M&As not necessarily the way to build a better mousetrap ..

Mr David Kershaw, one of the founding partners of M&C Saatchi World, is a firm disbeliever in resorting to mergers and acquisitions to build strong, global agency networks. Speaking during a trip to Hong Kong recently, he said there was at least some logic to the M&A activities that were occurring outside the advertising world, such as within the banking industry where bigger banks translate into banks with bigger clout or in the dotcom realm where complementary assets were being united when a distribution firm merges with a content provider. Mr Kershaw told MEDIA: "The people consultancy business, like us in advertising, all have the same assets and operating synergies. There are little or no complementary assets to merge. "What advertising people forget is that at the end of the day you have to be able to bring together the best collection of brains and you don't need to do that through huge corporate financial deals." He underlined this by saying that a merger or an acquisition loses its point if people and clients in the 'target agency' jump ship. "At this point, you have got nothing left but a shell," Mr Kershaw said. In his opinion, the best way forward was for a series of formal and informal joint ventures with companies operating in a range of different communications disciplines, such as the "village" structure that M&C has used since it set up shop five years ago. The agency was launched in 1995 by Charles and Maurice Saatchi and Mr Kershaw, among others, after their controversial departure from Saatchi & Saatchi, which was followed by the even more controvesial defection of British Airways and Qantas from Saatchis to M&C. In its early days, M&C was forced to create informal partnerships with other communications companies because "we were just a few admen spread thinly around the world", said Mr Kershaw. But he described this "as a happy accident borne out by the fact that we could start all over again with a blank sheet of paper". The "village" structure allows for partnerships to form and evolve over a long period of time, and if the chemistry was right and the strategic and creative thinking were similar, it could develop into an equity relationship. This arrangement gave rise to willing partners and a degree of flexibility he had not experienced during his pre-M&C days. One of the biggest problems with mergers and acquisitions, Mr Kershaw said, was that there was an inevitable clash of corporate cultures, and after an agency or a network was acquired there was no guarantee that a common corporate culture or attitude was being shared across the whole group. In addition, there was also the problem of political in-fighting among the different parts of the group. "It is important for a group of people to share a certain way of thinking and doing business," he said. "It impacts positively on how clients, especially global ones, perceive you, and that in turn helps to build the client-agency relationship." But Mr Kershaw stressed: "There is also a duty for that group of individuals to try to spread that culture and attitude throughout the agency so that the company is not dependent on just five or six people at the top."

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