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
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
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
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
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
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.