News that The Partners Design Consultants has been acquired by Young & Rubicam, the US-based advertising group, might be expected to cause a stir. Despite its creative reputation, the group has long been identified as a possible takeover target. What is surprising is the stealth with which the deal has been carried out.
Under the deal announced last week The Partners, now a 90-strong consultancy, will join Landor Associates in Y&R’s Diversified Communications Group. Within such a setup The Partners will not only have the backing of Y&R offices in 73 countries, but it could become central, some suggest the cornerstone, of a bid to rejuvenate Y&R’s European design arm.
The official statement from Y&R is ambiguous, but nonetheless interesting: “The move further strengthens Y&R’s creative resource in branding and corporate identity specialism and makes London its centre of European design excellence.”
An extra dimension is added to the story by the actions of Sir Martin Sorrell in May. The hostile takeover of Y&R by his WPP Group throws a different light on proceedings. What unfolds will only become clear after the WPP takeover is formally completed.
The Partners has won more creative awards than any other British design group during the 17 years since it was founded. Now it may catch flak for daring to tinker with the legend it has created.
Outside the consultancy, the worry will be the conventional one that creativity, profitability and growth cannot be reconciled. Not so, says Aziz Cami, managing partner of the group, who maintains The Partners’ unique success has always stemmed from challenging such rules.
Cami and co-founder David Stuart began to seriously consider new routes for growth about 18 months ago. Following a repositioning of the business some four years ago, it was now clear that to win heavyweight corporate identity projects would mean acquiring worldwide reach. Clients were calling for global networks to enable consistent implementation of identities, and expanding organically was deemed too slow.
“The international network aspect became a bigger and bigger issue for us,” says Cami. “We have got four or five pitches on at the moment and the first thing we did yesterday was to talk to those people and say this is what we have done. And suddenly their response is ‘great – that solves that problem’. An issue they might have had with us now isn’t there,” he says enthusiastically.
“It’s really galling either not to get on to a pitch list because you don’t have the same resources as your competitors, or to find that as you go through a pitch process something which wasn’t at first an issue becomes an issue,” Cami continues. He says it was not unusual to be told after an unsuccessful pitch – “we really wanted to work with you and you were the most creative of all the consultancies, but because you don’t have this international infrastructure we have had to go somewhere else,” says Cami.
A need for what he calls “business or sector intelligence” was another reason for pursuing a sale. “We have always believed that creativity stemmed from understanding unique problems not generic problems – it’s fine to have a generic understanding about the issues facing a business or a sector, but if you really want to have the most creative solutions which really benefit clients, then you really need to know more and more.”
But there is another reason which made finding a big buyer an attractive proposition. The Partners, reveals Cami, has not found it easy to collaborate with technology partners. He talks of “struggling to build the kind of relationships that we would want to have, quickly enough, on a sufficient scale, or at the kind of levels we would wish on an ad hoc basis”. A rather alarming prospect in this era of network-focused business collaboration.
After drawing up a wish-list of buyers and undergoing a thorough vetting process, The Partners went into negotiations with Y&R just over 12 months ago. The deal was concluded last week.
“I think that there is a great opportunity for us with Y&R. It has an overtly collaborative approach as a group and has been very active in this whole area of technology and partnerships,” continues Cami. As a US-centric group it would no doubt provide great opportunities for The Partners to grow the business in its own way, without much local interference.
Cami is under no illusion about the challenging task of expanding the group. Having opened The Partners Australia office two years ago, the trials of expansion are clear in his mind, as is the possibility of growth without compromising creativity. As project sizes grow, and the importance of brand positioning and strategy increases, how creativity is handled will be the key test.
On the back of The Partners deal, the movements of the remaining independent design companies should really be called into question, too. If Cami’s reasoning is sound, they will need to exploit similar deals in order to grow and compete.
Ticegroup chairman Ian Cochrane feels the The Partners’ sale could mark the way for some other independent design groups: “I think this deal will make a few people in the industry sit up a bit. The timing is very good,” says Cochrane.
“I would say that there is a window of opportunity for acquisitions at the moment, but it will probably only last another 12 months or so.” Cochrane adds that a recession is inevitable sooner or later and being part of a bigger group can offer protection in hard times.
PSD Associates sealed a deal with Cordiant three weeks ago (DW 23 June), while MetaDesign, Caribiner International and Fitch have also found new owners over the past 12 months. The hot favourite for the next acquisition could be Wolff Olins. And, if rumours are anything to go by, watch cash-rich management consultancies like Andersen Consulting as potential buyers.
As for The Partners, the future is not quite resolved. It is uncertain if its original plans for growth with Y&R will remain unhindered by the WPP deal, although as Cami points out it could offer unexpected opportunities to The Partners.
What happens to Y&R and how enthusiastic its new owner will be to leave The Partners deal untouched remains to be seen. Formally, opportunities with Sorrell have not been tabled.
Ripe For Takeover?