Omnicom is poised to clinch a $100m deal to acquire eCRM and research company Communispace, according to sources in a position to know.
Communispace specialises in creating communities online – it claims to have over 350 in operation. It can mine and shape sophisticated customer database material for large, blue-chip clients – which often find difficulty in establishing the actionable status of “chatter” in the social media sphere. Communispace clients include Coca-Cola, Campbells, Colgate, Hasbro, Heinz, HP, Microsoft, Pepsi and Unilever.
Communispace was set up in 1999 by current president and chief executive officer Diane Hessan, a Harvard MBA. It is based near Boston, Massachusetts, but has global reach, with offices in London; Genoa, Italy; and in the Asia Pacific region, operating out of Sydney, Australia. Maria Rapp, a founder of Communispace, is managing director of European operations.
Communispace is 43% owned by California-based Dominion Ventures Inc. A further 13% is in the hands of Boston-based Women’s Growth Capital Fund. Senior staff appear to own the rest.
It is easy to see why Omnicom would be interested in buying such a company, but not why it should be paying so high a price – if financial data that has come my way is any guide. Communispace’s 2010 gross revenue is expected to be $47m and profit before tax, $6.3m: which suggests an already high price/earnings multiple of about 16. Additionally, however, just under 30% of that profit-before-tax figure is expected to be siphoned into an options bonus scheme for senior Communispace management, which would effectively make the multiple soar well into the 20s. It has rightly been pointed out that Omnicom is not normally known for its financial extravagance. Nor has it been particularly active on the acquisitions front recently. There must be a pretty important piece of mutual business at stake to justify paying Communispace’s $100m asking price.