NVM reaps 2.7x on £37.5m sale of MSQ Partners to LDC

The deal brings to an end a five-year holding period for the vendor, during which time MSQ experienced "double-digit annual growth", according to a statement. The company pursued expansion in the Asia Pacific region, fueled by what it described at the time of NVM's initial buyout as "above-average growth" in the digital communications market.

MSQ generated a headline operating profit of £4m – prior to exceptional costs, amortisation and impairment of intangibles – from a turnover of £75m in the year ending in February 2018, according to publicly available documents. This compares with a headline operating profit of £3.5m from a turnover of £86.4m in the previous year.

Under LDC's tenure the group will pursue further international expansion, driven partly by recruitment and potentially bolt-on acquisitions. It will also look to develop its cross-platform MSQ-branded services, which currently account for around 75% of its business in London, across its other international operations.

LDC investment director John Clarke and director Jonathan Bell will take seats on the MSQ board of directors as part of the deal.

HSBC has provided a debt package to support the transaction.

Previous funding
NVM invested £7.8m in exchange for a majority stake in MSQ via a 2014 management buyout.

Company
Founded in 2011, London-headquartered MSQ provides marketing communication services for the consumer, B2B and public sectors. It has a total headcount of around 600 across 15 offices in the UK, Asia and the US. MSQ's clients include PSA Group, Diageo and Unilever.

The group comprises branding and design agency Holmes & Marchant, public relations firm Smarts Communicate, social media marketing firm Stack, B2B marketing agency Stein IAS, advertising and marketing agency The Gate, and digital marketing firm TwentySix.

People
LDC – John Clarke (investment director); Jonathan Bell (director).
NVM Private Equity – David Rolfe (partner).
MSQ Partners – Peter Reid (CEO).

Advisers
Vendor – Browne Jacobson, Gareth Davies (legal); GP Bullhound, Simon Nicholls (corporate finance).
Equity – Deloitte (corporate finance); Gateley (legal); KPMG (financial due diligence).
Company – Grant Thornton (tax).

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• Topics
• Exits
• Buyouts
• UK / Ireland
• Media
• United Kingdom
• NVM Private Equity
• LDC
• Deloitte
• Gateley
• KPMG
• Grant Thornton
• Secondary buyout