Independents Say No Sales Plans

Executives at some of the Midwest’s largest independent shops said the sale of Deutsch and the top dollar being paid by big holding companies won’t lead them to the acquisition altar anytime soon.

“We like being independent; we’re staying independent,” said Alan Kalter, chairman and CEO of Doner, Southfield, Mich. “We enjoy being private and we’re staying private. We eat well and are not greedy. “

Kalter’s shop stands near the top of the dwindling list of independent agencies with billings Kalter estimates at $1.5 billion. Deutsch in New York, only slightly larger, was acquired by The Interpublic Group of Cos. two weeks ago for an estimated $250-300 million.

After Doner, there’s a sharp drop in size among Midwest independents to a tier that includes Cramer-Krasselt in Chicago, MARC USA in Pittsburgh and Bernstein Rein in Kansas City, Mo. All said suitors exist but sales are not imminent.

C-K CEO Peter Krivkovich said his shop has the infrastructure and resources to continue on its own, and that annual growth rates indicate the market is still there for an unaffiliated mid-sized shop. “We’re getting on the pitch lists,” Krivkovich said. “To me, there’s nothing to stop our growth.”

MARC has been on its own acquisition spree, building up a national network of small to mid-sized shops. “On a smaller scale, we’re doing the same thing” as the major holding companies, said chairman and CEO Tony Bucci. Like the other executives, Bucci said he is not eager to be financially beholden to a holding company and shareholders. “I’d rather be making the call (about profits) than getting the call,” he said with a laugh.

Kalter concurred, saying, “We work for our clients, Not (IPG president and COO) John Dooner.”

Still, most observers don’t expect consolidation to end anytime soon, and say that eventually all independents have their price. Doner, now atop or near the top of the list, could be next, said one source.

“Given the price that Donny [Deutsch] got, I’d be shocked if Alan didn’t sell” within a year,” the source said. “That’s just too much money to say ‘no’ to.” KAREN HIRSCH