Next Fifteen, which owns tech PR brands such as Text 100, Bite and AugustOne, has just acquired tech boutique OutCast for $6m. The intention is to run OutCast as a new brand under the NFC banner. The details are necessarily vague in the press release, but it seems there is an additional earn out potential of up to $7m over the next five years, bringing the deal to a maximum of $13m. This is a great shop to add to Tim Dyson’s (NFC CEO) collection and the price seems a good one. The release claims that OutCast posted 25% profit of $1.6m on revenues of $6.1m in 2004. That’s pretty high for PR firms which normally turn in between 7-15%, especially since OC opened a New York office last year so should be in investment phase. If 25% were sustainable, OC would easily pay for itself over the next five years without any growth.

Still Margit and Caryn (the owners of OutCast) have done a great job building OC into a strong agency in the Valley with an impressive client list. I think NFC will bring more positives to them than one of the bigger conglomerates could. OC’s star was on the rise and with the market in an uptick, at first, it seems an odd time to sell out, but will make the earn out dollars easier to hit. NFC wins a good name, but the additional debt on the back of below-average profitability, the recent downshift on the stock market to AIM, and persistently low share price, seems to be a considered risk.

Good to see some movement in the PR market, and a definite reflection on confidence. Fun times at NFC with Bite’s recent Sun win, and the Applied deal prior. All eyes will be on OC to see what happens next. Meantime, congrats to Margit, Caryn and Tim – I didn’t expect this, good luck.

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