What you need to know:

• Simon Ryan aiming to add content – including creative – to RyanCap’s portfolio after cash plus equity deal with Paris-headquartered, UK private equity-backed Labelium.
• He says the deal puts him five years ahead of plan – but doesn’t crimp autonomy.
• Ryan also backs new breed holdcos – the likes of Dept, Brainlabs and Labelium – to outmanoeuvre traditional agency parent groups.
• He’s still aiming to run one globally, emulating former Dentsu Aegis Network boss Jerry Buhlmann as a post-takeover reverse CEO. The fact that the equity swap makes Ryan one of the single largest shareholders in Labelium gives credence to that intent.
• Either way, Ryan thinks local media owners have hard yards ahead as global platforms win the sales and metrics battle for marketer budgets – and need to fight harder to defend their turf.

Double or quits?

Three years ago Simon Ryan told Mi3 that by 2025 his then newish venture RyanCap would be aligned with either a private equity play, a public listing or another strategic equity partner. 

He also forecast that two of the global comms holdcos would be gone from the local market by that point. There’s still time for that prediction to come true, though it looks unlikely.

Either way, last year’s deal with Labelium happened faster than even the ever-confident Ryan expected, though he disagrees with suggestions he sold too soon. He’s backing the Paris headquartered group, majority owned by London-based private equity firm Charterhouse, to double in size within five years. The impression Ryan gives is that he’s hoping for a crack at running the whole thing.

At its current run rate, doubling up is achievable. Labelium had 500 staff in June 2021 when Charterhouse took a controlling stake. It’s now circa 1,300. Ryan claimed RyanCap has also been growing at “significantly north of 20 per cent a year”. Easy enough off a small base, he acknowledged, but harder as you get bigger. Nevertheless “we’re fortunate enough to still be growing at that percentage”.

Harold said no

Ryan’s fellow shareholders Joseph Pardillo and Marcus Betschel are also both ex-Dentsu, Pardillo with Carat which Ryan ran in its heyday before stepping up in 2016 to take the reins at Dentsu Aegis Network, exiting three years later ostensibly for a “senior role outside of the group”, per his statements at the time.

Trouble was, he wanted to run a holdco and those roles were thin on the ground.

“So when there's not many parent company jobs around and you’ve got a pretty heavy non-compete, which I did, I decided to launch my own and just roll the dice and see how it went.”

The three shareholders pooled resources and Ryan had “some family assistance”. Presumably, his own family. No industry doyens involved?

“I did ask Harold Mitchell but he said no,” said Ryan of the late, great media agency supremo who, so the story goes, didn’t always look kindly on execs turning up in Porsches – but recognised an operator when he saw one, and eventually relented on the Porsche after making said exec drive a boxy ute for at least a few months. “I’m going to miss him terribly,” said Ryan. “He was a good man and a great advisor.”

Labelium said yes

Launching in 2020, they began scaling the three brands – Ryval Media, Foxcatcher (data and tech) and Tightrope (consulting) – starting in Melbourne before moving into Brisbane and then Sydney, which Ryan admits has been a tougher nut to crack, given the competition.

Nevertheless, he claimed RyanCap was sitting “just under” $20m in annual revenue when Labelium came knocking last year. Ryan, who had extolled the virtues of being an independent agency, did the deal. Pressed for details – the industry rumour mill suggests a range of $20m-$40m – Ryan won’t spill.

“I can’t confirm or deny your number … Your range is good, but at the same time I can’t tell you the absolute cost … there is a financial aspect and an equity aspect.”

Not taking orders

Ryan insisted that becoming part of Labelium is a different ball game from selling to a major network. Day-to-day, the brands retain autonomy, he said, but now have the means to grow faster – and globally. Plus, the equity stake potentially opens up a bigger payday, or “liquidity event”, down the line while easing the financial pressure of trying to grow a business from scratch. Ryan said it would otherwise have taken “at least another five years” via its own Ebit and debt structures to get to the stage where it can start flexing its newly grafted financial muscle.

“Labelium isn’t a huge holdco … I still think and feel as if we are independent, because in Australia, Labelium is quite small,” said Ryan.

“Yes, I’ve been on the record talking up the positives of being independent and flexibility and all those sort of things. But the agreement I have done with Labelium is that I still have that managerial responsibility and flexibility to make decisions. The only thing now is I have the added firepower of Labelium and private equity to be able to chase further growth,” he added.

“The businesses that I and the other shareholders launched will still be the same businesses … I'm still going to operate the same way. I don't have anyone telling me not to do stuff.”

The brands “will remain the same … as long as I am here”, said Ryan, with the group now looking to acquire further capability in commerce, content and creative. Content is likely first up “but I am looping creative into that,” he added.

Running the show?

Ryan said he’s promised Labelium at least two years in Australia. But he turned 50 last month and is also keen to get overseas, preferably Europe or the US. “So if I can continue to grow the business and work with them globally I would do so.”

He’s eyeing the path carved by his one time boss and mentor Jerry Buhlmann (co-incidentally now Chairman at Dept, another of the new breed digital ad groups scaling globally).

Ryan points out that Buhlmann sold his media agency to Aegis in 1999 before becoming CEO a decade later. He then ran Dentsu Aegis Network for five years after the Japanese holdco bought out Aegis in 2013, (a deal that saw Harold Mitchell finally cash out with another $200m after selling what was then Mitchell Communications Group to Aegis for $363m three years earlier).

“Jerry Buhlmann is someone that I look up to, and I aspire to having a similar career,” said Ryan.

If that plays out maybe Ryan will end up running a global holdco after all. Just not one of the traditional ones. He thinks that’s a good thing – and suggests the new breed, the likes of Brainlabs (which in January acquired Sparro) and Dept alongside Labelium – have plenty of runway and less baggage.

“There are some up and coming parent companies around the world that don't have – legacy is the wrong word – but that are not trying to transform, they've already transformed. They have the ability to manoeuvre and move quite quickly,” per Ryan.

“The bigger parent companies, they've seen change four or five times and they always transform eventually, but it's harder to transform when you're really large. They will do it because they are smart … but I think there is a number of up and coming parent companies or brands that will be a lot bigger in time to come.”

Platform pressure

But he’s expecting the market locally to get worse before it gets better – and a bumpy ride for Australia’s media owners. Ryan thinks they need to “play a harder game and protect their revenues” as the global platforms post bumper profits and marketers scramble for quick wins.

“I'm not suggesting that any of the big Australian media CEOs or salespeople aren't doing their job. They're fighting against the global ecosystem and an economy that is tough. But if I look at Australian media, and I look at their share prices, where they've gone over the last three or four months, and the fact that they've invested quite heavily in digital, you would assume that they'd be doing slightly better than they are,” said Ryan.

“I'm not having a dig. I'm just saying that we don't have the Kerry Packers of the world batting for Australian media and yes, there is a bit of a vacuum happening.”

He suggests the challenge may be structural.

“The absolute key focus for clients is immediate results. They can assess how many sales they get per channel now and you've got some clients where they're getting 60 per cent of their sales through one channel. It's pretty hard to move away from that. You work out how you can mine more out of that channel rather than taking a risk. So it's a big war to fight there. I wish the Australian media the very best and I want them to smash it, but it's tough.”