By Jeff Mottle

The Boundary Paves the Way for Investment in Arch Viz

Last summer the big news from our industry was the announcement of one of the world's leading visualization studios - The Boundary - securing outside investment from private equity firm Mobeus. As one of the very first to do this, CGarchitect spoke to the team at the Boundary about their success and what it means for the studio moving forward and how others might follow.

CGA: First off, congratulations on the recent investment into the Boundary. You guys must be pretty excited?
Absolutely, we are delighted to have brought a strategic partner on board for the next period of growth. As a management team we are focused on improving our client services, and taking a minority investment was a calculated move to help strengthen all areas of the business with that clear focus in mind. Most importantly that means attracting and recruiting exceptional talent across the business and investing in R&D, and this investment has allowed us to divert more resources into what we do best.

CGA: To the best of my knowledge, you are the first or one of the very first to receive outside investment of this nature and scale. How did this all come about?
We have always had a very clear long-term mission statement to be the best in the world at what we do, and that has driven every management decision we have taken from day one. That clarity of thought and purpose has always been our guiding star when asking ourselves searching questions about what we should do, and just as importantly what we shouldn’t do as a business, to help deliver against that mission statement. Choosing to take investment, and gaining access to the wealth of knowledge and expertise that a first-class private equity business such as Mobeus provides, was a natural progression for us. 
The Boundary (Top Left to Bottom Right) - Peter Guthrie - Director, Henry Goss - Director, James Falconer - Managing Director USA, Tom Wood - CEO
CGA: I know many studio owners are talking about this news, and all of them are very happy for your team, albeit probably a tad jealous.  Can you speak about what this investment means for the Boundary and how this translates into the growth and direction for the company?
The investment has enabled us to strengthen our executive and non-executive management teams and to double down on our commitment to research and development. Having the financial resources to maintain and accelerate significant investment in R&D, talent acquisition and talent development is a prerequisite to remain at the forefront of any industry, and we are no exception. The investment has also enabled us to make a significant investment ourselves in our long-term virtual reality software partner VRPM, which will allow us to further develop and elevate our world-class Boundary Explore VR platform.

CGA: When you started the Boundary, did you have a pretty solid picture of growth and overall direction, or is this something that evolved?  Was outside investment always in the cards?
When we founded The Boundary our sole focus was on producing work we were proud of, working with clients that appreciated our quality. As the business started to grow we quickly realized that in order to remain at the top of the industry, we would need to make smart decisions and employ the right people at all levels of the business. We knew that from a business development strategy perspective we needed the expertise to help guide us, and it was a coup to attract Tom Wood to the business in 2018, who began as our commercial director and who is now our CEO. Tom was the Chief Commercial Officer at Rapha for a number of years and has 20 years of experience in growing businesses, and his appointment galvanized our long-term strategic thinking.
Peter, Henry & James in a recent NYC Heli Shoot
CGA: The last 24 months have been pretty challenging for the industry for many different reasons. What challenges did this time pose for you?
One of the things we value so much at The Boundary is being a great place to work, somewhere that people look forward to coming to every day.  The culture and environment of our studio are something we take incredibly seriously. When the pandemic started and we were forced to shift to a full work-from-home strategy, we were worried about how this would affect the team. Really, we needn't have worried as our team has been unbelievable throughout. The energy and enthusiasm remained and although Friday beers became a virtual happy hour, and our weekly image reviews were done on-screen shares, everyone rallied and did their bit to keep spirits high. From a business perspective, it forced us to be very decisive and purposeful, and are very proud to have maintained our 100% record of paying our staff significant year bonuses over the last few years, particularly as we knew that other studios were laying staff off and enforcing pay cuts at this time. This summer we're taking the team to Mallorca to thank them for their continuing hard work. And yes, all new joiners will also be invited for a fully expensed team trip on the beach!
Remote Working at the Boundary
CGA: Quite a few years ago, before The Boundary had started, I hosted several meetings of top studios around the world. One of the things we spoke about with some of the consultants we brought in was mergers and outside investment. The consultants came from the advertising world and were surprised that this sort of thing was not already happening in our industry.  Why do you think it took so long for our industry to attract this kind of attention and investment? What attracted Mobeus to The Boundary?
In order to be attractive to professional investors, businesses in any industry need to have various core commercial and strategic fundamentals in place. Given the relative immaturity of our industry compared to the advertising industry, and given the inescapable reality that most established CGI studios have been founded and developed by young creatives, rather than by those with a solid business background, the majority of studios don’t have those fundamentals in place at this moment in time to attract investors such as Mobeus. Investors are looking for businesses with sustained profitability and high growth rates over a number of consecutive years, as well as those with a clear differentiation within their market, and we are lucky enough to be the first to tick those boxes. We hope that others follow!

CGA: Many in the industry have been speculating on what this amount of investment means for the valuation of visualization studios. While I don’t imagine you can speak to your valuation, were you able to retain control of the company?
Yes, absolutely. This wasn't a takeover by any means. We have only sold a minority of the business to Mobeus, so we absolutely retain control of all key decisions making. The investment is a true partnership between ourselves and Mobeus, as they support our next phase of growth.
CGA: For someone who has never been through this process, could you walk us through the steps taken from initial contact to a final deal?
The process really starts six months prior to initial contact with potential investors. The first step is to find a specialist M&A (mergers and acquisitions) representative who will be your intermediary and expert adviser through the deal process. The next step is to work with them to put together a comprehensive investment prospectus which will be used to garner initial interest from potential investors, essentially a marketing document for your business. Once a long list of potential investors has been put together, which will be a key task for your M&A advisors, your prospectus will be circulated to qualified leads, and then a long period of discussions, presentations and refinement takes place until you whittle down the list of interested investors until you are hopefully left with your preferred investor, with whom you can then thrash out the detailed terms of a deal. Once agreed you can expect 3-6 months of due diligence by the prospective investor to take place, covering commercial, legal and financial matters, before the deal is signed and agreed. Any such process is not for the faint-hearted, it is an expensive undertaking, and it isn’t unusual for the whole process from start to finish to take 12 months.

CGA: Hopefully, your success will be a beacon for further investment into the visualization industry. What advice would you give to others thinking of perhaps going down this same route?
The best advice we can give is to get all your key management and financial information and reporting, both for current and historical periods, in good order before you embark on a process. Due diligence is very rigorous and demanding, and no stone will be left unturned, so the more preparation you can do ahead of time in this regard, the easier things will be towards the back end of the deal process. The other piece of advice would be to think about how to mitigate the potential negative impact on the current trading performance of key leadership personnel being distracted and consumed with deal-related work through what can be a lengthy process. It is vital to take care of business as usual and not let the deal throw your in-year results off as that could scupper the deal at the 11th hour. On top of all of that, you have to ensure your clients are still receiving the same standard of service and deal distractions aren’t compromising your work or client relationships.
CGA: Congratulations once again, and thank you for taking the time to speak about your exciting news.  Anything else you’d like to add?

Surely that’s enough news from us Jeff!?  In all seriousness, thanks for getting in touch, hopefully, we’ve clarified a few things and given you an insight into why we are all excited for next year and beyond! Stay tuned though, there are a lot of very exciting projects that will be coming from The Boundary soon.

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About this article

Last summer the big news from our industry was the announcement of one of the world's leading visualization studios - The Boundary - securing outside investment from private equity firm Mobeus. As one of the very first to do this, CGarchitect spoke to the team at the Boundary about their success and what it means for the studio moving forward and how others might follow.

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Jeff Mottle

Founder at CGarchitect

placeCalgary, CA