KPE has found a new investor, one that has restructured the troubled i-shop in the hope of an 11th-hour turnaround.
Second Frontier Capital, the VC arm of The Recognition Group, has bought out two of KPE's investors, Clarion Capital and Wasserstein Ventures. The New York-based venture capital firm now owns a third of the company, while Grey and KPE's employee shareholders each own a third, said Kaleil Isaza Tuzman, partner at the Recognition Group.
"With a mixed shareholder base, it was difficult to get a long-term strategy in place," Tuzman said, referring to Clarion and Wasserstein's past involvement. "You can make that work in go-go times. But, in times of retrenchment, those are different investors with different strategic visions and difficult to get on the same page." When Wasserstein and Clarion came on board in late 1999, KPE lost its focus on marketing and started investing in dot-coms, sources said
Meanhwhile, Marc Patricof has stepped down as CEO of KPE, a spot that Tuzman is filling temporarily. An executive search will commence in about 60 days, Tuzman said. Patricof could not be reached for comment. Sanford Anopolsky, evp of KPE in Los Angeles, has also resigned; His duties are being absorbed by Colleen McKenna, vp of digital services.
To cut costs, the i-shop has renegotiated lease agreements, eliminating one of two leases in both New York and Los Angeles. The agency has also cut more than 80 percent of its staff over the course of the year. The employee count now totals 38 in the U.S. and 5 in London, down from a high of 250.
Some of KPE's clients include Sony, Princess Cruises and Mandalay Bay. In 2000, the New York-based agency claimed $18 million in revenue.