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2pm, Thursday 5th August 2021

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STORY OF A SALE: Naked Communications

  • Paul Allen was part of the senior leadership team that sold Naked Communications for over £26m in 2009.
  • They were bought by Enero, a new marketing services group, and had the freedom to ‘carry on doing what they were doing’.
  • Paul now runs Red Dots Consulting, which helps agencies get ready to sell – he’ll be sharing his perspective from both sides of the fence.

Naked Communications was sold in 2009 for over £26m. Former CFO, Paul Allen, tells us why an agency of its size and reputation decided to sell.

“It wasn’t as if we went to market looking for a buyer – it was more opportunistic,” he says. “After ten years, we wanted to see what a sale might look like for us.”

That’s when Enero (formally Photon Group) came along. A new marketing services group with backing from private equity and investors, they had already snapped up the likes of Frank and Hotwire PR.

“They told us we’d still be able to operate and run the business exactly as before,” says Paul. “It was a really intensive process, and we did the negotiations of the term deals ourselves.”

“But there wasn’t any kind of pressure. There were semi-regular catch-up calls, but it was very light touch. We were left to get on with it.”

There was an earn-out, but they didn’t hunker down and maximise profit – this saw the agency on a downward trajectory as the earn-out approached.

“People were starting to move on, wanting to go and work elsewhere, or set up their own agencies,” says Paul. “Over time, you lose a bit of that magic running your own thing, having been independent.”

This also coincided with Enero’s own problems.

“They had some issues with debt and got themselves into a bit of a mess financially. Some of the agencies they bought, they couldn’t afford to pay them,” says Paul. “But thankfully it didn’t have any real impact on us.”

He now runs Red Dots Consulting, which helps agencies prepare themselves for sale – this gives him a fairly unique perspective on both sides of the coin. But would he change anything about his own experience with Naked?

“I would probably do the same,” he admits. “Whenever you’re doing a deal and selling your business, the advice I give clients is you really can’t bank on that earn-out. You need to be comfortable with the money on day one.”

Come along to hear more about:

  • Advice on preparing for a sale
  • Things to expect once you’ve signed on the dotted line
  • What it’s really like to do an earn-out

Paul will be sharing his experience of an agency sale, and what he now advises others when it’s time to set up shop.