According to financial terms of the deal, Ascential will pay:
- US$60 million up-front;
- US$47 million to US$196 million in earn-outs over the next three years.
- However, the total payout could reach US$400 million if Flywheel reaches extremely stretched revenue levels, Ascential indicated.
A portion of that lofty earn-out is subject to Flywheel’s founders remaining with Ascential, the deal details also indicate.
About the Seller and the Buyer
Here’s a closer look at Flywheel and Ascential
About the Seller: Flywheel Digital provides managed services to roughly 70 Amazon-centric consumer product companies. Unlike MSPs that focus on Amazon Web Services (AWS) and cloud workloads, Flywheel’s managed services include software, tools and expertise to drive sales and brand performance across Amazon’s e-commerce platforms. Amid that market focus, Flywheel was not ranked among ChannelE2E’s Top 100 Public Cloud MSPs list for 2018.
Flywheel’s MSP and consulting services for Amazon e-commerce customers typically involve:
- organic and paid search;
- Amazon display advertising;
- catalog optimization;
- insights and analytics; and
- strategic consulting services.
Flywheel has roughly 90 employees across Baltimore, Maryland and Seattle, Washington. The team members include account managers, search specialists, analysts, and software developers.
In the year ended December 2017, Flywheel grew its revenue by more than 150 percent and delivered unaudited profit before tax of $4.8 million, Asciential said. Actual revenue figures were not disclosed.
About the Buyer: Ascential, based in London, is a digital consulting firm that offers product design, marketing and sales services. The company’s half-year revenues from continuing operations were £188.9 million (roughly US$ 130 million in today’s exchange rates) for the six months ended June 30, 2018.
Ascential Acquires Flywheel Digital: Reporting Structure
Flywheel’s team now reports directly to Ascential CEO Duncan Painter. The acquired business tucks into Ascential’s Sales segment alongside the newly integrated Edge business (comprising One Click Retail, Clavis, Planet Retail RNG and Brand View). The Edge business offers a range of insight and advisory solutions to improve performance across Amazon and other eCommerce platforms, Ascential indicated.
In a prepared statement about the deal, Painter said:
“We have a clear focus on providing information and capabilities that enable our customers to succeed in the digital economy. The acquisition of Flywheel is in line with this strategy, further strengthening our offerings in eCommerce for brands navigating the digital market places, particularly Amazon.”
This is the fourth M&A deal involving IT service providers and digital agencies in recent days. The other three digital agency acquisitions involved such buyers as Accenture, Perficient and Tata Consultancy Services (TCS), as reported by ChannelE2E.