Stagwell Buys Create.Group // Marks 3rd Deal in MENA

January 24, 2025 by Chris Erwin

RockWater Roundup

RockWater analysis to make you a better investor and operator. Today we discuss Stagwell’s acquisition of Create.Group, including the deal logic, post deal ops, and Stagwell’s current valuation multiples.

————

Let’s break it down…

–TARGET: Create. Group–

Overview

Strategic digital communications group
Focused on digital strategy and content prod / mgmt
Based in Dubai, offices in Saudi Arabia and Egypt
Founded in 2010 by Tom Otton
150+ team members

Company Highlights

Clients include Abu Dhabi Dept. Tourism, Sony, COP29, Volkswagen Middle East
Key projects include redefining the Zayed Sustainability Prize and collaborating with Meraas to transform Dubai’s landscape
Campaign’s Middle East Digital Agency of the Year 2022-2024
Adweek Fastest Growing Agencies 2019-2023

Business Lines

Create. → digital strategy, social media mgmt, digital activations, performance, content distro
Create.Production → content prod studio (video, podcast, live, AR)

–BUYER: Stagwell–

Overview

Digital-first marketing company
Founded by Mark Penn, 40 yr industry vet
A “challenger holding company built to transform marketing”
Suite of SAAS solutions via Stagwell Marketing Cloud (SMC)
Launched 2019 when Penn combined Stagwell Group and his MDC Partners
13k specialists in 35 countries

Business Lines

Code and Theory Network – does tech-led biz transformation advisory, team of 50% creatives and 50% engineers
Sub agency brands of C&T Network include Kettle, Instrument, Left Field Labs, Truelogic, Rhythm, Mediacurrent
Relaunching SPORT BEACH, an athlete-centric marketing agency with Carmelo Anthony, Sue Bird, and DeAndre Hopkins
Provides research and insights on consumers
Creative studios to service client needs

Capital Markets History

Create. Group marks 11 acquisitions for Stagwell in 2024 and 3rd MENA acquisition
2024 M&A:
- Create Group (MENA)
- UNICEPTA (Germany)
- Consulum (MENA)
- LEADERS (MENA) – our deal analysis
- Business Traveller (Global)
- BERA (US)
- Luxine Relations Publiques (Canada)
- PROS (Brazil)
- What’s Next Partners (France)
- Sidekick (UK)
- Team Epiphany (US) – our deal analysis
2025 M&A:
- ADK Global (APAC)

Stock Price

$6.51 as of 1.23.25
Down 4.5% MoM
Down 5.3% YoY

Financials

(via public filings and stockanalysis.com)

2024 Organic Net rev growth 5-7%
2024 Adj EBITDA $400-450M
3Q TTM Revenue $2.7B
3Q TTM EBITDA $271M

Valuation

Mkt Cap: $1.7B
C&CE: $146M
Total Debt: 1.8B
Enterprise Value: $3.4B
7.5-8.4x 2024 est EBITDA
12.4x 3Q TTM EBITDA

–DEAL DETAILS–

Overview

Terms undisclosed
Announced 12.30.24

Strategic Rationale

Strengthens Stagwell’s international agency portfolio with localized expertise
Helps Stagwell grow biz / tech transformation practice in growing MENA region where there are “some of the biggest projects in the world”
Helps CG offer more transformation services to MENA clients via talent and tech from Stagwell’s C&T Network
CG’s in-house production capabilities allows Stagwell to reduce reliance on 3rd-party vendors

Post Deal Ops

Otton to continue to lead CG, and will fall under Dan Gordon (exec chairman/founder) and Michael Treff (CEO) of C&T Network
CG to integrate into Stagwell’s Code and Theory Network, now 2,000 global team members

–WHAT ELSE I FIND INTERESTING–

Stagwell’s 3rd acquisition in MENA. Follows acquisition of LEADERS and Consulum in 2024. Shows Stagwell’s high conviction in the region
Our RockWater team was in Dubai for recent 1 Billion Followers Summit. Clear that UAE and Middle East countries are making big push to build major creator economy business hub.
In 2024 UAE gov adopted business-friendly regulations and deepened ties with Euro / Asian / US, leading to more local investment and M&A
MENA is an attractive creator economy market for 3 key reasons (1) youthful, digital-native population (2) high mobile Internet connectivity (3) mandate from regional governments to diversify economy including financial subsidies
$71B in overall M&A volume across MENA for Q3 YTD, up 9% YoY
On Jan 16 Stagwell announced acquisition of ADK Global in APAC. Signals potential increase in upcoming Asia-based M&A for Stagwell
Driving global reach and diversity of services through acquisition is priority for Stagwell as they position themselves as the go-to global marketing agency…their M&A activity feels unmatched vs peers!

I’m the founder of RockWater Industries. We do M&A and strategy advisory for creator economy and digital agencies. From buy and sell-sides and fundraising, to consumer research and go-to-market planning.

DM me on LinkedIn or email me chris @ wearerockwater dot com