Cash Sought For Expansion, Upgraded Resources
BOSTON--Hellman & Friedman's equity investment last week in Bronner Slosberg Humphrey provides the Boston agency with the capital to compete in the global marketplace and ensures that it will remain privately held and locally managed for at least the next five years, said founder and chairman Michael Bronner.
The San Francisco investment firm bought roughly 20 percent of the direct marketing giant for $60-80 million in cash, sources said. In addition, Hellman & Friedman secures a "minority position" and seats on Bronner Slosberg's board of directors, according to Bronner.
The agency will remain privately held under current management for at least the next "five to seven years," said Bronner, who sold the stake to open additional offices overseas, upgrade technology and hire new employees.
The agreement likely allows Hellman & Friedman to increase its investment at regular intervals, sources said. If the firm chooses to raise its stake in Bronner Slosberg, its influence over day-to-day operations will grow and so too will pressure on the agency to either go public or sell so that Hellman & Friedman can recoup its investment, sources said.
In 1996, Hellman & Friedman bought an undisclosed stake in Young & Rubicam, believed at the time to be about 20 percent. When Y&R this year filed papers with the Securities and Exchange Commission pursuant to issuing public shares, the firm's stake had risen to more than 45 percent.
Bill Montbleau, a consultant in Burlington, Mass., who specializes in the finances of ad agencies, said the deal gives Bronner Slosberg the means to grow but spares the shop the interest payments and other complications it could encounter with loans or revolving lines of credit.
Hellman & Friedman officials referred questions to Bronner Slosberg.
The cash infusion comes as Bronner Slosberg announced its London office had opened and added several notable assignments.
The outpost, which represents the shop's first overseas office, is being helmed on an interim basis by chief operating officer Michael Ward. Co-chairman and chief creative officer Mike Slosberg is assisting Ward in setting up the office.
Looking to ramp up to 50 staffers in short order, the London outpost has picked up direct marketing duties for Cellnet, the wireless technology company affiliated with British Telecom. Cellnet split with OgilvyOne in April.
Closer to home, U.S. Satellite Broadcasting in St. Paul, Minn., tapped Bronner Slosberg for direct marketing and interactive duties. Those chores will be handled, respectively, by the San Francisco offices of the Sansome Group and Strategic Interactive Group, wholly owned subsidiaries of Bronner Slosberg.
OgilvyOne in New York is believed to have handled most of those chores. The premium satellite programming service recently broke an ad campaign from Ogilvy & Mather in New York starring movie directors Francis Ford Coppola and Martin Scorsese.
In addition, Bronner Slosberg has added a project from Johnson & Johnson in New Brunswick, N.J., to help launch "a new product," said agency president and chief executive officer David Kenny. Strategic Interactive Group last month picked up Johnson & Johnson's interactive buying assignment [Adweek, Nov. 23].
Neither Bronner nor Kenny would disclose budgets on the new assignments. However, they are believed to be worth at least $25-30 million in combined billings.
All told, the agency will likely finish 1998 with overall billings of more than $900 million and is set to surpass the $1 billion billings mark and have 1,000 employees worldwide sometime next year, Bronner said.
Bronner Slosberg earlier this year reorganized along the lines of a holding company with three distinct agency brands: flagship Bronner Slosberg, interactive marketer Strategic Interactive Group and direct startup Sansome Group [Adweek, Oct. 5]. An umbrella organization--likely called Bronner Marketing--may be formed in the near future, but plans have not be formalized, Bronner said.
--with Joan Voight and Judy Warner