Why Media.Monks Is Merging With Tech Consultancy TheoremOne
S4 Capital executives including Martin Sorrell discuss the reasoning behind the deal
Agency group S4 Capital has strengthened its burgeoning Technology Services pillar through its latest merger, this time with custom software development and technology consultancy TheoremOne and its creative services agency Media.Monks which will also add to the group’s presence in the United States.
TheoremOne, the Los Angeles-based company that was founded by its head of services Will Jessup in 2007, offers services across innovation, engineering and design as it aims to help brand clients with strategy and digital transformation needs. Its client base including major financial and tech services brands including American Express, AT&T and Intel as well as Caterpillar and Starbucks.
Since 2017, the business has been led by chief executive Brady Brim-DeForest, employing a team of around 335 staff, three quarters of which are based across North America, and claimed to generate revenue of $58 million in 2021.
The merger, which was originally set to be completed in March but then delayed alongside S4 Capital’s end of year results by PwC until earlier this month, makes it the second business to join the technology services division since the merger deal with Zemoga last September which launched it.
Why buy TheoremOne?
According to executive chairman Martin Sorrell, the completion of the latest merger will mean that tech services will make up 10% of the company’s revenue which it has forecast to grow to reach around $1.3 billion overall for the year. Although, he adds, the ambition is to see them generate around $200 million in revenue between the two by March next year.
“What [having technology services] does for us is that instead of us just being focused on chief marketing officers and sales officers, we broaden the scope to chief information officers and chief technology officers,” explained Sorrell. He believes this will help the business compete in the tech space against consultancies such as Accenture and Globant and that S4’s marketing background will give it a competitive edge with its ability to offer creative services on top.
“It broadens our offer and makes us more noticed,” Sorrell added, revealing that the largest of TheoremOne’s clients—a financial brand—would become the latest ‘whopper’ [the name given internally to a client account valued at over $20 million].”
He also revealed that the deal has seen a change to the typical 50/50 stake of merger agreements done by S4 Capital with the TheoremOne team choosing to “invest more in the company” with a 55% majority sale agreed.
“We’re trying to find people who want to buy into the mission of creating the new model and disintermediating the old,” Sorrell added of the dozens of business owners who have joined him in growing S4 in the last three years. “It needs a different type of mentality if somebody wants to build a business.”
Choosing S4 Capital
Brim-Deforest claimed that over the last eight years they have had “a steady stream” of potential acquirers but that most had a challenge around talent retention or attracting talent to help them compete for their desired levels of business. However, he saw S4 as “one of the very few organizations” that “had the vision to disrupt the way things are typically done” while building a culture the team wanted to be a part of while working on larger scale accounts.
“Being a part of this family enables us to accelerate towards that really important tipping point,” added the TheoremOne chief who admits the business had set its sight on becoming an industry disruptor.
“We’re going to start tipping the scales and gathering more and more momentum more quickly,” he continued.
Founder of Zemoga DJ Edgerton said that in the six months since his own business, which employs over 400 people primarily in LATAM, agreed to join the fold, working alongside the integration team has been “pretty darn smooth” and “better than expected.” He and Brim-DeForest will now begin the task of finding further “like-minded organizations” to bring on board.
“We’re going to build something that’s going to have a huge impact, not only on S4 and what we can deliver but also, more importantly, for our clients,” Edgerton stated. “This model complements that because at the end of the day, someone has to design and build this stuff, and manage it. And that’s what we’re here for. So it’s a beautiful marriage.”
“The fact that we are able to deliver new skills to our customers is really an important part of why this works,” he said. He cited “culture fit” as being another key component to concluding the deal, with its treatment of employees proving important to clients, in Edgerton’s experience.
Once the mergers are agreed upon, the companies all aim to improve the S4 Capital bottom line, which according to Edgerton breeds a culture of cross-collaboration throughout the various elements of the Media.Monks business. “The thing that’s beautiful about this is that we are truly an entrepreneurial driven and managed organization. You leave your ego at the door. Sir Martin has set it up so that if the waters are rising all boats arising, we’re not fighting against each other.”