Next 15 said the acquisition enables it to accelerate plans to build a similar business in the States, with around 25 per cent of London-based Pinnacle’s clients based in the US.
The announcement comes as London-listed Next 15 reports a 30.3 per cent rise in half-year revenue, with pre-tax profit up nearly 50 per cent, buoyed by acquisitions (see further below).
Pinnacle, co-founded by MD Simon Flatt in 1996, is described as a specialist technical content and digital marketing business for the electronics, telecoms and engineering sectors. Its clients include Toshiba Electronics, Sandvik Coromant and European Telecommunications Standards Institute. It generated pre-tax profit of £1.1m ($1.4m) in its most recent financial year from net revenue of £2.2m ($2.9m).
The deal will involve a £4m ($5.2m) initial cash payment and the remainder in share options to the founders. Flatt will remain in the business, and Pinnacle will be managed alongside Publitek, the UK-based content marketing business acquired by Next 15 earlier this year.
Next 15 is to settle £1.7m ($2.2m) of payment for the Publitek acquisition early to align the earn-outs of the two businesses. Like Pinnacle, Publitek is based in the UK but generates a large minority of its revenue (36 per cent) from US-based clients.
Pinnacle will join the likes of PR shops Bite, Lexis, Text100 and The Blueshirt Group in the Next 15 stable.
Next 15 CEO Tim Dyson said: "Pinnacle extends our deep tech marketing capabilities and will enable us to accelerate our plans to build a similar business in the US. [Co-founders] Simon Flatt and Bob Jones’ history of working together gives us the opportunity to integrate their businesses without many of the usual challenges that mergers present. Advanced technologies require highly specialist marketing skills, which Pinnacle and Publitek bring to the group."
Flatt said: "Pinnacle has built a solid reputation for developing and delivering integrated, content-based marketing communications campaigns that target highly technical global audiences. It is clear that Next 15 truly recognises the value of this content-led approach.
"By becoming part of this dynamic, international group, we believe we can further enhance the value we bring to our existing clients, take better advantage of global opportunities, and further accelerate plans for growth."
In recent months, Next 15, which has secured a £30m ($38.9m) funding package via an extended credit facility with HSBC, has also acquired the likes of creative and digital agency Twogether Creative and creative agency ODD.
Recent acquisitions have helped Next 15 grow revenue by 30.3 per cent to £80.5m ($104.4m) in its most recent half year (six months to 31 July), the firm announced this morning. Organic revenue growth (excluding acquisitions) was 12.8 per cent.
Pre-tax profit grew 47.2 per cent to £10.6m ($13.7m) and operating margin increased from 11.7 per cent to a "record" 13.8 per cent.
Client wins in the period included Tesco, Softbank Robotics and Johnson & Johnson.
US revenue grew 27 per cent to £50.7m ($65.7m) , with growth of 17.2 per cent on an organic basis, led by its Outcast, M Booth, Beyond and Bite agencies. US operating profit was £10.2m ($13.2m), up from £8.4m ($10.9m) in the same period last year, with operating margins "strong" at 20 per cent, but diluted by the acquisition of Story Worldwide, which made a loss in the period.
In the UK, revenue grew 56 per cent and operating profit increased from £1.5m ($1.9m) to £3.6m ($4.7m) as operating margin rose from 11.5 to 17.8 per cent. "This was the result of strong performances by Morar and Encore in particular," Next 15 stated.
EMEA "rebounded" after a loss in the first half of 2015 to deliver four per cent organic revenue growth and a 4.8 per cent profit margin. Organic revenue growth in APAC was 6.6 per cent, with margin improving from 13.2 to 13.5 per cent.
The company said it's made a "good start" to the current half year, with the group benefiting from the relative strength of the dollar.
Chairman Richard Eyre described the performance as "very encouraging".
"These results have been driven by continued strong organic revenue growth in our North American business of 17.2 per cent. However, we have also seen significant growth in profitability in all of our other regions, due to a combination of organic revenue growth, acquisitions and efficiency measures."
Next 15 increased its interim dividend by 25 per cent to 1.5p per share, it announced this morning.