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."
