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‘It’s less about the money… more about succeeding’: How The Works and RXP will come together
RXP may be paying up to $33m for The Works, but the founders of the agency tell Mumbrella's Abigail Dawson that their reason for selling is all about cultural fit
This week saw The Works become the latest independent agency to sell.
The acquirer came from leftfield – ASX-listed technology company RXP Services.
The deal values the 15-year-old agency at an upfront price of $25m, which could rise to $33m, depending on its performance over the next two years.
According to the ASX announcement, The Works is budgeting a $16.5m turnover and $3.9m profit for the current financial year.
In the last financial year, it made a profit of $3m, suggesting a profit multiple for the sale of between 8.3 and 11, depending on future performance
Compared to the 17 times earnings multiple that Accenture paid for The Moneys back in May, the multiple for The Works looks like a relative bargain.
But co-founder Damian Pincus, co-founder of The Works, tells Mumbrella the acquisition is “less about the money, it’s more about succeeding”.
Speaking with Mumbrella, Pincus says the partnership with RXP – and chemistry with its CEO Ross Fielding – “just makes sense”
He tells Mumbrella: “The cultural alignment was probably one of the key factors and also a genuine feeling that the vision that we had for the future of our industry, and where we were heading as a company fitted with where Ross and his team are heading. It felt like a really powerful thing for us to do and a big statement to make in the industry.”
Co-founders of The Works: Douglas Nicol, Kevin Macmillan, Damian Pincus
Pincus adds: “We are constantly trying to keep our business at the forefront of our industry but the most critical thing when we met the team at RXP was the cultural alignment, there is a genuine feeling that both our businesses are very very aligned in terms of how we look after our people.”
RXP, which was founded by Fielding in 2010, says The Works has “the same willingness to keep pushing and driving forward and evolving and growing here in Australia,” and was a missing piece to the puzzle.
Fielding says: “We want to keep evolving, we can see the convergence from consultancies into agencies and agency into consulting.
“The piece that we were missing was the real front end brand strategy or strategy, brand, brand creative and the linkage into what we do.”
Although The Works is joining a group of 15 other business’ acquired by RXP, including 10 collective, Zenith Solutions and Insight, Fielding says “the last one is the most important”.
“Every acquisition we have done, and we have grown organically, has been done for a reason and that is the most important thing to us and I mean a positive reason because it adds something to the broader business.
“I think The Works will change the way RXP works as well as adding capability to the business for clients.”
Founded in 2002 by Douglas Nicol, Damian Pincus and Kevin Macmillan, the agency will not change its name, business model or its position in the market, explains Pincus: “What we have agreed on is that ultimately our clients will drive the change that we want to make and they want to make.
“The clients want to know more, they want to know more about what RXP has to offer and I think it comes back to the need thing, they ask that because that is what they want and ideally if they can get that from one provider then that’s an even better result for us.”
Although The Works’ business model will not change, RXP says its adds a seventh pillar to its business.
The new pillar, ‘re-imagine’ will be added to the company’s six existing services. “It does have that real strategic up front strategy, brand strategy, brand and creative that we don’t have and that’s the new piece that it brings and a whole bunch of new opportunities that come with it,” says Fielding.
Abigail Dawson was Mumbrella's senior content journalist covering event content. She left Mumbrella to move into an agency role in 2020.
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I’m pretty sure the shareholders of RXP would be seeking a healthy financial return on investment. Not sure what “succeeding” is
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So The Works makes twice the annual profit of The Monkey’s. Who would have thought?!
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A great agency doing great work and I think a great acquisition for RXP. Makes very sound strategic sense so it should definitely make 1+1=more than 2.
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Douglas wasn’t a founder, he came along some years later
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