On a sunny afternoon in April 1996, Michael Greenlees left his Soho penthouse offices, hopped in his chauffeur-driven car and was whisked past the West London enclave of hip ad agencies, noisy wine bars, trendy restaurants and the occasional sex shop. A few miles but worlds away, he got out at the Dorchester Hotel, overlooking Hyde Park. Home away from home for the super rich, the Dorchester attracts little notice from flashier types in the media and advertising business. In London, where unusual lunch sightings make for ripe gossip, the Dorchester provided the secrecy Greenlees wanted. In recent weeks, he had sought, through U.S. intermediaries, a meeting with Jean-Claude Boulet, president and chief executive of Paris-based BDDP Worldwide.
Greenlees had one thing on his mind–empire building–and meeting Boulet was a vital step forward. His GGT Group, founded in 1980, was growing steadily, but remained tiny among the world’s global ad networks. Boulet represented a chance to triple his billings overnight, gain a crucial foothold in continental Europe and a toehold in Asia, and add a flagship U.S. agency.
Boulet was no stranger to deal making–and its dire consequences. In 1989, Boulet had become notorious in British advertising circles for his hostile takeover run at Boase Massimi Pollitt. Fellow London agencies backed BMP in denouncing Boulet’s ‘Napoleonic tendencies’–going after an agency more than twice his size and outside his culture. Boulet eventually backed down, but the episode marked BDDP’s launch as an international player. A year later, it would walk away with an even bigger prize, the glittering Wells Rich Greene. That deal also marked the start of Boulet’s journey from making conquests to becoming acquisition prey.
Now it was Greenlees’ turn. Like Boulet before him, he was intent on snapping up a much bigger agency than his own. Yet the last thing he wanted was to stir up any imperialist accusations. Although BDDP was on the block, its founders still ran the agency and would resist any comedown. Pleased with his discretion, Greenlees strode through the Dorchester only to wince: His reservation was booked for the Waterloo Room.
Despite the omen, the cross-channel negotiations began on friendly terms. A year later, they would finally be completed, with GGT acquiring BDDP in a deal valued at $203 million. That Greenlees’ maneuvers took a year to accomplish, with legions of bankers, agency and client principals, private investors and public shareholders to satisfy, served as a sober reminder of the perils of agency life. In particular, to those living in the difficult middle ranks–and the defining middle ages–of the agencies and the executives involved.
‘Mike’s not a rash man,’ says one London agency veteran who knows Greenlees well. ‘In a sense, this is the last throw of the dice for him internationally. He had to do it.’
Greenlees, 50, and Boulet, 55, hail from the same generation of European entrepreneurs. Both started their agencies after youthful successes at bigger companies in the 1970s. Greenlees had hustled accounts at BMP and learned client rules at Imperial Tobacco; Boulet had risen swiftly to managing director of Young & Rubicam/Europe. Both built their agency networks in the shadows of the Saatchis and WPP’s Martin Sorrell, picking and choosing smaller to midsized targets. And both entered the 1990s with companies that were too big and scattered to be run as focused boutiques, yet too small and limited to compete in the growing league of worldwide accounts.
Boulet and his colleagues had gambled, disastrously, on assembling their empire. ‘We overpaid for Wells Rich Greene once,’ reflects Boulet’s partner, BDDP chairman Jean-Marie Dru. ‘And we paid the price again when it cost us our company.’
For Greenlees, the chance to play on a global scale couldn’t be resisted. ‘No one has ever taken a group of creative agencies and launched them as international businesses,’ he says. ‘Our challenge will be to do that while keeping the creative flair and entrepreneurial spirit that has made these companies special.’
But to get his deal done, Greenlees also had to win over a shrewd, dispassionate financier who controlled BDDP’s fate. Walter Butler, a 40-year-old former Goldman Sachs banker, had bailed out the debt-plagued BDDP in 1994. Now he wanted to cash out, paying off his co-investors and banks while keeping a stake in the agency. Part of a new breed of Euro-merchants, Butler had been educated at France’s elite Ecole Nationale d’Administration and served in the Ministry of Culture, where he managed the privatization of TF1, the country’s leading television network. After a stint with Goldman Sachs, Butler set out on his own. Although Butler came from a wealthy background, while Greenlees was the son of a north England fishmonger, the two could sense a kinship. Butler recognized the self-made drive in Greenlees, while their persistence carried them through the extended mating dance.
‘The deal was extremely complex,’ says Butler, who speaks fluent English, has dual U.S. citizenship and has lived in New York. He recalls the six months of negotiations as ‘tough and fair,’ and says Greenlees’ ‘reputation as a good businessman is quite deserved.’
