Cardiff-based S3 Advertising completes MBO with help from Caple
Alternative SME credit specialist Caple has supported S3 Advertising, a national full-service advertising agency, with an eight-year unsecured loan. This deal with Caple will enable the current S3 Advertising management team to complete a management buy-out and retain independence.
Following the MBO, S3 Advertising plans to pursue more national business by demonstrating its commitment to creativity and to delivering results to its clients. Managing director Mike Webb, business director Rebecca Campbell, HR and operations director Mel Matthews and finance director Louise Evans acquired the business from founder Matt Jones.
This unsecured loan has helped S3 Advertising solve the equity dilemma. Without this deal, the new owners would have had to consider giving up equity to fund growth.
Like many creative businesses, S3 Advertising found access to secured lending an issue because its business is based on intangible assets. It therefore lacked the tangible assets such as stock to put up as security to banks.
Sean Brophy, country manager, Caple, said: “S3 Advertising is a profitable, well-managed and successful business. However, because it lacked physical assets to use as collateral, traditional lenders were unable to offer financing. With our deal, the agency can implement its growth plans without having to give up equity and while retaining full control of the business.”
Mike Webb, managing director, S3 Advertising, said: “We have grown significantly since we started in 2010 and that’s down to our creative culture and disruptive approach. But finding the right funding partner was a challenge as many lenders were unable to flex to our specific needs.
“That’s where Caple came in. The team understood our business and recognised that we are a profitable and successful agency, despite not being asset-rich. This deal with Caple enables us to retain our independence, our culture and ability to implement ambitious growth plans.”
Cardiff-based S3 Advertising is a full-service advertising agency that works with major clients including Airbus, Deliveroo, NHS Wales, S4C and the University of South Wales. Now employing some 39 people, S3 Advertising champions bold ideas and seeks ambitious results.
Caple is the UK’s first firm to offer access to unsecured lending based on the future cash flows of the SME. It requires no collateral or personal guarantees as security. Loans originated through Caple also work alongside existing bank lending, meaning firms can have access to more funding than they would get from their bank alone.
Caple originates loans through a local partner network of accountancy and business advisory firms. Craig Blackmore, director at corporate finance firm Verde Corporate Finance advised S3 Advertising.
Craig Blackmore, director, Verde Corporate Finance, said: “The solution that Caple provided for the transaction was a great fit. S3 Advertising is an exciting business which has already risen to great heights, but the nature of the revenue streams provided challenges to the funding structure. Verde was delighted to be able to work with Caple to achieve the desired outcome and support S3 Advertising on its growth plan over the coming years.”
The loans Caple facilitates are part of BNP Paribas Asset Management’s SME Alternative Financing direct lending platform, which enables SMEs to access funding from institutional investors. BNP Paribas Asset Management aims to provide €1bn per year in funding to SMEs across Europe.
