There was an audible intake of breath last Wednesday after news of the Seymour Powell-Loewy deal broke.
At a stroke, the future of one of the world’s most high profile product design duos had been sealed in a cash-and-paper deal estimated by dealmakers to be worth up to £6m up front, with more to follow. The deal won’t see the two Richards clearing their opposing partner’s desks just yet, though – Dick Powell is far too attached to his, he says.
‘Kenneth Grange used to say “tidy desk, tidy mind”, but we have never seen it like that,’ says Powell, motioning to the stack of oddities lying across theirs. ‘”Empty desk, empty mind” seems to work better, as far as we’re concerned.’
Their move to join Loewy will generate enormous interest from the design world – 12 months ago it would have been scarcely imaginable. Back then, Loewy was best known for buying up and aggregating a modest mix of groups not known for design from right across the marketing services sphere, in an effort to breathe life into the ailing Loewy brand.
Spotting its potential towards the end of 1999, Bryan Wilsher – now chief finance officer – had bought Loewy, pretty much as a shell, from Patrick Farrell for a rumoured £600 000.
He was beefing it up with acquisitions when Charlie Hoult came along. The merger with Hoult’s Wilson Harvey in 2004 brought Loewy some notoriety, particularly when Channel 4 chairman Luke Johnson offered to invest £1m in the business and become its chairman. (He held the post until the end of last year.) It was widely expected that Loewy would seek an Initial Public Offering on the Alternative Investment Market, but after exploratory talks towards a flotation, the group realised it needed more scale.
But, even though its roots threaded back to the consultancy formed by the great industrial designer Raymond Loewy, ‘New Loewy’ wasn’t known for producing work with serious creative credentials.
Hoult and Wilsher were beginning to have some success rebuilding and exploiting the Loewy legacy, and realised that to succeed in the competitive world of marketing services they would need to invest seriously in the brand.
It wasn’t until 2006, with the acquisition of Williams Murray Hamm, that Loewy could say it had design credentials of note. The deal marked the transition to a ‘string of pearls’ strategy for the network, whereby individual consultancy brands would sit alongside the main Loewy engine, rather than being subsumed into it. Subsequent deals were made with bigger-name design groups including The Team, Epoch Design and Bite, but it was the WMH one that enticed Seymour Powell into the mix.
‘Without Williams Murray Hamm on board, we wouldn’t have considered this deal at all,’ says Powell. ‘And, no doubt, now that we are in, others will take a more serious look at Loewy, too.’
Strings of suitors have been courting Seymour Powell director Russell Lloyd, who masterminded the deal for the consultancy. Seymour Powell was even at the altar with one group, when Hoult turned up on his pushbike and convinced it to reconsider.
No doubt money was a factor in the final decision, as well as the terms of the three-year earn-out, but Powell points to a like-mindedness that manifested itself through Loewy’s management team.
‘The thing is, they are ordinary guys just like us,’ Powell continues. ‘We liked the fact they’d show up on a bike. We felt the fit would be good.’
‘Loewy does give you a lot of freedom and pays well for the things that it buys,’ says Jim Surguy, founder of Harvest Consulting and ex-managing director of Results. ‘It also did well to secure its £12m of private equity funding last year.’
That investment came from Veronis Suhler Stevenson, the media and communications private equity firm. Loewy has just secured a further £4m for its war chest since the Seymour Powell deal, and can count on further loans from the bank as well (see News, page 5).
Included in the Seymour Powell deal is a considered plan to allow for the succession of the business, an old bone of contention, designed with incentives for the senior management team – Russell Lloyd, Nick Talbot, Adrian Caroen and David Fisher. Powell says the directors have yet to formally agree who will be appointed to the new layer of associates that will support them.
Looking to the future, Loewy looks set on its acquisitive course. The group is looking at adding a digital component, and another ‘big acquisition’ is expected in the coming weeks.
Hoult says he is also keen to capitalise on synergies within the network, and is working with the various management teams to offer a brand council of experts, currently codenamed Loewy Together. What happens to Loewy ultimately is still to be seen. If it achieves its £100m turnover target, it could consider an IPO or a sale, and could look further afield than the marketing services world for a buyer.
Until then, it’s probably just a question of ‘business as usual’ or, as Powell would say, ‘keeping the desk as messy as possible’.
BUILDING ON THE LEGACY
2000 Raymond Loewy International merged into Workhouse Design and McBride’s & Grandfield to form Loewy Group
2001 Loewy Group merges with Journey Branding Experience
2004 Loewy Group merges with Wilson Harvey, a PR and IT group founded by Charlie Hoult. Channel 4 chairman Luke Johnson invests £1m to fund expansion, and becomes chairman
2005 Loewy Group makes a string of acquisitions worth £6m, including branding group Think, corporate communications specialist McQuillan Young, PR consultancy BMA Communications and NMI Production
September 2006 Loewy acquires branding and communications consultancy Bite for £2m
December 2006 Loewy acquires Williams Murray Hamm for an estimated £7m
March 2007 Loewy acquires The Team
July 2007 Loewy buys Bristol brand packaging group Epoch Design, plus PR agency Mantra
September 2007 Loewy acquires Seymour Powell