Sir Martin Sorrell built his empire at WPP with acquisitions – some of which, like Ogilvy and Chris Ingram’s Tempus media agency were bitterly contested – and, for a while, the strategy worked well enough at his subsequent vehicle S4 Capital.
S4 Capital, chiefly via the acquisition of online content factory MediaMonks, was aimed at big tech, the platforms that have more or less taken over the global ad market. But, alas, even these behemoths fall prone to budget tightening (and, maybe, the realisation that they don’t need S4 as much as Sorrell hoped.)
S4 has just issued yet another profit warning on the back of a 19.3% revenue drop to £198.4m in Q3. Cutbacks across the board are now the order of the day, inviting the question: how small does S4 need to be to be a viable business? Uncharted territory for Sorrell.
Last year Mark Penn’s Stagwell, which has many tech clients, made a tentative takeover approach only to be firmly rebuffed by Sorrell who has a controlling share in the business. Other shareholders may have been more tempted.
S4 now has a market cap of just over £220m, slightly less than M&C Saatchi. At one point it was valued at a dizzying £5bn, with Sorrell’s own stake worth around £1bn.
Nearly £800m of revenue is still worth having for someone. The fabled takeover-meister may find it harder to say no when the next bid comes along.
