McKay Gets Backing

McKay Communications has secured financing from venture capitalist James Rappaport to help pay for acquisitions, according to agency founder and chairman John McKay.
“You can’t get much bigger than we are organically. You can’t grow exponentially,” McKay said last week. “Acquisitions are required, and those require money. I didn’t have any [money], so I went out and got some.”
Rappaport’s initial infusion of cash, believed to be in the mid-six-figures, will support the agency’s proposed buy of advertising, design or Web marketing firms “in our size range or larger,” McKay said.
Rappaport, the former head of the Mass- chusetts Republican Party, was a failed U.S. Senate candidate nearly a decade ago.
The Rappaport family’s New Boston Fund and various related holdings have interests in real estate and other industries. Through a family-run entity, Rappaport, who did not return calls by press time, has taken a minority ownership stake in McKay Communications.
Rappaport gets a seat on the company’s board along with majority owner McKay and Joe Burnieika, who heads up public relations.
Rappaport has the option to appoint another board member as well, McKay said.
The move comes just weeks after McKay denied accusations made by one agency vendor that outside funds were sought because the shop has had cash flow problems [Adweek, Oct. 11].
Rappaport’s investment in McKay is his second foray into advertising. He also has an undisclosed stake in Park Transit Displays of Weymouth, Mass., which has managed ad placement for the Massachusetts Bay Transportation Authority since 1992. That MBTA contract has just gone out to bid, an MBTA official confirmed. Park Transit is expected to defend.
Rappaport’s involvement with McKay follows the resignation of advertising group president Frank Mainero, who joined the agency just 14 months ago. Mainero said he stepped down for “health reasons.” The executive is now vice president of marketing at Primix Solutions, a communications consulting firm in Watertown, Mass. Mainero is hoping the pace at Primix will be somewhat less stressful than at the agency, he said.
McKay is now seeking a director of account services to assume Mainero’s former duties at the agency.
When Mainero joined the shop, his stated goal was to help boost billings past the $100-million mark in three to five years. The agency has grown about 20 percent in 1999–bringing overall billings to $35 million.
Wins this year include RoweCom, a Westwood, Mass., firm that helps companies manage their purchases of magazines, books and journals. With an estimated $8 million in billings, RoweCom is believed to be the agency’s largest single client. The shop last week unveiled a national TV campaign for RoweCom tagged, “It’s all you need to know.”
In recent weeks, McKay also picked up the low-seven figure account of Language for Industry, Boston, a translation firm.
While pleased with his agency’s growth and anxious to aggressively approach the nine-figure threshold, McKay believes an infusion of capital was needed.
Additional investments from Rappaport are contingent on McKay’s ability to grow the company quickly, he said. Over time, Rappaport’s investment may rise well into seven-figures, McKay said.
McKay, a former reporter for the Quincy Patriot Ledger, originally founded his ad agency five years ago on Boston’s South Shore.