Anatomy of a deal

Selling an agency is one of the most nerve-racking experiences agency heads can face. Here, four of adland's most successful independents behind some of the biggest deals of 2005 explain why they chose to sell, how they picked the right suitor and how to break the news to staff.


1.30pm, 30 June 2004. Taxi to Covent Garden. Greg (Delaney, my business partner) and I have just met a man called Don Elgie. We're not quite sure what to make of him.

We've been seeing potential partners for the past couple of months. After five good years as an independent, we want to create the next stage of development and that's going to mean doing a deal of some sort. But who with? We've talked to both the traditional network players and the newer breed of consolidators. What we're clear about is that merging companies rarely works and we want to keep our autonomy.

Don is hard to place because he's not one of the usual suspects. He's serious and is approaching this in a very businesslike way without the usual veneer of playfulness. And we've never heard of Creston. But the fact that it's on the main stock market gives it clout.

8.30am, 27 August 2004. Number One Aldwych, meeting room three. The six founding partners plus Matthew (Griffiths, finance director) are gathered in a basement room at the hotel across the road from DLKW. It's crunch time. We have to decide which of two deals we're going to go with. Or neither.

Both potential partners have made detailed presentations and we've spent a lot of time discussing how we'd work together. Matthew has lots of spreadsheets - we look at the best-case possibilities and get very excited. We look at the worst-case scenarios and get very gloomy. Gary (Betts, executive creative director) has put his glasses on which is always a sign it's serious, Malcolm (Green, creative director) turns out to be astonishingly fluent in Excel. We choose the option that will be best if all goes well rather than the one that protects us most if it isn't so good.

7.30pm, 29 October 2004. Home. I'm limp from a highly charged call with Don about the deal. We've agreed the last of the crucial details. It's been emotional, as Vinnie Jones might say, but we're still friends. The difference between this and any other negotiation is that at the end you have to still get on with the other person.

9.00pm, 24 January 2005. DLKW conference room. This is horrid. Two weeks away from the signing, we've found a huge potential tax problem that could kill the whole deal. This meeting is with one of the UK's foremost tax experts. He's very tall, very posh and completely sure of himself. In the mass of indecipherable legalese, he thinks he may have found a solution.

God, I hope so - we'll know tomorrow. For Matthew, who's handled the weight of the whole deal brilliantly, it's another late night.

5.30pm, 8 February 2005. DLKW reception. This is the moment of truth: Greg and I are about to tell the agency about becoming part of Creston.

Over the past few days there have been a few rumours but the story has amazingly stayed discreet. Fortunately the rumours involving wholesale identity changes are much more lurid than the reality. Nonetheless, I'm nervous - the sense of DLKW as "us" is crucial to our success. But, as Greg talks, I can see enough smiles to know it's going to be all right.

After all, there are 30 shareholders in the audience.

8.00pm, 10 March 2005. DLKW uncompleted second floor. Tonight the founding partners are forking out to throw a party for the agency. Time to let down any hair we have left!

23 March 2006. We're coming up to the end of our first year as part of a plc. In growth and business performance it's been our best year ever.

Creston has been a good partner and has certainly imposed no new pressures.

No-one's gone mad and swanned off - if anything, we're working harder. So far it has been a good experience.


Glue London has had a pretty interesting history. We started from humble beginnings: multiple investors, a bankrupt parent company and the madness of being both a digital and an advertising agency in the midst of the dotcom collapse. So by comparison, the decision to join Isobar, the digital network of Aegis, was an unexpectedly easy one to make.

When news came out that we'd been snapped up, there was some surprise that we had jumped when we did. In all honesty, it actually happened about two years before we had thought it might.

Nigel Morris, Isobar's chief executive, first approached us in September 2004. At that time, we were not convinced that we should be looking for a sale and regretfully rebuffed his approaches.

Up until then we had been exploring tie-ups on an informal basis with various media agencies. These relationships had proven to be more productive than working with creative agencies, as two creative directors tended not to be a good mix - even now, our digital ideas still have to work that much harder to be considered on a par with offline ideas.

So in February 2005, when Nigel decided to have another go at enticing us into the clutches of Isobar, we had a good long think about it. Aegis, with its legacy in media buying, posed no threat that we might become a junior supplier to another creative agency, yet gave us access to the wealth of research and learning that we needed to make our work more strategic. This was hugely attractive.

We also discovered that we have a very similar mindset to Isobar. They share our goals and ambitions and of all the people we spoke to, they were the only ones who really understood how much digital would change all media.

Up until this point we had kept the discussions pretty quiet. So when we began to outline what Isobar was trying to do to a wider group within the agency, the encouraging reaction was extremely heartening. Keeping these discussions to a tight circle of people was crucial in maintaining our independence until the right moment. It's too easy to get overexcited about every opportunity that comes along. The best bit of advice I was given was: "Sell before you're ready." If you wait until everything is perfect, then it will be too difficult to grow through an earn-out. This tipped us over the edge.

With the broad brush strokes of the deal outlined by March 2005, the hard work actually began. The paperwork and meeting schedule was incredibly daunting, but made manageable by the brilliant team of advisors we had on board.

The hardest part was actually breaking the news to the whole team. We've always been open about the workings of the company with the staff, so to keep such a large and important decision a secret was a gut-wrenching experience. But it was the right thing to do.

The day we announced the deal, we took great pains to explain to everyone exactly what was about to happen, why it was right for our next stage of growth and how it would affect their day-to-day jobs. The stunned silence we were initially met with soon turned into a barrage of questions, and the overwhelmingly positive nature of the discussion was a relief. Everyone was on board and we completed the sale in August 2005.

