St Ives has agreed to buy Realise for the initial sum of £21.7m (£18.4m in cash plus 1.7m St Ives shares) plus the further sum of £18.3m (£15.5m in cash and the rest in shares) payable dependent on Realise achieving certain growth targets by 30 September 2014 and 2015.

For the year to 30 September 2012 Edinburgh-headquartered Realise achieved EBITDA of £1.7m on revenues of £9.7m while unaudited accounts for 2013 showed EBITDA of £2.7m before one-off items. Sales figures for 2013 were not revealed.

The company, which will become a subsidiary of St Ives, was founded in 1995 and employs around 96 people, the majority based in Scotland with a smaller team based in Farringdon, London. The existing management will remain in place while the business will retain its own branding.

St Ives chief executive Patrick Martell said following on from its 2013 acquisitions of Amaze and Branded3, this latest move was a continuation of the group’s aim to develop its range of digital and marketing services.

“We’ve already made two strategic investments in this market with Amaze and Branded3 and this is a really complementary business in that it’s the same space but with different sector focus.”

Realise offers a range of services predominantly to the entertainment and finance sectors, that includes digital and marketing strategy and creative services as well as web and mobile platform development and film and motion graphics production. Clients include AXA, Lloyds Banking Group and Standard Life Investments, as well as Google and Channel 4.

“With the acquisitions that we’ve made in Realise, Branded3 and Amaze, we are now in the top 10 of UK digital marketing agencies by size. As well as the strength of these businesses we think their combined scale in the digital and mobile market place is important.

“The market is growing and changing at a fast rate. People are diverging more of their marketing spend online and into digital services,” he added. Martell said the growth of the group’s marketing offering presented great opportunities for a number of its customers.

“Our print companies benefit from having a good range of bluechip customers and these new businesses we have acquired can work with their legacy customer-base in different areas as opposed to just print.

“Looking at some of the group’s big customers, it’s significant how many we are now supplying from more than two, three or four subsidiaries in a way that we would never have been able to do with just print,” he added.

Martell highlighted the group’s intention to see marketing services become the majority of its operating profit.

“To achieve that we will continue to make targeted acquisitions and we will continue to invest in our businesses’ organic growth,” he said.

“We continue to look and we hope to make further acquisitions but of course there is no certainty because it depends on finding the right relevant, quality businesses."

Commenting on the company’s acquisition, Realise chief executive Tony Murphy, said: "Realise already has a strong reputation as one of the most respected digital marketing agencies in the UK.

“With the support of St Ives Group, we can continue to grow both in the UK and internationally by being part of a larger group whilst still retaining our own identity and culture as an independently managed specialist agency."

St Ives shares were up 0.2% at 192.8p this morning. 

The group will release its half year results next week.