For his part, Greenlees had to play the delicate role of the eager, but not desperate, bidder. He suspected Butler would not be able to sell BDDP piecemeal to other agencies because the French executives would revolt and key U.S. clients, like Procter & Gamble, might not approve. Yet he knew his strongest card to play–the fact GGT would keep BDDP intact–could not be backed up by a lot of chips. ‘There was posturing,’ recalls Greenlees. ‘At no point in the negotiations did (Butler) recognize how much leverage we had. He was very smart, a very good negotiator, saying we had no chance. He said that right up until we signed the deal.’
In the end, each needed the other to mark the next stage of their careers. For Butler, BDDP was one of his biggest and most elaborate investments, bringing together 65 equity partners and bank lenders. (His other deals have ranged from furniture distribution and Paris office property to transport and packaging companies.) For Greenlees, a successful bid would raise GGT one rung higher on the agency scale and boost his own stature. With BDDP’s expected $225 million in annual revenue added to GGT’s annual $100 million, the combined agencies should reach $350 million in the next fiscal year, which started May 1. That level would place it 15th among the world’s advertising companies. A great ways, to be sure, from the high end occupied by WPP, Omnicom and Interpublic. But GGT will now be within hailing distance of the middle tier of agency holding companies, such as Bozell, Publicis, MacManus Group, and the soon-to-demerge Saatchi and Bates, which command $500-750 million in annual revenue, though lack complete networks around the world.
Greenlees is confident his collection of agencies will form into a profitable whole, one that can compete for and service a wide range of clients, companies in Britain, France and the U.S. to multinationals such as McDonald’s, Mastercard and P&G. The opportunity to work on a grander scale has clearly recharged Greenlees. He spent much of the 1990s cleaning up a mess made with an ill-starred European investment in GGK, coping with turnover in his executive ranks, and holding hands with probing analysts in the City. For a few months he even dallied with selling out to Young & Rubicam.
In May, once the deal with BDDP closed, Greenlees’ passion for the business was on display again. He took an extended trip to the U.S., which he embraces as a second home. He stopped in Texas to attend the splashy opening of GSD&M’s new Idea City headquarters and dropped in at Martin/Williams in Minneapolis, making the rounds at his two thriving U.S. shops. ‘Mike looked and sounded great after the deal,’ says Tom Weyl, M/W president. ‘He was excited. We hadn’t seen him this energized in awhile.’
With a New York agency now under his wing, Greenlees will become more of a regular stateside. He spends a lot of time hanging out with GSD&M’s Roy Spence in Austin, Texas, with the two describing themselves as twins separated at birth. ‘People have said to me, I’m British only through the accident of birth,’ relates Greenlees. ‘It’s true, I’m much more comfortable over here.’
That comfort may stem in part from his ready acceptance in the U.S., where his street smarts and hustle are lauded, not sniffed at. By his early 30s in London, Greenlees knew he didn’t want to work for the old-school British agencies. Unlike the smooth graduates who ended up in advertising establishments like JWT/London, Greenlees preferred the company of scrappy, working class lads. He created an agency in London that in its early days had an impact similar to Doyle Dane Bernbach in the ’60s. With his creative partner Dave Trott, GGT turned out gutsy ads for clients such as Marlboro, Honeywell Bull, Mazda and Cadbury’s.
His initial success with clients and attention-getting ads spurred Greenlees on, to a public stock offering in 1986 and U.S. acquisitions. But after more than 15 years of building GGT, Greenlees had not quite developed a true network, had not really made his fortune. He takes an annual salary of £300-400,000, modest by U.S. chief executive standards. His rounds of financing have left him with less than 2 percent of GGT’s shares. Heading into the BDDP deal, Greenlees’ roughly 1 million shares were worth $4 million. A nice sum, but not what some advertising tycoons have made from their agencies. It’s nowhere close to what Mary Wells Lawrence pocketed in her day, for instance (see story above).
Going forward, Greenlees sorely needs his BDDP units to boost earnings and share value. He paid handsomely to see the deal through, shelling out some £8 million on attorneys, advisers and related costs. (That amount is more than GGT’s combined net income for 1995 and 1996.) Stock analysts in London generally approved Greenlees’ bid, although their optimism came with a lot of ‘what if’ strings attached.
Most critically, Wells Rich Greene must recover from several years of dwindling revenues and regain clients and confidence under a new management team. Meanwhile, in France, BDDP has to warm to the new ownership and shrug off the uncertainty and doubt that hung over the agency during the sale. Boulet and other agency principals were alternately distraught by
Butler’s auctioning of the agency–they felt he had promised to hold on longer while the business recovered–and protective of the financial information that was leaking out to potential buyers.
