Determined to keep the company in good hands, this B2B media business sold to its management and employees

Annex Business Media, founded in 1997 by Mike and Sue Fredericks, began as a small collection of local newspapers and industry trade magazines.

Through mergers, acquisitions, and the creation of new publications and properties, Annex grew into Canada’s largest B2B media company with more than 60 media brands across industries, from agriculture to public safety.

As the founders approached retirement, they entertained a few offers from buyers, but the founders “were not confident [the buyers] would represent the legacy of Annex or were able to manage the complexity,” said Scott Jamieson, who became CEO post-deal (and was COO before the deal).

Instead, they made a deal to sell to their management team and employees.

How Annex Business Media grew through 25+ acquisitions

Jamieson joined the team in 2004 when Annex acquired three forestry magazines he edited and partly owned, he shared on A Media Operator Podcast.

Annex’s growth strategy through the years is in its name: Annex.

“That’s how we intended to start growing when the company was founded about 27 years ago, through annexing other B2B companies in Canada,” Jamieson said.

In 2010, Annex made its largest acquisition, buying seven or eight magazines from CLB Media. In 2015, Annex also bought much of what remained of Rogers Communications. This deal doubled Annex’s staff and revenue.

“I would say we are typically opportunistic acquirers,” Jamieson said. “We don’t chase a lot of deals.”

Prior to Annex’s own sale, it had grown through more than 25 acquisitions to 155 full-time employees. Publications under Annex mostly served niche Canadian audiences that varied in size from 3,500 to more than 100,000 — including Manure Manager magazine.

Being around since 1997, Annex has experienced firsthand the drastic shift from print to digital. Jamieson told us this was the most challenging part of Annex’s growth — “developing the skills and tools to drive a tech-driven omni-channel media company from an historically print-centric approach.”

Even in 2019, 65% of the company’s revenue came from print advertising, Jamieson told Donnelly. The team deliberately moved toward digital, rebuilding a new tech stack and recruiting and training the leadership team in 2015, and the pandemic gave them an extra push toward digital.

In March 2024, about 40% of Annex’s revenue came from print and about 35% came from digital. Digital ad products include display ads, email newsletters and programmatic ads.

Another 15% of revenue is from Annex’s events arm. Events — both in-person and virtual — is now the most rapidly growing sector of the business.

Finally, a small percent of revenue comes from an e-commerce business for book distribution, commercial printing and other services.

Jamieson couldn’t disclose the company’s revenue, but he did share with Donnelly that the company’s profit margins in 2024 were 20% stronger than they were in 2019.

The company had about 4,000 advertisers, exhibitors, event sponsors and marketing services clients that each spent between $5,000 to $400,000 annually, Jamieson told They Got Acquired.

Why Annex Business Media decided to sell to its employees

In 2014, the Fredericks were no longer involved in business operations, and they began entertaining the idea of selling Annex as they reached retirement age.

On A Media Operator podcast, which was recorded a few weeks before Annex’s acquisition was announced, Donnelly asked Jamieson if Annex would ever consider selling. He said they’d been approached by private family equity, but “we’re having a hard time finding someone we believe will actually run the business properly.”

He added: “Our owners are really interested in the legacy of the business, so they don’t just want to just sell it for the right price. It’s got to be the right price with somebody who’s going to move forward the business in the way that we believe in… that’s tough. You have no right to ask anybody that if they’re giving you the money.”

Jamieson explained he was working on a succession plan for the next five years.

Turns out, a succession plan came to fruition a bit sooner. In March 2024, Jamieson announced on LinkedIn that Annex was officially an employee-owned business.

“Today is Phase 1 in the transition to a unique Employee-Management Partnership (EMP),” he wrote. “50% of Annex Business Media shares are now owned by a broad management team. Phase 2 will see the remaining Annex employees more closely integrated with the financial success of the company through an Enhanced Employee Incentive Program (EEIP).”

In other words, 50% of the company shares are owned by a management group of 17 — “essentially a management buyout,” Jamieson said. The other 50% is held in a trust for the benefit of the remaining approximately 140 employees. They don’t own these shares directly, but the protected trust ensures 50% of the company’s after-tax profits are evenly distributed regardless of seniority or role.

Jamieson said the structure was inspired by employer stock ownership plans (ESOP) and employment ownership trusts (EOT). “Think of that as a modified ESOP,” he said. “Combined you have an employee-management partnership (EMP) that is likely unique, at least in the world of media.”

The transaction wasn’t simple. First off, it required “an operation with little to no debt, solid cash flow, independent leadership teams, and owners that are patient to recover their equity over 5+ years,” Jamieson told us. In this case, the owners’ earn-out is 8 to 10 years.

Even more, Canada’s federal government doesn’t yet have the structure and support in place for EMPs. And TD Bank, Annex’s banking partner, also lacked experience with the unique structure.

“Annex has been working with consultants EY for the last 10 months to secure financing and find an option to dedicate up to 50% of after-tax profits to power this significant employee benefit, and will continue to do so in the coming months,” Jamieson wrote.

Annex ultimately sold for more than $25 million — 6x EBITDA, Jamieson told us. He also became the CEO and will serve on the board of directors. Over the next five years, he plans to grow the company and prepare a CEO succession plan.

As for the employees, “the biggest reaction was relief that we were not being acquired by an outside party and gratitude for the financial stake,” Jamieson said. “We have to continue communicating the reality and benefits as it is not a common structure and so some staff are not entirely sure what it means.”

The Fredricks continue to serve as co-chairs on the board.

“Offering the opportunity to ‘own’ Annex’s next phase to the people who helped to build our success is our way of paying it forward,” Sue said in the announcement.

Jamieson encourages business owners who are looking to take a similar route to find a trusted consultant who will help determine if this is the right move for your company. The process could take a couple of years  — so don’t wait until you are ready to retire or sell. Start sooner than later.