnouts is complete:
Kassan said: "The handshake I had with Duncan [Painter, Ascential CEO], not legally, but the spiritual condition precedent to signing the document was a promise we made that I am never going to carry another business card that says anything other than 'MediaLink' on it. Contractually I signed a four-year contract, but spiritually I will be here as long as they will have me."
Painter said: "We ... have been excellent in the last few years of making acquisitions and doing them in the same style - an earn-out. Many of the founders that are part of the business remain long beyond the earn-out ... Michael has a great business that is predominantly US-focused. We have operations in 16 countries and we want to enable Michael and his operation to execute brilliantly across all major economies."
One of the first big events the two will work on together is Cannes Lions 2017 - but Kassan explained that being under the Ascential banner does not mean it will have to dial down its attendance at other events like CES in Las Vegas or Dmexco in Germany as MediaLink will still continue to operate fairly independently.
In fact, he jokes, MediaLink just signed its partnership for Cannes Lions 2017 just yesterday - and had to pay an increase in the price from last year.