‘Nothing like your rivals finding out what your clients are spending, and how much you’re making on the business,’ complains one BDDP company executive. ‘It was horrible, like having someone go through your underwear drawer.’
Dirty underwear is the last image that comes to mind at BDDP’s headquarters. Although the agency is off-the-beaten path, in a Paris suburb called Billancourt, it gives off an earthy coolness. Long expanses of wood floors are interrupted by overstuffed navy velvet couches and huge bamboo plants in an airy atrium. The notably young employees gather around a coffee bar in the morning for breakfast, then stay for wine and gossip after work.
The agency’s 50ish founders still convey a sophisticated hippie aesthetic. Marie-Catherine Dupuy, the worldwide creative director, shows a picture of the agency’s first staff, taken outside a French farmhouse. She looks like Joni Mitchell; the agency’s intellectual leader, Dru, has hair down to his shoulders. Dru and Dupuy were once married; they have a soft, familiar way with each when they’re in the same room.
The other remaining BDDP founder, Boulet, is tan and athletic; his tennis was deemed good enough to compete on the French professional circuit. Flashy and haughty, Boulet has dated Catharine Deneuve and traveled across southern France to learn mystic art of firewalking. He seems barely humbled by the Wells Rich Greene debacle, brushing it off as ‘when you move too fast, you make mistakes.’ He is still keen on expansion for BDDP, and says he is looking forward, not back. In the wake of the GGT acquisition, however, he will cash out 50 percent of his GGT shares, worth about $2.6 million.
Dru, on the other hand, is keeping 80 percent of his GGT shares. He is contrite and a little embarrassed about the Wells deal. He makes the point that BDDP never wanted to be known as simply a French agency: ‘We’re from Young & Rubicam. We’ve always been international businessmen, not French businessmen.’ They had looked at Wells’ roster of worldwide brands–Ford, P&G, IBM–and figured they could latch onto those U.S. accounts throughout Europe and beyond. In turn, they hoped to extend some of their mainstay French companies, such as Danone and Michelin, into the U.S.
In 1990, at a Manhattan press conference, Boulet and Wells Lawrence, still exuding her trademark star quality, had announced with great fanfare that BDDP was acquiring the New York shop, with its $835 million in billings and revenues of $89 million. Both agencies trumpeted the rationale behind the association: a perfect fit of strong creative values, a similar business philosophy and extended international reach. BDDP ended up paying a whopping $160 million for Wells, borrowing heavily to pay the tab. ‘We thought we had a good match,’ Boulet says. ‘We thought we could bring a lot to the party.’
The party was over quickly. The celebration that started with champagne toasts on the East River soon dissolved into sour grapes. ‘When we bought Well Rich Greene, it was making $15 million a year, which would have covered our debt payment without a problem,’ says Boulet. ‘But when an agency loses half its business in less than five years and has two financial scandals, all our plans were upset.’
In short order, Wells lost major clients such as Sunoco, Hefty, Alka Seltzer Plus, Sheraton, MCI and IBM. A glaring mistake was the absence of Wells herself. BDDP had not required her to sign an employment contract, and she soon withdrew from agency operations and moved to Europe. She took more than her memories. Her loss proved irreplaceable to clients. ‘Even I underestimated her emotional link to them,’ says Ken Olshan, who succeeded her as CEO. ‘After we sold, clients perceived she was gone, and we lost business as a result.’
Some close observers say Wells Lawrence had a very serious cancer scare in the early ’80s. Olshan won’t comment but admits, Wells had not been active at the agency for several years. ‘In the early ’80s, Mary began to step back. Her husband retired and she began to reorient her life,’ he says. ‘She focused mainly on client retention and occasionally on new business.’
Not surprisingly, the relationship between Wells executives in New York and the BDDP brass in Paris tensed as clients walked out the door. Making matters worse was the recession, felt as deeply in France as in the U.S. Sources say Olshan complained that the cash-strapped parent was pressuring him to extend media payments and to sell AdvAnswers, the fourth-largest U.S. media buying service in America. Wells’ new business performance languished; top executives like president Dick Hopple left the agency. By 1994, BDDP was crippled by its debt service. Instead of throwing off cash to help, Wells was barely turning profits and faced huge overheads in its space–one of the most expensive addresses in Manhattan–and personnel.
Along came Butler, introduced to BDDP by Francois Pinault, the owner of retailing giant Printemps. Butler rounded up $34 million in capital, convinced BDDP lenders to swap some of their debt for equity, and ordered staff cuts and sales of nonessential businesses. The price? The BDDP founders’ stake in the agency dropped from 55 percent to 15 percent, and Butler served notice he would need to have an exit strategy for his investors once the business recovered.
