Be Heard made its debut on AIM back in November following a reverse into Mithril Capital and Dowgate reckons it has everything in place to be a success on the junior market.
“Be Heard benefits from a proven management team with an excellent track record, that is gaining from the synergy value of new acquisitions against the background of a marketing industry entering the next phase of an exciting digital revolution,” said analyst Jason Roberston.
Speaking of management, chairman and founder Peter Scott heads up what Robertson calls a “high calibre” senior team.
Given Scott’s previous successes at WCRS (sold for £3.2bn) and Engine Group (sold for £100mln), the analyst says investors “will be hoping history repeats itself”.
Importantly, Be Heard also gives investors the opportunity to take a stake in the booming digital advertising and marketing space.
Robertson estimates that internet advertising overtook traditional advertising back in 2015, and expects it to represent 60% of the ad market in the near future.
“Be Heard is uniquely positioned as a pure play digital business, seeking to acquire and connect a cluster of best-in-class mid-size agencies,” explains the analyst.
Robertson also notes that Be Heard has a track record of acquiring businesses for reasonable prices, especially when compared to some of its larger peers.
“Be Heard’s first four acquisitions have averaged a multiple of 5-6x EBITDA [underlying earnings].
“This appears cheap when compared to acquisitions made by others that have tended to be in the range of x10 to x22, with mid-size acquisitions and those paying a premium for scale, in the x16-x20 range.”
Robertson has the stock as a ‘buy’ with a price target of 5.2p.
Shares were up 2.5% to 3.95p early on Tuesday afternoon.