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Vinyl Group, Australia’s only ASX-listed music Company, has announced that it has executed a binding Heads of Agreement to acquire end-to-end events and brand activations business Funkified Entertainment Pty Ltd.

Founded in 2009, Funkified has served as The Brag Media’s in-house events arm since 2021, and as a brand activation agency, white-labels for some of the largest advertising and creative houses in Australia.

The deal will see Vinyl Group acquire 100% of the issued capital in Funkified Entertainment Pty Ltd in exchange for $1.8 million in cash and $200,000 in shares valued at the 15 day Volume Weighted Average Price (VWAP) of Vinyl Group shares on the ASX for the period immediately preceding the Completion Date.

These shares will be subject to a 12 month escrow from the date of issue. The cash portion will be paid in two equal tranches of $650,000, the first at the Completion Date and the second no later than six months after the Completion Date, with a further $500,000 deposited into an escrow account as security for 12 months from the Completion Date.

A further $500,000 in Vinyl Group shares will be paid to the shareholders of Funkified, contingent on Funkified achieving a minimum Earnings Before Interest and Taxes (EBIT) target of $500,000 in the 12 months following the completion date.

These shares will also be subject to the above escrow conditions and valued at the 15 day VWAP of Vinyl Group shares on the ASX for the period immediately preceding issue.

Upon completion, Funkified founder and Chief Executive Gus Stephenson will enter into a full-time employment agreement with Vinyl Group to lead Funkified to achieve its performance goals.

To incentivise performance, Stephenson will receive five million options upon commencing employment with Vinyl Group, vesting in four equal tranches following each subsequent anniversary of his employment and provided his ongoing employment during this Term. These Options will have a seven-year term and will have an exercise price to be agreed between the Purchaser and Mr Stephenson prior to issue of the Options.

Funkified unaudited revenues for the 2024 financial year amounted to $4.03 million, with an EBITDA of $430,000. Integrated under The Brag Media operation, Vinyl Group expects to realise immediate margin improvement as a result of this acquisition.

Following Vinyl Group’s recent acquisition of media and marketing trade publication, Mediaweek, group operational efficiencies will include Funkified managing the Mediaweek events schedule.

Completion is dependent on certain completion deliverables including the buyer giving notice to the Seller that Due Diligence has been completed, obtaining any necessary shareholder, ASX and/or ASIC consents and approvals, and no material adverse changes occurring between now and completion. Completion is expected by no later than 31 December 2024.

Commenting on the acquisition, Vinyl Group Chief Executive, Josh Simons stated “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. “Additionally, it accelerates our path to profitability. We look forward to welcoming the Funkified team and working closely together on opportunities to grow.”

Completion is expected by no later than 31st December 2024.

Image credit: Funkified Entertainment.

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