Geier, Dooner Seal Deutsch Deal

The Interpublic Group of Cos.’ acquisition of Deutsch brings principal Donny Deutsch the largest single payout to an agency executive, eclipsing the notorious $112 million that Bob Jacoby netted when he sold Bates to the Saatchis.

Most observers are amazed at the price Deutsch commanded, which sources pegged at $250-300 million in a stock deal. That gives Deutsch himself, who owns 87 percent of the agency, a payday of about $217 million. Most ad agencies sell for a price equal to or one-and-a-half times revenue, which was $133 million for Deutsch last year.

Furthermore, Deutsch is believed to become one of IPG’s largest shareholders, equaling or surpassing chairman and CEO Phil Geier, president and COO Dooner and former CFO Gene Beard, now retired.

“Everyone’s been on our dance card,” said Deutsch, chairman and CEO of his shop. “These guys really recognize what we have in our brand. It makes so much sense with where we want to take Deutsch. Now we have the muscle behind us.”

The deal will lead Deutsch onto the global stage alongside siblings McCann-Erickson Worldwide and Lowe Lintas & Partners.

In a conference call last week with Deutsch, Geier and Dooner that was by turns professional and playful, Geier, the relative “quiet man” of the trio, dismissed the reported $250-300 million purchase price. “That’s what he would have liked,” he chortled. “That’s not what he got.”

In addition to a U.S. reach beyond New York—Deutsch has offices in Marina del Rey, Calif., Chicago, and Boston—the shop’s integration capabilities through iDeutsch and dRush and clients such as Pfizer, Mitsubishi, DirectTV, Snapple, Lenscrafters and Tommy Hilfiger have long made it attractive to companies looking to strengthen their networks.

It also has what Dooner called a “world-class management team” in the form of 10 agency partners who share a 13 percent in equity.

“In the end, this is a people business,” Dooner said, suggesting the purchase was as much about Deutsch’s talent as its other assets. “It was a fair deal and a good deal.”

Alan Gottesman of West End Consulting noted the deal brings Deutsch himself more cash than the entire New York Yankees’ annual payroll, and suggested that since IPG paid such a premium, it is important that it keep that which created the value. “Under terms of this deal, it appears the central figure could walk away without dire financial consequence to himself,” Gottesman said. “But who knows? Donny may now have more fun [working] than ever. Bill Gates didn’t get bored after the first billion.”

For Geier, 65, the deal is the culmination of a relationship he helped cultivate between two like-minded men—Dooner, 52, and Deutsch, 43.

Geier knew Deutsch from casual meetings at industry functions over the years and knew him to be nothing like his father, the soft-spoken, genteel David Deutsch. Geier had worked with the elder Deutsch at McCann on Nabisco a few years before the latter started David Deutsch Associates in 1969. Donny Deutsch joined his father’s agency in 1983 and bought him out in 1990. (David Deutsch retired in 1992.)

During a 4A’s convention last year, Geier said, he made a realistic appraisal of the younger Deutsch. “He was always known as a very brash, very shoot-from-the-hip type of guy,” Geier said during a separate phone interview last week. The re-served Geier was charmed by the fun-loving, gregarious Deutsch, but noticed a subtler side, too.

“I noticed a maturity about him,” Geier said. “He’s a great motivator and talked about wanting to build a great agency. He was a very different person from what most people thought.”

At an Adweek roundtable earlier this year, Deutsch was introduced for the first time to Dooner, who succeeds Geier in the CEO role on Jan. 1. Geier describes them as “two peas in a pod. They speak the same language—growth, great product, integrated communications, profit and people. You can’t get a word in edgewise.”

Though he describes both men as action-oriented, Geier admitted the courtship was slow. “We never pushed him,” he said. “He did his due diligence and then said, ‘OK, it’s time.’ The chemistry grew with John. Once that worked, I knew it was fine.”

Deutsch remains CEO of his agency, which will operate independently under the IPG banner.

IPG, which claimed $4.4 billion in 1999 revenues, also owns DraftWorldwide, Suissa Miller, The Martin Agency, Carmichael Lynch and other agencies. Deutsch, among the last of the U.S.-based independent shops, becomes IPG’s 17th major advertising company.

The Deutsch partners reaping the rewards are Linda Sawyer, general manager; Val DiFebo, director of account management; Peter Drakoulias, director of new-business development; Cheryl Greene, chief strategy officer; and Kathy Delaney, executive creative director; as well as two partners in Boston: Kristin Volk, evp, director of strategic planning; and Kathy Kiely, evp, general manager; and three in Los Angeles: Michael Sheldon, evp, general manager; Eric Hirshberg, evp, executive creative director; and Jeffrey Blish, svp, director of account planning. PHOTOS BY Nigel Parry