Digital agency Jaywing is making waves with its latest strategic decision, reflecting a keen focus on its core business.
By divesting its £6m turnover contact centre arm, the company aims to address widening losses and reposition for future growth.
Strategic Business Move
Jaywing, a prominent figure in the digital agency and consultancy space, has strategically decided to divest its contact centre business. This decision aligns with their focus on streamlining operations and strengthening their core business offerings. By selling HSM Ltd to Bidco, Jaywing aims to redirect resources towards its primary growth areas.
The competitive sales process witnessed significant interest from various potential buyers, underscoring the value and potential of the contact centre arm. Ultimately, Aquiline Capital Partners-backed Bidco emerged as the chosen buyer. This deal is structured on a cash-free, debt-free basis, ensuring a clean exit for Jaywing.
In light of the sale, Jaywing will receive a sum of £500,000. Rob Shaw, the CEO, highlighted the business logic behind this move. He acknowledged the professionalism of the HSM team and expressed optimism about Bidco’s future success.
Financial Performance Insights
The announcement of the sale coincides with Jaywing’s financial results for the six months ending 30 September 2018. During this period, the company reported a widening of pre-tax losses from £309,000 to £743,000. Additionally, there was a decline in revenue from £23.5 million to nearly £22 million, reflecting challenging market conditions.
Chairman Martin Boddy, however, noted that despite these losses, the company made ‘solid progress’. He emphasised that Jaywing’s strength lies in its integrated ‘One Jaywing’ model, which combines consultancy, agency, and technology services driven by data science.
The leadership remains hopeful about future performance, particularly pointing to positive momentum in the performance marketing division, Epiphany. Such progress suggests a potential rebound and growth in the forthcoming quarters.
Regulatory Considerations
The completion of the sale to Bidco is pending regulatory approval. Specifically, consent from the Financial Conduct Authority (FCA) regarding the change of control is required.
It is anticipated that this regulatory hurdle will be cleared within 30 working days, enabling the smooth transition of the business to its new owner. Such regulatory processes are standard in transactions of this nature, ensuring transparency and compliance.
Jaywing is committed to working closely with the FCA during this period to facilitate the necessary approvals.
Future Focus and Restructuring
Post-sale, Jaywing plans to intensify its focus on enhancing the profitability of its core business areas. This strategic shift includes a renewed push towards technology and data science-driven consultancy services.
In line with this vision, Jaywing has already initiated a restructure within its martech division, known as Jaywing Intelligence. This move sees the departure of Managing Director Alex Craven, as the company aims to better align its Artificial Intelligence (AI) offerings.
Such realignment efforts highlight Jaywing’s commitment to staying at the forefront of technological advancements and industry demands.
Market Dynamics and Opportunities
The decision to sell its contact centre operations is a reflection of Jaywing’s adaptive business strategy, which focuses on leveraging market dynamics to its advantage.
By shedding non-core assets, Jaywing not only streamlines its operational focus but also positions itself to exploit new opportunities in the market. This approach is expected to drive sustained growth in the long term.
As the digital landscape continues to evolve, Jaywing’s emphasis on core competencies, backed by robust data and technology, places it in a competitive position to meet emerging client needs.
Leadership Perspective
CEO Rob Shaw’s remarks underline a positive outlook for the company, reiterating a commitment to core strengths and client-centric solutions.
He expressed gratitude towards the HSM team for their contributions and reassured stakeholders of continued focus on delivering high-value solutions through the One Jaywing model.
The leadership’s strategic vision is aimed at fostering stability and growth, capitalising on data science as a key differentiator in a competitive market.
Conclusion of Transaction
Once the FCA approval is secured, Jaywing is poised to finalise the transaction, enabling the next phase of its strategic plan.
This move marks a significant step in Jaywing’s journey towards achieving enhanced operational efficiency and market leadership.
In conclusion, Jaywing’s strategic divestment of its contact centre arm epitomises a forward-thinking approach aimed at bolstering its core business focus.
This transaction not only addresses immediate financial challenges but also positions the company for future growth in a dynamic digital market.