IQ News: Avalanche Altar-Bound? Suitors Pursue Shop




Following some financial speed bumps, New York-based Avalanche Systems is now being courted by a number of suitors. Sources said that the agency may either allow potential partners to take a majority stake in the company or buy it out altogether.
“We are in negotiations with a number of parties,” confirmed Peter Seidler, president and creative director of Avalanche, who said such discussions were in the early stages of a “formulation of a strategic partnership.” Though Seidler would not reveal any potential partners, sources said Agency.com and Razorfish, both part of Omnicom Group’s Communicade unit, and Interpublic Group are interested suitors. Seidler did say, however, that a deal would be announced soon.
“The exact nature and deal structure is not formulated,” Seidler said. Sources speculated that an investor would buy out Avalanche’s debt, keep its management in place and allow the shop to build on its reputation for well-designed interactive work. The company, which is privately held, would not release details of its financial situation. Avalanche has created Web sites for Carnegie Hall, Warner Music Group, Sotheby’s and Gruner + Jahr.
Chan Suh, chief executive of Agency.com, would not comment on potential negotiations between the two companies. “I think Avalanche does outstanding work,” he said. Razorfish and Interpublic Group did not return calls.
“The results of any partnership will be to increase our strength and visibility of the Avalanche brand,” Seidler said. “They would all be top strategic partnerships.”
It should come as little surprise to industry observers that Avalanche would consider an equity stake from another agency, though Avalanche principals Seidler and chief executive Michael Block have always insisted on remaining independent. Recently, several staff members were laid off, while others resigned in the middle of the company’s internal restructuring [IQ News, Sept. 29]. Meanwhile, Avalanche has hired a manager of client relations and business development and a director of operations. Though the shop has constantly been recognized for its sophisticated design work, it has not been known for its financial stability.
“We have relationships that are expanding, and what we will be doing is leading with our strengths and building our relationships with existing clients and the kind of clients that we work with,” Seidler said.–with Laura Rich