Agency Network The Company Acquires 37-Year-Old Phelps of L.A.

Shop to become part of Houston-based 'collective'

Founder and former CEO Joe Phelps stepped down last fall. Phelps
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The Company, an independent international network of marketing agencies based in Houston, Tex., has acquired Los Angeles creative shop Phelps, representatives from the two companies confirmed.

The deal closed earlier this month for an undisclosed sum.

“It was a full 100 percent acquisition but not in the purest form,” said Jose Lozano, CEO of The Company. “The way we do partnerships … each partner owns a piece of every other agency. Think of it as a collective.”

In other words, Phelps’ principals now own shares in each of its new parent company’s six other agencies.

The acquisition follows significant changes at Phelps, which has been a mainstay in the Los Angeles independent agency scene since namesake Joe Phelps, a former account executive at Grey, launched his own operation in 1981. Last September, he announced he would be stepping down as CEO to become chairman, thereby making way for president and 18-year veteran Ed Chambliss to take over day-to-day operations.

Phelps then sold ownership of the agency back to his employees.

(L to r.) The Company CEO Jose Lozano, Phelps chairman Joe Phelps, Phelps CEO Ed Chambliss

The shop will retain its name, its leadership and its existing clients. Partners Tony Stern and Aaron Dubois will now hold shares across The Company, with Stern continuing to serve as chief creative officer, Dubois leading digital strategy and Chambliss serving as managing director in L.A. Phelps will also sit on the larger organization’s board.

I met Jose about a year ago, and we’ve been talking on and off about coming together,” Chambliss said. “Our strength is in brand strategy and creative, and he wanted to shore up that area. It’s a good fit, like two puzzle pieces coming together. What they needed we had—and vice versa.”

The two also worked together on a new business pitch while finalizing the details of the acquisition.

Joe Phelps started his plan to sell the agency back to its employees in the 1990s, Chambliss said, with the final shares changing hands in 2016. “As part of this plan, the ESOP [employee stock ownership plan] will continue down the road to payout,” he said. “All employees and former employees will benefit.”

Chambliss did confirm that 11 employees in different departments were let go as a result of the acquisition. “It’s just a function of the elimination of redundancy,” he said, calling the move “very unfortunate.”

Lozano also told Adweek that his network, which offers creative, research, media, talent and public relations services to clients, is “actively acquiring” other properties in these spaces.

The Company bought Dallas-based shop ReedMitchell in November 2016, also for an undisclosed sum. With the addition of Phelps, the network consists of seven agencies in seven offices across three countries. Beyond Houston, Dallas and L.A., it currently maintains operations in New York, Denver, Buenos Aires, Argentina and Nha Trang, Vietnam.

Lozano estimated The Company’s annual billings at about $150 million with revenues in the mid-30s, adding that those estimates are approximately 20 percent higher thanks to the addition of the Phelps organization.

The network currently employs more than 200 people around the world.

The Company’s offices have worked with clients including McDonald’s, Heineken, Mattress Firm and Phillips 66. Phelps’ roster recently included such names as Panasonic, Whole Foods, Panera Bread, Natrol and the Los Angeles International Airport.

@PatrickCoffee Patrick Coffee is a senior editor for Adweek.