Fresh from a £62.5 million ($100 million) cash infusion from Britain’s HIG Capital last week, The Engine Group has acquired independent U.S. interactive ad agency Deep Focus, the companies are announcing this morning. New York-based Deep Focus, which was founded in 2002 by Ian Schafer, the company’s president and CEO, has never taken on an outside investment and was one of the last major ad shops to emerge out of the dot-com crash to remain independent.
Financial terms of the deal, which was handled by The Jordan, Edmiston Group, Inc. on behalf of Deep Focus, and Palazzo Advisory working for Engine, was undisclosed.
In an interview with paidContent, Tolman Geffs, the JEGI Co-President who worked on this transaction, noted that the continuing recovery in online ad spending helped convince Schafer that time was right to sell the company after all these years. “Over the past few months, a slew of offers [to buy Deep Focus] had come pouring in,” Geffs said. “There were a number of different avenues and arrangements they considered. But they ultimately went with Engine, because that would allow them to retain their independent approach, while still having the support of the larger entity.”
In Februrary, Engine opened its first U.S. office, hiring ad industry veterans Martin Puris as CEO and John Bernbach as COO. Part of their mission is to scout out acquisition targets. With Schafer on board, retaining his post at Deep Focus, Puris and Bernbach are expected to work out additional acquisition plans for Engine as it looks to increase its stake in the U.S.
The decision to enter the U.S. is an interesting one for London-based Engine. While most of the major ad holding companies are focusing most of their acquisition plans on Asia and Latin America, where ad rates are growing from the bottom very quickly, the U.S. market is often considered too expensive. That’s especially true in the case of a perennial acquisition target like Deep Focus, which was boostrapped by Schafer after he left Miramix (the film company also became his first client). But with the ad recovery doing even better here than in Europe, it’s a good time for a company like Engine, which is looking to accelerate its growth and compete with the more established firms.
As for what Engine will likely buy next, it’s not clear. But a good bet will be a mobile marketer to round out Deep Focus’s general interactive creative abilities.