Sir Martin Sorrell’s S4 Capital reveals tie-up with Californian tech services firm against background of accounting scandal
- MediaMonks is ready to to mix with TheoremOne for an undisclosed sum
- TheoremOne’s clients include the media giants Disney and twentieth Century Fox
- S4 Capital expects the deal to spice up its underlying earnings by over 5% this yr
S4 Capital has reached a merger agreement aimed toward expanding its technology services within the US.
Sir Martin Sorrell’s promoting group revealed that its digital production subsidiary MediaMonks, which it bought in July 2018 for $350million, would mix with Los Angeles-based TheoremOne for an undisclosed sum.
S4 Capital expects the deal to spice up its underlying earnings by over 5 per cent this financial yr and add one so-called ‘whopper’ account – a serious client generating over $20million in annual revenues – to its roster.
Boss: S4 Capital has announced 30 acquisitions or mergers since being founded by Sir Martin Sorrell 4 years ago, the previous CEO of WPP, the world’s largest promoting business
TheoremOne’s clients comprise a few of the largest corporations within the US, including entertainment giants Disney and twentieth Century Fox, technology behemoths Google and Microsoft, and mining equipment maker Caterpillar.
Founded in 2007 by Will Jessup, the corporate has offices across multiple major cities, reminiscent of London, Shanghai and Singapore.
Its chief executive Brady Brim-DeForest said the merger ‘means we’ll be taking the sector with a few of the most effective talent on this planet. The entrepreneurial, growth-focused culture at S4Capital is one where I’m confident our team will feel right at home.’
The deal is S4 Capital’s thirtieth acquisition or merger since being founded by Sorrell soon after he left his chief executive post at WPP, the world’s largest promoting business, in 2018 under contentious circumstances.
However it comes against a background of controversy regarding the group’s accounting practices, which saw the publication of its annual results for the 2022 financial yr delayed twice.
After they were finally released on 6 May, Sorrell described the delay as ‘unacceptable and embarrassing’ but said the firm was undertaking reforms to rectify the situation, including hiring more auditors.
Investigation: On the weekend, the Sunday Times reported that MediaMonks had not paid social media influencers and creditors on time, and sometimes used a company bank card to pay suppliers (Pictured: MediaMonks’ Los Angeles office)
An investigation by the Sunday Times published on the weekend revealed that S4 Capital’s rapid expansion had led to finance staff being overwhelmed and invoices being improperly recorded.
MediaMonks was reported to haven’t paid social media influencers and creditors on time, and sometimes used a company bank card to pay suppliers.
The Netherlands-based group also relied on software meant for small and medium-sized businesses even after S4 Capital had rapidly expanded, something many insiders argued had made the system unfit for purpose.
Problems were amplified by staff not making invoice edits on the corporate’s software – often called Exact – but as a substitute using the invoice PDF, which meant billing changes weren’t being accurately tracked.
Former MediaMonks employees made further allegations of some staff acting like ‘Mad Men,’ a reference to the tv drama about an promoting agency set in Nineteen Sixties Latest York, in addition to a distinguished drinking and ‘frat house’ culture.
Sorrell denied such claims, telling the Sunday Times: ‘We don’t accept, in any way, that there’s either a drinking culture or frat house culture inside MediaMonks, or that the culture is any different to the industry norms that you simply would find elsewhere.’
Following the report, S4 Capital shares plummeted by 9.7 per cent. They did subsequently rebound by 3.3 per cent to £2.94 on Tuesday, yet their value has still declined by greater than half to date this yr.
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