SAN FRANCISCO — W2O Group has sold a share of the company to private equity firm Mountaingate Capital, in a bid to help fund acquisitions to grow its geographic scope and service offerings.
The investment comes as W2O marks 15-years in business with global revenues up 15% to $95m with around 400 people. The Denver-based Mountaingate Capital is a newly-formed fund led by partners from KRG Capital with experience investing in marketing/communications agencies. While at KRG, Mountaingate principals led investments in Minneapolis agency Olson (now owned by ICF International), Dallas shop Ansira and Chicago firm Aspen Marketing.
“We’ve been looking for funding for acquisitions and have been talking to other parties and [Mountaingate] provided the best terms for us to retain our investment,” Weiss said. He declined to provide any other details on the deal structure and whether the firm has a majority or minority stake — but did say W2O "retains its independence."
It is understood W2O previously held talks with Chinese marketing services giant BlueFocus and a US holding group. The Mountaingate investment will be used to fund acquisitions that extend W2O’s geographic reach and service offerings.
“We wouldn’t open an office on our own in Latin America, the Middle East, India or even Asia because it’s probably more prudent to buy there,” Weiss said. “While geography is important, the biggest focus is services — having paid, earned, owned, shared and continuing to have cutting-edge analytics. I’d like to go deeper on our creative and digital services. [Mountaingate] has experience with these kinds of builds.”
Weiss added that Mountaingate will not be involved in day-to-day operations but will provide financial and operational guidance. He acknowledged that private equity investment typically indicates another financial transaction down the road.
In a blog post to employees this week, Weiss said “As we completed the year at $95m in fee income and thought about how we maintain 15 more years of consistent growth, momentum and opportunity, we realized we had hit a new phase in our development. Our goal has always been to find the right partner to help us advance through this exciting yet challenging stage in our life as a firm. To that end, we have re-capitalized the firm to allow us to enhance our capabilities, expand our footprint, accelerate and facilitate talent acquisition, and drive faster innovation.”
“The company has demonstrated an enviable rate of consistent, sustained year-over-year revenue growth since its founding, and has built strong partnerships with its client base of leading global companies and brands,” Mountaingate managing director Bruce Rogers said in a statement.
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