Going Dutch is now all the rage when buying a stake
A view from Danny Rogers

Going Dutch is now all the rage when buying a stake

As the process for choosing our agencies of the year reaches a crescendo, one is reminded of the differing ownership models of the modern ad...

Bartle Bogle Hegarty, shortlisted once again for advertising agency of the year, has somehow maintained its reputation and management stability despite selling the rest of the business to Publicis Groupe 18 months ago.

BBH, which also cleaned up at the Campaign Big Awards, originally sold a 49 per cent stake to the network in 2002. It is an unusual strategy. Most holding companies prefer to quickly gain control of their new investments.

But, in BBH’s case, Maurice Lévy said: "We have decided… to engineer an integration that will preserve and protect their specific culture, their working methods and the characteristics of the agencies through an approach of autonomy inside the Groupe."

Independents have collapsed shortly after their purchase from a network. So will 50/50 ownership become prevalent?

BBH’s UK boss Ben Fennell explains: "I’m convinced that the transition to full ownership has been as smooth and seamless as it has because both parties spent the time and energy getting to know each other properly."

And now others are following this blueprint. Earlier this month, CHI & Partners – which sold just under half of its business to WPP in 2007 – announced that it was taking a 50.1 per cent stake in the PR consultancy Halpern and would make similar acquisitions.

WPP’s Sir Martin Sorrell was happy to continue with his 49 per cent stake in the expanding integrated group and appears sanguine. By gradually transferring equity from the founders to new management, Johnny Hornby argues that this was the only proven way of tying in, and continually incentivising, senior talent.

David Droga, the founder of Droga5, clearly agrees. In June, he sold 49 per cent of his business, not to a holding group but to an aggressive entertainment conglomerate, William Morris Endeavor. Droga’s team, still creatively revered, have no plans to move on.

From CDP to HHCL, we have seen once great independents collapse shortly after their purchase from a network. So will 50/50 ownership become the prevalent model going into an upturn?

What may mitigate against this are current notable successes using the old model. Adam & Eve, which sold 100 per cent of its business to Omnicom’s DDB network 18 months ago, has enjoyed a stellar year.

And Abbott Mead Vickers, wholly owned by BBDO for 15 years now, is the other most consistently awarded UK ad agency.

One suspects the answer lies in the outlook, over the next three years, for CHI, Droga5 and Adam & Eve/DDB. All have ambitious and charismatic leaders but quite different ownership models. Network heads will be watching their every move with growing interest.

danny.rogers@haymarket.com
@dannyrogers2001

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