Mark Sheard and Steven Penny, the founders of the direct marketing agency Stretch the Horizon, have left the agency following a decision by owner Mosaic Group Marketing Services to merge it with other parts of the group.
The two are thought to have been unhappy about the launch plans for Mustard, a merged agency comprising Mosaic's STH, ZGC, Dialogue and Creative IQ.
Sources close to Sheard and Penny, who sold to Mosaic for pounds 17 million in 1999, say they were concerned about the fit between the sales promotion cultures of ZGC and STH.
Mustard was launched earlier this month as an agency offering skills across direct marketing, sales promotion, data and digital services.
Samantha Smith, who joined Mosaic last year after leaving FCA, is running Mustard as the managing director. She will report to John Gellett, the chief executive of Mosaic .
STH had built a good creative reputation through work for clients including Coca-Cola, Renault and BSkyB.
But ZGC appears to have won the upper hand in the merger, with STH relocating to its offices in Chelsea Harbour. Smith was unavailable for comment as Campaign went to press.
In terms of gross profits, Mustard will be the UK's fifth-largest direct marketing agency.
Sheard and Penny were paid mainly in cash when they sold to Mosaic. The directors of the agency split dollars 22 million in cash with a further dollars 4.8 million payable based on future earnings. Mosaic, a Canadian-based company, bought ZGC in 1998.