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Just three weeks after settling the acquisition of trade publication Mediaweek, diversified Melbourne-based music industry company Vinyl Group (ASX: VNL) has announced it is buying events business Funkified Entertainment for $2.5 million.
The cash-and-scrip deal effectively brings the Funkified business into the Vinyl Group fold as it has acted as an in-house events arm for Vinyl subsidiary The Brag Media since 2021.
Funkified, which was founded in 2009 by Gus Stephenson, reported unaudited revenues of $4.03 million for FY24 and EBITDA of $430,000.
Vinyl Group CEO Josh Simons has indicated that the deal for Funkified may be the last of the group’s growth strategy acquisitions for some time, coming on the heels of the $1 million deal for Mediaweek and the $10 million buyout of The Brag Media in December last year.
“The acquisition of Funkified completes our acquisition strategy aimed at fully realising the opportunities identified in The Brag Media business, while improving group company margins, revenue and driving growth,” says Simons.
“Additionally, it accelerates our path to profitability. We look forward to welcoming the Funkified team and working closely together on opportunities to grow.”
Vinyl Group, which counts Richard White - the billionaire founder of logistics software group WiseTech (ASX: WTC) - as a major shareholder, delivered revenue growth of 754 per cent to $4.971 million in FY24.
While the company posted a net loss of $17 million for the year, $11 million of this was non-cash expenses amid the company’s planned growth strategy transition.
The acquisition of Funkified Entertainment will comprise a $1.8 million cash payment and $200,000 in shares, with a further $500,000 in deferred performance shares.
The deal will see Stephenson, as founder and CEO of Funkified, join Vinyl Group on a full-time basis to drive the events business towards its performance goals.
Stephenson is tasked with growing Funkified’s earnings before interest and tax to at least $500,000 over the 12 months from settlement if he is to earn the performance shares.
“Following several years of working closely with the incredible team at The Brag Media and Vinyl Group, creating some of the country’s largest and most innovative events and activations, it is an exciting step in our 15-year history to officially join Vinyl Group,” says Stephenson.
“We look forward to bringing our expertise and accelerating the growth and profitability of events and activations across the wider organisation.”
Vinyl Group plans to integrate the Funkified business into The Brag Media, which is expected to deliver immediate margin improvement for the group.
Operational efficiencies are also expected as Funkified will manage the Mediaweek events schedule after settlement.
Vinyl Group expects the acquisition to settle by 31 December 2024.
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