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

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