Chime buys JMI; Brown to stay as CEO
|Sebastian Coe (right), chairman of Chime-owned CSM Sport & Entertainment, and JMI’s Zak Brown
The deal is the largest sports-related acquisition Chime has made since creating a sports subsidiary, CSM Sport & Entertainment, in 2007. JMI, which is headquartered in Indianapolis, is CSM’s first U.S.-based company and its fifth company overall. It will work alongside the sports activation and hospitality agency iLuka and sports branding agency Icon and report to CSM Chairman Sebastian Coe, who chaired the London Olympics, and CEO Jim Glover.
The deal brings an end to a sales process begun earlier this year by JMI’s majority owner, Spire Capital Partners. The private equity firm, which also owns the Professional Bull Riders, has owned 50 percent of JMI since 2008. It sold its share of the company, and the other owners — Credit Suisse (10 percent), WPP (20 percent) and JMI CEO Zak Brown (20 percent) — sold their stakes, giving CSM full control of JMI. (WPP will retain an interest in JMI because it owns 20 percent of Chime Communications.)
Coe said in a statement that he expects the deal to strengthen CSM’s business by bringing the company into two new markets simultaneously: motorsports and the U.S.
Brown, 42, will remain CEO of JMI and become group head of business development for CSM. He will work out of JMI’s new London office, which he opened in August.
He said the agency will continue to focus on motorsports, but it will work with other CSM companies to bring their clients into motorsports and bring some of JMI’s clients, which include UPS, Subway, Crown Royal and others, into other sports.
“It’s business as usual, but we now have a very good strategic partner with complementary clients,” said Brown, who founded JMI in 1995. “We’ve been looking at other sports for a long time, and now we’re plugged into this larger group that can offer that.”
Spire hired Rothschild Group earlier this year to put together a sales book on JMI and approach potential buyers. Sources familiar with Rothschild’s sales book said JMI last year claimed earnings before interest, taxes, depreciation and amortization (EBITDA) of $8 million. The company’s sales price of $76 million is slightly less than a multiple of 10 times EBITDA.
Bruce Hernandez, a partner at Spire and the chairman of JMI’s board, said it took nine months to sell the company. He said a half-dozen companies looked at the business, including agencies, media companies and private equity groups. Chime began expressing serious interest in June. Its chairman, Evan Davies, knew Brown and was familiar with JMI.
“We found a good home for the business, for the employees and Zak, and a fair transaction for the equity holders,” Hernandez said. “It’s not a metal-stamping business you could sell to anyone. We feel strongly there’s a good cultural fit here, a good strategic fit, and a good business fit.”
JMI employs more than 130 people in the U.S., U.K. and Hong Kong. The company has succeeded in building its international business in recent years, particularly in Formula One, where it brokered a five-year, $200 million deal for UBS to become a series sponsor in 2010. The overseas growth allowed JMI to offset any revenue losses in the U.S. when NASCAR and IndyCar began to struggle to attract sponsors during the recent recession.
Brown relocated to London to continue to expand the company’s international business, and he expects the CSM acquisition to help with that.
“It’s very strategic and has a lot of synergies,” Brown said of CSM. “It allows us to expose our clients to other sports in the family. It allows us exposure to their clients to pull into motorsports. And there are good career growth opportunities for staff, which has been a challenge for us only in motorsports.”