Be Heard Group buys content marketing agency for up to £10m

7th Dec 2016 08:35

(ShareCast News) - Marketing firm Be Heard Group has bought content marketing agency Kameleon Worldwide for an initial £4.05m that could rise to £10m, in a bid to deliver a more cost-efficient service to clients.The AIM-listed company said the acquisition, which is expected to be materially earnings enhancing in the first full year of ownership, is part of its goal to build a digital marketing services business that will deliver "better, more cost efficient and more creative solutions to clients".The £4.5m sale price represents 5.2 times Kameleon's adjusted earnings before tax, depreciation, depreciation and amortisation (EBITDA) for 2016.About £3m will be paid over three years to 2018, subject to to revenue reaching 110% of last years level.An additional 'stretch' payment will be paid if Kamelon makes at least £8.1m worth of sales and EBITDA of £1.62m, with the total deal capped at £10m.Both the initial and deferred considerations will be paid with 65% in cash and 35% in shares, while any 'stretch' consideration will be made with 50% in cash and 50% in shares.Peter Scott, executive chairman of Be Heard, said: "Digital content is a natural next step for Be Heard as we develop our range of services across the digital ecosystem and Kameleon is precisely the sort of agency we want - fast-growing, at the heart of digital transformation and ready to work with us to take their business to the next level."He added that the company had a "very healthy pipeline" of future potential acquisitions.Kameleon provides content marketing services to brands including Danone, Quorn, Lee Cooper, City Index and Sony. It had already partnered with the company's existing business - digital media planning agency Agenda21, buying agency UX, and design and build specialist MMT Digital.Mark Webster, chief executive and co-founder of Kameleon said: "Working with Agenda21 and MMT Digital we will capitalise on the advantages that Be Heard brings and take our business to the next level."For the year ended 31 December 2015 Kameleon had adjusted EBITDA of £530,000 on revenue of £2.43m . In 2016, it is expected to generate revenue of £3.89m, which is 60% annual growth, with adjusted EBITDA of £785,000.Shares in Be Heard Group were up 7.65% to 3.66p at 1007 GMT.