Jeremy Middleton is passionate about using acquisitions as a rapid growth strategy and there’s no denying he knows how to put failing businesses back on their feet.
Jeremy Middleton is passionate about using acquisitions as a rapid growth strategy and there’s no denying he knows how to put failing businesses back on their feet. GrowthBusiness meets the chief of the fifth largest quoted marketing communications company in the UK.
If your business were struggling, your first thought would probably be to try and consolidate, cut costs and tighten your belt. You probably wouldn’t consider it wise to go out on a spending spree, buying up other businesses in worse shape than yours! Yet that’s exactly the route Jeremy Middleton took when he assumed the helm at Media Square in 2002.
‘Organic growth is far too safe and boring!’ says Middleton, an affable entrepreneur with a frank approach to business. ‘When I joined Media Square we were having a few financial problems, but I wasn’t about to up sticks and walk away, nor was I going to slave away for the next twenty years growing little by little. Instead, we acquired a bust business and made it a success, turning Media Square’s fortunes around in the process. It just goes to show a well-timed acquisition can be a smart strategic move.’
Since then, Media Square has undertaken a swathe of acquisitions, most recently purchasing the Marketing Services Group from Huntsworth Plc in a £63 million deal. This impressive move makes Media Square a major international marketing player, with estimated sales of circa £200 million, more than 2,500 clients, 1,700 employees and operations spanning Europe, the Far East, Africa and the US.
From recipes to public relations
Not bad for a guy who originally trained as a chef. ‘That happened by accident really,’ he recalls. ‘I wasn’t particularly diligent at school, a bit of a waster in fact! I managed to achieve the sum total of three O levels, so the only further education open to me was catering college in Buxton, Derbyshire. Now, of course, being a chef is the epitome of cool, but then it was more of a last resort. After that, I ran a pub in Buxton for a while in the late 70s, which was called The George, rather stereotypically.’
Then, in January 1981, Middleton’s father and grandmother both died, within just a few days of each other. ‘Everyone rallied round to support each other, myself and my two younger sisters and older brother, so I said I’d help my mother run her small PR business. My father had never worked there, but I felt my mum could probably do with some help keeping things afloat at that difficult time.’
Keeping it in the family
Osbourne Publicity Services Limited, as it was called then, consisted of five or six people providing services to companies in the local area. ‘That’s basically where I learnt the ropes of running a business in marketing and communications,’ says Middleton. ‘In fact, media and marketing very much runs in our family â“ my youngest sister was group operations director of Future Publishing for a while, my other sister used to work at VNU and then joined Dennis Publishing to work on MacUser, before becoming a full-time mum, and even my grandfather used to work on the Manchester Guardian.’
By 1996, the company had grown into a thriving PR, design and advertising business employing around 45 people. ‘But I have a tendency to get bored,’ admits Middleton, ‘and after a while it wasn’t particularly challenging for me.
‘So, we pared the company right down to 15 staff we really valued, and instead started to back bright young people we came across who were doing interesting things in our sector. That proved very successful and we ended up investing in quite a few businesses around the country, starting with Sheffield, then Chesterfield, Leeds, Manchester and so on. It was a brilliant way to expand while bringing in fresh talent and new ideas.’
Eventually, those individual businesses were brought together under one umbrella and the new company was branded Equanim. In spring 2002, the company was approached by the existing marketing services firm Media Square, which purchased Equanim for £1.1 million and all the staff from Middleton’s mother’s firm came with it. Middleton ended up with a 30 per cent share and a seat on Media Square’s board as operations director, with Graham Burns as commercial director. ‘Graham is the best manager of cash I’ve ever worked with,’ says Middleton, ‘which was shown to be a rather crucial skill to have later on in our careers.’
Squaring the circle
What happened next, Middleton says, is a lesson in due diligence. ‘Media Square had floated in 2000 at the end of the dotcom boom,’ he remembers. ‘It was a generalist, offering e-marketing solutions together with traditional services having acquired a company that was called an “end-to-end e-business marketing communications support services provider” â“ what you and I would probably call a printers! But by trying to offer a range of services, from printing and web design to marketing support, in such a competitive market, the company was rapidly eating through its capital.’
Middleton took the radical decision to identify a ripe acquisition target â“ a business in Leeds that was producing the Argos catalogue, but was going into administration. Middleton believed he could turn the Leeds business around and that would, in turn, strengthen Media Square’s position. ‘Unfortunately, it became clear that Media Square didn’t have the funds available to buy the business,’ says Middleton. ‘Our financial position was not as we’d been led to believe.’
So, Middleton and his colleague Burns decided to take the gamble and buy the Leeds business anyway, with their own money. ‘I suppose I didn’t like being told, “No, you can’t do that,” probably because I’d been so used to running my own business.
‘Over the next two or three months, it became clear that Media Square was struggling and without radical change would probably go under. Graham and I could have walked away at that stage, but that didn’t sit well with my determined nature. Plus, it was coming up to the end of the year and I didn’t like the idea that all the employees could end up with a very bleak Christmas without a job.’
Going for broke
With the backing of a major company shareholder, members of the Media Square board resigned and Middleton and Burns took over the reins in October 2002. When the complete picture became apparent, Middleton found the company was about
£2.5 million in debt, ‘which was incredibly daunting,’ he says. ‘At that point, we really were bust, so we had two options â“ close the business or grow very quickly. There was no middle ground. So, using what funding we could scrape together, we began buying marketing-related businesses that were struggling or bust, which we could buy cheap and then turn them around and make them profitable. Within the space of a few months, we bought five businesses!
‘It sounds crazy, but it’s easy to make tough, brave decisions if the alternative is falling off the cliff altogether! And that took us from £3 million revenue to £7.6 million revenue, in the space of seven months. The total cost of that process was £360,000, just over ten per cent of our initial revenue. The rest, so the cliché goes, is history.’
Clearly, Middleton gets great satisfaction from acquisitions. ‘Aside from the obvious rapid expansion and commercial benefits, there’s a human angle. A lot of the time, you are giving employees who think they’ve hit rock bottom a second chance,’ he enthuses. ‘During our first 18 months running Media Square, we saved about 400 jobs â“ there’s no denying that’s a great feeling.’
These days, Middleton purchases going concerns rather than bust businesses, but his appetite for acquisitions is still as strong as ever. ‘I love the challenge of integrating new expertise and expanding, and it’s an immense privilege to be heading
up such a large international organisation with so many talented people under its wing.
‘After this huge Huntsworth deal, I’ll be waiting awhile before making any another purchases to allow time for consolidation. I’d like us to become debt free and even more profitable in the future. But I don’t think I’ll be quitting the acquisition trail forever, so watch this space.’