It was only a matter of time before the French did a complete housecleaning at Wells. Privately, they felt misled by Olshan and his managers; publicly, they stubbed their toes when they dismissed Olshan by fax on Rosh Hashanah in 1995. Boulet now says he wishes he had made changes faster. ‘We were too nice. We didn’t want to look like arrogant French,’ he says. ‘We should have replaced Wells’ (executives) sooner than we did.’
In retrospect, Boulet admits the original offer to Wells was an overreach, as the ambitious agency succumbed to expansionist pressures. ‘We started too late. In the ’80s, you didn’t have the luxury of building a network the way Y&R did in the ’50s. The first client we won was Michelin, and they told us we would lose it if we didn’t have a network,’ he says. BDDP got its network, all right, from Wells in the U.S. to 20 percent of a hot shop in Asia, Singapore-based Batey Advertising. But it lost control of its own destiny in the bargain.
That lesson is not lost on Greenlees, who managed to convince Butler and the London stock market that his projections for a turnaround at BDDP are achievable. And Butler soon realized his options for a buyer were limited. ‘All the major groups looked at it,’ he says. ‘But Interpublic and Omnicom have a policy not to invest in difficult situations,’ says Butler. ‘The two other French companies (Havas and Publicis) didn’t think it would survive.’
What’s more, P&G also indicated its preference in any deal. ‘They didn’t intercede directly, but they let their support of (new Wells) management be known,’ says an executive close to the deal. Other potential acquirers, such as WPP and Grey, were expected to break apart BDDP to gain specific geographic or client relations. In the end, only Greenlees and his policy of independently run agencies truly remained in the hunt.
Butler and Greenlees first met in Paris last May, over lunch at an outdoor cafe near Butler’s offices off the Champs Elysees. A year later, they marked the closing of their deal with a dinner at a private club in the French capital. Butler had every reason to be pleased, despite the sluggish six months between an agreement in principle and the closing. (GGT ended up paying roughly $155 million for BDDP’s equity and assumed $45 million in BDDP debt.) ‘We’ve multiplied the value of our investment by three,’ Butler notes. ‘We doubled our cash investment, and we get an extra third in GGT stock.’
Butler and another French investor also have taken seats on the GGT board for the coming year. And although Butler has maintained all along he is an investment banker, not an advertising magnate, he says the GGT deal has whetted his interest in agencies. ‘I’m definitely interested in pursuing other advertising investments,’ he says, without specifying them. ‘I think there will be lots of opportunities in the future.’
In the immediate present, the key to Greenlees’ deal will be found around Union Square in Manhattan. In late July, Wells Rich Greene will move to a renovated office building there, abandoning its chic lair in midtown, at 9 West 57th St. The boldly sloped office tower, which houses such blue-chip tenants as Chanel, Henry Kravis, Avon and J.P. Morgan, was an antiques-filled high-rise for the old agency, a museum of closed doors and power politics determined by closeness to Mary.
‘We’re going to throw all that ’80s stuff away, all that mahogany and chintz. That was the age of Dynasty,’ says Linda Kaplan Thaler, Wells’ executive creative director. ‘In the new building, it’s a spare look where only the ideas matter. We’re all going to be outside in the open space, naked without the status armor.’
‘With the new building will come the real representation of the new culture at Wells,’ says agency president Paula Forman, who oversaw the design of the new space. ‘My brief to the architect was ‘disruption’ (the strategic philosophy espoused by Dru). We wanted to maximize communication while encouraging creativity. It’s a meritocracy.’
The move, which is a powerful metaphor for the new team, is intended to kill off the ghosts of Wells’ imperial but lavish past. By moving onto a single, sparsely adorned floor, Wells will eliminate one-third of its former space and enjoy a reduced rent. Greenlees expects to save $5 million annually with the new lease, which will go a long way to restoring Wells’ profit margins. The agency will even pick up a few dollars through the disposal of the Oriental rugs, antiques, paintings and other trappings from West 57th. Some items will be donated to charity; the rest will be sold by Sotheby’s and private dealers. ‘The key here is disposing of these things,’ says a Wells official. ‘We’re not looking to make a killing.’
So an era is coming to an end at Wells, as a new one starts. Following its own restructuring, BDDP is now turning out respectable operating profits in France and Britain. ‘I’m not an ad man, but I thought the company was actually more stable than people thought,’ concludes Butler. ‘Wells Rich Greene was still a good company. Just because you overpay for something doesn’t make it worthless. Their problems were not commercial; they were financial and management problems.’
Those are now Greenlees’ problems to solve. Whether BDDP turns out to be his crowning achievement or his Waterloo will be the next chapter in his empire-building saga.
Copyright ASM Communications, Inc. (1997) ALL RIGHTS RESERVED
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