Announcing an exit of its struggling King Content business, listed media intelligence company Isentia has demonstrated that business acquisitions are not a foolproof strategy for growth.
Isentia, previously called Media Monitors, purchased the content marketing business for a reported $48 million in 2015.
“The Isentia-King Content combination provides a unique service across earned, owned and paid media that will further diversify Isentia’s revenue streams,” the company told investors at the time.
However, since then, King Content’s business value has plummeted as it struggled to maintain revenues, putting strain on its parent company to retain value from its multimillion-dollar investment.
Just two months ago, Isentia wrote off its investment and announced plans to axe the King Content brand, instead absorbing its staff and functions into Isentia.
This week, however, Isentia went even further, announcing it would “exit” the business altogether “given its continued underperformance”.
“At the FY17 result, Isentia’s management set a clear objective for King Content; that it would be at least EBITDA-neutral in FY18,” Isentia said in a statement.
“Given its continued underperformance, Isentia has commenced the process of exiting the business, which is expected to be completed by 2017 year end.”
Accountant and director of LMS Advisory, Alexander Laureti, has previously told My Business that business acquisitions can be a great path to growth, but conducting due diligence before a sale is only part of the process – too many business leaders then fail to effectively integrate that acquisition into their established business.
“It’s a big cultural difference because you’re meeting a whole bunch of people that you don’t have that history with,” he said.
“When you’re starting from scratch, you really are basically convincing people and giving them comfort that even though things might be a little bit different, for them everything will stay the same.”
Disclosure: Adam Zuchetti previously worked as a contractor to King Content.
Adam Zuchetti is the editor of My Business, and has steered the publication’s editorial direction since early 2016.