Next Fifteen buys into Lexis in 'phased' deal

Next Fifteen Communications Group has acquired a 25 per cent stake in Lexis PR - one of London's best-known independent agencies - in an unusual 'phased' buyout.

As revealed on last Friday (5 August), the global tech specialist group is set to own 100 per cent of the agency by 2010 in a 'phased sale' deal.

Next Fifteen will pay an initial £1.27m for a quarter of Lexis, funded by cash and debt facilities.

Further consideration will be paid over the next five years based on Lexis's performance - with total consideration capped at £10m.

Lexis, which has 86 staff and is known for its consumer heritage, will continue to operate as a separate business. CEO Hugh Birley said: 'I have not come across this type of deal in the PR industry. We retain initial control of the business and significant shareholdings until final exit in 2010.'

Birley added: 'We believe this is a significantly better model than the usual buy-out earn-out.'

San Francisco-based Next Fifteen CEO Tim Dyson said: 'We want to expand outside the tech sector. Lexis is a high-quality business with excellent potential for growth.'


Results Business Consulting MD Jim Surguy: 'Yet further consolidation in the PR industry. Next Fifteen's acquisition technique here is extremely unusual and I have only ever seen it before in acquisitions by Japanese buyers of non-Japanese agencies. The deal suggests Lexis was bought for 8.6 times its 2004 profits. If 25 per cent of the net liabilities are discounted against the purchase price calculation, which would be normal, the multiple is even higher at nearly 8.9. Current market rate multiples are certainly not at this high level in the PR industry.

I can only guess Lexis is forecast to make more profits this year than last.'

Go to for more comment on the deal.

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