Six months in, we're already a larger, more ambitious company with a hugely supportive partner. We're still as independently minded as day one, but being part of Isobar allows us to work on a grander, more international scale. So everything has changed and nothing has changed. Which is exactly how we like it.


We decided to sell Billetts in autumn 2004, for a variety of reasons.

First, I had passed 60 and fixing my pension was sensible. Second, we had a strong brand identity and personality that we judged attractive.

Third, we had a proven management team in place, and fourth, accelerating our expansion would require further investment.

Our growth had come at our own expense: the business was 100 per cent owned by the working directors, with no outside backers and no debt. But we had gone as far as our resources would allow.

We shared our thinking with all the director shareholders and got everyone's buy-in. Private equity and venture capitalists could offer only money.

Flotation was not suitable. A trade sale was the most appropriate route.

We then set about finding the best advisors across legal and corporate finance (the "beauty parades" were instructive and amusing). Macfarlanes and KPMG Corporate Finance were selected - both were sympathetic to our naivety and shared technically brilliant experiences. They were on board before Christmas 2004. We then prepared a candidate list of prospective buyers, all of which shared our brand proposition of impartiality and independence.

Organising our resources was a key factor. Our realisation team was me, the financial director and our two non-executive directors, which ensured our chief executives and managing directors could focus on running the business.

Writing about us comes easy. Writing an information memorandum for prospective buyers was something else. Setting out in detail our operations, finances and business plans required a discipline that tried our patience and our stamina.

KPMG then prepared a comprehensive valuation for us. We learned a lot from several confidential discussions with interested parties and received varying degrees of interest. Sharing our information memorandum and presenting Billetts established who was real and who just wanted to nose around.

Eventually, we got to advanced stages with three businesses. We declined one enthusiastic prospect even before they talked money - the chemistry was just plain wrong. Another offered a good fit, but their ideas never matched the reality. As a plc, Thomson Intermedia had the right combination: a successful young business that wanted to take the Billetts brand forward; a product offer that could add to the service and a long-term international focus and a positive vision for the joint companies.

The subsequent negotiations spanned long days and nights, but were well worth the effort. Most importantly, we achieved great opportunities for the Billetts brand and our management team to play wider roles within the combined operation.

We completed and signed on 23 August 2005, some ten months from the decision to sell to the completed deal. Seven months on, the reality of the sale is better than any of us had hoped for.

I may have sold a business before, but I still learned a lot this time around, not only about business but also more importantly about ourselves.

First, we worked out who and what we were in advance of the process. Only through that could we work out what we could become.

Second, we committed serious resources to both maintaining customer service and doing the deal.

Third, we employed the best advisors we could find (which meant we got better insights into target companies' operations and a larger net payout).

Fourth, we got the business proposition right and developed real chemistry with Thomson Intermedia.

We became certain of how to work together before we started. Our experience is that preparation and focus pay off.


All of the partners at Miles Calcraft Briginshaw Duffy knew that, at some point, we would do a deal. Our ambition from 1 June 1999 was to build a company that made profit from year one, was creatively led and where media-neutral communications was the norm. Over the following five years, we followed the maxim that it's good to talk and there were plenty of people who wanted to talk to us.

We all agreed we didn't want to sell to a major network or go public and that mergers were a no-no because retention of operational control was very important. We also knew it had to be a long-term deal and that the culture of the agency had to be protected at all costs. It would also have to be in cash and uncapped.

In November 2004, Graham Beckett at Results Business Consulting told us about a medium-sized Canadian company that was looking to expand its operations into London. This company, Cossette Communication Group, was passionate about integration and had created a business that had proved highly successful. Graham felt we would be well matched.

At our first meeting in January 2005, we were immediately struck by how passionate and courteous they were, and how they talked about their people as integral to their success.

The following day, the partners went out for dinner and all decided that, in principle, we could do business with them. We also agreed to retain 49 per cent rather than 51 per cent of the business, given the reassurance that operational control would remain with us. There followed numerous discussions, and a key meeting with Claude Lessard (the Cossette chairman and chief executive) in March, when it became clear that both parties were keen to proceed.

After that, the process became more formalised and vast quantities of financial and commercial information were exchanged before terms were finally agreed in May. Due diligence took place during June and July and detailed legal agreements were drafted, negotiated and re-drafted during July and August.

In June, all the partners travelled to Vancouver, Toronto, Montreal and New York to get a feel for the company. The highlight was flying in Claude's jet from New York to Toronto (now renamed Air Claude by us). During the flight, he asked Helen Calcraft whether she would like to take a closer look at Niagara Falls. At that point, I knew we were kippered (she's so easily impressed).

Throughout the process, I was amazed that we managed to keep it all a secret but, during the final few weeks, I became paranoid about the news leaking out.

With Cossette's help, we organised a timetable with military precision - down to a specific hour and minute, due to the time difference between the two countries. Clients had to be informed just before the staff meeting when I announced the news.

The night before, all the partners went to Cossette's lawyers' office to sign the paperwork. It took a lot longer than we thought and ended at 2.30am with a bottle of Champagne. Six hours later, all our clients and MCBD knew what we'd been plotting for nine months.

The night of the day we did the deal, Claude flew over and we had a wonderful dinner at George. I finally got home at about 2am and couldn't sleep.

At 4.30am, I retired to my den and thought about how proud my dad would have been of us (he had died four months earlier, halfway through the process). I got up just a few hours later to read Campaign's view of the deal.