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Looks like Lord Ashcroft has further upped his stake to 23.7%!
Good post FG. Agree with what you are saying. The offer does feel opportunistic and clearly hasn’t gone down well. Much prefer a friendly takeover where management stay on and keep their clients on board. How many clients would stay if their key contacts left? Not a lot I suspect unless there was a lengthy handover and the takeover went smoothly. We also have to consider the debt that would be taken on which is large and would take some time to pay down even in the event that brave bison turned mission around. I won’t be particularly sad to see this one fall through and hope the board don’t get into a petty war.
Theo and Oliver Green have a history of building up a company and then selling it on which was one of the reasons for my investing here so they are obviously very clever business people so I hold my position...
Some serious and thoughtful thinking there FG...'smash and grab' Yes...'Cheeky' Yes...'Gung-ho' Yes...my first thoughts were NO! and don't raise the offer for goodness sake...
I've followed BBSN for 4+ years now, and have built a 2.5m shareholding. I like the story, and I like the Digital marketing space, in terms of its growth potential. I think that the management team here, to date, have done a great job of growing organically, whilst, at the same time, integrating bolt-on acquisitions which have delivered a full menu of capability into Brave Bison, and also brought some high profile corporate logos into the customer base. The business is profitable, and has a growing cash balance. So far, so good!
However in the context of achieving further growth, my experience is that there are no short cuts to building valuable customer relationships and developing enhanced service offerings. It takes time to do a proper job. You can't just slam companies together and expect the value to be retained.
Managing a £120m business is a very different beast to managing a £20m company.
The practicalities of a £20m agency, taking on and successfully integrating the customer accounts of a £100m agency comes with high risk of it becoming all consuming and destroying the value acquired, as well as the value already developed within the current business. It would be more normal to continue with a twin-track strategy of picking off new customer wins, ensuring that no customer relationships are lost from the current base, and to look for digestible bolt on acquisition opportunities that can be financed with a blend of Cash and issuing paper. Targeting growth of 30 - 50% per annum is ambitious enough, and will make for a very valuable business.
Traditional marketing agency businesses are built on developing hand-in glove relationships with your customers over a long period of time. Therefore the most successful acquisitions tend to be those which retain the management of the acquired business, to ensure that the customer relationships purchased are retained. Their interests need to be aligned with the new combined Group.
The dimensions and All-share nature of this deal feel a bit "smash-and-grab". Maybe a little opportunistic, on what I have read about TMG.
My vote would be to see BBSN grow within their means. Acquisitions should be affordable relative to cash balances available, and in terms of Management bandwidth that is available to go through the inevitable windy process of due diligence, engagement with the acquired customers, accommodating the new work force, and the integration of the business operations.
Biting off more than we can chew presents a high risk of damaging the development of what is still a fledgling business.
Don't let egos get in the driving seat of running the business.
FG
It’s worth noting that Mission’s directors are open to proposals that would enhance shareholder value and deliver benefits to its own shareholders. It leaves the door open as Brave Bison engages in talks with Mission’s board and major institutional shareholders, both of whom would have to be on board for any deal to be agreed. There is also the possibility that Brave Bison’s approach could flush out interest from other bidders attracted by Mission’s recovery potential and low rating.
So, having placed buy recommendations on both companies when I recently covered their respective annual results, I continue to feel that their shares are undervalued are worth buying at the current level. Even though Mission’s earnings are expected to recover this year and the board is looking to pay down debt, the company is priced on an enterprise valuation to cash profit multiple of 3.6 times and prospective price/earnings (PE) ratio of 3.9 for the 2024 financial year.
Brave Bison’s track record is more impressive in recent years, hence why its shares enjoy a higher enterprise valuation to cash profit multiple of 5.9 times, and trade on a cash-adjusted PE ratio of 7. Buy.
That's a word salad that could mean anything.
Typical of the scribblers to try and mean anything to anyone.
Not helpful.
Conclusion: A Strategic Forge Ahead Amidst Challenges: Brave Bison's FY23 results illustrate a company on the rise, marked by strategic acquisitions and robust financial performance. Yet, the failed bid for MISSION Group demonstrates the challenges of M&A in a market where value perceptions can diverge sharply. As Brave Bison continues to adapt and evolve, the broader market will watch keenly, assessing whether its ambitious growth strategies will indeed cement its standing in the dynamic landscape of digital marketing and technology services.
https://lemminginvestor.substack.com/p/brave-bison-plc-1b7
As a Mission holder, this looks more like an attempt to de stabilise than a serious offer.
Mission has a weakness in over borrowing, but, in all other respects, would contribute far too much to the enlarged group to settle for the pittance suggested. I don't think this oddly named outfit has deep enough pockets, but we'll see.
Thanks Baz....for non-subscribers though could you possibly please give a very brief snippet of the report...thanks
This company does seem to be having great progress. Long may it continue
BBSN have bid for Mission:
Two articles so far:
https://www.cityam.com/owner-of-steven-bartlett-founded-social-chain-eyes-swoop-for-aim-listed-mission/
https://www.thetimes.co.uk/article/lord-ashcroft-backed-brave-bison-to-bid-22m-for-mission-group-lrzvsvkjg
Big article today ‘ Brave Bison eyes bid for rival agency Mission Group’ Mission group Mcap currently £21m.. revenues of £86m last year! Also says that Lord Ashcroft now owns 20% of BBSN! Mission Group Would be an incredible acquisition… fasten your seat belts!
Rumours circulating of a very large acquisition of mission group for circa £22m. Might be interesting tomorrow.
I heard their name in one of my customers recently regarding a pitch for some business, just hearing their name made me purchase some more shares, if this is representative of the businesses they are going after and they can demonstrate wins and capabilities , then I think this year could be transformational/
IMHO, I think this is a X bagger
Thanks for sharing Bazzaman.. IC are well researched and respected so there posting reinforces my belief in this company’s ability to grow and deliver .
Update from Simon at IC
https://www.investorschronicle.co.uk/ideas/2024/04/29/back-brave-bison-s-influential-social-media-business/
GLA
Does anyone know if the last 2 trades are buys or sells?
10 mins in....https://www.youtube.com/watch?v=5CZby_R1sEo
Well, they have stated that like for like performance for Q1 is ahead of prior year, so they will be looking for a beat, but have been cautious in their outlook which is fair enough. Most marketing companies are struggling at the moment so they are still doing very well. If they manage to meet y24 expectations - which are conservative imo - and have increased net cash to "in excess" of 9m as suggested, that will be a third of the market cap in cash. That makes the business very cheap and could lead to a series of acquisitions, dividend, or buy-backs to bolster SP. Plenty of upside here.
Misread on slater they're new
Offloading positoins, until Slater and Merchant f'eck uff this sp will drift between 2 and 3p
Not sure what happened to my second point below!.. gone AWOL.
Point I was making is that the reported market expectation for FY24, is not very stella. Slight increase in revenue, and lower Adj EBITDA than that achieved in FY '23. PIs are invested on the back of a growth story, and with a target of £4m of new business for this year, the market expectations need to be raised. We should be looking for 15% to 20% growth per annum, else the SP will hit the doldrums.
Very good presentation from the BB team this morning.
Two points I scribbled down; 1) other than £0.2m govt Covid loan, there is no debt. 2) aiming to double new business to £4m this year
*happy to be corrected if I misheard either of these points