Photon Group’s downward spiral continues
Photon Group’s precarious financial position appears to still be crumbling with the possibility of key talent walking or agencies changing ownership, media commentary suggests today.
The marketing holding company is struggling to raise the necessary finance to recapitalise.
The paper suggests that agency founders who were expecting large earn-out payments have been told to expect 35c in the dollar. As the paper puts it: “If they leave they get nothing. If they push too hard and Photon goes under they get nothing.”
Among the agencies owned by Photon are BWM, BMF, Bellamy Hayden and Naked Communications.
Meanwhile, the Australian Financial Review reports today that the founders of BWM have been approached about leaving and setting up a new agency, which they declined.
Among the speculation that has reached Mumbrella is that two of the jewels in Photon’s crown – BWM and BMF – could end up being bought by STW and Clemenger Communications Group respectively.
Photon has now been suspended from the ASX for more than a month. When it was last listed, the share price was $1.02. Speculation had suggested that an equity raising would price new discounted shares at around 25c. The Australian suggests that in order to attract finance this has now fallen to 10c, effectively wiping out existing shareholders.
Tim Burrowes founded Mumbrella in 2008. He worked on Mumbrella until 2021. At various points he was editor, content director and editor-at-large.
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So…you can either have a shit sandwich, or a shit sandwich with cheese.
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Would that be a Merde Royale?
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Someone needs (edited by Mumbrella for legal reasons). Kiss goodbye to your money.
There should be a revolt. The companies WHO WON’T GET THEIR MONEY, should UNWIND THE EARNOUTS and say that they get their companies back (afterall, they haven’t been “paid for yet”) leaving the directors with a hollow shell of companies left that probably can’t make enough to pay the debts, and it will all IMPLODE, the good companies that leave start up their own organisation and do it properly…. and leave those other monkeys a few box of tissues when they have to front up to the ASX and tell them why they have lost all our money!
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BMF owned by STW. Why – for both parties?
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all these marketing congloms are likely to fail one way or another sooner or later because they are all just cynical valuation arbitrage plays
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Has Sir Martin booked his flight?
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No but Hamish has.
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you couldn’t give it away
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If anyone in Photon or other places want to start a new agency, let me know whynotstartanewagency@gmail.com
I am a advertising finance professional who holds senior position in Sydney who would like to set out on a new path. All ideas considered
Tim this is a serious question, so please don’t delete
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A slightly different perspective on the Photon saga.
it won’t apply to all, but it will to some.
Many of the companies that sold to Photon received well above the standard industry multiple.
Many received a large percentage of cash up front.
One could reasonably speculate that many that are waiting for the rest of their sale proceeds have already received the financial equivalent of selling for a standard industry multiple.
In fact, as many have had use of a large cash payment up front they have enjoyed a financial benefit most agencies don’t enjoy when selling to a multinational group.
Then, when you add on another guaranteed payment of .36c in the dollar, even with no chance of receiving more than that, it’s not such a bad deal [for many, not all].
Therefore, my observation [from a distance] is that many of the agencies that sold to Photon have done very nicely and their disappointment stems from not receiving the bonus of an extra big carrot to add to the very generous payment they’ve already received. [I’m not suggesting they’re being greedy, just disappointed].
In other words, despite the PR frenzy and talk of gloom, many owners of businesses purchased by Photon [not all of them, but many] are still well ahead of selling to WPP, Omnicom etc.
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Photon may return but it will be a different animal. Tim H and Matt B screwed the business by having very little knowledge of the industry and going on a buying spree of agencies in different fields which they had zero understanding off. Matt B is from a brokerage business which grew into a merchandising agency. From a private business of 30m AUD to running a listed business operating internationally across different marketing verticals. It was doomed to fail.
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