Opinion: Perspective - Start-ups are selling up while the selling is good

There goes another. 2005 has become the year that the independents sold out. Delaney Lund Knox Warren & Partners in February, Vallance Carruthers Coleman Priest in July and now Miles Calcraft Briginshaw Duffy.

There are many reasons why it's happening now. When DLKW sold for a headline figure of £38 million to Creston, a starting gun was fired. Witnessing Delaney, Lund, Knox and Warren become millionaires overnight was an inspiring spectacle for its closest rivals. And as the names of the above agencies suggest, each has a group of founders positioned to do well out of any sale.

But the DLKW sale also triggered a rush because the number of buyers offering credible cash will eventually run dry (if it hasn't already).

There's also been a window of opportunity: in 2005, the advertising downturn finally lifted. The independents, particularly those that have now sold, performed well in the downturn, often at the expense of networked agencies.

With the advertising market growing again, the networks are emerging fighting fit and hungry, posing more of a threat to the young agencies.

These factors make the gameplan of the remaining independents Clemmow Hornby Inge, Mother and Naked a bit of an enigma. It seems the founders of CHI are enjoying running their own agency too much for an immediate sale. Additionally, as last week's Toyota, Argos and Teletext trio of wins suggests, the agency still has a lot of growth left in it. The value of CHI is still rising.

Although the motivation of the MCBD, DLKW and VCCP founders may have being realising as much cash as possible, there is no sense that the protagonists have given up the hard grind. In fact, MCBD's deal sees them locked in for six years.

Selling now will enable all of the founders of the various agencies to concentrate on what they do best: building advertising agencies. For their older, but now smaller, equivalents at DFGW and Walsh Trott Chick Smith, a sale has long been a distraction. VCCP may have sold out after only three years in business, but a least the founders no longer have to concern themselves with achieving the best deal.

MCBD's deal, meanwhile, is interesting for two reasons. The length of the management lock-in is twice the norm. It seems either its new parent Cossette drives a hard bargain, or the agency's founders want to protect the status quo. The length of the lock-in will reassure staff and clients that the next three years won't only be about the agency trying to reach tricky targets before buggering off.

The deal is in cash and uncapped, however, so there's still a big incentive for growth. The first stage saw Cossette acquire 51 per cent of the agency for £7.8 million. The agency is aiming to earn £27 million in total using the remaining 49 per cent, so it's a ballsy agreement.

Cossette's stated motive, meanwhile, is to build a global network. It has a long way to go. Global advertisers who would prefer to employ a small network than hire the likes of WPP or Omnicom are like hens' teeth.

It's also an area ably occupied by Fallon, Bartle Bogle Hegarty and, more recently, M&C Saatchi.

Going forward, expect a rash of new agency launches. The founders of the likes of MCBD, DLKW, VCCP and CHI have made becoming a millionaire look easy and fun. Inspiring stuff for the next generation of advertising greats.

Speaking of which, Sir Martin Sorrell's WPP has turned in yet another set of impressive results. Pre-tax profits up by 32 per cent to £255 million represents growth that is bringing the holding company very close in size to the market leader, Omnicom.

WPP is a good new-business year away from achieving this feat. Success in the current British Airways and Bank of America pitches would be a fine start.

- Claire Beale is away.


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