PR Shop Sells to Holding Company; Owner to Remain in Charge
BOSTON–Carol Cone last week sold her 19-year-old eponymous public relations shop for a combination of cash and stock to the Omnicom Group of New York.
The 49-year-old Cone said she will remain chairman for at least one year beyond completion of an earned buyout, typically structured over three to five years.
Cone will be operated as a subsidiary of Omnicom’s Diversified Agency Services (DAS), which owns or has interests in at least 80 other marketing-related companies. In Boston, DAS public relations holdings include Brodeur Worldwide and Copithorne & Bellows. It also owns Porter
Novelli in New York and Fleishman-Hillard in St. Louis. The plan is to leave Cone alone.
Knowledgeable sources said Cone, which projected 1999 revenues of just under $10 million, likely sold for $12-15 million. Should it continue to grow at double-digit rates as it has in recent years, the final price would grow exponentially. Cone’s new boss–DAS president and CEO Tom Harrison–said the buyout has no cap. That means the better Cone does, the more she and her employees stand to gain.
What convinced Cone to sell her shop was access to other Omnicom companies that “will allows us to get smarter faster,” she said.
Employee retention was also an issue. Cone said she will commit “several hundreds of thousands of dollars” from her proceeds of the agency sale to fund a deferred compensation plan open to all staffers. One hitch: for Cone employees to take advantage, they must stay aboard for the next four years, helping Cone achieve performance goals tied to its sale. Another incentive is the opportunity to buy Omnicom stock at below market prices.
For Omnicom, purchasing Cone achieves two objectives. It brings Omnicom into “a new area where we previously did not compete and it complements a skill set that we currently have,” Harrison said. That new area would be “cause branding,” a term coined by Cone to describe the shop’s approach to building a client’s business through cause-related marketing programs.
In its early years, Cone created programs for Rockport, Reebok International and Avon. In the last 12 months, it has been tapped to create cause-marketing programs for Gillette, J.C. Penney, ConAgra and Chevrolet. K
Get Adweek's Brand Marketing Daily Newsletter in your Inbox
Today's highs and lows of creativity