There was a lot that made sense about the merger of Fahlgren and HMS/Hallmark, and a price had been agreed upon.
But ultimately, the heads of the two agencies and Rick Milenthal, CEO of HMS/Hallmark's holding company HMS Partners, couldn't agree on how the combined agencies should be run. Talks broke off last week, and the deal between the two Columbus, Ohio-based companies appeared dead.
"The closer we got, the more the differences between us became apparent," said Steve Drongowski, CEO of Fahlgren.
The two shops signed a letter of intent on a merger late last month [Adweek Feb. 5]. The combination would have created a $350 million shop with revenue of about $40 million and offices in nine Midwest and South-east markets.
A memo sent by Milenthal to HMS employees last week said talks were ended over differences that included "reporting relationships, vision for the future, common values and a common point of view on how to operate a growing, profitable company."
"There were a lot of things that on paper looked real good about this," Drongowski said. But the differences included such things as "work standards, quality control and how your clients get services," he said.
HMS Partners last year acquired Hallmark/Tassone Advertising in Pittsburgh and folded it into its ad arm, renamed HMS/Hallmark, under CEO Bill Binstock.
The deal, therefore, had to be worked out among three CEOs, a fact Drongowski acknowledged added to the difficulty of getting it done. "That reflects the complexity of the issue," he said.
Binstock was to have continued as CEO of the combined HMS/Hallmark, while Drongowski would run the agency's operations in Columbus.
Drongowski said Fahlgren has no immediate plans to look for another merger and plans to concentrate on new business.