Abbott Mead sells Leagas Delaney to management in pounds 4 million deal

The Abbott Mead Vickers Group has sold its second-string agency, Leagas Delaney, for pounds 4 million to its management, led by the chief executive, Bruce Haines, and the executive creative director, Tim Delaney.

The Abbott Mead Vickers Group has sold its second-string agency,

Leagas Delaney, for pounds 4 million to its management, led by the chief

executive, Bruce Haines, and the executive creative director, Tim

Delaney.



The disposal, which has taken a year to complete, comprises Leagas

Delaney in the UK - which Abbott Mead wholly owns - and AMV’s 30 per

cent shareholding in Leagas Delaney’s San Francisco operation.



Haines becomes group chief executive and Delaney chairman of the newly

formed holding company, the Leagas Delaney Group. This owns Leagas

Delaney London (including satellite shops in Paris, Barcelona and Rome)

and the two-year-old San Francisco agency. The buyout has been financed

privately by Haines, Delaney, the chairman, Jerry Fielder, the planning

director, Margaret Tully, and the finance director, Eric McClean.



The pounds 4 million cost comprises pounds 100,000 in cash, pounds 1.2

million in redeemable participating preference shares and pounds 2.7

million in the form of a loan note secured on the assets of the Leagas

Delaney Group. Abbott Mead’s preference shares represent 30 per cent of

Leagas Delaney Group. Leagas Delaney shareholders have the option to

purchase these shares over time.



Leagas Delaney was sold to Abbott Mead in July 1986 after the departure

of the foun-der, Ron Leagas. It was Abbott Mead’s first acquisition as a

public company. At the time, Leagas Delaney claim-ed billings of pounds

12.7 million. Haines, then an Abbott Mead director, joined Leagas

Delaney as managing director.



Last year, Leagas Delaney posted billings of pounds 43.3 million. The

agency had a successful year, winning the Nationwide and BBC Digital

accounts and creating award-winning ads for Adidas and for the BBC, most

memorably with ’Perfect Day’.



An official Abbott Mead statement commented: ’Leagas Delaney is a UK

advertising agency and Leagas Delaney Inc was established to operate

under the Leagas Delaney name in the US. Both companies have been

managed separately and have their own client base with little overlap

with that of the rest of the group. As a result, it is anticipated that

the disposal will not have any significant impact on trading in other

group business.’



Tim Delaney and Bruce Haines spoke exclusively to Campaign.



Why was it so important for you to own Leagas Delaney?



BH: We like the idea of being an independent agency and we are old

enough and ugly enough to be so. It’s a recognition that the two

agencies (Abbott Mead and Leagas Delaney) have grown with quite distinct

characteristics and attitudes to business.



TD: We’re not that kind of subservient second-string agency. We said

very early on that they (Abbott Mead) were benign backers.



BH: It’s not that they would ever have said ’no’. It’s just we had to

ask. This is a mature agency run by mature people. It’s always been

rather comfortable for us but now we can take risks.



Leagas Delaney won Coca-Cola’s Fanta account in 1996. Abbott Mead, of

course, handles Pepsi through the BBDO network. Was the buyout

precipitated by such issues of conflict?



BH: It means that, as we grow and they grow, we don’t have to deal with

any conflict that arises. But it’s not just a Pepsi/Coke thing. Because

we are increasingly handling international business, we are likely to be

bumping up against them through BBDO.



TD: It’s a natural process of separation based on commonsense. Coke and

Pepsi was a discussion, but once we proved we were not sharing secrets

it went away.



So is the buyout about making money?



TD: It’s not about the commercial side, it’s about control of our

destiny.



We are a hard-working agency already. We don’t need an incentive to come

to work. What we are looking for is a reward which is more commensurate

with the effort we put in. That’s extremely difficult for a public

company to give. Over the past 12 years we have given them every penny

we have earned. We can’t say, at the end of the year, ’we’ll keep this

or this in bonuses’. We can do that now - if someone has worked hard we

can reward them.



So who will take shares and what will that mean for the agency?



BH: Senior people in the agency will have the majority of shares with

approximately 20 per cent available for distribution within the

company.



If you are an agency of this quality, you need quality people working

for you. You have to be able to offer them more than just a salary. We

can now help people with their ambitions.



Now you own the agency, will you be expanding your offering into other

areas of comm-unication?



BH: What we want to do for the moment is consolidate. San Francisco will

make profits for the first time and we’re excited by that. We want to

help them grow their business and we also see major opportunities in

Europe.



TD: We are here to make the sausages, to do the ads. We work with other

companies, like design companies, but you should beware of wandering

outside what you do best. We are a famous advertising brand and now we

have discretion over how we act.



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