Last year when many media pundits thought the year was over, The Brag Media dropped one of the biggest bombshells of the year by selling to the Vinyl Group.
The ASX-listed company paid $8m in cash to acquire 100% of The Brag Media and its subsidiaries, with a further $2m payable in cash or stock based on financial performance.
A statement accompanying the sale announcement revealed the unaudited financial year 2023 results saw The Brag Media generate $8.39m in revenues with a net profit of $334,824. The indicative combined Vinyl Group revenue as of June 30, 2023, would have been $9 million. Following the announcement, The Vinyl Group’s stock price has been up by as much as 40%.
Vinyl Group, which rebranded from Jaxsta in December, also announced a second round of investment by WiseTech Global CEO & founder Richard White by way of an $11m placement and debt facility.
As part of the deal, The Brag Media Founder and CEO Luke Girgis entered into a full-time employment agreement with the company as publisher and managing director of The Brag Media.
Speaking on the deal, Girgis said that despite the six months of negotiations that took place, he continued to operate like the deal wasn’t going to happen, which he stated can be seen in the company’s financial results.
“It was a hard deal, for sure. All deals like this aren’t going to be easy to pull off, but we got there in the end. That’s a huge credit to Josh Simons (Vinyl Group CEO), who never gave up on the deal, even when it looked like it was dead a number of times. I always say that the deal wouldn’t have happened without his enthusiasm and his hard work. I always ran the business and assumed mentally that the deal wasn’t going to happen. I never set myself up emotionally or operationally that we were selling. I was always operating like we weren’t.
“That resulted in us making a lot less profit last year intentionally because we invested for this year. We invested a lot of money last year, which chewed up our EBIT intentionally because we want to set ourselves up for 2024 and 2025. If I was operating the business like I was selling, I wouldn’t have made those decisions, and I would have made as much profit as I could because that might have made the deal even richer. Emotionally, there was no real change for me, because I wasn’t assuming the deal was gonna go ahead.”
Girgis revealed to Mediaweek that when he first reached out to Vinyl Group CEO Josh Simons, he wasn’t actually planning to sell 100% of the business.
“I didn’t go to them to sell, I went to them to see if they wanted to buy equity from my business partner (Sam Benjamin). Sam was the co-founder and started the business with me. He’s got a long history of building companies from scratch and then they get to a level where he kind of gets disinterested and wants to build the next company. He then sells them and he’s done some really massive exits in his history a lot bigger than this deal.”
When discussing the deal, Girgis revealed that he later found out that it was Simon’s first day as Vinyl Group CEO when he approached him about the eventual sale, which was a big first day on the job for Simon as he proceeded to negotiate the biggest deal in his company’s history.
“From there, I was able to meet the biggest shareholders and the board,” said Girgis. “They were all super successful, smart, inspiring people and the kind of people I want to be around. I got excited about the deal after that. It was then a six-month negotiation and getting-to-know-each-other period. We then agreed to terms right before Christmas.”
When asked about what made him pivot from just selling some of his business partners’ share in the business to agreeing to a 100% sale, Girgis said the deal best set him up to achieve his global ambitions for the company.
“The thing that excited me the most is that our ambitions were aligned. My ambitions are far greater than being a small domestic publisher. I have global ambitions, and I have ambitions to grow The Brag Media in a lot bigger way. That’s reflected in our growth, we are much bigger now than we were two years ago. I want to keep that growth, I want to keep really aggressive growth. Their ambitions are aligned on that, and they have a public vehicle and other assets that will really help achieve that. That’s what got us excited and that’s why we ended up doing the deal.”
When speaking about Sam Benjamin’s exit from the business (who recently acquired food delivery service Providoor), Girgis called him his best mate and said that it was time for Benjamen’s to exit the business because there was one major problem, there weren’t enough problems.
“I could tell he was focused on his next business and he was working really hard on that. I could just sense that he was ready to work on something new. So I asked him ‘do you want me to try and see if I can get someone to buy some of your equity’. That was the conversation, it didn’t actually start with an acquisition at all.
“When a business is profitable and growing pretty consistently, and there’s no issues, that’s the moment he gets bored. He’s a fucking weapon when things are going wrong, and he gets really in there. He’s just so inspiring and creative in the way he runs companies, but once things are good he goes and finds the next problem.”
When asked what he thought the motivation was for the Vinyl Group to acquire The Brag Media, Girgis said that it was aligned ambitions and the power of The Brag Media’s portfolio.
“We can really help their assets. We’ve got quite a big media business with quite big ambitions. As we execute those ambitions and leverage the assets we already have, we can really support their other assets. We’re going to be a huge engine and flywheel for their tech company.”
Girgis has always been one of the most open and candid CEO’s in the Australian media industry, and when asked about how he is finding life at a publicly traded company, he said he hasn’t noticed a change yet.
“I don’t know. I feel like I’m still myself. The full five weeks we’ve been in the business, everything that I’ve wanted to do, I’ve been doing. I don’t see a change yet but to be honest, that is probably a big credit to Josh (Simons) because Josh handles all the bullshit that I don’t understand. He’s doing a really good job at that. I think we can continue to operate at the pace we are because Josh is doing all the public-facing CEO work that a publicly listed company needs to do.”